Mistakes to Avoid When Scaling Your Business

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Mr. Biz Radio: Mistakes to Avoid When Scaling Your Business

Unedited transcription of the show is included below:

This is Mr. Biz Radio sponsored by Capital Plus. However, the next half hour, Mr. Biz, Ken Wentworth, a two time national bestselling author and leading business advisor will cover topics that help business owners operate their businesses more profitably and more efficiently. If you're ready to take your business to the next level, this program is for you. And now here's Mr. Biz, Ken Wentworth. All right. Welcome everyone to another episode of Mr. Biz Radio with me, Mr. Biz, Ken Wentworth.

And this week, we are talking about a topic that I get asked about regularly. And I know a lot of you guys are going to nod your head on this one, scaling your business. And as you know, a lot of times when you scale your business, you make mistakes. So again, we don't just bring anyone on the show. So I'm very excited about our guests this week because effectively scaling businesses is what he has done many times. And he still does it for a living. Later in the show, he's going to give us, as you guys know in the third segment, we talk about tips from our experts that are expert guests. He's going to give us some mistakes to avoid when scaling your business, which as you know, you can be going along like gangbusters. If you make some mistakes during the scaling process you could end up out of business, right?

Everything can go away pretty quickly. So I will a little bit of a tease and I've been teasing this on social media last couple of days. So any of you as the fall, I mean, w I've just seen this, but our guests this week has something in common with the likes of Nelson Mandela, Snoop Dogg. That's right. Snoop Dogg, hockey's goat, Wayne Gretzky, the Olympics all time winning his gold medal winner, Michael Phelps, Sylvester Stallone and Mickey Mouse among many others. So you might be asking, what do they have in common? Well, you've got to stay tuned to find that out. He started his career by picking walnuts in his family's orchard, but look at him. Now, Brandon Dawson is the co-founder CEO and managing partner of Cardone Ventures. He is a scaling and turnaround expert, serial entrepreneur, real estate investor has passion for helping business owners and their teams amplify their vision and impact through belief, strategy, execution, and very importantly, team alignment.

So let me give you a couple of highlights here amongst the other things I mentioned that he has, you know, I mentioned earlier things in common with, but he found that his first business at the age of 26, he took the company public at 29. And he found that in self-fund that Audigy group with $500,000, he took on zero debt, no outside capital. And he grew the annual revenues to over $35 million through organic growth. And then this is why we have him on the show. He exited the company for $151 million, which was 77 times EBITDA crazy that's right. Craziness, whoever hears about multiples like that. He's a two-time Ernst and young entrepreneur of the year semi-finalist and he's a five time Inc 500 and Inc 5,000 fastest company award recipient without further ado. Brandon Dawson. Welcome to Mr. Biz Radio. Thank you for having me pleasure to be here.

Yeah. I've been looking forward to this. Honestly, I, I connected with you right after Grant Cardone’s GrowthCon earlier this year. And you know, we were kind of DMing back and forth and I said, man, I got to get you on the show and he graciously accepted. So here we are. So Brandon, I know I've given a lot here thus far about your background, but give us a little bit about your background to fill in some of the gaps that I left out. Yeah. Well, like you said, working on the Walnut orchard, you know, my, my parents grounded me my junior year because I did something stupid. I had this girl I was all excited about and they were going out of town for a week. So they, they knew I had school. I was working evenings at a restaurant and I had football practice.

So they basically said in between all that, you need to pick up all the walnuts where we're, while we're out of town. And I was a little off, you know, your hands get all yellow and it's just nasty. So I went to school the next day and saw the senior class, had a senior class drive to raise a thousand dollars for their senior trips. So I invited them all over to pick the walnuts, thinking if they few people came out, I could do it a little quicker, ended up having an army of people. And we picked that thing clean in a couple of days. And then I sold all those family members that came out all the walnuts and I was a 2.4 GPA. So I made a price and sold them for double what my parents would get each year that they needed for private school.

So I learned the power of scaling and, and the elements necessary with sometimes the things you're doing that you hate doing might be the catalyst for somebody else to have a remarkable life or create a remarkable point. So I learned a lot, a lot, a lot of things there and then just evolved my career from there. Yeah. And so you, you went from there, you obviously did some work in the audio world. I guess, and so then w whereas was that a company took it public had before that? So I moved, so I dropped out of college. I was in my first year, I hated school. I was not a very good student, and I was selling part time working at this place, selling over the phone and making more than the people working full time. So when they had an open position for an outside sales rep in Atlanta, I had never been to the South.

