Did you know that over 95% of businesses in the US fail to reach one million in annual sales? According to today’s guest, it’s not for lack of great ideas but rather, implementation and execution. Domenic Rinaldi sits down with Brett Trainor, 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 his clients. Extending his wisdom to us, he shares how business owners can get past the micro-business stage and start to grow. He talks about being customer-centric, networking, marketing, and exiting, taking you through the whole process and providing great tips and tricks to get the best out of them. Plus, Brett also shares his 11-point checklist to guide you on how to scale your business and reach that one-million threshold.
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Brett Trainor: Getting Past The Micro-Business Stage Through Implementation And Execution
Did you know that over 95% of businesses in the US fail to reach $1 million in annual sales? According to our guest, it’s not for lack of a great idea, but rather in the implementation and execution. Brett Trainor is a B2B expert who specializes in helping owners understand if they have the mindset for growth and develop a plan to scale their business. He’s also the host of the popular B2B Founder podcast. He shares some great insights and nothing more valuable than how to be customer-centric. You wouldn’t want to miss Brett’s thoughts on how to think about your prospects and clients. What business owner doesn’t want to grow their business? I know you’ll enjoy listening to Brett’s perspective.
Before we get into this episode, if you want to avoid common deal pitfalls and the risk of losing substantial dollars, you need to know how ready you are for a transaction because I believe proper preparation is critical to your deal success. I have developed a five-minute assessment that will allow you to immediately gauge how ready you are to buy or sell a business. You can access these free assessments and other free resources on our website at K2Adviser.com/resources. Being prepared is critical to ensuring that you maximize returns and minimize risks. Thank you for being here and hope you enjoy this episode. Brett, welcome to the show. I’m glad to have you here.
Domenic, it is my pleasure. I am a big fan of the show. I’m super excited to be on it.
Thank you. I’m a big fan of your show as well. I’m excited to dive into how businesses can grow and some of the things that you’ve built and developed. Let’s start off with a bio on yourself if you could give everybody your background.
I can give it to you in the short order, but I hate to admit that I’ve been many years in the workforce and almost all of it has been in that the B2B space, the business to business space. For the most part, I’ve bounced back between enterprise, large enterprise and the startup world. I guess I got burned out with one. I went back to startup and ping-ponged. I think my background’s a little bit unique from an enterprise perspective that I either was an operator or led almost every function within the go-to-market space like sales, marketing, customer success or what they used to call account management. Demand generation is a relatively new term, but I had the opportunity to run those.
It gave me a perspective of what works within each of those functions, but also probably more importantly, what doesn’t work specifically between the two. When different functions don’t work together, it creates a lot of problems. Years ago, I moved into management consulting because I wanted to apply what I’ve learned right over the course of my career and help. At that point, enterprise and mid-market companies. I spent about two years working with firms on digital transformation, but it was just helping them modernize and improve their go-to-market functions.
After a few years of screaming at the mountain tops, “You need to change. Change is coming. Your customers and expectations are changing. You have to get with it,” I moved back into the startup space. Mostly, I’ve been focused on coaching and mentoring B2B startup founders and helping them build a modern and go-to-market organization rather than try to fix or pivot to know how do you build the right infrastructure to build a scalable company? I’ve jumped into the world of venture capital and we’re all investing in early-stage B2B startups. I am putting my money where my mouth is. If I’m going to help these companies, why not put some money in there to help me? It’s been quite a journey and I’m super excited. It is better late than never in finding your passion and career path. That’s what led me here.At the end of the day, you still have to have somebody who has the ability to ask for the money in the sale. Click To Tweet
You bring a wealth of knowledge from all the different functional areas, which is tremendous. I’m excited to unpack all of this with you because whether you’re a business that does $500,000, $1 million or $3 million on your standing, the elements and the foundations of how you grow your business is important. One last thing before we dive in is you’re also a podcaster. You launched your own podcast about a few years ago, correct?
