Be an Ethical Entrepreneur, Marketer, and Business Builder

The most exciting, energizing work of an entrepreneur!

May 30, 2011 by Leave a Comment

If my business coaching clients could claim I preach about something, tops on the list would be scheduling in at least 4 hours per week to work ON your business… What they sometimes forget is that I have my own businesses where I need to do the same thing.

Not unlike my clients however, sometimes more “important” things come up. When I do take the time to work ON instead of IN one of my businesses nothing is more energizing! Let me explain…

As a mechanical engineer I come from the world of, “put in your hours and get your paycheck.” It’s a fairly well established quid pro quo in the professional world. It’s the hallmark of a “job.” What makes owning a business different is that you have the ability to destroy that paradigm. As a matter of fact, the more you work ON your business the less you’ll have to work IN it. The key to this is one simple word – LEVERAGE.

Working ON your business is defined as the time you spend creating leverage in your business. Leverage is doing ever more with ever less and falls into 2 primary categories for business owners.

  1. Team Members
  2. Systems

Everything you can leverage in a business comes down to one of those 2 areas. Either you hire someone to do something so you don’t have to, or you create a procedure, script, or checklist to pass along knowledge so other people can use it. Software, and technology in general, would be a systematized solution.

Today I started an Auto-Responder Email Campaign that got me giddy with excitement about leveraging my business. If you’re not familiar with an auto-responder it’s simply a series of automated email responses to an inquiry. So if you go to a website and it says, “Enter your email address to learn how to make a guaranteed $1 million in the next 30 days”, most likely they’re putting you on an auto-responder. No one is personally responding to your request, even though the goal is to make you feel like it’s very personal. Reference my blog on conversational marketing.

The website owner wrote a series of emails days, weeks, or months ago that automatically market to you to build a relationship. The beauty of this is that you can build a direct, relevant, and personal relationship simultaneously with dozens, hundreds, or even thousands of people.

Mailchimp.com, Aweber.com, ConstantContact.com, or InfusionSoft.com automatically send those emails to potential clients at pre-scheduled intervals. The emails will discuss your products or services for which they requested more details. Like a great website will generate customers around the clock, this is all done while you sleep or lounge at the beach.

An auto-responder email campaign is just one simple example of a System that helps you leverage yourself however, can you see why this gets me so excited? While I’m out cruising around the country on my motorcycle, I’m automatically building relationships and creating future clients by walking them through my “sales process” in exactly the way I want to.

Now if you come from the online world of sales and marketing, this blog is laughably outdated. Auto-responders have been around for years after all. However, in the brick-and-mortar world of small business do you know how many businesses I’ve encountered that use auto-responders as part of their on or offline marketing? None. Sure, everyone has a website these days, but very few business owners know how to fully engage the power of the web. Do you?

Since the vast majority (probably over 95%) of people who visit your website leave without taking any action, think how much business you’re missing by not actively engaging visitors. With a well-written auto-responder campaign you become THE expert in the visitor’s mind and he stops shopping around. You become a trusted advisor and friend. It really is that powerful.

This is why working ON your business is so important. It’s regularly dedicating time to leverage your operations by replacing a Person or System with work you would otherwise have to do.

One last thought as you wipe the spittle from your lips because you’ve been frothing at the mouth with excitement… When determining what work in your business requires a human or systematize solution, the simple answer is EVERYTHING. That’s right, ideally the business shouldn’t be dependent on you, the owner, for anything. It should continue running smoothly with or without you.

Just remember, systematize the routine and humanize the exception.

To your vastly leveraged success, Bryan

P.S. Navigating the waters of auto-responders is not without its squalls so if you need some help getting started, shoot me an email.

Filed Under: Ethical Marketing Tagged With: , , , , , , ,

Every small business needs a Marketing System… And how to create one

February 28, 2011 by 5 Comments

Michael Gerber in The E-Myth Revisited and Sam Carpenter in Work the System both talk about developing effective systems, processes, and scripts in your business to help create a consistent front for your customers and also to develop a business that works without you. Brad Sugars wrote an entire book dedicated to systems called, Instant Systems, because he believes so strongly in their value.

The front line system in your business is your system for generating leads through your marketing. You can argue this is your most important system since, without marketing there’s no way to get customers, however without a strong sales system, service system, or finance/accounting system you won’t have a business for very long even if you do have prospects contacting you. My definition of marketing is anything that gets a potential customer to contact you. Whether that’s by phone, walk-in, email, web-form, or even a direct online order. Once they contact you, it’s up to your sales system to take it from there because now they’re in your sales process.

