The Biz Sherpa

Craig discusses some examples of poor cash flow management and how you can avoid making the same mistakes as others. Cash Flow is an art and a balance. 2

Jim Stachowski is one of the most dynamic trainers in the Arabian and Saddlebred industries. He is not only an excellent showman but he is continuously trying to improve the Arabian horse breed. He is a recognized expert in equine breeding and has bred multiple national champions.

Do you take time away from your busy schedule to step back and take time to yourself to express your passions? When we enhance our creativity in return it can improve our ability to meet our customer's needs. Craig shares an exercise you can try to help you enhance your creativity. 

How often do you treat yourself to good education and continued learning? Craig discusses how to enhance your ability to concentrate and focus on the tasks at hand. 

Craig discusses profitability and how it is similar to science. Just like a science experiment, when you have too much of one thing, it might cause the whole experiment to blow up. He discusses the balance that is required to attain a profit. 

Craig discusses some examples of poor cash flow management and how you can avoid making the same mistakes as others. Cash Flow is an art and a balance. 

"Inspiration is a feeling of enthusiasm you get from someone or something that gives you new and creative ideas." Sometimes we feel stuck and we need something to drive passion into us and help us to be creative. We each have a divine nature and we need to help identify what that is for each of us.

Often we are faced with different opportunities and we are left deciding whether that opportunity is right for us. Confidence is key. When you can find confidence in your abilities, it can overpower your fears of failure. 

Craig discusses the importance of being ready for opportunities that may open up to us. When opportunity knocks are you ready to open the door? Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn

Craig discusses the importance of being ready for opportunities that may open up to us. When opportunity knocks are you ready to open the door?

Tommaso Cardullo is an Italian fashion designer who is passionate about designing clothing that empowers people to be and look their best selves. He is the founder and designer at Tommaso Cardullo Inc. Tommaso shares how he loves and enjoys life and how he takes things in life and makes them more simple. Links Tommaso Cardullo Inc. Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn

Tommaso Cardullo is an Italian fashion designer who is passionate about designing clothing that empowers people to be and look their best selves. He is the founder and designer at Tommaso Cardullo Inc.  Tommaso shares how he loves and enjoys life and how he takes things in life and makes them more simple.  Tommaso Cardullo Inc.  

Craig discusses the different avenues you can take when looking to fund your startup. Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn

Craig discusses the different avenues you can take when looking to fund your startup.  

Doug Wing joins Craig to discuss his new book GIANT SUCCESS: Leadership and Business Strategies of Hal Wing Founder of Little Giant Ladders. Doug is the son of Hal Wing the founder of Little Giant Ladder Company, the best-known ladder in the world. Doug shares with us stories about Hal, the legacy he left, and what it took to build the company to the success it is today. Links Doug’s book GIANT SUCCESS Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn TRANSCRIPTION:

Doug Wing joins Craig to discuss his new book GIANT SUCCESS: Leadership and Business Strategies of Hal Wing Founder of Little Giant Ladders. Doug is the son of Hal Wing the founder of Little Giant Ladder Company, the best-known ladder in the world. Doug shares with us stories about Hal, the legacy he left, and what it took to build the company to the success it is today.  Links Doug's book GIANT SUCCESS    

A business can take 2-3 years before it really starts to turn a profit. It takes quite a bit of effort in the initial years of starting your business, so it is important to make sure you are in a position to take on this endeavor. Craig shares 15 principles to help you be more successful. Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn

Tom Heckens is the CEO/Founder of Metris Global, a military training and defense contract training company. Tom shares his experiences having been in military special operations to then diving into entrepreneurship and the challenges he has worked to overcome. Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn

McKay Johnson is an accomplished Tax and Estate Planning attorney who joins Craig in the Sherpa’s cave to discuss how to navigate choosing an entity for your business. Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn

A business can take 2-3 years before it really starts to turn a profit. It takes quite a bit of effort in the initial years of starting your business, so it is important to make sure you are in a position to take on this endeavor. Craig shares 15 principles to help you be more successful.   CLICK HERE to access our free resources, social pages, and website!

Tom Heckens is the CEO/Founder of Metris Global, a military training and defense contract training company. Tom shares his experiences having been in military special operations to then diving into entrepreneurship and the challenges he has worked to overcome.

McKay Johnson is an accomplished Tax and Estate Planning attorney who joins Craig in the Sherpa's cave to discuss how to navigate choosing an entity for your business. 

Nathan Gwilliam is the Founder and CEO of Monetization Nation and the host of the Monetization Nation Podcast. We discuss the concept of Monetization and how you can better monetize your assets. Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn

Nathan Gwilliam is the Founder and CEO of Monetization Nation and the host of the Monetization Nation Podcast. We discuss the concept of Monetization and how you can better monetize your assets.   Check out Monetization Nation at the links below: Monetization Nation Website Youtube Channel Apple Podcast   CLICK HERE to access our free resources, social pages, and website!

Are you wondering whether you should start a business? Starting from the ground up can be a daunting task. Craig discusses the need for passion when starting a business. Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn

Are you wondering whether you should start a business? Starting from the ground up can be a daunting task. Craig discusses the need for passion when starting a business.    CLICK HERE to access our free resources, social pages, and website!

Budgeting can sound restrictive. However it isnt about limiting yourself, instead it is about making things that excite you possible. If you are like many of us who hate budgeting listen and take a new point of view on budgeting with the mindset of it allowing you to reach the goals you are searching for.   CLICK HERE to access our free resources, social pages, and website!

Budgeting can sound restrictive. However it isnt about limiting yourself, instead it is about making things that excite you possible. If you are like many of us who hate budgeting listen and take a new point of view on budgeting with the mindset of it allowing you to reach the goals you are searching for. Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn

Often times it can be hard to know what we should delegate to others. Where do I start? We need to be careful that we aren’t delegating tasks. We need to delegate authority. As you delegate authority you are creating leaders. Listen as Craig shares where to start when deciding what you can delegate to others. Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn TRANSCRIPTION: Speaker 1: From his first job flipping burgers at McDonald’s and delivering The Washington Post, Craig Willett counts only one and a half years of his adult life working for someone else. Welcome to The Biz Sherpa podcast with your host, Craig Willett. Founder of several multimillion-dollar businesses and trusted advisor to other business owners, he’s giving back to help business owners and aspiring entrepreneurs achieve fulfillment, enhance their lives, and create enduring wealth. The Biz Sherpa. Craig Willett: This is Craig Willett, The Biz Sherpa. Thanks for joining me today in the Sherpa’s Cave. I love staying warm by the fire and I hope what I say to you will warm your soul because I hope that some of the things we talk today inspire you to delegate. Stephen Covey once said, “We accomplish all that we do through delegation, whether it be to time or to people.” So think about that. We often work long and longer hours. My wife was telling me this morning, Carol said to me, talking about the career of somebody else that we know, that they can work from six in the morning until 10 o’clock, and in four hours can accomplish what they need to do. And she said, “Craig, you worked from four in the morning until 10 o’clock at night sometimes.” And maybe I did take on too much. In fact, this is probably something that I share with you because I’m still learning to delegate. I’ve had a year here where I’ve had to learn better how to delegate. And I think sometimes we keep it to ourselves and try to keep that control. But I think it’s important that we learn to delegate. So I hope that you can learn from some of my mistakes and that it motivates you because I think it’s really important. So I always start with, what do I delegate first? Right? So I look at what might be most annoying and what I might have a weakness at. When we take time to delegate those, we need to be careful that we’re not delegating tasks. Someone once said, “If you delegate tasks, you get followers. If you delegate authority, you get leaders. You build leaders.” And I think that’s important. Think about that. You have an opportunity, as you start or grow your business, to develop future leaders for your business. It doesn’t always have to be you. You may play a prominent role, but you have to surround yourself with others who can make decisions based on authority that you’ve delegated to them within certain parameters. And I think that frees up your time. Of course, it takes resources, so you need to grow your business to a certain size and I get it. In those early days, you can’t hire all the talent you need. You don’t have the budget for it, but you need to be aware when you get there. And I think that might have been one of my mistakes in my career is that it grew so fast and was so successful that I was hiring and I was delegating, but I could have hired even more and delegated even more. I might have been able to be more available, even though I did manage my time well, and I like to accomplish a lot in a short period of time, but it’s no excuse for building other leaders. I think it’s important. It is one of the regrets I have is not building more leaders. You have a chance to impact society. Think about the families and the lives that you bless as you delegate that authority to others and let them realize their potential and become better and have their dreams come true as well. You might also look at not only what’s most annoying, but what’s most repetitive. And I know that sounds like tasks again, but some people are really good at doing the same thing over and over again and I think it may bring to them a great level of satisfaction. And this, again, isn’t a task, but it may be something that takes up a lot of your time that has to be done on a regular basis and you have a higher purpose or a higher need. I would look to delegate that. And then one of the great things—and we’ve talked about this with budgeting, we’ve talked about it with cash flow and we’ve talked about it in other aspects of The Biz Sherpa podcast—but one of the great things to delegate is into your area of weakness. That doesn’t mean that you can’t learn, and being the owner, you need to know and understand all aspects of your business. But hiring somebody and delegating to somebody—whether inside or outside your organization—areas where you’re weak, such as budgeting or being accountable, is really nice. We do this when we have a lawsuit. We have to hire a lawyer. We’re not lawyers. And so that is delegating certain authority and certain opportunities where we don’t have that expertise. We can still be involved and be consulted for major decisions surrounding it, but we don’t need to pursue a dramatic situation, that dramatic situation being that we have to stay in charge and really run into our weaknesses. When we spend all of our time working on our weaknesses and being confronted by them, it becomes discouraging. When we overcome our weaknesses, that’s great. And we may do that with the help of someone else. And when you think about it, if we delegate just tasks, guess what happens? People are going to be knocking at your door all the time. I think of a great example in the Bible. Solomon was one who had great wisdom and people were lined up to see him all the time, and I think he had to learn to delegate. We need to learn to delegate. And as we learn to delegate, we free up bottlenecks. Think about it. If we give them tasks, but not authority to make decisions, they’re going to put people on hold who are calling in to have a problem with a product or service, just to find you and ask you if it’s okay. That’s not great customer service, is it? Think of when you’ve been on the other side of that phone call and you can’t get the answers that you think you want and someone on the other end can’t and doesn’t have the authority to solve it for you and you have to keep going up the chain of command. Think about that—how that feels to your customers. Within limits, you need to give that authority for them to make decisions. Think how freeing that is when someone has the authority to make a decision, to accept a product return, or to help someone out by doing something extraordinary and above and beyond. When we allow that kind of flexibility, then we build in the opportunity for success. Sure, there’ll be some mistakes, but those mistakes shouldn’t be huge and won’t cost you everything. We learn from them. They’re going to happen in the short run, but you’ll learn and have greater success in the long run. Carol always tells me that I expect people to do it my way and you know what? She’s right. I do expect people to do it my way, because I think my way might be the best and I think that’s not a good attitude. I think the better attitude is give people—within their personality and within their talents and abilities—the opportunity to be successful and have the authority to make decisions so that they can experience personal success. You’re not trying to create a robot that mimics you. You’re trying to create someone who takes it upon themselves. I know early on in my CPA career, I was associated with a furniture store and there was one person in that furniture store who owned the carpeting department. Not literally, he was just an employee, but he owned it in the sense that he spoke in the first person to them. Not, “We do this—I can do this.” And he was able to do so many jobs. He developed rapport with a lot of people. He didn’t need someone looking over his back. He knew how to price his product. He knew how to schedule it. And he really owned it. No one dared step in. No one could really replace him. He became the expert. And the business owner totally trusted him and they had over a 35-year relationship and I admired that. It’s a great example to me of being able to delegate and not bottleneck. Sandra Day O’Connor said something that I really like. She said, “The really expert horse riders immediately let the horse know who’s in control, but they give them loose reins and seldom use the spurs because they guide them. They don’t take control of them, but they let them know if something happens, who’s in control.” I’ve found that. You’ve probably seen, and if you haven’t, I’ll put it on my website, www.BizSherpa.co, a video of me winning a World’s Championship with a Saddlebred horse where I’m not riding him, but I’m in a buggy behind him. And how you control them: you can’t control them with your feet. You control them with the reins. The times that I did really well with that horse weren’t the times where I was afraid or where he was pulling on me and I was pulling on him. I let him know I was in charge and then I gave it to him because he knew what he was doing. I had a great horse and he had a great rhythm and he knew how to step and what to do. I had to give him some small commands and keep him straight in corners and set him up and frame him right and let him know I was there, but he knew what he was doing. And we had developed that trust and confidence over the years. Think about that. Let people know who’s in charge, but then govern with a loose rein and seldom correct using spurs, which would probably hurt them. I had a whip, which probably substituted for the spur, and you know what? I rarely—if ever—used it on him. And if I did, it was just to let him know I was there by setting down the end of the whip, just on his back flank, to let him know I was there. It was not something that I did in a mean way. I think that from that experience, I learned what Carol was telling me. I wanted people to do it my way. You know what? The horse did it his way. He was great at it. I knew what he needed to do and I knew how to control him and guide him and reassure him and motivate him, and I think that’s the key. Delegation is really about giving authority and motivating others to be able to realize their full potential. And if you think about that, then you have a better experience. I think about training as part of the delegation process. You give training before you give them the reins and that’s not not trusting them. It’s developing that trust. When I was younger, my dad would always throw me in the pool. And in fact, to learn how to swim, he just tossed me in the pool and there were two things that would’ve happened, right? I would sink to the bottom, in which case he’d have to jump in and bail me out, or I’d have to flop around and learn how to keep my head above water, which I did. I became a very accomplished swimmer in my teenage years and actually won some county records and had some pretty good experiences in swimming. You’ve heard me tell some of those stories on The Biz Sherpa podcast. But it’s not always sink or swim. We don’t want to throw people in because we may not be around if we’re just throwing them in saying, “Okay, it’s yours. I don’t want to have to deal with it. Let me know how it goes. Call me if you need some help.” They may be drowning and they may not be able to call you. They may be suffocating under the pressure of what you’ve given them. And so it takes follow up. It takes reporting. It takes sitting down and encouraging, having them share with you what their challenges are and their experiences are and then helping them overcome those challenges and experiences by making some suggestions to them, but it’s not expecting them to do it the way you would do it. One of my first jobs was at McDonald’s as a 16-year-old. I was learning to cook and I cooked, and that was my job, it was in the kitchen. But one Saturday, somebody called in sick that did all the cleaning and I didn’t know what to do. I had to be trained. While I was a great employee at cooking—I could cook the Egg McMuffins and I could cook the burgers and the cheeseburgers and do all of that—I didn’t understand how to mix the chemicals and to mop the floors and when to do it and where to do it and how to go around the parking lot and pick the place up. And as you know, I mean, Disneyland is a good example of it, too, they keep it clean. And one of the things about McDonald’s, in my era, was it was a clean place to go eat. And I had to take on different responsibilities, and think about that. Don’t just throw somebody to something who’s capable, but doesn’t have the adequate training. We all have potential and we can all rise to the potential. And we don’t need our hand held all the time. Think of yourself. You don’t want it. You don’t want someone watching over you all the time. You have to empower that success, but you have to measure it and you have to review it and you have to train and you have to motivate. I remember a time that I was going on vacation for three weeks for my business and you heard me talk about this. In the summer times, I’d like to get away with my family so I could focus on them because as Carol said, probably a lot of the time, I was working weekdays, four in the morning till 10 o’clock at night. And I’d squeeze in the family here and there and certainly on weekends I did. But that time with family was valuable to me. We had just announced a new project and we were taking pre-orders or pre-sales on that project, as we were getting it finalized to be able to break ground. While I was gone in the middle of our presale, they announced a hospital a mile away. Most of our target market were healthcare providers. You can imagine what happened. All of a sudden, it sold out. They never called me. They didn’t need to. I had given them the authority to do that. But it’s probably one of the reasons I was a little scared to not have people do it my way. One of the things I didn’t delegate to them, because I didn’t think it would happen during the three week period, is I was in charge of pricing and because I was in control of the financing, it was my personal guarantee on it. I determined the pricing of our buildings. And one of the things I always did is when we hit certain benchmarks, I raised it. Price is a certain percentage because we are now coming down to having fewer and fewer buildings left in the project. Well, I didn’t delegate that to someone and it would’ve been simple to say after X percentage of sales, raise the price to this. Well, I didn’t do that and my failure to do that meant we sold out, which was great, but we probably could have gotten 25% more at the end of the day, had we been raising prices during that three week period, as we were taking more and more orders for our buildings. It was a great experience and there’s more to that story someday. But my point is be sure when you delegate that you delegate enough authority and go beyond to where they can exercise some judgment. Now, they could have called me. They didn’t know what I did, because I didn’t share it with them. And so I held back on some of that authority and I paid the price, because it was my profits, not their profits. They got paid and they got paid their commissions. It didn’t really affect their living the way it affected the profitability I could have had. We made profit, made a great profit, but it could have been better. I like to think about how we govern in our lives. I look at our country and it seems like we’re coming up with more and more laws for every little situation. I think that happens when we don’t trust, when we don’t trust people to use their own intuition. And we’re seeing it during the great pandemic. People are not allowed to use their own judgment. We need to allow that. Otherwise, we start making very, very restrictive rules and we create a bottleneck. “You can’t do this.” “Only in this situation.” “Don’t do that.” And when it’s a lot of don’ts, then you know it’s being restrictive. Think about it. Think about when your parents raised you and they loved you. They gave you some things not to do. “Don’t touch the stove when it’s on.” But think of all the things they gave you to do. “Go out and play with your friends. Join a baseball team. Go to the dance class.” They provided opportunities for you to do and I think it’s in the doing that we experience the greatest freedom. Give freedom to do, and not a list of rules of what not to do. And I think that will be the greatest thing that we can do to help delegate. And I think it is reflective in the lives of our employees and you can apply this in your personal life with your family and your friends. Don’t give restrictions, give opportunities. And when you do that, you’ll find at the base what delegation really means, it’s about building leadership. It’s one of the key elements of leadership. We don’t want restrictions at every turn. You need to retain key areas, like I said. You don’t want to hand over the reins of all the spending and all of the controls and the signatures at the bank, unless there’s certain parameters put around that, but we want to elevate people. We want to evaluate, reward, encourage, teach, train, focus on things that make a huge difference so that it allows you to spend the time where you need to spend it and then encourage. I would spend more time building the person. I learned that from Hal Wing too, that when you build the person, you really get great production and you get great satisfaction. Richard Branson said, “If you’re going to grow as an entrepreneur, you’ve got to learn to delegate.” I think that’s important. Delegation is not a set of rules and it’s not a task. I’ve learned the hard way. I hope you don’t make the mistakes I made, but that you delegate authority, you empower, you train. Think of the horse. Again, let them know who’s in control, but then give them the loose rein and allow them the freedom to experience that success and then train, evaluate, reward, and encourage. And as we do that, we will find that we’ll have fewer bottlenecks in our business. We’ll experience greater success and think of your customers. I always say this. What’s their experience like? If you have to go up the chain of command so far and people can’t get answers quickly to their questions and problems or resolutions solved quickly, it’s the source of most of the negative reviews. So let’s find a way to best meet those needs of our customers and that will be to delegate that authority that needs to. Not a task, but that authority. I hope that you’re able to take something from this and have a wonderful experience in your business career. I think as you learn from the mistakes of others, like me, that you can be better, do better and your customers will be happier. Thanks for joining me today in the Sherpa’s Cave. This is Craig Willett, The Biz Sherpa. Speaker 1: Be sure to go to our website to access the resources related to this episode at www.BizSherpa.co. If you enjoyed this show, tell your friends about us and be sure to rate our podcast. Craig would like to hear from you, so share your thoughts in the Facebook community @BizSherpa.co. Follow us on Twitter @BizSherpa_co and on Instagram @BizSherpa.co.

