How exactly does an Australian business coach end up transforming the exit planning landscape in the UK? In this episode, Darryl Bates-Brownsword, Managing Partner of Succession Plus, and Founder of Succession Plus UK, shares his remarkable journey from coaching small and medium-sized enterprises (SMEs) to spearheading a niche consulting business that helps entrepreneurs strategically prepare their businesses for successful exits. Darryl talks about his early days of building a coaching business in Australia, moving to the UK with plans for a short-term stay, and how that journey evolved into a deep passion for helping business owners maximize the value of their businesses before exiting.
In this episode, you’ll learn:
How Darryl doubled an already seven-figure business by bringing a fresh approach to exit planning in a new market
The key strategies to de-risk your business and make it attractive to potential buyers
Why preparing your business for an exit early can prevent the pitfalls of earnouts and protect your valuation
The value of networking and leveraging personal connections to grow your consulting practice
The importance of systematizing processes and reducing owner dependence to make your business more scalable and sellable
Welcome to the Consulting Success podcast. I’m your host Michael Zipursky, and in this podcast, we’re going to dive deep into the world of elite consultants where you’re going to learn the strategies, tactics and mindset to grow a highly profitable and successful consulting business.
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Yeah. So, let’s dive right in. You’ve gone from getting involved in a consulting business that was already generating solid revenue in the seven figure level, but you’ve come in and helped to double that business in a matter of four or five years. And I want to unpack that and have you kind of walk us through the steps that you took to get it where the business is today and really what it looks like. But before we do that, let’s kind of go back in time and I’d love to hear what were you doing before you got involved in this business, which is really all about helping business owners to exit their businesses successfully and at higher valuations. But take us back a step before that.
Okay. So a step before that, I was involved in a coaching business, so you may pick up the accent. It’s an Aussie background. And I was involved in coaching and consulting with SME businesses and I got into that in 2000. We started building that coaching business and it was pretty successful and we grew. And in 2005, I moved over to the UK with that business with an intention of getting it started and growing it. And I was going to stay in the UK for two years. Here we are, 2024. Still here, still loving the UK, living just out of Oxford. Look, the coaching business was right at the early days of coaching SME businesses and I renamed myself of what I was doing over those years. Sometimes I was a management consultant, sometimes I was a coach, sometimes I was a mentor, sometimes I was a consultant. But all the time I was working with SMEs and just sort of helping them to grow with a corporate background, sort of applying all the different areas of strategic growth to an SME and bringing them to them. After a while, that business, I sort of ran out of steam with that business and where that business was going, got out and I went and joined a client for a couple of years. I don’t know what your background and experience is, Michael, but after being self employed for about 15 years and then going into an employed role, as much as I wanted it to work it just wasn’t the right fit for both of us.
So I got out of that and then figured out what was I going to do next. One thing I did learn is that from the advice and working with others is that selling consulting or coaching, just and helping business owners with all areas of aspect of their business, it’s really hard work when trying to say, “I can fix everything and just have a management proposition.” And the marketer said, “Look, you really need to narrow in and pinpoint your focus on what your areas of expertise are.” And that’s when I came upon and thought, “Hey. Look, all of the clients I’ve worked with are gearing up and someday they want to exit their business.” And I saw a lot of them exit their business and they sold their business and they end up having to work some sort of earnout arrangement. And I saw the goal post move through those earnout arrangements and just thought, “That’s tragic and it’s avoidable, let’s get involved in that.” And I know this is sort of a long answer to the short question, but that’s sort of how I was thinking about it. And then I started thinking, “Hey, look. This is what I want to do.” And then I remembered my colleague, my old business partner in Australia, through that coaching business, I’d met him 20 years earlier and knew that he’d started in exit planning, so got in touch with him and said, “Do you want to bring the brand over to the UK?” And that’s how we got things going over here.
