The Four Stages of Scaling Your Business

0:00In this episode, Michael and Megan reference a document called The Four Stages of Scaling. It is a visual representation of all of the information in this episode. In order to download your free copy, go to fullfocus.co slash scaling. That's fullfocus.co slash scaling. And as a bonus treat, Michael himself designed the mountains. I was very excited about that. To go see it for yourself, get your free four stages of scaling document at fullfocus.co slash scaling.

0:37Hi, I'm Michael Hyatt. And I'm Megan Hyatt-Miller. This is the Business Accelerator podcast. We help busy but growth-minded small business owners scale themselves and their businesses so they can win at work and succeed at life, something we call the double win. Now today, speaking of scaling, we're going to be talking about the four stages of scaling. And we talk about scaling, we're talking about business growth. That's just the cool today word for business growth. But how can you take your business from where it is to the next level, regardless of where you're at right now? Well, I'm really excited to talk about this because I think half the battle of growing your business is knowing where you are and where you want to go.

1:24And sometimes when you're in it, as you often say, Dad, it's kind of like trying to read the Coke bottle label when you're inside the Coke bottle. You know, it can feel a little confusing. And so I love this model that you've created because I think it will provide our business owners listening today a lot of clarity about where they are and what the next step looks like and what they're shooting for.

1:52Okay, let's talk about the four stages of scaling. Now, you'll see in the handout, but I'm going to try to describe it for you visually. This is basically a series of successive mountain peaks, each one larger than the previous. Okay, so imagine a mountain range where there's a small foothill and there's a little larger mountain, little larger mountain, and then the peak mountain. So those are your four stages. Okay, stage one, I'm going to call this self-leadership. You might think of this also as solopreneurship, but basically the focus is that you're doing almost everything yourself. Now, when I left the big corporate world to start what has now become Full Focus, that was me.

2:40It was just me. And I was trying to do everything myself. I was everything from the guy that generated the contracts, to the guy that had to collect on the contracts, to the guy that was selling my services, to the guy that was desperately trying to find the FedEx box when I had to send something overnight, email, invoicing, all of that. I was the CEO, which at that time stood for chief everything officer. That's funny. Funny and true. I bet a lot of you listening can relate. You're like, yes, that's me. Well, and, and, you know, those were really simple days. I was definitely overwhelmed. And I, I later hired an executive assistant, which also is part of this stage.

3:23So you don't have to progress beyond this stage. And just because you have one team member or even maybe two team members, you might still be in this stage where it all depends upon you. But the goal of this, and we're going to follow a similar format for each of these stages, the focus, you're doing almost everything yourself. The goal is you launch the company, launch the company and generate consistent positive cashflow. Because why? Without that, you don't survive. You know, if you can't generate consistent positive cash flow, you got nothing. You got to do that to survive. You got to do that, you know, to pay the bills, take care of everybody that you're dependent upon to run your business, contractors, and so forth.

4:02But that all comes down to generating that consistent positive cash flow. But here's the temptation. And I'm going to cover a temptation under each stage. Megan, I'm going to invite your comments here in a second. The temptation in stage one is that you work too many hours at the expense of your health, your most important relationships, and your personal freedom. Megan, have you seen this movie before? Absolutely. I mean, I think this was your story, you know, when you were in the corporate world and you had to learn some hard lessons about this. And really, it kind of created the foundation for this idea of the double win and the transformation you experienced in your own life.

4:48But of course, we see this so frequently with our prospective clients and new clients, because this is often what they come to us wanting to solve. You know, working too many hours. Yes, I am successful. I'm generating consistent cash flow. I'm proving my concept. Maybe I've even been in business a while, but I'm doing it at the expense of my health and most important relationships. And I can see that this story is not going to end well if I don't make some changes. And what I love about calling out self-leadership as stage one is that this is a really easy stage to skip over in terms of what you have to be able to master.

5:31And if you don't master kind of the core competencies at this level, then when you go to the next mountain and it's at a higher altitude with a higher summit, you're going to have problems. You know, you're not going to be ready for the challenges of stage two and beyond if you haven't mastered these core competencies in stage one. And honestly, a lot of the clients that come to us are in later stages, but they're missing some of these core competencies. And I think part of what our coaching program has become really great at doing is help to shore those things up and give people the tools that they need to, as you said in our little intro, to scale themselves.

6:14so they can scale their business. Because if you can't scale yourself, if you can't do self-leadership, team leadership and beyond is very difficult. Well, I think the biggest threat here, frankly, with this temptation is that it becomes an ingrained habit and so that you carry this into the other stages. And I promise you, if you do that, something will eventually break. It might be your health. You have a health crisis. It could be your marriage, your relationship with your kids, just your own personal freedom. And we don't want that to happen. So resist the temptation. And by the way, at this stage, the brand is essentially you.