Often times it can be hard to know what we should delegate to others. Where do I start? We need to be careful that we aren't delegating tasks. We need to delegate authority. As you delegate authority you are creating leaders. Listen as Craig shares where to start when deciding what you can delegate to others.  CLICK HERE to access our free resources, social pages, and website!

Craig is joined in the Sherpa’s Cave by Terri Bearden. Terri worked with Craig in his Real Estate Company. She has years of experience as an Executive Assistant as well as in positions in HR. We discuss where to advertise when looking for employees, how to interview, who the best candidates are and the process of firing employees. Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn

Craig is joined in the Sherpa's Cave by Terri Bearden. Terri worked with Craig in his Real Estate Company. She has years of experience as an Executive Assistant as well as in positions in HR. We discuss where to advertise when looking for employees, how to interview, who the best candidates are and the process of firing employees.    CLICK HERE to access our free resources, social pages, and website!

Craig sits down with Ryan Moss the CEO of Little Giant Ladder Systems. When Ryan started with Little Giant Ladders 37 years ago he started out sweeping floors and being part of the manufacturing team. Craig and Ryan discuss the growth of the business and how Ryan has climbed the ladder up to the role he is in today. Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn TRANSCRIPTION: Speaker 1: From his first job flipping burgers at McDonald’s and delivering The Washington Post, Craig Willett counts only one and a half years of his adult life working for someone else. Welcome to The Biz Sherpa podcast with your host, Craig Willett. Founder of several multimillion-dollar businesses and trusted advisor to other business owners, he’s giving back to help business owners and aspiring entrepreneurs achieve fulfillment, enhance their lives, and create enduring wealth. The Biz Sherpa. Craig Willett: This is Craig Willett, The Biz Sherpa. I’m glad you could join me today. I’m in Springville, Utah with Little Giant Ladder Systems. I’m grateful that they are friends of mine and that they would allow me to come to their offices today. I have the opportunity to visit with Ryan Moss, who’s the CEO of Little Giant Ladder Systems. I think you’ll find some insights here that will be good for each of us to think about. Ryan has a different path to business ownership than a lot of people and he has a lot of innovative background. I think he’ll be an inspiration to those who will take the time to watch the entire video today. Welcome, Ryan. Ryan Moss: Thanks, Craig. Appreciate you having me on. Craig Willett: This is a great opportunity for me. Not everyone that’s a business owner started out the way you did. When you started with Little Giant Ladders, how many employees were there? Ryan Moss: Boy, there weren’t very many at that time. There might have been—oh, probably 35, maybe 40 on the outside, but really not that many. Craig Willett: What was your initial role with the company? Ryan Moss: I actually started in manufacturing. I tease a little bit that I started at $4.50 an hour, and I just recently got a raise to $5.00, but anyway—yeah, I started in manufacturing. I was punching rung and bending channel, sweeping floors, and just part of the manufacturing process. Craig Willett: How many years ago was that? Ryan Moss: We’re coming up on 37 years now. Craig Willett: Wow. That’s quite a bit of time with the company. I think that says probably a lot to why you’re still here, your dedication. With 35 employees, you saw a lot of different things happen. In the history of Wing Enterprises or Little Giant Ladder Systems, I know the company was sold by the family at one point. You were working with the company then, weren’t you—when they sold it? Ryan Moss: I was, yeah. It was sold to a company by the name of Technical Equities. There was kind of I guess a shady group that was running that or at least an individual that ended up causing some trouble with that company, and ultimately, its demise. Because of all that, Hal Wing, who was the original founder of Little Giant Ladders, went back and bought all the assets of Little Giant and started over again. Craig Willett: You were with him through that transition. Ryan Moss: I was. Craig Willett: What role did you play in the restart of Little Giant Ladders? Ryan Moss: I had only been with the company for two years, still in manufacturing when all of that took place. As Hal bought back the assets and opened a facility here in Springville, I was made the shop foreman, which was kind of terrifying. I was pretty young at the time. I was 23 years old and a lot of the guys working for me were double my age. Anyway, Hal saw something in me that maybe I didn’t see in myself, I don’t know, but he gave me the opportunity to be the shop foreman over this new facility. Craig Willett: What did you do with those responsibilities once you got comfortable and settled into the major task ahead of you? Ryan Moss: I think for me, really the way to understand how to be a good leader was to get right in with those people that were working on the line. I got involved in the challenges that we were facing in producing—at that time, we were producing hinges and ladders for hinges and that type of thing, and really got involved in what does it take to build these and what are the challenges? I used to maybe have a different view of I’m just making this stuff, and I didn’t really care so much about what the challenges were that were involved, but in a leadership role, then it’s, well, what challenges are we having as far as getting materials or being able to produce enough on time and those type of things. It really changed my perspective by getting closer to the guy on the line to really understand what challenges he was having, and then how could I help him. Craig Willett: Where did you learn this leadership? I mean, you didn’t have—did you have a formal education in leadership? Ryan Moss: Actually, no. I have a high school diploma, and at that, maybe—I often say an 11th grade education because my senior year was spent in all gym classes. Craig Willett: You aced everything else through the 11th grade, and you could just play. Ryan Moss: Yeah, I didn’t really—I did have to have one English credit, of which I took Spanish for that. Anyway, formal education, I really don’t have much anything past high school. I do read a lot, but I will tell you that I was blessed with good parents that provided a lot of opportunities for me to work. Small farm and lots of things to do, and I was really engaged from a young age at taking care of responsibilities that I had on a small farm. I give a lot of credit to my parents for making sure that I knew how to work and how to problem solve. Craig Willett: You were able to take those hard working attributes and problem solve, take it to the shop floor and figure out where the snags or difficulties were to make it more effective. Ryan Moss: Yeah. Craig Willett: When next did you capture the attention of Hal Wing—who by the way, is the founder of this company—how did you take what you were learning on the shop floor and take it to him as the owner and president of the company? Ryan Moss: I think I captured his attention early on. I was recommended by Jeff Dinsdale, who at the time was over manufacturing, to fill that shop foreman role. It was early on where we were having some challenges in meeting some demand and, as we were trying to resolve some of those supply challenges, I had come across a couple of large containers of parts that had been set aside. Potentially—I can’t remember if it was for quality issues or some type of issues. Anyway, we went through all of those and were able to glean enough good parts to be able to supply the demand. That got back to Hal, and he came out and talked to me about that. Really, it was one of those early experiences that really kind of caught his eye, and he said, “I just don’t think we’ve seen that kind of approach before.” I think we really thought a lot alike in problem solving and in work ethic and hustle and ingenuity. We just saw a lot of things eye to eye. We became friends over the years, but I think mostly because we shared similar values. Craig Willett: That’s interesting. Elon Musk recently was quoted as saying that we have too many MBAs in the world. We need people who can set aside the financial statements and learn to innovate and do that. You mentioned that you and Hal probably bonded or found common ground on ingenuity and innovation, so not only solving that on the shop floor; I sat in board meetings where I saw you present new product, inventions that you came up with. What role did some of the innovations that you have come up with—or that your team has come up with, because I know you won’t take the credit, you’re too humble, but I’ll attribute it to you, so I can embarrass you for a minute, but— Ryan Moss: Well, you’re going to. Craig Willett: I know the truth. You can’t pull the wool over my eyes on that one, but I know that through your innovation, there were probably periods of time where the company being kind of a one ladder, one-trick pony, it became something more than that. Maybe tell us a little bit about that, some inflection point in the company where your ability to innovate, and where there were demands and other opportunities for your ladders to fill other markets than what you were penetrating at the time. How do you go about that? Ryan Moss: Sure. Maybe I can answer this with a little bit of a story, a little bit of history because— Craig Willett: I’d love to hear a story. Ryan Moss: You mentioned us being a one-trick pony. I specifically recall a time, in fact, I will never forget the time where many of us were around a conference room table in the old Springville facility, and we were having a meeting. I’m not sure about what. Somebody brought in a USA Today newspaper and spread it out and laid it out on the conference room table. There was a full page ad of an identical replica of our product. Now, we had really one product in a few sizes. It was the aluminum articulating ladder, and they showed this product, it said, “Now available at Home Depot for $199.” Now, we sold that product and were the originator of that product at $400 or $399, so it was exactly half the price. You can imagine the gut shot that took place in that conference room. The ripple went through the company. We later learned that this company that had this replica of our product went to the home and garden shows, bought the ladder from our salesmen, sent it to China, told them to copy it identically, to not change anything. In fact, they copied it so closely that you could interchange the parts from our ladders and their ladders. That’s how close everything was. Craig Willett: Same kind of materials or different materials? Ryan Moss: Similar materials, but they even copied the die lines from the extruders. They didn’t know why they were copying things, but die lines are identification marks from extruders, and they even copied those. Here we had this kind of gut shot that ran through the company, and we had salesmen saying, “I’ll never be able to sell another ladder again. How long are we going to be able to hold on? Are we going to make it? I’ve got a mortgage and kids to put through college and food on the table. Should I start looking for a new job?” You can imagine there was some time that was really concerning for the company. We had a couple of different meetings on what can we do. Ultimately, proposed to do an infomercial. Now, anybody that knows Little Giant’s history today say, “Yeah, that was genius,” well, I think we were blessed because what we know about infomercials today is only one out of a hundred work. When we say work, that means that they maybe broke even, but drove some retail sales. Ours was wildly successful. Well, let me backup for just a second. Hal wasn’t quite sure, like what is this infomercial thing, how is it going to work? We talked about it a few times and he finally said, “Okay, let’s do this,” because there was two years left on the patents, so we could either fight legally, but in the end, if we win, we lose because— Craig Willett: Because the patents expire anyway. Ryan Moss: —the patent would be expired at that point or take a different approach. The infomercial was the other approach. Craig Willett: The infomercial idea was so that you could capture the market as the innovator, the original. Ryan Moss: Really, yeah. Just to be the original because we weren’t in big boxes, so it was going to look the other way around that this one, this knockoff was in Home Depot, was the original, and we’re this little company copying. You have to think about it, this was all in 2000 and the end of 2002-2003. We had had the twin towers go down in 2001, so the economy was going down. We had had a 20% drop in sales at that time, and then we have this knockoff. Craig Willett: Price competition. Yeah. Ryan Moss: Boy, it was tough. We didn’t have the money to fight legally or to really do anything else, and Hal had a little farm down here in Springville, went to the bank and he leveraged—he bet the farm on this infomercial. Borrowed a million dollars and we went to work, spent about eight months putting that all together. There was a whole new excitement in this company that we’re going to shout to the world that we’re the original, we’re the best, made in America, all those kinds of things. Craig Willett: Right. Take pride in your products and let everybody know what it is. Ryan Moss: Let everyone know and it was going to be this branding exercise. Anyway, we got all ready, did the first spot. Craig Willett: You didn’t know that very few were successful. Ryan Moss: We had no idea. We had no idea statistically that we were in a rough way as far as… more than likely you would lose the money and your effort would be nothing kind of thing. We didn’t know that. Craig Willett: Because you didn’t really have a retail outlet to sell. Ryan Moss: When we did our first airing, although it was a small test airing, everybody’s waiting for those results. We get them at the end of the day, and had run, after a million dollars and eight months in time, we had received four phone calls and sold one ladder. Craig Willett: Wow. Ryan Moss: Another gut shot hit, and it was like, “Oh, wow, we spent all this money and all this time, and we sold one ladder.” As you can imagine, all the emotions came back again. How long are we going to be able to hold on? We’re not going to make it. Fortunately, we had some good people helping us with the infomercial and they said, “A 25% close rate is pretty good.” We said, “Yeah, but it’s only four phone calls.” Craig Willett: Got to look at the sample base. Ryan Moss: They helped us out. When we talk about innovation, innovation isn’t always just product. It’s innovation in going into the market in different ways. The one thing we did know over the many years we had been demonstrating ladders is when we demonstrate to people, we sell, and an infomercial is a bigger group of people. We thought, well we have to. We did go buy the— Craig Willett: Your demonstration experience prior to this had been trade shows. Ryan Moss: Trade shows, home and garden shows, state fairs— Craig Willett: County fairs. Ryan Moss: —those kind of things. We were a small company, didn’t have a lot of money to do what we were about to embark on, but- Craig Willett: What were your sales like in that— Ryan Moss: At that time, we were—gosh, we had slumped from about 20 million down to around 17 and a half million because the economy was in a recession at that time, so we were small. Here’s what happened. We went and made some changes and the world turned around for us. We grew by 600% that year. The next year we grew by another 500%, so you can imagine in two years’ time going from 17 and a half million to 170 million. Doing that all in a little, teeny facility. I remember that time all too well because I was over manufacturing at that time. I was in operations, and we went around the clock. Went from building 280 ladders a day to 7000 ladders a day— Craig Willett: Wow. Ryan Moss: —all in that same tiny, little facility. We were blessed. It was wildly, wildly successful. Craig Willett: You say you were blessed, and I can understand what you may mean by that because having served on the board of the company at one point, Hal would start board meetings with prayer. I know he was a God-fearing man, believed in God, and I can understand that that blessing comes from Him, but I also understand you have to work to receive the blessing. What about the innovation, what about your demonstration, because you guys were expert demonstrators, why did that appeal in your opinion in the infomercial market? Ryan Moss: Well, first of all, I think one of the things that really helped was we had Hal as our host, and he had a lot of passion for the product. You do mention, we still today start our management meetings with prayer, and we believe that we do have to work hard and do our part, but a little help from beyond has also helped to get us where we’re at today and will help us to get there in the future. I think we applied a work ethic and let’s call it the leap of faith in about everything that we’ve been able to accomplish. Craig Willett: This was the time in Hal’s life to—his biggest sales moment probably ever. Ryan Moss: Yeah. Craig Willett: Other than this first one when he pulled up to the first show to demonstrate his ladder. Next to that, this was probably a very pinnacle moment for him to do the biggest sales pitch of his life. Ryan Moss: It absolutely was and- Craig Willett: I liked that he was all-in because he bet the farm, so he was not just feeling the pressure of that, but he had to prove that he was right. He had to believe in it. Ryan Moss: He was all-in. He risked—I mean, he would have given up the farm literally if it didn’t work out. It would have went back to the bank and that’s the passion of Hal. That came through in the infomercial. Of course, we had a great product, which also helps. Right? Craig Willett: Right. Ryan Moss: An innovative product that does a lot of things and that passion for showing and solving problems. Right? So here’s what happened. We had this great success, so sales went like this, but you also have to think about it, a very, very popular infomercial in which we still run the infomercial today, now almost 18 years later, which is another anomaly because they usually last, if they’re good, about 18 months. Now, we don’t run anywhere near as much media today as we used to. I mean, back then we were spending a million dollars a week on media, but we were selling. We drove sales to all types of retailers. In fact, we ended up selling our product in Home Depot, next to the knock off. Craig Willett: Wow. Ryan Moss: We were double the price, and we were incredibly successful in Home Depot even at double the price because of that media, because of that infomercial that really drove demand. Craig Willett: I love that. That’s really important. Often people ask questions about how to price your product, and so many people think they have to price to the lowest cost producer. When you have a superior product, and you’re the original, you have a lot of room. This tells me there’s a lot of flexibility and a lot of elasticity to be able to price. Ryan Moss: Well, and the ability to create value because I think a lot of times, people with their product don’t give it credit, if it’s an innovative product, credit for what it will really do. What they’re going to accomplish with that. If you think about somebody buying a quarter inch drill bit, they really don’t want a quarter inch drill bit. What they want is a quarter inch hole, and the reason they want a quarter inch hole is they’re going to put an anchor there and put a picture on the wall. Right? Craig Willett: Right. Ryan Moss: They really don’t care about the bit; they care about the picture being hung on the wall. We would take the opportunity to show people what they were going to accomplish with the ladder, not just what the ladder did. I think that’s that value of—creating value of what is it going to help you do? Craig Willett: It’s not a ladder is a ladder is a ladder. Ryan Moss: Right. Craig Willett: It’s this ladder does 27 or 32 different things. Ryan Moss: It’s the safest, strongest, most versatile ladder in the world, so there was value that was brought into it. That’s how we could sell for double the one that was right there next to it. Now, we also sold in interesting places. Right? Bed Bath and Beyond and Linens N Things. There was so much popularity that everybody wanted to sell it. Craig Willett: Wow. Ryan Moss: What happened, Craig is—what you would expect to happen—is in time, enough people had seen it and, of course, the interest starts to wane. We’d taken all of these sales for years and compressed them, which created this bell curve, but you know after you get to the top, where does it go? Craig Willett: Right. Ryan Moss: It starts coming down. Let me tell you, as we’re coming off and you start cutting back on media because you can’t afford to keep doing that, well, then the retailers start losing interest, so you’re losing infomercial sales, then retail sales. At this point then, 2008, we lost the general contractor, so it was kind of boom, boom, boom. We lost all of those, and— Craig Willett: 2008, because of the financial crisis? Ryan Moss: Because of the housing crisis. Right? Craig Willett: Yeah. Ryan Moss: All the general contractors are like, “I’m not building anything.” You know what I mean? People were giving houses away at that point. We had the whammy after whammy, you know, three of those in a row, and what we decided to do at that point was to innovate. We knew we had this one-trick pony, but we can’t just rely on that, especially where we’ve compressed many years of sales into a shorter period of time. Craig Willett: What were your sales about this period of time? I’m just trying to give people perspective. Ryan Moss: They start, I mean, from our high of 170-ish, boy, you go down into 2008 or 09, maybe got clear down to 40, so we never went back to where we were pre-infomercial because the one thing that did was brand us, but we went down a long, long ways. We had a choice. Do we hunker down and just ride out this or do we innovate and be ready to take market share when the economy turns around—which we knew it would, just not how long is it going to take. Craig Willett: Right. Ryan Moss: We decided to innovate, and I have an affinity for products. I love the innovation process, and have been blessed with the ability to see what could be in products and to listen to pain points and interpolate those into products. The best products solve pain points, but I will tell you we learned the hard way in innovation. This is what we’re going to do, this is our mantra, we’re going to innovate. We brought on some more marketing people and some engineers, and I worked specifically with this group to say, “Well, here we go. Let’s get going.” We had— Craig Willett: I’m curious to find out what you identified as the biggest pain point to go after the biggest potential— Ryan Moss: Well, I’ll tell you what our biggest pain point was initially was not listening to the customer. We spent two years and a lot of money—think about how far the sales had come down and this was part of our plan in innovating. We spent two years and a lot of money, and we created some really, really cool products that nobody wanted. Craig Willett: Oh, no. Okay. Ryan Moss: The reason being is we got ahead of ourselves. They were cool, they were innovative, but they weren’t solving anybody’s pain points. We learned the hard way on that. We had to step back and really analyze what is it that—why is it that we are innovating and what is it that we’re going to try to accomplish with— Craig Willett: At this point in your career, you’re leading this innovation team. Ryan Moss: Yeah. I was, at that time—so I was promoted from Chief Operations Officer to CEO in 2006, so— Craig Willett: In the middle of all this. Ryan Moss: It was in the middle of all that. That was actually one of the first big major decisions was, what are we going to do next? That was, let’s innovate, but also, I failed at it terribly because we didn’t listen to the customer. We just created—we just thought we could sit down and create innovative things, which we did, but there was a— Craig Willett: I’m glad you did that because normally, I have to ask people what their greatest failure is and what they learned from it, but you just told me what it is. Ryan Moss: It was an epic failure, absolutely epic failure. Here’s the thing that really helped get us going. During this time, after we’d had these failures, we started to realize, “Okay, wow we really need to get some people in here and talk about ladder usage and what pain points they have