Seven Factors of Scale – Growing a Seven Figure Business to Eight Figures [Part 1] with Chad Cannon

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In this interview, Joe talks to Chad Cannon, Founder and CEO of Scale Factor, a company that enables successful businesses to scale by breaking through plateaus and slow growth.

Most recently, Chad helped Michael Hyatt & Co. in growing from a sub-seven-figure to a mid-eight-figure business in six years. In his roles as CMO and CSO, he was instrumental in the company’s explosive growth, which included developing multiple 8-figure product lines such as online courses, an e-commerce product, and business coaching.‍

Chad helped thousands of million-dollar-plus businesses across hundreds of industries grow and scale by growing BusinessAccelerator to over $8-figures in annual revenue. Over the course of the last five years, he has discovered a specific roadmap to scaling and has become obsessed with assisting others.

Topics Discussed

  • Chad’s Background
  • Digital Dust
  • What Scale Factor is All About
  • The Law of the Lid
  • Working for Michael Hyatt
  • The Seven Factors of Scale

People and Resources Mentioned

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Joe Troyer 6:48
welcome to another episode of show me the nuggets. today. I'm super excited to have Chad cannon on. And we're going to be talking about one of your guys's favorite favorite topics, we're going to be talking about scaling and specifically, what Chad calls really the seven factors of scale. And we're gonna be really diving into, you know, what is that secret sauce to take you we're just talking behind the scenes from where you're at now to not just growing a little bit, but you know, doubling and doing it quickly. And so it's my great pleasure to have Chad here with us today. Hey, Chad, pleasure to have you.

Chad Cannon 7:23
Hey, Joe. Thanks for having me excited to dig in. Yeah, man. So

Joe Troyer 7:27
I want to talk about scale factor. And I really want to talk about kind of the the origin of that. But I feel like I'd be remiss if we didn't kind of start from the beginning, so to speak. So help me understand how you got in this crazy world of digital marketing. And then, you know, maybe working with Michael Hyatt and CO and we'll kind of go from there.

Chad Cannon Speaker 7:47
Yeah, real quick. I mean, probably about 15 years ago, I got into the publishing space, so in marketing, and ended up working on 60 book campaigns a year, helping kind of launch those into where social media really rose and, and ended up launching about 35 New York Times bestsellers. And then we ended up happening is those a list authors? You know, we would never say that publicly, but behind closed doors, the A list authors said, Hey, what would what would it look like for you to come help me kind of grow, take the intellectual property, it's in this book, how to grow my business, you know, digitally grow social media, email, all those types of things. And so I was stupid not to do it. And so I started a marketing agency kind of really, in that space. And I do that to about 2 million in the first two years, and went to try to fire a client, the client was Michael Hyatt, because the the agency was exploding with 15 people on the team, he was 50% of my personal time, but only 10% of the agency's revenue. So just there was kind of a mismatch and so we said hey, you know, I want to come up with a six to nine month exit strategy. I love what you guys are doing you know, at that time, they were you know, roughly a seven figure business and he had a he had a nine figure vision you know, at that point and I said, Hey, I can't I can't be there with what I'm also doing with my company and so I was gracious conversation two days went by and they said hey, we'll look like for us to hire you long story short, I spent the last six years helping them grow and scale and when I started like I said was right about seven figure business when I left about a year ago now was a mid eight mid eight figure business well on its way to being a nine figure business and we saw the business shift quite a bit you know, Michael was initially known as this like online marketing guy, you know, as courses, we just saw the future of courses, it was a flooded market, you know, we always call it digital does, people would buy a buyer course, but actually go through it. And we really cared about transformation and really believed in, if we could transform someone's productivity leadership, their companies could be different, their futures could be different. And so that's when we transitioned the product line into a physical product called the full focus planner. They ended up being a multiple, seven figure business, actually now an eight figure business and then also a bit In this coaching program called business accelerator, so I got behind the scenes of starting both of those brands kind of underneath the Michael Hyatt and in business accelerator got to see behind the scenes of 3000 plus businesses of what made businesses grow, maybe stagnate and scale, you know. And so that's kind of what's turned into scale factors, all that knowledge and experience over the last 15 years, I was

Joe Troyer 10:21
a real quick fly by, man, that's so awesome. There's so many things in there, like I want to pull on. But I guess I gotta say, first, I'm really excited to chat with you, because of your background, like you come from the agency world, which is super interesting. So many of our listeners come from that space, maybe running a digital marketing agency, maybe they did in the past, maybe they've sold one, maybe they work at one. So I think that that's really interesting. And then transitioning, you know, work with Michael Hyatt, and in the info space, I love what you said digital dust, right? Like, you know, we care so much about transformations as well. And it's hard because people buy info and you look at the success rates. And I think like, you know, they're way worse than than anybody talks about, right? It's like how many people

Chad Cannon 11:04
talk about publicly at least talked about publicly?

