If You Want to Scale, STOP Doing This…

Summary

• My co-CEO Alex and I attended a local event in Las Vegas, where I engaged with several operational professionals who shared how my content has been assisting them in scaling their businesses.
• Scaling a business from seven to eight figures is a common challenge, and I identified five main areas where businesses struggle based on my conversations and observing patterns in companies we work with.
• The number one mistake is incurring too much management debt, which includes not replacing ill-fitting team members, avoiding difficult conversations, and postponing necessary changes.
• It can be tough to make personnel changes, even if you're a strong leader, but holding on for too long can harm the business.
• You should replace team members when you've given them significant coaching without improvement; however, consider that your own leadership skills might need development too.
• CEO stepping out too soon is the second mistake, often when the business reaches between $2 million and $5 million in revenue.
• A CEO prematurely distancing from daily operations can cause a dilution of the company culture and values.
• It's important as a CEO to stay involved in weekly leadership and monthly company-wide meetings, monthly check-ins with leaders and key team players, and areas you excel in.
• The third mistake is fearing reinvestment in talent, as hiring ahead of growth is crucial, but many CEOs opt for cheaper, less qualified candidates within their networks due to financial concerns or the intimidation of experienced talent.
• Not engaging in "boring work" is the fourth mistake, lacking the discipline to repeat successful actions and improve incrementally to scale the business.
• The fifth mistake is letting ego interfere with business decisions, attempting to emulate people who are far more advanced rather than focusing on intermediate growth steps.
• To avoid these mistakes, businesses should manage their team effectively, maintain CEO involvement, invest in qualified talent, commit to necessary repetitive work, and keep ego in check to achieve growth from seven to eight figures successfully.
• Remember, if you are content with current success levels, your drive to scale further might be diminished; it's important to constantly challenge yourself and maintain ambition beyond current achievements.

Video

How To Take Action

I would suggest starting with managing the team effectively. Avoid piling up management debt by addressing ill-fitting team members quickly. If someone's not improving after significant coaching, it might be time to replace them. But, also check if you need to improve your leadership skills.

Next, maintain your involvement as a CEO. Don't step back too early. Stay involved with leadership meetings, company-wide meetings, and check-ins with leaders and key team players. Don't lose touch with areas where you excel. This helps preserve your company's culture and values.

Investing more in qualified talent is also key. Don't hire cheaper, less experienced people just to save money. This could hurt your business in the long run.

Commit to the "boring work". Repetition and discipline are needed to grow. Keep doing what works and improve little by little.

Lastly, keep your ego in check. Don't try to copy what businesses much larger than yours are doing. Focus instead on the next immediate growth steps for your business.

Remember, if you're comfortable with current success levels, you might not push to scale further. Challenge yourself and maintain your ambition to grow beyond your current achievements.

Quotes by Leila Hormozi

"What I've noticed a lot of people do once they start to gain some success and they're on their way to eight figures is they start emulating people who are really far ahead of them"

– Leila Hormozi

"It is better to hire ahead conservatively so that you can grow higher so that you can build the infrastructure to accommodate new clients than it is to not hire and then you know have clients come in have a terrible experience you ruin your reputation you can't get your reputation back"

– Leila Hormozi

"It's probably gonna break what you're making"

– Leila Hormozi

"There's nothing wrong with that it's just very difficult to grow a business with that objective in mind"

– Leila Hormozi

"You have to find a way to be hungrier than that"

