Scary issues for business owners and salespeople often boil down to what you’re trying to do versus what you’re actually able to do. Those gaps are really the things that are going to make the biggest difference. And a lot of what we do with our clients is help them to identify, “all right, how can we help you plug these holes, overcome these fears, so that you can generate the revenue you need and the profit you need to have the business that you want to have.”
David: Hi, and welcome to the podcast. In today’s episode, co host Jay McFarland and I will be discussing scary issues for business owners and salespeople. Happy Halloween and welcome back, Jay.
Jay: Yeah, Dave, it’s great to be here with you again. And I love the Halloween theme. A lot of times starting out a new business can be very scary. But also, for me the biggest thing is the unknown and how do you plan for that?
David: Yeah, that is a great one. It covers a lot of territory too, doesn’t it? The unknown, because nearly everything that we think about that scares us in business is probably because we either don’t know what it is or we don’t know how to handle it when it comes along. So yeah, that’s a really nice big umbrella one to start out with.
The unknown, which in business includes a whole lot of stuff.
Jay: Yeah, I think part of that is having your systems in place so that you’re prepared for the unknown. I mean, we talk about the unknown, but in business, I think you can generally deal with those issues. If you’ve been in business over time, you kind of know annually where the scary times are going to be, but just starting out, it’s hard to know.
David: It really is. And as I was thinking about this episode and discussing this episode, I took some time, not always a great thing to do, but I took some time to think about what were some of the biggest scares I had over the years in business and what did they generally relate to?
And I didn’t actually come up with the word unknown. You came up with it, but it really does take into a lot of different things. When we think about unknown, my thinking goes back to the time when you’re a child and you’re scared of the dark, right? And the reason we’re scared of the dark is not because of the dark.
It’s because we don’t know what’s in there. It really is about the unknown. It’s not our fear of the dark. It’s our fear of what could happen in the dark that could potentially be a little scary.
So as I was thinking about this in terms of business, and it goes for salespeople, anyone in business, and even people who are employed and just get a salary, there are a lot of things that can come along and make life a lot scarier.
A lot of them have to do with money, especially not having enough of it. If you’re a business owner, the question, can I make payroll comes up? Can I pay my tax bills? Am I able to afford the things I need to do? Can I pay my mortgage, right, for my home or rent for my business, whatever it is So I think money is a big one and the unknowns that are related to that
Jay: Yeah, I agree. Money is the hardest one. And people, especially starting out, they don’t really know and understand the term cash flow. Right?
So you may be making great money, but people aren’t paying you up front or they’re not paying you on a regular basis. I’ve worked for a company where you work for insurance companies and you had to harass them constantly in order to get your receivables paid.
And in the meantime, how do you pay for the electricity? How do you pay for your staff? How do you pay for those kind of things? It can be a very difficult situation.
David: It really can. And I think a lot of times the default is to say, okay, let’s cut costs. What can we cut? And a lot of times that comes with, whatever, it can come with manpower. It can come with overhead.
And the problem with cutting overhead, or cutting costs in some cases are first of all, that it doesn’t always get the job done. And second, it also then can diminish your capabilities. Because if you’re having to let people go, then how are you going to be able to generate enough of the business going forward to be able to offset some of those things?
And I know when I’m working with clients, a lot of times, if their cash flow isn’t exactly where they want it, or if their sales or their profit numbers aren’t where they need them to be, we look at a couple things.
One is, you know, what do you expect your existing customers are going to generate for you over the course of the next six months to a year? And then where are you looking to be? And then how much of that needs to come from new customers?
Because once you’ve identified those things, then it becomes a lot easier. To do the math and say, okay, well, I need to bring in X number of customers at this amount per year in order to subsidize that.
So you can cut, and sometimes you have to do that. You can build, and it’s often a good idea to do that.
And you can watch those margins. Because if you’re generating a lot of sales, but your margins are really small, you can be spending a lot of time on sales that are not actually going to benefit you and the business going forward.
Jay: Yeah, it reminds me, you know, I grew up in the restaurant business and I used to do restaurant consulting and I can’t tell you how often I would walk into a business and I’d say, well, how much does this plate of food cost you? And they’d say, I have no idea.
And I’m like, well you price it at this much per plate. How did you come up with that price? And they’re like, well, it sounded good.
Yeah. Or that’s what other people charge.
Yeah, and I’m like, okay, when we did the math on that plate cost, you’re actually breaking even on that plate. So, people look at their profit and loss at the end of the month.
