Did you know that 90% of all businesses never exceed $1 million in sales? That is a huge number of companies and solopreneurs basically just plateauing in their business growth after capping a certain threshold value. If you’re an existing owner of a business or someone who is contemplating to acquire one and grow it, you may want to take some time for this one. Join in as Domenic Rinaldi talks to a return guest, Brett Trainor, an expert in helping companies that have plateaued break through that barrier and achieve substantial growth. Listen as they discuss Brett’s template for analyzing a company’s growth barriers, strategies for growth, and how to implement those strategies without making bad investments that won’t provide a return.
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How To Break Through The Business Growth Plateau With Brett Trainor – Ep. 094
Did you know that 90% of all businesses never exceed $1 million in sales? I was shocked to hear this statistic from my returning guest, Brett Trainor. He is an expert in helping companies that have plateaued break through that barrier and achieve substantial growth. He’s done this countless times for himself having helped two companies. One he grew from $200,000 in revenue to over $14 million in 2.5 years. The other he helped grow from $6.5 million to over $11 million in four years. He now focuses on helping entrepreneurs break through their revenue plateau to achieve real growth and market dominance.
We discuss his template for analyzing a company’s growth barriers, strategies for growth, and how to implement those strategies without making bad investments that won’t provide a return. Whether you are an existing owner of a business or you are contemplating your business acquisition and want to grow it, you wouldn’t want to miss Brett’s advice. In addition, he has a free Growth Readiness Assessment that you can obtain on his website. Before we get into this episode, we have created best practices and checklists for how to conduct diligence. This is a free resource available on either of our websites, SunAcquisitions.com or K2Adviser.com. Take a minute to download this invaluable resource. It’s a great starting point for you and your advisors when contemplating an acquisition. Thank you for being here. I hope you enjoy this episode.
Brett, welcome back to the show.
Domenic, it’s great to be back.
It’s nice to see you again. The first episode that you did with us was fabulous. I’m excited to talk to you about this topic of growth and how companies can grow. I know you’re an expert at it, having helped two companies specifically that had dramatic growth. You took one from $200,000 in revenues to over $14.5 million, and another one from $6.5 million to $14.5 million, which is awesome. That’s tremendous growth. You’ve seen it, you’ve lived it, and you know what the templates are. We’re going to walk through the methodology that you use. What a lot of people don’t understand is that less than 10% of all businesses get over $1 million in revenue. There’s a plateau that many businesses hit. Whether you own a business and you’re looking to scale it or you’ve bought a business and you want to grow it, this episode is going to help you think about how you should attack growth when you’re looking to grow your existing business or you’ve acquired a new one. Brett, I’m excited to dive into this topic with you.
I’m super thrilled to be back. I’m a huge fan of your show. Anytime we can get on and talk about growth in business, I’m excited. You mentioned that stat and that was one of the things that drove me when I moved back from management consulting into the startup space a few years ago, that 10% reach $1 million in revenue and less than 1% get to $10 million in revenue. You throw out maybe all the solo businesses or side hustles, but it’s still a large number that don’t get there. You’ve been around this long enough to know that it’s probably not an idea issue, it’s probably more of an execution issue.The three revenue levers are acquisition, retention and expansion. Click To Tweet
I set off on that path of how do we solve the problem for the folks that do have a good business, a proof of concept beyond that? They’ve got some customers, it sells, the customers like the product, but they haven’t been able to get past it. When I originally dug into the million dollar mark, it seems arbitrary. What is it about a million? Through the podcast and interviewing a bunch of founders, what I found was almost to a person or to a company, that threshold was their network.
They started a business. They have cofounders or co-owners. They’re successful in selling into their network, people who know them and know what problem they have. Once they tried to get a break beyond that into either new markets or folks that don’t know them, it’s where they plateau. Unfortunately, if they don’t figure it out, they end up burning out, running out of money, and never getting to that next level, or on the flip side, it took them 12 to 18 months to try to figure out how to grow. For the last couple of years, I’ve been completely focused on how do we help those companies that want to get there solve this problem.
