Momentum Podcast: 62
Why $1,000,000 Businesses Still Feel Broken
by Alex Charfen
I've said this before, if you ask the average entrepreneur today who's maybe never even made money. Like the average pre-revenue entrepreneur, you say, “Hey, what are your goals?” They'll tell you, “Make a million dollars.” Most of the time, I'd say like 70, 80% of people say, “I want to make a million dollars.” And then you ask, “In what timeframe?” And they'll very quickly tell you, “Well, this year.”
Well here are the numbers, the statistics. I want you to understand this. 3% of businesses, 3 out of 100 ever achieve 1 million dollars in revenue. 4 out of 1 thousand ever achieve 10 million dollars in revenue. And while so many entrepreneurs see that seven figure barrier, that seven figure threshold, that seven figure finish line as a destination, I want you to know something.
Only 3% of businesses ever get to $1 million in annual gross sales. If you have achieved this already you are in the minority, it takes a lot to get a business over a million dollars… You have to understand the value you are creating, understand your clients and the effect you can create with them, and then you can repeat that effect over and over again with a level of consistency. Most entrepreneurs see hitting $1 million dollars in revenue as a number that will change everything for them. In a lot of ways it does, but not exactly how you would think. For most of us, hitting the $1 million mark doesn't mean things have necessarily gotten any easier – in a lot of ways, crossing the $1M barrier can make things harder on an entrepreneur. Here are some tips on how to prepare to cross $1M in revenue and continue beyond 8 figures.
Full Audio Transcript
I'm Alex Charfen, and this is The Momentum Podcast, made for empire builders, game changers, trail blazers, shot takers, record breakers, world makers, and creators of all kinds. Those among us who can't turn it off and don't know why anyone would want to. We challenge complacency, destroy apathy, and we are obsessed with creating momentum so we can roll over bureaucracy and make our greatest contribution. Sure, we pay attention to their rules, but only so that we can bend them, break them, and then rewrite them around our own will. We don't accept our destiny, we define it.
We don't understand defeat because you only lose if you stop, and we don't know how. While the rest of the world strives for average and clings desperately to the status quo, we are the minority, the few who are willing to hallucinate there could be a better future, and instead of just daydreaming of what could be, we endure the vulnerability and exposure it takes to make it real. We are the evolutionary hunters, clearly the most important people in the world because entrepreneurs are the only source of consistent, positive, human evolution and we always will be.
I nailed it that time, that was a good one. So today's podcast, I do the intro live every time because it gets me a little revved up. I really like reading that. And it prepares me for the podcast. Today's podcast, why one-million dollar businesses still feel broken, and I feel like I really crushed it on that one, and it's excited because every time I'm doing that intro and I stumble a little bit, or I say one of the words wrong, I'm always like, "Ugh." But every once in awhile it goes like that.
So today's topic is why one-million dollar businesses still feel broken. I've said this before, if you ask the average entrepreneur today who's maybe never even made money. Like the average pre-revenue entrepreneur, you say, "Hey, what are your goals?" They'll tell you, "Make a million dollars." Most of the time, I'd say like 70, 80% of people say, "I want to make a million dollars." And then you ask, "In what timeframe?" And they'll very quickly tell you, "Well, this year." Well here are the numbers, the statistics. I want you to understand this. 3% of businesses, 3 out of 100 ever achieve 1 million dollars in revenue. 4 out of 1 thousand ever achieve 10 million dollars in revenue. And while so many entrepreneurs see that seven figure barrier, that seven figure threshold, that seven figure finish line as a destination, I want you to know something.
Seven figures is anything but a finish line. In fact, for many entrepreneurs, the road to a million dollars is challenging. In fact, many hit a million dollars and they find themselves asking questions like, "Should I just go back to when I could do it all myself? Should I shrink it down again to what was manageable? Should I make it smaller so that I can just make it all happen?" Because here's what happens. This is why million dollar businesses feel broken. Foundationally, there's one major reason.
You as the CEO, you as the entrepreneur, you as the growth engine for the business, at a million dollars it becomes clear that you have two responsibilities. The first thing that you have a responsibility to in the business is creating your unique outcome in the business. Creating the deliverable of the business. What is the product, the service, the market effect that your business creates? That is responsibility number one, and the most important one. It's how do you service your clients? How do you create the outcome? How are you different? What's your unique selling proposition?
But next to that, and parallel to that, you now have the position, the job, the vocation of creating the system in the company that grows the entire business. The cadence, if you will, of the meetings that you have, the communication you have with your team, the forward looking structure. If you haven't heard my podcast yet on what only one percent of businesses have, go back and listen to what only one percent of businesses have. It's one of the last few. And what I'm talking about there is a forward planning structure, and the issue, the reason why million dollar businesses so often feel broken is when you get to a million dollars, most of the time, the entrepreneur, you, is still doing too much.
There is far more complication and you can't do it all, you need a team, and so you end up in this position where to get to a million dollars, you've created value, you've delivered a product over and over again, you've created a market effect, and now you have to absolutely shift what you're doing. You have to shift your focus within the company from doing those things to hiring a team, and finding the right people, and onboarding them, and bringing them in, and making them feel like they're part of the outcome you create, and helping them as your team understand what to do next, create momentum, and grow the business.
And here's why so many million dollar businesses feel broken. Because this is the point right around a million dollars where as an entrepreneur, you don't just delegate things to a team, you have to train them to do what you do well. I'm going to say that again. When you get to around a million, if you want to build past it, you have to create the cadence, the communication structure, the system, go back to the one percent podcast. But the other thing that's crucial is you have to train the team to do what you do well, which is so hard for entrepreneurs. I think this is why so many of us get caught underneath that million dollar threshold, or so many entrepreneurs just struggle right at like over a million, or around a million, but never get past three.
