An Interview With Fotis Georgiadis
To successfully scale your business from start up to small business it is paramount that you have established a market/message match. You need to ensure that people actually find value in your product, good, or service. I see so many early-stage business owners pushing to make products or create complicated marketing and sales systems to support a business that has not passed proof of concept yet. Early-stage businesses need to presell products to help dial in the messaging and process through the real-world experience of building the business. If no one cares about your new greatest idea or invention, then they won’t buy it and the business won’t be able to exist for long.
Startups usually start with a small cohort of close colleagues. But what happens when you add a bunch of new people into this close cohort? How do you maintain the company culture? In addition, what is needed to successfully scale a business to increase market share or to increase offerings? How can a small startup grow successfully to a midsize and then large company? To address these questions, we are talking to successful business leaders who can share stories and insights from their experiences about the “5 Things You Need To Know To Successfully Scale Your Business”. As a part of this series, we had the distinct pleasure of interviewing Ryan Niddel.
Ryan Niddel is a CEO, Board Member and Entrepreneur. He is also the leading authority on improving revenue of companies by improving EBITDA through increased operational efficiency, lean manufacturing principles and more. He has helped with the acquisition or exit of more than 11 companies while seeing their collective revenue surpass more than $237M. Niddel has successfully tripled the revenue of more than 5 companies in under 2 1/2 years adding an extra $950M in valuation to these companies.
Thank you for joining us in this interview series. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’?
I am a Midwest man at heart. I was born and raised in Ohio and still reside there today. I grew up the son of two hard-working, middle-class parents who saw tremendous value in pushing me to earn my own way for things that I found value in. This led to my first entrepreneurial journey at 10 years old, a local lawn care business. I went door to door, selling my services to our neighbors. With 4–7 lawns at $10 a piece per week, I got a taste of the good life and was hooked (tongue in cheek). This lawn care business led me to a mentorship relationship, and employment, with a local business owner who showed me what it meant to consistently strive for excellence while putting in a full and hard day’s work. I didn’t fully realize the lessons he was instilling in me, until a few years back. I will be eternally grateful for that opportunity and relationship that lasted until I was 20 years old. I eventually found myself as an affiliate manager for a startup tech company out of Akron, Ohio. Within 6 months of employment, I was able to take over as President and Chief Executive Officer while simultaneously becoming a partner. We collectively grew the company from 10,000 clients to 580,000 clients in two years’ time, before selling off the company to a competitor. Since then, I have launched 2 companies, sold one of the companies (in the CBD space), have helped 11 people exit their companies, launched a small private equity fund, and am now the CEO of MIT45.com.
You’ve had a remarkable career journey. Can you highlight a key decision in your career that helped you get to where you are today?
There are two key decisions that helped get me to where I am today. Both involve investing in myself and mentorship that showed me a new way of thinking and being. The first decision was to stop lying to myself, about myself and to others. This came from the wisdom instilled upon me by Garrett J. White and his company, Wake Up Warrior. The tools that I picked up from that season of life are still some of the core pillars of my success today. The next decision was to view reality as something I am creating in every moment of everyday life, and from that space to understand that I have the ability to effortlessly change my reality at any moment. William Lam and John Madson shared that with me through their company called UPGRD which I am still currently working in.
What’s the most impactful initiative you’ve led that you’re particularly proud of?
I lead an initiative to create stock issuances for all the employees that are helping support the rapid and exponential growth of my company MIT45. Being able to arrive at the idea that it was best for the growth of the company to issue stock to all employees, then to figure out the ideal corporate structure that was able to minimize downside risk while maximizing the future potential, and then to work with our team to create the proper documentation, structure and administration of the issuance was amazing. All of that was trumped by being able to surprise our staff with a company wide offsite where they received their stock issuance changing their net worth forever. It was one of the best, most emotional days of my life.
Sometimes our mistakes can be our greatest teachers. Can you share a mistake you’ve made and the lesson you took away from it?