My marketing system goes into the Marketing Manual… The big picture concept of the Marketing Manual is a resource to reference for all marketing you’ve ever tried along with results. It’s a resource for creative along with your entire marketing plan. Say what? You don’t have a marketing plan? Then let’s get to work.

Just like every aspect of your business, your Marketing Manual has to start with your company vision and mission.  The Marketing Manual Flowchart outlines the major pieces in your marketing manual to provide a quick, graphical guide.

  1. Vision/Mission/Culture – If your marketing doesn’t fit in-line with these, then don’t do it. Simple as that.
  2. Revenue Streams – What product lines or services does your company offer to generate revenue? My chart only has 5 revenue streams because, for most businesses, that’s all you can reasonably handle and become excellent at. It’s much better to have 5 strong revenue streams than 10 half-way streams.
  3. Strategy/Clarity – Before you write a sentence of copy, you need to know who your marketing is meant to talk to (target customer); what specifically is going to set you apart from everyone else (Unique Selling Proposition); and what position, if any, your business holds in the mind of the consumer (positioning strategy). Notice I didn’t say what position you want or what position you think you have; you need to know what position you actually occupy. Once you have a position it’s EXTREMELY difficult to change that position so it’s generally best to work with what you have.
  4. Lead-Generators – This is where most small business owners start. They hear the word marketing and think of where they can run ads or what they can do to generate leads. Don’t make that mistake. Start at the beginning and work your way down. Otherwise, when you get to this point, there’s no real way to know if your marketing is actually working.
  5. Implementation – Each lead source has several pieces to it including what it will cost, how long it will run, special offers, training of the sales staff, copy, and most importantly a method of tracking. If you’re in a small business and are thinking of doing some marketing that you can’t track, then don’t do it. Sure it might make you feel good to see your name on a billboard or hear yourself on the radio. But if you can’t actually track its performance, then pass on that marketing piece. Donations and charity work would be an exception since you’re not doing it to generate leads but just to be a good member of your community.

Instead of making this blog exceedingly long, I decided to break this concept up into a few pieces. Your homework for this week is to start thinking about your company’s vision and mission. If you already have those, define your top 3-5 revenue streams and start thinking about the Strategy/Clarity stage. I’ll give you more tips on how to create a Vision, Mission and Culture and then identify your Target Customer, Unique Selling Proposition, and Positioning Strategy in the next few blogs.

Keep in mind that when your Marketing Manual is finished, you can pass it off to someone else to take the reins, they can pick up where you left off, and keep growing the business.

To your marketing success, Bryan

Filed Under: Ethical Marketing Tagged With: , , , , , , , , ,

How to fix your business FAST – Part 5 – Build Recurring Revenue and Prioritize

November 17, 2009 by 1 Comment

There are 3 reasons to build recurring revenue to fix your business:

  1. It can generate immediate cash.
  2. It will generate consistent cash over time.
  3. It will increase the value of your business if you’re looking to sell.

Since your business is struggling, building recurring revenue by offering payment plans for your equipment and services is not what we’re focusing on right now. At the moment, we need to generate cash today with little up-front investment, which I covered in detail in my blog on this topic. For that reason I won’t spend any more time on it again. Since August 2009, my business has created an additional $314/month in recurring revenue. That doesn’t sound like a lot (and it certainly isn’t considering our potential), however we’re just starting this program, everyone is still learning how to sell it, and our up-front costs, for a predictable $3768/year, are very close to nothing. Our goal is to have $500/month by 2010 and $3000/month by 2011.

In reality, the idea behind building recurring revenue and improving your sales and marketing is the same. Your goal at these last 2 steps is to develop a way to create consistent cashflow. Whether that means you need to sell something new to your customer again and again, or you need to bring in new customers regularly, a great sales and marketing system will generate predictable income for your business. I would venture to suggest that if you had a sales system in place during boom times, you wouldn’t have nearly the problems you do now in a slow economy.