Yes. We have been consistent with one episode a week and it’s been quite the journey. If anybody is interested in checking out, it’s the B2B Founder podcast. It’s about helping B2B founders and small business owners with growth. If you’re looking for supply chain and manufacturing, some of those other areas, this is probably isn’t the show for you, but if you’re interested in how to learn to grow and scalable growth, that’s what we focus on.
I had the opportunity to listen to a couple of your episodes. You have some great guests. You cover some awesome stuff. It’s a great launching pad to what we’re going to talk about because in my world, people come to us and they want to sell their businesses. I’m sure this is not going to shock you or anybody in the audience, but invariably, people come to us and they want a market opinion of value around their business. More often than not, they’re shocked at what the value is. Not because it’s on the high-end of what they thought, but because it’s not meeting their expectations.
Time and time again, I talk about the need to prepare ahead of time and get a market opinion as early as you possibly can and then get it updated every couple of years. In addition to that, you have to understand what it takes to grow your business. I think this is where you come in. I read an interesting statistic on your website. Over 95% of businesses fail to get to a $1 million. It’s shocking to me. I didn’t know that statistic. I knew it was high, but I didn’t know it was 95%. Can you talk a little bit about that and what’s behind that and why people never get past the micro-business stage?
That’s a stat that surprised me. It became my mantra that I don’t believe it’s an idea problem. I believe it’s more of an execution issue. The next step of that stat is less than 1% gets to $10 million. That number was always interesting to me. I try to figure out if is it just arbitrary? What is it about the $1 million and $10 million that set that threshold? What I found out by interviewing founders that scaled their businesses beyond those measures, it wasn’t a set number, per se. What I found to a person was they got stuck in their business when they weren’t expanding beyond their network. If you’ve been in business for a long time and you know a lot of people, you can sell a lot of products to those people assuming that they have the need.
Once that network ran out, then they either were able to expand to reach people that didn’t know them or they didn’t. I think that’s what happens with a lot of those businesses. They can’t get beyond that threshold. They burn out and go away. That’s where I’ve turned a lot of my focus is, how do we get beyond the people that you know? Frankly, if you can’t sell it to the people that you know or know you, then your long-term prospects probably aren’t good. Let’s assume that everybody can sell within their own network.
Does that happen because owners are the chief salesperson in their businesses and they don’t bring on salespeople? They don’t know how to build a marketing function. Is that what happens there?
It’s a combination. The owners, founders and the chief sales officer do well. In the early days, you should be out leading those charges. I’m sure when you started your business, you were the lead salesperson and got to know what’s resonating and what’s not resonating. Why are people buying? When you try to scale that business, I like to refer to the old days of sales where customers and prospects relied on the salesperson for their information, their product features and their pricing. Those days are gone. You’ve got to have that information digitally on your website, and your social media. You need to be able to tell your company’s story digitally before anybody even talks to you. You could hire some good salespeople that will win deals and help you grow your business.
The way I like to look at that, it’s hand-to-hand combat, they can probably hit their quota. Is that going to help you scale the business? You have to bring 200 salespeople to get to the numbers that you want to get to. When I talked about the modern version, you have to be digital in where your customers are looking for you. If they’re looking to solve a problem, the first thing, they’re going to do is go to Google. If you don’t appear on those searches, it’s going to be hard to get that traction. There’s still a role for this salesperson and how do we close it. It’s changed a little bit, but if you don’t have the digital capabilities, it’s going to be hard to scale your business.
I have to say in my several decades of analyzing thousands and thousands of businesses and helping owners sell their businesses, I’m always shocked at the lack of sales and marketing prowess in many companies. You do come across companies where the owner was an old sales guy and he knew how to do it and knew how to build it, but a lot of people start their businesses because they had a great idea or they took it over from an older generation. They don’t have some of those fundamental skills in sales and marketing. They fumble along and they have an okay business, but it never broke through the ceiling. Whether it’s the $1 million or the $5 million ceilings, they could never figure out that sales and marketing piece of the business.
