Running & Growing a Business QuickStart Guide: The Simplified Beginner’s Guide to Becoming an Effective Leader, Developing Scalable Systems and Growing Your Business Profitably

Introduction

Anyone interested in reading about how to run and grow their business will find plenty of content out there offering advice, tips, or narratives about the best ways to do it. Some of this material is good, some of it is trite, and some of it is downright awful. So, if I’m asking you to read my stuff, the obvious questions are: Why should you? What sets me apart from any number of other would-be experts? Before we get to the real meat of this QuickStart Guide, let me tell you a little bit about my background and why I think my unique perspective will help you navigate complex issues more easily than you could on your own—or by turning to the myriad blog posts, newsletters, podcasts, etc., that deal with these topics.

A few years ago, I was approached by the publishers of the QuickStart Guides to write about starting a business. I did, and to my gratification, Starting a Business QuickStart Guide became an immediate bestseller. Running and Growing a Business QuickStart Guide is my follow-up, reflecting the next significant hurdle for a founder after a successful launch.

I believe my first book succeeded due to both my experience in academia and my fluency in the practical, nuts-and-bolts aspects of entrepreneurship. This combination allows me to use relevant, real-world examples to illustrate tried-and-true models from the domains of operations, human resources, and strategic management in addition to entrepreneurship. Hopefully, this will demystify these concepts for you. I also don’t pull any punches and am very blunt about what works and about the mistakes I’ve seen founders make over the years. My hope is that this will make for an enjoyable and educational read.

I also write for readers who did not start out as entrepreneurs—as I didn’t myself. I’m a Gen-Xer; my dad was a corporate wage slave and I assumed I would be too. So when I graduated from university, I started working in a series of normal jobs in finance. I ended up as a managing director at a major brokerage firm in San Francisco and also acquired (sorry, Elon!) an MBA. But I wasn’t in San Francisco at just any time; I was there in the mid-to-late 1990s. In other words, during the dot-com boom and bust. It was the first time I’d been exposed to the startup world, and I was at ground zero. My company wasn’t a startup, but we were making a major push into online brokerage and disrupting the relatively sleepy world of personal finance while basically inventing high-volume e-commerce as we went along.

The whole firm experience left me burned out. I was tired of the middle manager’s life of going to meeting after meeting, trying to get support and resources for the things I wanted to do. I wanted a way out, but I still wasn’t thinking of starting my own business. In those days, tech deals needed massive amounts of capital to scale, which venture capital (VC) firms and other private equity organizations were happy to provide to the right people. I didn’t have the technical background or expertise. It wasn’t for me.

Several of my MBA professors had suggested academia as a career path, so I started to ask more questions about it. It sounded awesome: freedom to pursue whatever research projects I wanted, tenure for job security, and a good salary to boot. So I went to the University of Oregon to get my PhD in strategic management and entrepreneurship.

As I was studying and observing the dot-com bubble in real time, my advisor and I realized that private equity (PE) investors were pivoting. They had been roasted in the press for their extravagant bets on what seemed to be worthless e-commerce plays. I remember in particular people laughing about VC funding for five online pet stores. Who in the world would buy pet kibble online? (I write this as I await my latest Chewy order.) On the other hand, when pets.com was buying sock puppet ads for the Super Bowl, we all probably should have predicted that the bubble would burst.

Once I got my PhD, I joined the faculty of Drexel University in Philadelphia as an assistant professor of strategy and entrepreneurship. At a school like Drexel, a professor’s job is to produce high-quality research and teach a few courses each term. After a while, I found that I hated the research part of the job. I was too practical and impatient with the long time it took to get published and the politics it took to get into the best journals. I found myself drifting toward work at the entrepreneurship center, helping students who were interested in starting businesses, and taking student teams to national business plan competitions. Even though we were well into the internet age, it still took a lot of money to begin and scale a tech startup, and budding entrepreneurs needed business plans with extensive details to pitch to potential investors.

Because I wasn’t enthusiastic about the major part of my job—academic research—I knew I had to find a new gig. By this time, I had acquired a decade of experience in the startup ecosystem. I’d met a lot of entrepreneurs, and I began to understand what made them tick and what deals were fundable and workable. With my foot already in the academic door, I got a job running the entrepreneurship program at the University of Miami School of Business. Freed of research responsibilities, I could focus on what I really loved: tapping into the local entrepreneurial ecosystem and getting my students involved in it.

