Every entrepreneur knows about the flat line. It’s the ominously even indication that profits are exactly where they were the quarter before. Business founders are the ones paying the most attention to data: What’s off? What’s missing? Inherently, we’re not comfortable with business as usual; that equals stagnation.
Many prospective clients call me when they are in a chicken-or-the-egg situation. For example, do I borrow money to hire more developers, and do I start pitching to them instead of prospects? While this scenario isn’t fun, to me it’s a sure sign that your company is growing. It’s the “Everyone is great. There aren’t any urgent emails” week that eventually turns into business owner pain points. No one stays on the flat line successfully. When there are no new data indicators, those data points you relied on translate to dollars, which matters most to the person whose pocket that money comes out of.
The line going up is fun. It’s not definable yet, but you’re never more alive than when you have something to prove (and looking back, a lot less to lose). If you have a high tolerance for risk, both the upward lines and downward lines will serve you well. But going up is like winning on a slot machine that you built. It’s similar to the feeling of being a proud parent, but the baby was born directly from your brain. You hire a solid marketing agency and bam! You’re featured in an article in a publication you can buy at Barnes & Noble. Then it gets syndicated. Your sales team tells you they are thanked when they call prospects. You see the sales cycle shorten. The gravy train is rolling at breakneck speed, and it’s exhilarating, and possibly dangerous. Now what?
As an advertising agency owner for several years, I’ve met business owners, serial entrepreneurs, VCs and more CEOs than I ever would have imagined in a wide range of industries. Through it all, I’ve noticed certain patterns that emerge, both on the agency side and on the client side.
They staff up.
Everything is chaotic. The CEO can’t keep up with their own inbox. The two main account leads are drowning in emails. While everyone is getting deliverables out, nobody has the time to put systems in place to alleviate the madness. So the solution is to hire more staff. Those new recruits are dropped into a chaotic environment where there are no baselines or standards to follow.
The company steadies its course, but it isn’t growing anymore — at all. This induces what is personally my least favorite emotion in the world: dread. It generally tends to happen when a business was backed by capital because its product seemed to appeal to everyone and was therefore deemed less risky. Now it has competitors killing it in niche markets, and a price point that once seemed high has it on the commodity side because its product or service appeals to everyone. That is a brand positioning problem we see when owners are on the flat line. The business may be doing great at that price point, but it’s starting to move toward the downward line unless product development makes it smarter.
The company is losing money. The current course leads to a flat line and an all-hands-on-deck emergency. You’ve lost some accounts and read nothing but bad news about the economy. Vultures are circling. CEOs start joining their VP of sales in meetings they typically wouldn’t attend. It’s grim, but somehow invigorating. You’ve been here before. You have something new to prove.
Say you’re in logistics, and Uber Freight has launched. The fear and dread are gone because you now have a clear vision: selling everything that Uber Freight never will and never can be. This is a familiar place. You’ve done this before and succeeded. Failure is not an option. It’s true when they say the journey was the fun part.
You never feel more alive than when you’re the underdog and have something to prove. It’s that first year, when you have no benchmarks for success, and you feel like this is your chance to prove yourself. You only get a hint of that feeling again when you’re in trouble and coasting on cruise control is no longer a viable option.
It’s the middle ground that is anxiety-producing. The scariest part of a rollercoaster ride isn’t the fall, it’s the moments before when you’re suspended at the peak of the climb. Here, it’s more of the fear of the unknown –– that you’ve already gone through a massive uphill battle and now you can’t find the next hill. And you’ll probably go through it again.
The flat line isn’t as scary as the middle line, yet you have a lot to lose. When the flat line happens, what I’ve done in the past is go straight into recruiting and operations at the same time. When you have the A-team, you have to be the company cheerleader to keep the quality of work at a high level. The key is finding that one person who tells you this time, you’ll fail. Find that person so you can write them a thank-you letter soon.
In the end, the point is to never feel like you’ve reached your pinnacle or “made it.” It’s a natural feature of entrepreneurs that they’re always looking for the next challenge. But there can be this complacency that sets in after early success. If an entrepreneur had success going out on their first try, they are the most susceptible to getting on the flat line sooner. When the odds are against you starting out, and you prove to yourself that you can do it, you are susceptible to a certain type of arrogance.
Business owners, keep your eyes ahead and don’t get too comfortable. If you have hard decisions to make, you’re actually doing great. If the line isn’t going up or down, start looking at different data to ensure you won’t stay that way for long.