Build a Billion-Dollar Business in 5 Steps

Throughout 2018, Mind Your Business will be reviewing the highlights of the 2017 BizConCLE event hosted by COSE and the Greater Cleveland Partnership. Today’s article focuses on the lessons small business owners can learn from the startup success of CoverMyMeds. Read the other stories in this series here.

In January 2017, CoverMyMeds achieved what every startup company dreams of: a billion-dollar valuation and sale to a major corporation.

Funny thing is, Ted Frank, the CFO of CoverMyMeds, never really thought of the company as a startup. Rather, he and his partners viewed operated the business as a company with a long-term future instead of as a startup simply trying to survive from one round of funding to the next.

Operating with a sound, long-term business plan in mind was just one of the lessons that Frank, one of the keynote speakers at the Greater Cleveland Partnership’s and COSE’s BizConCLE event, imparted to those in attendance. In fact, Frank laid out a five-step plan that small- and mid-sized businesses can easily adopt that could put them on the same unicorn trajectory that CoverMyMeds has been on.

Step one: Focus on your distribution channel

Frank said the reason most startups fail is because their distribution channel is either misaligned or not economically viable. How do you make it viable? You enlist the help of your customers to help you grow.

It’s critical that businesses understand that their success is linked to that of the business and that your value to them increases as the business scales.

Step two: Your operating model is not an afterthought

Too many businesses believe they can bolt on their operating plan after they get funding. That’s a precarious line of thinking, particularly in the Midwest where private equity can be difficult to source and you can’t raise $300 million to build a company as some Silicon Valley firms might be able to do.

Instead, businesses in this region need to rely on great economics to succeed. And you get to those great economics by being innovative in the way you approach your business and distribution model. When you have these great economics, Frank said, it makes it easier to win because revenue becomes more of a focus instead of costs. And it’s not that profit is unimportant. It’s just that profit is baked into the business model.

Step three: Win through people

At the end of the day, the success or failure of a business is linked to the people who comprise the business. Give these employees something to be excited about, Frank said. The focus on revenue, as described above, can create opportunities for rapid growth where staffers can find opportunities to work in emerging areas of the organization.

Senior leadership should also target specific “star” employees and “connectors” in the marketplace you’re engaged in. These people will help you recruit other Rockstar employees.

And create an environment that is not restrictive (think one-page explanations of company policies) and encourages instead of punishes risk-taking. You want your employees to feel like they’re a part of something and these are just two ways of accomplishing that, he said.

Step four: Don’t rely on fundraising

One of Frank’s favorite sayings is that business owners should be focused on building a company, not a startup. As such, the business has to be one that is sustainable and does not live or die based on the availability of angel investors. If you’re focused on just surviving from the “A” round of capital raising, to the “B” round to the “C” round, etc., you’re not focused on building a company.

Put another way, if you’re raising money because you need money, you’ve already lost. Don’t worry about your exit strategy. Worry about how your business is going to help people—while also making some money along the way.

Step five: Set big goals

Don’t be afraid of setting big, hairy, audacious goals. Again, if your company is all about offense, you’re going to attract valuable heavy-hitter job candidates who want to help you do amazing things.

BizConCLE is just one example of the many educational events hosted by the Greater Cleveland Partnership and COSE each year to help give the business community the knowledge they need to make their business a success. Check out this list of upcoming events to find one that’s right for you.
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  • Next up: Cascading and Communication

    Cascading and Communication

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  • Next up: Cascading and Communication

    Cascading and Communication

    There’s a great visual metaphor for business related to the concept of cascading. The idea is that you can conceive of your company as a waterfall in which the decisions that are made at each level affect the decisions made as you go down the waterfall into the pool. You can imagine that the decisions made at the top of the waterfall are quite strategic. 

    There’s a great visual metaphor for business related to the concept of cascading. The idea is that you can conceive of your company as a waterfall in which the decisions that are made at each level affect the decisions made as you go down the waterfall into the pool. You can imagine that the decisions made at the top of the waterfall are quite strategic. 

    Let’s say you’re a visionary and decide to start your own company. Given that decision, you might ask these eight questions.

