You’ve read stories of how 7-figure businesses are built.

But how does a 7-figure business die?

In this tale, you’ll see how.

And if you pay close attention, you’ll learn lessons that will help you avoid the same fate.

After all…

There are many different ways to grow.

But there are a thousand ways to die.

Note:

The protagonist, Kat, is entirely fictional. She’s an amalgamation of various business owners I know, and their stories. Any coincidence is unintended. Any coincidence is unintended.

See…

It’s easy to believe that growth is a one-way street…

That money grows on trees…

That we’re indestructible…

Sooner or later we have to learn that we’re not.

But with the right insight, it’s possible to see the hurricane coming down the track and take measures to avoid it.

Meet Kat

Kat is a blogger who started her business in the early 2010s.

She’s a photographer and wanted to share her love of photography with the world.

She made tutorials for how to use cameras, compose pictures, post-production and so on.

Her blog was unique. She put a lot of effort into building her audience.

Kat’s reputation online grew steadily, as did her traffic.

She went to conferences, spoke on stage, made friends in the industry and became a recognised figure.

At first, she monetised with ads on her website.

In time she created courses teaching photography skills.

She made $50,000 from her first course launch – a success she couldn’t believe.

All the time, her traffic grew. Her courses made more and more money.

For years, it was rinse and repeat.

Create content -> grow traffic -> launch products

10 years in, she was on top of the world.

Her business was turning over 7-figures in revenue. Mostly profit.

The 2010s were a gold rush for niche websites. Competition was minimal. Online courses were a novelty. Traffic was essentially ‘free’.

Life was good.

Kat had a family now. She bought a big house – probably a bit too big, but the business went from strength to strength, so why not enjoy the spoils?

Couple of cars.

Nice holidays.

You get the picture.

Kat was a successful businesswoman.

Money was in abundance.

It all felt too easy.

Expert Ambition

She hired her first business coach.

He said:

“You need to remove yourself from the business, Kat, so you can scale! Then, one day, you can sell!”

Kat agreed.

It made sense.

Who wouldn’t want to scale and sell?

He made her read Scaling Up and implement EOS.

She drank the Kool Aid:

“I’ve been blogging for 10 years now. I’m kinda tired of it. I feel like I have more important things to do. I should be working on the business, not in it.”

She hired an editor and built a team of writers to take over writing articles for the website.

Her coach said:

“Great move! This is what scaling looks like!”

But it didn’t end there.

Her coach told her:

“The next step is to hand off operations, so you can fully remove yourself from the business.”

Kat loved it.

She really didn’t enjoy being responsible for a team. Management just “wasn’t her thing”. She missed the days of just sharing my photographs online. Responding to comments. Just teaching from the heart.

Remove herself fully? Sounded like the dream.

Luckily, Kat had the perfect person already on her team. She promoted him to COO.

Her coach said:

“You’re doing great!”

The Growth Problem

A few months later, Kat had a realisation.

Her new COO was great at running the day-to-day. (Better than she’d ever be!)

But he wasn’t a marketer.

Kat found herself still doing all the marketing.

Everything still ran through her.

When a new campaign was needed, Kat needed to provide the strategy.

Film the videos.

Write the copy.

She had always been the one in charge of growing the business. But if she wanted to step back, who would look after growth?

Her coach was ready with an answer:

“Real businesses have a CMO!”

So she decided to hire a CMO.

An experienced A-player.

Someone more experienced than her, who could help scale the business to the next level.

They found the perfect person.

He seemed like a rock star.

“We’ll build a plan for growth and scale this to the moon!” he promised.

Finally, Kat could relax.

Operations? Taken care of.

Growth? Sorted.

It was time to Kat to create time for the art again.

The photography.

The thing that started it all.

“I’m an artist, after all. And the business doesn’t need me any more.”

Gradually, she started to reconnect with her craft, spending more and more time away from the business.

Travelling.

Spending.

She was on top of the world.

Until…

April 2020.

