GE 189: EO & Gazelles Founder Verne Harnish Reveals How To Take Your Business From $1M to $100M

Verne HarnishHey everyone, in today’s episode I share the mic with Verne Harnish, founder of the world-renowned Entrepreneurs Organization (an organization that I’ve joined) as well as founder and CEO of Gazelles, a global executive education and coaching company.

Listen as Verne shares how he came up with the idea of EO (hint, Steve Jobs), why you should wait until the $1M mark before scaling up, how he bounced back after losing $1M in 10 weeks, 3 simple tips for branding and marketing success, and gives specific advice about how to scale your company.

Download podcast transcript [PDF] here: EO & Gazelles Founder Verne Harnish Reveals How To Take Your Business From $1M to $100M TRANSCRIPT

Time-Stamped Show Notes:

  • 03:13 – Verne talks about how he started Entrepreneurs’ Organization
  • 04:04 – Verne helps people scale up their businesses
  • 04:36 – The number one weakness in a company is marketing
  • 05:15 – Verne shares that it was during a stint for Steve Jobs that he came up with the idea of EO
    • 05:45 – Verne believes that entrepreneurs need a support group, because it is tough work
    • 06:11 – EO has forums for its members giving them the opportunity to share
  • 07:00 – Eric shares how the EO forums have helped him
  • 08:13 – Verne shares three simple tips for branding and marketing: get focused, hang in there, have a great product
  • 08:36 – EO currently has 12,000 customers
  • 08:41 – Gazelle’s has 210 coaching partners, 2,000 active clients on six continents and about 40,000 companies using their scaling up tools
  • 10:26 – Verne advises people that once they reach the one million mark, they should start scaling up
  • 11:40 – There are templates for strategic planning at Verne’s websites: Gazelles and Scaling Up
  • 12:35 – Verne’s new goal is helping 150 cities create scale-up ecosystems
  • 13:50 – “Whatever is the strength of the founder will ultimately become the weakness of the organization”
    • 14:09 – As the company scales, the entrepreneur should find someone who is better in their area of expertise
  • 16:35 – Verne shares that entrepreneurs should look at their gross margin when they reach $1-10 million
  • 17:08 – When a company reaches $10-100 million, you should focus on profitability
  • 17:40 – With EO, Verne’s biggest struggle was in bringing in the right person when scaling up
  • 18:22 – With Gazelles, Verne’s biggest struggle was the money
    • 18:35 – When 9/11 hit, Verne lost a million dollars in 10 weeks
    • 19:05 – Verne found religion and followed John Moen’s advice to get his business funded by customers
  • 19:25 – Verne explains the importance of the cash conversion cycle
  • 19:54 – Verne followed Bill Gates’ strategy of having a year’s worth of operating expenses in the bank
  • 22:38 – Eric shares the importance of having a good CPA
  • 23:00 – Verne refers to the book Simple Numbers by Greg Crabtree
  • 23:27 – “It doesn’t take a genius to give something away. It takes a genius to sell it at a price where you make the margins, so you feel the growth of the company.”
  • 23:48 – Verne talks about how he gets his talent through networking
  • 24:55 – Verne suggests Geoff Smart’s book Who and reiterates the importance of knowing how to hire the right people
    • 25:30 – Growing a company is about hiring people who are smarter than you
  • 25:50 – Verne wished he was bolder when he was younger and shares Liz Wiseman’s book, Rookie Smarts
  • 26:10 – Verne shares the people he targeted to be part of EO such as Ronald Reagan, Steve Jobs, and Regis McKenna
  • 27:15 – It is important to be resourceful and go after the best
  • 28:01 – What’s one big change that you made this last year that has impacted your business or you in a really big way? “It is infinitely easier to scale if you only do one thing”
  • 29:01 – What’s one new tool that you’ve added that has added a lot of value? The tool that Verne uses is FollowUp.cc
  • 29:50 – How often are you reading, and what does that process look like for you? Verne discusses his reading habits
    • 30:35 – “Leaders are readers and learners”
  • 30:55 – What’s one publication or blog you tune into every day? Verne loves Seth Godin’s Daily and Brad Feld
  • 31:15 – What’s one book you’d recommend to everyone? The number one business book for Verne is Eliyahu Goldratt’s The Goal
  • 32:35 – Connect with Verne through his website Scaling Up

3 Key Points:

  1. In scaling up your business, hire the RIGHT people who are better that you or are the BEST in their field.
  2. Set money set aside for when problems arise OR that you can use to grow your company.
  3. Growing your company works best when you focus your energy on ONE thing.

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