The 5 Stages of Business Growth

The 5 Stages of Business Growth

Clate, thank you for joining us on the show.

It’s great to be with you.

We met in 2007. I was a barely new client of Infusionsoft now Keap and I came to a small conference called ICON at the time. It was probably 40 to 70 people, a very tiny company transitioning into email marketing. Ever since then, you were truly inspiring as far as watching the company journey and ultimately the growth over the years.

Thank you, Meny. I can’t believe that you’re at that first user conference, I remember it well. I remember we were crammed into that little room and Michael Gerber joined us at that time. It was a great start to an awesome event that we carried on for about a decade. We stopped doing it a couple of years ago so we could focus on getting our new product out. It was fun to meet you back then. It’s been awesome to see your company’s growth and we’re glad to have our software be a little part of it.

[bctt tweet=”Every entrepreneur loves that they can put a system to work for them and it’s working in the background, helping them to achieve their goal. ” username=””]

I met Michael Gerber for the first time at that event, right away bought his book and was hooked ever since and stayed a great friend as well. There’s a unique story behind Clate Mask, behind Keap and Infusionsoft. Take us back to the earlier years when you first got started. What was Infusionsoft then? What was the vision for it?

When we started off we were creating software for small businesses to help them automate their sales and marketing. The internet was a pretty new thing for small businesses back then, believe it or not, it was a different world. What happened is we recognize how hard it was for small businesses to find customers, get leads and turn them into customers then turn those customers into lifelong clients. We saw how challenging it was to do that. We saw those small businesses were disorganized. They would drop the ball and despite their best intentions to serve their clients and create a great experience, they were wearing so many hats and juggling so many balls. They just couldn’t manage it all. You know this as well as anybody, when you’re an entrepreneur and you’re trying to serve your clients well, you’re wearing all those hats, trying to make payroll. You’ve got life pressures and everything that’s going on. Unfortunately, all too often, things start to slip through your cracks and it gets difficult to grow your business successfully because you don’t have a system, a method and a way to get organize, follow-up and get the most out of your time every day.

We saw that. We began helping small businesses address that. Meanwhile, we were going through that exact challenge ourselves. We were struggling with it. We were trying to find customers, serve those customers and we were using our software. And then an amazing thing happened, we started to automate the follow-up process with prospects and it took us from struggling like crazy to persuade people to sign up with us. Instead, they became more predisposed to join us and we started to get more clients. Things started to get much better in the business. But as most business owners know, it’s one thing for the income in the business to start flowing. It’s another thing for that to begin making its way to your personal bank account. About two-and-a-half years into the business, I was a total believer at this point because I was seeing what the software was doing for our clients and for us. When I would go tell my wife, “Things are getting better,” she would say, “It’s not getting better for us.” We were struggling. We were on the verge of bankruptcy.

Personally, it was very difficult. We didn’t have a bunch of capital or a rich uncle or anybody to help us to get the business started. We were trying to do everything we could to keep the lights on. And although I knew that the business was getting better and it was going to work—by the way, I didn’t know that for sure a year prior. It took a while to get to that point where we were using our software and it was working and working for our clients—but trying to grow the business and have enough business income to provide for our families, and there were three of us as partners, was really tough. One night Charisse said, “I can’t do it anymore. You’ve got to go look for a job. You’ve got to promise me you’ll do that.” I’d many times successfully persuaded her to stick it out, hang in there, all the pep talks I could give. At this point, she was done and I was frustrated. I was like, “I can see the light at the end of the tunnel. I know this is going to work.” And yet I don’t blame her one bit because it’s been nearly three years of day-to-day struggle, survival.

She said, “Promise me you’ll look for a job when you go to work,” I said, “I will.” This was a tough conversation. These were tear-filled conversations. Every entrepreneur knows you want it to work, you believe it’s going to work but you’re also a little bit delusional and you don’t have a lot of evidence to suggest that it’s going to work. I begrudgingly said, “I’ll go look for a job.” I went to work the next day, got into my office, sat down and the work enveloped to me. Before I knew it, the day was over and I hadn’t done one bit of job searching.