Because in order to go past three, you must have a team that is replicating, they're doing what you do well. And this is why it's so difficult, because everything that got you to a million has to shift in order for you to go past it. You have to now start recruiting people and onboarding them and duplicating your decision-making in the people around you. You have to build that team, grow the team, communicate with them and make sure that they know what you're doing and they understand what the outcomes are and what the focus is. And you have to build the team around you to help you have an easier time and stop working so much, and get more free time, and more time to think, and more time to understand what's going on, and more time to contemplate your next moves and to come up with a strategy.
And for people like us, that is the hardest thing in the world to do because here's what happens. We have to go into dangerous territory for entrepreneurs, scary territory. We have to ask for help. I call it the entrepreneur's dilemma. People like you and I need far more protection and support, far more help from the world around us to reach our full potential. I mean, that's just a fact. If you want to do more in the world, you're going to need more help. But any request for help makes us feel vulnerable and exposed. And the challenge for most entrepreneurs is we ask for help from our team, we build a team, with very little structure or process.
And at a million dollars, there's a shift that has to happen. See, you can drive up to a million, and even beyond that. I've seen some companies get to two or three, I've seen some really struggle and get to five or six. But you can get to a million, maybe two or three, maybe like the small, small percentage can get to five or six with personality leadership, or personality management. That means you come in every day, you tell people what to do, you check that it gets done. It's like this constant almost micromanagement. But if you shift, you go from personality management to process-based leadership.
You go from transactional management to transformational leadership. And around a million dollars is where everything feels broken because for most companies, not all, but for the vast majority of companies, this is where you as an entrepreneur have to significantly shift your behavior. You have to go from doing everything to making sure that there's people who understand what the outcomes are so that they can get it done. You have to go from being the center of what is going on in the business to having people duplicate what you do well, and you have to go from that transactional, telling people what to do, checking that it got done, and telling them what to do again, which we all know is exhausting, to transformational, giving people outcomes, coaching success along the way, and getting leveraged results.
Now, one million dollar businesses do feel broken sometimes. But if you're an entrepreneur who can shift from transactional to transformational, go from personality to process, and put a cadence in place where you're letting your team know where you're going, like, "What's coming next? Here's where we're going. This is our hall of fame goal. This is our Superbowl, this is our schedule, this is the game we're going to line up on. Here are your assignments for the week. And today is game day." If you can translate that to your team on a daily basis, and you have a system to grow the company, everything changes.
Because if you have a forward-looking planning system, if you have a meeting cadence where you communicate those things to your team and they always know where you're going, if you can start having your team duplicate what you do well, and you create the infrastructure I just described, here's what I want you to know, that is not a seven figure infrastructure, that is an eight figure infrastructure that will take you beyond. And as an example, I'm working with a couple companies right now that when we started, they were right around a million dollars. And now they're exploding past that million dollar mark.
And here's what we did. We put a communication system in place. We put a series of meetings in place. We put that forward planning strategy in place, and everything changes because when you are the entrepreneur involved, in order to go from process to ... Or sorry, from personality management to process, you have to know where you're going. In order to go from transactional where you're telling people what to do, checking that it got done, and telling them what to do again, to transformational, where you give them outcomes, coach success along the way and get leveraged results, you must know where you are going, and you have to have a system to communicate it.
So the fact is that so many people that you see get up on stage at events, or brag on Facebook, or announce to the world that they've hit seven figures, while that is something to celebrate, that is something to congratulate, that is something extraordinary, only three percent of companies will get there, it's also something to be cautious with. It's also something to understand intimately, because here's what I want anyone who is close to that million dollar mark to know, or anyone who's surpassed that million dollar mark to know. You have the potential, and the momentum, and the ability to go so far beyond it. But it's going to take you changing all of your behaviors.
Because from start up to scale is two completely different things and each transition we go through as an entrepreneur, what got you here will hurt you moving forward. I really want you to consider that, because what got you to a million has to completely and totally shift to get you to higher if you want a sustainable company, where you enjoy what you're doing, your team grows, you grow, you have a bigger market effect and you make things happen. You go from personality management to process leadership, from transactional management to transactional leadership, and you start actually growing a team forward based on knowing exactly where you're going.
You know it's crazy that even hitting seven figures as an entrepreneur is not this massive relief. It's just a new set of responsibilities. That's why I always tell the entrepreneurs I work with, "Your business is broken, and if things go well, it always will be." Because if you're growing and you're scaling, and you're approaching seven figures or you've even passed it, you're on your way to eight like several of my clients are, here's what happens. Each new threshold, each new transition allows us as entrepreneurs to grow. But it also means that we as entrepreneurs have to go through a full transition ourselves so that we as the guiding force behind the company don't hold it back.
There's a reason why most million dollar businesses feel broken. And it is my mission to help as many entrepreneurs as humanly possible hit that seven figure mark, but then create the infrastructure, and the system, and the processes so that they can go crush eight figures and beyond. If you're in that situation, reach out to us. We'd love to hear from you. If you would like to understand more about how to grow your business, how to accelerate what you're doing, how to do even more today, contact us. Reach out to us. Let us know. Someone on my team will qualify you, and we will find out if you're ready to talk to me or one of my team members.
You can even call us at 800-482-0335 and we'd be happy to guide you, qualify you, and put you into the right situation in our company. And if you're an entrepreneurial personality type and you're figuring this all out, you want to understand yourself better and really understand how to create momentum, download a copy of my book. Go to FreeMomentumBook.com. You will not be sorry. That book will tell you more about yourself possibly than anyone ever has. Thanks for being with me here today. I can't wait to share tomorrow's podcast with you. It's only going to get more exciting.