In 2015, I co-founded a fully-remote outsourcing company. I had dabbled in a few entrepreneurial ventures up to this point, but this one felt different. We were on a mission to reinvent the way work gets done by providing a dynamic team of highly-qualified and vetted freelancers for businesses to use on-demand.
We grew the company to seven figures within the first year and had over 150 contractors on our team. We were growing by 10% month after month, while my co-founder and I were the only people on the organization chart! He was the face of the business, interacting with our clients and team members, while I was working on the back-end systems and processes that allowed the company to operate.
It was a great system. But one day, everything changed…
An abrupt departure
In October of 2017, my cofounder left the company. I had five minutes notice.
Within hours, I was hit with setback after setback. The most problematic was that many of our team members and clients literally didn’t know I existed. Because I had spent most of my time in the back-end of the business, I had never needed to interact with these people. But now, I did–in a big way.
I also discovered that we had made some crucial mistakes which were about to catch up with us. We had spent the past two years celebrating our increasing revenue without realizing that we were actually growing by 20% while losing 10% of our clients each month. Basically, our successful marketing was masking a bad product.
Because my cofounder was the face of the company, all of our marketing and lead generation came to a grinding halt when he left. All of a sudden, that 20% growth was turned off and we were losing clients at a rapid pace.
But that’s just the tip of the iceberg.
I couldn’t pay our team because our bank accounts were frozen. I had internal team members–many of whom I had never spoken to in my life–telling me that I was running the company into the ground while I was cashing out my 401(k) to get them paid.
We had no actual hiring process, and I soon found out that many of our team members were largely unqualified–a few even had criminal records!
When I took over the business, we were losing $ 450,000 per year and had $ 750,000 in debt. My stress levels were off the charts and I was working like a madman. Not to mention, many people were reaching out to me and telling me to shut down the company, saying I would never make it.
But there were two main things that kept me going…
I knew it was morally wrong to our clients and team members to dissolve the business, as over 100 people would be out of a job and many of our clients had prepaid for work that we wouldn’t have been able to refund. Many of those clients were members of Joe Polish’s Genius Network–the mastermind group that helped me build this business from the ground up. These were the people that helped me build my business from the ground up, and I couldn’t hurt them like that.
But more importantly, I knew there was a future for this company. I saw a path to recovery.
Turning it around
Over the next two years, I made it my mission to improve our client retention rates. I employed the philosophy of “Getting Everything You Can Out of All You’ve Got” from my friend and mentor, Jay Abraham, one of the top executive business coaches in the world.
Why look for new clients when we could just get more revenue from our current clients? I shut off all of our marketing efforts and focused entirely on retaining our clients by providing the best quality of service possible. Only when our retention rates improved did I start focusing on external marketing.
I also had the foresight to document many of our core processes in the early stages of the company. This played a pivotal role in keeping the business afloat as other people in the company were able to take over the core responsibilities after my cofounder left. Without this, I doubt the business would have survived.
Now, three years later, we’re doing better than ever.
We’ve transitioned from an outsourcing company into a tech-enabled growth agency with senior marketers, growth hackers, and operational efficiency experts. We’ve cut internal costs, improved our margins, and optimized internal processes to operate more efficiently. But most importantly, we have a rock-solid team and our growth isn’t hindered by poor retention rates.
And I’m proud to report that over the past two and a half years, we went from losing around $ 450,000 per year to turning a profit.