I started to drive home that day and I felt bad that I hadn’t done what I said I was going to do. I was really nervous about how Charisse was going to receive that. She’s incredibly supportive and has been but at that point, she couldn’t do it anymore. I will always remember that day I walked into our house. I came around the corner and her back was to me then she turned around and said, “Did you look for a job?” I said, “No.” She walked towards me and I was unsure of what was going on. She gave me a big hug and held me tight. The emotion overcame both of us and I wasn’t quite sure why she was holding on to me so tightly. I tried to let go and she held on tighter and we both cried. Finally, I was able to talk and I said, “What happened?” She said, “God knows what’s happening with us, just keep going. It’s going to be okay.”

At that moment, it’s hard to describe what I felt. To this day, I remember how empty and frustrating it felt when she couldn’t believe anymore in what we were doing. I remember how sky-high I was on cloud nine when she said, “Keep going.” That’s the story of small business success. Everybody has their “keep going” story. As you know, Infusionsoft has always stood for small business success and that cheerleader and encouragement to keep going. When we decided to raise our sights and set our sights on serving millions of small businesses, we decided we need to do that with a simple name that conveyed a simple message and that’s why we call our company Keap. For keep going, keep serving, keep growing.

I’ve heard the story and every time I hear it again it reminds me of almost like how you felt at that time. The reason why I wanted our readers to hear the story is because we live in a world that people look for instant gratification, instant results, and instant success. Sometimes we hear an exit of a company or we hear something happening in the company that made it millions of dollars and all of a sudden we think that’s how it started. How important was that moment or those days, weeks, months in your career, life or the life of the company, even your personal life, that gave you the commitment towards small business success?

Most people don’t see this. I didn’t see it during those [first] three years. It was about three years of brutal day-to-day struggle for survival. The truth is I wanted to quit. I would’ve quit if you could’ve gotten out of the personal guarantees and everything that we had wrapped ourselves up in. Deep down inside, I believed it was going to work and yet there were some days where the belief was fleeting and it was hard to buy into. The discouragement was so great and we were struggling financially. About a year-and-a-half in, I remember saying, “Man, I would not wish this on my worst enemy. This is so hard!” I struggled but I started to work on my mindset. I began to understand how critical it was that I mastered the conversation between my ears and that was a critical learning point for me. It was critical for me to understand that this tenacity that’s required of our business is required of all small businesses to be successful. It gave me an understanding and empathy.

Ultimately, what I realized after coming out of those three years was that there couldn’t be a better blessing to experience those three years and understand what it is to be a small business owner. It created inside of me a passion for helping small businesses succeed. Compassion for what they go through and a burning desire to make life better for small businesses. We spent several years after that building and growing the business. At one point along the way, we ran into some new challenges and then we weathered that storm.

A few years ago, we ran into some new challenges. It’s not the case that once you get all figured out in business, you hit a certain point and then it just gets easy. That’s not the way it is. That’s not the way life is. That’s not the way business is. There are ups and downs. Hopefully, it’s on a trajectory up into the right, but sometimes when you’re down, you wonder if the trajectory has changed and you’re no longer on that upward trajectory. That’s where the mindset is so critical. I appreciate you asking the question and also simply say, “It was critical for me personally in understanding my mindset. It was critical for me as an entrepreneur to understand other businesses. And it was critical for our company to relate to small businesses and build inside of this company a culture of passionately helping and serving small businesses.” So, you’re question is great. What I once felt was a curse during those three years, I consider the greatest business blessing I’ve experienced.

With this interview we could go so many different ways. There’s so much information that we could get into. Let me try to adjust this for the audience and try to ask them questions which are, “No nonsense advice for business owners reading this episode.” I have a question for the record, public information as far as where Keap is now and as far as clients and team size.

We have about 200,000 users on our system which is amazing. As you know, we changed the name from Infusionsoft to Keap. We still have our Infusionsoft product which we love. It’s the high-end solution for our software. Our software is sales and marketing software that helps you get organized and follow-up and automate the tedious manual work that so often prevents small businesses from growing. We have a simple version of our software and we have a more powerful sophisticated version of our software which is Infusionsoft and in between we have Keap Pro which is a little bit of the combination of both. We love the opportunity we have with a product line to take to the market and help small businesses grow wherever they are in their stage. You know this and for me this was really hard but for a long time, our software was for those more sophisticated marketers, people who are willing to flow chart and map things out. There are huge payoffs and rewards for customers who will do that.