– Leila Hormozi

Full Transcript

my name is laila hormozzi co-ceo of acquisition.com which is a portfolio of companies that does about 85 million per year in revenue and my goal with this channel is to get you from wherever you're at in your business between 3 and 10 million in revenue for free and so that being said what i want to talk about in this video today is one of the most common mistakes in scaling from seven to eight figures and the reason i'm making this video is actually this last weekend uh alex and i went to an event and we went there to support some of our friends that were speaking at this event and you know we live in vegas so we're local to it and so it's not hard to attend that kind of stuff we were at that event and a lot of people came up to us and you know for me to give context i think more people that are a little bit more operational came up to me and we're talking about the content that i've been putting out and how it's been helping them how it's really resonating with them you know as they're really building into like an eight-figure business and i was thinking more and more about it because i had a lot of conversations i want to say like i had five really great conversations with people who are at that point where they're at i want to say between four and six million and they're trying to scale to you know 10 and beyond right i think everyone kind of has like once you've hit seven figures you're like i really just want to hit eight figures and that's kind of the the focus and from those conversations i was kind of thinking about like how do i make content on this like what i want to talk about and i realize that each conversation was really me helping them work through why they're not there yet right and each person kind of had something that was like a sticking point for them um and so when i was thinking about i was like there's really five main things that i see when we're talking to companies when we're working with our portfolio companies when i'm talking to just you know people in general when i meet them that stand out to me and that like i realize that my brain is constantly looking for in their companies in terms of why they're not at that eight-figure market and so i wanted to share that with you guys today because these are things that i have gone through and i deeply feel and so you know i was talking to one woman at this event she's like i just feel like your content is so perfect for me and i'm like it's just it's literally it's not it's because i've done this four times this is our fourth business that's you know gone beyond eight figures and so i just want to share what's worked for me and what's helped me so you can avoid the pain because the first time or two times you do it like it's really painful but once you see patterns and you have pattern recognition and that's really what experience is right it's pattern recognition on a scale that most people can't comprehend and when you talk to 25 businesses a week that are in this range right they're going from seven to eight figures it's really easy to start spotting like what are the mistakes that people make that are stopping them from getting date figures right and so yes i've done it myself but it also helps to talk to so many businesses every week and see where they're at and so that being said i want to talk about the first mistake and probably the number one mistake that people make on their weight eight figures and guys this is not sexy [ __ ] it's actually the really boring work and sometimes i even get like really weird talking about stuff because i'm like hi is anyone listening you know because like all the stuff that is sexy like the marketing sales like that's usually not the problem when you're trying to get to eight figures and i think that a lot of our portfolio companies would attest to that the number one reason that people can't get from seven to eight figures is that they have they've incurred too much management debt okay so what do i mean by management debt so in the software world you can incur technical debt technical debt is really when you know you've built a product but you've built it on a really fragile infrastructure so what that usually means is that you haven't built it the correct way you've built it in a way that you're like i just want to get the product out there get an mvp and then later we'll work on the real product right so it's almost like it's stood up on these you know toothpick stilts and so then once the product works you're like check we have technical debt we have to attend to otherwise it's going to build and build and build and eventually our product will explode down the road well the same goes for service businesses and for teams you incur management debt management debt is when you start off in your small business and then as you continue to scale you know that there's some people that probably aren't the right fit or they probably need to get replaced or they probably need some hard conversations but you allow that debt to incur anyways and so you essentially have built your business on toothpicks instead of silts and so you're doing the same thing in these software companies doing except in software it's very it's like a hygienic practice to make sure that at that point when you know that you have product market fit that you tend to the technical debt before you scale because they know that eventually it will implode the company it's the same with management except the issue is that most people don't actually do that most people hold on very long and honestly if you're a great leader which i think a lot of people that watch this channel are you probably hold on way too long than you should be and it's really tough i understand because i've gone through it i hate firing people i hate knowing that people aren't going to be able to make it to the next level right it's just the stats you know in my last video i talked about how to get promoted like i shared a lot of those and i had a lot of people tell me you know like i don't want to show my team this i'm like why is this not an ongoing conversation we want to make it one like i wish i had done that the first business the first time around now it's something that i feel very comfortable talking about especially with the team but like it didn't used to be it used to be this you know don't talk about that you know you want to scare people or whatever it's like no we're just trying to share the same information and that being said most people let that pile up and what i see most the time and what we have to do with a lot of the companies that come in is we have to flip people out change their role coach them up or fire them and the reason for that is that most people it's like they're waiting for permission for someone else to say