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Guest: Chris Mellon, a coach at CEO Coaching International. Chris has over three decades of leadership experience as CEO, CFO, and COO in various industries, including wholesale distribution, banking, consulting and advisory services, formation and sale of SaaS entities, and public accounting.
Quick Background: BIG growth isn’t an accident or a stroke of good luck — it’s a process. And committing to that process through intentional planning and continuous review is the only way to sustain growth while staying true to your company’s culture and values.
On today’s show, Chris Mellon explains the 4 things he focused on as a hired gun CEO leading a family-run business from $300 million in revenue to almost $4 billion.
Keys to Driving BIG Growth from Chris Mellon
1. Engineer the plan.
At great companies, every part of the business is a reflection of the overall culture. At great family-run companies, culture runs even deeper than that: it’s part of the inheritance that has been passed down from stakeholder to stakeholder across generations. Whatever your company’s history, these non-negotiables should be the north star that guides your growth plan and all subsequent strategic decisions.
“Coming into a third-generation family that had been in the business 80-plus years, if I was going to engineer a top-line sales growth plan it had to be aligned with what their core values were as a family,” Chris says. “They were all into organic growth, but they were against acquisitions. They were extremely risk averse when we came to that. So it was really important for me to understand those two elements. We committed only to contiguous growth outwards from the northeastern United States. There’s so many ways you can grow, but you need to be disciplined in how you apply it.”
2. Understand what drives profitability.
“When I came on board, we lacked any form of customer profitability modeling,” Chris says. “We were chasing business for business’ sake, an incredibly lagging indicator, just hoping it all went well. So we had to first stop and say, What is going to be our profitability model? For us, it was not only establishing a customer profitability model. It was going through and saying, What of our existing portfolio meets the criteria of what this model now dictates?”
Sticking by the rules that this kind of analysis establishes isn’t always easy. Chris’ company had to terminate their contracts with several existing customers in order to increase their capacity for more profitable customers. Your firm might have to put underperforming satellite offices or aging products or services on the chopping block. And then, at the end of every quarter, you’ll have to run this test again to make sure your company and its offerings are keeping pace with emerging trends and customer behavior.
“I find that a lot of entrepreneurs and startups really haven’t dug deep enough to understand their profitability,” Chris says. “For us, it was a journey. And that model continuously evolved over time.”
3. Reinvent your senior leadership team.
“I learned this painfully,” Chris admits. “I fancied myself such a great CFO and CEO that early on in my career, I tried to do both. In hindsight, part of it was ego, part of it was cost savings. ‘I don’t need a CFO because I’m going to be the CEO, and look at my financial acumen!’ What a fool, to be candid with you.”
There’s actually several C-suite lessons from Chris’ experience:
- You get what you pay for, especially when it comes to talent. Whatever money Chris thought he’d save by serving as his own CFO was quickly swallowed by inefficiency and personal stress.
- Being the CEO means letting go. If you really want to spend your days balancing the books or dealing with customers, then you want to, at best, be a manager, not a CEO.
- Hire for tomorrow. Chris was so immersed in his dual rolls that he was selling both short: he wasn’t giving himself CEO space to be the visionary the company needed, and this lack of visionary time meant he had no clear perspective on whether or not Chris the CFO was the best executive for the company’s future.
“In the hyper growth mode we were in, it became even more important not only to have that senior leadership team, but to continuously reinvent it,” Chris says. “And one of the things I learned from Mark Moses’ book Making BIG Happen is that you should always be interviewing. You’re always constantly out talking to people for all of your senior leadership positions, even positions that aren’t on your org chart, but on your draft org chart of the future.
“A core value for me with my senior leadership team was surround yourself with people better than you are. And you should be looking at every hire as your possible replacement. We were going through a process of interviewing for a new CFO. And I had flown down and met with a gentleman. The interview went so well that as I got on the plane to fly home, I was thinking about what I was going to do in my next career, because I just hired my replacement. By the time the plane landed, I felt really comfortable that I was living up to my expectation of my own senior leadership team: surrounding yourself with people who are better than you.”
4. Capitalize for growth.
As the newly hired CFO, Chris was expecting to spend his first couple weeks touring his new family-run employer, riding along with salespeople, and meeting customers. Instead, on day one, he discovered that the company’s accounts receivables securitization was in default due to pipe dream projections.
“One of the first things I realized is that this was an infinitely more technical and structured financing arrangement than was needed for where we were at,” Chris says. “So I immediately started working on making changes. We went from the accounts receivable securitization, a very formalized structure, to a conventional commercial financing relationship that set us up for success. We evolved into an asset-based lending relationship with a small group of banks. I was constantly balancing who we were with, where we were going, and knowing that we needed dry powder because there were expectations for growth.”
When faced with a problem he did not anticipate and could not control, Chris didn’t pivot the company away from the challenge — he set a path to grow through it. That understanding of what drives growth and that commitment to achieving it is what separates companies that have been stuck in crisis mode since 2020 from companies that know how to thrive under any circumstances and never pause their march to BIG.
“When we look at that top line, you gotta have that plan,” Chris says. “It’s gotta be culturally aligned with who you are, and then it’s gotta be profitable. Being grounded in who you are and how you make money and the vision to facilitate your growth is really what’s so critically important to CEOs coming in with high expectations of both sales growth and EBITDA growth.”
Top Takeaways
1. Your plan follows your culture. Who you are determines what you’re going to do and how you’ll do it.
2. Always look ahead.Hire today for the company you want to have tomorrow.
3. Never stop growing.Companies that shrink before a crisis either stay small or die.
About CEO Coaching International
CEO Coaching International works with CEOs and their leadership teams to achieve extraordinary results quarter after quarter, year after year. Known globally for its success in coaching growth-focused entrepreneurs to meaningful exits, CEO Coaching International has coached more than 1,000 CEOs and entrepreneurs in more than 60 countries and 45 industries. The coaches at CEO Coaching International are former CEOs, presidents, or executives who have made BIG happen. The firm’s coaches have led double-digit sales and profit growth in businesses ranging in size from startups to over $10 billion, and many are founders that have led their companies through successful eight, nine, and ten-figure exits. Companies working with CEO Coaching International for two years or more have experienced an average revenue CAGR of 31% (2.6X the U.S. average) and an average EBITDA CAGR of 52.3% (more than 5X the U.S. average).
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