Tapping into that ecosystem was also very educational for me. It was the first time I had really interacted with entrepreneurs on a personal basis, rather than as research subjects. I began to better understand how they thought and what motivated them. Because I was trained as a business researcher, I was able to recognize and characterize behaviors that led to successful outcomes in a way that was different from those without this background. I was also able to apply standard tools of strategic management (like external analysis of the firm environment and internal analysis of firm competencies and capabilities) to the entrepreneurial context and show how they were meant to be used: to help managers make more effective decisions. As you will see over and over in this book, these tools can help you understand not only what needs to be done, but why. This realization led me to run an entrepreneurial consulting program with my students, helping local entrepreneurs, and eventually to found my own consulting firm, Innovative Growth Advisors.

After a few years at UMiami, I felt I was ready for my next challenge in academic administration, so I became a dean. People misunderstand what a dean does—and those misperceptions aren’t helped by depictions of deans in movies as evil despots out to foil students’ fun. In reality, they are unit managers for fairly large organizational entities, managing academic programs with (in my case, anyway) thousands of students and millions of dollars in annual revenue. I have been dean of business schools at three universities as of this writing, and I’ve tried to take the lessons of entrepreneurship and apply them to academia. In other words, to use the tools of creativity and innovation to attract new students and to help existing ones graduate and get good jobs.

During these twenty-plus years, I’ve been both an observer and a participant in the startup ecosystem in many ways—studying it as an academic, teaching it to students, acting as a consultant to help students and others start and grow their own businesses, and running my own ventures. This varied background has provided me with insight into what works and what does not. My perspective on business growth and success is very much my own and quite distinct from that of the others who currently write, speak, think, and publish in this field.

Speaking of twenty-plus years of close observation, I’ve seen radical changes in the startup world over the last two decades. Gone are the days when you needed to raise millions of dollars and live in San Francisco or one of the other entrepreneurial hot spots. You can live wherever you like and start a business on your phone sitting in your local coffee shop. There are apps to resolve every startup headache—supply chain issues, finding vendors and employees, payments, accounting, everything. And your venture doesn’t have to involve big tech or big science to scale. It has never been easier to start a business. But in the end, you’ll still have to deal with some very fundamental issues if your business is going to succeed.

That’s where this book comes in. It addresses the critical topics of personal health, management style, organizational design, and strategic management at three levels of analysis: the individual founder (you), the organization (your business), and your strategic context (the economic environment). That may seem a bit daunting, but don’t worry—I’ve provided numerous real-world examples of companies, many of which you’ve heard of, dealing with these issues. It is my sincere hope and objective that the perspectives gained and refined through your reading of this book will lead to successful outcomes for both your business venture and your general well-being. Good luck on the journey!

One note on terminology: Growth and scaling are technically two different concepts, though they are similar and I treat them as such. Growth refers to any incremental revenue increase, and scaling is a specific type of growth in which revenue increases much more rapidly than costs. Scaling is often the goal of company founders and brings with it a unique set of challenges, because organizational complexity increases very rapidly with scaling. This book addresses the challenges of scaling, but the ideas and techniques I discuss work no matter what level of growth you seek. So I use the terms growing and scaling somewhat interchangeably throughout the text, because while that distinction does exist between the two terms, the general concepts surrounding them have the same basic relevance to your business.

Chapter by Chapter

This book is divided into three parts: Getting Yourself Ready for Growth (part I), Maneuvering for Growth (part II), and Strategic Issues in Growing Your Business (part III). You may be tempted to skip over the material in part I to get to the more nuts-and-bolts stuff in parts II and III. Resist that temptation. If you are going to truly scale your business, you need to look at yourself with the same scrutiny you apply to your business.

So, before diving into the strategic and operational issues required for rapid expansion, you need to ask a personal (and potentially uncomfortable) question: Am I ready for this? In chapter 1, Reflecting, I’ll help you look in the mirror to find the answer. We’ll examine how mindsets that fuel personal growth—such as curiosity and accountability—are essential to support your company’s growth. I’ll also share ways you can develop these mindsets.

Continuing the emphasis on your foundational role, chapter 2, Balancing, explores the link between your health and your company’s health. I’ll show you ways to preserve your mental and physical well-being as you grapple with growth. Rapid expansion creates plenty of upheaval, and this chapter will provide a path to balance.

Personal development is also central to chapter 3, Laughing, which reveals how lessons from the world of comedy can help you think in more flexible ways. Stress management amid business challenges is part of that. But as you’ll see, the tools of the comedy trade can also enhance your ability to effectively communicate, collaborate, and find creative solutions for complex problems.

Part II kicks off with chapter 4, Leading, where we’ll build on the earlier exploration of great leader characteristics and look at facets of leadership that affect a firm’s growth. You’ll learn how aspects of leadership such as delegation and transparency will shape your ability to create and execute a compelling vision for your company.