and what struggles and all those types of things, and really understand the end user.” We started to do that. We brought a lot of general contractors in here and we showed them some prototypes and things we were working on. Craig Willett: You’re looking for more industrial users, not retail users. Ryan Moss: Yeah. Yeah. We were focusing kind of on the industrial, so we brought them in, and we started listening and just talking and what challenges and what kind of things—and it started opening our minds to so many opportunities with ladders. At that time, I was on the board of the American Ladder Institute, today I’m the president of that group, which is made up of the North American ladder manufacturers. We weren’t really talking about the same things on this group that we were hearing from these contractors and safety professionals and all of those. I found it interesting because many of them started talking about ladder accidents and how these safety professionals would have to go to the families of somebody that was either killed or severely injured in a ladder accident. Ultimately, learned through this whole process, and I couldn’t believe that we weren’t talking about this in the American Ladder Institute, that there’s 2000 ladder accidents every day. Craig Willett: Wow. Ryan Moss: And a hundred disabilities from those accidents and a death every day. I thought, “How in the world could we be part of an industry that somehow finds this acceptable?” If it was the airline industry, there’d be Congressional hearings every day about how to solve this problem, but apparently since it’s ladders, it must be okay. I was just really, really surprised. We learned from these different professionals. At the same time, I’d been reading a book by Simon Sinek called Start With Why. It’s a fascinating book, highly recommend it to anybody in business. The premise is that people don’t buy what you do, they buy why you do it. I’m an all-in believer on that. In fact, I give a lot of credit to Simon Sinek for much of the success—he doesn’t know this, but the success we’ve had because that started us on a path. All of this is happening, and I finished the book and went to the rest of our management team, and I asked them to read it with me. Not literally sit down and read it. We made a weekly meeting where we’d read a couple chapters, get together, talk about it. Until we got done, we said, “We’re going to create our ‘Why.’” We got all the way through, and, “We’ve got it, guys, this is our ‘Why,’” and I’m going to be embarrassed to tell you what I thought it was— Craig Willett: Okay. Ryan Moss: —or what we thought it was, but I’m going to tell you. Craig Willett: I appreciate your honesty. Ryan Moss: I’m going to tell you. We get through the whole thing, and we say, “Okay, our ‘Why’ is chasing excellence.” Now, if you’ve read the book, you’d say, “That’s a terrible ‘Why.’” Right? Craig Willett: Right. Ryan Moss: It was, but we had all the justification in the world. Chasing, you’re doing things with speed and excellence is never obtainable, so you’re going to have these—you’re always going to be moving the bar up on your products. Today, I just cringe to think that we actually accepted that. Craig Willett: It’s inspirational, but not concrete enough to do anything measured. Right? Ryan Moss: Yeah. There’s really not—it just doesn’t feel good without some justification. Anyway, we go, “Okay, that’s our ‘Why,’ keep chasing excellence,” and a few weeks later I’m getting on a plane to come back to Utah. I get a phone call from Ted Hartman, who was our marketing coordinator at the time. He just says, “Hey, we can’t do it.” I said, “Can’t do what?” He’s like, “We can’t do the whole chasing excellence thing.” I said, “I’m so glad you called me because I feel the same way.” I said, “I don’t feel anything when we say it.” He’s like, “We don’t either, and we don’t get how to promote it or anything.” I said, “Super. Let’s read the book again.” So we all got together, we read the book again, we went through the whole exercise, and this time when we got done, when we said it, we felt that we had to have no rationalization. That was, our ‘Why’ was preventing injuries and saving lives. Craig Willett: I took a picture in your boardroom of that on the wall this morning. I thought, “Okay, this is the ‘Why.’” Ryan Moss: I will tell you it was a reinvigorating turning point for Little Giant Ladders because you think about it. Now we don’t just get up to build ladders to sell ladders. We get up to get the one guy home tonight to play soccer with his kids or go to his daughter’s piano recital or take his wife out on a date. That’s what we do. We do it through better climbing equipment, so it now drove all the decision making in innovation. We’re not going to innovate anything unless it helps to prevent an injury and save a life. Right? It has to make the product safer. Craig Willett: It’s interesting that you did this by not being sued by someone forcing you to do it. Ryan Moss: No, no, no, no. Craig Willett: Usually, a lot of this comes when— Ryan Moss: We actually have very, very low incident rates with our products, so— Craig Willett: Probably did from the beginning. Ryan Moss: Oh, from the beginning. It’s been inherent in our design and quality and all of that. But we realized that by having this “Why,” it could lead our innovation, but not just that, everything we do in the company. There’s signs out in the facility that says, “Every rivet, every weld, every person matters.” Those building the product knowing that, “Hey, people are going to climb this,” and understanding that—I don’t want to say that we embrace those statistics, but we kind of did. That 2000 injuries a day, a hundred disabilities. We just said, let’s not shy away from this. Let’s embrace it and see if we can lower it. It invigorated the company, and now, everybody comes to work knowing, hey, we’re just trying to get that one guy home at night that might not come home. That’s our “Why.” The way we— Craig Willett: How did that translate into sales then? Ryan Moss: Oh, the thing that was—so think about that beacon to product innovation, and then taking those innovative products back to these safety professionals that came here or the ones that we visited with all over this country and shown them, “Hey, we listened to you. We heard.” We took the five leading causes of ladder accidents, identified how and why they’re happening. Most of them really are basically just human traits where we’re overreaching, so we make products that if you’re going to overreach, we still discourage it, but we know that people do it. Craig Willett: Right. Ryan Moss: We make it harder for them to get hurt doing it. We kind of protect them from themselves. We have a ground cue at the bottom of a ladder. 25% of ladder accidents are missing the bottom rung while descending, so we now have an audible, tactile ground cue that when you’re going up and down, you hear that and you know, “Oh, okay, I’m safe to step off.” I could go on and on about all of these innovations we have. Most people, when you tell them innovate a ladder, they look at you like— Craig Willett: Yeah. How are you going to do that? Ryan Moss: —“What could you possibly do? Isn’t it like rails and rungs and—”and we show them what we have and they’re just, their minds are like, “Wow, I had no idea you could do all this with a ladder.” We have a full on innovation team, a whole group of engineers now. We lead the world in ladder innovation. We are the benchmark for ladder innovation that really helps from a safety perspective, but then we also learned something else that’s really, really critical is safety is very important to safety professionals, not important—well, everybody wants a safe ladder, but a lot of people are saying, “Hey, I use a ladder to get a job done.” Craig Willett: Right. Ryan Moss: It’s also critical to understand that it’s we have this kind of mantra, “Faster, safer.” Right? They need to be able to get their job done quickly, whether you’re doing it for yourself or you’re making a living by that, people want to get it done quickly, but they also want to make sure they’re safe in doing that. We’ve designed all of these products that really do make it to where they can be highly productive, yet safer at the same time. Having that “Why” helped really in product innovation because that drove all of these new sales for people that were looking for answers to this problem. Craig Willett: Right. You mentioned, so I’m curious because I think this might be a key for some people. The safety people, do they make the buying decisions and who makes the buying decisions, and how do you get going from the safety perspective to getting companies to adopt your product, not only from a safety standpoint, but from a function and in a cost-effective manner because you’re probably going to be more expensive than your competition? Ryan Moss: We are. We are. Innovation costs money. Pioneering new products costs money. Marketing costs money. All of those things make you more expensive. I will tell you that’s not an easy approach, but what we did is we took our products to the safety professionals, and for the first time, they said, “Wow, somebody actually listened to me.” We made friends very, very quickly, and we did this in many, many industries, but then we would get them some sample products and they would get them in the hands of their users. The experiences they were having and seeing another ladder, in fact, one of the leading causes of ladder accidents is the weight of carrying extension ladder. Back injuries, neck injuries, shoulder injuries, knee injuries from carrying those big, old extension ladders. We reduced the weight by 25%, so you can imagine end users going, “No, I don’t want my—I know I’m field trialing this one, but I don’t want my ladder back. This is way better.” Right. That would kind of just spread through, so we had to do a lot of long, I mean, years of expensive leg work to get these products in the hands of people, and now people see them all over and like, “Oh, yeah, I want that. I want that.” We did take it to the safety professional because he has influence when it comes to, you think about it, injuries and accidents are a cost, a business cost. Craig Willett: Right. They start adding up, the disability costs and— Ryan Moss: Right. You start adding lost work time, all of that. Procurement’s going to take a different route, they’re going to just say, “Hey, well I’m incentivized to buy cheaper products.” Well, that’s where we use these safety professionals as our leverage in those companies to say, “Hey, time out here. I’m incentivized to reduce costs due to accident and injury.” Those working together ultimately, it’s been good work. Craig Willett: Combine the budgets. Ryan Moss: Yeah. Craig Willett: They can afford it. Ryan Moss: Then, some of that stuff is carrying on into retail now because most DIYers or weekend warriors, homeowners, they want to have good quality products and they also have day jobs. They see what’s out there in the professional world and many people that use a Dewalt drill in their day job, also have one for their home. Craig Willett: Right. Ryan Moss: I think we’re having a lot of success, and people also appreciate innovation. They will pay for it, and we’ve proven that over and over is that they will pay for innovation that solves problems. It’s riskier and harder. The one other thing that I think that really helped in our favor, you think about ladders, right, it’s probably maybe one of the first tools ever invented. We joke that Adam and Eve used a ladder to get the fruit, but probably wasn’t. Craig Willett: It was a fairly new tree, so it might have been short. Ryan Moss: Yeah, it might have been short. You’ve seen pictures from Anasazi Ruins or whatever, where there’s old ladders there, so ladders have been—ladders were invented before the wheel, so we’re talking about a category that is thousands of years old. I think that’s why the industry is so stale is just because it’s kind of commoditized. You’ll see on Black Friday a ladder for $19. You can’t buy the materials for $19, let alone retail it for that, but that’s a whole another discussion. People have taken what we view as a lifesaving tool and put it into this throwaway category, which we just said we’re going to take a different approach because we believe that human life values more than a throwaway item and that we’re going to take this approach where we’re going to help you work safer, but also more efficiently. It will cost a little bit of a premium, but we have found that people are willing to pay for that. That’s every day. We have the most expensive ladder and yet, we’re growing year over year over year. We’re a 48-year-old company now with—I mentioned to you the last three years in a row, 20% year over year over year at a 48-year-old company. We’re blessed and it’s working because there is an appreciation. Craig Willett: Because of branding, then innovate on top of that branding, and you bring the “Why,” so that everybody understands. Ryan Moss: You bring that all together. It’s that listening to the customer. One of our products, there was a company in Salt Lake that came down, a safety professional described the problems he was having. One of our—in fact, the most expensive product we sell today was a direct result of listening to that safety professional. That is now going all over the world being used, and it was because we listened to a problem he was having, and we innovated based on solving that specific need. It’s the combination of those things of truly understanding the customer. Craig Willett: It’s my belief that problems require truth to solve the problem, and then, if you take the premise that I believe in that truth resonates with people, so the truth resonates with the users of your product, or they wouldn’t be continuing to order it. When you’re able to solve the problem with the truth and get the truth out, then there’s no sales pitch, there’s no sales job. There might be some marketing, there might be some marketing channels and that, but now you’ve solved probably one of the business’s biggest problems is how do you distinguish yourself, and you did it. How to solve the problem. Now, you solved a different problem for me. As I look at business owners in The Biz Sherpa podcast, I typically will see people who started on their own or who are third or fourth or second generation in the family. You’re unique in the sense that you’re not a member of the Wing family, who founded Little Giant Ladder Systems, and you still became a business owner. Tell me a little bit about what that was like and what that means to you. Ryan Moss: Well, first of all, I don’t take it lightly because I understand outside of Hal and Brigitte, who founded the company, and their children, who had ownership in the business after Hal and Brigitte passed, that I was the only one outside of the family to have ownership in the business, so I don’t take it lightly. I do feel very, very blessed to have had the opportunity to participate in ownership, and I will tell you that it, for me, when you have that little mind shift of that, “Hey, this is partly mine,” right, I was a minority stake in it, but every decision I make is also directly affecting me, I think it does change your decision making some. Although, I felt like the reason that I got it in the first place, and mine came in buckets over the years, I mentioned I’ve been here 37 years, so it came in—not all at once—in some along the way, that even when I first started, I still tried to work as if it really meant something because it did. I mean, I was just taught that if you’re going to do a job, you do right. Craig Willett: Right. Ryan Moss: You get in and do it and be dedicated. I went the first—and I wouldn’t recommend this to anybody—the first 16 years that I worked at Little Giant without taking a vacation day. I went 30 years without taking a sick day, and I can promise you I was sick. I wouldn’t recommend that. I don’t know that that was the right approach, but it worked for me, and I know that Hal saw that dedication, he saw the problem solving, he saw the initiative, and he didn’t want to lose it. As a business owner, he did not want to lose that. I think the first thing he did, even before stock, initially, was like, “Hey, I’m going to pay for a whole life insurance policy for you as these golden handcuffs. As long as you’re here, you have this kind of thing.” Then, he saw in time that I need to make him more and more a part of this. I think part of my success also, and I’ve tried to help our people understand that it doesn’t—not that Hal had every answer, because he didn’t, he had a lot of people to help him grow this business, but I did try to understand him and the way he thought. I could pretty much finish his sentences. I knew the way he thought about certain things, so if a problem came up, I could pretty much tell you, “I know exactly how he would—” and 99.9% of the time, I was spot on because I made it a point to understand the way he viewed business and the way he viewed problem solving, and the way he would view spending money, those kinds of things. Craig Willett: You aligned yourself with the values of the ownership and that put you in a position to be an owner. Ryan Moss: Yeah. It’s like, “Hey, he’s acting just like we are, and seeing things the way we are.” That doesn’t mean I didn’t have an opinion. Many times, Hal would come to me with the problem and say, “What do you think we should do?” I would tell him, and he would say, “I think you’re right,” and we would do it. He wouldn’t always come in with—many times he wouldn’t come in with the answer. He would come and ask me, “What do you think we should do?” It wasn’t that I was just yes-man on everything. It was I’ll give you a perspective and let’s share perspectives and let’s come to a—but I felt like it was important to understand that. I got to the point, and we laugh about this a little bit, and a few others in the company that have been here a long time, depending on what he was wearing when he came into the building, you knew exactly the mood he was in, so you would know whether to be in another part of the building or if you were going to be around him. I think maybe you don’t have to quite know the person that well, but for us, it was—in my case I felt like really understanding him helped me to propel my career here and then ultimate ownership. Craig Willett: I’m going to say something that you wouldn’t say about yourself, but I wonder what your reaction to this statement would be. You used this earlier when you were talking about the product. You talked about adding value. You might be dedicated. That could add value, but you said it alone, not taking a vacation for 16 years you don’t recommend, and it doesn’t necessarily add value unless those are productive dedication. Ryan Moss: That’s exactly right. Craig Willett: Being able to align yourself with the philosophy of ownership qualifies you to be an owner potentially, but probably people get ownership or succeed in business because they add value to the company, to the product, and ultimately, to the lives of the people who benefit from the product. How do you react to that? I know I’m embarrassing you because you probably wouldn’t say that. Ryan Moss: You’re right. Craig Willett: What I heard today is a story of someone who added value. Ryan Moss: I mean, that’s the thing is people get—it’s the difference between getting a cost of living raise, and a raise. Right? Cost of living is you existed, you did okay. Craig Willett: Right. Ryan Moss: Whatever. Craig Willett: You didn’t stub your toe too many times. Ryan Moss: Yeah. I should be careful on that because there’s times in a business cycle to where maybe you can’t do more than the cost of living, so you just do that, but there are those who get a raise because they brought value. They brought something to the company, and you shared with them what they brought. I would say I have been fortunate to have ideas, products that have been developed, things that have truly brought value to the company, and I’ve been fortunate that way, and I can’t say this without saying that I feel like I’ve been blessed, but I’ve also worked hard for it. It has to be a combination of luck—what is the saying? That luck is when preparedness meets opportunity. Craig Willett: Exactly. Ryan Moss: Right? Craig Willett: Yep. Ryan Moss: There’s definitely a combination of that, but you are right. I mean, if it’s not perceived that you’re bringing value, people won’t give you something of value. Right? Craig Willett: Right. Ryan Moss: It really is an exchange for value for value. Craig Willett: I think that is the greatest lesson we can take today. Ryan, I appreciate your time. This has been very insightful, very rewarding to me, and it will be to all the viewers as they watch this video. I think it’s amazing the value that you’ve been able to add, and it not only has blessed many lives with the safety and the penetration that you’ve been able to do, and the thought of somebody going home tonight to their family because they were more safe on the job because of innovation of the company you preside over, but also, I look at it and say that you add value to the company every day. The fact that you would admit that you were wrong on the “Why” and then go through the exercise twice, tells me not only are you dedicated, but you’re humble enough to know that when you don’t have it right, you need to do what it takes to add that value. I appreciate that. It’s one of the greatest lessons, greatest examples that I’ve ever seen, and I know that this will mean a lot. Ryan Moss: Thank you. One thing that I tell everybody that comes to our facility, and this particular facility is a quarter million square feet, is we have some big rooms in this facility, but the biggest room is the room for improvement. I think if we own up to that, life is a lot better. Yeah, sure we all have egos, and we all want to put on the face that we know what we’re doing and truthfully, none of us faced 2020 ever before. Right? Craig Willett: Right. Ryan Moss: You just have to do your best and have to recognize your weakness and shortcomings. I actually feel like there’s nothing—there shouldn’t be anything wrong with sharing your failures because we learn more from our failures than we do our successes. If more people are open about those, we could, I think, accelerate business growth by being willing to share those with each other and to recognize that we learned it’s not really a failure unless you don’t get back up. If you stay down, it’s a failure, but if you get back up, it’s a success. Craig Willett: So often we think when we do fall down, we’re going to get fired anyway, so it’s kind of hard to own up to it. Ryan Moss: It can be. Craig Willett: I think you’re a great example of that. 37 years with the company and I think there’s some rewards that you’ve experienced recently. I’ll be talking with one of your partners in this, Hal’s son, Art, and he’ll tell us a little bit more about what happened with the sale of this business this last year and how you rolled some of your equity and stayed in, but I commend you for your example. I’m grateful that you’d be a guest today on our show. Ryan Moss: Thank you. Craig Willett: Thanks for taking the time. Ryan Moss: Thank you. Craig Willett: I know you’re busy and it’s a busy time of year, and I do know Ryan’s leaving next week to go on a vacation to the beach. Ryan Moss: I am. I’ll tell you this, I would close on this note. I have learned that not taking a vacation actually was hampering and that many, in fact, most of these people here, dread the fact when I go because I come back with— Craig Willett: All kinds of ideas. Ryan Moss: After I relax for a couple days, I’ve got all kinds of ideas, and they’re like, “Oh, boy. Here we go.” I truly have had some of what I would consider my best thought processes and things that have helped the business while I’ve been on a beach. You can’t spend all your time there, but if you block that out, it is amazing how the subconscious will take over when you pull away from the daily grind. Craig Willett: There’s a lot to that. I finished reading a book recently, Essentialism by Greg McKeown, and it’s a great book if you haven’t read it. It subscribes to that when you do less, but better. Ryan Moss: Yeah. Craig Willett: I think that’s something we can all strive for. Well, Ryan, I appreciate your time. This is really meaningful, and I’m glad our friendship continues through the years, and that you’d respond to my call to be a guest. This is Craig Willett, The Biz Sherpa. Thanks for joining us today. Speaker 1: Be sure to go to our website to access the resources related to this episode at www.BizSherpa.co. If you enjoyed this show, tell your friends about us and be sure to rate our podcast. Craig would like to hear from you, so share your thoughts in the Facebook community @BizSherpa.co. Follow us on Twitter @BizSherpa_co and on Instagram @BizSherpa.co.