As a traveller and outdoor photographer, Kat was mortified.

Stuck at home was no way to live.

She was terrified about what would happen to the business.

Would everyone stop going outside and taking photos? Would her business crumble overnight?

In fact, the opposite happened.

Lockdown sparked a boom in home learning.

People suddenly realised how much they valued nature, and interest in photography exploded

Kat’s website traffic doubled overnight — she couldn’t believe her luck.

“Every cloud…”

Kat congratulated herself for having started an online business. Perhaps she was smarter than she gave herself credit for?

She arranged a huddle with her team.

How should they respond?

With everyone cooped up at home, desperate for community, they decided to launch a cohort-based programme.

“Learn Nature Photography in 8 Weeks.”

It was a great idea.

Worked like a charm because people were desperate for connection and organised activities.

The cohort sold out in days.

In fact, so many students joined, they had to start hiring support staff to manage everything.

• Community management
• Admin
• Marketing support

And with everything exploding, it made sense to hire for other elements of the business, too…

• Content writing
• Short-form video
• Financial admin

She started thinking of her business as a real company.

These days it was all about org charts and management.

After all, all the people needed managing.

The traffic kept growing, the money kept coming in…

Kat felt indestructible.

Investing in Growth

Around this time, she noticed YouTube exploding in popularity and she decided to start a YouTube channel for the business.

But she had the voice of her business coach in the back of her mind:

“You’ll never sell your business if you’re the face of it!”

So she decided to hire someone else – a photographer from her audience – to be the face of the channel.

And a couple of other people to manage production.

The channel grew gradually.

(Slower than expected. But that’s ok, she thought. After all, it’s not me doing it!)

Kat was thrilled – this is what scaling looks like!

Kat noticed herself hiring outside help more readily.

$10k here.

$30k there.

She was a bit taken aback how readily she would spend the cash.

But, with piles of cash in the business account, it was better to put money into the little problems that had ben niggling away at her with the business.

When consultants proposed marketing projects, Kat accepted readily. The fees were high. Often eyewateringly high. But Kat justified it to herself — “the business is bigger now, I should get used to writing larger cheques.”

Kat thought:

“This is what reinvesting looks like!”

From the outside, this level of spending might have looked like a lack of discipline.

(This is the biggest danger of holding cash, after all – lack of discipline.)

But it didn’t matter. The cash was there. Gotta spend money to make money, right?

Right?

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Kat didn’t know it yet, but this was the most cash she’d ever see inside the business.

Had she known this, she might have been inclined to hold onto more of it.

Indeed, in years to come, she’d wish she had.

But let’s not be too hard on her, it’s hard to read the label from inside the bottle.

And let’s not get ahead of ourselves, either.

There’s a lot more story to come.

Cracks Appear

One day, she got an unexpected email from her COO:

“Sales on our latest cohort were 30% down.”

Probably a blip.

Never mind.

“It’s probably just a cooling of interest since the Covid boom. It’ll level out.”

So they carried on.

3 months later:

“This latest cohort is down too. It’s only just breaking even.”

What’s going on?

Kat and her team spent a couple of weeks diving deep into the data.

(First time they’d done that in a while.)

What they discover is disturbing.

It wasn’t what they thought.

Traffic had been dropping steadily for the last 6 months – turns out the last Google update had hit them hard.

Kat was mildly concerned:

“Weird. We’ve never had any problems with Google updates in the past. Why now? And why has traffic dropped so much — over 50%?”

It occurred to Kat that her rockstar CMO had been strangely quiet recently.

Wasn’t he supposed to be looking after growth? (Wasn’t that what the $200k salary + bonus was for?)

He explained:

“I can’t control what Google does.”

Not untrue.

But then…

What’s he for, if he can’t actually influence the dynamics of the business?

(This is a question that would return to haunt her.)

Kat took her COO aside for a quiet word.

But we hired the CMO to grow things – what have they actually done?

Turns out they’ve been very busy.

Frameworks.

