70% of startups fail in years two to five (and 90% in total).
70% of lottery winners go bankrupt within a few years of cashing in their ticket.
The lack of financial education is one explanation for these things. “If you can’t manage $1000, you won’t be able to manage $1 million either” is a favorite saying of mine. It’s true in business and in life.
A lot of us think that $1 million (or 10, we can be generous with imaginary money) would fix all of our problems — again, in business and in life. While money can buy a lot of peace of mind, it doesn’t come without its own problems.
Tell me, [FIRST NAME GOES HERE], how would your business change if you could triple your revenue overnight? If you could get not one, but 100 of your dream clients?
It would be great, wouldn’t it?
It would, for the most part. But only if you’re prepared for it. If you don’t make the same mistake I made back in 2017.
A 70% year-over-year growth nearly killed my agency
Sick and tired of crappy job interviews, I launched my digital marketing agency, Idunn, in late 2015. I expected it to have a modest growth curve and for me to make just a bit more than I would have in a “traditional” job setting.
Well, my agency grew so fast that it blew right past me.
In 2017, my second full year in business, we had a 70% YoY growth. By most measures of success, this was it, I had made it.
But growth isn’t always your best friend and it certainly wasn’t mine.
That exponential growth happened because we started onboarding any client, with no regard to how they fit our core mission and values. My agency’s tagline, “Boutique approach, grand results”, was forlorn and nearly forgotten.
A vicious circle ensued: because we had so many clients and so much work to do, we also needed to hire more people. And hire we did, even though I knew they were not a good fit.
I was in a (gold) rush, you see. I fell for the “grow or perish” mantra.
I woke up a few months later with enough money to allow me to stop working for a few years but also with a crappy agency to run. We had nearly become a (bleah!) content mill.
So I started cutting and firing. I let go of 30% of our revenue, fired clients, and fired writers. We were back on track by the end of the year, faithful to our tagline once again.
I wrote more about this in an article for Thrive Global to mark my agency’s 3-year anniversary.
Wanna know what I did wrong? I can tell you now because hindsight is (usually) 20-20.
A primer for mindless, unsustainable, and unscalable growth
When your business is growing like weeds after a tropical rain, you don’t have time to stop and analyze the pros and cons. Sadder yet, you don’t even have time to celebrate.
You make your way through the weeds: you prune, nurture, and water them some more because to most entrepreneurs growth is a humongous hit of dopamine, serotonin, and a lot of other yummy brain chemicals.
I noticed the same tendencies in a lot of other entrepreneurs and, more recently, in solopreneurs and content creators.
These are the first tell-tale signs. If you notice them in your business, stop for a second a grow back to the drawing board:
- I had a ton of backup plans for failure but none for massive success. We think a lot about the worst thing that could happen and we plan for it, but we rarely do so for the best-case scenario.
- I hired people far too late. I did everything myself and ended up in another vicious circle: when I had a lot of work to do, I didn’t have time for the hiring process. When work slowed down, I thought I didn’t need to hire anyone anymore.
- I didn’t document any of my processes, not even the client onboarding one. I had to start (almost) from scratch every time. Worse yet, when I did hire people, I had to spend a lot of time documenting what had only lived in my head until then.
- I didn’t have a long-term vision. I started my business out of need and I kept acting “hungry” for too long.
- I believed that “grow or perish” is to be taken literally. What utter nonsense!
- I didn’t prequalify my leads or vet my clients. This is a huge mindset issue that I have since fixed — you don’t have to be grateful when someone pays you for your work. It’s not charity, they get something out of it too.
- I winged my long-term plan. Que sera, sera is a beautiful bohemian sentiment. But very few successful entrepreneurs are bohemians — in their professional lives, at least.
You don’t have to make the same mistakes I made, though. I got you covered:
How to build a solid foundation for long-term sustainable growth
I know, you want growth now. And you should go after it — but do it smartly:
Where do you see your business five years from now?
Yes, it’s the world’s most dreaded interview question, repurposed for your business. While it’s inane to ask this in an interview (of course no candidate will tell you the truth), you can be honest with yourself.
To answer this somewhat vague question, parse it into smaller ones:
- What’s the (realistic) revenue you can expect five years from now? You can get this number based on your historical performance to date and on industry averages.
- How many people will work for you within five years? What are the key positions you need to fill?
- How will your own involvement in the business change within five years? Will you work more or less?
- What processes and solutions do you need? Add everything, from accounting software to social media management tools and even paid subscriptions to media outlets.
I recently wrote about creating a marketing strategy from scratch. This issue will help you create a documented long-term plan.
Document everything you do
How long does social media take you every day? What exactly do you do (create posts, engage, monitor, analyze)? Can you outsource any of these things?
