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  19. Everyone in the organization has at least one number they are accountable for keeping on track each week.

  20. We have a budget and are monitoring it regularly (e.g., monthly or quarterly).

  Total number of each ranking

  Multiply by the number above

  Add all five numbers to determine the percentage score that reflects the current state of your company: %.

  SCORING RESULTS

  If your score falls between:

  20 and 34%

  Please read on. This book will change your life.

  35 and 49%

  You are normal. But would you prefer normal or great?

  50 and 64%

  You are above average, but there is still room for improvement.

  65 and 79%

  You are well above average.

  80 and 100%

  This is where most EOS clients end up.

  This is your goal.

  CHAPTER 2

  LETTING GO

  OF THE VINE

  An entrepreneur slips and falls off the edge of a cliff. On his way down, he manages to grab onto the end of a vine. He’s hanging there, a thousand feet from the top and a thousand feet from the bottom. His situation seems hopeless, so he looks up to the clouds, and decides, for the first time, to pray. “Is anybody up there?” he asks. After a long silence, a deep voice bellows down from the clouds: “Do you believe?” “Yes,” replies the entrepreneur. “Then let go of the vine,” says the voice. The entrepreneur pauses for a second, looks up again, and finally responds, “Is there anybody else up there?”

  Most business owners are unable to reach the next level because they are simply not ready to let go of the vine. You might know the feeling; you want to see your business grow, but at the same time, you’re frustrated, tired, and unwilling to take on any more risk. The truth is that before you can grow, you’ll need to take a leap of faith. But don’t worry—you won’t have to act until you are comfortable and clear on all of the EOS tools.

  Here’s a textbook example of the man hanging from the vine. He’d only started The EOS Process because his head of sales and marketing had begged him to. At the time, this man had his hands in every aspect of the business. His makeshift leadership team was a sham because he pulled all the strings. On top of that, he was logging 80 work hours a week and was overworked to the point that he’d actually started to nod off during meetings. He was a zombie.

  But once, in an uncharacteristic moment of vulnerability, he admitted to me in confidence that he didn’t want to live that way any longer. He put his faith in The EOS Process, and in two years he managed to elevate himself to a true leader for an organization that had a solid leadership team in place. Now, he spends more time with his family, he’s decidedly less stressed, and he’s generating more profit than ever.

  If you’re not happy with the current state of your company, you have three choices. You can live with it, leave it, or change it. If the first two are not an option, it’s time to admit that you don’t want to live this way any longer.

  Change is scary. You’re not alone in feeling anxious about jeopardizing what you already have. But despite these worries, it’s time for a shift in thinking. You need to change from believing that you are your company and letting it become its own entity. With the right vision, structure, and people in place, your company can evolve and realize its full potential. To be truly ready for this change, you must be willing to embrace the following four fundamental beliefs:

  1. You must build and maintain a true leadership team.

  2. Hitting the ceiling is inevitable.

  3. You can only run your business on one operating system.

  4. You must be open-minded, growth-oriented, and vulnerable.

  BUILDING A TRUE LEADERSHIP TEAM

  Would you prefer a dictatorship or a true leadership team approach to running your business? Both leadership methods can work, so you have to decide. The philosophy of this book advocates a healthy leadership team approach, where you build a team of people that define the company’s vision with you. These leaders all have clear accountabilities and must be able to take initiative over their respective departments. You must also all remain open and honest about all issues and be willing to fight for what is best for the company as a whole.

  Dictatorships not only are exhausting, but also preclude future growth. It’s simple math. One person can only make so many decisions and solve so many problems. You cannot build an enduring, successful organization that lives beyond you if your organization is designed to crumble the minute you step aside.

  Until now, you’ve probably been holding all the pieces together on your own. But once your organization reaches a certain size, you won’t be able to lead that way. If you want to grow, it’s not possible to maintain a hand in sales, service, accounting, complaints, and follow-up on a regular basis.

  This means that it’s time to let others take control of those areas, and that you have to decide who you want to do so. Each of your departmental heads should be better than you in his or her respective position. Of course, you will need to give them clear expectations and instill a system for effective communication and accountability. Once you have the right people in the right seats, let them run with it.

  Your job right now is to select these people wisely. If they don’t already work in your organization, you’ll have to find them elsewhere. Best-selling author and highly sought-after speaker Patrick Lencioni summarizes this very point in his book Obsessions of an Extraordinary Executive: The Four Disciplines at the Heart of Making Any Organization World Class. His first rule of building a healthy organization: “Build and maintain a cohesive leadership team.”

  Once your team is in place, each member needs to agree that the problems in the organization are also his or her responsibility. Once you take responsibility for a problem, you can help to solve it. Don’t worry if you don’t know how to solve a particular problem just yet—that will all be covered by the Issues Solving Track in Chapter 6.

