Tom Ellis has gone from bootstrapping his business to finding alternative financing methods and securing big private equity deals to grow.
On the Dealmakers Show, Ellis talked about the sport of entrepreneurship, the one job you should get before launching your own startup, staffing, building a marketplace, alternative ways to finance your startup and growth, top down versus bottom up hiring, and how to scale your team the right way.
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The Sport Of Entrepreneurship
Tom Ellis was originally born in Seattle, before moving to Eugene, Oregon. Moving in your youth is always great practice for learning to network and meet new groups of people, to adapt to new environments, and deal with challenges that are out of your control.
Ellis also took to basketball. Making it all the way up to the state champion team. He says that playing sports is a great foundation for learning to succeed in entrepreneurship.
He says that it teaches you the ability to focus, how to work hard at something, that there is competition out there, and that in order to get the reward, you have to put in the effort. Plus, of course teamwork.
The One Job You Should Get Before Starting Your Own Company
Joining the workforce, Tom Ellis started out in the fitness space before making the transition into the staffing industry. He told the Dealmakers audience that he thinks everyone should have a sales job at some point.
It taught him how to grind out the work, and to pitch in front of people. These are essential skills for any aspiring entrepreneur, who will no doubt need to secure customers and raise funding on the journey.
Most people don’t have what it takes to sell and keep on putting in the work. He says that out of the 27 people in his cohort of recruits at the staffing agency he worked for, half quit in the first two weeks. Maybe only three of them lasted as long as he did.
See How I Can Help You With Your Fundraising Efforts
See How I Can Help You With Your Fundraising Efforts
Financing Your Startup & Company Growth
Tom started out by bootstrapping his business. Then they were able to get an SBA loan of $80k to get things going.
A bank was willing to extend their financing up to $300k,much of which they invested in creating jobs. Of course, when they wanted to grow even further, the banks didn’t step up to help.
That’s when they found factoring as a way to access capital to grow the business. Factoring is a solution where you essentially sell your future income and accounts receivable, for growth capital now.
This lean approach also meant that they had to heavily focus on achieving real sales and making the business profitable.
This in turn can have its own problems, such as when he had to tell his salespeople that if they booked any more shifts for their clients that week, they would not be able to cover it. Sometimes your best month in sales is also your riskiest and most precarious for paying the bills and making payroll.
However, since then they have been able to bring in a big private equity partner with another $450M. Enabling them to take some chips off the table, restructure the cap table, hire more, and grow.
Storytelling is everything which is something that Tom Ellis was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Scaling Your Team The Right Way
Ellis has now grown his company ShiftKey to around 600 employees. No small feat by any means.
Over the years Tom says that he has learned the best way to build your startup’s team is top down versus bottom up.
While many new business owners look to grow bottom up, hiring basic help, in the hopes of grooming them into management later, that can be a slower route to success. They normally can’t scale themselves as fast as the business needs to scale.
Instead, Tom recommends taking the top down approach. First hire your leaders. Then let them build out their own teams. They’ll be able to operate at a better scale, get the work done, and manage the others that are brought in as well.
In fact, he says that your job as a CEO is really to just be a great recruiter and bring in the right people that can continue to grow and improve the business.
Note that hiring strong finance help is going to be one of the top needs of your recruiting list. Only once they brought in their own finance team were they able to make that big leap to attracting the big capital that really helped to move the needle, and stay out ahead of the competition.
The Staffing Business
ShiftKey is transforming the future of work, leveraging technology to empower licensed professionals to define their value, embrace independence, and live life on their own terms, while meeting strategic business, resource and workforce needs for licensed industries.
The ShiftKey model is bold, yet practical. Independent licensed professionals can choose their pay rate, set their availability, and connect directly with healthcare facilities with workforce needs, creating a “relief valve” and equipping care facilities at every level to make forward-thinking scheduling and business decisions.
Listen in to the full podcast episode to find out more, including:
- Business pivots
- How ShiftKey works
- Making private equity deals work
- How your business will be different after a private equity deal
- Tom Ellis’ advice when starting your own business