But do you know how those numbers actually came to be? And whatever business you’re in, do you know your cost of goods sold? That’s an important step as you’re trying to figure out cash flow and all of these other things.
David: Yeah. And the goal is not just breaking even, right? Breaking even if you pay for the food, but you don’t pay for any of the overhead or anything like that, you’re in a lot of trouble.
So I think money is a big one. Another one that I think is really big for a lot of people is getting and losing customers.
How do I get more customers? How do I keep the ones that I have? And a lot of times it’s like what you just described with the plates. They just don’t know.
A lot of people just don’t know what the best ways are to attract more of the customers they need into their businesses and how to retain the customers they have. They don’t have processes and procedures in place for that.
And when you don’t have that, you’re just basically hoping for the best.
Jay: Yeah. as you know, I’m in the process right now of starting up a new business. And one of the things we decided to do was to have a soft open. And we used to do this in the restaurant business.
And that’s because we think we know what the process is going to be. We think we know what our customer’s needs are going to be. We think we know our staff knows how to handle all of those things.
But until that first order comes in, and then 10 people want your product at the same time it’s hard to foresee what the reality is going to be. And so that’s why I love the idea of the soft open and constantly reassessing your systems to see if you’re able to handle whatever.
It’s such an interesting thing because you have to be prepared when times are really good and things are moving well, but then you have to be able to weather the storm and you can’t just hire and fire people as that ebb and flow happens. Right?
David: Very true. And I can’t tell you how many times I’ve said to a business owner, “what is your process for bringing new customers through the door?” And they’ll say, “referrals.” Well, that is not a process. That is a concept. It’s not a process.
And. It’s good when you can get the referrals, but then the question becomes, well, what are you doing to generate them? Where are you going to look for them? Are you doing anything proactive to help that happen?
What are you doing with your existing customers to encourage them to refer people to you? And that’s just the referral aspect of it. And very often when somebody says to me that their customer acquisition effort is referrals, that tells me they’re leaving an enormous amount of money on the table. Because generally when I hear referrals, I’m also hearing reactive.
Jay: Yes. Yeah. And you have to be able to react to many things, but there are things that you should be very, very strategic about. We’ve spent, David, we’ve spent probably six months just working on our Google ads campaign to get the keywords right. So that we can drive down that customer acquisition cost.
And when we started out, it was about a hundred dollars a customer. And we said, “okay, we need to cut that number in half.”
So we did A B testing. We did keyword testing. We made adjustments to our website. We’ve got it down to about $55 now, which that’s amazing. Right? But it’s taken six months to get to that point.
David: Yeah, and it all drops. I mean, the difference in that, it all drops to the bottom line, which is great for everything that you’re doing. Now to some people, $50 for a lead might sound like a lot. It might sound like a little, depending of course, on the value of the order and the profit margins and everything like that.
But just the fact that you know your number, you know where it is, you know what that does to the business, you know where you want it to be, you know what that will do to the business. Everybody who is in business needs to have a really good feel for that.
And I think it’s Dan Kennedy kind of popularized the phrase, “the person who can spend the most on getting a new customer wins.” And it’s true.
I mean, obviously you want to keep that cost as low as you can. But if you know that your average customer is going to be worth $5,000 to you, how much would you spend to get a $5,000 customer?
And you may find that you can spend a lot more. Or you may find that you’re going to need to throttle back and not spend as much as you’re doing. But if you don’t keep track of any of that, you’re never going to know.
Jay: Yeah, and it’s going to be scary, right?
David: Exactly, which again, getting back to the topic here. Another thing that I think is scary for a lot of people is competition. You know, how do I compete or better yet, how do I win?
Jay: Yeah, I totally agree with you and kind of just back to the customer acquisition costs. The other thing that I would like to add is the business I worked for before, which provides the same service that we’re providing now, they didn’t do anything to achieve reoccurring business.
I’m like, wait a minute, you don’t have the customer acquisition cost the next time they place an order. And so why wouldn’t you drive people in that direction?
And so that’s our next focus. Okay, we can get them in the door, we can close them now. Now how do we bring them back every single year?
David: Right. Reactivating it. And you have a very seasonal business, so that’s going to be important to you to be able to do that. Because, I use the analogy of it’s like building a brick wall.
You know, you want to get the first layer of bricks in place first, and that’s your first year in business. And then your second year in business, you want to layer on top of that.