Joe Troyer 11:08
Was like, how many people log in? And how do you really affect change if nobody even you know, logs in or does anything or gets any value out of it. So I love that shift to physical but man, that's that's scary coming from, you know, being an info marketer and crazy margins, the, you know, now now, now you got physical goods and E comm. And then, you know, adding on business coaching. So love it man really excited for today, I guess to fast forward just a little bit. Tell us a little bit more about scale factor and what it is today. Yeah, so

Chad Cannon 11:41
I left last March, and kind of just went into doing consulting and ended up actually consulting with another marketing agency, helping them kind of grow and scale and went in and kind of shared shared with them and their executive team, kind of some of our frameworks that were really used at Hyatt and then I really started to develop, and I got a call the next day and my team was blown away by this. And he this guy has multiple companies, he's like, Hey, we need to take this to the small business space.

And we need to kind of productize this and not just info, you know, because like, it's all about transformation. But how do we and so, you know, I could have already created a course and all this other stuff. But the reality is, is like I want to work with companies that that really do want to scale? Well we always say is that businesses spend so much time and energy on a business plan, but they don't worry about they don't build and spend time, money, energy and resources on a scaling plan.

Because the business plan is your go to market strategy. You know, that's where you spend, and then all of a sudden, you get into running the business. And you just do the next thing. You know, and I probably you're out there listening to this. And it's just like, man, you're just going from one deal to the next you maybe not don't even know how deals are coming in. If you're marketing agency, hopefully you do. But a lot of times, you know, they're their clients are drawn to you because of your charisma, you know, you know, as a client, and that's going to help you grow, but there becomes a ceiling.

And this is what we saw time and time again, John Maxwell calls it the law of the lid. At some point you're gonna become the lid of on your business. And then you've got to learn what do you have to do to go to the next level. And sometimes most times, even if your sub $3 million, it's you as the business owner getting out of the way, quit being the Rainmaker letting someone else step into that. And so, we've really developed what we said, you know, we took three or four months, and we just workshopped days at a time and what made companies that really scaled? And what did they do differently than companies that maybe grew the 10 20%? Year over year, they you know, 5%, depending on the industry?

You know, we would say it's just like, hey, how do you grow maybe twice as much as the industry average, you know, and publishing space, you know, you're not going to grow crazy amount, if you're going to 3% the publishing space, like hey, you're winning, manufacturing, you might be eight to 10%. You know, that's, that's the ceiling, you know, and so how do we how do we build a business model, and you know, top of the funnel, bottom of the funnel that allow us to really get get to that that scale. And so we've identified we say, are seven factors, that organizations that have really scaled need to have a game plan for and when we come in and consult, typically, we do have one day strategy session, what I always say is like, I love starting with a strategy session, because in this day and age where people like, let's just hop on Zoom.

It's like what you can accomplish in three months on Zoom we can do in a day, typically, if we get the right people in the room, and then we can get clear and say okay, here's what we're going to do over the next 6090 Maybe 12 months, 6090 days or 12 months depending on what all we're trying to accomplish in the business. Sometimes it's people ops processes, sometimes it's sales and marketing funnels. You know, it's all across the board, depending on what I would say what factors they're really being successful with or factors that are really struggling with.

Joe Troyer 14:51
Cool yeah, I mean, I'd love to dig in on like maybe one of those like you talked about, you know, specifically like digital marketing agencies or businesses, maybe like the You know, low 7 million, you know, low seven figure maybe like a million dollars in revenue. And they're the Rainmaker right. I see that all the time with our customers or clients, you know, and transitioning out of that is like dip is is very difficult. I know that I've had success in businesses transitioning out of being the Rainmaker. And I know like, in businesses like I failed miserably in that area. And I know like, even today, we have some businesses where I'm still the Rainmaker, and it's just, it is what it is, it's okay, we've decided just leave it like that. So I'd love to have a candid conversation about that. And kind of what you see, from your perspective, because you have a really unique perspective. But maybe before we do that, can we maybe get like a high level overview of what are the seven factors?