Craig sits down with Ryan Moss the CEO of Little Giant Ladder Systems. When Ryan started with Little Giant Ladders 37 years ago he started out sweeping floors and being part of the manufacturing team. Craig and Ryan discuss the growth of the business and how Ryan has climbed the ladder up to the role he is in today.    CLICK HERE to access our free resources, social pages, and website!

If you have a product or service and no one knows about it you aren’t going to generate much revenue. Craig discusses marketing strategy, product selling points, where to spend marketing funds and your advantage points over your competition. Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn TRANSCRIPTION: Speaker 1: From his first job flipping burgers at McDonald’s and delivering The Washington Post, Craig Willett counts only one and a half years of his adult life working for someone else. Welcome to The Biz Sherpa podcast with your host, Craig Willett. Founder of several multimillion-dollar businesses and trusted advisor to other business owners, he’s giving back to help business owners and aspiring entrepreneurs achieve fulfillment, enhance their lives, and create enduring wealth. The Biz Sherpa. Craig Willett: This is Craig Willett, The Biz Sherpa. I’m glad you could join me fireside today. I’m grateful for the opportunity to share with you some thoughts that I have concerning marketing. You know, it’s one of the key principles of business. If you have a product or a service and people don’t know about it, you’re not going to generate much revenue. So the key is to make people aware. Often we think of advertising, but I think marketing encompasses a lot more. It encompasses knowing and explaining what your product does and then making people aware of it. It has to be a conscientious effort. You know, Sun Tzu once said, “Tactics without strategy is the noise before defeat.” So you might say, “I have a marketing plan,” and that might be a bunch of noise before defeat, if you don’t have a strategy in place to support your marketing team, your sales team, and your product to make people aware of it. We all would like to think that we have the best product, and that people are going to knock down our door to get it. And that would be a nice situation. It doesn’t always happen. It takes making people aware of it. I remember when I started my real estate development business, I decided to have a sign. And I wanted my sign to be unique. Most people had a big sign that was rectangular, and they put it on the property and said, “Call for information,” and maybe told a little bit about the project. I decided to do something different. I actually hired a marketing company that did marketing for high-tech companies. And I said, I want a sign that looks like no other sign. And so what they did is they did a framing of frames, like it was a building being built, but it wasn’t totally rectangular. And then they had taglines in different colors on strips, so it looked like they were lines on a building. I thought it was rather unique, but the key phrase that we used was, “Own for less than rent.” And it talked about own your own office for less than rent. So it made it clear what our product was and who our market was: somebody who was looking to buy their office, not someone who was looking to lease. It resonated well. So I think you have to have that strategy and think of how to say it in as short a phrase as you possibly can. And you might say, “Well, how do I go about deciding what to do?” And I think it really—you sit back and you say, what are your advantage points over your competition? For me, all of my competition was anybody who had a building for lease, and I found that to be true. And so people who were looking to lease buildings could also consider buying if they were in certain qualifications. So I had a lot of competition. And when you study what that competition is, what’s your advantage? Most of my competitors who had office space for lease would never consider selling their building to one tenant. And so I really had an advantage. And then you have to look at what are your products’ selling points? And that’s where not just ownership, but owning for less than rent became something that they looked into. And when they could see that the equation worked and that they actually saved money by owning their building, and then had an asset to sell when they retired, they had—instead of a pile of canceled rent checks, they had a building. Something very easy to consider—and so often we know all the ins and outs, and there were a lot more features to my building, but those came later. You have to get the attention quickly. And so you lead with your biggest distinguishing factor. Now with marketing, you all always say, well, how much should I spend on marketing? A good place to start is to look at how much revenue you expect to generate. I know that’s hard in your first year of business, but you should consider that. And then new businesses need to spend about 20% of their anticipated revenue. You have to introduce your product to the market, which means you have to have some money set aside the day you open your doors. If you’re an ongoing business, you should have between six and 12% of your revenue set aside to do marketing activities. So where do you spend your money? A lot of people like to think in my generation and era, television advertising was a big deal, but it was also very expensive. So was radio. I saw people trying that, but I think we have to target—and we live in a day where that’s very easy to do with cable TV. It’s a lot less expensive than network TV. You can really target the demographics of your potential market. And so you need to understand who your likely buyer will be so that you can buy the right kind of advertising and the right kind of message in front of them. Of course, we live in a day that’s even better than that, with social media. And there’s a way to target your audience in social media, and that can also be free advertising as you get endorsements and you post things, but you can also buy fairly inexpensive ads on social media. Direct mail, telemarketing—they exist today, but I think there’s much better ways to target your market. There are trade shows and sometimes you can’t avoid those. They’re expensive, but they’re a great way to reach a broad audience to introduce your product. I know people who have done a great job with that. I love signs. Of course, I’m in real estate, so I love the sign. My dad always told me, “Your sign never calls in sick, never takes a vacation, never sleeps.” And so it’s there 24/7. For anybody who drives by that’s looking for a location, that’s the number one factor in real estate, is to have the proper and correct location. And so I think that’s a big factor that we all need to look into, is what is the selling factor? Is it proximate to location? If it’s not, if it’s over the internet, then there’s other ways to attract that. I don’t pretend to be an expert, but I also know there’s value in search engine optimization on your own website. And I would look into having a website. It’s hard to imagine a business today that doesn’t invest time or money in a website that allows people to interact with the product, read endorsements and satisfactions and reviews. And it gives the ability to order, or at least get information so that they can make a decision on purchasing. And maybe then they talk to someone who’s qualified. There’s also YouTube and Facebook. And there’s a lot of ways to put information out there in short one minute clips that really demonstrate your product. Sometimes that’s what it takes, is actually demonstrating a product for people to understand and to be able to use. Those are kind of inbound methods where people are searching you out, once you put that out there, and outbound would be your television, your radio, and that kind of advertising. Now, you want to be efficient and succinct with your message. Like I said, “Own for less than rent” says a lot when someone’s looking for an office building and they see one and they can start to now understand your value proposition. So you really need to think of what that is. I trademarked, “Own for less than rent,” and it really worked for quite a long period of time. The other thing is be careful that your message really tells your story. You don’t want to have a message that’s confusing. It will only frustrate potential buyers, and they’ll give up without making the next step to a call to action. Of course, I think it’s important that you test your marketing. You don’t want to spend a lot on a marketing campaign if it doesn’t work. There are focus groups. There are people that you can get that aren’t friends, because they’re not going to be honest with you, but find people who will share their honest feedback based on your marketing message, and be sure that you refine that. I wouldn’t go with the first thought that comes to mind. It takes some effort. You need to stay on top of your product. You want great reviews. And so that means if you’re getting negative feedback, you need to address the issues with your product or your delivery or your service or the interaction in making the sale. It may be that the transaction’s a little wonky and that people need a little reassurance that they’re going to get a quality product and that it’s easy to buy. I think that’s one of the great distinguishing factors today, is to make it easy, to consider and anticipate all of their needs so that they have a great experience. And so it takes that, and when you get good reviews on those things, you tend to have the opportunity now to exploit and develop that market a lot further. So testing ahead of time is very important, and get feedback. What might be good to you or simple to you may not be simple to someone else. You might be an engineer and you have a complicated process, but for you, it might be simple, but for your potential buyer, it may be difficult. And so you have to understand that potential buyer really well. And then you have to decide, what is your brand? Jeff Bezos once said, “It is what people are saying about you when you’re not in the room. That’s your brand.” Think about that for a minute. What people are saying basically behind your back, if it’s good things, and they’re things that resonate with others, that describe your product, then you’ve done a great job marketing. And so you need to have those great customer experiences early on so that the people when you’re not in the room are saying great things about you. And that leads me to further discussing the test marketing. You may not want to be there. You may want it videoed. You may want a third party doing the interviews because they’re more likely to be honest with someone else than the owner, because they’ll be afraid to offend you. I don’t know how many times I had people not be honest with me when I wish they would have been. And I took them to be sincere. But at the end of the day, they probably just didn’t want to hurt my feelings. Again, I think you have to make it quick and simple. If it requires a demonstration, then do it in a minute or less. Hal Wing is one of my great mentors in business. He started the Little Giant Ladder system company, and one thing that Hal could do—and I think they still show it, he’s since passed away—but his infomercials, he can show what that ladder does. I think there’s 36 or 37 things that a standard ladder can do, and he can demonstrate most of them in under a minute. It’s quite interesting, because he used to go to trade shows. And I think it’s important to understand that some products require that. And if it requires a demonstration, be able to do it fairly quickly. Sometimes it might even take time lapse photography, but whatever it takes, be sure that your customer, if they invest that time to click on something to get a demonstration, that it happens quickly, that it hits the major points of what you want to do. Sometimes we put a lot of bells and whistles on our products, and those are there just to reassure or to anticipate the future. But you want to hit at the core value proposition that you have. And then you need to stand out from the crowd. There has to be a way that you distinguish yourself, where people recognize your product over somebody else’s, whether it’s the color, whether it’s the packaging, whether it’s the delivery, or whether it’s the size, the shape. Whatever it is, it needs to stand out, and that’s how you create your branding image. It has to be something that distinguishes you so that you’re easily recognizable from everyone else. And then in marketing, it’s important to automate your lead tracking. There are so many CRM softwares that are out there that are available. And I would say it’s worth the investment in one of those to keep track. I can tell when I’ve inquired on something and that two, three, four years later, I’m still getting information. I’m not hounded by it, but it might be once or twice a year. I do hear from companies about their product that I once looked at on the internet. And I think it’s important for you to do that. If someone was interested at one time, it may not have been the right time for them. It may have been too early, or your product may have evolved. And that when you reach out to them again, you can put new news in front of them that may entice them to buy your product. And then you want to measure what your conversion rates are. When people inquire, you need to see how your process is, how good are you from taking an inquiry and turning it into a sale? That’s the conversion rate, and you need to determine that because it will help you determine how to spend. You’ll want to source where the lead came from, and it will help you spend that budget I talked about more efficiently. If you’re setting aside 20% of your revenue, you want it to be very effective. And so the way for it to be very effective is measure that, and be faithful and religious about measuring that. And then you’ll know where to spend. It became quickly apparent to me that while I got talked into a radio campaign, my lead sources didn’t come from the radio. They came from the signs, and you can imagine, signs are way less expensive than radio advertising. And then you have to keep in mind, what is your difference? I can’t say that enough in here. What is your distinguishing factor? A lot of people think they have a great product and it’s for everybody. We’d all like to think that. What we all like to think that we have the next Wonder Bread, or whatever, a slice of bread. But we usually don’t. We have something that’s unique and is for a targeted and niche market. And as you look at that, by the very nature, a niche market is something that not very many people are participating in, and you’re an expert at. Be sure that your product is not something for everyone. You know, Henry Ford said, “Stopping advertising is like stopping your watch to save time.” So while I talked about marketing, a function of marketing is advertising. And if we think, “Boy, I’m not getting enough leads,” then you need to look at the efficiency and where you’re spending it. But that may mean that you stop spending in a certain area, but not spending altogether. Don’t get discouraged until you find your target market. And the sooner you find that, the better off you’ll be, as you can imagine, spending 20% of your anticipated revenues and not getting the leads you are hoping for. So I think it’s very important. You know, Seth Godin once said, “Don’t find customers for your product. Find product for your customers.” And that leads me to the concluding thought I have in marketing. And it’s been a theme in The Biz Sherpa podcast the whole time since I started it in July 2020, and that is that you develop a business around a product or service that meets the needs for people. You can’t forget, you’re not selling to machines. You may sell over the internet, but you’re not selling to machines. You’re selling to human beings who are going to interact with that product. And you have a chance to make a difference in their life. The greater difference you make in their life, the greater your success will be. You can’t forget that that interaction is all more important. Around Christmastime, if you’ve ever watched the movie Miracle on 34th Street, you could have any old Santa or you could have a Santa that makes a difference. One thing that I liked about the marketing ploy in the story that’s in Miracle on 34th Street is Kris Kringle was not afraid to send customers to the competition to get a toy for the people who are looking for it, if Macy’s didn’t carry it. And before Macy’s could get upset, the people who they referred out of the store somewhere else said they were going to be more loyal to Macy’s. Even though they went there somewhere else to buy the product or toy that they needed, that Macy’s didn’t carry, they said they were going to be faithful because who cared about them enough to send them to the competition? We can’t be afraid. You don’t want to inadvertently send people to the competition. You want to put your best foot forward, but we can’t be afraid of competition. We need to be willing to stand out and know that our product or service will make a difference in their life. If we make a difference in their life, you’ll win over customers for your lifetime. I’m grateful for those who continue to watch and participate and share with their friends The Biz Sherpa Podcast. I hope these vignettes that I do alone reinforce the interviews that I do. I think you’ll find that some of the people I interview portray a lot of the principles that I’m teaching here. I learn from them too. I’ve learned from them during my career. And I hope that something that I share with you will make a huge difference in your life personally, and in your life in business. Again, remember, it’s not about a product. It’s about the people who use your product. Make sure you understand who they are, what makes them tick, and make sure you know how to appeal to them so that they are a hundred percent satisfied. If you make them happy and you change their life, they will tell a lot of people about you. Your marketing budget will go down—I promise you—as a percentage of sales, because your sales will go up. And some of them you’ll acquire without even having to spend money. I found that to be true in business. I’m grateful for you, and I hope that you’re able to set an effective marketing budget, manage your spend, and measure where your leads come from and then your conversion rate, and then be sure your focus is always on the satisfaction of the customer. My Biz Sherpa Scorecard helps you do that. I hope you use it. It’s free. It’s a resource on our website at www.BizSherpa.co, on the internet. Just go ahead and find it. Click free resources. I hope you use them. This is Craig Willett, The Biz Sherpa. Thanks for joining me today. Speaker 1: Be sure to go to our website to access the resources related to this episode at www.BizSherpa.co. If you enjoyed this show, tell your friends about us and be sure to rate our podcast. Craig would like to hear from you, so share your thoughts in the Facebook community @BizSherpa.co. Follow us on Twitter @BizSherpa_co and on Instagram @BizSherpa.co.

If you have a product or service and no one knows about it you aren't going to generate much revenue. Craig discusses marketing strategy, product selling points, where to spend marketing funds and your advantage points over your competition.   CLICK HERE to access our free resources, social pages, and website!