[bctt tweet=”The reality is that it is the skill that is required to be successful in sales. ” username=””]

But many small businesses want to start simple. We didn’t have that for a long time until we began on our new mission after several years of our Everest mission. We started off on the Mars mission in 2017. That’s where we set our sights on getting the new version of the software out there and now we have Keap. It’s fun to see user reviews roll in, it’s a total blast. Customers can grow and progress with this overtime and advance to Keap Pro and to Infusionsoft if they like to do that or they can stick with the addition of the software they’d like. To this entrepreneur who’s passionate about simplifying growth for millions of small businesses, it’s amazing to now have a full product line that we can meet small businesses where they are and help them grow.

Let’s dive into a question that I would love to ask you. Obviously, you’re passionate about the industry and about helping small businesses succeed. Their purpose is loud and clear, it’s all over the place. As far as vision, this is a question business owners have all the time. They start off something small, it might have a vision. The market evolves and things change. How much would you say your vision was there from the get-go or at least once you started seeing where you’re going with the company? How much did you need to deviate based on market fit or based on data coming in? What I’m trying to ask is sometimes somebody is so into their vision but they’re getting signals all over the place that this is not what the market needs or this is not scalable. This is not a product that you’re going to get the dollar amount people to spend on and they’re just not seeing it. I would love for our listeners to learn a little bit about your experience. You mentioned before the different times and different variations of the product or even on the company level.

I talk about “vision” as purpose, values and mission. We started business several years ago and we didn’t have the purpose, values and mission from day one or even year one. It takes you time to find your way and discover your place in the world a little bit and it wasn’t until 2007 when we had been in business for six years. That was the point where we started to crystallize the vision, our purpose, our values and our mission. And it wasn’t that we weren’t trying. The truth is for those first few years, it was all about survival and we didn’t have a mission. Once we got to, “This thing is going to work,” we started to figure out, “What is this? What is this opportunity? What do we want to do?” It took us another few years before we were able to articulate it. At that point, we were able to call out what we wanted to do for the world and it was to be the leading sales and marketing software for small businesses. To do for small businesses in sales and marketing what QuickBooks have done for them in finance and accounting.

That was a big, bold ambitious thought that we would do that. We began to put more specifics around it. We established our purpose which is to help small businesses succeed and that has never changed. That has remained the same. We established our values which have changed in wording a little bit a couple of times over the years but for the most part it has remained the same values of what we’re doing. We set a ten-year mission at that point which was to become the leading sales and marketing automation software for small businesses with 100,000 customers worldwide. After we got through that, we said, “Now we need to set a new mission,” and that mission is to simplify growth for five million small businesses worldwide by the year 2030. That’s our mission, that’s what we’re up to. Our purpose is always the same, to help small businesses succeed. We have a set of seven values and how we go about doing our work. Those three things combined purpose, values and mission. Those are the vision of the company. As I mentioned, it didn’t just hatch from day one. It took us time, but it is absolutely what drives and directs this company.

What I’m getting is that the purpose, values and mission, it’s there to stay and the mission evolves based on the Mars mission, where you’re up to and what you want to accomplish. What is the actual product? Is that something that a company could involve? This is what we want to accomplish but how?

Most companies start with their product, that’s what they explain. I believe it’s much better to start with why you exist and what you do for people and how you do it. What we do is we help small businesses get organized, follow-up and automate their business so they can grow. That’s what we do. How we do it is with our software. Our software is a system for small businesses that helps them get all their stuff in one place so they’re not jumping back and forth between different systems because that’s where a lot of the breakdown occurs. It helps them get everything in one place, it helps them to follow-up with their prospects and customers because that’s the critical thing that breaks down when you don’t follow-up. When you don’t follow up you lose customers, leads, referrals, you miss out on repeat business. You hamstring the growth of your business and most small businesses don’t realize how much they’re leaving on the table because they struggle to follow-up.

