Most owners believe bigger is the goal. John St. Pierre believed it too. He is the CEO and chairperson of Rhombus Group, a holding company with six businesses, and the author of The $100 Million Dollar Journey. Years ago he co-founded a sports company and grew it past $50 million in revenue over 15 years. Then his own board let him go.
"The reality is I was growing a business for the sake of growing it," he told Chaz Wolfe on Driven To Win episode 429. If you run a construction, trades or home service company and you are chasing the next revenue number, his story is worth your time.
How do you grow a business without losing control of it?
You keep your equity and you pay for growth with your own cash. That is the short answer. John's first principle is "protect and grow your equity." His second is to "build your own capital," which means generating enough net operating cash flow to fund your own growth.
When the cash runs short, owners go looking for investors and bank debt. Every round of outside money takes a piece of the company. John's equity shrank round after round on his way to $100 million, until he no longer had control. As he put it, he sat in the boardroom of a company with "the logos tattooed on my forehead" and found out it was not his to run anymore.
Before you take on a partner or a big loan, ask what you are giving up and whether you could fund the job another way. The SBA's guide to funding a business is a plain place to compare your options.
Are you building a business or buying yourself a job?
Most owners are buying themselves a job, and they do not know it. John asks one question first: "do you want to be a business operator or do you want to be a business owner?" An operator shovels the dirt, solves every problem and works 60 to 80 hours a week. An owner builds an asset that creates value without him on every job.
If you choose the operator path, John has a warning: "you're gonna go work for a complete lunatic, right? It's you."
Why do owners need a life plan before a business plan?
Because a business plan only tells you how to grow. It does not tell you why. For years John ran strategic planning sessions with his executive team every fourth quarter. "I never sat down with myself and said, what am I trying to achieve?" he said.
He sees the same gap in the owners he coaches. "I'm finding way too many entrepreneurs don't have a life plan. They have a business plan."
His format is simple. Think 30 years out and break your life into the areas that matter to you, like money, health, family and faith. Then work backward. Where do you need to be in 10 years? In three? In one year? This quarter? This week? Then look at your calendar and see if it matches.
What should an owner do every week?
Pick the big rocks and move those first. John writes a weekly plan with his top priorities. If something on that plan does not connect to his long-term plan, it comes off.
Plenty of contractors fill a week with estimates, callbacks and running materials, and they get to Friday with nothing big moved. "Way too many entrepreneurs are moving gravel every single week," John said. His fix: "Start moving big rocks."
If you do not know where your week goes, start by writing it down. The workbooks and tools on our books page were built for that job.
How do you protect a business from the thing you did not see coming?
You look for the holes before the water comes in. John calls it having "a healthy dose of productive paranoia." He has seen a customer go bankrupt on his company for a quarter million dollars. He has also seen a quarter million dollars wired to Asia by accident and never recovered.
Once a year, sit down and list everything that could sink you. Check your insurance, your financial controls, your HR process and who has access to your bank account. Then look at who is advising you. John runs major decisions past six outside advisors. "We do not sneeze unless all six are unanimously on board with a decision," he said.
He was not always that careful. Before he got fired, his podcast co-host, Rich Hoffman, asked who was coaching him. His answer was, "coach, I don't need a coach." Hoffman brought it up again after the failure.
What are the seven principles John St. Pierre uses to grow a business?
He laid them out in order, because each one protects the one before it.
Protect and grow your equity.
Build your own capital.
Reinvest smartly.
Build a culture of entrepreneurship.
Protect the house.
Access owner's liquidity in a tax-smart way.
Move from CEO to chairperson.
John says he violated all seven at the sports company. When he applied them to his next business, he grew it to $100 million the right way.
What should you do this week?
Start with one honest question. If your company doubled next year, would your life get better or worse? If you cannot answer that, you do not have a life plan yet. Block two hours, write down what you want 30 years from now, and work back to this week.
Then watch the full conversation on episode 429 of Driven To Win.
This article was written by the Gathering The Kings team from Driven To Win episode 429 with John St. Pierre.