I’m excited to dive into your methodology. Before we do that, why are you so convinced that this methodology will work for any company once applied to it?
Part of it is experienced. I’ve learned over the years. I have 30-plus years of doing this. The B2B space has changed. We used to use brute force, cold calling. I ran a team of 120 outbound cold callers that did nothing. That was years ago. The digital world has changed. What I found is coming from sales and moving into more of the marketing and demand gen, how to reach people has fundamentally changed. The pandemic stopped that transition. There is a new way that we’re doing this. A quick step back, it’s part of that and we’ll probably get into it, a lot of business owners don’t realize or they don’t pay attention or don’t have a strategy for what I’ve called Three Different Revenue Levers.
You’re now stepping into the methodology. This is the high level of your methodology. There are three levers that you can look at when it comes to growth.
It sounds super simple, AR and E, Acquisition, Retention and Expansion. What I found historically is most companies will have a strategy for one, probably not two and definitely not three. When you think about it, acquisition is new business, new logos, and people who haven’t done business with you. Expansion is, how do you get more money and how do you expand that relationship from your current customers? Retention is, how do we keep them? One of the age old problems is the boat. You’re going after a new business and you’re working twice as hard, but yet you’re churning customers at 50%. Not only do you have to backfill the customers you’re losing, you also have to sell more above that. I found the acronym simple, but it’s much harder to execute. When you break it in, it’s easier than to focus on strategies and tactics around each of those areas.
Acquisition, retention, and expansion, that’s great. When you first meet a client, what’s your discovery look like? How do you approach a client to find out where the plateau is? Why is it there? What needs to be done? What’s your process when you first meet a client?
The first one is, what is your goal? This is focused on people that are trying to grow. You don’t have to. If you can build a nice business with revenues, and you just want to maintain what you have, it’s perfect. If their objective is to grow the business, the first thing I want to do is break down those revenue numbers, and can you break down those revenue numbers? You’d be surprised that maybe you wouldn’t be with the number of folks that don’t understand where those revenues are coming from by channels, if you will call them channels. It’s hard to figure out where your biggest opportunity is until you can break down those numbers. Historically speaking, 90% of that acquisition portion is less than probably 5%, less than 3% of where their revenues are coming from. That tells me that there’s a pretty good opportunity from a growth side if they’re stuck with the acquisition.
When you’re first meeting somebody, you’re assessing all three of these components and trying to break down their revenue. I would imagine that’s a problem. I haven’t looked at the financials for probably tens of thousands of companies myself. I know that a lot of those financials don’t tell the story. How do you dig into that and figure it out because I find the reporting to be a real challenge? A lot of owners don’t know exactly the percentages of where their business is coming from.
A lot of the time, it’s going to be manual work. They’re not set up in the systems that way. To your point, the reporting is not as sophisticated, especially if you’re a startup or more of a mature business. They didn’t set it up that way. It’s fundamentally going in and pulling the customer list and working backward. How long have we been doing business with this customer? Doing at least a high-level segmentation to get an understanding of where they are.
Most of the time, the owner is not as accurate as they think they are from where the revenues are coming from. That’s usually the first. You can pull it again. If it’s 10,000 customers, it’s going to take you a little bit longer. With easy math, you can figure out what the retention numbers are. As long as you’re pulling those numbers, the other thing that I like to look at is the lifetime value of the customer, so you’re not repeating work. If you’re starting to say, “What’s my acquisition strategy?” Without going too far, at least you have an understanding of how much the value of those customers are. I believe in doing work for the sake of work, but starting with that customer segmentation is priority number one.
Once you’re past the discovery phase with a client, and you figure out what they have, what they’ve been doing, what the historical performance has been, how do you then take the next step of analyzing where the true opportunities are and the cost of each of those opportunities? There may be an opportunity, but the cost may outweigh what the opportunity is. What’s that next step look like?