Now, if you’re losing the bricks from the first layer, you’re going to spend the beginning of your second year.
You know, filling those holes, plugging those holes, and so maintaining that first layer is key so that you can continue to build that year after year so you can build a nice sturdy infrastructure.
Jay: Yeah, absolutely, absolutely. Any other scary things? You were kind of heading somewhere and I sidetracked us.
David: No, it’s good. We were talking about, you know, competition is scary for a lot of people. But a lot of that goes back to the money and the getting and keeping of customers. Because if you have these processes in place for getting and keeping customers, then it’s going to be a lot more difficult for your competitors to compete with you.
I think also for a lot of business owners, particularly small business owners, hiring and firing can be terrifying.
Jay: Yeah, I totally agree. And of course, I have a lot to say about both. My experience is that competitors are a lot like your fellow employees. Most employees are not walking in the door saying, I’m going to be the best I can be today.
Most of them are saying, I’m going to survive the day. And so if you’re somebody who says, I’m going to be the best at my job, I’m going to own it. I’m going to go the extra mile. It’s so easy to stand out.
My experience is that most competitors are like that as well. They say that they’re going to provide this higher level of customer service, but they don’t.
I really believe the ones that provide the highest level of service are rare. You can go through a drive thru at a restaurant and feel the difference at like a Chick fil A versus somewhere else. They put an emphasis in the right place.
So I don’t really believe it’s that hard to stand out to your competitors and provide that higher level of customer service. I don’t think there are many that really know how to do it.
David: Yeah, I agree. You mentioned Chick fil A, and there are some times where I’ll go into a restaurant, not a Chick fil A, but like a more higher end restaurant, and a waiter or waitress will come over, and you’ll say thank you to them, and if they say, “my pleasure,” I’ll normally say to them, “hey, did you used to work for Chick fil A?”
Right? Because they teach them that. And it’s kind of funny, because they get them programmed to do that. Because it’s different. It implies, not just, you’re welcome, but it is my pleasure to serve you. That’s sort of the rest of the sentence that’s not spoken.
And it’s very different and it creates a very different impression in the mind of the person when you hear something like that. So…
Jay: Yeah, in fact, we went the other day and the girl didn’t say it and we were like, Oh my…
David: Is it not your pleasure to serve me, madam?
Jay: Yeah, it’s the world ending. She didn’t say my pleasure. What’s going on? But I have never had a bad experience at a Chick fil A. Never! Now that may just be that I’m programmed by them, you know, but never!
Because that’s where they put their emphasis. And if you can do that. It’s very hard to compete with that. Your competitors just, a lot of times they’re just putting out fires and when you’re putting out fires, you cannot provide a good quality product to customers. You just can’t do it.
David: Right. And it’s scary when your competitors can.
So I’d say one final thing that I’d like to touch on real quickly is selling the business or succession planning or retirement, which at some point everybody has to think about that. Whether you’re a salesperson, business owner or whatever. You have to think about, “okay, what happens next? Have I been able to save enough? Have I put enough aside? What am I going to do with my book of business?”
If you’re an independent rep and you own the book of business, are you going to sell it? If you’re a salesperson and you’re paid by the company, then the company would own those customers. But that’s something else that can be very scary to people because most people don’t do it very often.
And, if you’re an entrepreneur and you’ve done it a few times, like the first time, it’s really terrifying. And the second time it’s like, okay, I kind of know what I’m doing. And by the third or fourth time, when you’re selling a business, it’s actually kind of exciting because you know what to expect, as long as things go well, and they don’t always go well..
Jay: Yeah, absolutely. Such a great discussion. I feel like we could talk about this for a long time, but we’ll save some of it for a deeper dive on future podcasts. In the meantime, how can people find out more?
David: Well, you can go to TopSecrets.com/call, schedule a call with myself or my team. We’d love to have a conversation with you.
If there is something right now that’s scaring you about your business, in terms of what you’re trying to do versus what you’re actually able to do. Those gaps are really the things that are going to make the biggest difference. And a lot of what we do with our clients is help them to identify, “all right, how can we help you plug these holes, overcome these fears, so that you can generate the revenue you need and the profit you need to have the business that you want to have.”
So TopSecrets.com/call. We’d love to have a conversation.
Jay: Yeah, it’s a great resource, David. Thank you and have a Happy Halloween.
David: Thanks a lot. You too, Jay.
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