Do the same for everything you do in your business. Yes, it takes time. Yes, it will take more time the longer you wait to do it. And you’ve got two good reasons to start now:
- Documented processes can be improved upon. It’s easier to see the cracks when they stare at you from a screen.
- When your team grows, the onboarding process will be much smoother.
Hire people sooner rather than later
This one’s a tough balancing act, especially for new entrepreneurs. It’s also one of those few cases where you shouldn’t err on the side of caution.
Whatever stage your business is in, even if you already have entire departments all set, it’s always better to hire sooner. Not only because the new employees, freelancers, or partners will take stuff off your plate but also because the injection of new ideas into your business is invaluable.
No matter how dedicated they are, people who have worked in a company for a while get jaded and set in their own ways — yes, this goes for founders too. A fresh perspective can stir things up and open your business up to new opportunities.
Re-evaluate your ICP (Ideal Customer Profile) as often as possible
As your business changes, your ICP may change as well. If your growth is hasted, the change may be inadvertent. Just like me, you may end up onboarding the wrong clients and then wake up one day realizing you hate your business.
If you wonder why that is happening, this is usually the cause: you’re working with the wrong clients. Go back to the drawing board, think back to the days when you were excited about your work. Who did you work with back then?
Better yet, correlate your revenue with the amount of effort you and your team put in. Do you see a direct correlation?
If not, it means that some of your clients demand too much of you and/or take up too much of your time. These are bad-fit clients and you should get rid of them as often as possible.
I recommend a re-evaluation of your ICP every six months. This is a wide enough window to allow you to make correlations with your revenue and with your state of mind. If there are unusual highs or lows in either of these two, do it sooner.
You don’t necessarily need to grow every month or every year
“Always be prospecting” is a freelancing mantra and a great way to make sure you don’t end up in the feast-and-famine cycle. But if you feel confident that your ongoing clients are enough to sustain your business for a while, you can take a break.
In fact, you should take a break to re-evaluate, re-group, and analyze what can be improved. Very often, you don’t need more, you need better: better systems, better clients, better approaches, better pricing. You can bulk up your revenue without onboarding new clients.
Invest in systems that scale
It’s perfectly normal to look for cheap or free alternatives to expensive software. But ask yourself this: do they scale? Go back to the question about the next five years in your business: what kind of solutions do you need to foster that growth?
You don’t need to invest in a fancy and overly complex CRM like Salesforce from day one. Mailchimp or ConvertKit are great solutions for smaller businesses. More importantly, you pay as you grow and, should you need a more complex solution in the future, you can easily migrate your contacts.
In the middle of a growth spurt? Do this!
It’s Q&A time again! If you love your current growth spurt (who doesn’t>) but you’re not exactly sure if you’re headed in the right direction, ask yourself:
- If your client count doubled overnight, could you handle all that work?
- Would you like it? Be honest here: do you like your clients enough to want to deal with twice as many identical ones?
- What could you do so that, when your revenue doubles, your workload does NOT double? (Hint: systems and solutions are your best friends.)
Lastly, growth spurts are exciting and rewarding! If you are in the middle of one, congratulations — you’re definitely doing something right!
This issue of Ideas to Power Your Future is meant to get you to consider if that “something right” is something you should be doubling down on. Or, on the contrary, if you should stop and re-assess things — as painful as that may be during a growth spurt.
Re-assessments may slow down your growth for a little while but they will also straighten the needle of your compass and point you in the right direction. Think about it this way: you can only win a marathon if you run the 42K in the right direction. Otherwise, you’ll just end up exhausted and lost.
_____________________________________________
Adriana’s Picks
- Terry Schilling is an experienced conversion copywriter who’s worked with rising startups and entrepreneurs along with big brands like Airbnb, Johnson & Johnson, Volkswagen, and Kimberly-Clark. His Cool Copy newsletter is full of copy examples and tips you can use in your marketing — no matter what you’re selling. No fluff or theories.
- Sendible just launched auto-posting for Instagram stories. I knew I had a good reason for sticking with them for social media management for 8+ years. If you spend a lot of time on Instagram, try it out for free.
- Social media trends have lost all their meaning to fads and ephemeral trending topics. Confusing what is “trending” with trends does not bode well for long-term success.
That’s it from me today! See you next week in your inbox.
Here to make you think,
Adriana
____________________________________________________________________________________________
Need me in your corner? There are three ways I can help you:
- Get my product launch email templates that sell: 5+1 emails you can send to your list in 45 seconds.
- Book a 1:1 strategy session with me. Let’s unlock your growth in 60 mins!
- Get content or copy that converts AND ranks. My digital marketing agency is here.