Our software helps customers get organized. It helps them follow-up and it helps them automate so much of the day-to-day manual stuff that fogs down small businesses. When you organize, follow-up and automate, now you’ve got a system to grow your business and it gets fun when you have that system that helps you and is working for you in the background, working for you while you sleep, not calling in sick just doing work for you. What we’ve found is every business owner loves the fact that they can put a system machine or a system to work for them and it’s working in the background, helping them to achieve their goals.

To close up what you’ve said is I interviewed an accountant before and one of the things I asked him about the failure of small business and he answered that people don’t have the data in front of them. They should have every single piece of data that they could pull at their fingertips, to be able to see the healthiness of the company. A system like Keap or Infusionsoft and people that know me for a while know when I speak about the products and about the importance of systems. Having the information, if you speak to a sales rep and you should be able to ask them, “How many leads do you have in your pipeline? How many people are you following up with? Where are we with every single lead?” It’s that piece of a system like this that brings them all together.

A lot of times I talk about getting organized, but I don’t describe specifically enough. It’s getting all of that customer data in your system where you can then take action on it in a confident way. You know what it’s telling you and so many times what happens in the disorganization is the information is spread out in a bunch of different places and you can’t put together the picture that you need to take action to serve a customer.

I want to dive into a topic that I know you’re very passionate about and you teach this a lot when you speak. It’s going to be valuable for business owners reading this episode which is business growth. Business growth, in general, people look at growth as a good thing. Business growth is a great thing for businesses but you also have to look at the scalability of the growth, understanding which stage of your business you are in and how you identify your needs at that stage. It’s a five-step process, five stages of growth. It’s beneficial if you could go through those stages and give us a little bit of a glimpse of what are the needs of a business owner in those stages.

The way we created this, it wasn’t something that we just said, “Let’s put this on paper.” This was over the years of working with small businesses. Some of our own business experience factored in but it was more about as we worked with small businesses and as we solved the evolution of these businesses. I was talking to Scott one time and he was like, “It’s eerily predictable. You can see what’s coming and what’s going to happen next and what they have to address in order to break through the next barrier and get to the next stage.” We felt that, we saw it and we would experience as we worked with the customers. One day we were talking about the book we were writing and I said, “I think we need to take this opportunity, do a bunch of research and either confirm or reject this notion we have where we see these predictable stages in business growth.” We did. I spent dozens if not hundreds of hours going through census bureau data. Looking at how these businesses evolved, looking at the numbers and watching the numbers as they flow through the different stages.

Nobody was calling out the stages per se in the data but I could see it. We were experiencing it every day with our customers. We boiled it down and we said, “There’s this stage of solo entrepreneurship with one person, and this is stage one,” and it’s broken into two pieces. It’s the first part where you’re working a side job and you haven’t quit your day job. There’s the second part where you’ve quit the day job, you’re now self-employed and you’re the only person in the business. That’s stage one with a split down whether or not they quit the day job. That stage one business has one person in and it’s usually under $10,000 a month in sales. When you get to stage two, the distinction is you’ve hired your first person. A lot of times in stage one, you may have a contractor or somebody like that. Stage two, you’ve got another employee and you’re responsible for payroll for the first time. You’re usually in about $100,000 to $300,000 in annual sales. That’s where stage two generally sits. We call that stage the new employer stage, you’ve begun employing people. It’s two or three people in the company but not more than that.

What are the usual challenges those people face at that stage?

[bctt tweet=”If you want to get as simple as possible, they don’t have a marketing process. ” username=””]

The challenge there is somebody has to take responsibility for sales. You can get to $100,000, $200,000 in annual sales but to get up to $300,000 in annual sales, somebody gets good at selling. It’s interesting to talk to entrepreneurs who are in stage one or stage two. They haven’t broken out of stage two and got to beyond $300,000 in annual sales. It’s usually because somebody on their team has not yet become effective at selling. The reality is that it is the skill that is required to get past $300,000. Are there other things you’ve got to do? Sure, but if you don’t get past that skill, if you don’t overcome that challenge and become good at selling to a prospect that’s interested in what you offer. If you don’t get there, you won’t get past $300,000 in annual sales.