I talk a lot about how buyer expectations have changed. I look at early in my career, so this is before the internet bubble for a software company. I ran an outbound lead gen team and I had college-age plus students on the phones making outbound calls all day long. I have 140 people doing nothing but making out. That’s how we made our number. If you do that now, do you know how many voicemails you’re going to get and the lack of people you’re going to get? The buyers have changed the way they want to buy from you. The whole businesses have to shift. I’d say probably in the last years, that’s changed. With the pandemic where I used to say, “Buyer preferences are changing. You’re not going to be able to get away with some of these things. It’s fundamentally changed. It’s not coming back.”
That horse has left the barn. Let’s make a breakdown example. A business that maybe comes to you and is doing somewhere between $500,000 and $1 million in annual revenues and they’ve been stuck there for many years, how do you approach that client? What are you doing with them to help them understand why they’re there and then break through it? Do you follow a common framework for that discussion?
No two businesses are the same but fundamentally, they are. It’s super simple. I know some of my more sophisticated marketing friends get on me, but at the end of the day, your business or your product, what problem is it solving for the customer? How does it solve it? Most importantly, how is it solving it differently than the competition? Do you have proof points? Can you prove that it works like that? It still amazes me the number of companies that are leading to features and benefits or the latest in technology. Frankly, customers don’t care. One of the first things I do is a workshop. Now, it’s a digital type of meeting and let’s understand who your customers are. What pain points are you solving for those customers? We can start to build out from there.It doesn't matter what you want to deliver. It matters how people are going to consume it and interact with you. Click To Tweet
I’m a real big believer in starting with the customer first, understand the problem you’re solving, and if you’ve only got to $500,000 in revenue, isn’t the market any bigger than that? Is the problem you’re solving any bigger you’ve tapped out? Ninety percent of the cases, the market is much larger than that. They’re not reaching those customers so that’s usually step one. Step two, let’s take a look at your competition. You shouldn’t necessarily be copying what they do, but you do need to understand what is their positioning in the marketplace? How are they going to market? The last thing that you want is to be saying the exact same thing as your competition. One of the things, and you probably hear this too is, “We do it better.” It’s hard to prove. You’ve got to be exponentially better or our technology is better, which used to be a differentiator. Now, if you have good technology and it works, months later, somebody else is going to have that technology.
My biggest pet peeve is pricing. We’re cheaper and it’s a race to the bottom as well. It’s digging in and understanding what your differentiation is. Surprisingly, the fear from a lot of business owners is, what if we’re not different? What if there is no differentiation? If you’ve grown your business that far, you’re doing something right and there’s something different. It’s drilling into it, whether it’s an experience, people, whatever the value add that you’re adding through the process. To me, those are the two fundamental things. If you can’t answer those questions, then it’s going to be hard to scale your business without having clarity around those.
If you get to the point where somebody has got a differentiating product, they understand who their client is, there’s enough of a market, where are you going from there with the client to then help them execute and move the needle?
It used to be a ten-point checklist that I had. It’s now eleven because I’ve added content marketing. That used to be a need that’s nice to have. You’ve got some content to show that it’s almost a cost of doing business these days. More mature industries, you’ve been around and you’ve got some name recognition. It’s still coming that way because they go back to the new buyers who may not be aware of you. They’re going to search and whoever wants the content battle is going to be the one that’s going to show up first. You still have to prove yourself and validate that you can deliver what you say, but if you don’t even show up, you’re not even part of the conversation. As much as I’d love to give you a get rich quick or a silver bullet, it’s building good content.
What I stress with companies is it can’t be about you with the content. You’re solving a customer for the problem. You’re helping customers understand how this works or how they can solve those problems. You happen to have that offering so it ties into it. It is like what we do with the podcast. If I came on my podcast and always talked about my methodologies and everything that I do, there’s not a lot of value to that. I’m trying to give people different perspectives and that’s what you want to do with your content. You’re helping customers solve the problem and you want to become that trusted leader in solving it. It’s not going to happen overnight, but assuming that becomes the foundation and then there are some different strategies and tactics you can do without reach to get into unknown customers.
This eleven-point checklist that you talk about, is this available on your site or how can people get access to that?