Spreadsheets.

Standardising branding. (Very important, apparently.)

Kat’s COO delivered her verdict:

“Our CMO has been doing a lot, but it hasn’t really moved the needle. Truth is, I’m not sure they really ‘get’ the business.”

Kat asked what they should do to turn things around?

“Look, if we take a step back, the only thing that’s ever really worked is when YOU are making content and building the audience. Everything good that happens in the business comes from that.”

Kat’s heart sunk.

She was enjoying her new life too much.

She had wanted to step back from the day-to-day, not work harder.

But the bad news didn’t stop there.

When they looked at the sales data, the list was converting into the cohorts at a lower rate.

Her COO said:

“I guess there just isn’t as much interest as there was in Covid. People are getting on with their lives.

It was a blip.

A nice blip… but a blip all the same.

Kat asked what that meant.

“Well, we’re only just breaking even.”

She couldn’t believe it.

Their last cohort had done $250k in revenue.

“Yes, but our salary bill is over $1m/yr now. All this expense made sense in Covid, but now… I’m not so sure.”

They had drastically over-hired.

Expanded too soon, not anticipating a contraction.

Kat was concerned.

They still had plenty of cash in the bank, but making $3m/yr and not keeping any profit, that was bad news.

Her business coach was adamant:

They had to scale their way out of trouble:

• Hire people who can reverse the decline
• Test paid ads
• Open new lines of business

“Spend our way out of trouble? Well, I suppose the plan always was to scale!”

Kat was surrounded by people in her mastermind group who were making far more money than her. She didn’t want to be outdone.

She sat down with her CMO and made it clear that she needed to see results.

She hired an expensive CRO agency to start testing landing pages, email sequences and checkout pages.

She found a Facebook ads agency who showed her a case study of a client of theirs who was “doing $1m a month” and that “there’s no reason you can’t do that too!”

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Spend Your Way Out Of Trouble

[6 months later]

Black Friday had been and gone.

Typically the biggest sales event of the year.

All the financial worries of the year would be wiped out in the blink of an eye!

They needed it to work.

This year, they’d been reaching eye-watering levels of overhead with the agencies and ads, spending their way out of trouble.

A lot of interesting results. The breakthrough was always ‘just around the corner’.

“You’ve got to stay the course. This is supposed to be hard. But when we get the breakthrough, we’ll scale to $10m!”

Except the breakthrough hadn’t come.

The crack marketing team gave their verdict:

“There’s something about your audience…”
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“Things just don’t work with these people the way they do in other companies.”
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“The market has changed…”

Lots of explanation.

Results in short supply.

The cash, however, had been moving in only one direction for the last 6 months…

It had flowed out of the business bank account… and into the hands of the agencies.

“There was only one winner here. And it wasn’t us.”

Kat sat down with her COO for an ultimatum

Something had to be done.

Time to turn to the books.

Opening the Books

“What’s causing all this?”

The two leaders stared at the Xero P&L report.

They looked at each other helplessly.

They’d never look at the books in much detail before. When money’s coming in in droves, you don’t much care about the details.

All they saw in front of them was a jumbled export from Xero.

They didn’t recognise how the line items were labelled.

Revenue wasn’t linked to expenses in a way that made sense.

It was going to take time to dive in and really make sense of this.

Kat’s COO asked:

“Should we hire someone to get the books in order?”

Kat asked why her accountant wasn’t doing that.

“Yes, but… they always preferred to do it their way.”

Kat had known the books were an issue for a while. But she didn’t have the energy to battle with her accountant.

The books were just done the way they were done.

By this point, Kat was getting nervous about how every solution required spending money. Hiring new people. Money only seemed to be flowing in one direction, and the flood gates were opening.

Kat was becoming resolute:

“We need to get a handle on this ourselves.”

Kat asked her COO to go away and make sense of the numbers herself.

They would reconvene when she had a better idea what was going on.

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[2 months later]

They reconvened after the summer and looked at the situation.

