Seven Factors of Scale – Growing a Seven Figure Business to Eight Figures [Part 2] with Chad Cannon

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In this episode, we bring you part 2 of Joe’s interview with  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

  • Why you need to build rapport with your sales team
  • The importance of deprogramming the sales process
  • Nailing down your ICP
  • Getting clear with your niche and customers
  • Why there are no sacred cows in business
  • Understanding who you’re reaching out to

People and Resources Mentioned

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Joe Troyer 0:48
I guess like relating it back to the audience, if you're a digital marketing agency owner, and you got a seven figure a year business, but you're in that Rainmaker seat, right, and you've kind of made it by hustle and grit determination, you know, building a little bit of, you know, a name in the industry, I would say is kind of like, how a lot of smaller seven figure agencies get there. And like, they don't have that, as you said, repeatable sales motion, right? They really don't even have like an ICP, right? Their product is like, you know, Charlson, the, you know, lots of made up different things. And, you know, I guess like, what, what advice would you give to, you know, the person in that seat?

Chad Cannon 1:36
Yeah, great question. I think you hit on it earlier. You know, some people that may be what they want, you know, and I think here's the filter that I would say, what I've seen time and time, again, the ceiling on that type of business, where you do not where you, you know, are no longer the chief Rainmaker and you pull yourself out of that, and doing all of it is probably a two or $3 million agency, you know, that's probably the ceiling on it. And that's if you're dang good. If you're a phenomenal salesperson, you're a phenomenal leader of people, you can get people motivated to do things, even out systems and processes, but you're going to be worn out, you're going to be overwhelmed. And so if, if that's the size of agency you want, and that kind of lifestyle, like, feel free to do that.

But if you're looking to build a five to $10 million agency, it's going to be essential. There's just no if ands or buts about it, where you're going to have to be willing, you know, what I always say is that you have to de like, deprogram, what makes your sales process unique, you know, there are certain things you have to do in the sales process. And most of these marketing agency owners, I'm sure you know that, because you're probably coaching people on it, but you don't do it for yourself, you know, kind of the dog fooding it, you know, eat your own dog food. And so, and I had to do this with business accelerator, honestly, because when I stepped in at Hyatt, I sold our first 400, seats to 15,000, our coaching program. And even though my name wasn't on the door, my face wasn't but people got to know me is like business accelerate, even though it wasn't my thing. It was still Michael's thing.

But I sold the first 400 seats that I literally, and it was like, it was kind of out of necessity in the business were like, Hey, this is an idea, we've got this momentum, let's just do it. We had all these leads coming in. And we didn't take time to build out the sales process. So I had to actually what I would say is kind of deprogram my mind and be like, Okay, what do I do in the first 10 minutes? And why? You know, like, naturally, we all know, we need to build rapport. So how do we build rapport? What's unique about our company and how we build rapport? What do we want to say, in that rapport building phase? And then I would say is, then, you know, this again, this is like a sales call. But like any, you know, this is email. Anytime you have a conversation with someone, there's something you as the business owner is doing unique, that if you just hire a salesperson, they're not going to do.

And I don't know how many business owners I've talked to you and I've gotten burned so many times, because I've hired a salesperson, they just don't do what I did. And guess what, they're never going to do what you did, if they can do 80% of what you did, that's a win, like 80% of what you did is a win. And so you've got to be willing to work with that person and not just be like, Hey, here's our company. You know, here's some customers go talk to them about really spend some time in the trenches under and helping them understand what what made more unique process tick. And what I would say like that create the products that you've got to standardize your products. Because if they're working for you, the business owner time and time again, they're going to be scared. And they're not going to they don't feel like they don't feel like they have the freedom no matter how much you tell them. They've got the freedom to make it up on the fly. They're not you. They're not the business owner. They don't know the financials. They're going to just sell what they see and what they think the product is.

Joe Troyer 4:45
Yeah, makes perfect sense. Yeah, lots of good stuff in there deprogram deprogramming the sales process you know, I see it all the time. You know people hiring commission only salespeople and thinking like it's just gonna work. Like it's it's a dream because like, I don't have To train them, they only like get paid. If they actually work. It's like, well, then what? What are the chances do you think this is actually going to work out? Like, you know, what's the training that you give them? Well, I send them over this document that says what we do, and our packages and what permission they get, like.

Chad Cannon 5:17
Yeah, well, and the reality is if they're really that good at doing that they're probably running their own company.

Joe Troyer 5:23
100% 100% So yeah, I love I love that analogy. Like the the name that you gave it, the deprogramming because it is like it. It's like literally peeling back the onion layer by layer and like looking at it from a third point of view, or third party view of like, how am I doing this? That's, that's getting this result because you don't know like, through repetition. And it's the

Chad Cannon 5:45
hardest thing I mean, in the in the info product space. That's the courses that work the best are, you know, people that have people around them that have actually deprogram the things that make them tick? Like I think of our course, at Hyatt, which was five days your best year ever. So goal setting program we didn't set out to create that product we ended up happening is Michael was sharing with us one day about his goal setting process at the end of the year, getting ready for the next year.

