This week I was working with my friends Rich and Simon on creating a video trailer for my new book and we were talking about why someone would want to create a sellable business. My friends had assumed – like most people – that Built to Sell is about how to sell your business and sail off into the sunset.  I tried to convince them that the book has a broader message, and is really about creating a business that doesn’t rely on you personally.

Rich and I have known each other since we were ten years old. As I gave him my well-worn lines about how building to sell gives you options like installing a manager or taking a vacation, I could see his eyes rolling through the phone line.  He knows when I’m giving him the standard pitch and he called me on it:

“There must be more to it than that”, Rich said.

Finally, after about twenty minutes of hard questioning, we realized I had been overlooking the most important reason to build a business that can thrive without you: The Ceiling of Control.

The Ceiling of Control

In the first 5 years of my research company, we grew fast. Our top line revenue was roughly:

Year 1: $150,000

Year 2: $300,000

Year 3: $750,000

Year 4: $1,500,000

Year 5: $2,200,000

Then a funny thing happened: we got stuck at $3.3 million dollars in revenue:

Year 6: $3,300,000

Year 7: $3,300,000

Year 8: $3,300,000

Each year we stood still, I grew more frustrated. I felt like I was trying to swim in a pair of jeans. Three years is a long time to go nowhere.

With the benefit of hindsight, I know what happened. I had reached a ceiling beyond which I would never grow until I gave up control of our product and how we sold it.

In an effort to grow, we were offering way too many things which meant my employees were out of their depth a lot. To compensate for my lack of focus, I tried to control things too much. I wouldn’t let a project leave the office without my personal revisions and edits. I frustrated my juniors employees and smothered my senior people. If an important prospect called, I would take the meeting instead of sending a salesperson.

Somewhere around $3 million dollars of revenue, I went from being the driver of my business to the bottleneck.

I’m sure this happens at different points in other industries.  Photographers probably hit The Ceiling of Control early — maybe $250,000 in revenue. Heating and Air Conditioning (HVAC) businesses can probably scale up to $5 or $10 million before they hit the ceiling. A professional speaker or lawyer may get stuck around $500,000 in revenue,  but no matter what industry you’re in, I’m pretty sure the ceiling is there.

For me, bumping up against The Ceiling of Control was a difficult period. Intellectually I knew I needed to revamp my business model but emotionally I was tired. Three years going nowhere takes its toll and part of me just wanted to lock the doors one night and walk away. The blank canvass of a new start up was much more appealing than the messy work of trying to change an existing business.

In the end, I decided eight years of my life was too important to throw away so I committed to putting in a few more years to scaling up and getting out. We changed from project-based consulting to a subscription model,  hired a sales and senior management team and we started to grow 30-50% a year again.

The most important reason to build to sell

I have been peddling my book for more than a year. First, the self-published version and more recently, the second edition being released this month. Only this week did I stumble on the most important reason to build to sell: because it allows you to grow past the ceiling under which most owner-dependent businesses get trapped.

It’s too late to change the back cover art work of the book to incorporate the idea behind The Ceiling of Control but I’m going to start hammering hard on the point in interviews and articles because, while only a small percentage of business owners want to sell, a much larger percentage want to stop treading water.

Just curious, have you ever run into The Ceiling of Control?