Written for EO by Floyd DePalma, CEO of UX agency DePalma Studios.

When I started DePalma Studios, my mission was to design and build applications that people love to use.

Six years into my entrepreneurial journey, I had achieved the goal of being my own boss. It was satisfying on a personal level, but the business had plateaued around the three-year mark. It wasn’t growing how I envisioned.

In search of a solution to grow my business, I decided to enroll in the Entrepreneur Organization’s Catalyst program taught by Michael Burcham. I’d heard great things about the class, and as a member of EO’s Nashville chapter, I could join at no cost.  

The topic for the first class was “A New Attitude,” and it started with the message, “if you’re not scaling up, you’re stalling out.” It was a real wakeup call for me.

After the very first class, my entire perspective on what it meant to be an entrepreneur changed.

So I bought in to everything Catalyst offered and the results speak for themselves: In 1 year we’ve added 30 new clients—a record year for the agency.

Transitioning From a Founder to a Leader

The goal of the Catalyst program is to make founders take a step back and honestly assess their current business. This helps them learn how to improve and reimagine what’s possible by developing greater discipline and focusing on fundamental business strategies.

This is the central tenet behind transitioning from a founder to a leader.

I began to think like a leader. And using what I learned in the Catalyst program, I focused on five core areas of my leadership style and the organization as a whole.

#1 Organizational Development

My first move was to look at how I’d structured the organization and who I had on staff. I realized I needed to make some changes and additions to key management positions and our production team configuration.

I started by filling the management gaps in our organization. I hired a creative director to lead our UX design department and an experienced engagement manager to lead our engineering department.

Finally, we moved our production resources nearshore and offshore to increase scalability and profitability.

#2 Design Thinking

The principle of design thinking can be a powerful one if you have the right people in leadership positions.

You need A-players who are self-starters to help you think about how to grow the business. This type of leadership team is capable of creating processes to execute against the strategy which, in turn, creates a cycle of innovation.

Thanks to that approach, we now have:

• An organized, productive design process led by our creative director
• A repeatable, profitable sales and marketing process lead by our VP of marketing
• A scalable full-stack development process led by our engagement manager

#3 Process Optimization

Before Catalyst, I didn’t have a single documented process. All the work was done on an ad-hoc basis. That means that it was done differently every time depending on who was doing it that day.

You can’t grow a business that way. All of your core competencies must be process-driven so they can be optimized to enable the business to innovate and drive profitability.

Now we have battle-tested processes that we continue to iterative and improve in the following areas:

• Marketing and sales
• UX design of new and legacy applications
• Sprint Zero development estimation and release planning
• Agile development
• Recruiting and hiring
• Onboarding and HR

#4 Financial Modeling

Out of all the areas of focus, knowing my numbers and financial modeling is where I’ve done deepest dive.  

A year ago I was picking a revenue goal out of thin air. Now, I work my way backward into revenue using a model that focuses on bottom line pre-tax profit as the target instead of top line revenue, which is just a vanity KPI.

Now, I have a trustworthy financial model for calculating the health of my business—and planning for its future.

I now focus on the real fuel that drives the profitability: labor efficiency rate (LER).  I track LER’s for everyone in the company: indirect labor, direct labor, contract labor. These numbers tell me the exact ROI in dollars and cents for every dollar spend.

Using LER calculations, I’m now able to set my markup on services systematically to get the correct margins that I need for growth.

#5 Strategic Mindset

All of the previous points illustrate how my thinking has changed to be more strategic. Instead of being reactive, I’m always in planning mode. I’m looking six months ahead of where the business is today and planning for upcoming quarters.

With this new attitude my role as a strategic leader has become:

• Setting and reinforcing the vision and strategy
• Communicating with my leadership team so they are well informed
• Listening to the voice of my customers, and
• Charting the course for the business

By thinking less like a founder and more like a leader, I’m now running a growing business instead of organization that’s standing still.

Floyd DePalma is the Founder and CEO of DePalma Studios, a UX agency that builds applications people love to use. He is also an EO Nashville member.