So let’s summarize once again what it takes to fix any business in trouble (and though I write passionately for small businesses, nearly everything can be applied to Fortune 500 companies):

  1. Change yourself – By making a commitment to do so, particularly by working ON your business instead of IN it, and making by making lists.
  2. Know your numbers – If you don’t know where you are, you have know idea where your problems lie and can’t develop a plan of attack to fix them.
  3. Cut Costs – As drastically as necessary based on your current circumstances.
  4. Improve Efficiency and Productivity – Since your business is not doing well, your profit per person is obviously lower than it needs to be for you to succeed.
  5. Improve Marketing and Sales – Though this is number 5, you need to work on it along with the rest to make sure you always have money coming in.
  6. Build Recurring Revenue – Make this a priority. It can help you through the next tough time.

Several times I’ve mentioned the importance of lists, systems, and procedures. These items are not just for your team members, they’re for you (and me). You need your checklist to fix the weak links in your business systematically without losing focus. You also need a daily schedule to block off your time for each of the 6 items above. You literally need to block off time for each one without any phone calls, emails, door knocks or other interruptions.

My final bit of advice is 3-part:

  1. Steal the best ideas you can. This can be from your competitors, other similar business, businesses you see on TV, from reading books, asking people who are doing well, taking classes, or almost any other business related source. Granted, there are a lot of people who don’t provide much “meat and potatoes” advice, however when you find a source that does, learn as much as you can. As I like to say, “It’s always better to learn from others’ successes than your own mistakes.”
  2. Apply the pareto principle. 20% of what I’ve covered in the last 5 blogs will give you 80% of the results. The trick is determining which 20%, right? Well if you know your numbers this isn’t that tricky. Your numbers will tell you where you have the greatest potential for improvement. This is how you will prioritize everything.
  3. Know when to cut your losses and move on. If you’ve legitimately done almost everything we’ve reviewed over the last 5 blogs and you’re seeing little to no improvement, you need to move on. Don’t be the guy who holds onto GM’s stock thinking “they’ll never go bankrupt.” Salvage what you can and sell either the whole business or the assets and move to the next project. No amount of money can ever buy you more time, so if your time isn’t being invested in a business that’s moving forward and making your life better, you need to get out of that business.

In less than 5,000 words we’ve reviewed literally dozens of directly applicable things you can work on today to improve your business. Take action and make the improvements.

To your success, Bryan

P.S. If you’re looking for a business to buy, find one that does very few of the things reviewed in the last 5 blogs yet is still making money.

Filed Under: Business Buying/Selling, General Business Tagged With: , , , , ,

How to fix your business FAST – Part 3 – Cut Costs and Improve Productivity

November 14, 2009 by Leave a Comment

On the face of it, cutting costs sounds pretty simple. In reality, if you know your numbers, it is rather simple.

Here are some ideas to evaluate for potential cost-savings in any business:

  1. Insurance – whether it’s commercial, auto, or health insurance, if you haven’t shopped around in a few years, you need to. This area alone has saved my small business $9,000 over the past 2 premiums with slightly better coverage. Granted, it took a lot of time and energy to get to that point, but how can you argure with that level of savings?
  2. Telephones – cell phones and land lines can both be EXTREMELY over-priced if you don’t shop around. Make sure you have the best group or individual or combination of the 2 for all of your cell phones. For land lines, if your internet is reliable enough, you seriously need to consider VOIP. VOIP stands for Voice Over Internet Protocol and simply means using internet data lines instead of phone lines for your phones. In my business this would save us about $250/month IF we had reliable internet. Our internet is very spotty, has little competition, and relatively slow so we’ve tested with VOIP several times and just can’t make it work. :-/
  3. Vendors – When was the last time you renegotiated with current vendors OR shopped around to make sure you’re getting the best rates? Through buying in bulk, group purchases (with similar businesses), shopping around, and good old fashioned renegotiating (particularly on things like fuel charges and freight expenses) you should shoot to save 5-10% on all of your purchases. While your at it, double-check your retail price list and make sure your mark-ups are sufficient. We found a handful of items on our price list going for little to no mark-up as we performed this exercise.
  4. Pre-payment discounts – While you’re calling to renegotiate prices with your vendors, be sure to find out if they offer pre-payment discounts. Those are simply discounts for paying early which could be within 10 days, or 10 days after the end of the month, or whatever their terms are. If you consider those discounts can range from 1% to 5% this can be VERY significant. If your business buys $200,000 in products each year, at 1% you would save $2,000 year or$167/month just by paying a few days earlier!
  5. Meals & Entertainment – and all other “discretionary” spending. Are those meals, trips, expensive hotels, etc. etc. etc. really necessary? If they’re an integral part of your business recruitment strategy then fine. But make sure your deducted-meals are actually legit. Meals are only allowed for documented business purposes (i.e. names, place, and business discussed all have to be available to the IRS) and overnight travel. Even then, only a portion of those meals can be deducted. The upper-management of Walmart and Sam’s Club are still required to fly coach and book modest rental cars when traveling just like their founder always did.
  6. Shop around for cheaper services – Every business needs the help of other businesses to get things done. This could be your IT firm, your accountant, lawyer, bottled water delivery company, tire and oil change business, uniform company, or even your payroll company. I’m well aware that it’s very hard and expensive to find a lawyer you trust, so if that’s something you already have, I’d leave that one alone, however the others can be done with relative simplicity. Just changing our payroll from Paychex to Quickbooks has saved us over $100/month (though QB prices have just gone up slightly so the gap is lessening).
  7. Improve Efficiency and Productivity – This is probably the most important of all of them which is why I put them as a separate step in a separate category for fixing your business. This all boils down to basically 1 thing: Paying people for the results they deliver.