Expanding to the UK: Reactivating Networks and Bootstrapping Growth
You have a unique perspective. Most of the people that I speak to on the podcast here, they’re founders of their consulting business. So Craig had already founded this, years earlier, had taken it to seven figures in revenue as a consulting business for helping businesses to become exit ready or planning for that exit. You came in and as I mentioned earlier, helped double the business in terms of where you are today. Can you talk to me about what were the first things that you did? Because when you come to a new market, you’re taking it from Australia, let’s say, to the UK, in some ways it’s like starting from scratch, although there are assets and learnings of what was working and what wasn’t. But could you share with everyone what did you do? What did that first 90 or 120 days look like once you decided to bring it over to the UK?
It was a case of, well, the first 90, 120 days, we were bootstrapping it and we’re still bootstrapping it. So we’re growing through our own funding, we’re funding it ourselves. The first thing was getting our heads clear around, “Hey, look. How much do we just go out?” And is it just sort of grafting and just going and approaching our network and going, “Hey, look. We’ve had some contact over the years.” Looking at my LinkedIn contacts and people that I’d worked with in the past and just done the general consulting and gone, “Look, when we were working together in the past, we looked at this, but we neglected this stuff over here, the exit planning, getting the business ready for exit. We didn’t touch that. How’s the timing now? Do you want to look at it? And by the way, if you start doing that early, your business will be more valuable for that instance if you just get approached out of the blue.” Because everyone talks about, “Yeah, I want to sell my business, I want to plan my business.” And they’re hoping that one day someone will just approach them out of the blue and offer a bag load of cash. But whenever that happens, if the business isn’t exit ready, the people go their separate ways. And when you scratch below the surface, it’s always, “Well, it just wasn’t the right timing and we weren’t ready.” And when you start asking a few more questions, what you really realize is the person who made the approach started sniffing around and said, “This business is just too big of a risk at the moment for me. I’m moving on. I’ll go find another opportunity.”
The Importance of Exit Planning: Avoiding Earnouts and Increasing Value
So Darryl, let me just ask you for a moment here, just to clarify. It sounds like the first step that you took once you brought the brand over to the UK was to reactivate your network, to go to people that you were already connected with and to say, “Hey, have you thought about preparing for a potential exit? Have you thought about ways to increase the value of your company instead of just waiting for the potential down the road. If you start thinking about that earlier, you can actually significantly increase your chances of success, but also increase the chances of the value being higher of your business if you decide to choose it later on.” Is that summarizing that accurately?
Yeah. And the big anchor that I keep working on is, “Hey, look. If you’re ready in advance, you can remove the risk of having to do an earnout.” Let’s face it, statistics show that entrepreneurs and earnouts are like oil and water. They just don’t mix.
So just to also clarify, for anyone who may not understand what an earnout is, this is when the buyer will essentially, let’s just say they’re going to acquire a business for $10 million. They might say we’re going to pay you cash, $5 million, but the other $5 million is going to be paid to you over a period of x number of years. You still need to be working as the founder or key person inside of that business for let’s say an additional three years and they’ll give you part of that $5 million each year over those three years or you have to hit some certain metrics over those three years in order for you to get the remaining $5 million. Is that an accurate way of describing it?
Yeah, that’s the gist of it. And it’s by the way, we’re buying the goal posts and we reserve the right to move them once we own them, which is where all the risk is.
Early Marketing Efforts: Email, Content, and Networking
Yeah. And so what happened? Do you remember how many people initially you start to reach out to in terms of your network? Was this 10 people, 50 people, 500 people? What did that look like? And then what kind of response did you get to that initial messaging?
