Responsibility #3 – Secure Fuel For Growth
- Set the Vision
- Build the Team
- Secure Fuel for Growth
While, Setting the Vision and Building the Team are essential responsibilities for any CEO, I want to tell you my views about the third responsibility for just a few minutes. I see this so often in growing companies… entrepreneurs with a lot of ambition and a big Vision, who really want to build their businesses, but they have the wrong mindset about capital. Let me try to explain what I mean.
The background story
It is very natural for entrepreneurs to not want to go into debt as they grow their businesses. You want to make sure that your business is completely self-sufficient. That’s a great desire to have and is very responsible.
Most business owners are very conservative when it comes to money. They are proud of bootstrapping their business and growing it to $1M+ in revenue without leveraging any outside capital. I think that is really admirable. In the early days at Infusionsoft, we grew this way too. I never imagined employing other people’s money to grow our business.
My financial upbringing
I consider myself to be a very debt averse person. I despise paying interest in my family finances. This may be, in part, due to the fact I was brought up in a family trying to get by on a teacher’s salary. There were six children in our home. We lived within our very modest means. In other words, we just went without if we didn’t have the money to buy something. If I wanted a new pair of shoes, I found a way to earn the money to buy them myself.
A different way to think about money in business
I am not a fan of debt in my personal finances and avoid it whenever possible in our business, but it’s really important to understand the difference between your business and your personal situation. Your business not only has the ability to pursue a Vision that can have a great, positive impact on the world, buy it also has the potential to create a lot of wealth.
In our personal finances, we typically use money to sustain life and to acquire things or experiences that enrich our lives. In our businesses, however, money or capital is the fuel needed to grow. Money is life-sustaining and growth-enabling for a business. We don’t use money in a business to bring more possessions or more fulfillment to the business.
Think of it this way, in order to keep our physical bodies properly fueled, we eat food. If there is insufficient intake to fuel the body’s needs, many people will use supplements to ensure their bodies have what it needs to stay healthy. If we consider our businesses as bodies or living organisms that need life-giving nutrition to survive, we might see more clearly the role of money to keep our businesses alive and well.
Intuitively, you know this already. Most entrepreneurs learning to become CEOs of growing businesses have known about Primary Responsibility #3 for a long time, only the framing has come from a reactive, defensive posture rather than taking a proactive, offensive stance. You see, most entrepreneurs still view their financial responsibility as ‘Don’t Run Out of Money’. Whereas the entrepreneur who is working to become the CEO must see this financial responsibility as ‘Secure Fuel for Growth’.
Shifting to an investment mindset
If you have been working really hard to ensure there was enough money to simply keep your business alive, it is time for you to start thinking about money for your business as Fuel for Growth. With enough fuel, your business can thrive!
Provided you have taken care of Responsibilities #1 and #2, you now have a clear and compelling Vision and the right team in place to pursue it. What if the difference between success and failure was securing enough fuel to make sure the rocket of your business had enough velocity to escape the gravitational pull against your business?
Sometimes, financially conservative entrepreneurs will be too conservative in the sense that they won’t give the business enough fuel to achieve their Vision. In an effort to try to keep their business safe, they end up denying the business of the very thing that would enable it to grow.
They don’t want to take on debt or they don’t want to take on investment from an investor or from a partner. When you’ve got a great Vision and you’ve got a team to make it happen, it’s time to get a little more aggressive. It’s time to look at ways that you can grow the business faster.
Think of it this way… if you can grow the business much faster than the rate of interest that you’re borrowing at, then that’s a really wise business move. In other words, if you can get a line of credit or a loan for 8% or 10% per year in order to grow the business 20%, 30%, 50% or even 100%, that’s a really good investment.
An unexpected burden and a happy ending
As I look back on my first steps into using other people’s money to grow our business, I still remember the additional burden of responsibility I felt when I started taking checks from friends and family who wanted to invest in our business. I especially remember taking money from my school-teacher’s-salary parents and my in-laws. The added pressure to succeed was real.
The trick is to never take anyone’s money unless you are confident that you will be able to grow their investment. When I could see that additional fuel for growth would allow us to grow faster, I knew I was doing my loved ones and others a disservice by withholding an opportunity for them to grow their money through the vehicle of our business.
While I know that not all investments work out, I’m happy to report that one of the best days of my life was returning a sizeable check to my parents about 5 years after they had written me a modest investment check to fuel the growth of our business. Our business was able to provide a 100x return to my parents who never had much money. That was a personal payday that I will never forget.
Stick with the status quo or create a new future?
So I just want to encourage you to have an investment mindset as you work to secure enough fuel to grow. You will limit the success of your business if you stay in the ‘Don’t Run Out of Money’ mindset. It is time for you to look at your business in an entirely new way that can actually produce much more income than the dollars that you put into it from an investment standpoint. If you want to become the CEO your business needs you to become, you’ll have to fulfill your responsibility to Secure Fuel for Growth. I wish you the best as you begin your new path to success.
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