    1. What are the business’ core values?
    2. What is the business’ core focus?
    3. What is the 10-year target?
    4. What is our marketing strategy?
    5. What is our three-year picture?
    6. What is our one-year plan?
    7. What are our quarterly rocks?
    8. What are our issues and challenges?

    The questions are strategic in nature, and the decisions made further down the waterfall are guided by your answers to these questions. Suppose you decide you will win by manufacturing organic chocolate with superior new product development capabilities. These choices will impact the decisions made throughout the organization:  hiring, sales, marketing, purchasing, operations, product mix, customer service and so on. The employees at these various levels then make decisions within the confines of your upstream decisions. 

    At each level of our expanding waterfall, more and more people are involved in the decision-making, and our choices become more tactical and operational in nature, with everyone working to achieve your vision. 

    One of the tools your team should use to ensure you are achieving strategic goals is a leadership scorecard.  Your leadership team should meet weekly to monitor progress against goals, and identify and solve issues as a healthy, functional, cohesive team. 

    Deeper into your organization, scorecards and meetings can be used as well, but the measurables on the scorecards need to be more operational and focus on the activities and issues the associates in these departments can impact.  For example, no. of new product introductions, no. of face to face sales calls, no. of qualified prospects, wasted dollars, quality of service, on-time delivery percentage, no. of cases shipped, order accuracy, etc.

    The company’s senior leaders must work to create an environment where those accountable to them understand their rationale for making certain decisions.  This requires open and honest two-way communication, always keeping in mind the greater good of the organization.   

    For more information, download our free eBook, “Achieve Your Vision”.  For more information please visit our website at www.profitworksllc.com.  Be sure to attend my workshop at this year's Small Business Convention on Friday, Oct. 24 at 10:15 a.m. on the topic, “Are you Running Your Business or Is Your Business Running You?”

    Meet Alex


    Alex Freytag, partner at ProfitWorks LLC, helps business owners get what they want from their businesses.  In 1996, he co-founded and built the training and coaching firm to help entrepreneurial leadership teams achieve their vision, traction and healthy and to teach financial literacy to employees.  In addition to his training and coaching work, Alex spreads his mission and message by speaking to audiences of all types.

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  • Next up: Chairman's Column: Notes from the 'John Young Coffee Tour'

    Chairman's Column: Notes from the 'John Young Coffee Tour'

    Read on below for what I've learned what other COSE members want to see from the organization and how you can make your voice heard, as well.

    Among the items on my to-do list after becoming Board Chair at COSE was to sit down with my fellow Board members as part of what I affectionately termed the “John Young Coffee Tour.” The purpose of these informal meetings? I wanted to get a sense from these Board Members on what their thoughts are as it relates to COSE’s priorities moving forward and what we could be doing to ensure that COSE remains a powerful tool for small businesses.

    What struck me as I had these conversations is that COSE meant something different to each person. I learned from my Board Members that they all joined COSE/GCP for different reasons. Some enjoyed the networking opportunities. Another group of folks wanted to take advantage of the advocacy work the organization does on behalf of small business. For others, COSE’s health benefit option—the COSE Health and Wellness Trust—was an attractive offering that convinced them to join. And then there were some members who appreciated the robust offering of educational events COSE/GCP coordinates every year.

    What I’m trying to get at here is that there was something that brought everyone to the table. But that’s not enough. Our challenge is to continue to develop a large suite of products, services, events and other offerings. The goal here is that when I meet with COSE Members in the future, they don’t just point to one thing that brings them to our organization; rather, they point to a number of reasons why they chose to become a Member.

    During a recent COSE Board Meeting, we dove deeper into the program of work COSE provides our small businesses to ensure we are doing the right types of things for you. But I want to hear from you as well. Please send me an email with your thoughts and suggestions and I’d be happy to bring “John Young’s Coffee Tour” to your inbox.

    In addition, we are in the process of surveying our members about what’s working, what’s not and what else we should be doing to better meet the needs of your business. This very short (we promise) 5-minute survey will help us develop our priority areas and program plan through the balance of 2018 and into 2019. Thanks in advance for your feedback and perspectives. They are integral in helping us to be sure we are helping you to be more successful!

