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5 Stages of Mastery
Damon James
October 08, 2023
5 Stages of Mastery in Business
I believe as an business owner there’s 5 main stages you need to gain awareness, understanding, and mastery over in order to succeed:
Risk
Revenue Generating Skills
Leverage/Leadership
Operations
M&A
So today I want to deep into these and give some examples from my life and people that I’ve worked with.
Let’s dive in:
1. Risk
Risk can come in a variety of forms. Some common ones today are dropping out of college or blowing all your money on a business (that fails).
I think that you need to have a certain level of comfort with risk if you ever want to make it in business.
Much of my identity comes from being an athlete at a high level. In sports, your success largely comes down to things like hard work, perseverance, mental toughness (and talent of course).
I wouldn’t necessarily say that you have to take a lot of risks to succeed in sports though (that’s how injuries happen which can be detrimental to your long term success).
In business you absolutely HAVE to take risks (especially in the early stages).
In hindsight, the biggest reason why I’m not where I want to be is be isn’t due to a lack of skills or work ethic, but rather a lack of risk tolerance. I was afraid to launch offers, spend money on ads, risk money on hiring people.
I think there are a lot of people out there who are less talented than me and work less hard than me, yet make WAY more money than me because they were willing to take risks that I wasn’t willing to take.
Comfort with risk is very much a skill you need to develop (ideally as early as possible) that will allow you to go very far.
2. Revenue Generating Skills
If you can’t bring in customers, clients, sponsors, affiliates, or someone else who is going to PAY YOU MONEY…
Then you, good sir, do not have a business.
You have a hobby.
Sales, copywriting, media-buying, organic growth…ideally all of these, but at a bare minimum being extremely good at atleast 1 and competent in the others.
I’ve seen a lot of people try for YEARS to get their businesses off the ground and never make it. Why? Because they don’t know how to generate revenue. You can’t run a business if you can’t generate revenue.
Regardless of what you may learn in school or college, in the early stages of any business the Founder is basically just a glorified salesperson.
On the flip side…
I’ve seen a lot of people build large, successful businesses in short periods of time. The large majority of these people worked in sales beforehand and were really good at client acquisition.
Take someone like Cole Gordon from Closers.io. Prior to starting Closers.io, he was already a top .01% salesperson and a worldclass marketer. Because of this, he was able to hit an 8 figure run rate in less than 2 years.
On top of that, he competes in an extremely competitive industry (sales training + recruiting) yet he completely dominated everyone.
His revenue generating skills played a major role in that, but it was also heavily dependent on this next point.
3. Leverage/Leadership
How do you detach time from money? A good business needs to be able to make money while you sleep.
How do you scale yourself out? There’s a limit to how much you can accomplish in a day.
There’s no limit to how many people you can hire to get work done without your time involvement.
There’s 4 forms of leverage:
Capital (injecting money into the business)
Code (proprietary tech)
Media (organic channels)
Labor (hiring employees)
Using capital to grow your business allows you to grow 1,000,000x faster. When you can spend $1 on ads and get $1 back (then retain clients on the backend), you can basically scale to the moon.
If you have a massive IG following or Twitter following and have a consistent stream of followers booking calls, your CPA plummets (plus these prospects are generally much higher intent). This allows for greater efficiency of time and money in your client acquisition process.
If you build proprietary tech (Neil Patel is a huge advocate of this and drives MASSIVE optin numbers through it), then your valuation is generally much higher at the time of sale.
If you can hire people to scale yourself out, develop those people to get the best out of them, and ultimately turn them into leaders within the company, you can essentially replace yourself and your time involvement.
These are not easy things to do but they’re super important.
4. Operations
Can you manage a company at scale?
Can you make the transition from Founder wearing multiple hats to CEO who works “on the business” not “in the business.”
Can you combat entropy in the business.
I’m not at this stage yet in my own business, but this is a HUGE problem for basically all of my clients.
I personally believe #3 and #4 are ultimately the difference between a company that makes $3M per year and one that makes $30M/year.
When your business is making a few hundred grand per month, many times you can still wing it with a lot of things.
Onboard clients when you have a free 30 minute window.
Bring on a new employee and just “full send” it hoping they’re adaptable and learn fast.
This does not work at scale.
One time a few years ago I was talking to my friend Eddie Maalouf (one of the owners BAD Marketing). I was asking about what he felt made him so successful and allowed him to scale to over $1M/mo.
He said it all came down to his ability to build systems in his company. His systems are so bulletproof that a 5th grader could walk into his company and be able to succeed.
This may not sound like a big deal in the early stages of a company, but with 100’s of employees it’s a HUGE deal.
My first job was with a massive $50B/year consulting firm called Accenture. We had 400,000 employees (I believe we were in 28 countries worldwide).
An issue companies at this level face is projecting employee headcount to accurately reflect revenue projections.
My company overhired at the Analyst level so about 100 new Analysts (who were all making $90,000/year) spent our first 6 months doing literally nothing (because the deal flow didn’t meet revenue projections).
$4.5M essentially flushed down the drain (that doesn’t account for recruiting fees and people who left as well).
At scale operations are extremely important and extremely expensive.
5. M&A
Can you make your company a sellable asset?
Can you actually find a buyer and get the deal done?
I personally think this is the elephant in the room in the marketing agency/coaching+consulting space.
These are primarily cashflow businesses but most are not sellable assets.
People run cashflow businesses, put all the profit into real estate (I.E. a sellable asset), but the area where they’re spending all their time (I.E. their business) will realistically never sell.
Ultra wealthy people buy and sell extremely valuable assets.
Ownership is everything when it comes to the game of wealth-building (there’s a reason why many of the world’s wealthiest people are in Private Equity).
What are people like Mark Zuckerberg and Elon Musk spending a lot of their time doing?
Buying companies.
Elon bought Twitter.
Zuck bought Reality Labs.
If you’re a billionaire, your time is extremely valuable and starting up a new business many times doesn’t make sense. Why start one when you can just buy an existing one and make it better?
I think the fastest way to achieve true “fuck-you-money” is to build a company, sell it, buy up a bunch of real estate to ensure cashflow, and then sail off into the sunset.
That’s all I got for you today. Got any thoughts?
Enjoy your Sunday!
Damon