So I moved, packed. It sold everything, moved to Atlanta and traveled 11 States calling on ear doctors and learn the business. And I knew one day I'd want to have my own business. So I just saved enough to have a year's worth of salary. So when I quit my job, which by the time I quit, I was living in Minneapolis. I was making about 130 grand a year had a baby and a brand new born baby and just built a nice house. And I decided I was going to do my own thing. Cause I saw a trend in the marketplace and sold my house and liquidated everything and had a year's worth of cash. And then started going around, meeting with business owners on the concept of, I didn't have any money. If they sold me half their business on a note, I would grow their half to be bigger than it was.

And I made dozens of those presentations and found one guy to say, okay, and parlayed that into $70 million public company. Absolutely crazy. So as you see now I think even aside from the intro, why we have Brandon on the show, because he's been there done that multiple times and not just like, Oh, well we, you know, kind of three X things, which is fantastic, of course. But the things that he's done have been absolutely amazing. So I want to mention that by the way, I don't want to keep everyone on, on the edge of their seat. And I'm guessing Brandon, you know, what you have in common with those folks? Is that correct? I don't know what I have in common with them. Okay.

All right. Well, I'm as excited as everybody

Else. Okay. All right. Well, the thing that Brandon has in common with Nelson Mandela, Snoop Dogg, Wayne Gretzky, Michael Phelps, Sylvester Stallone and Mickey Mouse, and a whole bunch of other people is he rang the opening bell at the American Stock Exchange. But he did not only did that. He did it at the age of 29. So, and I was trying to find this during my research to see if you were in fact, the youngest person to ever do that. And I could not find, I could not dig through. I don't want to say it definitively if I didn't have a proof of it, but I looked everywhere trying to find out if you were the youngest. I know you're one of the youngest, if not the best have done that. That's why I use one of the youngest. I couldn't find it either, but they told me, they said, Hey, asked me how old I was.

And I told them, and they were like, you are the, you are the youngest. Now I laugh because now there's 14 year olds that are worth billions of dollars doing it right with all these tech companies. But back when I, you know, traditional brick and mortar businesses and acquiring them they were like, we've never had anybody, this young ring, the opening bell. So, and I will tell you, you guys, if you go out and look, it's it, you can find the video pretty quickly. But Brandon looks like he's about, I dunno, 14 in the video. So even though he's 29, he looks much younger. So I will say that much. So again, we're talking this week with Brandon de Austin of Cardona ventures, I should mention you going out to the cardoneventures.com

And find out more information. And more importantly Brandon of course he was going through all this COVID stuff. Massive impacts of globally ran has written recently written a book, emergency business response, and I have a copy of it myself. It's actually outstanding and it's free. Best thing of all right free go to cardoneventures.com forward slash emergency. And it talks about the three big things, right? Talks about finance. What do you need to be doing in the financing for emergency response people? What should you be doing with that? And then marketing and sales. If you get those three things nailed down, you're going to be in good shape and you're going to kickstart things back the way they need to be things like that. So, very important. So again carton ventures, and I would also suggest gonna follow these guys on social media. Brandon shares a lot of information on social media all the time. So definitely go check them out. We are going to a break here. We're going to come back, give the Mr. Biz tip of the week. And continue talking with Brandon Dawson of Cardone Ventures.

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All right. Welcome back to Mr. Biz Radio

Is talking to Mr. Biz tip of the week

And this one's a short one, but sweet hard work puts you where good luck can find you as they say. There is no substitute for hard work. Anyone that you look at that's been successful in life and a career has a success as well. Family. It all requires hard work. There's no easy button to success, unfortunately. So definitely guys keep that in mind. All right, so let's get back into, I should mention Mr. Biz Radio, we are brought to you by Capital Plus. Capital Plus removes the hassles of balancing cash flow by becoming your full service credit and collections department. All right. So let's get back into talking with Mr. Brandon Dawson this week. So let's talk a little bit about your current where your current energies are primarily focused and as Cardone Ventures, how the heck did that whole thing get started, Brandon?

Well, I had hired a couple of research firms over the last eight years to look at all the industries that were struggling due to poor for wall you know, independent individual independent locations that struggled with maybe profitability and synergizing their operations. And so I came up with about a hundred different verticals that are industry specific that I knew I could add value. And so then I evolved to how well I go to market in those different industries. And I was looking at lots of different ways of doing it in, in Natalie had suggested that I look at some of the social media influencers. So I started going through the traditional, a list of social media, and I was fairly disappointed that they, although they all did things, what I wanted to do, they weren't really influencing until we landed on Grant and Elena Cardone.