  The next leap of faith you have to take is this: As goes the leadership team, so goes the company. Your leadership team must present a united front to the rest of your organization. In a nuclear family, when the child doesn’t like the answer from Mom, he or she might go to Dad. In your company, there can be only one answer, and your leadership team needs to parent everyone to greatness.

  HITTING THE CEILING IS INEVITABLE

  Organizations usually expand in spurts, by smashing through a series of ceilings. Reaching the natural limits of your existing resources is a by-product of growth, and a company continually needs to adjust its existing state if it hopes to expand through the next ceiling. You and your leadership team need to understand this, because you will hit the ceiling on three different levels: as an organization, departmentally, and as individuals.

  In all of these instances, growth is your only option. If you’re not growing, be it internally or externally, you’re dying. Most companies strive for external growth, but internal growth also leads to future greatness. In fact, most companies need to start with a focus on internal growth before they can even think about external growth. The paradox is that they will actually grow faster externally in the long run if they are focused internally from the outset.

  Schechter Wealth Strategies (SWS) exemplifies this point. Founded by Robert Schechter in 1971, SWS built a solid organization with a great reputation. After being joined by his son Marc and his son-in-law Jason Zimmerman, Schechter decided to aggressively grow the company. Unfortunately, their internal operations were already at capacity, chaotic, and in need of reorganizing before the company could hope to expand. With a powerhouse sales team, a strong culture, and great product offerings, their only barrier was operations capacity. They had hoped to get operations open for business within a few months. To meet this extremely aggressive timeline, they needed to change their corporate structure, reassess their staff, and make their processes consistent.

  Thr
ough hard work, focus, and determination, they eventually achieved this goal. They clarified their vision, set up the right structure, put great people in place, and streamlined their processes. After a little more than a year, their reorganization was finally open for business. That may seem like a large time investment, but it couldn’t have happened any faster, and the results now speak for themselves. Thanks to their very talented team, they have grown an average of 50 percent per year for the last three years. In the long run, they have grown faster than if they had started aggressively selling and forced the new business into an operational structure that couldn’t handle the increased sales. The entire structure might have imploded, causing them to upset and lose valuable customers. Instead, the patience and hard work they put in paid off. If your organization needs an internal transformation first, be honest with yourself and spend the next one or two years growing internally and honing your business model so it can support external revenue growth.

  But regardless of whether you grow inside or out, you’re going to hit the ceiling. While there are a lot of differing statistics out there on the subject, they all point to the same conclusion: Many organizations fail because they’re unable to survive these growing pains. On its official website, the U.S. Small Business Administration purports that “roughly 50 percent of small businesses fail within the first five years.” In a study published by the Monthly Labor Review in 2005, economist Amy E. Knaup states that 56 percent of businesses die within the first four years. And in his book The E-Myth and The E-Myth Revisited, author Michael Gerber paints an even scarier picture, saying that 80 percent of businesses fail in their first five years and 80 percent of those remaining will fail somewhere between years six through ten.

  The good news is that you can survive hitting the ceiling by choosing a leadership team that possesses five core leadership abilities. Above all else, your leaders need to be able to simplify, delegate, predict, systemize, and structure. To the degree that you and your team apply these five abilities, you will grow to the next level. Let’s take a look at them one by one.

  SIMPLIFY

  The acronym KISS (“keep it simple, stupid”) is your mantra here. Simplifying your organization is key. This entails streamlining the rules you operate under as well as how they’re communicated. The same goes for your processes, systems, messages, and vision. Most organizations are too complex when they begin. Use models, visuals, acronyms, and checklists to simplify processes and procedures, because as your organization grows, it will get more complex. Henry David Thoreau got to the core of the issue in Walden, but Ralph Waldo Emerson later did him one better:

  “Simplify, simplify.” Henry David Thoreau

  “One ‘simplify’ would have sufficed.” Ralph Waldo Emerson

  Dan Sullivan, the creator of The Strategic Coach® Program, makes the point as follows: “No further progress and growth is possible for an organization until a new state of simplicity is created.” With its many tools, the entire EOS process is designed to help you create that new state of simplicity. It’s a common thread you’ll see over and over again throughout this book: Less is more.

  DELEGATE

  Your ability to break through the ceiling also depends on your ability to delegate. Be prepared to “delegate and elevate” to your true god-given skill set. You’ll have to delegate some of your responsibilities and elevate yourself to operate at your highest and best use. It’s not practical for you to remain chef, head waiter, and dishwasher as your company grows. By hanging on to all the tiny details, you’re actually constricting the company’s growth. When you experience that personal growth, the company will grow under you. This is exactly what is meant by letting go of the vine.