And it was just going to be a masterclass in our low cost monthly membership. And we were all like, No, this is actually this feels bigger than that, like, we need to productize it and help him kind of pull that pull back the onion. And that turned into a course that we launched every year, in December in January, it was a multi, you know, two to $3 million launch every year. You know, if we wouldn't have seen that opportunity. It would have just been a free training 90 minute masterclass as part of a $39 a month membership.

Joe Troyer 6:42
Yeah. Crazy event that that can have right like this little one time masterclass, you're gonna run or, you know, special training and it becomes like this huge, you know, standalone alone product all by itself. Love that. The other thing I think that you said was the really cool, you're kind of piggybacking on a previous comment that I said was like, just like you don't you don't have to scale. Right? Like, you know, where do you want to be? So you talked about, you know, kind of three ranges, you know, one to 3 million, you can probably get away with being the Rainmaker three to five, like, you're gonna have to make some changes and get yourself out of that position and, you know, make some key considerations to really scale.

So, I'm curious, I guess, at what point do you think it's really important to really nail down your ICP and kind of your products? You know, I see a lot of agency owners that the agency owner is that Rainmaker, and they're kind of able to, you know, in a couple of years with some grit and determination, you know, get to that million dollar a year mark themselves. And then it's like, Well, can I just continue here?

Should I really go after and build an ICP? Like, you know, they're kind of a, an agency that does all sorts of things with all sorts of different, you know, products. And I think it's like, one of the things I get asked the most by an agency is like, you know, I've made my, I've made it to here, like, just that dumb luck ensured the determination, right? Like, how important is it that like, I really starting to nail ICP is really what they're saying. And then also the products that go with it.

Chad Cannon 8:23
Yeah, honestly, I would say it's even at the sub seven figures. I mean, I know, probably, there's people out there that are at seven figures, and don't feel like they have that, and maybe not even a necessity. But what I would say, and I know, looking back at kind of the challenges I had in my own agency, and the things that kept me up at night, and I'm sure you know, the, it's that one big client that makes up 35% of our revenue. And if it goes away tomorrow, where am I going to go?

And so what having your ICP and having a repeatable sales motion does is it protects you from that fear, and not being reliant upon the big fish that if you lose, you don't replace, you have to lay off half of your staff when that contract is up, you know, and so, if you can get that done sooner, you know, sure, you can continue to be successful, and you have growth and all of that, but until you can't, you know, until that one big fish is gone.

Yeah, I mean, I, I see this all the time. And like the biggest agency here in Nashville, Paramore, you know, they lost a client that was about 25% of the revenue and guess what they had like 25% of their staff. You know, just kind of unfortunately, the marketing agency kind of model you know, but it protects you from from that, that happening, and helping being really clear and then you get the right type of clients to you don't have those pain in the butt clients. You're like, oh, man, I gotta hop you know, I got to do this today. But you really get the clients you want to serve. And then you just enjoy your business more.

I've seen it time and time again that when you get that clarity and you know, there's there's that what I would say limiting belief that when I get cannot get to the numbers that I want. If I niche down if I get really clear about these customers, and the answer is always, yes. Amy Porterfield says this all the time, and we have spent a lot of time with her. The riches are in the niches and she helps people get clear on their niche, which is helping you identify your ICP is own that there are riches in the niches.

Joe Troyer 10:20
Yeah, I love that. I think that's great advice. well articulated. Thanks. So I want to jump over for a little bit. And talk about kind of Michael Hyatt a little bit more before we wrap this thing up. So I'm curious, like, as you zoom out, like the results that you achieve the company achieved together, you know, while while you were there during your tenure, like was explosive, like crazy results. I'm curious to have you articulate like what you think was the the 8020 that really, you know, led to that company's explosive growth. And I guess even if we pull it back a little bit more, right, if we take Brando's principle of 8020, we FDI. itself, and we got the 64 for right, like what do you what do you think that that is? Like, what were the major levers?

Chad Cannon 11:09
Yeah, it's a great question. And I love this question. You know, I think people ask all the time, you know, hey, what made Michael different than the other, you know, info personalities, that, you know, they, they have good businesses, you know, five or $10 million businesses, that's a great business. But we went well beyond that. And part of it was, Michael has a lot of business experience, you know, he ran a half billion dollar publicly traded publishing company, he's hired people, you know, he's built structures, I think he had an appetite for staff that a lot of these info printers don't, you know, they just bring in contractors and all of that.

