Starting a company is hard enough, let alone making it profitable. But if you're going to have a sustainable business, you need to figure out how to scale it. So why not set your sights high? Go for millions. We spoke with one entrepreneur, Bruce Pellegrino, who built and scaled two multi-million-dollar businesses.
"It took eleven years to go from zero to $10 million, and then we merged with another company that was doing something similar," Pellegrino said. "They were a $20 million dollar company. So in 1999 we had a $10 million business [mine], plus a $20 million business [theirs], which made it a $30 million business. Then we built that up into a $90 million business by 2005."
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He told us the secrets of scaling a business to millions in revenue:
- Risk and reinvestment of money. "Oftentimes, you need to do things outside of your comfort zone," said Pellegrino. "For me, that meant opening an office in Houston, or Chicago, or Canada. Also, merging a business with another business involves risk with the transfer of equity... things like that."
- Keep customers happy. It's easier to keep a current customer than to find a new one. Make sure you have impeccable customer service to keep your users loyal. "Do whatever is necessary to keep them happy," Pellegrino said.
- Attract and retain key employees. "Good people will want to be with a growing business that is rewarding them; if they see a better opportunity elsewhere, you can't blame them for leaving," said Pellegrino. Make sure your employees feel valued and they'll be more likely to stick around.
- Share your success. Make people feel that they are contributing to their own personal growth as well as the company's. "I made the decision to share equity with our guys in China and in France. That was a good decision and it kept them around," Pellegrino said.
- Surround yourself with intelligent people. "Some of my friends served as my board of advisors, sort of like a board of directors but not in the legal sense," said Pellegrino. "Having those four or five people helped a lot; they provided a great deal of insight and fresh ideas on how to build a solid business foundation."
- Have incentive-based compensation for all employees. "It helps to have a good, incentive-based compensation (bonus) system that rewards all employees for working hard, for working smart, and for sticking around," Pellegrino said. Then they will feel appreciated, like they are earning success themselves.
- Expand your market to other cities and countries. "Expanding to France, Germany, the United Kingdom, Japan and China were also very necessary steps to scale the business from say, $30 million in 1999 to $90 million in 2005," Pellegrino explained. "Exporting products and selling them internationally requires a fair amount of logistical support, legal entities, accounting -- there's a lot to it. You need a good team you can trust because they're spread out around the world."
- Luck. "More than anything, growing a business requires a bit of luck," said Pellegrino. "There's a saying, 'it's better to be lucky than smart.' I was fortunate to have been surrounded by great people, both as employees and friends."