When you do get there and you start to get effective at selling your product or service and you get over $300,000 in annual sales, you get past the daily fight for survival. It’s not that you are into a stage where everything is smooth but you’re no longer worried every day that you’re going to be around. We call stage three the steady operation because this is the stage were from $300,000 to $1 million in sales and four to ten employees. You have a business that works, everything is not all smooth but you definitely have a business that works. You’ve got a product or service that your customers appreciate. You are always trying to do better with your sales. You’ve got something that can work. It’s a business that you can no longer feel worried about every single day, “Are we going to survive?” Steady operation is stage three and the big challenge that people face here is how to generate leads that they can sell effectively to.

This becomes about marketing and serving effectively so that you get referrals. What you see here is frequently a business owner can’t get past this stage which is getting to $1 million in sales and ten employees. They don’t get past this stage because they’re good at selling and they’re good at delivering what they sold. They haven’t yet figured out how to get referrals and leads out of the customer base that they sell to or they haven’t figured out how to get leads from people they don’t know. When you don’t know somebody from Atom and suddenly that person is interested in what you have to offer. That happens every so often but it doesn’t happen enough for you to get to $1 million in annual sales unless you know how to generate and bubble up those leads systematically. Lead generation, referrals, and getting qualified leads are the key skills to get past $1 million in sales and get past stage three.

Would it be fair to say that at this stage, most people will rely on inbound here and there and then ultimately getting the wrong customers in because they don’t have a good qualification process with those leads?

They don’t have a marketing process. If you want to get as simple as possible, they don’t have a marketing process. It’s haphazard, they get leads, they get occasional referrals. They take what comes in but they don’t have a system or a process for generating leads and systematically working those leads and turning them into new customers. Stage four is the seven-figure business. This is $1 million to $3 million in revenue. It’s typically 11 to 25 employees. You’re beyond just one team, you start to have multiple teams and leaders. The real challenge here to get beyond $3 million is you have to tackle people and systems. Specifically, as an entrepreneur you can no longer tell everybody what we’re doing and share, “This is what we’re going to be doing.” You’ve got to create a way for your leaders to lead. That is a tricky thing because now you have people challenges and the entrepreneur who was bold, driven, charismatic, capable, hardworking, and driving that got the business to $1 million in revenue which only 3% of small businesses that start ever get to that point.

It’s quite an accomplishment to get to $1 million. What happens is that old saying of, “What got you here won’t get you there.” You want to breakthrough stage four at the $3 million mark, and not constantly get stuck in between $1 million and $3 million where you go up and then you go back. This is so common, I see this all the time with stage four businesses, so much so that the entrepreneur will say, “Clate, I don’t even care anymore. I don’t want to build a business over $3 million. It’s too hard.” I was making more money when we were only at $1 million and I had everybody reporting to me. I don’t want to deal with people’s problems. I’ve heard that over and over.

It’s sad and unfortunate because the reality is it’s just the people and leadership issue that you as the entrepreneur need to take on. You can take it on like you took on the marketing challenge, the sales challenge, and the entrepreneurial challenge to start your business in the first place. Nobody was born with these skills and yet sometimes people tell themselves, “I’m not a people person, he was born with that.” I’ve got news for you, it’s your company and you can do it. It’s not like there’s somebody that can do that. You have to take on that leadership responsibility.

These key things are additive. It’s not once you learn how to sell back in stage two you stop selling them. Somebody on your team has to keep doing that. It might not be you, but the company has to maintain that sales capability like in stage three when you built the marketing process and that capability, somebody has to continue doing that in stage four. You need to also get over the big hurdle that prevents entrepreneurs from getting out of stage four and that’s people systems. It requires you as the leader to say, “I’m going to set the purpose, the values, the mission and we’re going to hire, train and fire to it.” When you start to do that it gets fun because you get the right people in the business and the wrong people out of business. You start to look around when you do that and you say, “This is cool. We have all these capabilities, we can do so much more and we don’t have people dragging us down like we used to have.”

