10 ways to maintain a growth mindset as a business founder

Every founder would love to end up on How I Built This, having created a rapid-growth business everyone wants to hear about. However, growth comes with significant tension that requires an unanticipated mental fortitude. There's a reason burnout doesn't only haunt the failures. Here is a list of 10 ways to maintain a growth mindset from my experience scaling my company to 8 figures in two years:

1. Stop seeking stability

Growth and stability are competing ideals. I remember dreaming of a "stable" business during growth, thinking eventually we would land the plane and coast to a lifetime of profitability or a big sale. Instead, constant growth feels like this:

There are moments of stability where you catch your breath, but it's not a stable environment, and it won't help you to try and make it one. The future is unstable. Unknown. Leadership in a growing business is about maintaining the courage to run into the unknown. Your employees will match your mindset. Employees that want stability have no place in a startup environment. It's not the right culture for them. In this article, Chris Anderson highlights what employees should consider before joining a startup. It will help if you read it to ensure you are leading the charge of the environment these employees are signing up for. You can find stability when you step away from the company or sell it.

Employees who want stability have no place in a startup environment. It's not the right culture for them.

2. Understand opportunity cost

Opportunity cost is the price of the opportunity you choose not to pursue in relation to the one you do. If you can only eat 5 apples or 4 oranges and pick the apples, the opportunity cost is the 4 oranges. This video will explain it in more in-depth. In theory, growth is a direct response to opportunities you've prioritized that put you in a position to create customers and start winning. Thus, more opportunities are created. However, too many opportunities can become a distraction that dilutes the effectiveness of what got you there.

I fell prey to pursuing new opportunities without realizing their impact on what had made us successful up to that point. I disrupted the systems we had created to make the business thrive, thus weakening our greatest competitive advantage. Don't take the success you've created for granted. Having an audience doesn't mean you can put your logo on anything and have it sell.

As this article from mentorphile explains, Jeff Bezos classifies two types of decisions founders need to make: Type 1 is non-reversible and definite, and Type 2 is reversible and exploratory. The tactics for making either decision are very different. When you've had some success, it is a common pitfall to begin using one process for making decisions due to your success rate. That is a trap. Strategy exists so you can measure opportunity, not avoid it. But before you chase the next splendid thing, optimize what you have already created to the furthest extent possible.

💡 I fell prey to pursuing new opportunities without realizing their impact on what had made us successful up to that point.

3. Don't die of indigestion

Remember the days of shamelessly selling to anyone interested in trying your product or visiting your site? The days of desperation, wondering if it would ever be worth it. We can all relate to the hope-filled days of optimism fueling early founders. Companies work hard to get fed and then die of indigestion. Rapid or even moderate growth can be overwhelming and shock the system with a new batch of problems you didn't anticipate. Problems such as:

Cash getting in a crunch as you try and supply the demand,
Hiring quickly can lead to improper culture fits or a few bad apples which do spoil the WHOLE bunch
Hire a bunch of developers to fund the new product features you haven't found product-market fit with
Due to increased demand, you need to enter into long-term contracts with suppliers to take advantage of volume discounts
It can threaten sustainability by exposing shortcomings in your systems
Unpredictability for forecasting
Unreliable variable costs making profitability a moving target
An increase in fixed costs to support growth can put pressure on performance
Reduced profitability to support the growth

People. Process. Systems. Don't let growth kill you by only focusing on revenue. Revenue is vanity, results are sanity, and cash is king. Yeah, growth is cool, but managing it effectively to high profitability is way cooler.

👑 Don't let growth kill you by only focusing on revenue. Revenue is vanity, results are sanity, and cash is king.

4. Don't become lazy in hiring.

Nothing is more important than who you choose to bring into your company. During growth, we bring anyone who can take the work off our plate. Understandable. But don't get caught up in the problems of today. Don't hire for where you are; hire for where you are going. Solve the problems of tomorrow. The rule of thumb should be "Find the right person for the open position whether you are on Day 1 or Day 1,000. If you think you've found them. Hire them fast and onboard them with the same tenacity you hired them."

Turnover is an unavoidable progression. Companies grow faster than their employees. Letting people go who were there with you from the beginning due to the organic nature of business growth is like putting a dog down. You're sick to your stomach about it, but it's come to a point where it isn't fair to them. If you have a superb culture fit, look to put them in a more appropriate role before getting rid of them. Finding people who fit within your culture, are trustworthy, and work hard is difficult. If you've got them, hang on to them for as long as the business performance will allow it. Here is an article from Forbes helping you with the hiring process, and if you are getting ready to hire your first employee, here is a video I created of 5 tips for hiring your first employee. Just because you've hired well in the past doesn't mean you will repeat the success in the future. Be obsessive about who you bring into your company.