    So, click the link, send me an email, and let me know what you think. I look forward to hearing from you!

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  • Next up: Cheryl & Co. Founder Shares Her Entrepreneurial Story and Advice

    Cheryl & Co. Founder Shares Her Entrepreneurial Story and Advice

    Cheryl Krueger, cookie, gourmet dessert, and gift basket retailer extraordinaire, will share her entrepreneurial insights as the featured speaker at COSE’s next think spot event. We recently had the opportunity to ask Krueger a few questions about how she got her start, her advice for entrepreneurs starting out today and what to expect at her upcoming think spot appearance.  

    Cheryl Krueger, cookie, gourmet dessert, and gift basket retailer extraordinaire, will share her entrepreneurial insights as the featured speaker at COSE’s next think spot event. We recently had the opportunity to ask Krueger a few questions about how she got her start, her advice for entrepreneurs starting out today and what to expect at her upcoming think spot appearance. 

    What will you speak about at the COSE ThinkSpot event?

    My talk will cover several topics and I have some great stories to share with the COSE audience. I’ll talk about the journey of Cheryl & Co., how I got started and the obstacles I overcame. In the beginning, I was undercapitalized like most entrepreneurs. I was also a single female in the ‘80s looking for capital for a cookie business!  It was hard to get financing. 

    I’ll talk about the structure of a business. Owners often just think about taking their product to market without thinking about the structure of the business. Should it be retail only, corporate sales, wholesale, catalog sales, should I sell to QVC? Should we outsource, centralize production, etc.? It’s important to understand that opportunity often brings more challenges. You have to decide how many areas you can be an expert at.

    I will also talk about vision. My definition of vision is the ability to see the invisible and do the impossible. The invisible is the ability to see the potential of a product.  Entrepreneurs get it – they see the world a little bit differently. Often times the category already exist, they just find a way to deliver a product or service it in a different way – a way that saves the customer time, solves a problem, or offers a convenience.

    Customer service is also one of my favorite topics. I’m a great believer in customer service and I was a fanatic about looking at our customer retention rate at Cheryl & Co. Because really there is no sense of taking all the time and energy to find a new customer just to let them slip out the back door. I always say if you don’t take care of your customers someone else will.

    What the best business advice you ever got?

    I’ve been fortunate to have had several great mentors along the way who have shared their wisdom. During a particularly tough time, one gentleman who spent time in a concentration camp and had escaped Nazi Germany, simply told me to never give up. It really struck home and I needed to hear that at the time.

    Another mentor extolled the importance of cash flow; the old Cash is King adage. He told me that just because you’re profitable doesn’t mean you have cash on hand. Making sure you pay your bills and never running out of cash is critical. Both seem obvious now, but I believe you get pearls of wisdom when you need them.

    What advice do you have for entrepreneurs starting out today?

    Entrepreneurship is not for everybody. It’s a lot more than luck. It takes perseverance and a lot of sacrifice. You can get immersed in your vision and making your dream come true and that can affect your personal life and relationships. It’s important to always have great optimism and surround yourself with others that have that same optimism and a realistic awareness of what it takes to be successful.


    See Cheryl at think spot on Thursday, May 21, 2015, 5 - 8:30 pm at Windows on the River. Register now at www.cose.org/thinkspot.



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  • Next up: Join COSE's Peer-to-Peer Group

    Join COSE's Peer-to-Peer Group

    Earlier this year, a small group of COSE board members launched what we call “Peer-to-Peer” groups, offering a forum through which group members can share their highs and lows as a small business owner as well as bounce ideas and strategies off fellow entrepreneurs. 

     

    Little did we know in January how impactful and welcomed an opportunity like this would be for the small business owners of our region. COSE Peer-to-Peer groups have been meeting virtually since March and the value of these conversations has been immeasurable during this challenging time for all. 

     

    If you would be interested in learning more about joining a COSE Peer-to-Peer group, please email Jason Guyer and he can facilitate an introduction to appropriate group leader.

     

    In the meantime, please review these FAQs for more information.

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