There are two pieces to that. One is let’s validate the market. If you own 80% of the market and there’s nowhere to go, you’re going to spend a lot of money on incremental growth if you get that. Assuming for our sake that there is market opportunity and there are no competitors that you can take that space, that’s one look at it from an acquisition. Usually, the first thing I like to do is let’s make sure that we’ve got a plan and a process around protecting what you have now. What is your post-sale model if it’s an account management? The only time your folks are talking to customers is when their contracts are up or renewal. Let’s talk about how we put at least some baseline tactics around to protect the revenue base that we have.
Two, it’s around creating consistency and alignment around your messaging, which may not seem intuitive. When you’re looking for new business, I can refer to one of those clients that it’s pure cold calling and it doesn’t work. The way you’re looking at new clients now is you’re going to have to reach them digitally more times than not. Not only digitally, you also can’t sell them the first time you contact them. It’s about, “I understand the problem you have. Here’s some value. Here are the problems that we’re seeing. Here’s how to solve it.”
The analogy I’ll use with that is the hockey analogy. If the hockey players are always chasing the puck, they never get there. They’re always trying to catch up. You’re trying to get to where the puck is going to be. That’s what you want to do with your customers. You want potential customers. You want to be there when they’re ready to buy. You can’t go from “I don’t know you” to “Buy my $10,000 or $20,000 product” within a two minute piece of that.
I want to go back to something you said, which was to analyze the market. When you’re doing that with a client, are you analyzing all three of the growth aspects, the acquisition, the retention, and the expansion? Are you looking at all three of those? How do you approach analyzing the market?
The first thing, and you’ll see a theme coming from me is this customer. Let’s get in, talk to some customers, and find out why they’re buying from you, why they’re doing it. I also find a lot of value in interviewing or talking to prospects that didn’t buy from you or why they left. It starts to paint the picture of why they may have bought from you years ago, why you started the business. It may not be as relevant now or they’re doing it for a different reason. There’s value to better serve the customers that you have now and understand where their pain points are, why they’re still with you, but also taking that information as you start to build a strategy for acquisition. It’s going to be around those pain points.
One thing is I like to break it into simple. If you’re a business, I want to understand what problem you’re solving for the customer, how you solve it, how you solve it differently than your competition or do nothing, and do you have those proof points around that? It sounds super simple but being able to pull that from customers’ feedback and start to build your strategy is so much more efficient, so much more valuable than, “This is why I think our customers are buying.” We all fall into it.
I’m even guilty of it myself where I guess what the clients want. Sometimes we’re falling into the trap of, “I do this every day and I know better.” What problem are you solving? Not what problem do you think you’re solving but what problem does a customer want you to solve? You can only do that by talking to clients, prospective clients, or clients that you’ve lost. I wonder if there’s any information out there about how many people conduct that kind of research on a regular basis? I imagine not many.If customers can't find you, they're not going to do business with you. Click To Tweet
It’s small because I do some work with a couple of market research firms. It’s rare that they get into that. Maybe they’d sent customers an NPS survey out, a Net Promoter Score, or they do some interviews, but rarely is it a formal program or project to get this information?
Is there a way for companies to do that inexpensively where they can go out and talk to clients, prospective clients or ones that they’d be lost without it being a $10,000, $20,000, $30,000 project?
The key is setting up the program to where the questions that you want to have answered. What I found is clients and prospects are usually more than happy to chat with you, especially when it’s not a biased discussion. What I mean by that is you don’t want your head of marketing to be the one to interview the clients and the win-loss folks. You can use a third party or a part-time contractor if you want.
Would they be looking for a market researcher? Is that the resource that people are looking for?
I’ve always found that somebody outside the company is asking those questions is better than somebody inside the company. Clients are more transparent when they’re talking to a third party.