In a nutshell, that’s what an efficient, productive business will consistently do. It will pay people for their work. What a novel concept, huh? Now you need to determine if your business is a better model for a Results Oriented Working Environment (ROWE) like I discuss in my blog on Intrapreneurship and Entrepreneurship or whether your business simply needs to get away from paying everyone an hourly wage with no incentives.

Here are the steps to take to increase productivity for every employee in your business:

  1. Make job descriptions – If your people don’t know exactly what their duties are, you as a leader aren’t even giving them a chance to succeed. Everyone needs a job description and possibly even a daily, weekly, and/or monthly checklist to make sure they’re taking care of all of their responsibilities.
  2. Create processes, procedures, scripts, and checklists – This goes hand-in-hand with a job description. If you don’t have scripts to teach people how to handle customer inquiries, procedures for how to track those inquiries, and checklists to make sure nothing has gotten missed you will never ensure a consistent customer experience. Making this fundamental throughout your business is the key to successful franchising. If you want a successful, universally applicable, consistent business, this is your foundation. This will also help you determine who on the team needs to stay and who needs to go.
  3. Know your numbers – My last blog dealt with this in detail so to just make the point quickly… If you don’t know the income and profit per person on your team it’s very hard to develop benchmarks, set goals, and recruit new people who you believe can achieve those goals.
  4. Remove temptations to “cheat the system” – In my business this comes in 2 major forms. No temptation to play on the internet for the office people, and no temptation to take extra long lunches or sneak home early for our service guys. The first is temptation is removed but letting everyone know their internet usage is tracked and will result in dismissal if internet use is inappropriate. GPS systems on our service trucks take care of the latter temptation. Very rarely do I ever analyze either item. Basically it’s just there in case a problem develops.
  5. Incentivize and create healthy competition – I still credit the doubling of our profit/day/technician in large part to converting a portion of technicians’ income to commissions. Find ways to incentivize everyone on your team to do their best.
  6. Get rid of those who don’t stack up – If you’re the kind of guy who hates to let people go and so cuts everyone’s pay instead of just letting the weakest link go, you need to change your practice immediately! There is nothing worse for morale then to have everyone “punished” with lower pay when the low-hanging fruit needs to go (and everyone but you knows that). If you really feel that bad about letting an unproductive employee go, cut your income first before any one else’. To keep costs down, review my blog on how to let someone go without paying unemployment.

Keep in mind, that the more drastic the situation the more drastic the cost-cutting measures required. Act quickly and decisively and move on. If you make a mistake in that process, learn from it.

To your cost-cutting success, Bryan

Filed Under: General Business, Team Building Tagged With: , , , , , ,

Are you putting yourself out there for criticism?

September 20, 2009 by 1 Comment

When you want to get better at something, there’s a big difference between tracking your own personal performance and exposing your strengths and weaknesses to your peers openly and publicly. That’s why all business owners should make a habit of exposing all the details of their operations to their colleagues. Why? Because no one runs their best race, plays their best game, or builds their best business behind closed doors. The pressure, the crowd, the feedback, and most importantly the competition always makes us better.