The response wasn’t over the top, but the model is that we only need to work with a handful of people to get it up and running and be viable. So I think I may have approached a couple of hundred people and reinvigorated, I don’t know, 50 to 60. In reality, a lot of them were LinkedIn and so I’ve always had a smaller network but tight. The other thing we did fairly quickly on is we’ve gone, “Let’s have a mindset of no matter what happens, let’s build a business model.” I started with a business partner, which is just two of us that we went out to market. She didn’t have much of a network so it was kind of leveraging off the network I had. She had one or two people that she wanted to bring in. But what we did do is we said, “Look, let’s just put a percentage of the revenue, anything that comes in and it was 15% at the time and we’ll just put that in a bucket and we’ll just go, that’s allocated to marketing.” So we were able to bring the website and extend the website from Australia and just sort of go and here’s the UK page straight away. We had a lot of history with blogs so what we started to do is just go here’s the website, what other marketing can we do? There’s 15% that we’ve set aside for marketing. So we went straight to email marketing, cold outbound email marketing. Naively, I guess, thinking that email marketing that I’d seen work in other consulting products worked really well. But one of the things I think you’ll ask me is, what do you wish you’ve done differently or what do you wish you knew back then that you know now?
Sure. Yeah.
What I know now is that people see exit planning as important but not urgent.
Does that mean when you did the email marketing that you did not get the kind of response you would have expected?
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Yeah, we get a lot of people who are interested, and so we’ve been able to build a mailing list and we’ve been able to build that network, but it’s a much slower burn than we would have liked it to have been. And what we learned is that in SMEs, people are aware that they need to work on their business, but not in their business. When you start talking about exit planning, and this may be a UK thing as opposed to other markets where we’re just a little further behind, but when you start talking about exit planning, they go, “Wait, what? What do you mean I’ve got to specifically prepare my business to be exit ready? That’s a new one on me.” So it’s an educational sales process rather than a why us sales process, if that makes sense.
Marketing a Non-Urgent Service: Focusing on Value and Risk Mitigation
No, it makes a lot of sense. I mean, this is, I think, an area that for many people, especially consultants, don’t necessarily get into the world of consulting or decide to start a consulting business because they want to sell it in the future. Some come to that realization later on. I mean, a very few, I think a very small percentage know that from day one when they start the business. But to me, the value of thinking to build a business that is exit ready is even if you never sell it, or even if you have no desire to sell it, just the process can also increase the value of the business, even in the present day, have it running more efficiently, more effectively, have it running so that it has less reliance on the founder. There’s lots of benefits that come with it.
What have you found related to that? Because I think even for those that are working in areas of consulting where it has nothing to do with exit or exit planning, they might be helping their clients with something that is in the mind of the buyer. Maybe a ‘nice to have right now’, but not a requirement, or not a today thing, maybe it’s a tomorrow or a future thing. Can you talk a little bit about what have you learned about kind of marketing when the product doesn’t address something that is maybe immediate, but there’s lots of value potentially down the line?
Yeah, and my background’s engineering, so marketing–
I’m putting you on the spot on the marketing side.
But it’s really foreign to me, but I have to embrace it. So really understanding what our proposition is in terms of what problem does it solve for the client and that’s how you framed it, I think. So. We’re going, “What are the problems we solved?” We started to talk about highlighting that, hey look, in this marketplace and the market we serve, Michael, is sort of that $2 to $30 million bracket. Once a business scales through no man’s land of being an owner with 10 people to “I’ve employed a management team and now I’ve got a fully functional business with a leveraged management team.” And what we found is that businesses in that bracket, when they do go to market, only 20% get a deal. So that means 80% of businesses in that owner managed and were looking across the whole spectrum, but 80% of privately held businesses that go to market fail to get a deal. And to me that’s the tragic thing. So we’ve just sort of put that on the front page. Look, make sure you’re one of the 20%. Here’s what you can do to de-risk your business and just make sure you’re one step ahead of all your competitors that increase your odds drastically.