You’d be surprised because I discovered this years ago. We partnered with somebody to come in. This was at the time probably with an $8 million business. We thought we had a pretty good idea of why they were buying, why they weren’t buying. We were surprised, and the other unintended benefit for us was their experience as they went through the process. We weren’t a big business but the number one takeaway for us was I felt like I was dealing with four different companies because we were operating off of handshakes as prospects went through their buying journey. Every time, they handed it off. We weren’t big enough to provide that type of experience. I know it’s a little off topic, but if you’re going to have somebody ask the questions, ask about the experience as well. You’d be surprised at how inefficient you may be or how frustrated your customers may be going through that buying process.
This is a good point, especially for people who have just acquired a new business. They come in guns blazing and they have all these great ideas, but it’s taking a step back and doing a little market research. Unless they’ve done it during the diligence phase, which is possible, this makes a lot of sense for people to do before they blast off and start spending money on things that may not prove to have a good enough return.
You’re 100% right. You’re going to get your return back on that investment with the market and customer research every single time. I’ve yet to see a company that did not that did it right. It’s not rocket science, but it’s having a process around it. The learnings there are invaluable.
You’ve also mentioned something in that string of thoughts around the Net Promoter Score, which a lot of people are not familiar with but it’s a simple way to measure what your clients think about you. I can’t remember the question off the top of my head. It’s something like, “How likely are you to refer us?”
On a scale of 1 to 10, how likely are you to recommend us or recommend me to folks?
You tabulate and collect those. Anything over 70% or 80% is a great score. Anything under that, you might have issues in your client base. It’s one question and it is a simple way to gather feedback from your clients.
Use it as a leading indicator because you may not see the churn rate increasing, but also if your Net Promoter Score dips a little bit, that’s usually a good indicator that you’re going to see some revenue start to fall off.
Brett, we’ve done the discovery. We know what the mix of acquisition, retention, expansion and opportunities are. You’ve done some market analysis. I was lucky enough to have someone who mentored me early in my career around not writing big checks until you have some proof of concept. Do you follow suit with that? What’s the proper way, now that you’ve got this information? Before you start spending lots of money, what’s the next step to test whether or not you’re going to get the returns?
I 100% subscribe to that school of thought. Test to see where the ROI is going to come from. One step slightly before that is to make sure that your messaging is aligned with the target market that you’re going after. If we use the problem that you’re solving, and if the problem that you’re solving is you’re selling to attorneys, and it’s the same problem you’re solving for landscapers and plumbers, you can have the same messaging going into each of those. It sounds simple and you are solving something, but if you don’t speak the language of those prospects, especially if you’re acquiring a business and this is a new industry you’re selling into, understand that language because there is no quicker way to disconnect a prospect than not be able to understand or speak the industry jargon.
Understand that problem in that industry. The first step is your content and content marketing. Years ago, I would have said this step would have been nice to have, but now it’s a need to have. It’s not about your sales sheet, features and benefits, but value that you can provide to your target customers. I tell founders who just started a company who are selling themselves, “You’ve got to have a couple of these pieces of information of education and also the awareness piece of it.” You’re trying to create awareness, back to that point of, “Be there when they’re ready.” You have to be able to provide some value to every contact, whether it’s digitally, in-person, face-to-face. If you’re not, you’re going to run the risk of not being able to do business with that person.
One area that I probably should have mentioned, that I’m surprised I didn’t see this stat a while ago, but less than 3% of your target market and prospect base is in active buying mode. If you’re thinking, “I’ll cold call, reach out and connect with folks,” that’s finding a needle in a haystack to find that right person that’s right to buy. You may get lucky and there are a lot of bigger companies that can deploy 50 people making cold calls and find that 3%. For most of us, it’s reaching and connecting with those prospects to say, “I’m here when you need it. If you have any questions, give us a call.” It’s a longer game but with SEO, and we won’t go down the whole digital marketing channel, but it’s the cost of doing business these days. If customers can’t find you, they’re not going to do business with you.