When you get through that $3 million mark, now you’re into stage five and it’s $3 million to $10 million and this are companies that typically have between 26 and 100 employees. There are only 300,000 of these companies in all of the United States. With 26 to 100 people, now you’ve built a management team. That management team has the challenge here of establishing a culture, establishing leaders that execute to that culture. What you created in the prior stage of having some people systems of how you lead people. You have to have leaders who lead those people and do it consistently with your culture. That is the critical thing that helps you to build a business to $10 million. You have to establish that culture. It’s no longer the charismatic leader or even three or four leaders but you create a culture. You create a process where you lead your people in that culture and it’s fun to scale a business to that point. That’s stage five, it’s $3 million to $10 million. If people paid close attention to what I’ve described, they’d notice that the stage changes happen on the ones and threes of revenue.

Stage one is $100,000 and then stage two is $100,000 to $300,000. Stage three is $300,000 to $1 million. Stage four is $1 million to $3 million and stage five is $3 million to $10 million. I can’t tell you why it works out this way, I’m telling you it just does. If you’re reading this, if you don’t take on the challenges I described then you’re in a plateau at the revenue level at the top of that stage. What you typically see if you study businesses, they plateau at the ones and threes of revenue and they get stuck there. Hopefully, this has been useful to help people understand the stages.

Let me ask you a couple of questions on this. The first question, if sometimes you speak to a leader and he or she says, “I’m perfectly fine in stage two. I’m not interested in going to stage three.” Is it fair to say that as long as they keep on doing what they need to do as far as having that system which helps them overcome that? Is there something a stage they could stay there? Is it something you constantly have to go up otherwise you’ll just go down?

Generally speaking, you don’t have to move through all these stages if you don’t want to. If you want to stay as a solo entrepreneur you can do that. If you want to stay in stage two as an employer or stage three as steady operations, you can do that. The caveat is this and it’s an important one. There is no such thing as standing still. It’s not possible to not grow. If you don’t grow over time you will die. In our book Conquer the Chaos, Scott and I talked about this, it’s a grow or die world. You don’t have to grow at meteoric rates. You don’t have to even grow through the stages if you don’t want to but you do have to grow. There are a number of reasons. First, the inflation rate would tell you if you’re not growing 3% per year, you’re going backward. Things get more expensive but more importantly as you get older as an entrepreneur, life gets more expensive. Kids need braces. Spouses say, “Are we ever going to take that dream vacation?” You’ve got a car that needs to be replaced. There’s just stuff. Life gets more expensive as you get older. That’s the second reason why you need to have some growth.

The third reason and the most important is one that I’ve observed over many years of working with entrepreneurs. It is that business owners grow bored and tired if things stay the same. If you don’t grow over time you can’t sustain the energy to continue doing what you’re doing. There has to be some new change, it has to be some growth because several years in a row of this same exact thing wears you out. Frankly, you’re wasting your talents in the world if you’re not making some improvement and some gradual upward trajectory. I’m not saying that you have to move through the stages, I’m saying that you can stay in a stage if you want but beware because it is a trap for entrepreneurs to say, “I’m going to stay still.”

It reminds me of one of our leaders’ forms that we do for leaders. One participant asked, “What if I don’t want to grow? I’m comfortable where I am.” I told him almost similar to what you’ve said but I added, “Are you comfortable coming tomorrow to your employees and telling them, ‘Everybody listen up, we’re not planning to grow. We’re planning to stay exactly as is?’ Are you comfortable and confident enough to say that to them?” He said, “Absolutely not.” Even if you’re comfortable in this stage, you have people that want to grow within your infrastructure, within your operation.

In addition to the reasons I mentioned, those are for the individuals making the decision. You’ve then got all of the needs of the people that are around you. Your employees, your customers don’t want to hear that everything is going to be the same forever. You’ve got to innovate and you’ve got to improve. If employees don’t see change, growth, and improvement then you ran into a brick wall. If customers don’t see that or if partners don’t see that, certainly if you have a bank or an investor or somebody that’s a financial partner, for all those reasons it is a grow or die world. It’s fool’s gold for a person to believe, “I’m in a place where I’m comfortable. I’m just going to sit here.” That won’t last. Resources dissipate, enthusiasm wanes, expenses go up. You’ve got to grow.