And so I looked and did some due diligence hired another research firm, looked at what Grant Cardone does and realize that 600 of the industries they currently do coaching for sales, training and marketing were at 80% of my verticals were on their lists. And so it prompted me to want to go to growth con check it out. And what I saw GrowthCon was so remarkable. And the three days there, this is Miami GrowthCon 2019. And what I saw there just blew me away. And so when I met Grant Cardone, I told him I had a strategy that I thought could add a couple extra billions to him, but also created an enormous amount of value for independent business owners. So that was the start of our conversation. And then the relationship evolved over 90 days. And then we decided to form a partnership in June.

So guys, if you didn't catch all that, right. So Brandon went to, does the research finds Grant and Elena Cardone, then decides to go to GrowthCon check it out, right? And by the way, those of you guys who listen regularly have been listening for the last several years, you know, that was my first GrowthCon as well down in Miami. So one year think about this one year, Brandon Dawson attends his first GrowthCon, then this past year, Brandon was on stage as a speaker. He was one of the presenters on stage at GrowthCon in Vegas and did an amazing job as well, which is again, one of the main ones that prompted me to ask him to come on the show. So think about it, that guys take action. Don't sit on the sidelines, man, go out, grab it right. As I tell you guys all the time, Steve Jobs, if you don't ask the answer's always no.

Right. Brandon didn't he, he asked, right? What's the worst thing that Grant could have said. So he formed that relationship and look where they're at now. So tell us a little bit more about Cardone Ventures, what you guys do, how you do it. Yeah. So all the IP I've created on growing and scaling businesses, which I used for my own business, started it with what you said in your intro with a half a million of my own money, paid myself back, never raised any money, never borrowed any money and grew it organically generating over 50 million of profits and then selling it for 150 million all that technique and skill set and IP that I've learned along the way that I've helped hundreds of businesses do. In addition to my business, that's what my business was helping hundreds of other people's businesses doing exactly that.

So I brought that IP to Cardone Ventures. And what we've done now is we've got over 200 businesses in our first year that we're growing and scaling using those techniques, using those methodologies, using those skillsets, including the technologies I've created. And we are in business. You can engage us one of three ways. You can you Grant. This is part of what I love about Grant. He he's like people need to be able to come to workshops and learn and go home and do it. Then I've created online curriculum for people that want to come to workshops, want to go deeper, the technical aspect of how to do it, and then followed up by more workshops. So you've got the mastermind version, you've got the workshop version, you've got the online version. And then for businesses that were very excited about that, we believe by bringing my whole team in alignment with the team or the business we can immediately and enormously grow it and scale it, which we've already signed a couple of those partnerships this year.

And one of the businesses is AMI advanced medical integration group STEM cell and chiropractors coming together and growing those businesses. And I believe that will be a three and a half billion dollar enterprise in the next 60 months. Yeah. So again, I've been following Brandon on social media for quite some time, and I, you know, he's been creating this content. It's kind of funny those of you again, think about this. So while a lot of people during the pandemic where like, you know, contracting and, Oh my gosh, you know, kind of folding, folding into a ball Brandon took his, his garage in his house and turned it into a studio so he can continue video studio. So you can continue creating content and creating all this stuff for us all to consume and to be able to deliver this to us. So again, there's no contracting, it's all about expanding and this provides a great opportunity to do that.

So tell us a little bit more. So again, CardoneVentures.com  is where you can find that. And if you want to get the most recent thing that Brandon's play out, it's an absolutely free resource is Emergency Business Response book, go to Cardoneventures.com/emergency  absolutely fantastic resource. Not only to help you come out of this pandemic, but also help you be better prepared for the next downturn. Again, Emergency Business Response. There's a lot of, a lot of different things that can be, it doesn't have to just be a pandemic. So definitely check that out. Cardoneventures.com/emergency. Tell us a little bit more, Brandon, what is, what's a typical business that you guys can help the most with Cardone Ventures? You know, we help businesses all the way from startup to, I've got some guys that are in the hundreds of millions.

You know, I wrote that book because as soon as this hit, I got inundated with people. So I said, anybody that I'm working with has any questions, any concerns get on my, get on my chats. I talked to an average of probably three to 5,000 businesses a week dinner on the different channels. And I'm like, ask me any question, I'm going to answer it. So I was what, the reason I set up the original studio at the house is because I was answering 30, 40, 50 questions a day, editing them and then producing them back to people. And in the process of doing that, I realized there's just some really basic information that people are missing. So I pulled my team together and said, we need to put this book out in two weeks because people need to understand how to technically attack the problems.