😈 The rule of thumb should be "Find the right person for the open position whether you are on Day 1 or Day 1,000. If you think you've found them. Hire them fast and onboard them with the same tenacity you hired them."

5. Avoid death by overconfidence.

The only good thing about death to your business from overconfidence is it happens swiftly. Stay discovery-driven as a founder. The second you think you've finished innovating, you're dead. Hold onto the hungry desire and lean effectiveness responsible for catapulting you, and keep creatively innovating.

A significant cause of innovation is the sheer volume of ideas. Adam Grant tells us in this short video, "The more original you are, the more bad ideas you will have." Always be ideating, but knowing most ideas suck, don't reallocate your resources to indulge every idea you have. Stay humble by constantly seeking innovation through a herd of ideas. Good, great, terrible; it doesn't matter. You got to where you are by shamelessly putting your ego aside and asking people if they will allow your product to solve a problem for them. Remain in a state of desperation. There is always someone chasing you.

💀 The second you think you've finished innovating, you're dead.

6. I promise, you don't need those fixed costs.

Fight the urge for the increased payroll. Fight the desire for the epic office (more manageable now with remote work). Fight the urge for unnecessary expenses, increasing your burden. Keep fixed costs where you are and variable costs where you are going. Here is an excellent rule of thumb to practice as you increase your costs: ask yourself, "If this business started tanking, what would we eliminate first? Odds are you may be able to eliminate or optimize it while the business grows." I remember visiting a mentor of mine and asking him about what to do since we had outgrown our office - which use to happen to every rapid growth company before there were empty buildings CEOs were begging people to come back to.

We considered buying a commercial building instead of entering into a shorter team lease agreement for a few years. My mentor asked me:

How long did you think you would be in the space you're currently leaving?

"Forever" I said. We lasted 10 months and spent 3 of them hiding from the fire marshall.

How much less do you spend on a monthly lease versus a mortgage?

The lease is 1/3 the cost.

Are you a commercial real estate developer or investor?

Nope.

How much money is required to get the space to where you need it to be?

Over a million.

What would you do with the cash difference if you didn't buy?

Marketing. Distribution. Save it for a rainy day. Take a distribution Honestly, anything else.

Great mentors don't give advice. They ask questions that lead you to give the answer you already knew was right out loud. His final piece of wisdom: Your best asset is the business. Your business has been around for three years. It's the best place for your cash to go. Three years into a rapid growth business is rarely the proper time to diversify into another vertical, especially one that locks your cash away like real estate. You have yet to learn what the future holds. Having money keeps you deleveraged and flexible. Flexibility is HUGE in a growth mindset.

We bought the building. Straight cash homie into down payments, interest, increased monthly rent expense, and property taxes and owned that beauty until selling it in thriving days of covid commercial office real estate ownership.

You don't know what's next. You don't see what potholes lay in the road. You're still growing and innovating. Don't become buried in fixed costs full of contracts and long-term commitments. Employees. Leases. Supplier contracts. If things go sideways, which they almost always do, you want to be as flexible as possible. Run lean, efficient, and throw that cash at the opportunity. It feels way better thinking you blew money on chance marketing that didn't work than on an unnecessary hire to who you now owe months of severance while they eat flaming hot Cheetos watching The Office re-runs on your dime.

👍🏼 Here is an excellent rule of thumb to practice as you increase your costs: ask yourself, "If this business started tanking, what would we eliminate first?

7. "Billion dollar vision, million dollar tactics"

This quote is from Vinod Khosla, owner of Khosla Ventures, one of the most prominent VCs in the world. I love it. Another way of saying it is, "Think Big. Act Small." Stay convicted and courageous amid growth. A massive vision is only as valuable as how well you execute the tasks required to get you there. Stay laser-focused on the obstacles in front of you and what your company needs to overcome immediately. When thinking about strategic execution, here is a way of breaking it down:

0 - 6 months - operational planning; thousand dollar tactics - these are given to mid-level managers to control and make sure the essential day-to-day of the business is moving toward desired objectives.

6 - 18 months - tactical planning; hundred thousand dollar tactics - these are managed by your department leads to ensure the operational planning is working toward the long-term objectives.