The other pain point that we really wanted to have started addressing probably in the last 12 months is just saying, hey look, and it’s touching that point that you were in saying that what we know is that as businesses in that bracket, business is pretty much owner dependent. So how do we eliminate that owner dependence? How do we really secure your business up and what is it, an actual formula to make it easy and a step by step guide to remove that owner dependence? What are the key things that we need to do? And it’s the classic let’s get a structure, let’s get the systems in there, let’s figure out what your proposition is, your process, your methodology, and let’s introduce those things, but address the owner dependence problem/issue/pain. Oh, and by the way, that makes you exit ready and far more attractive to be acquired anyway and your valuation goes up.
Coming back just to the marketing side for one more moment before we go on here, is there anything else that you’ve found- I mean you talked about kind of step one was reactivating your network and that worked to get the business moving. You tried email marketing, which you found initially wasn’t the right approach to doing cold outreach to people, but the business has doubled. So what would you attribute that to? What do you think from a marketing perspective or even business development perspective has had the biggest overall impact on helping you to double the business’s revenue?
The biggest thing is I guess it’s a combination because it’s grown across in a couple of different territories as well and we’ve all grown up. And sharing amongst ourselves like we’ve got the heads of each territory, we get together monthly and just sort of, “What’s working for you? What’s working for you? Well, I did an event and here’s the topic of the event and here’s the heading and it worked really well and we got this response rate.” So having that peer support network with the other territory leaders, whatever we want to call them, this worked really well. We’ve kept doing the email marketing just to keep building that pipeline. So as a long term game, a long term play because we go, “Hey, it can be two or three years.” We’ve launched a scorecard and just going here’s a scorecard to create that more active engagement and that’s just been in the last couple of months so the results aren’t too telling at the moment. But this scorecard, the intention is let’s get that active engagement rather than just blasting the marketplace with content and being like everyone else. How can we really stand out a bit more? We do webinars and the other thing that’s been the biggest savior is the network. So the outbound email marketing is great for the long term, but the clients that convert the quickest are the ones that are introduced through our network of insurance accountants and finding us through the website.
Do you have an intentional kind of active plan or approach to build that partnership network? So if I’m understanding correctly, Darryl, it sounds like you run this consulting business which is all around being exit ready and helping to increase the value for an exit. But you’re getting leads and opportunities through, as you said, accountants or maybe lawyers, attorneys, insurance, so people that would have access to a customer base, that could be your customer base. Is that correct in terms of how you’re going?
Yes.
Okay. And so how are you doing that or how do you think about that? Maybe just kind of give a quick example or two of maybe how you approach somebody and what that has resulted in.
We call them our next door products and we talk about this being project management as opposed to pure consulting. So to get exit ready, it’s not something one professional can do on their own. You’ve touched the key ones. We need to make sure that their insurances are properly addressed. We need to make sure they’re sure of their legal and agreements and they’ve got shareholders agreements at the very minimum. They need to do tax planning, they need to do financial planning, and they want to get ready before they go to a broker or an M&A person that’s going to help them get ready. So they’re all the next door people that we approach. And we sort of said, well, the way we approach them, one of the things we did and thinking through it now is I started a podcast myself too about 150 episodes ago. So at the beginning of the pandemic, it’s something that’d been on the back of my mind for a while and I couldn’t figure out what was the angle. And writing blogs was painful for me. So podcasts were the way. And what I found is when I approach people, I’ve gone, “Look, what I want to do is approach people who can sort of help those next door type products.” So I’d search the web and go, “Right, who’s got a high profile accounting practice near me? Let me have a look and see what sort of products they sell, research them.” And then through a LinkedIn connection request, sort of do that connection request with an invite and go, “Hey, look. Looking at your profile, it looks like you could be a good fit for being a guest on the Exit Insights Podcast. Worth the conversation.” And it was amazing the amount of people that replied to that. And I’d go, look, I’ve got a specific story I want to tell. How do we do tax planning? How do we do personal financial planning? How do we build the marketing machine? And go to them with a specific topic and it’s amazing how that opened doors as opposed to what I’ll call the old style, which is, “Hey, you’re a next door product. How about we do that old promise of referring and we’ll trade referrals?” I was offering something of value first, even if it’s just a bit of PR to a small audience. I guess that appeals to human nature, doesn’t it, that we want to be valued and get our message out there.