Fifth generation business owners of UWM Men’s Shop, Bart, Brandon and BJ Stringham discuss how they have been able to weather recessions, depression and other challenges over the last 100 years! UWM Men’s Shop was established in 1905 and continues strong today providing men’s fashion in Salt Lake City, Utah. Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn TRANSCRIPTION: Speaker 1: From his first job flipping burgers at McDonald’s and delivering The Washington Post, Craig Willett counts only one and a half years of his adult life working for someone else. Welcome to The Biz Sherpa podcast with your host, Craig Willett. Founder of several multimillion-dollar businesses and trusted advisor to other business owners, he’s giving back to help business owners and aspiring entrepreneurs achieve fulfillment, enhance their lives, and create enduring wealth. Craig Willett: This is Craig Willett, The Biz Sherpa. I’m excited to have you join me today for this episode. I’ve got some really good people that I’d like you to meet. They own UWM Men’s Shop in Salt Lake City, Utah, at the City Creek Center. The Stringham family, BJ, Bart and Brandon. They’re fourth- and fifth-generation business owners and I hope that today you’re able to take from what they teach us and from their experiences a lot about marketing, sales, customer service and also, how to get along in business and stay family. Welcome, guys. BJ Stringham: Thank you. Brandon Stringham: Thank you. Bart Stringham: Thank you. Craig Willett: Grateful that you’d join The Biz Sherpa podcast. It’s really rare and I have to give you great recognition and commend you for being fourth- and fifth-generation business owners. Do you guys realize how rare that is? Brandon Stringham: Yes, actually, we do realize how rare that is. Craig Willett: Really? What makes you realize that? What— Brandon Stringham: Actually, I was curious, so we’ve googled it before just to see what the percentages are and from what I could find, less than 3% of family businesses make it to fourth-generation, and I couldn’t find any statistics on fifth-generation. So yes, we know it’s very rare. Craig Willett: That is very rare. Recently, I interviewed a sixth-generation— Brandon Stringham: Wow. Craig Willett: —but it was a harness maker, very skilled practice, very niche market. And I’m sure this has migrated from what it first started out as. UWM Men’s Shop was formerly known as Utah Woolen Mills. What was that about five generations ago? Bart, do you want to share with us what that was like? Bart Stringham: Our business in the old days— that was great-grandpa and grandma. It was direct-to-consumer sales. We had over 400 salesmen at one time canvassing the United States and Alaska, and we made things. We went around to farmhouses, set up in hotel rooms and the people would come to us. From where that was to what it is today, as a high-end men’s retail shop, some big changes. Craig Willett: What was it that they made in that— Bart Stringham: Well, they specialized in coats, outerwear, underwear, suits, sweaters. Clothing. Everything— Craig Willett: Wow. Bart Stringham: —people needed at the time. Back in those days, they didn’t go to malls and the cars were—I mean, there was no central place to buy so they got everything. Craig Willett: The store went to them, basically? Bart Stringham: The store was there. We had sample cases. We still have the sample cases around the store here because that’s our heritage of what we used to do. Now, people come here and we just lay it all out. Craig Willett: Well, we’re going to get some video of that to make sure we’re showing that during this podcast to show that. That’s amazing that you had preserved that kind of heritage. What are some of the key principles that have led to the success for the generations of the Utah Woolen Mills-UWM Men’s Shop legacy? BJ Stringham: I think one of the core principles is just we have a set of cultural beliefs, and one of them is “Own it.” I own our results and consistently ask what else I can do to achieve them? I think from my perspective growing up, seeing my dad and my grandfather work just insane hours to make sure the business got taken care of, not seeing my dad all December because he was here at the shop. Craig Willett: It’s true that, in retail, December’s the biggest month of the year? Brandon Stringham: By far. BJ Stringham: But for me—and I don’t want to speak for them—but for me, just owning what the responsibility is, not waiting for somebody else to do it I think is probably the core principle that’s kept us in business. Craig Willett: Get in, get it done and— BJ Stringham: No excuses. Craig Willett: Get it done and be accountable. BJ Stringham: Be accountable. Craig Willett: “Be accountable,” I love that. Great. How was it to be accountable, Bart, to your father? Bart Stringham: Kind of the same. I just figured he would do everything unless I stepped in and tried to take some responsibility off his shoulders because he wasn’t waiting around for other people to do it, it was for him to do. For me, I liked being able to relieve a little bit of that burden, be here, help him, and take over and not have him having to micro-manage because he knew if I said I would do it, I would get it done. Craig Willett: That’s great. That’s good DNA for your family. How did it go from going on the road to becoming a premiere men’s high-end retail shop today? What was the next step from having 400 salespeople to manage on the road? That’s a big deal. Bart Stringham: Well, I think what happened is just history. The automobile, malls and stores, the accessibility for people to travel, be where they want to be, get what they want, so the traveling salesmen aspect kind of changed. It wasn’t as viable. Our business—we became more centralized in the things that sold the best, like clothing, suits, sport coats, slacks. We still did do blankets but those were the things that sustained us, these items that people would come to us for that kind of quality because they were used to it and as the salesmen started doing less and less on the road, we did more and more in the store. The store became the focal point. Craig Willett: How long has the store been here? Bart Stringham: Well, we had a store even back in the day, so 115 years. Craig Willett: 115 years. Wow. What a legacy— Bart Stringham: Yeah, 115 years is a long time. Craig Willett: —to have. Not a lot of businesses make it that far, like you said. What are some of the other principles? I like what BJ said but Brandon, do you have any ideas that you’d like to share about principles that have guided you as you stepped into more responsibility here? Brandon Stringham: It’s interesting. I hadn’t thought too much about it. Bart was mentioning he had to take over roles that my grandfather was doing and I think that’s—without him saying that, that’s what I did and that’s what BJ did. I looked at how our books were being done and it was all done by hand. It was correct, it just—we wanted to know where we were at today and we never knew, we always had to wait. I was like “Well, why is that the case?” It seems crazy but about— I don’t even know how long ago—maybe 10 years ago is when I got us computerized and got us onto inventory and constant, consistent spreadsheets of “We know exactly where we’re at, at any one time.” It was just one of those things that wasn’t there. It was creating opportunities for myself for a full-time job because I didn’t see myself being on the sales floor forever. Sales isn’t my thing. BJ’s great at sales, my dad’s great at sales, but that’s never been my thing, so I wanted to create something that I’m good at, which is numbers. I think it’s just a way of being able to see something that needs to be done, creating it for yourself and do it. I think that’s the principle I’m trying to get at there is you need to create it. Craig Willett: If you have to create it, I’m interested in the 10 years that you’ve automated the accounting system. Are there some things that you’ve changed your pattern of as a company from the information being more timely and maybe more in detail? Brandon Stringham: Oh, man, yeah. Definitely. Bart Stringham: Regarding every aspect of our business. Just— Craig Willett: Really? Bart Stringham: Inventory, for example. We know exactly what we have at any time. “Oh, we need more of this, we need more of that.” We can anticipate, and “This isn’t selling very well.” Craig Willett: So you just don’t go based on feel, you have to really be honest. The numbers don’t lie. Bart Stringham: Yes, and let’s face it, like blankets. My dad had to have blankets, everybody had blankets. We sold tons and tons of blankets. I’ll never forget, we got the computers, the boys came to me and says “Hey, you know, blankets are 2% of our volume. It’s taking up 20% of our space. This makes no sense, does it Dad?” I go “No, it doesn’t make sense.” Blankets were gone. Craig Willett: Wow. That’s pretty good information. Bart Stringham: Yep. Craig Willett: What other things besides blankets? What else did you find in that process? BJ Stringham: I think for me, because it’s such a personal business for us, having accurate data about what happened last year at this time on this date sales-wise—it gets very easy to get down. Anybody who’s in sales understands how it is when sales are not what they were the year before, so you’re always comparing yourself. You’re never satisfied. Having accurate data changed the game, at least for me, to be able to say “Wait a sec. This is normal. It’s okay.” To be able to step back a little bit and be able to see that this is just how business is. It fluctuates. Having the data to show it really eases a lot of those fears and “Oh, what’s going to happen?” Anyway, I just think for a good mental state, to be able to see the numbers was important. Craig Willett: I think that’s great. It goes back to the accountability principle, too, but also, I like that because numbers on their own without some understanding don’t really mean anything. It’s probably nice to have Brandon’s strength— Brandon Stringham: Awesome. Craig Willett: —to help with the business. What was it like and is there a formal passing of the baton? When does the father know it’s time to hand it over to the son? BJ Stringham: That’s the best question ever. Brandon Stringham: Let Bart handle that. BJ Stringham: Yeah. When do you know that? Bart Stringham: That’s really interesting. My role has changed here. It’s been rather difficult because I’ve been so hands-on in every aspect, every aspect: the numbers, the buying, the selling, the relationships, the advertising—everything, everything. I think Brandon just hit it. You start looking and they start looking at how could they relieve some of the pressures or the weight that I was carrying? And they did. For me, it’s been so easy because my goal now is to coach and to help our guys see what there is, see the vision and give some enthusiasm towards our goal, which is to satisfy the needs of our customers. Craig Willett: That’s great. So you knew when it was time? Bart Stringham: Well, I’m still involved on a different basis, but the time is they’re running the business and have been for several years, so it’s—yeah. Craig Willett: That’s great. You mentioned something really important and that is relationships. How do you pass relationships that you’ve had for 40 years to the next generation? Bart Stringham: Well, you’re a perfect example. You come in here, right, and— Craig Willett: Well, I call you up and make sure you come in. I track you down. Bart Stringham: Right, except if I’m not here, you’re with Brandon, you’re with BJ or with any of our guys. It’s so easy. I had a guy call me yesterday. He says “Hey, I’m in town.” I wasn’t here. I says “Don’t worry about it, the tailor will know you and take care of you.” Spent a lot of money, but he was so happy. Calls me, he says “This is amazing.” It’s pretty easy because our goal is the same: let’s take care of the customer and there’s no ego involved here. BJ Stringham: I think it’s also different because I think we visualize the business differently. Growing up in the business, it was every relationship was handled by a Stringham, full stop. That’s how business is done. Craig Willett: Right. Well, that’s how I came to know the business 30 years ago. It was your grandfather or your dad. BJ Stringham: Well, one of the big changes that we’ve made is looking at this more as “Well, wait a sec, is this something we can scale? Is this something we can grow?” If it’s up to me to be here, or Brandon or Bart to have those relationships, there’s only so many relationships, there’s only so many hours in the day and at what cost? We’ve made a lot of changes and they’ve been difficult to implement, both from a traditional standpoint, from the feelings that we have inside about what we should do because we’ve— you know, I’ve seen my dad work— Craig Willett: Because it’s your baby. BJ Stringham: I’ve seen my dad work Christmases my entire life, and I haven’t worked nearly the time in December, but we chose to do it differently. What we have chosen to do is we’ve hired more guys and we’ve said, “Wait a sec. The relationship is key. How can we teach other people what we know how to do so that we’re basically multiplying Stringhams so that people can have the same great relationship and the same experience, but it’s not necessarily me?” Can I use my skills that I’ve learned from watching my dad for 40 years—and I’ve been doing it for 20 years—can I use those skills to teach them how to do it so that maybe not only this location but can we do another location? Could we do another location and not lose that feel? Taylor, for instance, has been with us for 10 years and he has people that have just as strong a relationship that you and my dad have with him and his customers. As far as they’re concerned, UWM Men’s Shop— Craig Willett: Is Taylor. BJ Stringham: —is Taylor. Brandon Stringham: Right. Bart Stringham: Is Taylor. BJ Stringham: Taylor Hawkins. He’s not a Stringham but, as far as they’re concerned— Craig Willett: That’s amazing. You’re onto something here. I really want to talk about this more. This is a really interesting concept because so often as business owners, we feel like we have the magic formula and it resides with us as entrepreneurs. It’s difficult to try to train that, I think. For many of us, one, it makes us feel like “Oh, I have to give something up,” and “I’m giving up something and I’m really risking that they’re going to offend one of my prized customers.” How did you go about transitioning that? Your philosophy is “Take care of the customer and their needs.” How do you teach people to know the needs of the customers and then take care of them? You’ve been able to successfully do that. And you’ll see video of the story, you’ll be able to know that it’s not just Stringham-dependent. BJ Stringham: Well, we’re doing that but it hasn’t been easy. It’s been a challenge for us. We met with a great coach. What, it’s been about a year ago? Was it a year? Over a year ago. Tom Smith. He wrote Change the Culture, Change the Game. He lives in Provo. He is a great customer of ours, for years. I mean, he’s been shopping with us for a long time. I was talking to him one day about “Well, how do we do this? How do we grow?” I said, “How do we hold people accountable? How do we teach them how to do it how we want them to do it?” He says “Well, I wrote the book on that.” I was like “Really? Tell—” Bart Stringham: Yeah, read the book first. BJ Stringham: So anyway, we went down to his house and we spent a Saturday, no less, which for us was a big step because Saturday’s our biggest day, but we were not at the store. At his house, we wrote all the things that we feel like could be better in our business, that we didn’t like about ourselves and our business and it was a really brutal, honest evaluation of our business. And then, it was really fun because, then, we wrote the other side of, What do we want it to be? That’s where we came up with our cultural beliefs and there’s some fundamental beliefs that we have that we work with our entire team every day. When COVID hit, we did training videos. Now, we literally are sitting