Today, we have the pleasure of interviewing Rob Scott, Founder and CEO of Spark Growth Strategies. He is passionate about helping companies grow.
Great to have you with us today! Please tell us a little about your background.
Great to be here. I am the Founder and CEO of Spark Growth Strategies based in beautiful Colorado. Throughout my 28 year career, I have always had a passion for helping companies grow. After multiple successful ventures in the IT services, healthcare technology, and CRM spaces, I decided to put that passion to work for solo entrepreneurs and small to mid-sized businesses.
Why the passion for working with solo entrepreneurs and small businesses?
I think it was mostly because of my own journey as an entrepreneur. I started my first company at just 16 years old. I had worked summers and after school at a computer and electronics company and had pretty quickly learned that you could buy and sell (brokering) hardware that was being used to build some of the early personal computers…hard drives, monitors, printers, and so forth. So I quit my first job and did the paperwork as a sole proprietor, and I started buying and selling hardware. It was a great experience, but obviously, I knew nothing about running and growing a business at that age, so I went to work for another early-stage business in the same space to learn the ropes. I watched that business grow from under $1 million in revenue to over $100 million in just seven years and then be acquired.
I took that experience and once again quit my comfortable job to start another company. My partner and I quickly grew that business providing IT solutions to healthcare practices all over the state. This was in the early days of tech for medical practices, so it was an uphill battle.
Over the next few years, I would learn the value of capital reserves and the importance of maximizing a business's value before selling. My partner and I were not prepared for the stress and challenges of growing a business. We both were struggling to stay positive even though the business was booming. I bought out my partner at his request and soon sold the business for what I would later realize was far below the company's value. I was just 29 years old at the time and was really feeling the stress, so picking up a nice six-figure check and being able to start on something new was pretty attractive.
I spent the next 13 years working on growing two mid-market IT services companies. This is where I got to see firsthand the power of private equity investments. We were able to grow one company from $20 million in sales to over $200 million in less than 6 years and then did the same with another company from $30 million to over $300 million in just 7 years. This time I was fortunate enough to get in as a shareholder at an earlier point in the growth curve. So after a successful exit, I was positioned to take the capital assets and all that I had learned to launch Spark and focus on my passion for helping other entrepreneurs and small businesses.
So, what does Spark Growth Strategies do?
We help solo entrepreneurs and small business owners overcome the hurdles to their growth so they can scale their businesses and ultimately achieve their personal goals.
What I've learned is that these owners all face a pretty similar set of hurdles and challenges. Each has a unique business, but the things that get in the way and make it difficult to succeed are similar. I think we have all heard that new businesses fail at a very high rate in the first few years…something like 90% fail. On paper, it is almost always the same issue. They fail to achieve the revenue and profit they need to survive and to grow. It's easy to think that a sales or marketing strategy can be what saves the day, and to some extent, that is true. However, what we have seen is that just having a solid sales and marketing strategy is not enough.
You have to ensure that you as an owner are continually working on the business's strategic aspects more than the tactical growth.
What do you mean by that?
Well, I think an overused phrase is “You need to work ON the business, not IN the business.” That's true, but ask anyone who's bootstrapping a business in the first year or two, and that phrase is not really helpful and maybe even pretty offensive. Of course, as a business owner, you want to just be working on your business and not working long days in the business. But that is not a strategy; it's a result. It is not something you can just flip a switch and do. You need a strategy that will help you to achieve that goal, and I absolutely believe it should be the number one goal of any business owner.
A lot of people start businesses because they want the freedom to do what they enjoy, are good at, and are passionate about. They want the financial rewards they see successful business owners enjoy, and they want to be their own boss. But the reality is that for most, the first few years will deliver very few of those rewards. The days will be long, and the financial rewards minimal. The new entrepreneur will most likely realize they don't have even the same amount of freedom they did when working for someone else. All of these hurdles and challenges tend to break people down and lead to self-doubt. It is my personal opinion that self-doubt has been the death of far more businesses than any other challenge.
Interesting…so how can a business owner overcome self-doubt?
If I can offer any advice to someone considering quitting their job to start a business, their success will really come down to just these things.
First, do they have their personal finances completely under control and at a level that they can sustain for at least one full year without ANY contribution from their business? Basically, do they have one full year of their current income level stashed away? And I don't mean equity in their home or their kid's college fund. I mean actual liquid cash that they can pay themselves a paycheck while building the business. If they don't have it. I say wait until you do or reduce your living expenses to achieve that goal more quickly. It does not matter what you “think” the business is going to produce in terms of profits; you need that first year to build up cash reserves in the business and to fund expansion and scaling, not to pay your personal bills.
Second, I ask why they are launching the business and do they have that vision down on paper? I don't mean just the surface level, “I want to be my own boss” or “I really enjoy doing this, and I'm tired of doing it for someone else to make them rich.” I'm looking for a clear vision of what commitment will motivate them through the hard times. I would tell them to dream big and put it on paper. When things get hard, you are going to need some really concrete things driving you forward, or once again, self-doubt may get the better of you, and giving up or retreating may seem like the best option. You have to picture that “future state” when your business is incredibly successful, and you are living your dream life.
Lastly, I ask if they are willing to “burn the ships.”
What do you mean by “burn the ships”?
Basically, are they ready to completely commit to the business as if there is no “plan B” to turn to if things don't work out? When I started Spark, I had a piece of paper hanging on my wall right in front of my face that said in big, bold letters: “There is NO Plan B.” I did that because I knew from past experience that it would be hard, really hard at times, and I needed to remember that quitting was not an option.
I don't know the exact story, but as I understand it, in 1519, a Spanish conquistador named Cortez set out to conquer the Aztec people. He ordered that the ships they had used to get there be burned so that he and his soldiers would have no option of retreat. They would either conquer the Aztecs or die trying, but there would be no escape back to Spain. It was very hard-fought, but eventually, they did, in fact, succeed. Who knows if they had an escape option when things got really hard, if they would have retreated, hoping to fight another day, and they may never have succeeded in their goal.
Now I know that sounds harsh, but I really believe in the tenet. I can guarantee to each and every new business owner that no matter how good it goes early on, you will face challenges you are not prepared for. You will seriously consider giving up at least once and probably several times. So get rid of the escape route…burn those ships.
What else would you tell a new business owner?
Persistence is maybe the most important success factor. All the talent, all the best ideas, generous funding, and other advantages are great. Still, I think the key is persistence…just don't give up.
I would also tell them to have focus but with a big dose of flexibility. By that, I mean maintaining a steady focus on a strategic plan but also a willingness to adapt as things change, and change they will. We often sum that up as “love the problem, not the solution.” Many new businesses fall in love with what they think they are doing to solve a problem and are baffled when their target market doesn't respond or buy their solution. You need to be obsessed with the problem you are solving so that you can continually learn how to best solve it.
How has the Covid pandemic affected what you do?
In many ways, it may be our biggest growth catalyst. We quickly shifted to working with clients remotely, which led to geographic expansion. We went from focusing on local Colorado businesses to working with businesses all across the U.S. and Canada. We even recently started working with clients in Europe and South America. We've scaled much more rapidly than I think we would have if things were still as they were before the pandemic.
We were also able to attract a great team that is very diverse in all ways, including where they sit geographically. I am a huge believer in the gig economy and have always felt it will transform the way we work. I think the pandemic has served as an incredible catalyst in that way. It is hard to say that because COVID-19 took an immense toll, but some of the biggest growth comes from the biggest struggles and pain.
How can people learn more about Spark?
Thank you so much, Rob, for giving us your precious time! We wish you all the best for your journey ahead!