18 - 36 months - strategic planning; million-dollar tactics - this is big-picture planning with top executives to ensure the company has aligned strategic priorities and our goals are moving us toward our bold winning aspirations.

3 - 5 years - visionary planning; billion-dollar vision - the founder/CEO is responsible for setting this vision and articulating it to the team to guide our bold strategic choices as a company.

Start with the billion-dollar vision and work down to the thousand-dollar tactics. If you can master the pyramid's base, you will see traction putting you on the path to the big dream.

📺 A massive vision is only as valuable as how well you execute the tasks required to get you there.

8. Crave accountability

I remember sitting in a board meeting giving constructive feedback to a founder only to have them argue with me and tell me I was wrong. I nodded and lost all desire to help. That founder is going to learn a lot of lessons the hard way.

I remember believing my hype about growing a company to 8 figures in 2 years; then, we had our first board meeting. My shareholders came in and poked gaping holes in what I thought had been flawless execution and strategy. It hurt. It shook my courage. It knocked me on my ass. Then Monday came, and I knew what I needed to get done. Accountability forces extreme ownership. There is freedom once you crave it. Whether it is a board, an advisor, or a coach, you need someone who will bring you back to earth—no astronaut founders. You don't need a cheerleader; you'll have plenty of those. It's necessary to have someone who cares enough to ensure you don't sabotage the great thing you created. Momentum is ruined by founders who can't get out of their own damn way. Practice radical candor, and you will maintain your growth mindset.

🥶 Your employees are not there to hold you accountable for your behavior. If you use them that way, you won't have any accountability or employees.

9. Get a grip on finance

I had never taken a business course in my life. I thought I was a brand guy. I was a culture guy. I was a storyteller. Your business's most remarkable story is the one you find in its financials. Real life is always better than fiction. My business grew, and it forced me to play catch up. Not easy to do when your business is getting more expensive, distribution channels are expanding, and people are relying on you to feed their families. Here is a resource created by Marcus Lemonis on what it means to know the numbers in your business. You should take the quiz and see how you stack up. Understanding finance will not grow your business. I repeat. Just knowing how finance works will not grow a business. Finance is a secondary process which is why most business owners pay little attention to it. Entrepreneurs frequently skew toward growth and new money over cash management of money we've already made to ensure that growth is healthy. It's vital to understand how money flows in and out of your business. In each business, cash is used differently to trigger different events. Some examples of changes to cashflow throughout growth may be:

Gross margin adjustments as your COGS (Costs of Goods Sold) change.
Increased fixed costs as the company grows reducing the profit opportunity. Profit opportunity is the net income margin available to go up and down based on variable costs.
Variable costs based on the performance of the company will serve as crucial levers you will need to pull to generate more cash
Cash flow changes based on terms with suppliers, buyers, and contractors.
Special projects intended to develop future growth but require upfront capital
Burn rate adjustments if you are in a negative cash flow position

I took an accounting class after selling my business and was shocked by how many preventable mistakes I made by just "understanding" finance.

💰 Your business's most remarkable story is the one you find in its financials.

10. Competitive advantage doesn't last forever

Initially, while you're experiencing your "driving a convertible hair in the wind" feeling of growth, competition doesn't feel like much of a threat. You're focused on your value creation, not the performance of your competitors. However, thinking you have a sustainable competitive advantage is a trap. It doesn't last forever. Rita McGrath, a great business strategist, says the era of competitive advantage is being replaced by an era of flexibility within a growth mindset. Her book and this talk detail the attitude required to innovate faster than your competitors. If you are a first mover, there will be a second. If you have low CPM's they will increase. If no one is bidding on those keywords, they will. If your product has a unique attribute, it will get copied. The advantage that has generated your growth has a lifeline. It is your job to recognize when it has peaked. It happens. The great founders accept it and discover another advantage. Please don't put all your best employees on problems; put them on the opportunities. What got you here will not get you there.

And I'll leave you with a must-watch interview with this mind-blowing quote, "We're a very poorly diversified portfolio. It either makes it to the moon or it crashes down to earth." - Jim Balsillie, CEO RIM (Creator of the Blackberry)

⛰️ The advantage that has generated your growth has a lifeline. It is your job to recognize when it has peaked. It happens

Maintaining a growth mindset is easier said than done. Please don't lose sight of who you were and what was required to get where you are. Channel that desperation and instinct into the new skills needed to be successful to hit the billion-dollar vision. The King or Queen sitting in their castle on their throne, thinking they've conquered the world, will be the first to find the sword.