A very smart approach. I know many people who will leverage a podcast or something like that, writing for a publication to do research, to reach out to potential ideal clients, but in a way that doesn’t come across as being sales. So that’s a very wise approach.
Can you talk about any challenge as you brought this brand over to the UK? I know you’ve now expanded beyond even the UK and Australia in terms of territories where the brand and company is active. What was maybe one big challenge, Darryl, that for you was like a hard nut to crack, or maybe it’s something you’re still kind of working through? But what stands out to you in terms of business growth and getting the business to that next level?
It’s taken a hell of a lot longer than I thought it would, is the biggest thing, Michael. We’ve tried all sorts of things and where I thought with a niche down product and there was a really clear message to the market and knowing exactly who that message was for and in a way that whatever you do, you could demonstrate the actual value through measuring their valuation and their increase in valuation, you could show the value rather than just, “Feels good. I’ve enjoyed working with those guys. It feels right.” It’s still taken a whole lot longer than I sort of thought it would after so many years of consulting and coaching and growing businesses and helping a lot of clients grow their business. So there was, I guess, a realization that I wish I may have done things differently, I guess if I’d known that.
And why do you think that is? What do you think is the cause of it maybe growing slower than you originally expected? Is it just that your expectations were unrealistic? Is the business just a tough market? The macro environment? What do you attribute that to?
We started in 2019 here in the UK, just before the pandemic, so the first sort of year and a half was the business landscape was changing and we just had to adapt online and do all of our networking online. But everyone was in the same boat there and the economy. I guess part of it was just my naive expectations of thinking if I really honed down that it would be a whole lot easier than previous products. The other thing was the awareness that there’s not an exit planning industry. And when I started coaching 20 years ago, there were consultants out there, but when we were positioning ourselves differently, we’d go “coaches” and people go, “What’s coaching?” There wasn’t a coaching industry. Now, 20 years later, coaching is an industry and when you go and sell someone on coaching, you’re not having to go, “Well, here’s what coaching is, here’s why you want coaching, here’s the benefits.” You now go, “Why do you choose us as a coach?” It’s an evolved market. I won’t say it’s a mature market, but it’s an evolved market and people know what coaching is so you’re selling on a positioning perspective rather than a product perspective.
I wrongly assumed that the exit planning industry already existed, especially in the UK, just because of what I’d seen in the research I did and saw the amount of evolution in the States and in Australia. So there was soon a realization that we needed to create an industry. And that was part of the thinking behind the podcast and I would just go, let me get anyone on the podcast. Collectively, we need to create an industry, rising tide, every boat rises type of thing. So hey ho, let’s get on with it. It’s a really important task. We need to move that 20% of business owners to– Even if we can move the needle by 1%, yeah, that’s a lot of business owners that won’t come into a rude shock at the end of their career. And it’s the way I stepped out of the coaching business. It wasn’t a good story. Part of it is doing this is helping business owners do what I didn’t do in my previous, and sort of right past wrongs, if you like.
What didn’t work out with the previous coaching business that you had, when you say that it didn’t end the way that you would have wanted it to? What lessons did you learn from there or what can you share?
Look, my role is, I mentioned I’ve got an engineering background, so there must be a lot of your listeners that are familiar with Gino Wickman’s work, Traction.
Sure.
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Yep. So I’m not the visionary, I’m a half visionary, if you like. And I’m more of the integrated type role. The visionaries of the business, of the coaching business, they were great at telling a good story, they’d get everyone inspired. But it was a case of ‘do as I say, not as I do’. So we just weren’t putting in as much as- the people like myself were trying to put in the required infrastructure for the stage of the business. There were just a lot of the ‘cobbler’s shoes are always worn out’ type of thing.
Things breaking down.
It just got tiring after a while of banging your head against a brick wall. So yeah, I just moved on. A few others did as well.
