The letter/No. 1

The five ideasthat grew Red Seal.

I started Red Seal Fire Protection in Windsor at 19 with two vans. I hit my first million-dollar year at 22. I'm a sprinkler fitter by trade, with no business degree.

If you run a company under $10 million, these are the five ideas that did most of the work for us, and how to use each one.

One. Find the constraint.

Every business has one thing holding growth back. It lives in marketing, sales, operations or profit. The test: if this one area doubled tomorrow, would the company grow? Only one area gets a yes.

I built a team to run the day to day so 75% of my week goes to that one area. When it moves, I move with it. (Book: The Goal, by Eliyahu Goldratt.)

Two. Pick a lane and price for it.

There are two ways to win: lowest price or highest trust. I picked trust and priced like it.

Know your gross margin on every job, and price so each job funds the next hire. Put proof beside every price: the photos, the written scope, the response time. We lose some bids to price shoppers. The customers who stay have funded every hire since. (Michael Porter called this differentiation.)

Three. Put a number on speed.

We respond to service calls within 2 hours and send the report within 24. A slower company can't match that at any price.

Pick the one thing your customer waits on most: a quote, a callback, a report. Put a number on it, staff to hit it every time, then print it on your quotes. (BCG called this time-based competition in 1988.)

Four. Sell the small job that repeats.

An inspection is a small ticket, and it comes back every year. Once we're in a building, the repairs and upgrades come to us.

Find the recurring entry job in your business, like the maintenance plan or the annual visit, and sell it to everyone. Then track how many of those turn into bigger work. (Software companies call this land and expand.)

Five. Buy growth, too.

This spring, All Protex Fire & Safety joined Red Seal: 482 customers and four technicians in one day. Building that would have taken years.

A lot of small companies are owned by someone near retirement with no exit plan. Call them. Check recurring revenue and churn before you look at the trucks. (Private equity calls it buy and build.)

If you only take one, take the first. Find your constraint this week and give it your calendar.

None of these ideas are mine. Each one had a name and a book before I used it. I just ran them against a real business.

-Levi