Top Strategist Shares Tips on Losing Control and Scaling Too Fast On The Path to 7 Figures

For many founders, the first milestone of major success is viewed as reaching the seven figure mark in annual revenue. The path is not always linear and there are myriad business models and strategies that can get you there. But there are also common denominators when it comes to building systems, finding the right people and curbing the founder’s own habits and personality traits that can often derail a fast-growing company. Along this path, there is one strategist and coach that hundreds of emerging companies on 7 and 8 figure trajectories turn to and that’s Charles Gaudet.

As the CEO of Predictable Profits, Charles is regarded as one of the top sales and marketing advisors to entrepreneurs. He’s brought in to solve problems ranging from building a sales strategy, training teams, and helping companies survive countless pivots that happen at each growth milestone. As such, this is a seasoned executive who has seen just about every problem one could face on the journey. We caught up with him to learn a few core lessons: how to get your mindset in check as a CEO, how to not “grow yourself out of business” and what systems and people need to be in place to sustain rapid growth.

How much of scaling is a function of mindset versus tactics?

Charles Gaudet: Tactics are an obvious component for creating a scalable business. However, the entrepreneurial mindset is critical once founders begin losing control. 

This happens because the business grows beyond a founder’s ability to be involved with every client and employee. For many, this sticking point keeps them small (or worse, causes them to fail).  

Mindset is key when shifting gears from the doer in the organization to the designer of systems and processes that allow the company to thrive without the founder’s involvement.

What’s the biggest decision you ever had to make as an entrepreneur?

CG: Every day requires big decisions. The bigger the company gets, the more important the decisions. That said, the biggest decision I made as an entrepreneur was graduating from college and deciding  against getting a “real job.” I was set on becoming a successful entrepreneur.  

It wasn’t easy (and the stress almost killed me… literally), but I persevered and eventually found my way through lots of trials and tribulations.

When do you know you should hire your first employee?

CG: If you’re a solopreneur with zero employees, your chances of making seven figures a year is only .1%. However, once you expand your team, your chances jump to 4.5%. In other words, you are 4,500 times more likely to earn over $1 million a year by simply having a great team.

This statistic reminds me of what Malcolm Gladwell stressed in his book, “Outliers”: “No one — not rock stars, not professional athletes, not software billionaires — and not even geniuses ever makes it alone.”

You should hire your first employee the moment you can afford to do it.  This allows you to then focus on the business issues and opportunities that matter most and delegate the rest. 

Similarly, when do you know it’s time to move away from a flat management model and add a layer of managers between you and the team?

CG: We find the most people anyone can effectively manage is about seven people.  Once you get beyond this amount, you need to add management layers so the team can operate effectively.

Is it possible to scale too fast?

CG: Yes. History books are littered with stories of entrepreneurs who failed because they grew too fast. In fact, a study conducted many years ago by the Kauffman Foundation found that 66% of companies that earned a spot on the Inc 5000 fastest-growing companies list for the first time either went out of business, were disadvantageously sold or shrunk in size within 5-8 years.

This often occurs because momentum takes over as the company integrates scalable marketing and sales systems. The momentum creates a parabolic increase in growth, which creates challenges IF the entrepreneur doesn’t grow their leadership ability as quickly as the company’s growth.

When this happens, revenue turns downward to meet the skills of leadership. And poor leadership often can’t stop the downward spiral.

This is why the best-performing leaders often credit continued and sustainable growth to their business coaches and mentors.

How should founders determine how much of their income they should be reinvesting into their company each month?

CG: The formula can be answered in the form of a question. If you knew that for every $1 you invested, you made $5 in return, how much would you invest? When you track your KPIs regularly, you can quickly see the importance and impact of reinvesting in your business.

Most growth-minded founders reinvest as much as possible into their business to keep it on the growth tracks. When they reinvest responsibly, they achieve financial goals quickly.

What’s an area that you see many founders spend on that is often a waste of money for getting to 7 figures?

CG: Many founders spend money on services or strategies in hopes of generating a positive return on investment. The problem is, they don’t track the actual return on investment. For example, they invest in advertising that doesn’t make a financial impact.

In our company, we make (and teach our clients to make) data-based decisions. This eliminates the guesswork. You can clearly see the impact ( positive or negative),  so you can make better decisions.

To scale a company responsibly, you must make fact-based decisions.

What do you say to founders who believe their product or service is too complex to “productize” or systemize the delivery of?

CG: This is a common mindset among entrepreneurs. Many founders believe “no one can do it as well as me.” I refer to this situation as “the entrepreneur’s trap.”

This mindset limits the ability to grow and scale because the company is too dependent on the owner. As a result, the value of the business is limited.

You must isolate your unique “zone of genius” and productize it one step at a time through processes, systems, and training.

In closing, what’s something every founder needs to be thinking about from day one if they want to position their company to sell?

CG: The most valuable saleable entities have three items in common:

  1. Scalable marketing and sales strategies
  2. Processes and systems so the company is not dependent on any one employee
  3. Repeatable and recurring revenue

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