And so we put the book out, I wrote that book and put it out working with my team and, and it falls along all the guidance and advice that we've been giving. So I've been spending all my time helping and guiding business owners because, you know, growing and scaling when you talked about pandemic, I mean, almost any, and every business that is attempting to grow in scale finds themselves in crisis or emergency every single time. And I've seen it over and over at all different levels. And so usually what happens is the bigger they get, the more cautious they get. So they go raise private equity and they're really in trouble because they ended up giving the other two thirds of their business away for free when they don't execute, because they have the same systemic problems they had going into the cycle. So there are natural break points, zero to three, three to eight, eight, 15, 15, 25, 25 50, all the way up to several billion dollars that if you've been through it and you've lived through it, you know, what's happening. It's going to happen every single time. And when they do those break points, it throws a business into crisis or emergency. And that's what I've been solving for the last 25 years. So for us, it's very intuitive.

Yeah. So guys, again, scaling, you don't want to do it the wrong way. This is why we've got Brandon on the show. You can need to go check out cardoneventures.com . We're going to hit a break here, pay some bills, and we're gonna come back and we're gonna get his tips on mistakes to avoid when scaling your business.

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Welcome back to Mr. Biz Radio. And again, this week we're talking with Mr. Brandon Dawson of Cardone Ventures. Learn more at Cardoneventures.com  and get a free copy of Brandon's most recent book, Emergency Business Response book at Cardoneventures.com/emergency  great resource, great resource.

All right. So this is the time that everyone's been waiting for. Brandon's going to give us some mistakes to avoid when scaling your business. Now again, Brandon, I bet you can talk about this for days, but you know, we've got about eight and a half minutes left, so try to squeeze it down into eight and a half minutes. Sure. the first mistake is people want to go into building the business before they've replicated and duplicated the very fundamental things that they know work to, to allow the business to succeed. So they'd start doing things. And as they're doing them, they start dishing things off to other people, hoping as they grow that other people will pick up the pieces and then they can go focus on what they want to focus on.

And yet that's not how you grow and scale a business. So there's a process for handing off duties, responsibilities, and there's a process for holding people accountable, because if you don't get the foundation, right then when you go stack stories on your house, they will collapse. So most business owners build their homes from the ground floor up and they keep remodeling. It. That's how they build their businesses. They start something they're excited about it, and they start adding and accumulating, but no real big picture about where they're going. The bigger you can create that picture. So if I know a starting out, I want a a hundred story building, I'm going to have to have a different foundation than if I want to have a one story building. So identifying what you want to grow to so that you can learn to put the elements in place that will properly get you there because almost invariably every single time at 3 million, 8 million, 1525, the businesses collapse upon themselves because they had a poor foundation.

So understanding what that foundation looks like, having a bigger picture, where you want to go, and then most importantly, aligning your people with the opportunity, the objective and the success of the business. That is the fundamental mistake. People tend to think that they have to do everything themselves, and they trap themselves to be key man dependent or key woman dependent upon themselves. And others are always waiting around for them to make the next thing happen. And that will, that will implode a business as well. So fundamentals of growing and scaling a business it boils down to understanding your numbers. What are the most important factors that drive the business, understanding the life cycle and journey of your customers and being absolutely crystal clear about your value proposition, and then understanding how to find a track online and retain key personnel. Having them share the big vision perspective, because the intrinsic knowledge as you grow your business will be dispersed over a multitude of people.

And when you get to a certain size and they start leaving, that intrinsic knowledge goes with them, and then you replace them with people that don't understand the fundamentals of the business. So the better and more clear you can have your architectural plans. So someone can come alongside, you understand where the lines need to be and where the foundation needs to be and where the support structures need to be the better off you're going to be in building a business that has huge value. So I use kind candy as an example, when they were growing and scaling in Oh eight Oh nine, they were crushing it. But they weren't managing the financial aspects of their business. They ran into a cash flow issue. They did an emergency round of financing for $15 million or the private equity group only to solve their own internal problems and buy that share back for $220 million, six years later, all those proceeds could have gone to the team or to the customers that would have helped them solve those problems.