Granted, if you’re like me, your toughest competition is yourself and no one demands more of you than you. However, that’s not the point. The point is if you’re good at what you do you should share that publicly with others for 2 reasons:

  1. It will force you to be great.
  2. It will help others who have potentially helped you.

Now what do I mean by exposing yourself to the public? Do whatever you have to to make your ideas, best practices, and systems public. For instance:

  1. Give a speech.
  2. Do training for your colleagues
  3. Write a white paper on something for which you are an expert and pass it out to everyone you know who knows more than you.
  4. Write a blog.

You get the point. If you can’t receive feedback and criticism (maybe even praise if you really are good) than it’s not good enough. You have to be able to fail for this to be effective.

Let me give you an example of what I’m doing (in addition to this blog) and how it’s helped make me better.

Recently I’ve partnered up with my previous employer – a software company that provides niche software for my business – to host a training seminar for other businesses in the industry. The training is about a month away however knowing that I’ll have to expose my business and also provide value for all of those in attendance has put some pressure on me to produce something great. So this is what I did:

  1. Reviewed my biggest headaches. – Quite simply these are personnel and cashflow problems. Sound familiar?
  2. Reviewed my biggest goals. – Increase profits and limit the business’ dependence on me.
  3. Reviewed my plan for dealing with those headaches and goals. – Determine areas of weakness through efficient analysis of business benchmarks and then come up with a list of ways to improve each area of weakness.
  4. Developed a “system” for continually monitoring and improving my headaches and goals so it can be taught to others. – This is the hardest yet most important part. If I can’t break down my game plan into an easily taught system my business will never run without me.

Number 4 is really the only one that needs further explanation. My “system” was actually quite simple once I sat down for a few hours and thought it all through. It basically started with the big picture of my business – which just so happens to be the same big picture for every business – Brad Sugars’ Business Chassis as he teaches about in The Business Coach. He breaks down the 5 parts of every business that determine the profit of that business. You NEED to know these 5 numbers in your business to know where you’re doing well and where you’re lacking. The next step was to figure out how to use the software to determine those 5 numbers. Finally, I organized some ideas and suggestions on how to improve those numbers for each department in my business. My goal isn’t to provide all the answers on how to make each area better, but to help business owners understand how to find the areas of weakness so that they can then use their own knowledge, experience, and skills to make the most effective improvements.

Now the question that’s bugging me is why didn’t I come up with this game plan 18 months ago when I bought the business? I have no idea. It really only took me a few hours to plan out and it will certainly help guide my business (and hopefully others) in the future. Though I will never know the answer to that question, I do know that I finally took the time to lay out this detailed, systematic, and repeatable game plan because I was forced to prove to others that I am indeed an expert at my business.

The point of this blog is not to explain exactly what my training will encompass, but to encourage you to step out and take a risk by exposing your business acumen to the world and trying on the label “expert” for a few days to see if you can live up to it.

To your success as an expert, Bryan

Filed Under: Business Books, Business Psychology, Leadership Tagged With: , , , , , , , ,

Have you setup your business to achieve critical mass?

September 28, 2008 by 1 Comment

This blog is going to tie a whole bunch of other blogs together so try to keep up. 😉

As I mentioned in my explanation of why I buy, build, and sell businesses, its important to find a business that you can grow very rapidly. Another way of stating that is to find a business that’s about ready to reach critical mass. According to wikipedia, critical mass is The amount of a tendency needed to keep it going on its own momentum. In other words, you get your business setup with such a strong foundation that now it’ll take off and stop growing linearly and start growing exponentially! With that strong foundation, your profits will grow exponentially as well (and probably faster than your revenue).

So here are the components needed for any business to reach critical mass.

  1. You focus on improving the business through the 6 Stages of business evolution
  2. You have the 3 Leaders every business needs
  3. You have Systems, Processes, Procedures and Scripts in place for everything
  4. You have a program in place to maximize Back-end Sales and to generate Referrals from every sale

This may be the most simplistic way to view a business running on all cylinders, however all of these points are needed to achieve that massive growth. Keep in mind, most businesses do not have more than 1 point of critical mass. They can only have a massive growth period once in their existence which is why it’s so important to know a business that’s about at that point. More importantly you need to know how to take it past that threshold so you can then sell it and cash in on that amazing growth.

Ok so let’s look at each point in a little more detail:

1. The 6 Stages of Business Evolution

In his book, The Business Coach, Brad Sugars steps you through these 6 stages. At his Entrepreneur’s Masters Class he goes into even more detail. I haven’t written a blog about it in detail yet so here’s a quick overview of those stages.