6:50Now, I don't have a problem with the personality brand or with you being the face of the business. It's a quick way to build trust, you know, for people to be able to see your face and hear your voice. But it can also become a detriment later on. Perfectly appropriate for this stage. But you're going to eventually have to move on it if you want to scale your business. Because the business has got to be larger than you as a personality.

7:17Let's go to stage two. I'm calling this team leadership. And the focus here is that you're directing a small team of employees and a few key contractors. So it's a team. The goal is to create a vision, assemble a team to help shoulder the work, and focus on where you make your greatest contribution. Now, we have an entire tool on this that we've covered in previous podcast episodes and going into depth in in our coaching program, but it's called the Freedom Compass. And the only way for you to be able to focus in your desire zone where your passion and your proficiency come together is you got to have a team.

7:55And as I've often said before, if your dream doesn't require a team, your dream's too small. And so to go to the next level, you got to have that dream, which is what I meant when I talked about the vision, but you've also got to have a team. You've got to begin to assemble a team? Well, frankly, this is one of the things that we use as a criteria for, is someone a good fit for our coaching program, Business Accelerator? If they are married to being a solopreneur indefinitely, if that's kind of the ideal state and not a transitional state, we mostly don't take people into the program who don't have some kind of a team already, at least in the form of contractors, because we know that's where we want to take people.

8:39then in a way they're disqualified, you know, because our program is designed to help you build that team that can shoulder the work and really make your impact exponentially greater than it could ever be on your own. That's who we want to work with. That's who we're best at serving. And so, you know, in my experience, these two stages of self-leadership and team leadership, while I'm pointing to my screen because I'm looking at this handout that's available in the private Facebook group, But, you know, these are nice little columns. But in reality, they get a little muddled sometimes when you don't kind of complete one stage before you go to the next one.

9:18So I think that's an important thing to call out here is if you're kind of saying to yourself, well, I feel like I'm kind of in both of these stages. That's very possible. You know, and I just I want to say, too, if you decide that you want to stay a solopreneur, fine. You know, I think, unfortunately, that's not going to challenge you to become all that you could be and reach your full potential. but it's a choice, right? And this is your business. It's your life. So choose wisely. Okay, here's the temptation. Okay, you assemble a team. But the temptation is that you treat your teammates as glorified assistants and position yourself as the primary rainmaker.

9:56And I've seen this movie before too, where somebody says, well, I have a team. Well, but the team is not really doing anything of consequence, the business is still too dependent upon you. Yeah, they handle assignments and it frees you up to do some things, do more of what you do best, which for most entrepreneurs is rainmaking, but it's not the best and highest use of the team. Because if you get the right people on the bus, if you get the right people on the team, they're going to do many of the tasks that you previously were doing way better than you could have done or ever thought about doing.

10:32So you can't treat them as glorified assistants. They got to literally be, you know, teammates that are helping you to shoulder the work. Well, and what I think about, this is not exactly on this sheet, but kind of what's the core struggle here or what's the obstacle that's keeping somebody from addressing these things where you end up in this position where your teammates are really acting as glorified assistants And by the way, we love executive assistants. This is not to demean an executive assistant, but you're going to need a team much bigger than that with a lot of different capabilities beyond just the kind of administrative side of things.

11:08It's usually because they haven't developed that core competency of delegation. And if you go further back than that, upstream, it's the ability to get the vision out of your head. And I don't mean the vision for your whole company for the future, which is a kind of vision. I mean, seeing something in your own head that doesn't exist that you want to go create and being able to communicate that to someone else in such a way that they can execute on it. You know, that's really what delegation is, whether it's a humongous delegation or a teeny tiny delegation. Same concept. You have to see something in the future that doesn't exist that you want to create and then be able to communicate that to someone else so that they can execute on it.

11:45That's really where it breaks down. And it can be either you don't have the skill set or you have a lot of fear because you haven't yet had or maybe you've had bad experiences with delegation. And that holds people back of where they just keep themselves as kind of the center of the wheel where everything depends on them. And that goes from being a place that feels like this makes me feel secure. I know that I can trust myself to deliver the results to feeling like a lot of pressure where it can feel crushing. Like you can't take a vacation. You can't be out of the office. You've always got to be on every important meeting.

12:17You've got to be in the middle of, you can't get sick, you know, all that kind of stuff. And it's kind of the point where for a lot of business owners, their business goes from being a vehicle to freedom, a vehicle to do more of what they love. And it can start to feel more like a prison, like they're just stuck and they can't get out. I literally was having this conversation with one of our business accelerator clients on Monday. So I post a call every week with all of our clients. and this one particular client asked the question, he said, you know, I am the rainmaker for my company. And he said, he said, I'm sure this is a limiting belief, but I just can't imagine anyone who can conduct those discovery meetings, those first sessions with new clients in the way that I do it, you know?

