You’ll often hear people tell you to work on your business more than working in it. I find that advice difficult to understand. What it sometimes means is that you should learn to let go - delegate, trust, and free yourself to spend time working on the longer term strategy and planning. Though that's far-sighted, it still seems tactical to me.
What “working on” your business can also mean is something that I talk about as looking at your business “outside in.” We spend a lot of time in the office - working with our team, on our projects, with our money (investments, revenues). We see our business through the eyes of those who know us well - employees, investors, family. It’s a very narrow perspective that we get when we only interact with a typically homogeneous and friendly population. Every week, I drag entrepreneurs out of the office nearly kicking and screaming - they say they have too much work to do! - in order for me to help them view their business by talking with customers, competitors, partners and their market.
You may recall that I wrote about how Bianca Thompson got her business started by working on it from the outside in. Even more impressive, here are three stories to show how some of my clients and I did millions of dollars in deals by following an outside in approach.
Big Serendipitous Exit
Last year, I was engaged by a young company to help them develop a strategy to grow the business. It was the founders’ first startup and they had done quite well growing organically. The challenge was that the next step needed to be a big one. Despite lots of opportunity for them to raise capital, the founders wanted to retain equity and control and continue to grow through internal cash flow. The goal? Let’s start doing better than doubling revenues each year, and get into higher margin markets.
We had lots of opportunities because the market was growing rapidly. Focus would be challenging. We spent a few months understanding the business, identifying core competencies, doing SWOTs, even some balanced scorecard exercises - a methodical approach to pick a direction and develop a plan. Though every time we got close to finalizing it, some external influence changed our thinking. Competitors were getting huge amounts of funding. Big companies were starting to build their own teams. Technology expectations were rapidly increasing.
Best yet, there were lots of inbound requests coming into this company. So much so, we could have continued to sit at our desks and grow the company. Instead, it was time to start looking at the business from the outside in. Answer those email and arrange meetings. Talk to investors, even though we weren’t seeking outside capital. Meet our competitors. Visit prospective partners where they were. New York. California. We did, and started to get a more clear picture of the opportunity that existed.
And then it happened. One of the partners we met with brought in their corporate development team. An offer to be acquired was made. With all the opportunity in front of us, it wasn’t enough. We declined and went on refining our strategy. The partner made a higher offer - something now worth considering. The founders hadn’t planned on an exit - and initially were philosophically opposed to one - but with all the outside in clarity we had just acquired, we knew it was now the right place and the right time. We reached out to the corporate development teams at some of our other prospective partners and there was then competition for the company
The value became very attractive and an offer was accepted. Three months later, the deal was closed. The outcome was quite different than the strategy on which we had been working, but with the perspective of the business from the outside in, we were able to affect a better outcome for all.
More than Doubling
Just last week, I got the following monthly status report from another of my long-time clients:
His business has been more than doubling each year, growing organically and now profitable. The founder is a software developer who had built much of the early product. He went through what was a challenging process of bringing in a team to ultimately take over development. To accelerate growth, he started to focus on the company from the outside in, becoming comfortable to pull himself out of the business to travel, learn and meet, and even attended some of my earliest coaching programs a few years ago. He aligned his company with some of the biggest players in their industry - a market not particularly known for innovation. He hired and now leads a sales team and they often travel together. The rate of growth has accelerated.
One partner eventually became two. Then four. Now perhaps a dozen, each one bringing many new customers, magnifying the results he would have achieved had he done it alone. Conferences where he used to attend he now pays to have a booth - which usually ends up being the busiest booth at the show - giving him the opportunity to meet customers, prospects, partners, investors, and competitors. He sees his business through the eyes of so many others.
This company, too, has been made offers to be acquired several times by prospective partners met while traveling. They have also had offers for outside investment. Given the results the business has been achieving, and the nature of the industry, it’s too soon and too small to want to exit. But without a doubt, soon the millions in revenues will become many millions in an exit opportunity - all because he’s willing to spend time away from the office.
It’s Not Just for Startups
I spent some time working with an established telecommunications company. Though it had 8-digit revenues, growth had slowed, almost having reached a plateau, and it was looking for new and (perhaps) hidden opportunities. It didn’t take me long to figure out the problem - that they had forgot what it was like to be entrepreneurial.
After nice growth and financial success, it’s easy to get comfortable. Create dozens of jobs and millions of dollars and why not rest on your laurels? In this case, there was almost no travel, very little industry intelligence, not knowing the competition - and a culture of apathy and disintegrating leadership (both within the company and within their industry).
It often doesn’t take much to spark the entrepreneurial spirit. We moved the company to co-locate all departments. I created and ran business plan competitions (a great way to see your business or market from the outside in). We traveled to conferences to learn what was happening in the industry. We were definitely behind, but in very little time, we started to better see where we needed to be. The team evolved, especially as we brought in new talent with great enthusiasm. We developed a new platform and changed the operations. We found a competitor to acquire. At a conference, we formed a partnership to take the company into an adjacent market.
Over the course of three years, we more than doubled revenues and nearly quadrupled profits. All by looking at the business from the outside in.
It Doesn’t Take Much
From these three stories, you can pretty much guess what sorts of pointers I’m about to offer. It’s not really difficult to see your business from the outside in. The really hard part may be to be able to “let go” of being on the inside. Your company will grow so much more quickly if you can start to invest time in some of the following:
- Networking. Attend a couple of networking events in your local community each month. Learn who’s who and discover something new. Vary the events and see different parts of your community, though become a “regular” at one or two. Show your face. Having your colleagues know you will keep you and your business in their minds and lead to helpful introductions and referrals. It’s the first place to look for employees, customers, partners, investors - or any other leads.
- Attend and Speak at Conferences. I can’t think of a better reason to leave the building. These events go beyond your community and target a whole market and geography. This is where you are most likely to meet a prospective customer, partner, investor, or employee. Go to at least one per quarter. Don’t be reluctant to travel far. Do your research to make sure it’s more than a boondoggle - contact the organizers or find past attendees or exhibitors to be sure it’s a good fit. When practical, get a booth if you’re prospecting for customers. When possible, try to get a speaking opportunity.
- Your Current Customers, Partners and Investors. Your employees maybe be your most valued asset, but you wouldn’t have any without customers, partners or investors. Meet these constituents regularly and on their turf. Don’t make them look at your business from the inside out, but visit them and ask a lot of questions, then listen intently. Consider doing it over a meal, making it more intimate, and likely more authentic. By being outside in in this case, we're taking existing relationships and physically reminding ourselves that we're not interacting as "insiders."
- Meet Your Competition. I find that many entrepreneurs of young businesses (and some established ones) are fearful of building a relationship with their competitors. Don’t be! You won’t need to give away your trade secrets, or even sign an NDA. Knowing who they are, and keeping in touch with them, is an ideal way to see your market and industry from the outside in. Ask them questions, but also be prepared to share some of your answers, too, since the insight needs to be mutual. Whether they are a potential acquisition, a source for your next employee, or a hidden partnership opportunity, competitors are fertile ground.
Remember, work from the outside in and fortunes will follow you back :-)
BTW, you'll likely be reading this while I'm in Orlando for a coaching conference. You bet I'll be coming back to Philly with a bunch of learning and a few new clients and partners.