Leadership earned its own chapter, but it’s not the only management ability you’ll need to transform your business. We examine other essentials for your manager’s toolkit in chapter 5, Management Skills That Accelerate Growth. That includes strong communication skills and an organizational structure that fosters agility.

You’re not flying solo as a leader. You have a team to support you, and that team will need to expand significantly to drive your business goals. That’s why chapter 6, Hiring, is devoted to finding people who can fuel your growth. Your ability to recruit and keep valuable employees will help determine your company’s fate.

The people in your organization matter a great deal for your growth. So do operational tools—especially the ones that don’t exactly sound sexy, like policies and procedures. But these are exactly the kinds of tools that will help your business reach exciting heights. In chapter 7, Create Scalable Systems and Processes, we’ll learn why that’s the case, as we look at the importance of documentation that helps you respond quickly and gives you the ability to track performance closely while measuring what’s meaningful.

After exploring the ways you and your organization must be equipped for rapid growth, our discussion shifts in part III to address strategies for pursuing that goal. In chapter 8, Growing and Scaling, we’ll examine approaches such as expanding existing product lines, exploring new product categories, and making acquisitions. Any form of expansion requires careful assessment, because a painful gap exists between can and should.

While it’s great to have ideas for how to grow your business, you need to create something more concrete. You need a plan that allows you to execute your strategy. Chapter 9, Planning, is all about helping you develop a strategic plan that’s flexible and guided by a well-crafted mission, with relevant goals that let you monitor progress.

The best-laid business plans will languish if they lack enough money. To help you avoid that problem, we look at an array of funding sources in chapter 10, Funding. These options for debt and equity are a critical step on the path to growth, because investments from friends and family won’t be sufficient to support your new phase.

Unpredictable events can destroy much—or all—of your hard-earned growth if you don’t have strategies in place to respond. That’s why I added a coda, titled We Live in a VUCA World. The acronym stands for volatility, uncertainty, complexity, and ambiguity. Those things often require abrupt changes, and you’ll find guidance here for making effective decisions when the stakes are high. You’ll also see how the unofficial US Marine Corps mantra applies to navigating chaos and protecting the health of your company.

PART I

GETTING YOURSELF READY FOR GROWTH

| 1 |

Reflecting

Chapter Overview

Growth Mindset

Persistence

Accountability

Success is not an accident. Success is actually a choice.

– STEPH CURRY

When speaking to people who are interested in starting a business, I find that they often have one of two distinctly different thought processes about learning entrepreneurial skills through training or mentoring. On one hand, many people think that it’s unnecessary because entrepreneurs are born, not made. These people often have a fixed idea of what successful entrepreneurs look and act like, and they don’t believe they have what it takes. On the other hand, a good percentage of nascent entrepreneurs also think training and mentoring is a waste of time for them, but it’s because they already know everything there is to know and don’t need to learn anything else in order to be successful. In my view, both of these types of people are exhibiting fixed mindsets. They both think they have an innate set of skills and abilities that can’t be changed very much. They’re both wrong. This chapter is about avoiding a fixed mindset and focusing on a growth mindset instead.

The Growth Mindset

When you picture yourself, you may imagine a set of physical characteristics, like height, weight, hair and eye color, etc., alongside a set of mental characteristics-personality, intelligence, skills, and abilities. As people move into adulthood, they tend to think these qualities are fixed. This leads many to have self-limiting beliefs:

No matter what I do, I can never lose weight. I guess it’s just my metabolism.

Or how about:

I’m not one of those techie types. I could never start an e-commerce business.

And yet we all know people who have experienced very positive physical transformations or learned new skills that helped them in their lives and careers. Are these people just part of the lucky few, or can anyone improve their natural skills and abilities beyond whatever innate limitations they may have?

According to Stanford University psychologist Carol Dweck, your answer to that question has profound implications for your life, because it determines what you accomplish. In her book Mindset, Dweck explores this idea in detail. Grounded in more than twenty years of research, her work emphasizes the role of two different mindsets—fixed and growth—and their extensive power to shape our lives:

A fixed mindset stems from the belief that your qualities are carved in stone. It’s a mindset that drives people to prove themselves repeatedly. Dweck has observed many people who are consumed by the desire to prove themselves in their careers and relationships. In every situation, they feel compelled to reaffirm something about their intelligence, personality, or character. As Dweck notes, when people with fixed mindsets encounter challenges, they ask questions focused on personal validation: Will I succeed or fail? Will I look smart or stupid? Will I be accepted or rejected? Will I feel like a winner or a loser?