So I like to avoid those types of things and reallocate the upside. When I sold my business, 40% of all the cash that that was wired in at closing, got dispersed out to my customers, my employees, because I didn't have investors or shareholders. So I was able to share it with the people that helped me share in increasing the value of the business. So those are my principles and I live and die by six words. First words, inspiration in all conversations, all you do, you need to incorporate inspiration. Second word is discipline. The more discipline you can put into the business, the more, an easier people will succeed. Accountability. The more accountable you hold your team to executing to the things that you know, that work and create value, the less problems you'll have as you start accelerating your growth trajectory. The third is transparency. The more your team understands, the reason you're making decisions and the impact those decisions need to make on the organization. The better off everybody's going to be in execution mode. The fifth word is a alignment. The more you can align your team with the overall success, the better chance you have of putting a more energy and effort into accomplishing that and the sixth most important word of all the great belief and massive action is

You must have results. Wow.

A lot to digest. I love what you said. Even just starting out about building that proper foundation. And I've seen that even in my business and talking with the business owners that I work with that are, you know, typically much smaller scale than some of the ones you're talking about, but, you know, they don't build that proper foundation because they're looking at it when they first start out is, you know, they're, it's Paul the plumber. And he's like, man, if I could, you know, get the $200,000 in annual revenue, I'd be pretty happy. And so he doesn't build that foundation. The next thing you know, he's got, you know, 15 locations and, you know, he's got, you know, hundreds of people working for him and now the foundation is crumbling and I, and I've seen it too often. So I think that really hits home is that's so, so important to see that longer-term vision.

I think to build that proper foundation a hundred percent, that's the number one? So zero to 3 million is just getting things going and navigating and hiring a couple people three to 8 million is having some kind of process in place because now you're interdependent on other people, understanding contextually what the business needs to do once you're over 8 million and you're going to 15 million. Now you need some kind of technological solutions to try to help. By the time you get to 15 million, you go to 25 million. Now you're running your business on eight, nine, 10, 12 different systems. Nothing's interconnected, nothing's joined together. And so different. Now you're hiring teams to simulate data, to report data back to operators that don't quite honestly know what to do with the data because they've never run a bigger business. And so you have a leadership issue. How did all these, how does my leadership team all integrate and work together to create the greatest value next big mistake, you'll hire outsiders, bring them in.

And then they want to, they want to puff up and show everybody that they can fix it, but they don't really know what they're doing in a lot of cases, easy either either. So you've got cultural integration issues, financial integration issues, and operational integration issues, all that needs to get sorted out between 25 and 50 million. And it normally doesn't. And so businesses retreat back to eight, nine, 10, 12, the ownership gets comfortable. They've been knocked back a little bit, or they raise capital in the 18 to 25 million Mark. And they give up two thirds of their company to the private equity group when they don't execute with that same team, that couldn't figure it out before they think money will solve the issue and the problem, but it doesn't. And so they end up getting assimilated into somebody else's ecosystem like my first business, and then they go start it over.

And after two or three or four or five iterations of that, you hope that you finally get it right. And my objective and goal is to save business owners, all those negative iterations and just move into what value and success looks like. So they have a fundamental understanding how to execute and create value for themselves, their team members and the people they serve. Now, it makes perfect sense. Makes perfect sense. And again, guys, Brandon has lived this, he breeds it lives and breathes it every day, but he's lived it in the past. He's come across some of these hurdles and sometimes not handled them in the way he should have at the time. But now that he's learned from that, I got to share this and we've got just about a minute left, but I want to make sure I share this. One of the things that Brandon talks about one of his, I guess, axioms I'll call it for lack of a better term is:

What you think is what you say,

What you say is what you do,

And what you do becomes your legacy. 

So if you break that down and really think about that, it's powerful. It could give you one of those really deep thought moments when you start to think about those different aspects of that thinking, saying, and doing, and then, you know, creating that legacy. So again, we've got just a little bit of time, but I would be remiss if I didn't ask you this Brandon three words or less, what's it like working with GC - Remarkable, Inspirational, Accountable. Those would be the three words I would describe GC because he's all over everything. Like he doesn't, he doesn't let anything slip. He's a great business partner and great mentor. Yeah. Yeah. Well, I love seeing the interactions with you guys and I'm sure we'll be seeing more of that as things open up again. We've been talking with Brandon Dawson this week from Cardone Ventures.

Brandon. I really, really, really appreciate you coming on the show. Fantastic information. Thank you so much for coming on. My pleasure. Thank you for having me. All right, guys. Thanks for listening. Thanks for our show sponsor Capital Plus, have a great week and don't forget, as always cash flow is King.

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