Ben Tiggelaar 🟠

Good advice , I regret not doing this after I sold

Level Shifts: Thoughts on scaling a SMB👇 When you are growing, oftentimes new people will join the team and there is not clarity around a role, clarity around company best practices/principles, and clarity around core values/vision. You see this more when a company goes through a level shift. These transformational changes happen at predictable points. What worked at one level, won't work at the next. This causes frustration with new team members b/c the clarity is not there , and also existing team members b/c what used to work does not work anymore. Much like a video game, it's a different game at each level. I think it's a different game at each level and you have to expect a change when you buy a business when you level up to the next level. Nothing formal here and its just an observation (that a mentor told me about in the past) Here are some levels in which the company shifts: Level 1 : 0-10 Employees (Nimble Phase) Level 2: 11-30 Employees (Foundation Phase) Level 3: 31-100 Employees (Scale Phase) Level 4: 101-300 Employees (Fly Phase) 1️⃣ Level 1 (Nimble Phase): 0-10 You can really just freestyle it with the team as the leader. Picture a pickup basketball game where as a team, you communicate and give each other feedback. During this time, if actions and activities do not align with the plan, you can clarify it. 🔵 EBITDA Margins will be high when you approach 9 team members, b/c you don't have a built-out leadership team. So if you are buying a business that you want to scale with 9 employees, expect to add positions that don't generate gross profit and burden you're SG&A going forward. 🔵This phase is super fun b/c the team is small, and you are in the foxhole together building something special. 🔵IMO, it's more efficient to communicate organizational structure and standards during this phase vs. spend time writing it down. The reason is there are going to be many changes as you work things out to scale. IMO, don't over-systematize in this phase. ⚠️ Beware of the HUSTLE Leader, with a team of helpers in this phase. Sometimes this leader gets the team up to the next level. This is a big risk in buying a business when this person leaves. I call it hustle b/c the owner is Hustling..doing everything. We call it a reverse Hustle addback...its costly to replace an owner that is a beast. 🔵 You can get by not defining and creating clarity on paper b/c as the leader you can keep tabs on the team, and the critical drivers, and have one-on-one conversations on the way things should be done b/c you are less than 10 people on the team. 🔵 Define Style = Heavy one-on-one communication with limited writing down. 🔵 When you have 10 people, 3 people are key. Prices Law: square root of a domain is responsible for 1/2 of the output 2️⃣ Level 2 (Foundation Phase): 10-30 In this phase, an owner/CEO can't do one-on-ones with everyone. You have to start to build some leaders around you b/c you can't juggle all the balls. 🔵 New people coming on may stray from the way things are done and this could cause some friction b/c things are not written down. When this happens, its an opportunity to document 1. Best Practices 2. Roles and Responsibilities 3. Core Values...etc. The initial tendency is to correct and give feedback...but you are not freestyling anymore, so you need to turn that effort into documenting the former 3 things and also provide clarity. You need to also turn your attention to getting in getting the 5 people (see Prices law below) in this phase cohesive and aligned. 🔵 Read the book "Advantage", get the leadership team cohesive. 🔵You still know everyone's names but you can't lead them all. 🔵 When you have 30 people, 5 are key. Who are your 5. Prices Law: square root of a domain is responsible for 1/2 of the output 3️⃣ Level 3 (Scale Phase): 31-100 🔵 What worked at Level 1 for sure not work at the end of Level 3. You can't keep pulse on everything and you have to empower your leadership team. 🔵 Read the book "Traction" ..about EOS 🔵 Setting up a Goal system is key. We like OKRs. Rocks in EOS are good also. Same thing essentially. 🔵 Knowing the critical drivers (leading indicators) and tracking it via a scoreboard is key. Tracking the lagging indicators (results) are key also. 🔵 When you have 100 people, 10 are key. Who are your 10? Prices Law: square root of a domain is responsible for 1/2 of the output. 🔵 EBITDA Margins might go down b/c of the SG&A increase as you put in the structure and also bring on those 10 key leaders/individual contributors. 4️⃣ Phase 4 (Fly Phase): 101-300 🔵 This is when you realize the value you have created. 🔵 Read the Great Game of Business ⚠️ The important thing in this phase is to not get bureaucratic. This is hard b/c as the founder / CEO, you can't spin all the plates. You have to trust your leadership team. 🔵 You won't know everyone's name and how many kids they have. 🔵 Try to simplify the elements of EOS and equip everyone to make decisions and produce the activity to drive value. 🔵 Try to set more "meta" systems in this phase. Don't over SOP it and over do it. Make business a game. People love to play games and they want to win. Embrace this core truth throughout the organization. 🔵 When you have 300 people, 17 are key. Who are your 17. Prices Law: square root of a domain is responsible for 1/2 of the output Takeaways: -Each time you hire someone, you get the ability to "raise your average". This means the "3" when you are 10 employees, don't have to be part of the "17" when you are at 17. -That part of continuing giving verbal feedback after the level change when 1. Best Practices 2. Role and Responsibilities and 3. Core Values are not documented and there is not cohesiveness amongst the leadership team is very important. You can't freestyle it anymore and you need to create clarity. Use energy to create that clarity vs. playing wackamole with giving feedback. Work on building the machine. -Part of the game at each level is finding the right key leaders for that level. For example, who are your 5 when you are 30 employees. You need to establish a cohesive team. You need to overcommunicate clarity. - If you are trying to scale from 1 to 300 employees. I like to think of it as: Level 1 : 3 Cohesive Leaders (Nimble Phase) Level 2: 5 Cohesive Leaders (Foundation Phase) Level 3: 10 Cohesive Leaders (Scale Phase) Level 4: 17 Cohesive Leaders (Fly Phase) Let's say, you are looking at a company that has 30 employees. One of my favorite questions in due diligence is to ask is tell me about your top people in the company that you could not lose. Before asking the question I would have figured out in my head what the square root of the total employees were. In this case I would have guessed that he would say 4-5 names (b/c the owner is 1). Spend time understanding who those people are, what they do, and what their limits are. When you have a collection of leaders there that would be the leaders when the company is 100 employees, you have a 💎 Big Takeaway = 1. PEOPLE MATTER 2. A COHESIVE TEAM IS THE SECRET 3. PEOPLE WANT TO WIN GAMES Any other takeaways here that you have in going through different growth phases..comment below RT if you like this