By teaching and consulting with service businesses (and pet companies) throughout the US, there is a clear distinction between business levels. In the pet industry, I have roughly observed that start-ups (0 – 2 years; or $0 – $59,000) have different mindsets than teenage companies ( 2 – 5 years or $60,000 – $150,000); and more mature businesses (5/6 – 10 years or $150k – $400k) have their own paths; and senior businesses tend to have a MUCH different angle than any of their younger counterparts (11 years + or $401k.)
As a company masters different skills, there are always new skills to master. Also, as a company develops more mistakes can occur: They forget what they learned before, they are afraid to adapt, they get comfortable, or due to poor oversight on legal, HR, or just plain mismanagement. A research study on business shows 55.7% of business closings are due to a problem related to staffing (Neitzke & Faupel, 2004.) This research also shows that 14% of businesses could be saved if the business owner, who may know his line of work very well, knew how to bring on qualified and productive staff.
And then there’s a whole other realm that usually only 1% of the population gets — the $1 million+.
Those businesses are usually driven by a truly unique idea. It’s a great combination of marketing, CRM (Customer Relationship Management), great planning, and drive.
Some people might say that those who run the multi-million dollar business hit it lucky. As a business owner, you may have experienced that luck happens when we create the opportunity for it. Robert Kiyousaki taught me a great acronym: L.U.C.K. is Living Under Correct Knowledge. In other words, when we can align our lives with the right scenarios (right networking, right marketing, right support staff) people start coming to us with opportunity. And with this, opportunity does not knock on your door without some prompting.
So what makes these businesses so different? There are hundreds of books on the subjects and trying to go through it all in a blog would not do it justice, so here is the brief. It is NOT conclusive, but here are some of the major things I see in the pet industry for business cycles. Most experts say there are 4 or 7 stages of a business cycle (There are discussions about this in the APSE Forums.)
Lower profit margins, marketing learning curve (direct marketing, website marketing, what works and what doesn’t), learning customer service and what your customer’s really want; creating documents and forms, business flow (what do we do when a customer calls? What do we do when there is a problem?) How do I get covered if I can’t do the job?
Though problems will still exist when you finish this stage, you have definitely matured from where you started. You’ll have a pretty good handle on marketing, what customer service works, what to do when XYZ happens, all workable business forms & documents, business flow, and you’ll probably be looking at hiring.)
Again, there are THOUSANDS of tips that can be offered on what to do with specifics hurdles; one of my biggest suggestions (and time savers is to document EVERYTHING in a ‘manual’ format. Most importantly, doing this helps you see where you have grown and understand changes that have happened in your business. (It’s like a journal, but in corporate format.) This also gives you documentation that does not have to be created when you hire office staff. (AND if you have a heart attack or go on vacation, you can have someone else run your business.)
Stage 2: Growth
You have found your core customers that will follow you anywhere. To hire or not to hire? ß link to audio-à (staffing learning curve, ) brand identity established, creating goodwill with the community, general operations(stage 2): keeping staff on board, continual adjustments of forms / documentation, new policies, etc. (BTW, this never ends.), networking with lead generators who will bring you clients,
Profit margin is usually stable or predictable, you network with those who will HELP your business niche and begin to use them creatively through your business, you go from owner/operator to owner (and others do most of the work for you.), marketing / business trends are known (when you’ll be busy & how to prepare for it), consumer demand is in the rise, identity/branding are established (people see your business and know what to expect), networks are well established and well-functioning,
Stage 3: Maturity
Not forgetting about the business. Profit margins are stable; networks/advisors are well designed and functioning; processes are well built. (Sounds great!) The struggle is being sedentary. Once a business is used to everything running, it usually begins to fall apart. Things are overlooked or assumed to take care of themselves. At this time, a company needs to be innovative and refocus on itself.
If a company is innovative and refocuses on itself, it should continue expand and grow. If it becomes sedentary, it will slowly fall apart.
Stage 4: Decline
Usually , if businesses do nothing to improve themselves or push ahead, they fall into a stage of decline. If no one is driving the car and it’s moving forward, it’s going to crash… maybe not in the near future, but eventually it stop. A company needs to refocus on the first 2 stages. Luckily, by this time you have already been there… so it won’t be as hard as before to conquer.
SO where are the million dollar businesses in this list? Typically in the end of the second and beginning of the third stage. So what’s the key to success? Watch those businesses in the maturity stage; network with them; inspire them. APSE has plenty of active members that have passed the million dollar mark in their business. There are many members who are on their way up there, too.
(Zarajczyk, Richard E. (2007). An examination of small business failures. State University of New York Empire State College.)