The Limiting Factor: You

The Speed of the leader determines the pace of the pack.

“The speed of the leader determines the rate of the pack.” Wayne Lukas

Companies have predictable revenue plateaus: $1 million, $5 million, $10 million, $25 million, $50 million, and so on. Each plateau can be a major hurdle to cross, and often companies get stuck at key points along the way.

The ability to crack through the revenue plateaus is directly tied to the business owner.

In 2007 my family hired ProfitPATH to lead our business through our strategic planning and succession planning process. During one of the sessions Jim Stewart, the founder of ProfitPATH, shared an insight that’s stuck with me all these years, “A company’s ability to grow is directly linked to the business owner’s ability to grow and change.”

Growth is a process of change

The revenue plateaus are significant, because the strategies and people that got you to the current level won’t get you to the next.

You’ve got to implement the business model and infrastructure of the next level before you can get to it. For example a company stuck at $5 million in revenue must implement the business model, infrastructure and processes of a $10 million business in their category first.

A company’s growth pops once they implement the infrastructure and systems of the next plateau.

The odds are against growth

As much as we can discuss the tactics of growing through the revenue plateaus, the odds are not in your favor for achieving the next plateau.

The statistics clearly demonstrate how tough it is to grow a company. According to US Census data there are 5.9 million businesses in the United States, but less than 0.3% of them grow to 500 or more employees.

The majority of companies have less than $1 million in revenue and less than 10 people:

  • 78% – firms with 1 to 9 employees
  • 11% – firms with 10 to 19 employees
  • 9% – firms with 20 to 99 employees
  • 1.5% – firms with 100 to 499 employees
  • 0.3% – firms with 500+ employees

Working on you AND the business

The larger a business gets the more complex it becomes. When a company has less than $10 million in revenue the business owner can keep tabs on pretty much everything that’s happening. But as a business crosses the $10 million threshold the owner can’t keep everything in her head.

Growth requires delegation, systems and trust.

Clay Mathile, founder of Iams Pet Foods, describes in his book, Run Your Business, Don’t Let It Run You, “You need to let go instead of holding on so tightly … If you don’t bring on expert employees and begin delegating responsibility, you will prevent your business from growing to its full potential.”

He goes onto explain, “This is a big shift, a shift in how you think of your role as the business owner and leader, as well as how you think of the roles of your employees and customers, vendors, distributors and others.”

And it is the shift from doer to leader that Jim Stewart was talking about. Growth is dependent on the owner’s ability to make these shifts.

Growth is a choice, not a requirement

Growth is a choice. What size of business do you want? What kind of company do you want to lead? What do you want from your business?

If growing to the next revenue plateau fits with your goals, the tools and resources are available to get you there. The question is are you prepared to change as well?

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