How small businesses hit the big time
What would you say is the most critical aspect of building a profitable business?
Ask ten people, you could likely get ten different answers.
A motivated team is essential, some would tell you. Others might say a fantastic product or service is the key. You could hear that proper financing is the most essential ingredient — it takes money to make money. On the other hand, I’ve heard lot of people say the willingness to work hard and be committed is the number one factor in entrepreneurial success.
In my experience, any of those answers could be correct, depending on the stage of your company’s growth, and the precise nature of the obstacle that’s blocking your route to greater success.
But Mark Drager believes one thing matters more than everything else, and it’s none of the above.
"Generating sales," says the 28-year-old owner of Phanta Media in Markham Ontario. "A CEO’s number one job is building a sales engine and only that."
Maybe he’s right. As much as I hate to sound like Kevin O’Leary on Dragons’ Den ("It’s all about the money!"), at the end of the day, business success is determined by profit. Every other type of success comes from having a thriving enterprise. And you either generate enough profit to stay in business, or you don’t.
Of course, profit comes from one thing, and that is from making sales.
Initially though, I did quibble with Drager’s viewpoint. We met at an event where he’d produced a corporate video — that’s what his company does. He started Phanta as a pup of just 22 years of age. Now he employs seven people, and counts the Royal Bank, law firm Stikeman Elliot, and Fairmont Hotels among his clients.
"Sure sales are important," I said, "But the CEO also has to make sure the company is delivering a great product or service once the sale is made, don’t you agree?"
"Of course," he replied. "But you hire people to do that. You worry about sales first, and then deliver a really high quality product. Sales give you the revenue and the ability to hire the best people."
Drager tells me he adopted this focus after having a coffee with Bruce Hunter. Hunter is an author and speaker who was the vice-president and general manager of Kraft Canada. His bio tells me he "tripled the margin and doubled profitability of an underperforming $400 million business. He has led over $2 billion in acquisitions, divestitures and business integrations, and advised over 100 companies on how to better achieve their goals."
Don't be afraid to get help
Nowadays Hunter runs Lighthouse 360, mentoring and coaching entrepreneurs who want to turn their small business into a medium-sized business (and perhaps even bigger).
When I called Hunter to learn more about how he decided sales are the key to everything, I decided I wouldn’t share exactly what Mark Drager had told me straight off the bat. I wanted to hear Hunter’s overall approach to business success, and I was curious to know if his message was as clear and singular as Drager described it.
It turns out Hunter remembered his chat with Mark Drager, but sure enough, he had no idea what exactly Mark had taken away from it!
"I don’t know what I did to influence his approach," he says. "At the time I met Mark he was very early days with his business, and you never know what people find of value when you speak to them."
So what is Hunter’s most essential piece of advice entrepreneurs? He says his message does relate to sales, but can also relate to a number of different aspects of a venture: "You can’t do it all yourself."
He points out that a common evolution for entrepreneurs is that once they discover they’re good at something, they start a business. If they get enough work, they hire other workers and become a business owner. But as long as they’re working in the business, they can’t work on the business.
"You’re really acting as a general manager and not a CEO unless you can leave the business for a substantive amount of time and when you come back, it’s not only still running, it maybe running even better," he says.
That stepping back from day-to-day operations can be very difficult for a lot of entrepreneurs. They may not have faith that anyone else can do the work as well as they can, or perhaps they feel uncertain of what will actually fill their days if they’re not on the front line.
But if they want to see their enterprise expand, it’s essential to get a bigger perspective and make a plan, says Hunter.
"If they want to move from being a sole proprietor who does everything to owning a professionally-run organization, they have to bring in other people," he says.
Sometimes those are people who can do the work of the company; other times it’s a CFO-type, with expertise in managing the finances of a business. Depending on the stage of a company’s development, it could be someone who specializes in manufacturing. "Whether it’s a service offering, or manufacturing a widget of some sort, you need someone who can create the solid processes to take it to market," explains Hunter.
In the case of Mark Drager’s Phanta Media, Hunter’s diagnosis was that the company was at a stage where it needed revenue more than anything else. It was time to bring in someone that could specialize in developing leads for new projects and clients.
"There are different needs at different stages of the organization, and he was at that stage where he needed to focus on sales," says Hunter.
Drager did indeed hire a director of business development to help him grow Phanta. And he says he may be hiring another sales professional in the coming year. "When we reach the point where we have more leads than we have the capacity to respond to in a timely manner, then it’ll be time to add another person."
He hasn’t actually edited a corporate video himself for a long time. He’s not working in the business anymore, he’s working on the business. And considering what he’s achieved at the age of 28, it seems to be paying off.