FCB #036: Hitting the Ceiling & Breaking Through

Introduction

As I mentioned in my LinkedIn post on Thursday, there are 7 stages of growth for a commercial real estate appraisal business:

• Stage I - Still an Appraiser
• Stage II - Solo Practitioner
• Stage III - Early Startup
• Stage IV - Early Growth
• Stage V - Early Management
• Stage VI - Managed Organization
• Stage VII - Mature Appraisal Business

In today's newsletter, I'm going start by explaining why entrepreneurial appraiser founders "hit the ceiling."

Then, I'm going to do a deeper dive into the 7 stages, discussing the characteristics and difficulties of each stage.

Finally, I'm going to explain how you can break through each growth ceiling and go on to the next level of growth.

Hitting the Ceiling

An appraiser who sets out to found and grow their own appraisal business will eventually hit a ceiling.

In fact, this phenomenum is likely to happen multiple times as the business grows and matures.

Hitting the ceiling happens not only to the founder and the business, but also departments and team members.

You know you've hit the ceiling when the adage "what got us here won't get us there" rings true.

At this point, you may feel like you are either flailing around or perhaps even failing.

If you feel stuck where you are, you've probably hit the ceiling and have plateaued.

When a business or parts of it hit a ceiling, it's time to leverage a framework that can help you break through.

The key to breaking through is a professional management system that identifies and removes the roadblocks.

In the following sections, we'll discuss the characteristics and difficulties of each stage.

We'll then explain what you need to do to break through each ceiling to the next level of growth.

Stage I - Still an Appraiser

Characteristics:

• Mindset - 100% Technician
• Employees - 0
• Client Base - None
• Locations - Employer-driven
• Revenue - Low 6 figures
• Systems - Employer-provided
• Management - Employer-provided

Difficulties:

• Hit an income ceiling
• Unhappy as an employee
• No management opportunities

To Break Through:

• Get a professional designation
• Build prospective client relationships
• Develop 6- to 12-month emergency fund

Stage II - Solo Practitioner

Characteristics:

• Mindset - 90% Technician, 0% Manager, 10% CEO
• Employees - 1
• Client Base - 1-5
• Locations - Local, 1 home office
• Revenue - Low 6 figures
• Systems - Minimal
• Management - Self only

Difficulties:

• Minimal client base
• Limited startup capital
• Having to do everything

To Break Through:

• Create business plan
• Secure startup capital
• Lay business foundation

Stage III - Early Startup

Characteristics:

• Mindset - 80% Technician, 10% Manager, 10% CEO
• Employees - 1-2
• Client Base - 5-10
• Locations - Local, 1 home office
• Revenue - Mid 6 figures
• Systems - Rudimentary
• Management - Crisis-oriented

Difficulties:

• Lack of work
• Hiring quality staff
• Weak cash flow & profits

To Break Through:

• Do marketing & sales
• Get help with recruiting
• Start building core systems

Stage IV - Early Growth

Characteristics:

• Mindset - 50% Technician, 30% Manager, 20% CEO
• Employees - 3-5
• Client Base - 10-25
• Locations - Local, 1 business office
• Revenue - High 6 figures
• Systems - Basic
• Management - 1 manager

Difficulties:

• Weak alignment
• Weak business model
• Not getting systems built

To Break Through:

• Develop accountability chart
• Start strategic planning process
• Create Process Champion position

Stage V - Early Management

Characteristics:

• Mindset - 25% Technician, 50% Manager, 25% CEO
• Employees - 5-10
• Client Base - 25-50
• Locations - Regional, 2 offices
• Revenue - Low 7 figures
• Systems - Formalized
• Management - 2 managers

Difficulties:

• Employee turnover
• Weak project management
• Poor staff onboarding & training

To Break Through:

• Implement project mgmt. software
• Develop self-serve onboarding & training
• Improve marketing, sales & back-office systems

Stage VI - Managed Organization

Characteristics:

• Mindset - 10% Technician, 40% Manager, 50% CEO
• Employees - 10-20
• Client Base - 50-100
• Locations - Regional, 3-4 offices
• Revenue - Mid 7 figures
• Systems - Advanced
• Management - 4 managers

Difficulties:

• Hiring quality people
• Problem solving difficulties
• Low staff buy-in & satisfaction

To Break Through:

• Redesign key systems to be scalable
• Build quality management/leadership team
• Remove yourself from technical & manager roles

Stage VII - Mature Appraisal Business

Characteristics:

• Mindset - 0% Technician, 10% Manager, 90% CEO
• Employees - 20-50+
• Client Base - 100-250+
• Locations - Regional or National, 5+ offices
• Revenue - High 7 figures to Low 8 figures
• Systems - Integrated with automation
• Management - 5+ managers

Difficulties:

• Inadequate profits
• Rapidly changing marketplace
• Offerings not unique or differentiated

To Break Through:

• Have business valued regularly
• Decide which exit strategy you want
• Create an exit/succession plan & execute

Conclusion

No matter where you're at in the business growth life cycle, you're going to hit a ceiling.

The key to breaking through is a professional management / business operating system.

Such a business operating system needs to be comprehensive yet relatively simple to implement.

I found such a system which helped me grow my business from 6 to 7 figures with a 7-figure all-cash sale and exit.

Putting your own business operating system in place takes a year plus one to two years more for your business to become a well-oiled, smooth-running machine.

If you are experiencing growth challenges and want help breaking through to the next level, help is readily available. Just ask!

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If you're an appraisal business owner and like these weekly newsletters, please share these with other appraisers or small business owners you know.

Also, please consider working with me as your business coach. I truly care about you, your business, and your future success.

Help for you or your peers is available two ways:

1. Newsletter - Go to www.CalvinCummings.com, click on Newsletter at the top, and Subscribe to our Weekly Newsletter where I share what I did to grow, scale, and ultimately sell my commercial real estate business successfully.

2. Business Coaching - While you're there, go to the Coaching page and Book a Free Consult Call with me to see if our Founder Coaching Program might be a good fit for you and your business. Visit the Testimonials page to see what some of my coaching clients have to say about me working with them and their appraisal businesses.