I launched a merchant processing company focused on obscure clients. In consistent pursuit of new sales (growth), I paid little to no attention to the operations, and finances of the business. It took less than a year for me to run the business into the ground. It taught me to create simple systems of tracking and accountability inside of my businesses before I begin to truly scale the revenue. While sales are the life blood of an organization, operations and finance are the backbone.
How has mentorship played a role in your career, whether receiving mentorship or offering it to others?
Being mentored by individuals that are further down the road of business and life has allowed me to scale my current business more efficiently and effectively from $5m a year to north of $75m a year in revenue. While paying tithes to the church may certainly be important, paying tithes to the future version of myself is even more important to me. Consistently investing in mentorship and accountability is vital. Mentoring others has been a mainstay of the past 4 years of my life. I run a tight knit and exclusive virtual mentorship group each week. Being able to share lessons I have learned and skills I have obtained over my professional career, see that they are implemented, and then be able to witness others’ continued success is something I cherish each week.
Developing your leadership style takes time and practice. Who do you model your leadership style after? What are some key character traits you try to emulate?
My leadership style is a combination of Jack Welch, Ben Horowitz, Andy Grove and Bill Campbell. From Jack Welch I have taken radical candor, extreme ownership, and differentiation. These skills help establish and maintain the culture of my businesses. From Ben Horowitz I have taken the importance of hiring only A players and realizing there is ALWAYS an option. These skills help consistently level up the team that is supporting our rapid growth mission. From Andy Grove I have taken humility, removed communication barriers and focused on teaching others. These skills help me not take myself so seriously and to stop and enjoy the ride occasionally. And from Bill Campbell I have taken holding high standards and expectations while being supportive and completely transparent. These skills simply make me feel better each day. I love knowing that our company’s “high tide” is raising all our ships.
Thank you for sharing that with us. Let’s talk about scaling a business from a small startup to a midsize and then large company. Based on your experience, can you share with our readers the “5 Things You Need To Know To Successfully Scale Your Business”?
- To successfully scale your business from start up to small business it is paramount that you have established a market/message match. You need to ensure that people actually find value in your product, good, or service. I see so many early-stage business owners pushing to make products or create complicated marketing and sales systems to support a business that has not passed proof of concept yet. Early-stage businesses need to presell products to help dial in the messaging and process through the real-world experience of building the business. If no one cares about your new greatest idea or invention, then they won’t buy it and the business won’t be able to exist for long.
- To begin to move from early-stage small businesses to mid stage a business must dial in its numbers and centralize reporting. I see so many business owners that have crossed the $5m a year revenue hurdle still “winging it’’ when it comes to the critical numbers of their business. Tracking average order value, cost of acquisition, lifetime customer value, accounts receivable balance, cash balance, accounts payable balance and 10–12 more variables on a day-by-day basis begins to allow a business owner to feel more in control of the business and less reactionary.
- All businesses need to focus on tax planning and cash flow management but at a late-stage small business ($40m +) these variables become a lot more pertinent. In most businesses Payroll, COGS and Taxes are the three largest expenses. Payroll is a variable that is driven by the market and the quality of talent you wish to attract. COGS are a function of your buyer being able to navigate relationships and dialing in the best terms. Taxes on the other hand are constantly changing and the strategy to support them is always changing. An LLC of the $40m in revenue size is taxed north of 40% a C Corp is taxed around 20%. It is vital that a growing business understands that the same systems that began their growth may not be best to continue it.
- As businesses continue to grow into mid-market companies, acquisitions become the most effective and efficient way to grow. This is going to require knowledge of the merger and acquisition process, the ability to find good deals that can be strategically integrated into a company to increase its enterprise value while simultaneously adding profit to the bottom line. Growing from $50m to $80m can happen VERY quickly when you apply leverage to a business versus a process in a business.
- The mid to large market cap hurdle will require an understanding of the IPO process and the rules that govern the SEC business game. This feels like learning business all over again. SOX compliance, PCAOB audits, Q-1 and K-1 Filings and so much more. This is also where a new level of generational wealth can be created. By this point in the evolution of most businesses, the founder will have accumulated a good amount of strategic relationships that will help them navigate the waters that are uncharted.