It’s about nurturing. Thankfully, there are a lot of software programs, CRM systems, and things like that enable you to nurture your prospects and your clients. You just have to deliver good meaningful content, so your top of mind when that 3% is ready to do something. Let’s go back to testing. What’s your methodology for testing out? When you work with clients, is there a formula for testing so you’re not spending tens of thousands of dollars and not know that you’re going to get the return?
I hate to say that it depends. Part of it is what industry you’re in and how you’re going to reach those customers. You definitely want to set aside a budget. It’s two pieces. We’ve got the content piece and you got the organic that’s going to create the brand and the awareness. You’re going to have to spend on that regardless. Let’s assume we’ve done that, the bigger question is, how do we start to connect with these other folks? Digitally, you’ve got Facebook Ads and Google Search. Those are transaction based platforms for tools. I know that we’re getting a little specific, but that’s when a buyer has a specific problem. They search, “How do I do X, Y and Z?” You pay for that and you get those leads.
Where it becomes more important is connecting with LinkedIn if you’re in the B2B space. LinkedIn has becoming a powerful tool for connecting with your prospects. You can’t treat it as a transaction, but I got connected with 100 of my ideal prospects. Here’s the white paper on our research into the industry. I’m making it up. All of a sudden, you created awareness and now they can start to drip. You start to look at channels of where that acquisition is going to come from. Two that are underappreciated. I know you’re behind one, is acquisition. Two is partnerships.
Growing up in this space, I used to say, “It’s expensive. Channel partners aren’t going to sell the way we’re supposed to.” If you’re looking for a quick hit of growth, and there’s a complementary company or service in the market that has customers that you will know if they’re having this problem, it may make sense. It comes back to understanding the cost of acquisition and those types of things. The sooner you can develop a baseline of cost of acquisition, it’s going to vary. It may not be as concrete for you as you’d like but that goes back to the tasks. We’ve got to see where we’re getting responses from and double down in those areas that are paying off.
Any do’s and don’ts when you’re implementing growth strategies? Are there any pitfalls that people can avoid when they’re doing this? I’m sensitive to people spending money, lots of it, and not having some litmus test or ROI model to know that you should keep the checkbook open.
There are two big pieces of it. One that I see almost every company make is they’re going to spend on the acquisition piece. We’re going to go reach new targets. We’ve got people coming through the funnel. They spent zero time thinking of how they’re going to manage those leads that come in through the process. If you’re spending money with LinkedIn or whatever it is, I’ve got 50 leads coming in and I’ve got one person that works part-time that’s responsible for the lead qualification, you’re going to lose 80% of those folks because you didn’t respond timely.
It’s about having that lead qualification process as it comes in. Along those same areas are test and measure. We can talk about it and say, “How did we do on this campaign at a campaign level?” There’s a cost to everything you do, but measure it, so you know exactly what you were spending and what you weren’t spending. It ties back to our early point on what’s the lifetime value of those customers so you can start to see, “If it costs me $52 to get a new customer, but I’m only getting 2,000 lifetime value, I better make sure I’m keeping those customers.” The number one piece of advice I’d give to anybody is to have a process for the folks that want to do business with you. Make that process as seamless as possible.
That’s a great point, mapping that out, having all the systems in place, people’s roles, what you’re going to do, and be timely about it. You spend all that money to generate a lead. The last thing you want to do is have it go unattended.
You spent the time and the money. If you’re talking to 3%, and one of the 3% raised their hand, make sure you take advantage of it.
Brett, I know that you have created a growth readiness assessment. Can you talk a little bit about that? How long does it take and what does it measure at the end of the day?
It’s 22 questions. Depending on your area, it may go from 20 to 25. It’s where you are in your growth journey and how committed you are to that journey. I’ve got folks that have one customer, and they want to go to $10 million. There are some steps that you need to take before you get to that place. It’s around the infrastructure, their goals, do you have the right metrics in place. One of the things that I’m not a fan of are hacks to growth. Those don’t work. You may get some short term lift but how do we find out.
