A Stage 1 company’s Gates of Focus are Profit first, People second, then Process third.
The top priority gate is Profit. The only way out of Stage 1 is to generate enough profit to fund growth. In this Stage, generating, tracking, and preserving cash and implementing a foundational financial system are ways that a leader can successfully focus on Profit.
The second priority for Stage 1 is People. When an organization has 10 or fewer people, every person in the company plays a significant role in the organization. You must have the right people. One of the Non-Negotiable Rules in Stage 1 is to hire for fit, looking for generalists who can wear multiple hats rather than specialists.
Process is the third priority. The company is still trying to figure out what products and services it provides and how to best meet customer needs. Spending significant amounts of time perfecting a process that may need to change the next month (or day) doesn’t make sense at this point.
It’s worth noting here that if a business has been in a Stage for a long time, the leader may find that a high priority Gate no longer requires as much energy. For example, a business that has been in Stage 1 for 10 years may have prioritized Profit long enough that the business is generating sufficient revenue and profit to maintain its current state. As a result, the business may spend more energy on the People and Process gates. However, just because Profit is not taking as much energy does not mean it is no longer the top priority.
Remember that a Stage’s prioritization of the Gates indicates where the greatest opportunity for growth lies. In Stage 1, Profit represents the greatest opportunity, even if it does not require the greatest level of energy at that point in time.
Business leaders embracing these Gates of Focus should be constantly thinking about how decisions will impact the company’s profitability. Their energy should be focused on activities that generate revenue and increase profits.
Gates of Focus Misalignment
The CEO and Founder of an IT support company has spent months building up the systems he needs to be able to serve his clients. He has invested in subscribing to several technology platforms and has hired two other IT technicians who are highly skilled and knowledgeable. He’s confident that he has the right people and the right systems to provide top-quality IT support for just about any organization.
The problem is that he can’t get enough clients. The ones that he has engaged so far are happy with his services, but he needs more leads to keep paying for software subscriptions and employee salaries. After two years of struggling to pay the bills, he is contemplating closing the business and going back to the corporate world, where he at least is assured of a consistent paycheck.
This Stage 1 business owner has made the mistake of making Process his first priority, followed by People, with Profit last. He assumed that by preparing for a high volume of work he was being smart and planning in advance, when in reality he was operating on the unfounded assumption that clients would follow. Instead, he should have focused on Profit by actively marketing and selling his services. Then, as the revenue started to come in, he could add the right People to his team and build Processes as needed.
The concepts from this article were taken from The Start-up Stage: Organizational ReWilding Rules for Business Growth. Available through The ReWild Group and Amazon, the book explores this and other concepts in-depth while providing illustrations to help business leaders incorporate the ideas into their organizations. Get your copy today to learn the rules for growth for companies with 1-10 employees.