I’ve got a resource page in BrettTrainor.com. Go to the Resources tab and you can download it from there. It was one of those things down in where I’ve had in many years of putting things together, but never formalized anything. I had enough people asking, “Here’s what I’m looking at or what I’m advising you is go through these checklists.” It’s got some financial metrics on there. If you don’t understand your unit costs, your lifetime value, and things that make the owner’s head spin sometimes. There are certain core financial metrics you need to understand because if you scale the business and you’re not profitable on each unit, there’s not a lot of value. It’s a quicker race to the bottom.
Other than the content, is there one other on that list that you put at a high level from an execution perspective that people should pay attention to?
It’s a newer one. If people are starting to engage with your content, what is your process once somebody reaches out? Everybody is super excited. They can promise you 10,000 leads, view your content, your paid search or your outbound efforts are generating people coming to your site and reaching out to you. Have a process to manage those leads. It seems so simple, but I would say 80% don’t have it. Somebody spends a lot of money to go get paid acquisition, but they’ve got one person that works part-time that’s processing through all the leads. You’ve got one chance, a lot of time, with these new prospects coming to you. Make sure it doesn’t have to be super sophisticated, but have a plan and then be able to scale that as the volume comes in.
That’s such a good point because I talk to owners all the time when we do a market opinion of value. It’s more than the numbers when we break it down. We’re looking at the whole company and how they operate. One of the many questions that we’re going to ask is, are your systems and processes documented? Do you have systems, processes, and where are they? Are they in your head? Are they in the employees’ heads? Let’s get this documented. One way to improve value is to document all of that stuff. The other thing that it does is it makes you think about the process. As you write it down, you’re you start to think, “Does this make sense?” We’d been through that in our own company because we have a clear process on how we handle any prospective client that calls in or emails us. It goes through a set process. It’s done every time and there’s comfort. We all know exactly what’s going to happen every time somebody reaches out to us.
That’s such a good point. I’m such a big believer in the process too. That’s why I think that scalable growth is nuanced. You can’t do one thing. You can’t hire more salespeople, market, or do the content. It is about the process. It is about technology that makes the process more efficient. It’s having the right people in those roles. Another thing that I’ve been trying to get people to think differently about is, when they mentioned internally, “What’s our sales process?” I try to get them to think differently about it and say, “What is the buyer enablement process?” Too often, we look internal out and said, “I’ve got a lead management process, a sales process, onboarding, and customer success, but they’re doing it to fit into their own silos.” They’re all processes when you flip it and say, “How does this buyer want to buy? How do we move them through the process as quickly as possible?”In most cases, the owner is their own worst enemy. Click To Tweet
It’s not a huge difference, but there are fundamental differences in the way you do it. You think about the potential. You probably get this to founders and business owners, “I need a sales guy. I need a marketing guy.” If you look at how buyers are buying, you may rethink about that differently when you look at how your process aligns up with what their buying process. You may need more of a facilitator and help them get through it. At end of the day, you still have to have somebody who has the ability to say, “Ask for the money in the sale.” That’s hard for some people to do. That skillset is still there, but I encourage people to don’t think of it in silos between SDRs, sales and marketing success. Think about it as one. What does that process look like? What are the people you need to help with that process?
The other point that you were making there too is thinking from the outside in. What does our client want? What’s going to be the easiest for them versus what do you want to deliver? It doesn’t matter what you want to deliver. It matters how people are going to consume it and interact with you. Brett, I want to wind back to the table. We’re talking about growth and what the impediments are and some blocking and tackling. As in most cases, sometimes the owner is their own worst enemy. They get in the way. We are business owners. We get in our heads. There’s a psychological aspect to, “Am I even ready for growth? How do I know if I’m ready to be a $10 million business?” Forgetting about the market, whether or not it’s big enough and forgetting about the competition, how do you go in and assess whether or not that owner has the right mindset to grow their business?
Also the desire. I’ve worked with both if they said, “I do want to scale.” I’ve found even some of the business owners that have scaled beyond where they have to get themselves out of the day-to-day processes. If they’re involved in the day-to-day process, it’s almost impossible to scale your business. Even though they want to get out, it was hard for them to let go. It took time. Through my interviews, I’ve found that they wish they would’ve done it sooner, but sometimes it takes their baby. It’s hard to let go, but once they finally realized that they’re bringing in smart people and it may not be the exact way they do it, it’s going to grow and it’s going to grow.
