The truth about exponential growth and selling at high multiples.

The truth about exponential growth and selling at high multiples.

Welcome to today's episode. My name is Tom Rolley and I'm excited to talk about this because these problems are related.

So you've got to be good enough to actually have this situation that this isn't for entrepreneurs or people just starting out.

But let's say that you have worked out a reasonable game in business that you are growing, you're bringing your more team, your advertising is working, your sales is working, you're filming at some point, and you're growing, and you're growing.

And then you hit a very interesting problem, which is that you will not be able to grow any further that your results, your profits will start to plateau, and you'll start to have more and more problems.

Why is this? Well, you see, you have a management overhead, you have a problem of managing people.

And as you add more people, you get a increase in the amount of difficulty of communications, of trying to organize how people are working together.

And the interesting thing is, you cannot solve this problem by adding more people, it's a people problem.

And so as you bring on another person, they don't actually bring any productive value to the business because of the amount of difficulty in getting anything done.

You just running into significant problems with like, Okay, well, that person is meant to be doing this, and that person is meant to be doing that.

But I thought they were doing this, I thought they were doing that.

And this chaos prevents you from going any further.

So you hit a limit to your growth.

The second problem is, is when you are selling like let's say that your game is to take a startup to sell, or to buy a broken business and get it up to something that is worth much more.

What are investors looking for? Are they looking for a job? Do they want to buy a job? No.

Very few investors are seeking a job to buy.

It's not very attractive.

And so the interesting thing to me is both of these problems come down to one thing, the inability to exponentially grow.

And the inability to sell at high multiples comes down to your lack of documented systems.

Ah, really? Yes, you see, the problem with people is that they don't scale.

You can't scale me, you can't scale yourself, you can't scale any of your team.

They just don't scale.

But processes do systems do, you can bring on another team member to run exactly the same processes.

And suddenly you've doubled your results.

Also realize that systems and processes are the solution to being able to run bigger teams that people know what they're doing.

People can go again, that's how we do that.

And particularly if you get good at this game, and other people can see what everyone's working on, then you get really big benefits, you can actually go Okay, great.

That's our dependency that needs to be done before this.

And this can be done, or these ones can be worked on at the same time.

So let's assign person that one, let's assign a person that one, instead of having to wait for the first one to get done.

And then beginning you can actually see these things.

But none of this is possible if you don't have any systems and documents written down.

The second thing is with the sale of the business, you've got your systems on point, you've got your processes on point, you need far fewer people, increasing your profitability.

And the value of your business is way higher when you have your systems on point.

This is what you must come to understand that people don't scale but processes do.

And therefore you would think that people would be focusing on this like even at day one business, the benefits are there, it might be extremely simple.

sketching out just the process name with no details, no videos, nothing to track, but just the names themselves.

Because the benefits continue as you begin.

Remember, it's much easier to bring new people into old processes than it is to put old people into new processes.

It's not my quote, but it came from a great book, The hard thing about hard things.

My dad that is so true.

I've experienced it with my clients were like, Hey, we're going to bring in this new system and they're like, no, no, no, not not.

We are not doing it that way.

I'm like, Well, we're never going to grow, never going to scale, never going to be able to get bigger than you are unless you start drawing out even the most basic just the naming of the processes.

And as you go and as you get bigger, fine.

You can adapt and change and the eyes Hang on, maybe we should split this process in two.

And that will enable one person to work on this part and one person to work on that part.

But those problems are far easier to solve when you've already established a firm foundation of systems and processes.

And so you would think that this would be the focus, but very few do.

But those that do an interesting opportunity opens up like you can look for businesses that are hitting a systems problem, you can go and look for that business and go, Wow, they're they're kind of cooked.

They've got to as far as they can, without systems, you come in and buy it at a low multiple, and then you flip that entire business because you can install systems quickly and effectively, like you know how to get a workforce into those systems and deploy them.

And suddenly, you can take that business, increase its profitability, sell it at a hallmark high multiple, because all of the systems are in place, and go again, and you're just picking off, that's a great business, I can see that they're stuck on systems.

That's a great business, but I can see that they're stuck on systems.

And you just buy them install systems and flip and the best ones you get to keep for yourself.

You're just like, Man, this this thing's got awesome monthly recurring revenue.

I'm going to keep that this is going to be my cash flow baby.

Do you think there is more in houses or in businesses have a think about that there's so much effort going into businesses into houses instead of businesses, but the true profitability lies in businesses.

And your opportunity is to learn how to scale with systems.

You do this once, and the game opens up for you big time.

If you would like help with this, then send me an email at [email protected].

That's [email protected].

And we can look at how you can master the game of systems you only really need to do it once.

Once you know how to do systems, you know how to do systems.

And many of the systems that you install for your first business will be 100% applicable to every further business that you choose to implement them into.

Alright, thanks so much for tuning in today.

I hope you got a lot of value out of today's session.

I certainly enjoyed making it for you.

And I look forward to seeing you on tomorrow's episode as we continue this journey into the power of systems to create results.

I'll see you then.