Advice for Consulting Business Owners: Focusing on Revenue, People, and Systems
So let me ask you about the consulting business owner, and we can kind of maybe break this into a couple of different groups or levels. We can take the solo kind of independent consultant who’s pretty much doing everything themselves. They may have an assistant or two or work with a couple of contractors here or there. Let’s call them group number 1. Group number 2 is the founder that has a team, and that team is going to be some full time people, some part time people. Maybe they have somewhere between 5 and 10 people. And then we’ll say group 3, still very much a boutique firm and quite small, but they might have 10 to 15 people or even up to 20. I think those that are at the levels of anywhere from 10 to 20 people, they understand that you’re hopefully already shifting a lot of reliance away from the founder. There’s systems, there’s processes, there’s going to be a clear path to creating greater value and the potential to exit.
But just talk about the first two groups, the solo consultant with just some contractors or help, and the second group, that’s just a few people, what would you tell them? I mean, if someones thinking, “Hey, I have aspirations to either, a) sell this business in the future, or b) I just want to make it as valuable as possible and as resilient and strong as possible, so that if I get sick or something comes up, that the business does not depend 100% on me and we keep growing.” What’s the reality check that you might share with both those groups and what kind of guidance or what would you tell them to start thinking about or exploring?
So the way I think about it, Michael, is less than 10 people in the business and more than 10 people. And maybe that’s the conditioning that I’ve seen, because I’ve seen businesses where there’s the founder and 10 helpers. I’ve seen that up to the founder and 20 helpers where they just kept 20 people busy and they were phenomenal machines, highly profitable business or entity, but it wasn’t really a business you could sell because as soon as you unplug them, as exhausted as they were, the business just- the wheels stopped turning. That inflection point normally happens at about 10 people. Why? Because the span of control is you can manage about 10 people and have about 10 direct relationships with you before you lose control. You just can’t handle more than 10. And I think the research and study shows it’s between 7 and 12 and what have you. So less than 10 people, what I’d be focusing on is looking at your contracts with your clients, making sure that your revenue is locked in as much as possible if you want to boost your valuation. Have you got it contracted? Is it on subscription or if you’re doing project after project after project, you’ve basically got a contact list of clients that you can sell to someone and that’s about it.
And Darryl, just wanted to jump in there for a second and clarify really what you’re referring to so that everyone can benefit from this is things like annual or longer term contracts or monthly retainer subscriptions, but something from a revenue perspective that shows sustainability or stability, I guess you could call it, in terms of revenue. Would that be different from concentration of how much revenue is coming from any given client?
I’d look at it in the same sentence, but they are slightly different things, you’re right. And if we bundle those together, we look at it through a buyer’s lens. What are they looking at? They want to look at what’s the risk of decay once the owner leaves? Once the owner leaves, is it going to come to a grinding halt, stop? That’s worth nothing. If you’ve got some sort of contracts in place, will the decay be slightly slower and give them time to go in and boost it and rectify it and then shore it up as much as possible? It’s all about the risk of that future revenue when the business owner leaves, which has the greatest influence to the valuation
And what else stands out? What else would you kind of counsel somebody to look into beyond revenue?
Darryl Bates-Brownsword: So the first thing I’d look at is revenue and everything about the revenue. Then I’d start looking at the people. Have you got a couple of employees? How well are those employees- Have they got relationships with the clients? Are those relationships spread beyond the owner? But let’s face it, owners in a business up to 1 to 10 people, and a lot of those businesses sort of max out and cap out at 10 people because the owners are control freaks. They don’t want to give that sort of thing away. So if they can spread those relationships across more people in the business, again, that secures the revenue. If you’ve got the right workforce and they’re locked in and they’re loyal and you trust them and you build a great culture, then they, the staff, the employees, hang around. You’ve got great employee loyalty, and the clients love the employees, it’s not just the owner. So that’s the next thing that shores it up.