Having run this business for a couple of decades, I was the rainmaker for many years. I had my hands in a lot of different aspects of the business. Years ago, I decided that I was going to start to turn over a lot of that. My business is completely different and it was no surprise.
It was probably hard. It takes a while and you’ve got to have the confidence.
You’ve got to have the right people. You’ve got to know that they’re trained. It doesn’t happen overnight. You don’t wake up one day and say, “I’m going to have a self-managing business.” You wait and there’s a lot of hard work to get there, but it matters.
To close out on your point, there are business owners and founders that like working and doing that part of the business. Even though they think they want to scale, they don’t want to scale. Sometimes it takes a little while to get to that point. Some get through it and some don’t. I don’t know if there are any quick tips that I could give you one, if they acknowledge that, they’re not sure they’re ready to do this. They probably aren’t. You probably went through a few stages, but that’s the other thing. It’s not going to be a quick hit. You got to look at processes. People are going to do things differently, but as long as you can continue to share the vision and the passion that allowed you to get it to that point, and then the people can buy into what you’re selling, those are the businesses that succeed. It’s where the owner has been able to transition into that leader versus the head doer.
Going back to the psychological piece. You’re going in and I imagine that’s your first stop. Is that owner-ready? Do you follow up on any formula? Do you have a checklist for this? Is there anything that you go through that tells you whether or not that owner is ready?
If you have a secret formula to figure this out, please share it with me. It’s more of experience and asking you the questions and gauging how engaged they are within moving away with what they’re going to have to. It’s painting a realistic picture as you did. It wasn’t easy. It was hard. I moved away, but I committed to be able to do this. They need to be able to look themselves in the mirror and say, “Am I ready to do this?” If the answer is no, no harm, no foul. We’ll move on, but here’s what you need to be able to do to step away from your business and get the right people and the right roles to help you grow it. You absolutely can still be involved and I’m sure in bigger deals, you’re still part of that process. I don’t want to paint the picture that, “If you’re stepping away, you’re out of it for good.” No, you can’t be the bottleneck or the decision point.
It takes a huge monkey off your shoulders. To have other people that you trust and you know that can do the job, frees you up to go pursue things that you love to do in the business and create new networks and new opportunities. All boats rise in that tide if you use your time wisely. One of the big challenges we have is, is an owner ready to sell their business? When we first meet with people, we’ll try to ask them a number of different ways. One of our classic questions is, what would you do if you sold the business? If somebody says to me, “I have no idea,” I worry that they might not be ready. I’ve stated before on the show, which is over 75% of owners that sell their businesses are remorseful that they sold the business. It had nothing to do with how much money they received for the business. It had everything to do with whether or not they knew what their next phase of life looked like.
Firstly, if an owner comes in and says, “I’ve got a farm. I’ve got nine grandkids,” that owner is already thinking about the next phase. It doesn’t have to be retirement. I could have an owner that says, “I’ve got an idea for a new business. I’m already launched. I’m putting money into it.” You know that they’re moving in that direction. They’re ready to move away from this business, but I have to hear those things to know that people are psychologically ready because it’s a long process to sell a business. I’m sure it’s a long process to help somebody grow a business and you have to be ready for what’s ahead of you and be committed to the process. If you’re not, you’re never going to grow it or you’re never going to sell it.
I wouldn’t say it’s on a checklist, one telltale point is when you get a chance to interview the employees of that small business and ask about the owner, you’ll get a good gauge of how controlling may not be the right word, but in some cases, it is. You’ll get a sense of how involved and how deep they are in the day-to-day and that’s going to give you an idea of how hard you’re going to have to get them to step away. I don’t think it’s a one-size-fits all, but I think the employees will give you a good sense of the number of efforts going to make that transition.Only focus your time as a business owner in the places you're really good at and love. Click To Tweet
That’s the old 360 review process. Go and talk to everybody else. Isn’t it true that most business owners have type-A personalities? They are drivers and controlling. You have to have that element in you in order to start a business and grow it.
