working with the people you have great relationships with ?
Sensible Investment Options
Another crucial consideration for a growing business is how to obtain funding . NWN is a profitable company who invested their resources back into their business , but they still needed to secure funds from other sources . However , they didn ’ t go about this by giving up equity to outside investors .
Phelps doesn ’ t pretend that this route is the only one that can work , but he does acknowledge that it is the one that made sense to him . “ Giving up lengthens the decision cycle ,” he states . “ You also don ’ t know if your investors will have the same goals as you .” Dividing up equity can leave you in a situation where you have too many cooks in the kitchen or , to use Phelps ’ football metaphor , too many coaches creating the game plan .
Rather than courting investors , Phelps states , “ I would encourage people to build very strong relationships with the vendor community . There are options when you can move the needle for those folks . Marketing funding , people funding — there ’ s really no limit .” NWN also relied on a bank loan to withdraw funds as needed .
When it comes to exit strategies , Phelps also believes that appeasing others isn ’ t the best route . Even if your ultimate goal is to sell your company , he thinks trying to meet all the criteria of a salable business — the numbers you ’ d get from Wall Street , for example — is a fool ’ s errand .
“ My view is to build a great company , and growth will be a direct result of being really good at what you do ,” he notes . “ Build a great company . That builds value . When the time is right , you ’ ll have an opportunity to monetize .” People want to buy a successful , growing business . Create that , and you won ’ t have to spend hours making yourself the belle of the ball ; you ’ ll already be it .
Managing a Growing Team
Once you reach the higher tiers of growth , new problems arise . Chief among them is figuring out how to maintain alignment and foster team-building across a very large organization . That ’ s doubly true in an industry like IT services , where , as Phelps puts it , “ The show goes on . You can ’ t just call a timeout .”
The only time NWN gets its entire team together for an all-staff meeting is via phone conference , once a quarter , for 15 minutes . They also hold a yearly conference in which about one-third of the staff attend in a given year on a rotating basis . While they ’ re there , they continue to do business as needed .
Another essential part of managing an ever-growing staff is creating systems and processes that allow for consistent success . “ As you grow , you have to formalize some things ,” Phelps states . “ When done right , the process is enabling .”
One process that guides NWN ’ s sales team is a focus on rewards rather than incentives . “ We believe that if somebody ’ s not motivated , they shouldn ’ t be here . We don ’ t believe in incentives ; we believe in rewards . They may sound the same , but the philosophical underpinnings behind the two concepts are very different .” Yes , salespeople receive a commission for the value they bring to the company , but the commission is viewed as a reward for a job well done , rather than an incentive to do a job in the first place .
In Conclusion
In his years of experience , Phelps has learned that many aspects of business will differ from company to company . There ’ s no single recipe for success , even within the small world of MSPs . That being said , there are characteristics and patterns that improve companies of all sizes . With that in mind , we wanted to ask Phelps to provide us with the ironclad practices that will lead to what he calls a “ culture of relentless pursuit toward improvement .”
“ I encourage you to do two things ,” he says . “ One is building a team to the point where you trust other people to help you succeed , reward them for that , and give them an opportunity to fail themselves . The second thing is that we all make decisions , and we all make an effort to make the best decisions we can . That ’ s not news . To me , the more important thing is how you make it right . Once you know where you want to go , start moving in that direction — not in big , but in incremental steps with the whole team . Do that , and I think you ’ ll get there .”
Mont Phelps stepped down from his role as CEO of NWN Corporation in 2018 . He continues to be involved in the company but has passed on daily leadership duties to current CEO Skip Tappen . We ’ re grateful to Mr . Phelps for sharing his wisdom and experience with us . We hope you ’ ll heed his advice and grow your company past the $ 100 million revenue mark . n
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