And because of that, one thing, we always said, as an executive team, there's no sacred cows, we're willing to kill things, even if it's working. But it's not the future of the business. And we had a really clear, Michael had a clear vision of where he wanted this business to go. And which meant, you know, when we did our strategic planning year, like, I remember three years in a row, we had a pretty big shift and our strategic plan three years in a row, it was just kind of getting dialed in year over year, every time when we said, Okay, we're gonna own helping small business owners and leaders kind of this next layer down, potentially leaders inside larger organizations get to double win.

So at the end of the day, we were motivated by helping people get the double when when at work and succeed at life. And there was in that we had to have an element of coaching and everything that we did, even if it was a planner, which is a physical 90 Day executive planner that so when we were willing to shift from courses to the planner, go from an 80% margin product to a 50% margin product, because we knew that we could reach more customers, and we knew it would create greater transformation, which would create greater word of mouth, we were willing to do that. And so we were able to spend three, you know, $1, to make $3, and get the right customers and have this physical product pre COVID.

At one point, it was in every boardroom of the Fortune 100 companies. So pretty COVID, you know, they plop that planter down. And at Apple, you know, we had this conversation, I talked to their cmo and they, you know, Tim Cook was like, Hey, what is this thing, you know, and it's a product that ultimately around the table, you can have that conversation. And so that turned into us being able to then develop a coaching product. So once we got really clear on saying, Hey, this is who we're going to own reaching out to, and this is the transformation we're going to provide. It really aligned all of our marketing all of our messaging and our product creation.

And that's what really took us you know, I mean, it's the margin, obviously, the business isn't what it once was. But there was a ceiling on that business at at, you know, 70 to 80% margin. And that wasn't the vision, you know, Michael had $100 million vision. And so, you know, it's like, potentially not wanting to be the Franklin Covey, but a modern day, the best way to talk about it's kind of modern day Franklin Covey was what were happening.

And you know, funny enough that you went back to the planner, Franklin Covey gave up the planner tried to go digital, we did the opposite, and, and had way more success, you know, and so, and they're months away, and this is, like, probably not public information, but months away from rolling out an app, which I think will be the next iteration that will really take them to the next level because they there's people that always do print, and physical and there's some people that need the app, they've just kind of built their whole productivity in a digital setting even though we know it's not as effective just scientifically that they need something digital, and I think that that'll really, really take them to the next level.

Joe Troyer 14:43
Yeah, man, that's freaking fantastic. All right. In wrapping this up, instead of asking my my guests to recommend three books, which I feel like is like the end of every podcast like I've recently since starting this podcast, giving myself permission to stop reading a book if I don't enjoy it, right? Like, it's just really, really hard for me.

Chad Cannon 15:08
Especially being in the publishing background, I'm like, man, if I'm gonna start, I gotta finish it, you know.

Joe Troyer 15:13
So like, now that I've done that, though, like my reading is like, went through the roof, right? Because if I don't enjoy it, I just stop. And it never like just, you know, sits there and I, you know, avoided at all costs. So because of it like, I'm getting through a lot more content. So I always like to ask my guests, you know, what's, what's the one book that you think has made the biggest impact on the way you do business, the way you look at life, the way you look at things like if it had to be just one book, which I know it's hard. But I get unique recommendations all the time. And I'm able to put them in action very quickly because of how we ask this question.

Chad Cannon 15:47
Yeah. So it's hard to distill it down to one. But I would say the book that probably transformed more than it was measured what matters by John Doerr. And it yeah, this is where kind of the KPIs kind of came out of how KPIs are being used in Silicon Valley, and all of that. And are OKRs. It's like, okay, yeah, KPIs, objectives, key results. But really, it's forced me in my leadership of teams and people and you know, goal driven, but metrics focused, is when we can help a business owner, get metrics, focused, anything is possible. And it takes the like, Hey, this is where I want my business to be.

And we can actually prove it on paper that if we hit these metrics, on a 30 day basis, it's going to be there, you know, and what are the things we're going to do to measure those types of things and know if we're winning, and it's also the thing that can get your team rallied and start to, there's just so many, you know, it's like to take small bites of the apple before the before the biggest bite, you know, and so it just shows you that we can systematically grow this business, and not and get to the point where by doing it systematically is what forces scale, you know, you don't have to ultimately start scaling your operation. To get scale. It's actually systematically that's repeatable, that drives scale, which is what's always exciting to kind of see that light bulb go off for business owners.

Joe Troyer 17:09
Love that. See, we get a unique recommendation and a book I haven't read by asking this really precise question. So thanks for that chat. Awesome, man. So we'll make sure and link up to your website, I see seven factors of And link up to you on social Where are you most active on Instagram? Yep. Perfect. So we'll link you up there. I saw you got to LinkedIn as well throw it in the in the show notes for everybody. And thanks so much for coming on, man. It was a pleasure having you. Thanks, Joe. Appreciate it.

Joe Troyer 17:41

All right, everybody. That's it another episode. Go Check out Chad, see you guys.

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