Can you share a few of the mistakes that companies make when they try to scale a business? What would you suggest to address those errors?
Companies that are attempting to scale keep the wrong people in key seats for too long. Every year that a company experiences exponential growth, the roles, and responsibilities of team members in leadership seats (and many others) are almost entirely different than the year before. For example, the sales manager of a 5-person sales team generating $5m a year in domestic annualized revenue would have a much different skill set than the sales manager of a 30 person $100m a year global sales team. It is challenging to keep the team together through each growth season. It is the founder/CEO’s responsibility to encourage people to keep growing, investing in their growth while simultaneously realizing that roughly 20% (or less) will be able to keep up. The more painful reality of rapid growth is…many people don’t actually want to keep up.
Companies that are in midscale do not properly allocate capital towards growth initiatives. This forces them to go to market for capital infusions to continue to grow. The capital either costs them points of interest or dilution of equity. I have been guilty of this in the past. As companies scaled, I began to take larger and larger personal paydays. This had me trigger larger distributions than the business was able to afford for sustainable growth. Leaving capital in the business with a strategic plan for capital allocation is a vital requirement of ongoing sustainable growth.
Founders of rapid growth businesses do not normalize their salaries anywhere near early enough. The role of CEO for every business, in every market has a pay band that should be associated with it. This compensation should be in alignment with what the investment would be to bring in a new, highly qualified CEO. From that place you can see the true viability of the business and its ability to continue to grow. This also allows for CEOs to replace themselves once the business has grown to a point of their incompetence (which every CEO has).
Scaling includes bringing new people into the organization. How can a company preserve its company culture and ethos when new people are brought in?
A company can preserve its culture by infusing it throughout their hiring and onboarding process. At MIT45 we recorded B roll footage of our 6 offices and personnel interviews which showcase who we are, what we stand for and the cultural standards we adhere to. This video is part of our hiring process. There are questions inserted throughout the process to confirm that a candidate not only watched the video but would be a good fit for the culture of the business. It is also important to reaffirm that same message during the first 90 days of employment. We do that by having all new hires shadow other departments in 2-hour increments with a report on what they learned, what they have questions on, and what they believe could be improved. In addition, each employee spends 2 hours a month in a customer service role to better understand what our customers experience is when dealing with our company. This unifies everyone to the mission, vision, and values of the organization.
Many times, a key aspect of scaling your business is scaling your team’s knowledge and internal procedures. What tools or techniques have helped your teams be successful at scaling internally?
We have created a comprehensive company intranet where we share updates as well as an ever-growing knowledge base. We challenge all employees to document one new process per week, and then get it uploaded to the company intranet for review and understanding. Creating a simple level of available redundancy is paramount as a company grows. Documenting the standard operating procedures of the revenue path for the organization is a great place to start.
What software or tools do you recommend to help onboard new hires?
I recommend Cloverleaf to better understand their internal motivators and personality types. I recommend Lattice to better help employees see the goals of the company and the individuals that are supporting them. I recommend Voxer to keep up with real time auditory updates that impact the company or the individual. I recommend Criteria for IQ and EQ assessments to help ensure the right candidates are qualified for the right seats.
Because of your role, you are a person of significant influence. If you could inspire a movement that would bring the most amount of good to the most people, what would that be? You never know what your ideas can trigger.
I would inspire a movement that shares with people that they are much more capable, much more powerful, and much more deserving of success than they could have ever imagined. All the power to create the life of your dreams resides in you at this very moment. If you tap into it, hold onto it, and own it, life is yours for the creating.
How can our readers further follow your work online?
Rethinking Business Podcast on all platforms
Ryan Niddel on Twitter, LinkedIn, Instagram, Tik Tok, Facebook
This was truly meaningful! Thank you so much for your time and for sharing your expertise!
Ryan Niddel of MIT45 On 5 Things You Need To Know To Successfully Scale Your Business was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.