down with our guys and we say “Okay, look, when this situation happens, how do we want you to handle it?” I had to watch him for 20 years to really be able to effectively handle— Craig Willett: Experience is a great teacher. BJ Stringham: Experience, right? All of a sudden, we’ve tried to put all those experiences on videos, we’re walking our guys through those videos and we’re saying “Okay, look, this is what happens with that, this is what happens with this.” Anyway, that’s— Craig Willett: Through those experiences- BJ Stringham: —been that transition was sharing those experiences. Craig Willett: —and they understand principles that they can apply. Bart Stringham: Well, they can watch him. Watch him over and over again, pause it and just say, “Oh, this is what’s happening here, this is what’s happening there. Why did he do that in that situation?” Then, we explain it and they go, “Oh, I get it.” Everything makes sense because it does make sense because now, we’re in our 115th year. We know it’s successful, we just have to show others how to do it. Craig Willett: Now, I’m really curious: are you willing to spill some of the beans of the success? How do you know when you say, “People do this. Why did they do that?” You certainly understand customer behavior. BJ Stringham: Sure. Craig Willett: Is that right? BJ Stringham: You were going to say something. Did you— Brandon Stringham: Well, this is a little bit of back to what we were talking about with the experience, so it’s just real quick. One of the things that forced us to do this is they built City Creek next to us. This very big, successful mall, and we had to change our store hours. Well, we didn’t have to, we chose to change our store hours to compete with the mall. We’d always been open from 9:00 AM until 6:00 PM and we wanted to do— Craig Willett: Right, because you were an inner-city retail store. Brandon Stringham: Right, an independent store. We thought we should compete with the mall and they were open until 9:00 PM. That’s a huge change for a store that’s always been open until 6:00— Craig Willett: Right, and if you’re the family doing it, how do you get home for dinner? BJ Stringham: Ever. Brandon Stringham: We were trying it and after a couple weeks, “I can’t do this. I can’t work 12-hour days, five, six days a week. It doesn’t make sense. I don’t care if I’m making money, it’s not worth it to me.” BJ actually reached out to our—Tyler was the first part-time— BJ Stringham: Yeah. Brandon Stringham: —employee, right? BJ Stringham: Yeah. Brandon Stringham: It was a guy that just happened to walk in the store and BJ just offered him a job. Then, Taylor came on very soon after that and we were saying Taylor’s the one that’s been here for 10 years. We, after a little while, trusted them to run the store from 6:00 PM until 9:00 PM, so they were forced to learn it and I think that was a really good thing for them to get those experiences and have to have it, but it took them a little bit longer than this new training process, where it’s been a lot better than, “Hey, go figure it out,” it’s, “This is how you can do it. Now go figure it out.” Craig Willett: Hire out of necessity here, help us fill in the gap— Brandon Stringham: That’s what started it is City Creek moving in and us being forced to adapt to it, more or less. Craig Willett: He must know what he’s doing because I know the last time I was here—then, I want to get into this customer behavior thing because, and this might be the key to it. I was buying a few things and we were getting ready to leave. I’m usually trying to tell Bart “No, I have enough.” Bart Stringham: I never listen. Craig Willett: Somebody—and it must’ve been Taylor—came up to me and I ended up with this jacket at home. I had it in my closet for almost a year. I put it on the other day, my wife said, “Oh, that’s the coat that—” my wife said, “That guy needs a promotion down there. You were ready to leave, and he pulls this coat off and you bought it. You didn’t wear it for a year.” Now, I wear it a lot but it was kind of an interesting experience for me. Anyway, enough on that. How do you understand customer behavior? How does it help you with your sales and how do you train people to recognize that? BJ Stringham: That’s everything. It’s everything. What we’ve learned is men don’t like to shop. Men, if they’re going to shop, they want it to be fun. They— Craig Willett: That’s why you have a ping-pong table in here? BJ Stringham: We have two. We’ve got all types of ping-pong tables. Bart Stringham: Pool table, too. Brandon Stringham: And a pool table. Craig Willett: A pool table, okay. BJ Stringham: In our new shop, we’ve got a punching bag just to get out the stress before you shop. We’re men, so we know what we like, we know how we want to be treated, so as far as our training’s concerned, it’s just addressing those things. I always tell our guys the minute a man walks in the store, there’s a stopwatch. You’ve got a limited amount of time to make it a good experience for him so be on it. If he likes the jeans, you make sure you know what model he’s in so, if he wants another couple colors, he doesn’t have to try them on, it’s just there, just done. Make it easy because guys hate to shop, and that’s— Craig Willett: Oh, now I get it. That’s why I have three pair of the same thing. BJ Stringham: Exactly why. We’re giving you the inside scoop. Yet, you’ve been shopping with us for how long? Craig Willett: 30 years. BJ Stringham: Do you enjoy your experience? Craig Willett: Oh, always. BJ Stringham: That is because of the behind the scenes things that you don’t see that I’ve learned and we’ve taught our guys. It’s, “Hang on, there’s a reason why people like shopping with us. These are the reasons.” Make it quick, make it painless, take all the hassle out of it, make it easy. That’s it. Bart Stringham: And make it right. One of the first things we tell our guys: don’t sell stuff to sell stuff. Make sure it’s going to actually work for the customer. Find out what the customer does and have it work. You just said you had a coat for a year. Now, you’re wearing it all the time but, if we sell you the wrong thing, Craig, you’re never going to come back. If we sell you the right thing, maybe one thing, two things or 20 things. If they’re right, you come back, you have a great experience. It has to be the right thing. Craig Willett: Well, that’s great. There’s no high pressure? Bart Stringham: No. BJ Stringham: No high pressure. Bart Stringham: It’s just fun. The more you spend, the happier you are. Craig Willett: That’s an interesting philosophy. Let’s put that into business books. Let’s put that in writing. Don’t tell everybody’s family budget about that one but okay. You mentioned another location. How did you evolve to another location? BJ Stringham: You want to take that one? Brandon Stringham: Sure. We’ve talked about it for quite some time and part of the problem with Utah Woolen Mills and leading us to change to UWM Men’s Shop was the perception of what we were. The second location is actually called Tom Nox Men’s Shop. It’s a completely different name, it’s a different business, it’s also a different price point. It’s not even true, but people just assume that our suits are $8,000 here. We have $8,000 suits but we also have $800 suits. That gets missed somewhere in translation so, basically, we wanted a clean start to be able to go and really tell people what it is that this Tom Nox brand can do. We have suits at Tom Nox that range anywhere from $495 up to maybe $4,000, but the bulk of them are $900 to $1,000. It really was a way for us to get a clean start. We’ve been renting downtown for a long time. We wanted to not have a landlord, to be able to do our own thing so we decided to buy the building in a high-traffic area. That’s what we did. Craig Willett: I love it. I love the idea of owning the real estate behind it. Now, you basically own this. I know you have a rent, but you have such a long-term lease— Brandon Stringham: Very long-term lease. Craig Willett: —that it’d take somebody a lot of money to move you out of here. Bart Stringham: Yes. Craig Willett: To buy your interest out because a long-term lease is as if owning it, but I do like the fact that you own your second location. What a brilliant idea. Who came up with the price point and how’d you figure out that people lost track that you had the $800 to $1,000 suit lines? BJ Stringham: Well, I just think generally, when people come in for the first time, that’s part of our sales process. We’re asking “How’d you find out about us? Where’d you find out about us? Who told you about us?” That’s just kind of a theme that we’ve found. We also think that demographic that Brandon was talking about, that price point, is just something that we could actually replicate in more places, something that, with this level of quality and luxury in our downtown location, it’s hard to envision opening up multiples because there’s only—you don’t see— Craig Willett: You cannibalize your own market. BJ Stringham: Yeah. Craig Willett: You make it closer to home to your customer, but you don’t add any more sales. BJ Stringham: You don’t see a lot of Ferrari dealerships in the same city, and that’s kind of how I look at this. Craig Willett: Interesting. Very smart. You mentioned that your customers—when they come in—how do you go about marketing and advertising your business? BJ Stringham: Well, we talked about this. That’s something we had not done well. I mean— Bart Stringham: It’s been word of mouth, basically. Craig Willett: What’s wrong with that? Bart Stringham: Nothing, it’s just kind of a slow process and we like that, except the masses don’t have a clue. People— Craig Willett: For the Tom Nox, it’s probably more important? BJ Stringham: Well, I think it’s important for both of the stores to—we’ve been on that. We’ve been— Craig Willett: I used to see Bart on TV 20 years ago. BJ Stringham: Yeah, that’s true. Craig Willett: Doing commercials. Brandon Stringham: Well, I think that’s the truth. We’ve tried— Bart Stringham: We’ve tried— Brandon Stringham: — just about everything. Bart Stringham: —lots of things and we thought that maybe the name’s—Utah Woolen Mills—connotation was, as Brandon says, we shear sheep or something. They had no idea until they walked in. Even being here in the mall, people walked in and said, “Oh my gosh, I had no idea. Been here for 30 years, had no idea that you actually had this quality.” I’ve been to Nordstrom’s and they go there, they don’t—they stay here. They don’t go back because of our quality. It’s unsurpassed in the country. We have very high-end, nice stuff. Craig Willett: Well, on that note, you have two stores right next to or near Nordstrom and two locations in Utah. They just pulled their suits out of Utah. Maybe you guys had something to do with that? BJ Stringham: We just found out about it yesterday and we’re still in shock because it’s still—with the epidemic and all, it’s still a business. We’re still doing business. Brandon Stringham: We still sell a lot of suits. There are still weddings and plenty of other occasions to wear suits. Craig Willett: Great. Let’s talk about how do you get word of mouth. What does it take—in addition to just selling them what they need and selling them quality so that they want to come back, and not selling them something they won’t use—what is it about service after the sale, what is it about the relationship that makes people want to tell other people about you? BJ Stringham: Well, for me, I can just speak for me. I pride myself on the relationships I’ve built here with the men that have shopped with us, and it’s not just the men, it’s the wife that comes in and knowing their names. I send my family’s Christmas card to all my favorite customers and my wife gives me grief because I’ll tell her about this interaction I had with today and she said, “Oh, is he your favorite customer?” That’s just kind of how I feel. I’ve established some really great friendships, just like I see with you and my dad. It’s about friendship, it’s about relationships, and I think that is why the repeat business and that is why the word of mouth is so strong, because I’m not just a suit salesperson to somebody, I’m BJ. I’m somebody that they text, they ask about this or we talk about water skiing, we talk about basketball, we talk—the suits are just the clothing. Craig Willett: You become part of their life. BJ Stringham: The clothing’s just something that we connect on but we connect on a lot of deeper levels, and I think that’s what leads to them telling people about me or telling people about Taylor, Brandon, or Bart. That’s what does it, I think. Craig Willett: Great. As you look at it, you mentioned that you’ve been asking yourselves the question, “How do you go about marketing and advertising?” Are there some things you’re considering that you might want to share that might benefit our audience about how you’re going to analyze it, what you’re looking to do, what are some of the avenues that are best? BJ Stringham: Well, I can take this one. We actually reached out to a data collection service, Experian. They collect all sorts of data. We’ve never been data-driven, honestly. We’ve been— Craig Willett: Except for the last 10 years. BJ Stringham: Except for Brandon bringing us in. Brandon Stringham: Well, it’s getting us started with it. BJ Stringham: We’re learning to be more data-driven and finding out what is the common thread between our best customers? Not even best customers, what is the common thread through our customers? Then, how do we find more people like that, that would enjoy what we do? That’s really what it is, it’s about connecting a product that people like with the people who would like it. Craig Willett: Finding who’s in your area or market that would be potential customers to then getting— BJ Stringham: Finding mirror images— Craig Willett: —information in front of them. BJ Stringham: Mirror people of the people who love our business. Between talking to customers and also looking at data, that’s kind of where we’re trying to go. Craig Willett: When you identify them, what’s the best way to reach them? I mean— BJ Stringham: That’s what we’ve got to figure out, but that’s what we’re working on, honestly. It seems like we’re a 115-year old business and maybe that’s the lesson: we still haven’t got everything figured out. Every day, we’re still trying to get better. We’re still trying to evaluate what we’ve done, what has worked, what hasn’t worked. That’s not necessarily going to work tomorrow. Craig Willett: Magnify your strengths, then look at your challenges and then take on that opportunity. That’s great. How have you been able to survive some different inflection points over a 125-year history? I would imagine during that time there’s been the Great Depression, there’s been the Financial Crisis, there’s been wars. How did the family business react to those things and what’s key? Bart Stringham: They’re both looking at me, so— BJ Stringham: Well, you’ve been here for most of those 100 years. Craig Willett: They say “Hey, we’re in the pandemic, we know a little about the Financial Crisis,” so Bart, you’ve been through it all. Bart Stringham: It’s interesting. I think back and one of the biggest challenges we had, when they decided to put the light rail in front of our business and close us down. I happened to one day be talking to an attorney who happened to be the personal attorney for the mayor. He called the mayor for me and I got a little audience with her. She said, “Oh, hey, don’t worry about it. When this is done, your business will thrive,” and I says, “That may be true but how do we get to that point?” I think that idea of surviving anything and just doing what you’ve got to do to get through it. I remember getting up early and coming every morning—because it’d always be closed off. The city couldn’t deny us access so I had huge banners made, I had banners everywhere around us directing traffic into our building parking area. It was tough but we did well. When they constructed City Creek, we were basically closed down and we had to negotiate. We did all kinds of things with banners and signs to try to let people