Then I start looking at systems. Have I got some sort of methodology in place so that every time I bring a client in, they follow the same process? It’s pretty much templated. Or am I making it up from scratch every single time that I win a new contract? The more systemizing it, the more efficient my back office and my operations are, the less likely that something will go wrong. They’re the first three things. After about a mil in revenue, and depending on where the business is, I start going, “Okay. Can we change those systems? Can we change the business to where what you’re offering is, especially a service based business, is no longer a service? Can we change the proposition where people are now buying your methodology or so we can shift away from buying key people?” I want to move away from buying Michael and buying the proposition that Michael sells to me, the package that Michael sells. And then the business becomes known for the proposition, the methodology, rather than the people in the business. That’s the next thing that’ll start to boost the valuation. Then after that I start looking at all your various routes to market. Have you got a marketing machine type of approach, people coming to you? Have you got a position in the marketplace? Is your business known for something or is it still Draryl runs Succession Plus here in the UK? And then it’s that old Gerber. Have you built a franchise prototype? Have you got a plug and play business that I can just unplug it and then plug it into the next area until you get £2 or £3 million or $2 or $3 million business that you’ve got that type of scale that you can replicate.
Yeah, that’s great. I know there’s obviously a lot under the hood there, if you will, so that you could go deeper into.
What changes- I know you said you work with companies that are typically somewhere between $2 to $30 million in annual turnover and you just talked through at the $1 million, the $2 to $3 million level. What about the company who’s at the $5 million level or $10 million level? Can you maybe share just a couple of additional considerations for someone who’s a little bit further along in their revenue?
The key, I guess, inflection points, I touched on this earlier is that if you’re at about a £1 million business, rough rule of thumb is that you allow £100,000 per of revenue per employee. That’s about 10 people. At that point, you need to start going, “Okay, to keep growing my business, I need a layer. I can’t manage more than 10 people. I need to start appointing managers, some sort of management team.” Now, as soon as I start on that track of appointing a management team, I’m really committing to go all the way through from £1 to maybe even £10mil, if otherwise that gap between 1 and 10 is pretty much no man’s land. And what I mean by that is I’ve got a couple of managers as my business grows, but I’m not getting full benefit from those managers. So those managers aren’t what you might call professional managers and only doing management work. They’re doing half the time in the management and half the time looking after clients themselves and they’re not fully utilized as managers. By the time you get to a £10 million business, you’ve got a full on leadership team. The owners can be a full on CEO. The leadership team is just the leadership team. They’re professional, they’re skilled, they’re experienced, and they’re leveraging all of your investment in infrastructure there.
So if you’re going to go past £1 mil, think that I’ve got to push all the way through to about £10 mil. And there’s a big sharp intake of breath for founders. But why I suggest that is because at £ 1 mil you’ve got a fairly profitable model. Anywhere in between 1 to 10 it’s less profitable, but at £10 mil you’re really profitable again.
There’s just one last rule of thumb that might be really interesting for listeners to listen to. It’s a rule of thumb, but the rule of thumb says every time you triple the size of your business, you need to rebuild all of your systems and platforms and infrastructure. So the systems I built, and just think of an accounting system when I first start out as up to £100,000 or 100,000 in revenue, I’m probably going to use an Excel spreadsheet. I know that Row Zero is really cheap nowadays, but it would have been at one point where I would have used an Excel spreadsheet for a while. And then when I get from £100,000 to £1mil, an Excel spreadsheet just isn’t cutting it anymore. There’s too many mistakes. It just doesn’t work. I need to get a proper platform. So if you just think of that methodology and just go, what CRM have I got? What sort of staff recruiting system have I got? What sort of workflows have I got through my business? Have I got the free tools? Am I using paid platforms now? All of those systems need rebuilding every time you triple. So that’s from £1 mil, £3 mil, £10 mil, £30 mil, £100 mil, they’re the sort of inflection points where I need to start looking and go, “Okay, well maybe I need to relook at those seven things I touched on earlier of revenue, people, systems, methodologies, etc.”