Based on those growth stages, it’s an important question that probably you’ll have the right answer with your experience. You started as a humble cofounder with a small team. I saw the journey. As you grow, you now have to develop different teams based on the stages of growth. You have to take yourself out of the day-to-day. You have to take yourself out of listening to every single employee, how the party went yesterday and what this co-worker is telling them. How do you stay a humble, caring person and emotionally connected, yet you have to change your responsibilities the way you interact?

The bigger you get, the harder it is to be connected to the hearts and minds of your people, your customers and your partners. You have to find ways to maintain that human connection. As you get larger, you have to become disconnected from some of those things. How do you maintain the connection? You do it in efficient ways. You meet with groups of employees, you talk with groups of partners and groups of customers. You do things like listening in on key conversations that you know are critical that give insight to the business as opposed to being in the noise all the time. You have to have certain signals in your business that tell you, “This is important to listen to.” You just can’t take in all of the noise that you once could and distill what matters, you can’t do that. It will clutter your mind too much. You have to be wise about doing things in groups and about listening to the right information that someone has distilled for you through a signal.

You need to find ways where you, as the leader, can do things or connect with people in symbolic ways that strengthen the relationship when you can’t do that in a regular day-to-day type of things. You’ve got to connect with people and lead people in a way where they have an association with you, a relationship with you even though they’re not with you out on the floor day-to-day, through thick and thin. It’s an art to lead at a higher level because if you’re not careful, the numbers and the scaling, systems, and the science of the business will stamp out the care, concern and compassion that you need to have to lead effectively. You’ve got to balance that. You’ve got to think about it. You’ve got to be conscious of it and heaven knows I’m not perfect at it. I make mistakes on those things but I believe trying and working at it is half the battle. Once you say, “It’s too big, I can’t care like I used to,” you’ve thrown in the white towel.

A question on what you’ve said, there’s a saying that I use a lot that you have to inspect what you expect. As you grow to be working on the business versus in the business on a daily basis, what would you give our audience as far as some tips? How would you look at inspecting what we’re expecting? You have the teams. You have to give them autonomy. You know that you have a great culture. They follow the same values that we set out to do. How do you make sure that you’re not very far away from what’s happening on the ground?

I’ll come back to inspect what you expect. There’s something that you said in between that is where it all starts, and that is you hire great people that you have trust in to lead. That’s done as you get clear on your purpose, values and mission. You hire people who are aligned to that purpose, values, and mission because then you trust them. You’re able to give them the autonomy that they need because you can’t inspect everything. Do you need to figure out what do I expect? What are the key things that I expect? You then create measures around those and then you review those measures frequently. If you don’t have people that you trust, then you have a hard time inspecting because you’re looking at all kinds of different things. You’re micromanaging, you get in the way of people and that frustrates them. It starts with hiring great people who are aligned to your purpose, values, and mission who you’d trust to achieve the business outcomes that you expect. You set up the measures of what you expect and you look at those measures on a regular basis.

That might be daily, it might be weekly, monthly, quarterly depending on what those measures are. Where people fall down is number one, they don’t hire great people that they trust who are aligned to the purpose, values and mission, and so then they’re micromanaging. That’s the most common mistake that entrepreneurs make as they’re building a team. The thing that we like to teach entrepreneurs is getting clear on your culture, your purpose, values and mission. When you’re clear on that then you can hire people that are easy to trust.

The first mistake, you don’t hire people that you trust. The second mistake and this is important, leaders don’t take the time to figure out what do I expect? What do I require of the performance in this role from this leader? Instead they say, “I’ve got a good guy, Joe is good here. Sally is doing a great job over here and I trust her. She fits our purpose, values and mission.” The business owner hasn’t sat down in the quiet of the night and said, “Here’s what I need from this role,” I need these business outcomes. Once you get clear on that as a business owner, then you need to go and negotiate that with your leader because you might say, “I need these businesses outcomes,” and they might say, “I’m not signing up for those businesses outcomes.” You’ve got it figured out that this isn’t a fit because you need these outcomes. On the other hand, it might be the leader saying to you, “I can’t sign up for that, but I can sign for this.” That’s why I said you negotiate what you expect. You come up with a view of what you expect but then you’ve got to negotiate and agree on what you expect. Then it’s no micro managerial task that you’re doing when you inspect what you expect. You’ve already agreed with your leader that’s what he or she will deliver.

