Double Your Business in 12 Months

Are you trying to grow your business but not sure where to start — or what might go wrong? In this episode of Success Is Not Convenient, host Bernie Gallerani breaks down the five critical areas where businesses fail during rapid growth: leadership capacity, team talent gaps, broken systems and processes, cash flow shortfalls, and cultural breakdown. You'll learn why you need at least 12 months of operating capital before scaling, how to tell if your business is truly scalable or just dependent on you, and what questions every business owner must ask before pursuing aggressive growth goals.

Transcript

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Hello, everybody. Bernie Gallarani bringing another episode of Success is Not Convenient. This is where we continually keep talking about the challenges that entrepreneurs face at building a business. Seems to me that a lot of people would love to be business owners. They like to control their time and do their thing. Maybe you're entrepreneurial and you're willing to put in the effort to be a business owner and the struggles associated with that. But whatever you do, I want to encourage you this. Being an entrepreneur and starting a business and dealing with people and dealing with the process of growth is never easy. And so the topic I wanted to bring to you today is this. And this is for my entrepreneur friends that are in business today. And so here's my topic is what would break first in your business if you tried to double it over the next 12 months? What would happen to the current business that you have today if you tried to double that business in the next 12 months? Some of you guys probably went, oh God, doubling my business in the next 12 months? Try it. I'm working on it right now to over three times my business in 36 months. The challenges associated with that are fun. So I thought I would create this topic to try to give some insight or some light to some folks that may be finding that you're being spoken to inside that says, man, this would be a lot of fun to do it. See, most entrepreneurs say they want to grow, but very few ever asks the most important questions to growth. If my business doubled in the next 12 months, what would break first? See, isn't that interesting? What would be the first thing that would be challenged or stressed? Because here's the truth growth doesn't just create opportunity, growth actually exposes the weakest parts of your business. So when you go to scale at a high, fast level, the weakest parts of your company break first. They show the weakest part of your company first. Revenue doesn't break companies, scale breaks companies. So today I want every single business owner listening to ask themselves a very uncomfortable question. If my business doubled tomorrow, where would the cracks show up first? Answer that question for yourself. Where would the biggest struggle in your business to try to double it, what would be the first thing that would show up as a challenge? Let's walk through five places most companies actually break first, right? The first one is leadership bandwidth breaks first. Leadership bandwidth. In most companies, the bottleneck is the founder of the company. I'm going to say this again. The bottleneck to every company is the founder. And if the business doubled tomorrow, could you handle twice the decision making? Could you handle twice the problems? Could you handle twice the amount of people in your company? Most founders are already stretched so thin. And I've actually experienced this myself recently where there was so much on the table as the founder and owner and entrepreneur inside the companies that I have, where things get stretched pretty thin. See, growth demands much, much faster decisions. It demands a stronger leadership team, really smart leadership people inside your organization. It has to have better delegation because you're going to have twice as many people. So if you're going to scale this thing in 12 months, look at your administrative staff and ask yourself this whether they were lead management, sales managers, marketing people, accounting people, whatever it might be. You're going to have to probably most likely double the amount of people that you have inside your company. See if everything in the company still flows through you, your business can't scale past your personal capacity. What can you personally handle? The real question for all of our owners is have I built leaders or have I built dependency? And that's interesting, right? Have I built people that are leaders inside of my company, or am I building people that are dependent on what it is I do or what I say? People and talent break next. So people and talent are the ones that you really have to start considering first or next. Most businesses are overestimating their team's uh capacity because we have no idea what level where it's going to break because we don't really know how much our team can handle. And if you doubled sales tomorrow, could you the current team that you have, could they keep up? Could they handle that particular workload? Could they maintain the quality of the service you provide? Could they protect the customer service that your business your business expects? Right? I mean, that's always the hardest part. People don't even really think about it. It's when you expand and you add more volume to your company, it's gonna start cracking all over the place. You don't have to know all the answers right now, but the real fun part about this podcast is what would go first. See, most teams already are operating near full capacity. I would guess. That would be how we operate our businesses. You stretch it, you stretch it, you stretch it, then you ask yourself, how much more can we take on? Well, if you're stretching it as you're growing your company, then the next thing you do is to have to hire really good people and think operationally how I'm gonna continue to keep moving forward. And here's what happens during rapid growth process. Weak employees become very obvious. Don't overlook this. You're building a team of fabulous people who all have the same vision. Weak people are going to surface to the top. The business suddenly exposes all these different