know. We’d stop traffic because they’d have to come in here. There’s been so many roadblocks and I think the common denominator that we all feel—and I know BJ and Brandon are feeling the same—we’re not exactly sure what to do, but we figure out a way and then we try it and we do it. Some work, some don’t, but we keep trying. We’ve never said, “Nope, we’re done.” Can-do attitude. Craig Willett: That’s probably why when the statistics say 3% of businesses make it to the third or fourth generation and there’s none saying all the way to the fifth, it’s easy to give up. Sometimes, it’s easy to rest on your laurels and sometimes, it’s easy to say that. How do you take that attitude and make something? BJ Stringham: Well, I wanted to add the reasons why we’ve been able to weather those things is because of just very wise financial decisions from my grandfather, dad saying “Hang on a sec, we could be doing all sorts of things. We could be spending money here, here, here, here,” but the principle of, “If we can’t pay cash, we can’t afford it.” Craig Willett: You’ve never financed buying inventory or paying operating costs? BJ Stringham: It’s a very different animal. I remember when in December of 2008, when that hit, we said, “Okay, we’ve just got to—let’s pull back and let’s reduce our buys, let’s be smart about what we have.” We just changed everything and the next year, 2009, was very profitable. We made wise decisions but it was because we had this base from which we could make— Craig Willett: You had financial discipline already in place. BJ Stringham: Yeah, so that, I think, is a huge key to the ups and downs. Even right now, the epidemic, it’s a rough time. People aren’t running out and buying suits left and right, but— Craig Willett: They’re all working from home. BJ Stringham: I mean, we’re lucky people get out of their sweatpants. We’re okay and we will be okay. Craig Willett: You carry that, too. BJ Stringham: We do that, too, yeah. Craig Willett: Just higher-end. BJ Stringham: But I think that financial security, the wise decision to be conservative on how we spend our money and not getting in debt is what has enabled us to overcome. Craig Willett: I think that’s great and it’s a wonderful principle, but I could imagine it’s still tough as generation passes to generation, the older generation’s still holding on to those purse strings a little bit and the younger generation, I would imagine, would want to go out and try all kinds of new lines, want to appeal to their generation and the old generation’s going, “But we used to sell these suits, we have this relationship, these are more expensive and it’s going to take more of our money tied up in inventory.” How’d you make it through that kind of transition? Were there any experiences you’d like to share that might help enlighten how to deal with that? BJ Stringham: I feel like I’m talking too much—but we had one instance in particular was a shirt company that we brought in. It was high-end, great shirt. They retailed at $265 a shirt. Brandon and I fell in love with these shirts and we said, “We should have these.” Bart’s experience had been, to the time, that it’s a pain. It’s a pain to stock them. If you don’t sell them, they get shop-worn. It’s a losing venture and custom shirts was really where our business was at, which was a great business but Brandon and I felt strongly about it. The difference was they had a tremendous stock selection that we could draw on constantly. He advised— Craig Willett: You were able to convince him. BJ Stringham: He advised against it but the thing is, to his credit, he’s always been supportive. Whatever those crazy moves have been that we wanted to make, he’s been supportive, even if he’s like, “That’s terrible. Don’t do that.” Craig Willett: What’s that like? BJ Stringham: It’s been a great— Brandon Stringham: The trust is there. Craig Willett: The trust is there. Brandon Stringham: The trust. Craig Willett: And has there been times where it hasn’t worked out? Has there been any, “I told you so?” Bart Stringham: No. Brandon Stringham: I don’t think so. BJ Stringham: I just know with him, you made a lot of changes that grandpa wouldn’t have approved of. Bart Stringham: It was the same with my dad because our goal was to make this the best men’s shop in the country and for sure in Utah. We did. There’s nobody like us and he just kind of backed off. He says “Well, whatever.” I traveled the country and picked out lines. I did things that this city had never seen and he just says “Okay, let’s go for it.” We always were able to pay for it and when BJ and Brandon come and say, “Hey, I think we ought to do this,” I’m going, “Well, I don’t know. That didn’t work before,” he says “Yeah, but if we do it this way, it can work. We have the money to do it, let’s do it.” I’m very supportive, obviously, because the success is right there in front of us. Craig Willett: Wow. Brandon Stringham: That particular example makes us look really good because it was very successful and that was one of the best things we’ve ever done for the business. Craig Willett: That shirt decision? Bart Stringham: Yeah. Brandon Stringham: Thousands and thousands. We became their biggest specialty store in the country. Craig Willett: Did it grow your overall shirt sales, too? Brandon Stringham: Oh, tremendously. BJ Stringham: Like not even— Craig Willett: Really? BJ Stringham: And also— Craig Willett: No comparison to the custom shirts? BJ Stringham: It also helped us sell other items because they looked so good, you throw a jacket on top of it, that looks great, too. It also gave us the confidence to go after a couple other big moves that were big, that really helped us. Craig Willett: So small successes, calculated risk, and it works out, then you continue to expand. I think one of the things that you shared with me might be the secret to the Stringham success of five generations is the other generation’s willing to trust the next after a certain apprenticeship in here and support that. Especially in retail, you have to change with the times or you become outmoded. Bart Stringham: You’re out of business, basically. Craig Willett: Wow. That’s great. That’s a compliment to you. Well, one of the things you can never escape on The Biz Sherpa podcast is to explain one of your greatest failures and what did you learn from it. I don’t know who— BJ Stringham: Are we going one at a time? Craig Willett: One at a time or if one of you wants to be the spokesperson for— Brandon Stringham: Well, we actually talked about this because we actually hinted at it a little bit earlier—and they can finish up what I’m starting to say here—but you asked about advertising. We’ve been in business for 115 years and if you go ask a random person on the street, they probably don’t know who we are. That’s a problem. It’s a big problem, and we’ve tried different things. We’ve tried billboards, we’ve tried playbills, newspaper, radio, TV, like you mentioned, but we’ve tried them all. There’s got to be something else that we’re missing and I feel like that is our biggest failure is that we’re a 115-year old business and I bet 5% of Utah knows who we are. If you’re talking country-wide, less than a percent knows who we are. We’re doing something wrong there, and that’s something that BJ and I have been focusing on a lot, and Bart’s always been trying it, too. We don’t have that answer and I still don’t know what to do with that. We’re trying different things. Craig Willett: Clothing has to be hard online, especially at the level and the quality that you do, but what kind of online presence have you considered? Is that one of the solutions to—? BJ Stringham: It’s tricky. That’s a tricky thing. We’ve— Craig Willett: Not necessarily sales but at least an online presence of— BJ Stringham: Well, we do online—we have a weekly mailer email that highlights some products and we’re active on Instagram, we’re active on Facebook and all those outlets, but we’ve also seen as—I don’t know. If you look at the retail environment in total, especially in our space, a lot of the stores that went heavily into online business, they’ve really alienated their associates in the store, selling things online then having them come in and having their associates try to service it, whether it’s been discounted or whatever. Those associates can’t make a living servicing products that have been sold online. You look at a lot of the big box stores and even acquisitions of—maybe even Nordstrom acquiring Trunk Club and Trunk Club was—that’s a digitally native brand that’s online that’s sent to you, brought back. The jury’s out on how smart it is to really dive into online sales. Of course, online sales, if it’s something that doesn’t need to be serviced, that’s one thing. The things that need to be serviced, it’s tricky. It’s tricky. I think I’m with Brandon on our biggest failure: just the fact that people don’t really know who we are until they walk in the store and we educate them. I’d agree. Craig Willett: Wow. That’s hard to admit after 115 years. Bart, did you have any thought of other experiences you remember that you’ve stubbed your toe and you learned something from? Bart Stringham: Not really. I mean yeah, I’ve stubbed my toe many times and I think it’s usually on purchases, thinking “This should be amazing, why don’t people see this?” They don’t, so you think, “Oh, well, earlier, we were late to the game.” I remember Dad and I sometimes buying a suit, a particular maybe, color or something, thinking “This is unbelievably great,” and nobody liked it. Then, if you keep it for a little while, then somebody comes in, “Man, that’s cool.” Then, they’re gone within a couple of weeks. You never know. I think when I’m listening to BJ and Brandon talk about our greatest failure, the interesting thing is, Craig, and I don’t know if you’ve picked up on that because you don’t look at us as, maybe, failure in any way because your experiences here have been incredible, but they’ve been incredible because you got to know us, you supported us and you tell everybody you know about us. That’s probably our biggest success is you and guys like you. Because it isn’t a matter of all the stuff you buy, it’s the relationship that we’ve developed, so for us, our biggest failure is also maybe our biggest success because that failure, and I think BJ’s kind of touching on it, but we don’t really have the relationship with people when we’re online and things. Our business has been so relationship-oriented that we want to do that but we want people to know us because once they know us, they’re with us. That’s really true. Craig Willett: You earn their trust, you earn their respect. Bart Stringham: We want them that way. We want that. It’s kind of interesting. Craig Willett: I’m glad you said that. I almost said it. I didn’t want to be the one taking a guess at it but my guess is some businesses don’t lend themselves to spending a lot of money on advertising when you’re after such a small niche in the market that not everybody needs to know about you but, like you said earlier, what you’re researching with the credit bureaus and the information that you can get from the data out there are find the people in the niche that you want and those are the people that need to know you. If that’s only 5% of the people out there, then that’s all you need. Bart Stringham: Yeah. BJ Stringham: So true. Bart Stringham: Good point. Craig Willett: You can’t be all things to all people and that’s good. I think that’s been important. I think it’s important for survival in this. I have one last question and I’ve always wondered this because, sometimes, I’ve talked to my wife sometimes about doing business with our family and certain members of our family. Lately, I’ve brought them in on a few things, my children, and she always says “You know, business and family doesn’t mix.” Carol said that. I just wonder what are family reunions like, what are family get-togethers like? When you have the business that you’re operating in and have to get along, you have a great relationship, but there’s also other members of the family. How have you been able to survive and what has that been like? Brandon Stringham: Man, that’s a tricky one because obviously, with any relationship, whether it’s family or not, even if it’s a strictly work relationship, you’re going to have issues and I think the biggest thing for us has been trying to figure out boundaries of family versus work, being somebody’s boss at work, trying to be the boss at home and trying to figure out those boundaries of, “Okay, this is my life outside of work, I’m going to do what I feel is best for me and my family, and you have no say in this. This is my life, this is my family,” and just creating, I think, boundaries is what I want to get at there. Craig Willett: I think that’s a great concept and I think maybe it’s helped to hire more people so you’re not working the 9:00 to 6:00 or having to be open 9:00 to 9:00, training others so you’re not here all the month of December and you’re able to spend time with family and evolve that so that it’s not fully consuming your life as to why other people are going, “Why is he never here? We’re having a party and they’re down tending the shop.” BJ Stringham: Well, there’s a couple things for me. Building the trust, having open and honest conversations—it’s another one of those cultural beliefs we have. I think open and honest conversations between us. “Hey, this doesn’t work. Hey, I need to be understood here. This doesn’t work.” Having those open and honest conversations, understanding that we love each other, because we do. There’s a lot of love in this room. We have very different personalities, different skill sets, different problems. I mean, I’m as forgetful as they come. We had a staff meeting this morning and it’s 7:20, I was supposed to be here at 7:30, “Oh. Anyway.” Craig Willett: “Hey, where are you?” BJ Stringham: That would never happen to these guys but I’m also really good with our people. Establishing the trust in our relationship to be able to set those boundaries is really important. Another thing I’d like to say just when it comes to family: I’ve got four kids. Brandon has a kid, too. I want to make sure that—I’m very fortunate to be in this position that I am because Christmas, I can be with my kids. Family business is tricky, so I don’t know what I’ll say to my kids if they want to do it. It’ll be a different business going forward anyway, so— Craig Willett: That’ll be interesting to see, the sixth generation come along. It’ll be exciting. I’m grateful that you would spend the time today. What I really love about what you shared today and probably what is most important, and that is your understanding of who’s most important: the customer. You certainly put them first. You certainly build those relationships. I think that one-on-one contact is something that is more and more rare in the world that we live in. It’s becoming more and more of a digital age, but I think the businesses that can understand that and can get beyond having a digital presence but still have that feeling of closeness, feeling of trust—when you can capitalize on that like you have, you’ll have a successful business, not only for years to come but also in continued generations. I appreciate your honesty to be able to come on here and put your dirty laundry on our episode but also to share your secrets to success. I admire your business. I hope people will look you up and not only frequent your store but more importantly, that they’ll come to understand the principles that you have put in place and how they can benefit from those, too. You’re great examples to me that I see as I know your family. I appreciate the time that you took. This is Craig Willett, The Biz Sherpa. I’m grateful that you joined me today at UWM Men’s Shop in Salt Lake City. Speaker 1: Be sure to go to our website to access the resources related to this episode at www.BizSherpa.co. If you enjoyed this show, tell your friends about us and be sure to rate our podcast. Craig would like to hear from you, so share your thoughts in the Facebook community @BizSherpa.co. Follow us on Twitter @BizSherpa_co and on Instagram @BizSherpa.co.

