The Surprising Truth About Scaling a Million-Dollar Business

This is the Momentum podcast.

So many entrepreneurs today are headed towards and obsessed over the goal of hitting $1 million in business. And that is a fantastic destination. It's an amazing place to get to, but it's not a finish line. In fact, so many entrepreneurs hit $1 million and they're shocked because it doesn't feel like they expected it to.

I'm Alex Charfen and this is the Momentum podcast. Made for empire builders, game changers, trailblazers, 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, 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.

You may hear some wind noise today as I'm walking around, or maybe some car noises. I'm actually taking a walk in my neighborhood. Decided to grab my phone and my microphone and record this podcast. You know, that's how I record most of these. Walking around, processing, thinking, remembering what I've been through, remembering what I've seen other people go through. I think that's really the most effective way for me to record. I recently had somebody tell me that I need to give up walking around and do video podcasts so that everybody can see this, but for me, this format is like a conversation, and I want to be able to give you the best information I can. And for me, that means moving and walking. And so I apologize in advance for the noise.

Today's topic is one that I've talked about a lot. You know, I think in the entrepreneurial world, we have been shown and convinced and maybe marketed to that hitting seven figures in a business is a finish line. It's a destination. It's like we've made it. And in so many ways you have. If you hit seven figures in a business, you're part of only 3% of companies that get to $1 million a year. It is an incredible place to be. The majority of companies will never be there. But there's a shock for most entrepreneurs when they hit a million. If they're watching things and paying attention, they're like, ‘Hey, I'm at a $1 million run rate. I'm over $83,000 a month. I should feel like I've made it’. But so often we don't. In fact, hitting $1 million in run rate in your business can be one of the most stressful times in your business. Here's why: When you have a $1 million business, you typically don't have the resources and the finances to hire everybody. You need to do what you need them to do, and you have the responsibility of delivering for customers at $1 million in business. And so those two things can make hitting this milestone really challenging. In fact, nobody prepares entrepreneurs for what happens at this juncture, because when you hit $1 million in business, it's where you go from ‘you can actually do everything, see everything, understand a lot of what's going on’. to now you have to make increasingly difficult decisions with less and less information. I've been challenged on that before. What do you mean, less and less information? Well, when your business is a party of one, when it's just you, you know everything. You absolutely know every single thing that's going on. You got a second person or a third person, maybe a fourth person. And now you know less and less about what's going on. They can't possibly communicate to you everything that's going on every minute of the day. And when you get to that place, you now have an opportunity. You have a choice. You can continue running your business like most entrepreneurs do. They run it by personality. Here's what that means. That means you come in every day, you make sure everything everybody's doing, what they need to do. In fact, I was just in Florida at an event, and I was talking to a friend of mine who runs an eight figure business, and he has an office that is right in the middle of his entire operation. He has over 100 people, and his office has glass windows, and everyone in his building can see whether he's there or not. And I told him, hey, you know, that office is not a good idea because at $1 million in business, sorry, I had over $10 million in business. You don't really need your team to know if you're there or not. In fact, you need more time out of the office than in the office. And you have this fishbowl office where everyone can see whether you're there or not. And for us as entrepreneurs, what happens when we put ourselves in that type of situation where we're there every day? And he told me, you know, he originally set it up that way because he wanted to get in early and see who else got in early. That is some transactional management right there. I said, you know, that's a good thought, but I think you need to stop. And I think you need to let a process run your business, not personality run your business.

And here's what I mean by you have a choice in a personality run business, which most businesses they get to, $1 million are run through force of personality. And here's what I mean by that. Just like my friend in the fishbowl office, you show up every day, you make sure people are there. You make sure they're doing what they need to do on a daily basis. You're telling them what to do, checking it got done, telling them what to do again, checking it got done again, telling them what to do again, checking it got done. I repeated that several times just to make you uncomfortable. Every time I talk about that, it makes me uncomfortable. That transactional management of having to check that people are doing their stuff and having to make sure that everything's going out on time, having to make sure everybody's doing what they need to do is exhausting. When you run a business by personality like that, here are the symptoms you will no doubt experience. First, your to-do list gets longer every day. There's never a time where you have nothing to do because there's always something that can be done. You find yourself overwhelmed in the day to day doing way too much, and you feel like you just can't extract yourself from everything that's going on. And in a personality run business, you also feel like you are the vital glue, maybe the lubricant that keeps the business going. You have to be there in order for things to move forward. You have to be there in order for the business to continue, and for everybody to do what they need to do. It is exhausting. It destroys our visionary capacity. It reduces our creativity. It keeps us in a stressed out, irritable, fight or flight type feeling. And it makes it so that as our business grows, we are growing ourselves into pain. We are growing ourselves into more frustration. We are growing ourselves into a higher level of difficulty every day. And when I say difficulty, I don't mean strategic difficulty. I mean day to day tactical difficulty.