13:01And so he offers, he's got a professional services business and he offers a free consultation at the beginning just to see if it's a fit for him and for the client. And this is where he basically closes the business and then onboards or begins to onboard the client. He said, I don't think, I can imagine anybody that does that better than I do. And he said, I am such a master. He said, I'm not trying to be arrogant, but I'm such a master at closing. I can't imagine ever delegating that. And I said, well, you're right. That's a limiting belief. So let's talk about it. And I said, I think, and Megan, you were talking a lot about vision, Another kind of vision document, though we don't usually think of it this way, is a position description, a job description.

13:45That's your vision as the hiring manager for what you're trying to hire too. If you're not clear about the experience, the skills, the job responsibilities, all of that stuff, if you're not clear about that, then what are you going to hire based on? Likeability? That's a poor criteria. I mean, I definitely like to like the people I work with, but that's not enough. You need a job description. So that's where it starts. So if you're going to hire somebody that could be a rainmaker like you, what would that position look like? What would the experience, what would be the skills, what would be the responsibilities of that person?

14:25Get clear on that first and then come up with a process to go find that person. Typically, this is an issue of confusing. confusing, I could never delegate this to somebody because basically I'm so uniquely good at it. It's a confusion of that with the problem is having a mechanism to get it out of your head. And until you do that a few times, you may not realize that what you're doing actually is a recipe, you know, that there are steps that you follow, even though it kind of feels like jazz. It's actually something that could be more mapped into sheet music if you really were to deconstruct it and break it down.

15:03And then once it's out of your head, then you're able to pass it on to somebody else. Obviously, that person has to be capable, they have to be qualified, they have to have demonstrated performance and so forth. But the real challenge is getting it out of your head. And I think as business owners, we can tell ourselves the story that we're just so good at it, nobody could ever be as good at it. And the real problem is, it's just living in our head that recipe. And we've never written it down. So you know, kind of like grandma, we're the only ones that can make the biscuits that way. Not because we're so great at biscuits, but because we haven't written down the recipe.

15:35I'm just laughing because literally my grandmother had the most amazing chocolate cake. And she never wrote it down. And finally, my mom was able to capture it. And she's still, you know, there's still some things that aren't written down, but that's where it starts. And I can remember the first time I said in one of our coaching intensives, which is kind of like an all-day workshop. and somebody was teaching it that wasn't me. First time, I'm listening to somebody else, one of our former clients who's now a coach, who's teaching this session. And I literally thought to myself, he's delivering this content much better than I ever could.

16:10And that's really what you're after. And so what would that make possible? If you're in stage two, that's what I want to ask you. What would it make possible if you didn't have just glorified assistants, But if you had true teammates that could carry the ball right into the end zone and score the touchdown, that would be amazing, right? Okay, I have to say something here because this is sort of like if we had some kind of meta temptation line in this table, this would have to go on it. This question that you just asked, what would it make possible if you could have someone else do the things that you think you're so excellent at, you know, you could replicate yourself?

16:49What would that make possible in your business? that can create an existential crisis for you as a business owner. And if you're not careful and you're not self-aware, this is why the self-leadership part is so important, because if you're not self-aware, you can start to feel the anxiety of, well, then who am I if I'm not the only one that can do this? Or what will I do if I hand this off to somebody else? I can promise you I've watched hundreds and hundreds and hundreds of business owners go through this. You're going to have this experience of liminal space where your old way of thinking about yourself and your role in your business is obsolete.

17:24And you actually have to recreate how you're going to show up in your business. And we're going to talk about that in the next two stages. And there is an existential component to that. And it's really normal to go through this disorienting period that is kind of liminal space where you're not totally one in one place or another. And that's normal. And the thing to remember is keep going. Don't bail because I promise you there is something even better in the future and you have to figure it out and it will be worth it. Megan, I'm so glad you mentioned that. We could do an entire episode on that.

17:56We don't have time today, but that's a real issue. And all of our clients, almost all of them face that. Okay. So at stage two, the brand is you and maybe maybe a product or two are beginning to emerge as a brand as well. Okay, so that's stage two.

18:25Stage three, business leadership. This is where, and this is the focus, you're managing a team of executives or directors who manage divisions or departments of employees and contractors. And the goal here is to keep, the goal for you is to keep the company's core ideology visible. And by core ideology, I mean the vision, the mission, the values, the strategy. So keep the company's core ideology visible, steward the culture, because we know the culture is the unseen force that drives operating results and ensure the company is on track to achieve its ultimate vision. Anything else you want to say about that at this point, Meg?