I don’t have this statistic offhand, but the number of founders and CEOs that ended up stepping away from the CEO role when the business starts to scale is because it’s a different mindset. It’s a different skillset and desire too. You’re starting getting deeper into the operations and all the things that you’re not doing as a startup founder. One of my most classic examples is I interviewed a guy who was on the Shark Tank, Martin Hill. He invented a product called The Beebo, so dads could help breastfeed as a gizmo. He struck a deal on Shark Tank, but he never had the intention of building and running a company. He’s a product guy. He likes to invent. He wants to do more on the next product. By the time that episode aired, his company was a per sale already. He scaled it but he’s like, “That’s not my skillset. It’s not what I want to do.” Back to your original point, I think if more owners and founders sat down and thought about what they wanted and what makes them happy, it’s going to make the process much easier.
Understanding what your skillset is and what your desires are is important. I’m involved in a coaching program, Strategic Coach, Dan Sullivan. One of the things that they bring you through is what are your unique abilities? Not only what are you great at, but what do you love to do? Everything is focused on getting you in that quadrant and get rid of everything else because you might be good at something, but you hate doing it. You never going to do it. Only focus your time as a business owner in the places that you’re good and things you love. Once you get to that point, both psychologically and you can get there physically, it’s energizing. I believe in that.
For me, it took me many years in corporate to figure out what I like to do. I took the last five trying to figure out exactly. Now, I’m in a good spot. If I would have been more intentional about this several years ago, I always say, it is better late than never. I’m curious. From your perspective, are you starting to see more owners having more self-awareness of what they want to do?
No, we’re not but that’s not an absolute. I’m not painting a broader, but by and large, owners tend to be too involved in their businesses. They tend to be the chief salespeople, all strategic decisions have to go through them, sometimes all decisions and the business can’t grow that way. You can’t develop people. You just have worker bees. You don’t have people who can think and be strategic and move the needle for you. I see that way too often.
One day at a time, one owner at a time.
Brett, this has been tremendous. I appreciate all the info. I know your principles apply to whether somebody has less than $1 million, $1 million to $5 million. If you’re stuck somewhere, the question is, “How do you grow? What are the basic principles?” I know these apply, but if you were to offer one piece of advice to all owners out there that are looking to move the needle on their business, what’s the one thing that you would tell people?
Always align with the customer and you can’t go wrong. I know we talked a little bit about understanding why they buy, but I encourage them across the entire journey. Look at the customer insights and understand your customers inside and out. The better you do, the better you’re going to be able to sell to because you can relate. You can have better conversations. You can offer them better products. You’ll understand from a service perspective if they’re happy or not happy, and this seems intuitive and straightforward that all businesses do it, but I would say 80% don’t. If you can align with your customers and your desired customers, that’s priority one and the rest gets easier after that because then you know at least who you’re dealing with and what they want.
That is tremendous wisdom. I appreciate that. Check out Brett’s podcast, B2B Founder podcast. You have some tremendous guests. I enjoyed listening to a bunch of episodes. Brett, if people wanted to get in touch with you, how could they reach you?
It’s BrettTrainor.com. I also spent a ton of time on LinkedIn since I work with a lot of business owners, so feel free to drop me a note. There are not too many of me out there. You’ll see entrepreneurs, small business growth. That’s probably who it is. I’ll leave you an email, [email protected]. Drop me an email and I’m more than happy to connect and chat with anybody anytime about growth in their strategies.
Thanks for being here. It is a pleasure.
Thank you. I enjoyed being on the show. I appreciate it. This has been a great conversation as always. Have a great rest of your day.
Thanks, you too. I hope you enjoyed this episode. If you enjoy our content, please remember to subscribe and review our show. I look forward to seeing you again on the next episode. Until then, remember that scaling, acquiring or selling a business takes time, preparation and the proper knowledge.
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About Brett Trainor
WHO I AMMy 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 DOI 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”.
Specialties: Startup Growth / Growth Founders / Business Coaching / Business Mentor / Business Strategy / Growth Strategy / Startup Mentor/
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