it's not you it's them and so i hope this video if you're watching this you're trying to get from sunday figures like let this be the light for you like it's not you it's that if you've been coaching someone for months if you've been struggling with someone for a year why are they still in your cup and you know here's the thing is that there are many times where it is absolutely your fault and you might be coaching them and you might be training them and guess what you're not good enough yet you're not even effective in the way that you're coaching or training them and so it is your fault but you are the founder you're not going anywhere you can't wait for you to change and so you have to change them and that's the [ __ ] up truth a lot of people don't want to say that they're like no i can do it i got to wait it out it's my fault yes it is your fault but you also must do what's best for the business which is take your faults into consideration and build a team that has strengths where you do not that is why it's so important because if you the longer that you wait to flip these people out to get new people in to get people that accommodate your weaknesses the more your business is going to the more likely it is that your business implodes later on and i've seen it happen time and time again and i talked about it in my biggest mistake which is like waiting too long to fire people and guess what i look back at now and alex and i were actually walking the other day and we had this conversation i said you know it's so funny i can name five people off the top of my head that if they now worked for me they would have stayed on the team but i couldn't have done it then layla then didn't have the capacity to help those people the capacity to coach those people does that mean i'm a terrible person or leader i don't think so means that was inexperienced and if this is your first time going from seven to eight figures you're probably inexperienced too and so you have to accommodate that for some way you can't expect yourself to go from zero to hero overnight it's unrealistic and so even though it's your fault and it's on you you do have to tend for that in your team that being said that's the first one now the second piece and i see all too often and i'll tell you a little story is the ceo stepping out too soon so i see this actually a lot which is you know the business hits i want to say like anywhere between gosh i've seen it as low as 2 million it's like between 2 million and five million and the ceo gets on the phone and they're like everything's going great i've got this operator i've got these leaders these people i'm like i'm not even involved in the day to day and they sang it to me like it's this good thing and i'm like bro i'm involved in the day-to-day like this is my fourth business it's grown very quickly it's already got a lot you know going on and i'm still involved in the day to day very much so you know there's nothing one there's nothing wrong with that it's not bad second thing is it's almost like if you're raising a child right and like i don't have kids so you know bear with me here but if you're raising a child and then you're bragging about how like the child is all you know grown by the nanny don't worry it's the nanny raising the kid she's got it you only have to work with it an hour a day whatever now the child is not raised with your values but the nanny's values and so the business is the same way you are the most important potent source of value is in your company and if you outsource yourself too soon and this is what typically happens and there are rare occasions that are not but typically at this point when you outsource your responsibilities too soon the day-to-day the leadership etc to typically it's an operator it dilutes and it dilutes too quickly because one the business is new the operator hasn't even been there that long they are not emulating your values like you do they know yet have those values the only time i've seen it work is when it's a founder operator but if it's a brand new operator and you outsource everything you're like i don't even talk to the team just talk to my operator the amount of problems that pile up because of this are immaculate and i know that because we've done diligence on these companies we dig into these companies and it happens all the time i'll tell you the story which is there was one company that we were digging into and this person said like you know they were uh 2.9 a year and he said you know i house what's everything to my operator and i said well let me talk to your operator and i interviewed the operator and i was like oh no i was like this is i can you know and it's like you can spot different archetypes like this was the micromanagey team hates this person but doesn't say anything because they love the uh leader and the ceo this person was clearly like had no experience nor the capacity to expand beyond where they were at right like super high stress super high strong super stress and strong doesn't mean you're organized right you can be organized and be relaxed and so that's what i saw and this person was so proud to say like i'm not in the meetings anymore no i don't talk to anybody i don't do and i understand that as a founder there's a desire to get out of your business but until you have a ceo which it makes absolutely zero sense to have one at that stage with most companies that's not something to brag about that's not good for the company it's like being like oh my kid's two weeks old and i've got a nanny full time i don't do [ __ ] no more like i see a kid it's like it's way too early right and so i've seen this happen time to time again and with that guy ironically a month later he emailed and was like i just had a huge blowout i fired my operator you were right can we talk and now the business was like a huge mess right because he didn't know what's going on and then the people were really loyal to him they had the complete wrong team and i was like man this is like a little bit too much of a mess for us you've got to clean these things up before we can work together because it's like now you have to flip the whole team and that's what happens if you step out too soon and so if you are you know trying to go from seven to eight figures and you're like well when do i step out or what does it look like layla what should it look like with me being involved in the business i'll tell you these are where i would stay involved in the business at that point in time and if you're watching this video and you're you know just hitting eight figures you're trying to hit eight figures i would make sure that i'm involved in these things which is one weekly leadership meetings always be running those right does it mean that you have to be the one like setting