I often share with entrepreneurs, if your days are getting tactically harder in your business, you are building a house of cards. Let me break that down for you. What I mean by that is if on a daily basis you're doing more, if on a daily basis the business needs more from you, demands more from you. Then you're building a house of cards. Because the more you do for your business, the more a liability you are. Now, that doesn't mean you can stop doing everything at once. That doesn't mean you can just go from personality run business and the next day say, I'm not doing anything. I'm handing everything over. I'm delegating everything. It's not a good strategy. And I bring this up because, man, I've seen more than one entrepreneur try and do it, like from a Monday to a Tuesday. I'm just going to hand everything off. And the results are disastrous. Because if you're going to move from personality run business to a process run business, which is the escape hatch here, which is a way you can grow your business without doing it all yourself, which is the way you can put a process in place so that it runs the business, not you. Checking on everything that takes time. It doesn't take years, but it takes time. It takes a couple of quarters to get a system in place where your team is involved in planning what's going on. You have a clear monthly strategic plan where everyone understands every project that is being executed in the company. What every person's doing, what the accountability is, what the measurement is. They all have clarity as to what's happening. And then you have a process through which the people on your team get things done. Now we teach a process like this. We take people from personality to process run businesses, typically starting at around $1 million or somewhere in that vicinity. We've definitely had people come to us with much larger businesses and some with slightly smaller businesses, but they're all experiencing the same thing. They're overwhelmed in the day to day of their business, and they can't see how to get out. And what we do is simple. My company is called Simple Operations. We show them a simple planning structure, a simple people management structure for execution, and a simple analysis process to understand exactly what the company is going to need next at any juncture in time, so that when you're planning, you can build the infrastructure of your company. And this is the only way I know how to take a business that's at seven figures and grow it consistently and continue to grow it and have it be effective, and have it deliver the promises that you are making to people. Because in a personality based business, every single day, you are one straw from breaking the camel's back. And here's what I mean by that. If you're the one coming in every day and checking on everyone, if you are overwhelmed in the day to day, if your to-do list is too long, if you're doing too much, if every day is getting harder and anything happens, you go from a really tough situation to a panic situation. And when I say anything, you get sick. You need some time off. You can't be there. You have to go handle something personally. You get distracted by something. It can be disastrous because the only failsafe in place is you making sure everybody's doing everything in a process run business. It's actually the opposite.

It's interesting how many times in our membership we've had an entrepreneur come in with their operator, the person helping them run the business. They put our process for planning in place. They put our process for execution in place. They start consistently building the infrastructure of the company using analysis. And then something happens where there's a distraction. There's an illness. There's a challenge in the family. There's something that takes the entrepreneur out of the business for a period of time, and what previously would have been disastrous, what previously would have been an absolute panic and all types of challenges for the entrepreneur. Often result in them being out of the office. And get this, the business grows. The business grows because there's a team in place. The business grows because they have clarity. The business grows because they have process, not a personality to rely on. And the business grows because the team members know what they need to do, because they actually understand through the system, through the process where they need to focus. And when you have this in your company, it goes from being an unstable, challenging environment to an environment where if something happens, you can actually succeed. If something happens, you can survive. You can keep moving forward, you can have the business still grow and not have challenges like you would if you were doing everything. If you want the business to grow. The most important thing is that you protect yourself and you get out of the day to day. As visionaries, we need time. We need space. We need spaciousness. We need to be able to, like, actually create the future and have time to figure that out. You know, I think most visionaries are artists. Art takes time. Art takes space. Art takes. Taking deep breaths and doing some meditation and figuring out what you really want to do. And you can't do that if you are personality managing your business, you can't do that. If you're the only person who's making sure everything happens in the business and you don't have a process in place, when you do, you can become a true visionary. And that means having your team run the day to day of your business, and then taking a step back and looking at the ecosystem of the business and everything that's getting done and saying, where can I be the most effective? Where can I help? Where can I support? Rather than being overwhelmed by everything and trying to figure out how to get out of it? Running a $1 million business can be incredibly rewarding. I know I've run probably a dozen of them, maybe more, and it can be incredibly fun, and you can change a lot of people's lives and make a massive contribution. If you don't let the million dollar business take over your life.

As entrepreneurs, we got into this world for freedom, and then we build ourselves a prison of our own making. I'll share something kind of candid with you. So I was talking to that friend of mine who has the fishbowl office, and I really wanted to make him uncomfortable because I don't want him in that office anymore. I know what a challenge that can present for a business, because if he wants to be out of the office and he can't be there, and he wants to stay home one day and do some thinking, the entire team is going to be asking about where he is. And he's actually built himself this display, like this display box that says whether he's working or not. And I said, I know you really love that office. And you said, yeah, you know, I built it to all my specifications, but now you're making me uncomfortable. And I said, yeah, you know what it really is? He said, what is that, a prison? And he looked at me funny. He's like, what do you mean it's a prison? I said, you've created this space where you now have to be according to you, in order for the people around you to be productive. You are the model for their productivity because you're showing up every day, man, as a visionary, that is like the worst place for us to be. We want a process in place in the business. We want to make sure that everybody's executing as they should, that we have good leadership and team members that are moving things forward regardless of what size we are. And then we need to actually demand the freedom that we got into entrepreneurship in the first place for. And I've never seen anybody do it successfully without having a clear process in place to manage and run the business. So when you hit $1 million or before that, you really should start thinking about how do you get out of the day to day? How do you actually become a visionary? How do you get time and spaciousness? Otherwise you're not building yourself a business, you're building yourself a job where you're self-employed, and a business is one where you do what you want to do. You have time and space. That business is making money for you, and you don't have to be there, tethered to the business on a day to day basis. That's what team members are for. That's what employees are for. I want you to actually be a business owner, not someone who is tethered to their business, buried in the day to day and self-employed.

I really appreciate you spending this time with me. If you want to move towards getting out of the day to day of your business, we have a resource that I think you find incredibly helpful. It's called the Five Core Functions, and it is by far the resource or the information that, like our clients, are our friends. Everybody we know uses this analysis tool to understand exactly what they need to do in their business. And this will get you started on thinking about going from personality to process. In order to understand what you need to do, you can go to predictablebusinesssystems.com and download the five core functions matrix, the book, the instructions on how to analyze your company and get massive clarity on exactly what you should be focused on. Go to predictablebusinesssystems.com and check it out. And thank you for being a listener. Thank you for being here with me today on my walk, and I hope you found value here. If you did, take a minute and leave me a review. I love reading them. My team shares them in our huddle and we really get a lot out of hearing your words about what you think about this podcast. So thank you for being a listener and I'll see you on the next episode.