A growth mindset comes from the belief that your qualities can be enhanced through focused, sustained effort. This doesn’t mean people with a growth mindset believe that everything and anything is possible. They don’t expect to will themselves into becoming the next Einstein or Michael Jordan. Rather, they believe their true potential is unknown, because it’s not possible to predict exactly what years of dedicated effort will yield. In the words of William Shakespeare, We know what we are, but not what we may be. Unlike with a fixed mindset, the desire to learn eclipses the need for approval. People with a growth mindset reframe mistakes and failures. They don’t feel anxious because they’re afraid they might look stupid. Instead, challenging situations spark their enthusiasm and willingness to improve by practicing new skills and seeking new information.

These mindsets have particular relevance for entrepreneurs focused on expansion. That’s because in business, as in life, the only constant is change. To navigate the ever-shifting terrain of industry trends, customer needs, and the economy, you’ll need to develop new skills and improve existing ones. Your company won’t be able to adapt (a topic we’ll further explore in chapter 11) unless you have a growth mindset.

One essential quality of a growth mindset is persistence, which we’ll cover in more detail later in this chapter. As the leader of a growing company, you will find yourself repeatedly stretched to the limit. By cultivating a growth mindset, entrepreneurs do more than endure challenging times. They find ways to thrive and use their passion as fuel during a struggle.

How the Fixed Mindset of CEO Disease Will Keep You in the Dark: When company leaders have an overwhelming need to feel smart, they often end up with CEO disease. They insulate themselves from honest feedback. Travis Kalanick—the cofounder of Uber who was forced to resign as CEO in 2017—provided a memorable demonstration of this, thanks to a dashcam that recorded him arguing with an Uber driver. When the driver complained that he’d lost nearly $100,000 due to Uber’s lowering of rates, Kalanick lost his temper. Before storming out of the vehicle, he told the Uber driver, Some people don’t like to take responsibility for their own shit. They blame everything in their life on somebody else. Good luck! Instead of listening with an open mind and genuine interest in how the company’s decisions affected the lives of its frontline workers, Kalanick lashed out when his leadership was criticized.

If you want to see a cure for CEO disease in action, look to Fadi Ghandour, the cofounder of the Dubai-based delivery and logistics firm Aramex. When Ghandour arrived in Dubai at two a.m. after a trip, he stepped outside the CEO cocoon: instead of using a luxury car service, he had one of his company’s package couriers pick him up at the airport and drive him to his hotel. He used that time to ask the courier detailed questions about his work. As he listened closely, Ghandour discovered that operational issues hindered the courier’s ability to make on-time deliveries.

He immediately scheduled an all-hands meeting of local management. Ghandour ensured that several couriers also attended, so he could ask them questions and allow the managers to hear their descriptions of ongoing work problems.

The tone of the meeting was just as important as the content. The CEO didn’t call out managers and blame them for overlooking problems. Instead, the meeting focused on gathering information and learning. The experience compelled Ghandour to create a new company policy: all executives must occasionally work as couriers, so they can detect problems early by appreciating the challenges faced by frontline workers.

Think for a moment about those two CEO examples, Travis Kalanick at Uber and Fadi Ghandour at Aramex, and consider which one reflects your mindset when you’re faced with criticism. As a leader, what’s your capacity for listening to complaints and learning from them? Your initial feeling might be defensiveness, and that’s OK, as long as you don’t let that feeling control your next move. Instead of a knee-jerk reaction (jerk being the operative word here), you can choose to pause for a moment and respond to criticism with a sense of curiosity.

Cultivating the Growth Mindset

The real difference between a fixed mindset and a growth mindset is how much control you believe you have over your own future. People with fixed mindsets believe their future is something that happens to them and they just have to cope with whatever comes up around the bend. People with a growth mindset believe their future is something they can create. That may seem like a minor difference, but it leads to a profound difference in how you live your life and approach difficult situations. Here’s the good news: although one mindset often dominates much of our behavior, we are all a mix of both—and Dweck outlines steps we can take to shift the balance toward a growth mindset:

Start by accepting that we all have a combination of fixed and growth mindsets.

Learn to recognize what triggers your fixed mindset. This could be failure, criticism, deadlines, or disagreements. What are the events or situations that make you feel your abilities are fixed and, as Dweck says, transport you to a place of judgment rather than to a place of development?

Understand what happens after the arrival of your fixed-mindset persona—meaning the inner voice that urges you to avoid challenges and ruthlessly criticizes when you fail at something. This could mean giving your fixed-mindset persona a name, such as a person in your life, a character in a book or movie, or just a name you don’t like, to remind yourself that that’s not who you want to be. Think about how this persona influences the way you think, feel, and act. How does that affect you and the people around you? As you become more familiar