I remember for us in our business, when we first got to seven figure level and then start to see the requirement that we certainly need to invest in building our systems and the team, and profitability or margin, let’s say. Our margin percentage definitely started to decrease as we continued to add more millions to that seven figure level and build to where we are. But the overall dollar amount that the business was generating did increase. The percentage of the margin went down. And for somebody who, whether they’re at half a million right now or $200,000 or a million or $5 million, you kind of talk about this no man’s land and I’ve heard this before for many people that sometimes with slightly different figures that like the three to five is especially common where challenges come up. But regardless, it’s in that kind of a range. Some people might hear that, Darryl, and go, “Well then why? That just sounds really hard. Why go there? Why not just stay where I am at, call it a million or sub a million, have a very highly profitable business?” What do you tell people is or are the benefits of making the investments of time, energy, potentially lower margin to get to that other side where you can actually start to maybe reap greater rewards?
That’s a really good question because I get that it can be just sort of really take the wind out of your sails when someone sits in and says, “Well, if you’re going to go past 1, you got to go all the way to 10.” And you go, “Hang on a second. It’s taken me 10 years to get it to 1 mil. I’ve invested my life to get it there. What the hell are you saying, Darryl?” So, yeah, I get it. So it would depend on their age and their energy before I say anything, because as you pointed out, to get past 1, you will increase your revenue and your profitability percentage is likely to go down. But the absolute number is probably going to go up. So when I talk about no man’s land, I’m just talking about the profitability from a percentage perspective. So just be aware of that and be aware of what you’re going through as a business owner and just go, “Look, £1 mil, it’s really good, from a percentage perspective, profitability wise, I’ll increase my profit, my absolute number as I go from 1 to 10. But if I really want to get to that peak profitability, again, just be aware that it’s a £10 mil investment.” Now if I’m aware of that from a strategic perspective, I go “Okay. So how do I get there? What’s the fastest way I get there?” Well, Darryl’s talked about systems positioning methodology, the right people systems.
Now, I haven’t touched on funding or M&A yet, but that’s another great way. Once you’re really clear about your proposition and what your differences are in the market, then you can go out and you can be a little more focused around what you’re acquiring rather than a spray and pray approach of just going, “Well, there’s another consulting business there, management consultants. I’ll bring them in. And now we’re doubled in size and phew.” That’ll just create a whole lot of stress.
Yeah, it’s a fascinating topic because there’s so much that goes into it. And it’s not one of these things that you just plug in today and you’re off to the races tomorrow. It does require a lot of thought and planning and consideration. And I think for me, what I’ve always enjoyed about business is that there’s no one way to do things. Someone might be listening to this saying, “I have a half a million dollar solo consulting business or I’m doing $600,000 or a quarter of a million or whatever.” I mean, money is just one part of it. But they might be in a great place loving life, and then others might be in a place where they go, “I’m working myself to the bone. I’m at capacity. I know I don’t want to be the bottleneck anymore. I don’t want to be- everything to be fully reliant on me.” Or “I want to be able to make a greater impact.” There’s so many reasons to grow and scale the business and to make those investments for the longer term, even though there are challenges that you’re going to have to kind of work through.
So Darryl, I first of all want to just thank you for coming on here today, sharing some of your journey. I know there’s a lot more that we haven’t touched on. For those that want to learn more about you, about your company, everything you have going on, where’s the best place for them to go?
If you see my name on the screen there, that’s probably the first and easiest because I’m the only one in the world with that name. So, Darryl Bates-Brownsword. You’ll find me on LinkedIn is where I hang out the most. The Exit Insights Podcast. There’s another easy name to find me. And the website of the business is Succession Plus. So that’s Succession Plus. And so there’s a really easy way to find us there.
All right. We’ll link all up in the show notes. Darryl, again, thanks so much for coming on.
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