Remember when you first became a CEO? You probably had a lot of goals for the company – some reasonable, many necessary and a few that might not make a lot of sense looking back. But the big challenge wasn’t setting goals; it was trying to figure out how to achieve them.
When I bought Federal Resources Corporation six years ago, there were only three employees and annual revenues topped out at just over US$3 million – unremarkable in the United States federal government contractor space. It was my first time as a CEO and I set out to take the company to US$100 million annually.
We achieved that threshold last year, and now we’ve set our sights on tripling revenue in the next two years. Below are the three fundamental strategies that fueled our growth all along – strategies that you can use to fuel your own success, no matter your company or industry.
Start with strong finances
Revenue is important – without it, you won’t have a company for very long. But a steady stream of incoming cash isn’t a magic bullet when you don’t understand where it’s coming from or where it should be going. You can’t know which customers generate the most revenue or profit, which salespeople are your winners and which ones should be retrained or the most profitable way to deliver your products and services to clients.
Even worse, there’s no way to plan a year or five years out or build relationships with stakeholders such as bankers, investors and even possible acquisition partners.
One of the first – and best – decisions I made after buying my company was hiring a great CFO. He put us on the right track early by guiding us through the profits and losses while building budgets to help with planning and create a foundation of trust with important partners.
Revenue is important – without it, you won’t have a company for very long.
Taking this step helps narrate – and thus keep control of – a company’s financial story as its brand grows and changes. On the surface, we were just a United States federal government contractor that managed information technology services.
But as we grew, our books became more than numbers on a spreadsheet. They also told companies like Deloitte that they could trust us to resell their technologies. And our clients – federal agencies like the United States State Department – knew that taxpayer money was safe with us.
Years of strong bookkeeping and financial planning also proved beneficial when we purchased companies as part of our growth strategy. We didn’t have to worry about investment bankers and other mergers and acquisitions partners distrusting our books because they were clean and transparent. That gave us the strongest negotiating position and the privilege of being fought over by everyone who wanted to do business with us.
Constant investment in success
I wish I’d been as smart in other early areas of growth as I was about hiring our CFO. I hired eight salespeople because I wanted to uphold commitments I had made to hire people in and around the city of Erie, Pennsylvania. That created a new challenge – suddenly, 80 percent of the company was in that department, and I was not just CEO but also the head of HR, marketing and practically everything else.
What I didn’t understand is that businesses need systematic approaches to investing in success. Addressing current problems without planning for future needs is like trying to unclog your drain before you turn off your faucet.
When we realized that our unbalanced company roster wasn’t working, we pivoted. For example, where we might have had eight modestly paid people in a department, we fired two, moved two to other departments and kept the best four inside sales employees. All of the people we kept made far more money and added even more value, because they were the right people in the right seats.
Planning instead of reacting applies to every facet of an organization. We had to rethink every component of our infrastructure and assets. This includes:
- Putting more money into finding, hiring, training and retaining the best talent before thinking about compensation for senior executives.
- Investing in the right equipment. US$200 laptops sound like a great cost-saving measure until they don’t adequately meet employees’ needs and then break, forcing you to replace them every year. It took only a few busted computers for us to do a 180. Now we send new staff US$1,500 laptops that last.
- Having a human and technology infrastructure that performs faster and better. Our previous IT team got new employees producing for the company on day four. Our more ‘expensive’ IT team now gets every single employee up and running on day one.
The second investment is in ideas. Steve Jobs said, “It doesn’t make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do.”
CEOs should intentionally push decision-making down as far as possible and rarely say no to an investment or a new idea. I will consider any idea from any employee as long as it:
- helps someone do their job better;
- makes the company better;
- improves how the company serves clients.
Doing this requires a lot of trust. But the alternative is micromanagement – which is a great way to build a mediocre company.
Build a great culture
Once we had strong financial footing and the right investments in place, it was time to build a great culture. I spent a huge amount of early time attracting, training and retaining talent for both sales and back-end administration.
A key part of our strategy was moving company headquarters to Erie, Pennsylvania. It’s a medium-sized town of just under 100,000 people that largely employs people in the manufacturing and tourist industries – which made it an amazing growth opportunity for us because there simply aren’t a lot of IT companies in the area.
Right away, we partnered with a nearby university to create an IT technical sales department that became a feeder system of talent. This set us up as the big IT fish in the lake because – unlike where our previous headquarters was located, in the Washington, DC area – there aren’t 100 other companies that look and sound just like us competing for the same talent.
Our culture of people-first has come from top leadership in the form of mentoring younger and subordinate staff.
So, we tend to attract high-performing and motivated IT nerds, business majors and future salespeople who want to be part of the technology future without leaving their families behind.
Moving to Erie also allowed us to build a culture around our mission of community improvement. We serve United States’ taxpayers, so it was an easy decision to provide benefits like days off to volunteer in the community and a downtown living stipend. We’ve also done community projects on the company’s dime, which prove to community leaders and prospective employees that our mission isn’t just words in a tagline.
Lastly, as we added more people throughout the organization, our culture of people-first has come from top leadership in the form of mentoring younger and subordinate staff. Simply put, if you’re not interested in taking the time to mentor someone who works under you, you’re not a good fit for Federal Resources Corporation.
Leadership through uncharted waters
You know that being a CEO is a lot less about the perks and more about building great things to improve the world. Whether you’re in a corner office with a view of the White House or looking out over beautiful Lake Erie, what you’re really doing is creating new growth to help your clients, employees and community be better.
Six years ago, I’d never been a CEO. I didn’t know what it took to run a company of US$3 million, never mind over 30 times that size.
And while generating US$300 million annually is also uncharted waters, I’m confident that the systematic approach that took us this far will get us there and beyond. And I hope it can do the same for you.