skill gaps, leadership gaps, accountability gaps, growth forces, really hard truth. The team that built the business may not be the team that scales the business. You know, I did a podcast one time about scaling your company. And what it really talked about is who you started with may not be the people you need in your business in order to move forward to scale it, double it, triple the size of it, right? And that's okay. Those employees fit really well in at the time that you originally started the business or worked through the business. But the question is, does it work for scale? Systems and processes will absolutely collapse if you don't have it figured out. Entrepreneurs love speed, so we love things happening very quickly, but scale demands structure. I am dealing with that right now. So I've made a pretty hairy, audacious goal within the real estate industry that I'm in. And when we started building this plan to three and a half times the business over 36 months, um, we realized that the system was going to break. There's just no way it would ever support. And you look at it and go, well, everything I've built up to this point basically has to be broken down. So when you scale, it demands massive interior structure. And when businesses double, chaos usually appears. And where it appears is in its communication, the systems, the processes, the handoffs. So how does that handoff situation work? In our world, handoffs would be things like lead distribution to agents, the level of accountability that people have. Do you have all the measurable things in place? Or what would you design of the level of measurables you'd have in place to hold everybody accountable for the jobs that are needed to be done? What worked within just 10 people does not work with 50. Think about that. You have 10 people and now you have 50. Who manages those 50 people? What worked with 100 customers doesn't work with a thousand customers. You know, I remember when I had a few hundred customers and I could call them every 90 days, right? Now I've got over 7,000 past clients and customers that I have to figure out who is doing all this follow-up to make sure that those past clients are served. See, if your business doubled today, you need to ask yourself this. Do we run on systems, memory, or hustle? Because hustle does not scale. Hustle is a great attribute we have as individual people, but it doesn't scale. And so what we need to understand is your desire and motivation has to be given through other people to scale because your internal desire to hustle is not scalable. Cash flow pressures, this one is critical. We're dealing with this right now. Um, when you're scaling a company, cash on hand is critical because what happens is it starts putting, as you hire really good management, really good people, you have to pay them. And it really sucks up cash flow. Are you prepared for that? Cash flow is something that really surprises a lot of people. They don't realize how much you have to have. I'm not saying how much you should have, but I'm just gonna say this if you're running your business and you want to scale it at least twice of what it is today, you should have a minimum of 12 months of reserve in the bank, meaning 12 months of operating capital. I had a question one time. I did something based on operating capital, and they said, well, if I have six months, sure, you can do it if you have six months, but it's gonna be tight. It's gonna be tight. And in order for me to do it, I had to make a decision to take an extremely extreme cut in income to scale the business. Are you willing to do that? Um, growth actually consumes all of your cash. More growth means you have more payroll, you have more inventory, you have a more robust marketing plan, more operational costs, and you might be winning on paper while the bank account is under pressure. And I can tell you, that is a very uncomfortable. You run a business and you're doing pretty well, you got X amount of business, you have 10, 15 employees, and you're going, I want to take this to 20, 30, 40, 50 employees. That bank account's gonna feel it. Many companies fail during the growth because they don't prepare financially for the level of commitment, financial commitment it takes for expansion. Guys, don't overlook this. You might say, well, gosh, Bernie, I'm not ready to double and triple my business. Well, prepare. Take this year and prepare. Say, listen, I have to put X amount of money in the bank. I'm gonna take a little bit less money, but I'm gonna have a nice little nest egg so I can work on expansion. Here's an important question for you: Does the business have the financial strength to support its own growth? Does the business have the financial strength to support its own business? It is super important. If it's not bringing in enough cash for expansion, we've got a cash flow problem. A lot of entrepreneurs, they will earn and then they spin. They will earn and then they'll spin. Are you investing it back into your business or are you putting it into your bank account? Because if you're putting it into your bank account, scaling is probably not likely. When you scale and you test, culture gets tested. Culture is easy when you're a very small company. And that is something we're a little bit concerned with in our company today is as we've changed so much, what's our culture gonna look like? Right? And and that is very critical. Everyone knows each other and everyone feels aligned. And that is gonna stir. But when companies grow fast, new people arrive quickly and standards get diluted and expectations get blurred. The founder kind of has to protect all of those. They have to protect the values, they have to protect all the standards, they have to develop a high level of accountability or have management that does that. Because culture either strengthens during growth or it just totally falls apart. That's not a good thing. Here's what I want to share with you. Here's the real exercise every entrepreneur should do. Ask yourself honestly if my business doubled in the next 12 months, what would break first? Would it be leadership? Would it be talent, systems, cash? What would it be? Could it be culture? What is it? Because whatever that answer is, that is the next