Chad Cannon 15:46
Yeah, absolutely. So I'm an acronym guy. So fact, like, literally, it's, it's factors with an S is kind of me. And they build on top of each other. And so what I would say the first four factors are sales and marketing. The next two are sales and operations, kind of where they combine. And then seven is really just the scalability of the business. So if I had a, you know, when we take clients through, we help them identify, Okay, these are probably your you may be having struggling in sales and marketing, maybe sales, and opposite may be the sales to the scale element, which is all about identifying, hey, where do we want to be?

And what resources do we have to get there? So f is find your buyer, as a marketing agency, there should be no, you know, like I really struggle with is actually being the first factor, because a lot of people start out with products, you know, but I would say, first, you gotta understand who your buyer is. And, you know, again, this is what I would say is these factors are for companies that already have product market fit and are looking to go to the next level. You know, if you're a founder, and it's like, you're in the startup phase, product is probably going to be more important than buyer, you might just sell a product at any point to get to get buyers.

But this is now that, hey, you've, you've seen what's work, you've seen what hasn't worked. But now we're saying, Hey, these are the these are the buyers we want to serve, and we know we can help them, we've got testimonials, etc, etc. So find your buyer, it's not only like knowing who your ICP is, but where do they hang out? How do we reach them? Was it? Is it conventions? Is it paid ads? Is it you know, et cetera, et cetera. So that's obviously a marketing piece, aligning your brand. Once you know that, you'd be amazed at how many like how much work that has to be done on your own website, on your own social and your own bios, your LinkedIn, how do you communicate, to attract and align to the customers you really want to reach?

And then C is create the products. So this is where we kind of get into the products. And a lot of times it's not changing the products, but what how do we actually create more products that serve this audience now that we know their pain points, maybe we can go deeper and ascend them into something different in the info space, it's, you know, it's pretty easy. In You know, sometimes it's really challenging with the physical product space, and depending on your industry, things like that. T is then tell your story. And so this is where I would say the product and the tell your story becomes difficult if you're the main Rainmaker, because you are the chief storyteller, you're the chief product creation, you can make the product up on the fly, and your team hates you because they're delivering something you sold that you don't have, you know, but what you have to do, if you're going to quit being the Rainmaker, you're going to have to standardize your product offerings. And you're going to have to learn how to tell your story that someone else can tell and not you, which means you've got to be able to have testimonials, you've got to be able to know the origin story, you know, all of those things.

And we've got frameworks around each of those as part of the framework. So that's T, and that, you know, that's where you kind of get into the testimonial process, how do we capture stories? How are we putting that back into our sales process into our marketing, then oh, is your operating model. And this is this is where we would come in and say, now that you've got a team, you know, if you're looking to scale, you have to have people, even if it's contractors, or employees, how are we going to leverage those people? What systems what's the tech stack, what's all that that we we want to do?

We don't have a set tech stack, but we have a set, here's what you have to do, you can choose the tech stack that works best. And then we'll we'll help you go from there. So that's like people management, all the stuff that you have to operate your business. And then are is the repeatable sales motion. And so what I would say companies in the oh, we help you kind of get clear on what your goals are. But what I always say you need to be goals driven but metrics focused in this type of business. And so you're looking at your numbers, what are the metrics in that repeatable sales motion? It's all about metrics. So you know, if you get big enough you can kind of reverse engineer the success and the growth that you want, you know, to say hey, we want this many customers we know this many calls our sales team has to have etcetera, etcetera. So what's that repeatable sales motion? And then that's that's our and then ask for the seven factor is all about scalability, you know, we identify So here's our business challenges.

Here's our business opportunities, but there's a gap of where we are where we want to be. We look at resources okay, what what positions do we need to hire? What money do we need? Do we need to spend more money on advertising? What are the resources that are going to be tight that we need to take to scale and really focus on that? It's amazing how many business owners don't ask that question. They just think oh, let's get more customers. Versus Okay, what do we have? Do we need to cut back on certain things to focus on x y&z?

Joe Troyer 20:27
Yeah, sure. What's, what's the budget even related to that? Like, once you figure that out? You know, how do you come up with that money? Or where does it come from? Or do you have the money, you know, is another important process? Yeah. Cool. Yeah, that makes perfect sense.

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