One of the most powerful business lessons I learned came during a dinner party.
About a year ago an entrepreneur joined our family for dinner. He just completed a deal in which he purchased, rehabilitated, and sold a business for a 300% profit in just 26 months.
I thought this was an amazing turnaround. He netted a significant (seven-figure) profit. I congratulated him and asked if this was the first time he had done something like this. To my surprise, he said:
“No. It’s the fifth time.”
Five times he has purchased a business, turned it around, and sold it for a profit of at least 100%.
I asked him if he would share his “secret system” with me.
He laughed and said:
We left the room where we were having dinner and went into my office. A few other guests joined us – also curious about the secrets of a successful entrepreneur.
He went over to the white board hanging on the wall and he wrote down the following:
Step 1: Decide what I want the outcome to be
Step 2: Make quick decisions
Step 3: Work night and day until I achieve the outcome
Then he turned to us and said:
“That’s the process.
You either make things happen or you control how you react to things when they happen.
I make things happen 80-90% of the time. The things I make happen all lead to my desired outcome.
In this last business, I knew the business was failing because the sales and marketing effort was poor.
I knew if I improved revenue, earnings would improve, and I knew if I improved earnings, there were 3 or 4 bigger companies who would purchase the business within five years.
So I bought the business, rehabilitated the sales team, and invested in better marketing.
I focused on this night and day and in two years I went to all of the bigger companies in this industry and asked them to consider acquiring us.
Two of them made me offers. I took the best offer and exited the business.
Here’s the importance of each step:
Step 1: The Outcome – I had to find a business that was ripe for this kind of turnaround. They are out there but I had to review a few hundred opportunities before I found this one. Most people do not have that kind of patience or discipline.
Step 2: Make Quick Decisions – When I found the business, I moved immediately. I made the offer to purchase it after only reviewing the financials for a couple of hours. I had experience in this area but I knew that if I didn’t take action now, someone else would jump on this opportunity.
We signed the letter of intent 24 hours later, on a Sunday morning. And we closed on the transaction in two weeks.
Speedy decisions always trump slow, plodding activity.
Step 3: Work – Most people hate work. I love to throw myself into something. I gutted the sales team and hit the road selling the company’s products myself for 3 months. I learned the sales process and shortened the sales cycle – cut it in half. Then I hired people to implement the new sales system.
Now most people will look at the two years I invested in this business and say I made a lot of money in a short time.
I look at it and figure that I know how to make things happen quickly and unlock profit from failing businesses, but, more importantly, I make good, quick, decisions toward a specific outcome and I work my ass off.
I just gave you guys my formula. You can all do this. Will you?
Or will you make excuses and say this is not for you?”
Everyone in that room made a comment indicating they could (and would) take action based upon what the entrepreneur shared with us.
As a result of that conversation, I changed my business model. I’m happy to say I’m on track for significant growth year-over-year.
Now that I’ve shared this story, you know the secret of the successful entrepreneur. What will you do with it?