19:07I don't think so. I mean, I think this one is pretty straightforward. I think this is probably what a lot of us imagine as the end state. And what's important to me about this stage is, as you'll see in a minute, this is actually not the end state. This is stage three of four. So there's something beyond this. And that's going to be an important part of your ultimate vision, really. Well, this temptation, the temptation for this stage is very similar to what we were just talking about when you were discussing the existential crisis of trying to figure out what you're going to do now that you've delegated some of the things that you felt such proficiency and passionate about in the past.

19:45So the temptation is that you continue to work in the business at the expense of working on the business. And this happens because you're so busy. And this is why that stage one, self-leadership is important, because you're going to need time to think and actually work on the business and not be so caught up in the day-to-day operations that you become reactive and the business just kind of takes on a life of its own and doesn't necessarily grow by design, but just grows because there are opportunities and you're pursuing all of them. Well, what can also happen here, and this is what our clients report to us, or this is how they describe it, is they feel like firefighters.

20:26You know, they just go from one problem to the next because they've probably experienced a lot of growth at this point. And growth comes with tremendous opportunities and tremendous challenges. And a lot of times those challenges are rearing their ugly head and you're just kind of bouncing between one thing to the next. And if you don't leverage that team that you began to build in stage two and are likely continuing to build in stage three between team leadership and business leadership, then you end up being the chief problem solver. And the problem with that, where it kind of goes back to that existential part, is that you get this amazing dopamine hit every single time you solve a problem that no one else can solve.

21:04But you're not developing the competency on your team to be able to solve problems in the way that you would or even better, you know, with their expertise. And so this is one of those times when you've really got to be self-aware. You've got to challenge yourself to grow and you've got to challenge yourself to build this competency in your team so you can work on your business. Because what what happens is and we use a tool for this within the Business Accelerator Coaching Program called the Freedom Compass, where you narrow and narrow and narrow your focus as the business owner on only the highest leverage work that you could possibly be doing.

21:40And that changes as you go through these different these different stages. is increasingly your focus is going to be on vision and the future and all of that. But if you stay stuck in the present, focused on whatever needs to be done today, you're not really making your highest leverage contribution and that will cost you. You know, one little hack I thought about Megan is that you've really got to schedule this time. Yes. Jason Freed calls this time in the alone zone and you've got to schedule this time. John Maxwell calls it think time, but there it's basically an appointment with yourself where you're going to work on those high leverage, important, but not urgent tasks that drive your business forward.

22:19You're working on the business, you're designing the business, not just working in the business and drifting with the business. So schedule that time. Maybe it's only an hour a week. Maybe it's two hours a week. Maybe it's a morning a week. Maybe it's a time when you get out of nature and think a little bit. But I can tell you that where I usually have these breakthroughs is on airplane flights. That's what I really get a time to think about the business. But you can create that yourself. So the brand in this case is typically a suite of products. So you're moving in the right direction. The brand is no longer you.

22:53It's a suite of products that are taking on a life of its own, which by the way, the good news about that is, is it's creating value in the brands themselves. So that if at some point in the future, you decided to exit the business or sell the business, that those brands would have a life that you could monetize.

23:15Stage four, this is the final one. Again, stage one, self-leadership. Stage two, team leadership. Stage three, business leadership. And stage four, business ownership. Okay, this is huge. So the focus here is you're focused on succession. You've hired a CEO to run your business and you've transitioned from being an operator to being an owner. That's a big, big difference. So I know that was a hard transition for me because I'm used to being a doer. You know, I built FauxFocus for most of the years I've been with the company, which has been the entire time it's been in existence now that I think about it.

23:57But I was really focused on being an operator. And it's only in recent years that I've made this shift to say, no, and I don't mind working in the business and doing some things in the business, but I want to be an owner. That's a big jump for a lot of people. Well, and again, we're kind of back to that existential question. You know, one of the things that you've talked a lot about over the years as we've gone through our own succession journey is what am I going to do in the future? You know, if I'm going to leave something behind, what am I going toward? And if you don't answer the question of what am I going toward, and if that thing that you're going toward is not really exciting and more challenging and interesting than anything you've ever done before, what's going to happen is you'll drift backward in a desire for certainty.

24:45because it feels really unsettling, especially later in your life. And in general, this is going to, you know, over time, it's going to lapse over time. And so it's going to be later in your life to feel kind of at loose ends, like you don't have anything meaningful to contribute, you know, or you don't have a clear path toward a contribution that creates a lot of problems. So just be aware of that. And that's why in each of these stages, the existential part of this, where you're asking this question of what's my contribution and where do I need to focus now? And what matters is really important to answer.