the agenda and making the powerpoint no but like you want to be a voice that's heard through the leadership team at this point in time the second one is monthly meetings it is so one of the biggest pieces that gets lost your team expands to go from seven to eight figures is the voice of the ceo it's now it's becoming too big that you can't have personal relationship with everyone or it's very light touch it's not as deep as it used to be and so having a monthly meeting that you run that you tell stories that you ingrain the culture in the team that you explain the why explain the mission right and then say are we on track or off track to our goals that meaning is how you scale yourself it's how you scale your culture and if done well can be one of the biggest accelerants to growing your business now the third would be um monthly check-ins so a lot of the times you know if you have an operator and you're a ceo and you're going for seven eight figures your operators checking out those people on a weekly basis you don't want to lose touch with them and so there's nothing wrong with having monthly check-ins with leaders on the team leaders and people that are like key team players right like they may not be over department but they're very important to the business it's very important that you keep touch of those people so having monthly check-ins with those people very important as well and then the last thing is your sweet spot whatever you are absolute best at i would not outsource at this point in time now does that mean that you're handling the day-to-day you're running ads say you're good at marketing like you're running ads you're changing the pixel no but it means that you stay involved and a lot of times people think oh well now if i want to hit eight figures or when i hit figures like i can't be involved in this anymore you should absolutely be involved in it you know like our company was doing 40 50 million and i'm like i'm still involved in hiring people i'm still involved in customer service i'm still overlooking stuff it's called quality assurance and that's one of the biggest jobs of the ceo is to make sure that you continue to do that in all the areas and what's most important is that you don't outsource your strength too soon or at least all the way you have to keep really close quality assurance on the areas that you're very good at and i see this happen a lot of times especially with ceos who are really great with marketing and then they say it's time to outsource marketing and they do it it's like an all or nothing thing right it's not like a process outsourcing is a process it's not all or nothing like here you go it's off my plate now i never look at it again it's like yes i'm going to be on the marketing meeting still i'm going to be meeting with the marketing team still it just means it's maybe not my hands clicking the buttons but i'm talking to those who do and so that's how i see the most successful companies when they're making that transition from seven to eight figures stay involved and then number three in terms of common mistakes scaling from seven eight figures is the fear of reinvesting in talent and i talked about this in a couple of other videos but it's really it it just keeps coming up and so i'm gonna say it in 17 different ways until i feel like people really hear it which is people are afraid to reinvest in talent to grow the company and i see this manifest in different ways there's one company that we work with that every time there's a new role i'm like all right here's where we can source for this role uh here's this here's that and it's like they have to go they almost always wiggle around and they go find within their network someone that's cheaper it's because they're afraid to reinvest in talent i think in a deeper level it's afraid of what will true talent say if they come into this business what will my role look like what will they think of me because if you bring on true talent that has experience and has insights that you don't have it's a little intimidating you might feel stupid and right now you might feel really smart and so there's really two fears that you're like battling at this time one is the fear of the money that you're reinvesting in the team because the truth is and i've done this different ways it is better to hire ahead conservatively so that you can grow higher so that you can build the infrastructure to accommodate new clients than it is to not hire and then you know have clients come in have a terrible experience you ruin your reputation you can't get your reputation back that being said that's the first one it's like people are afraid of reinvesting in that talent because they're afraid that they're gonna lose money the second piece to it is that they're afraid of what that person's gonna say about them and so whoever is involved and responsible for the hiring typically their insecurities come to play here and you see them hire people that are less than higher people that aren't quite as good as them higher people that like them that make them feel good they don't hire people that are necessarily best for the job and i know this because i've seen it so many time and time again and i can say that this is not actually something i've struggled with because i don't feel like i'm that great at anything like i feel like i'm a massively talented generalist i don't feel like i'm a fantastic specialist to anything like there's not one area i would say like i'm probably hr customer success heavy in terms of my skills but there's not one area that i feel like i beat anyone in the team at i feel like actually what i am best at is knowing what everyone else should be doing right leading the team directing the way you know making sure the strategic plan is in place so because of that every time i hire someone i'm like well [ __ ] i'm not good at anything right like i look at i think about that way it's like i can work really hard but i'm not naturally gifted in this area that this person is and i think if if more people could kind of because i have to dissect my own success right it's like i think that i because i don't take i don't believe that i'm better than most people at something it's easier for me to hire someone who's very talented because i'm like well yeah guys i'm not that fantastic at anything and they're like oh my god whatever don't say that but like that's how i feel right and i think that some people feel the opposite they feel like i'm [ __ ] great at everything like nobody can touch this and so it's almost like they want to preserve that vision of themselves it's your ego right and they just want to continue to relive that story over and over again and so because of that they don't hire people that are actually equipped for the job and so that's number