  1. Mastery – Mastering Money (cashflow), Time, Delivery, and Reporting (most businesses are stuck here)
  2. Niche – You no longer can be compared to competitors because you have something unique
  3. Leverage – You’re leveraging (doing ever more with ever less) all aspects of you business
  4. Team – You know how to recruit and get the right people in the right spots
  5. Synergy – Everyone and thing is working together
  6. Results – Just a natural by-product of everything else

2. You have the 3 Leaders every business needs:

A leader leads people and a manager manages resources so it’s important that they’re leaders. Those leaders are the following:

  1. Service and Operations Leader
  2. Sales and Marketing Leader
  3. Finance and Administration Leader

3. You have the Systems, Processes, Procedures, and Scripts in place for everything.

Those systems include your software and computer systems as well as the systems needed to effectively deliver your product. The processes and procedures are the methodologies that you use to put those all into place. They of course all need to be documented to deliver consistency and to get someone trained and up to speed as quickly as possible. Scripts are the methods in which you effectively communicate with your customers, vendors, and maybe even each other. They should all be based on strong NLP principals.

In my office last week we just hired a new Office Administrator for Sales and Marketing and the person training her has given her a whole packet of the procedures, processes, and scripts we’ve developed over the past 5 months. It’s amazing how quickly those things can get someone trained and productive. It also helps you quickly determine if they’re up to the task or if you made a bad hire.

4. You have a program in place to maximize Back-end Sales and to generate Referrals from every sale

I tied Back-end sales and Referrals together because they’re basically the same thing. If I can drive down my cost per lead for marketing by getting referrals from every sale or by increasing the times a customer comes back to buy from me, I’m way ahead of the game. Building that loyal customer base is critical and an essential piece to acheiving critical mass. The way to do that we’ll have to address in a later blog.

So now you have a basic understanding of all of the pieces necessary to acheive critical mass, however don’t forget that this also gives you the perfect formula for determining what businesses have not yet acheived this. In other words, these are the businesses you want to buy! The businesses that just get by or manage consistent single-digit growth. If you’re like Warren Buffet you look for the businesses that have a strong position in the market but have been undervalued or beaten up by speculation in the market. Warren Buffet’s strategy, however is long-term. We however like to think short-term and repeat that short-term buy, build, and sell again and again. Warren Buffet himself said that he could generate 50% or better annual returns if he didn’t have so much money. In other words if he could just invest in small to medium businesses that are about to reach critical mass he’d be an even richer richest man in the world. Makes sense to me. Does it make sense to you?

To your success, Bryan

Filed Under: Business Books, Ethical Marketing Tagged With: , , , , , ,

Work the system – the WHOLE system

July 13, 2008 by Leave a Comment

In the spirit of Dale Carnegie’s How to Win Friends & Influence People, I will recommend Sam Carpenter’s book Work the System and I certainly felt reinvigorated about the systems I’m working on in my business. (Dale Carnegie suggested that before you critique someone you always offer a positive so as not to put them on the defensive.)

I recommend the book to people who don’t need or want to have a big picture of generating wealth – to people who just need to understand the importance of systems, but not everything else that comes along with being able to grow lots of businesses.

If I can pull a single good idea out of a book, then I consider it worth the $20 and time invested. It wasn’t until the last few chapters that I found that great idea from “Work the System”. It’s a concept Carpenter calls “PTO” or Paid Time Off. The way it works is that with every paycheck your team members accumulate vacation or sick days or both. Well Carpenter found out that caused a problem with people just taking one of those sick or vacation days because “i don’t feel like working today.” So instead of that, he wrapped both into Paid Time Off and paid the employee for that time immediately as an additional line item on each paycheck. That way when the employee takes off a day or week, they don’t get paid for that day or week since they’ve already been paid ahead of time. He claims it reduced absences by 80% and I believe it. I read that last night and this morning I was working with my accountant to get it into our Quickbooks program! Brilliant idea!

Beyond that, let’s call it what it is – Sam Carpenter’s “System” was an effective way for 1 man to take 1 small business (currently $2 million in annual revenue) in 1 area of the world in 1 specific industry to his own personal definition of success. God bless him because he’s living his American dream and I absolutely LOVE to hear how people are able to do that. The thing is, Carpenter tries to convince the world that what has worked in his very limited world and experience is the answer to all business owners’ prayers.