“So, where does this leave us?”

Her COO runs through the state of affairs:

• The YouTube channel is costing us a lot, but it’s not growing like we’d hoped
• Search traffic dropped again last month
• Our list is shrinking for the first time ever
• The Black Friday sale was 50% down on last year (our list hasn’t grown, after all)

And then the clincher:

“We’re losing $35k/mth.”

Kat asked what the analysis of the books revealed.

“It’s… everything!”

Kat wondered why she didn’t invest some of that Covid money into sorting out her books…

Or getting any kind of visibility into the inner-workings of the business.

That might have given a warning about what was happening.

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Understanding Risk

Kat was surprised by the emotion she felt.

An emotion she didn’t remember ever feeling before:

Helplessness.

See, it was easy enough to diagnose the problems:

• traffic dropping
• Costs too high
• Market sentiment changing

But she realised that there was little that could be done about it.

Worse:

Every solution came at a huge cost.

If costs were too high, she had to restructure the team.

But redundancies are expensive. Letting people go will cost $10,000s.

If SEO was dropping, she needed to hire SEO experts to try and fix the solution.

(They didn’t have the expertise to fix it themselves, and they couldn’t just stop publishing.)

She’d built her YouTube channel entirely with actors. It costs 5-figures a month. But cutting costs means cutting the YouTube channel — and then what??

If market sentiment was changing, the business needed to adapt too.

• new products
• new modes of delivery
• new marketing

And what — we’re going to do all that ourselves?

Kat had been building up her business up so that she could step back.

She never considered a hidden cost of building:

Risk.

The bigger a business gets, the easier it can fail.

“It’s obvious when you think about it.”

Ah…

Isn’t everything obvious in hindsight?

Kat and her COO both knew that changes were needed, and fast.

The team was on life support — being sustained by cash that had built up in the business in the years since Covid.

The business itself was losing money hand over fist.

They made a list of everything that was core to the business.

Everything that wasn’t core got cut:

• The YouTube channel was cut
• Product support people were let go
• The marketing team was thinned down

It took time.

Those who were left had to pick up the slack.

Kat had been transparent with her team about the situation. (It was her way of doing things. Transparency at all times.)

However, this had unintended consequences.

A couple of long-term team members got wind of the problems and started to look at pastures new.

This was helpful in the short term, as the salary bill was cut faster than planned.

But now Kat got dragged back in to help her COO with all aspects of the business.

The team was reduced to 4.

Essential operations only.

But despite the cuts, things still weren’t quite right.

The audience didn’t seem as passionate or as engaged as they used to be.

Kat suggested to her team that the market had evolved.

“People aren’t as engaged with online brands as they used to be.”

Her COO almost said something — but then stopped, and thought better of it.

His thoughts were:

“Of course people aren’t as engaged anymore… you stopped creating content! It was your unique voice that built the audience in the first place. What did you think was going to happen when you started outsourcing all your content to writers?”

But he didn’t say that.

He kept that to himself.

Stable, At Last

Finally, the finances were stabilised.

In the process, the business bank account was drained.

Kat was traumatised from the speed of the decline.

She began to reminisce about what got her into this in the first place:

“I never wanted to run a company. I just wanted to write about my passion. When did I get so carried away.”

She met with her COO and had a hard conversation.

With the business as it was, it was hard to justify the high salary.

That was a salary made for better times.

And bigger businesses.

They agreed to part ways.

And so it was that, 15 years after first starting her blog, Kat found herself once again a solopreneur.

Taking pictures.

Writing articles.

Reconnecting with her passion, and making content from the heart.

She even experimented with TikTok for the first time.

Her eyes lit up.

“I wonder what I can do with this!”

Her audience began to notice.

“You seem to have your mojo back these days! I missed the old Kat!”

…went the TikTok comments.

On a warm Friday evening, Kat sat in her garden, sipping pensively on a glass of rosé.

“It’s funny how things work out.”

Then she noticed something rustling in the trees off in the distance.

