Mo’ money, mo’ problems: managing a $1 million firm vs. a $50 million firm

Jeremy Barr is the CEO of Rocket Mindset, providing leadership coaching for founders and company leaders.

Scaling up is the goal of most founders and CEOs, but lots of us fail to consider how much our roles will change as a company grows.

Here are some differences I’ve observed between managing a company worth US$1 million and one worth US$50 million, from my own experience and via leadership coaching.

Image credit: Timmy Loen

Company worth US$1 million

• Anything from two to 10 different employees wear multiple hats, giving them all a lot of responsibility.
• You hire entrepreneur types who don’t love the “system” or bigger companies. They want a lot of freedom in their roles.
• If you’re managing a company of this size, you’re probably new to paid advertising and sales teams.
• You don’t have a highly scalable product or a lot of sales. Yet.
• You’re still figuring out how to best prioritize your time.
• You’re stressed to the nines, especially if you’re still trying to do it all yourself.

Company worth US$50 million

• You have 15 to 80 employees and they tend to be specialists, good at one or a few things. They like the safety of a reliable revenue company and defined roles and promotion criteria.
• You teach your employees how to communicate better with each other. Your one-to-one meetings with each employee are the most important thing you do.
• Weekly C-suite and director meetings are essential.
• You spend US$50,000 to US$100,000 a day on adverts while managing an analytics team.
• You create procedures that would have been unnecessary and slowed the company down at a US$1 million scale. Maintaining clear promotion guidelines is an example.
• You deal with customer legal issues regularly. You probably also face a lot more fraud as well and measure it on the profit and loss sheet to keep the percentage low.
• You prioritize tasks not based on what’s the right thing to do but on which task will provide the most return on your time investment. Your priorities shift by the hour and lots of “right things to do” have to be ignored.
• You make decisions that more often favor long-term employee retention compared to when your company was smaller. Losing an employee with a long tenure is more expensive at this stage as institutional knowledge is lost and can take months to rebuild. That downtime will hit your revenue.
• The company finances multiple large projects in parallel per quarter, and if it’s not the right bet or execution is poor, you can lose enough money to require layoffs. Keep your bets to less than 15% of profit and loss if profit margins are 20%.
• You’ll find you have to choose which processes are right to automate right now versus which should still be performed manually. This is because automation has a high near-term cost and a long-tail payoff.

This article originally appeared as a post on Jeremy Barr’s LinkedIn page. It has been edited for clarity.