I always say there is one thing worse than gaining your own clarity is not casting that clarity through your team. The business owner, the leader has the clarity but never had a conversation with people that have to report back to say, “This was my expectation.”

It’s fairly easy to come up with those expectations in sales. You have some sales goals and you work together with your sales leader. It’s a lot harder to come up with those agreements of what you expect in other areas of the business whether that’s in product or customer service or marketing.

We personally in Ptex have struggled for years to develop those KPIs. We call it KRAs, Key Results Areas. We came down to a simple system we call the 3 E’s which is Effectiveness, Efficiency and culture of Excellence. How effective are you in your job? How efficient are you doing it? Are you an asset to the culture?

That’s part of the fun that we do. The real core of our culture is our purpose, values and mission but we have a lot of fun things that reinforce that.

People sometimes confuse perks with culture. Your company has a great culture of excellence which is sticking to that vision and mission and ultimately delivering value to help growing small businesses succeed. On the product Keap, the company has changed to Keap and now we have the product Infusionsoft, Keap Light and Keap Pro. Ptex is part of the community. We’ve helped implement the software for companies. We spoke about the importance of data but one pushback we hear a lot, and I want to know how you will conquer that is when we speak about automation, it takes away the personal touch. All I got other than the product, the service I’m offering is that personal relationship I’m building.

People hear automation sometimes and they think, “It’s not going to be personal.” There’s a way for you to elegantly blend your personal touch in the automation and particularly when our customers work with great partners like you, Meny. They start to see how they can create that personal touch and scale their personal touch. That’s what’s awesome when you start to use automation is you can be there for so many more people in your unique personal way. What I tell people all the time is it’s not either automation or personal, it’s personalized automation. You’re doing it in a personal way that feels warm and relationship-building to your prospects and customers. There are a lot of different ways you can do that, from simple check-ins with your follow-ups to having the data that enables you to reach out at the right time that matters to the customer because of something happening in their life. There are a lot of things that you can do that demonstrate your care and the relationship you have with your clients. That’s when automation is fun.

We set up the software for one of our clients, the full sales automation, the sales pipeline and the whole CRM part. I remember one of the initial meetings, they were questioning the same question and I asked the following question, I said, “If you come in Monday morning and you want to do a sales follow-up, who do you call?” That person was quiet for a moment and said, “Let me paint you a picture. Tell me if I’m right.” You go through your notes, lead by lead, and then it takes you fifteen minutes or twenty minutes to figure out who to call and two minutes to take the call. You then go on and on again every ten minutes searching for accounts to call and then the call takes two minutes. What if the system will only show you the list that is ready for a call? This means if you are ready for a call, you’re making the whole twenty minutes of phone calls because you don’t have to search for who to call. The system will tell you who is ready for a call, a person that wasn’t followed up. I told him that all we do is the system is helping you do the personal touch and definitely not take away that personal touch.

From a marketing perspective, which people also don’t realize is when you have a system in place and you have templates based on the voice and tone of your brands. You hire a new salesperson. You immediately are able to give him the tools. Have the proper tools versus this person’s writing an email this way, that person is writing an email a different way. This person is following up in seven steps. This person is doing this type of follow-up. For the business owner, now they manage a team they have to have all these data come again in one place. This was amazing, Clate. There’s so much I wanted to ask you but I didn’t get to. Let’s close with four rapid-fire questions. Number one, what is a book that changed your life?

It’s Made to Stick.

Number two, what is a piece of advice you got that you’ll never forget?

Attitude determines altitude.

Number three, anything you wish you could go back and do differently?

Set our purpose, values, mission a little bit earlier.

Last question, number four, what’s still on your bucket list to achieve?

Hit all 50 states. I’ve got four or five left I’ve got to hit.

We’re looking forward to having you in New York.

I’m looking forward too. I’ll be out there.

Clate, thank you for joining us. I know your time is valuable and that is why in the name of our readers, we will forever be grateful for sharing so much of your time.

Thank you, Meny. I look forward to seeing you soon. Thanks for all you do to help small businesses succeed.