Show notes
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,