The readiness is around how ready you are from an organizational, founder, and owner standpoint to make the commitment to growing your business. It’s going to score on where you’re ready, where you’re not. It’s going to come back with some recommendations, “Here are a couple of 2 or 3 things to focus on first.” What it’s trying to do is provide value if anybody’s thinking about going down that road, “Here are the things we’ve learned in the past. Here are your quick hits, quick wins. Focus on these things.” It’ll give you the infrastructure or at least a plan to be able to scale your business.
It sounds like a great and tremendous tool. We’ve done the same thing for people who are looking to buy a business or people who want to exit, whether it’s now or twenty years from now. We’ve created these assessment tools so that people can understand in less than ten minutes how ready they are to buy or sell a business. It’s invaluable and that knowledge is power and why not take a few minutes to do that.
One of the things is in my older days, I can’t give away all the good stuff. What I found is I shared upfront like, “Here are all the things that we’d focus on. If you want to go do this yourself, here’s your plan to go do it.” I’m not a do it yourselfer. I like to bring in people to help and play to my strengths. That’s been helpful. The assessment checklist is the same thing. The more information you have, the better. If you want to do it, good luck to you.
The thing that strikes me in this discussion is that 90% of all small businesses never get above $1 million. I know we’re lumping into those solopreneurs, side hustles, and all that stuff, but still an enormous number of businesses never get above $1 million. It seems to me that they plateau and they don’t know why they plateau. You can shed some light on that for sure.
The number one reason is they get bad advice. A lot of times, depending on who started the company, if you were more of a technical expert like an engineer, you maybe don’t have the sales and marketing. The number one thing I heard from folks is, “When we’re ready to scale, I’m going to go hire some salespeople.” Maybe, maybe not, but hopefully, coming out of our conversation here, there are other things that you need to think about than having the salesperson help facilitate through that process. If you’re going after that 3%, I had good customers and successful people to help your customers get the most out of your product, and then tight on your strategy, go after that 3% of the market.
Brett, those are great information. If folks wanted to get in touch with you, how can they reach you?
It’s super easy. LinkedIn is one channel. My website is BrettTrainor.com. Please drop me a note. I’m happy to chat with anybody when they reach out. I’ll answer any questions and talk about your growth and your growth strategies.
I know you’re doing some great stuff. We didn’t even get into it, maybe on another segment. I know you’re even looking at doing some investments in certain businesses. Maybe we’ll have you back and talk about that in another segment. As always, it’s a pleasure to visit with you. I know you’re doing some awesome stuff. Thanks for being here.
Thanks, Domenic. It’s always my pleasure. I look forward to it. I’m a huge fan of your show. Anytime I can come out and be a part of it, it’s a pleasure for me.
Thank you so much. Have a great day.
I hope you enjoyed this episode. If you enjoy our content, please remember to subscribe and review our podcast. I look forward to seeing you again on the next episode. Until then please remember that scaling, acquiring or selling a business takes time, preparation and the proper knowledge.
- Brett Trainor
- First episode – Getting Past The Micro-Business Stage Through Implementation And Execution with Brett Trainor
- Growth Readiness Assessment
- LinkedIn – Brett Trainor
About Brett Trainor
WHO I AM: My name is Brett Trainor, and I’m a B2B startup mentor and investor who draws upon more than 25 years of experience in sales, marketing, demand generation, and customer service to help my clients. I’ve started up my own companies and have also led several startups during those years.
WHAT I DO: I work with B2B Startup Founders to help fast-track their growth and achieve $10 Million in revenue. Only 1% of all startups reach $10 million in revenue. My goal is to double the number of companies that reach the “5% Club”.
If you’re attached to your smartphone (and who isn’t!), be sure to check out my podcast, B2B Founder Podcast 🎧 In it, I speak with industry experts and leading voices to share scalable and sustainable growth tactics and strategies. I’m also an Angel and Private Equity investor.
Specialties: Startup Growth / Growth Founders / Business Coaching / Business Mentor / Business Strategy / Growth Strategy / Startup Mentor
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