Be an Ethical Entrepreneur, Marketer, and Business Builder

Work the system – the WHOLE system

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.