  When you let go, however, you need to make sure you’re letting go of the right duties. The responsibilities that you delegate to other people have to be tasks that you have outgrown. These include things such as opening mail, writing proposals, approving invoices, and handling customer complaints. Sometimes we’re afraid to pass off jobs that aren’t much fun for others, but, at a certain point, you’ll have to. The beauty of this transition is that there are people who have the skills and enthusiasm to do these jobs.

  Not only will you need to learn how to delegate and elevate, but the people around you will as well. Just as you need to figure out how to build an extension of yourself, your team can also extend the company by building teams under them, thus ensuring the company’s continued growth.

  PREDICT

  Prediction in business is done on two basic levels: Long-term and Short-term.

  Long-term prediction. Publicly held companies predict earnings. When they later announce their actual earnings, either they hit the prediction or they don’t. If they hit it, their stock continues to climb. If they miss, their stock simply drops. In a small to mid-size privately held organization, you don’t have the luxury of missing your prediction. If you do, it may put you out of business.

  Long-term predicting is the forecast of everything 90 days and beyond. To do so, your leadership team has to know where the organization is going and how you expect to get there. You do this by starting with the far future and working your way back. What is your 10-year target? What is your three-year picture? Your one-year plan? What do you have to accomplish in the next 90 days in order to be on track?

  At first, this task may seem daunting, so let’s take a little pressure off. No one has a crystal ball. No one can know what will happen tomorrow with certainty. Long-term predicting is not really about foretelling what will happen; it’s making a decision about what you will do tomorrow based on what you know today.

  Put another way, your leadership team has to “climb the tree” more often than others. I liken long-term prediction to a team of short-sighted people cutting a road through a jungle. They may be the most productive team that’s ever cut a road, or they may be twice as productive as any other team before them. However, if there’s no leader there to climb a tree and tell them where the road is going, they might very well be cutting a zigzag. Get good at taking the long view. As leaders, you’ll need to stop working in the business 100 percent of the time, and as Michael Gerber, author of The E-Myth and The E-Myth Revisited, puts it, work on the business every so often instead. This discipline will get you to where you want to go faster.

  Short-term prediction. While the long-term view addresses business needs 90 days and beyond, short-term focuses on the immediate future. These are the issues that will arise on a daily or weekly basis, and your ability to solve them will affect the long-term greater good of the organization.

  As a leader in an organization, you’re probably hit with at least half a dozen problems a day. Most leaders are so buried in the day-to-day grind that they’ll typically think up flimsy workarounds just to get nagging issues out of their way so they can make it to the next week. If this happens long enough, their whole organization will come to be held together by duct tape and twine, and it will ultimately implode. You’ll need to do a good job of predicting so that you can make those problems go away forever and avoid a similar fate.

  SYSTEMIZE

  There was probably a time when your business demanded that you fly by the seat of your pants. This involved reacting to every customer request, thinking on your toes, and being creative on the fly. At some point, though, certain actions have revealed themselves as redundant. That’s when you should systemize them.

  There are really only a handful of core processes that make any organization function. Systemizing involves clearly identifying what those core processes are and integrating them into a fully functioning machine. You will have a human resource process, a marketing process, a sales process, an operating process, a customer-retention process, an accounting process, and so on. These must all work together in harmony, and the methods you use should be crystal clear to everyone at all levels of the organization.

  The first step is to agree as a leadership team on what these processes are and then to give them a name.
This is your company’s Way of doing business. Once you all agree on your Way, you will simplify, apply technology to, document, and fine-tune these core processes. In doing so, you will realize tremendous efficiencies, eliminate mistakes, and make it easier for managers to manage and for you to increase your profitability.

  By systemizing your organization, you will start to see how all five leadership abilities work together to break through the ceiling. There is a direct correlation between organizational adherence to core processes and your own ability to let go. Handing over a turnkey system to an accountable leader makes it easier for you to delegate and elevate. As long as he or she follows the process and possesses the skill set to do the job, you’ll be confident that the job at hand will be accomplished correctly.

  STRUCTURE

  Lastly, you and your leadership team will need to structure your organization correctly. Your company needs to be organized in a way that reduces complexity and creates accountability. In addition, this structure should also be designed to boost you to the next level. Too many organizations become stuck because they are set in their old ways and unwilling to change to fit their expansion.

  Unfortunately, the structures of most small companies are either too loose or non-existent. Many of them have structures governed by ego, personality, and fear. You’ll learn how to use the Accountability Chart so that you don’t fall into this trap. This will enable you to implement a structure that encourages expansion and clearly defines everyone’s roles and responsibilities.

  In summary, once you understand that hitting the ceiling is inevitable, you and your leadership team must employ these five leadership abilities to reach the next level: (1) simplify the organization, (2) delegate and elevate, (3) predict both long-term and short-term, (4) systemize, and (5) structure your company the right way. The tools you’re about to learn are all designed specifically to help you acquire those abilities.