She put down her wine…

Grabbed her camera…

And walked slowly in that direction, a glint in her eye.

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Reflection

[18 months later]

Kat was catching up with an old friend from the blogging days at a business conference.

Explaining how it all unravelled.

“It was a comedy of errors, really.”

A story that was just waiting to be written.

And it all stemmed from failing to understand the true dynamics of an audience-led personal brand.

Here’s what she explained…

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Life was good for years. In the heyday of blogging, my business survived and thrived on free traffic from Google.

In the early days, I just blogged about photography.

I was the expert, I wrote with energy, I was doing something new.

Reading about your passion online from another human being was something new.

(It’s easy to forget how exciting this was in 2013.)

I was ahead of the curve, although I didn’t know it.

And Google rewarded me with oodles of free traffic.

When I made products, I made them with passion.

The products were good, and people were happy to pay.

As digital products, there was no fulfilment cost, and I kept all the cash.

Here’s the problem: This started to feel normal.

But there was nothing normal about it

• almost unlimited free traffic
• insanely profitable products
• limited competition

With hindsight, it was too good to be true.

In fact, it wasn’t.

It was right place, right time.

All I had to do was not screw it up.

Unfortunately, I did screw it up, in one royal “who’s who?” Of what NOT to do when you have something good going on.

Kat’s friend asked:

“So, what did you do wrong?”

Kat had a list…

First, I stopped doing the very thing that brought me success in the first place – building the audience. By outsourcing content creation, I ended up removing my presence from the business… and the soul along with it.

I didn’t realise how vulnerable we were to SEO changes. And I had no idea how hard it would be to grow YouTube without me. I should have protected my personal brand as my unique advantage.

Next, we over-hired. By getting used to the level of cashflow I had, I built a big team to “try more stuff”, but most of the spend didn’t really achieve anything. I thought I could just hire people to “do YouTube” for me.

I forgot just how much I was responsible for the success of the brand.

Now, with a team to support, there was pressure to maintain revenue. Lack of financial reporting meant that I didn’t have a handle on costs – I was used to there always being money.

This led to more activity, but the activity wasn’t fun any more. (I’m a creative after all, I never wanted to manage a team.)

So two things happened:

• I stopped doing the very thing that made the business successful in the first place (building the engaged audience of super-fans)
• While simultaneously spending all the money on other things that aren’t proven (hiring a team to do “stuff” that hadn’t been tried before)

This was like driving a wedge in-between the business and reality.

Now:

• The blog posts weren’t written by me and lost the unique edge that attracted the audience in the first place
• The YouTube channel didn’t grow because it wasn’t fronted by the charismatic founder of the business
• More and more products had to be built to continue to drive revenue
• With organic traffic dropping, new customers had to be found through ads
• But customers from cold traffic didn’t care, so they didn’t buy
• The agencies and consultants we hired were charging full commercial rates, completely disproportionate to the true scale of the business — and never actually stood a chance of getting results, because they didn’t understand the nature of organic content-led businesses
• I built a team that was far in excess of what the business actually needed, needlessly eroding margin and spending money I could have saved

Kat paused, and concluded:

You know, it’s almost as if there’s an ‘ideal level’ for an online business like mine. A level where you can make the most profit, with the minimal team.

What does that ‘ideal level’ look like?looked like.

If I had to guess, I’d say it’s somewhere between $1m and $3m in revenue, and 6-10 people. With the founder staying active as the face of the brand.

My mistake was not understanding that, and trying to push beyond it.

Sounds like a good lesson, her friend said.

Kat looked pensive.

It is. It really is.

Her friend asked:

“So what’s next?”

You know what? With AI, short-form video and automation, there’s a tonne of stuff I could never do in the past. I’m actually quite excited about the possibilities. Best of all, I’ve already made all the mistakes! I’m not a newbie any more.

“Sounds like you’re ready for your next big move!”

Kat grinned.

Who says it hasn’t already started?

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Namaste,

Olly

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