three number four is they won't do the boring work trying to get from seven to eight figures and especially going from like low millions to 10 million requires a [ __ ] ton of rep repetition you have to repeat the same actions that guy you that success at 3 million again and again and again and again better and better and better to get to 10 million and most people don't have the attention span for this most ceos get too caught up in the premature success and they start doing different things i need to be on social media i need to be speaking on stages i need to be doing this and that and then that and is that actually helping the business right now probably not the business requires you to be boring for a little bit of time and to scale a business often requires people to do the same thing over and over and over and over again and the battle is more so to not get bored and doing it to not lose enthusiasm in doing it if you think about sports teams it's like you're playing the same game over and over and over again but like you get point zero one percent better every time and most people when what i've seen is they just can't they can't do it you know i get on the phone there's some people that are like brilliant founders brilliant ceos and i'm like dude you have like six businesses like we can't grow just this way you need to get rid of the rest of them like your attention so split and they're all doing only like a million a year often the reaction is like i hate that it's just too boring for me listen there's nothing wrong with that it's just very difficult to grow a business with that objective in mind like if you'd rather be entertained than make more money that's like that's cool but you're not gonna make more money you're gonna be entertained you're not gonna be bored you're gonna probably like what you're doing but like if you could be bored and you can learn to be bored for a period of time and find ways to make the things you are doing more entertaining for yourself you know learn how to run better meetings learn how to really ingrain the culture learn how to do things better and get those incremental returns you're more likely to hit that eight-figure mark it's just that most people don't have the attention span to do it and then lastly is really ego and this is something that like i've really had to catch myself on because early on you know different mentors that i've had i think a lot of times you know when you're asking a mentor you're like what should i be doing they tell you what worked what they would do now not what they would do when they were in your shoes and that's something i have to be really cautious enough because especially for me when someone says you know what should i be doing now i am i really try to think if i were them in the position i used to be in at that revenue level what would my advice be not what would my advice be today and i say that because what i've noticed a lot of people do once they start to gain some success and they're on their way to eight figures is they start emulating people who are really far ahead of them and so they see someone that's too far ahead of them say you're doing 10 million you see someone who's doing 100 million and you say oh i see them speaking on stages i see them making content all the time i see them doing doing that and doing this i will do that as well you didn't see the 30 steps in between and so you probably skipped a lot of steps that it took to get them there and i see this a lot with and it's something that we try to be really verbal about which is you know don't copy what alex are doing right now look at what we were doing when we were at your revenue level copy that like i certainly when i was going to go from 78 figures was not making content i didn't start making content until we almost were done selling our business because that wasn't what was best for the business now i love making it i love learning it's a new process that i'm i'm enjoying but i knew that it was something i had to sacrifice at that point in time to really be the leader that the team needed to actually put my full-time dedication my full-time attention on that role and you see a lot of people that they emulate success too soon and they emulate people that are just too far ahead of them and so you need to either find somebody who can break things down to your level or you need to make sure that you find people that are only a couple steps ahead of you not 15 or 20 because that's probably not going to work it's probably gonna break what you're making and so those are really the five most common mistakes i've seen when scaling from seven eight figures it's not tending to the team debt right you're not flipping people out soon enough despite if it's your fault or not you're stepping out too soon you're letting people take over too soon you think that now that i've hit and i've had some material success you think you should really outsource the company and you should have other people doing what you're doing it's being afraid to reinvest in talent letting your ego get in the way and not doing the boring work and so that being said i hope that those were useful for you from this video you know i think scaling honestly that's probably the spot that i see most people get stuck is just that scaling from 78 figures and i think i think the biggest threat to it of all is just that you've already had some success i really think about it and like it's just the fact that you already are considered successful and because of that most people allow it to be an excuse like oh i'm already successful so i should get someone else to run the business i'm already accessible so i should start emulating this person who's really famous i'm already successful so i don't want to do those boring work when i do some more fun exciting [ __ ] and i think it's just like you have to find a way to be hungrier than that if 5 million a year or like 6 million a year satisfies your hunger you're [ __ ] someone asked me when i was at a i was doing a q a on stage the other day and they said you know how when did you know that you want to make a million dollars and i like just smiled because it's like you've never wanted to make a million dollars i didn't even feel impressed with myself when i made a million dollars i want to make a billion dollars that's impressive and someday maybe that won't be so i think it really comes down to knowing what drives you and if you don't figuring that out and using it to your advantage to stretch yourself and to make sure that you're not satisfied when you hit 5 million a year or 6 million a year because if you are the likelihood that you grow to 10 or 15 or 20 is very slim so with that i hope you have a great rest of your tuesday wednesday thursday and i will see you on the next