There are a few reasons his systems approach was so effective for him:

  1. He had absolutely none to begin with. I felt really bad for him reading the first few chapters about how his life and business were in such shambles. It was rather depressing.
  2. His business has a recurring revenue business model. In other words if he doesn’t sell another X this month he’ll still make payroll and there are a LOT of businesses that don’t have that luxury.
  3. His business is relatively simple. He mentioned they can take someone off the street with decent typing skills and have them handling calls for his 24/7/365 call answering business within 3 days. There are plenty of small businesses that require much longer then that just to get someone acclimated.
  4. His business is a necessity for its clients. Its not a luxury.

So let’s face it, he misses some VERY important points in growing a business that no business owner should be without. Here’s a quick list of just a few things he doesn’t address that are important to a business:

  1. Unique Selling Proposition and guarantee.
  2. Testing and Measuring particularly with lead tracking.
  3. He grows his customer base mostly through buying other businesses but gives no weight to the value of doing that. I’m curious as to how many new accounts he signs up every year through his marketing and sales system since they’re never mentioned.
  4. His first systems to fix were his operation’s systems not his sales/marketing systems (he had that luxury because he had a recurring revenue business).
  5. He never really reviews team-building other than to find people who buy into his systems mantra.
  6. NLP, Proximity, marketing, scripting are all missed.
  7. He doesn’t review any method for maintaining the systems or the business with important financial numbers such as a daily break-even, the cost of “buying” your customers, the 4 ways to grow revenue, lead conversion ratios, lifetime value of each customer, etc. etc. etc. How can you manage what you don’t know?
  8. Back-end Sales, cross-marketing, additional income streams
  9. Commission and employee incentives for productivity. For as much time as he harps on the necessary mechanics of life in that everything is controlled by systems, it seems ironic that he doesn’t have an incentive based pay-structure for his managers. Instead he seems to rely on the “pay my people a good salary and make them feel good and they’ll perform to their full potential” model. Wasn’t his whole hippy-to-reality conversion based on feeling good doesn’t produce results?

You get the point. The list can go on and on. Let’s face it, Sam Carpenter may be the McDonald’s brothers, but he’s no Ray Kroc. The McDonald’s brothers created a fantastic systematized business that made them both millionaires in a relatively short amount of time. However the McDonald’s business didn’t make it big until Ray Kroc bought them out and applied all of these other principles to their beautifully systematized business to become a billionaire.

If his systems are that good, and he’s looking to develop a lot of credibility so he can write books and charge people $3k to attend his workshop in Oregon, I’d recommend spending the next 2 years buying a competitor a month and applying the systems. Or just franchise his systems out to other call center businesses since his systems approach is the way you develop and sell a franchise. Within a few short years his business could grow ten fold into a $20 million operation. I have no doubts he could do that very successfully with the well developed systems he has in place. Then again he is more than twice my age so maybe at that point in my life I’ll be more interested in living comfortably than creating an empire. 🙂

Again, his systems approach has its place and is certainly a crucial point for every business – but its not the guiding factor for success and certainly can’t be taken on its own. Maybe it’s because I personally know and have consulted with at least half a dozen people who make a lot more money than him, work when they want, and take vacations wherever they like without his obsession for systems. Especially since many of those business owners I’ve worked with understood that their first priority and most important systems were the ones that generated leads and closed sales (something he never addresses).

Michael Masterson in Ready, Fire, Aim: Zero to $100 Million in No Time Flat probably points out the biggest flaw in Mr. Carpenter’s approach and that is that a Stage 1 business’ main priority is to sell. In Stage 2, once you’ve proven that you have a viable product and a willing market, you focus on systems’ development.

The freedom, comfort, and happiness that Mr. Carpenter has found through HIS approach to HIS business is awesome – this blog is just a fair warning to people who think that by reading his book you know all there is to becoming a successful entrepreneur. His book is excellent for what it is – a book on the importance of systems to small businesses – but that’s about it.

It’s worth the read and a decent book so check it out but only after you read the other 5 books on my list of books that make you wealthy so that you have a picture of the WHOLE system that a business owner needs.

To your success, Bryan

P.S. I can’t stop thinking that Brad Sugar’s is by far the greatest entrepreneur of the last 100 years (maybe longer). Eight years ago when Mr. Carpenter had his epiphany about systems, Brad Sugars was retiring at the ripe age of 26 with $10 million cash in the bank. He has since owned 54 businesses all over the world and is only 34 or 35.

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