problem that you should solve. Smart entrepreneurs don't wait for growth to expose their weakness. They identify the weak points early and then they reinforce them now so they can scale and build. Because the companies that scale the fastest are not the ones that chase growth. They are the ones that prepare for growth before it even arrives. And if you really want to challenge yourself as a business owner, ask one more question. Is my business actually built to scale or is it only built to survive? Oh, God, that's a hard one. I'm gonna read this one to you again. Is my business actually built to scale? Or is it only built to survive? And if it's built to survive, that's okay. But you shouldn't scale. But what I want to ask you to do, if you want to scale, ask yourself what has to happen in order for it to scale. And the one thing I would tell you is you you have to be mentally prepared, but also financially, you have your business has to be prepared because those are two different businesses. Survival and scale are two different ways to look at things. So here's what I'm gonna give you as an option just to think about some questions I want to ask. If my business doubled tomorrow, would I actually be the reason it succeeded or the reason that it breaks? And this forces all of us owners to confront their leadership ceiling and their decision making, their control issues. Oh boy, that's a good one. You have to really depend on a lot of people. You can't have a control problem and then leverage your business for other really smart, successful people to take it to another level. The next question I want to ask you is do you have a scalable business or do you just have a job that depends on me? Does the job just depend on you? Gosh, I would hate to think that I own a business that everything depends on me. And the question is, do you have good leadership in there that you can lean on other people to take the baton to the next level? And that one is a tough one because it stings a little bit, right? Because a lot of successful entrepreneurs realize that everything runs through them and nothing works without them. You don't really have a business, you just have a job. And so what I'm gonna ask that all of us think about is if we're the bottleneck, we could be the bottleneck in our own business. If I disappeared for the next 30 days, would my business grow, stall, or collapse? And if it does, this exposes the depth of leadership, your your ability to build systems that are strong, true dependence of the business. If it falls on you, you don't have a business, you just have a job. Question is, where am I tolerating mediocrity that would get exposed instantly under any sort of pressure? Where in my business do I just fly under the radar that I would be exposed if I tried to come above the sea? See, now you're hitting the weak team members in your company. So you might have these really great ideas, but you might have weak team members. You might have a broken system, you might have really low standards. I don't know. Growth doesn't create a problem, it reveals what you've been tolerating. God, I realized that in just working just the last few months in scaling where the weak spots are inside of my own company. And when you get the realization that you have these weak things going on inside your company, it's an eye-opener. You're going, man, I tolerated this for 10, 15, 20 years. I can no longer operate this way if I'm going to three times my business. Here's another last question for you Is am I preparing for the business I say I want, or am I operating like the business I have today? I'm gonna I'm gonna say this to you again. Am I preparing for the business I say I want? So are you preparing building cash, thinking about a strategy? Am I preparing for what I think is about to come? Or am I just operating like the business that I have today? Because you cannot build and scale on the business you have today. You have today what you have today based on what you do today, right? So because business is hard, scaling is even harder. So think about changing everything you know and the challenge of what that brings, of having to reshuffle the cards, change the management, look at employees differently. Because this is where most people fail in the process. They say they want to scale, but they operate small, small in their business and small in their thinking. Your business is perfectly designed for the level that you're currently at today. So if you want more, you don't need more motivation and you need a different design, a different program. You're recreating something completely different. And so I want you guys to take this just thought as we leave this podcast today. Growth is a choice, but it's also difficult. But it's no more difficult than it was when you started your company. The only thing is you just got comfortable with where you're at. You know, my mentor asked me an interesting question yesterday when I was talking to that to him. And he says, Why would you want to do this that I've just expressed I was doing? And I said, Because I want to grow as a person. And if I continue to stay where I am, then I'm not growing. And I have an importance in my life to feel like I'm moving the needle forward. Something is getting better within my company, within my life, within my relationships. And this is my business. And at this point, it's a little bit of a game. How far can I take the next stage of my business? And am I going to feel uncomfortable in the middle of that? And the answer to that is yes. I am going to feel uncomfortable. Well, that's why we're here. We're here to grow and expand and allow people to come into our companies to experience the growth as we can as a team, as a as a village of people coming together with the same common goal. Guys, I really hope that you found a lot of value in this. And please hit that like button, that subscribe button. It helps us continue to keep getting great people like yourself following our stuff. Please write comments or anything below. We'd love to hear from you. And I hope this message today has pricked something inside of you that says, Man, I really think I can actually become better next year than I was today. I hope everybody has a fantastic day. See you later.