Fifth generation business owners of UWM Men's Shop, Bart, Brandon and BJ Stringham discuss how they have been able to weather recessions, depression and other challenges over the last 100 years!   UWM Men's Shop was established in 1905 and continues strong today providing men's fashion in Salt Lake City, Utah.     CLICK HERE to access our free resources, social pages, and website!

One of the key fundamentals to knowing how to or continuing to finance your business is understanding your cost structure and cash flow. We discuss the role of fixed and variable costs and how to create a model of how you are going to pay your fixed costs. Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn TRANSCRIPTION: Speaker 1: From his first job flipping burgers at McDonald’s and delivering The Washington Post, Craig Willett counts only one and a half years of his adult life working for someone else. Welcome to The Biz Sherpa podcast with your host, Craig Willett. Founder of several multimillion-dollar businesses and trusted advisor to other business owners, he’s giving back to help business owners and aspiring entrepreneurs achieve fulfillment, enhance their lives, and create enduring wealth. The Biz Sherpa. Craig Willett: This is Craig Willett, The Biz Sherpa. Thanks for joining us today on today’s episode. I’m excited to have you with me. You know, as I look back on the guests that we’ve had so far in the last year, I’m grateful for each one of them. Each has a story with examples that really paved the way for us to learn. As we apply the principles that they’ve learned, we can avoid some of the pitfalls that come. In the last episode that I had with you a month ago, I shared with you some ideas about how to finance the startup of your business or the ongoing operations. And one of the key fundamentals at the base of starting a business and knowing how to finance it, or continuing to finance it, is to understand your cost structure and your cash flow. Today, I’m hoping that we can tackle those issues. In every business that I’ve ever started or been involved with, there’s a three to five year time horizon that it will take for you to feel that you’re comfortable. I’m not saying profitable, because I think you can hit profitability much sooner than that. But when I say comfortable, I’m talking about successful. That it has an energy in and of itself that is not so dependent on you as the business owner. Now that’s the assumption that you are actively involved in the business. And of course, I think most small business owners are. In fact, I think the pitfall is that many of us find that the business owns us rather than us owning the business. One of the ways a business can own you is by going into debt. And then you feel the pressure to repay it. I’m not saying debt is bad. I think there are ways and times where you should take on debt to finance some shortfalls or some seasonal needs in the business. As a business owner, you’re the equalizer, though. You are the equalizing force, whether you hire someone or whether you spend the extra hours yourself to get a particular task or job done. There are dangers in that because you can become distracted and lose focus on what’s important and the money making part. So saving costs at the expense of bringing in profitable business isn’t always the best choice. But sometimes as business owners, we find a way to do both. Now, when you really are looking to understand your costs, you really need to look at two really main factors. One is your fixed costs. That would be your overhead—commonly referred to as rent, marketing costs, insurance costs, costs to operate an office, utilities, and things like that. And then there’s your variable costs. If you produce a product, then it’s the cost to produce the product, both in labor and materials to do that. And if you’re transactional-based, then there are commissions and those become variable costs because they’re a percentage of the revenue you bring in. So you really need to understand what those are. Once you understand what your fixed costs are, then you need to develop a model of how to pay for those fixed costs on a recurring basis. Some people call this a break-even model, where you look at what is it going to take to bring in the costs, the revenue I need to cover my fixed costs, including your salary. And once you figure that number out, that will tell you how much in sales you need to have. Now that doesn’t mean you use that to set your goals, but it certainly gives you an idea to determine whether it’s realistic to incur the costs that you’re going to take on in order to achieve the revenue that you’re aiming for. You know, sometimes we get very optimistic when we start a business, right? And we want to do more and better than we think we can. Often I find that that’s the case. Sometimes we under shoot or under commit to what we think we can do and our product takes off. That’s a good problem to have. So I’d rather be conservative in the startup stage because it will help you determine the right amount of money that you need to have to finance your startup. I remember that you as a business owner have to really take into consideration those costs. I remember when I started my development business, that I sat down and decided, “If I’m going to tell people they can own their building for less than rent then I truly, personally, needed to make sure I owned our office building in one of our projects.” So in our very first project, I owned one of the buildings. In the process, though, here’s how I made up for it. I worked out of my living room until the first building was completed. And I worked out of a trailer in our second project until that first unit was completed. Now that building was bigger than what I needed for my young and fledgling development company business, but I built it out to accommodate a lot more people that we grew in to occupy the entire building at one point. But we rented out the other units as executive office suites, and were able to supplement our payment by the rent that we were able to charge and some of our overhead costs to operate the business, such as a receptionist. And it allowed us to pay for more because people wanted to use our conference room as well. Now, you need to live the part and you need to look at ways that you can save. One of the dangers is also putting a stress on the business that you demand too much for your own personal living expenses. I think I talked about this once before, and you need to be careful that you are living as economically as possible so that you don’t have to draw as much money out. That will allow you to own more if you’re offering equity, you won’t have to dilute as much to get more money, or you won’t have to borrow as much in taking on some of that additional risk just to cover your personal expenses. Then there are some costs that, really, you can’t afford not to incur. I remember when we were into our second project, that I had listed it with a nationally recognized brokerage firm. They were located in Phoenix. My project was located in Mesa, Arizona. They would get phone calls from the sign that they put on it, but rather than meet the people face to face, they would fax them information sheets. And then the people would, or would not get back to them. After a while I got tired of reports of a number of people being interested and inquired and that they had sent information, but had no real follow-up. I decided that I needed to take marketing into our own hands. This took some of my time and it meant that I had to hire a sales staff. Now some of that sales staff needed to be supported, so there were costs associated with that as well. The lion’s share of the costs were going to be commissions, but as you can imagine, there are still costs and time associated with it. We went from 3 million sales in those first two years to over the next 10 years doing nearly 700 million in sales. It was a great move, a cost I couldn’t not afford because I needed to do that, to get that personal, one-on-one attention that I wanted for the potential buyers of our product, of our buildings. Now, if you remember, I think I’ve told this story too, but I remember the first sign I got when I took down the brokerage firm’s sign and put up our sign. It was a doctor, he was driving around looking for a new office space. He said, “You know, I just drove by your sign. And I’m looking for new office space I need to be in, in the next four months.” He said, “It says that I can own it. It said own for less than rent. I didn’t know I could own my own office building.” At that point I knew that if I control their message, rather than just “For sale,” or “For lease,” that we controlled our message with our sign and with a live person who could walk them through that process. Then we could articulate turning those phone calls into buyers who are satisfied and refer their friends. This became a very dynamic decision for us. So when you’re looking at those costs, look at those that may seem like something you can do, but also look at it as maybe something you cannot not afford to do. You know, it’s really important to understand cash flow. Why? Because you need to understand how much capital it’s going to take for your business and when you need the capital, and when you’ll be able to repay that capital. Having that understanding of being able to forecast your cash flow and understand your cost structure will make the discussions you have with banks when you need to borrow on a line of credit, or with family and friends who you might need to borrow from for a short period of time, that will allow you to set expectations of when it will be repaid. I shared this before. I had a bank one time that kept asking me to come in every year and meet with their senior loan committee, including some members of the board. And I thought to myself, “Well, why are they having me do this?” Finally, I was so curious that I finally asked a loan officer one time, “I love coming in and making presentations to your bank, in fact, the senior management of your bank. But do you mind if I ask why they have me come in?” And he said, “Craig, you see, they want to make sure they set aside enough money this coming year to meet your needs because you’ve always paid them back before you said you would, and you’ve always met or exceeded the cash flow projections that you gave them.” That is very rare, I guess, in many circles. So you want to be sure that you have a good understanding of that. If you don’t, you can hire experts. We’ll have Matt Waller on from Henry and Horne CPA firm. He’ll talk about how you can manage and use outside resources to help you understand and make better forecasts so that you can manage your relationship with your lenders or with your investors, or even just for your own safety and peace of mind. You want to also be sure you understand your cash flow so you know what kind of commitments you can make. Early on in your business, you’re going to be signing a lease for a store or an office or a warehouse or a factory, and you need to understand what those costs are going to mean, how long of a term you’re going to have to sign for, what that guarantee means in terms of dollars and cents so you know how much you can commit for. You might also be buying equipment and how you finance that, whether you lease it or you buy it. Those are very important parts that can play a key role in determining in those critical first three years of your business, whether you’re one of the businesses that succeeds or you’re one of the businesses that struggles. Now I understand that costs don’t take a business down. They do make it difficult when they can’t sell. So you have to articulate with your customers— and we’ve talked a lot about that on niche marketing. We’ve talked a lot about pricing. We’re not here to talk about that today, but as I mentioned in financing your business, a large percentage of businesses—I think it’s nearly 90%, 85% of businesses—when they go to hire an individual, need some sort of financing in order to commit to employees. So I think it’s important to know your cost structure, so you can understand whether you have adequate cash flow. There’s nothing like having to turn to your first employee and say, can you wait an extra week for your paycheck? I’m sure it starts to make them nervous and may affect their performance at work. I’ve often talked about being able to relax. I understand that the first three years of a business, and even maybe up to five years, the business does own a good part of your time, and certainly a good portion of your mind. Whether it’s at night or in your quiet time, it still sneaks in and you still try to solve the problems and try to figure out how to make it work. And I admire that. I think that’s very important, but I also think that you need to find ways to set it aside. I had a client early on in my CPA career that told me I should have a hobby. And I asked him his and he shared with me his two hobbies. And through the years I’ve sought to do different things. One of the hobbies I’ve worked on is watercolor painting. Another one of the hobbies that I’ve worked at is golf. And that doesn’t sound like a hobby, because sometimes it’s very discouraging, but it does allow you to get your mind off of it if you can do it. But it’s a game that you have to learn to shut down and relax; otherwise, the muscles aren’t going to help you hit the ball in a straight direction and it can be very frustrating. I would say that you need to find what those are and find them early on because you do need to give time for your mind to rest. And when you put your mind at rest, you come back and are able to focus and are able to solve those problems. When our mind is burned out, we can’t have our subconscious work on helping us solve our problems. So when I’ve hit difficult times, I’ve found it helpful to have had hobbies and other interests and have been able to take vacations so that I have the reserve energy it takes to put in 110% of my time to solve during difficult times. Because they will come. We don’t know what they’ll be. If we knew what they’d be, we’d plan for them in advance and it wouldn’t take any extra of our time, right? So you want to really understand your cost structure. As you look at your cost structure, consider what kind of profits you need to retain in the business to grow and have longevity. You also know how much you can share with your employees or with your partners. I wouldn’t distribute all profits. I think that’s not a good idea. You do want to set aside money, though, on a regular basis outside the company so that you have a separate stream of income and assets to rely on during the difficult times. Sometimes you may be called upon to put those into the business, and I think that’s very important. Other times you may be able to lean on those to live off of rather than take money out of the business. So I think they will help build your longevity in business. Now we talked about our profit. We talked about our cash flow. Now we talked about our cost structure, fixed and variable costs. For each business, those can be a little bit different. I’m not going to go into details, but that’s something you can work on, and I have a worksheet associated with this podcast on our resource page at www.BizSherpa.co. You can go there and look and work out what you’re fixed and your variable costs are. And there’ll be a break-even formula at the bottom for you to calculate what your break-even point is, based on your cost structure. Now with that in mind, you also need to understand the difference between cash flow and profits. Often it’s really easy for business owners to slip into this and believe me, I understand, and I understand where you are on this. And I’m not making any accusations here, but I don’t know how many times as a CPA I had clients who called me from among the 700 small business clients I had and said, “Craig, you know, we’re running out of cash. We’re just not making money.” And I thought to myself, “Well let’s sit down and look and see how much money you’re making and what’s happening to the cash.” Let me walk you through a very basic scenario and I’ll put up the slide right now so that you can see it. But the basic scenario is a t-shirt business. Let’s say that you go into business and you sell $15,000 worth of t-shirts that cost you $5 per t-shirt. And that’s a thousand t-shirts. So a thousand t-shirts at $15 is $15,000 in sales in the first month. And then your cost is $5, so your cost is $5,000. So 15,000 minus the 5,000 gives you $10,000 of profit. That’s your gross margin, not your profit. So now you have to look at your fixed costs. Let’s assume your fixed costs are rent of $3,500, insurance of $3000, utilities $425, advertising $500, interest at $400 and salaries of $4,000, or $9,125 in expenses. You made $875 that month in profit. But your cash flow may not reflect that. Let’s say you had a loan and that you had to produce—because you thought you would sell more than a thousand t-shirts, so you made 5,000 t-shirts or spent $25,000 on t-shirts that month to produce them. Your sales were $15,000, so you collected $15,000, you incurred a cost of $25,000 just to produce the t-shirts. So you’re in the hole $10,000 before you even get out the door to sell. Now you have $9,000, $9,125 of expenses, so you have negative cash flow of $19,125. Now you might ask, how did you get to a negative balance, it’s because you had cash in the bank when you started. It was either your money or a loan. But let’s say you drew down $19,000 that month, so you’re feeling pretty weak, but it was your first month in business. And maybe your t-shirts take off and start to sell, and then next month you sell 4,000 t-shirts. That would bring in $60,000. Guess what? They cost you the extra $20,000, $5 a shirt, 4,000 t-shirts, $5 a t-shirt, 4,000 t-shirts. That means $20,000. You brought in $40,000 before your expenses of 9,000. Now all of a sudden you’re up $31,875 if positive cashflow the next month, if you produce no more t-shirts. So you can see the swings that can take place in cash flow. Your profitability won’t swing that much. Let’s go through that profitability calculation. It’s $60,000 minus $20,000, so you made $875. You won’t always necessarily have a negative cash flow month. Let’s look at why you had negative cash flow. You made 5,000 t-shirts. They cost you $5 each. There’s $25,000. You only brought in 15. So you’re $10,000 in the hole, and then you incurred $9,125 of expenses. So your negative cash flow was $19,125. But hold on, this was your first month in business. You had cash in the bank so you’re able to cover that, but you don’t want to go $19,000 in the hole every month, right? That’s not a winning proposition in business. Let’s say the next month you sell all 4,000 remaining of the 5,000 t-shirts and produce no more. At $15 a shirt you bring in $60,000. You incur, from a cash flow standpoint, no more costs to produce because you already paid it the prior month and you incur $9,125 of operating expenses. So you have $50,875 of positive cash flow in your second month of business. Now it’s probably not prudent to not have inventory to start your third month in business, but great that you sold out. What was your profitability? The profitability would be the $60,000 in sales, less $5 a t-shirt for 4,000 t-shirts or $20,000. So you have $40,000 gross margin, less your 9,125 of fixed costs, to result in $30,875 of profit in your second month of business. Imagine that. Now if your t-shirts take off, that’s great, but you can see that how you invest your money in inventory and equipment and other costs can determine your cash flow. That’s the key to operating an effective business, understand your cash flow. It’s not always easy to predict sales, but you need to be careful to be not overstocked. You know, the last thing you want to do is have too much invested that you can’t make it productive. So you need to determine how to start your business and how to grow it so that it becomes productive. The best problem to have is to sell out and not be able to deliver. The worst problem to have is to not get the sales you are expecting, and to have too much money in a product that’s not selling. So these secrets of understanding cash flow and understanding costs together—they harmonize and they allow you to become in charge of your future. As I mentioned, it’s so often easy for us as business owners to get confused. We work hard and then trying to figure out what the finances look like also adds burden to it. If that’s you, hire someone to help you, but look back and always have a finger on the pulse of where you are on your cash flow and on your profitability. As you understand your cost structure, you’ll make better business decisions. After all, that’s what it’s about. And when you make better business decisions, you’re in a happier mood. You’re more able to interact with your customers and your employees, and be able to really achieve the friendships and achieve the relationships to mine that emotional reward that comes from owning an effective and successful business. After all, it’s success that we’re after. Remember, many people start their business to make money, but I say you start a business so that you can exceed other people’s expectations. When you understand that, the money seems to take care of itself. No one ever started a business that really meant to take care of other people, and didn’t really have … No one ever regretted starting a business with the objective to help other people. If we start solely to make money, people are going to sense that, and they’re going to shy away from us because they feel that we’re only after their wallet. I’m grateful that I was able to get an education in accounting. Now that doesn’t mean that every business owner should be an accountant. I don’t recommend that either, because sometimes we’re too conservative and may miss opportunities. But my education gave me the opportunity to understand those costs and to be able to effectively manage them. I suggest that if you don’t understand those, that you find people who you can surround yourself with who will. As you do so, you’ll make better decisions, you’ll meet the expectations of the people that help you finance your business, whether it’s friends, family, yourself, or a bank. And the better you do at that, the more successful you’re going to be. They’ll look forward to understanding your situation when you need seasonal borrowing, and be able to lend to you during those times when you need it, because you’ve been able to prove that you know and understand your costs and are able to repay each time you borrow. This is extremely important. I think part of that’s called integrity, but some of it is just understanding your market and your business. I hope this, combined with niche marketing and pricing, will help you. Pricing is very important in this component. You can always discount, but it’s very hard to raise prices. I think you watch James Stephenson, who talked about that. He started low and got some market share, but he’s found it very hard with some of those initial accounts to raise the price, even though the quality of the service that they give doesn’t even compare to what they originally were doing. And I think that’s important for us to take into heart, that we need to value our own services. Someone once told me if you don’t value it and highly value it, no one else will. I wish you continued success. Thanks for joining me on today’s episode. This is Craig Willett, The Biz Sherpa. Speaker 1: Be sure to go to our website to access the resources related to this episode at www.BizSherpa.co. If you enjoyed this show, tell your friends about us and be sure to rate our podcast. Craig would like to hear from you, so share your thoughts in the Facebook community @BizSherpa.co. Follow us on Twitter @BizSherpa_co and on Instagram @BizSherpa.co.

One of the key fundamentals to knowing how to or continuing to finance your business is understanding your cost structure and cash flow. We discuss the role of fixed and variable costs and how to create a model of how you are going to pay your fixed costs.    CLICK HERE to access our free resources, social pages, and website!

Niche Markets are one of the fundamentals of starting your business. We discuss the questions to ask yourself to help you define your niche such as: What problem are you solving for other people? What is unique to you or your craft? How are your clients going to access your product or service? Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn TRANSCRIPTION: Speaker 1: From his first job, flipping burgers at McDonald’s and delivering the Washington Post, Craig Willett counts only one and a half years of his adult life working for someone else. Welcome to the Biz Sherpa podcast with your host, Craig Willett, founder of several multi-million dollar businesses and trusted advisor to other business owners. He’s giving back to help business owners and aspiring entrepreneurs achieve fulfillment, enhance their lives, and create enduring wealth. The Biz Sherpa. Craig Willett: This is Craig Willett, at the Biz Sherpa. Welcome to this episode of the Biz Sherpa podcast. I’m excited that you joined me today because I want to talk to you about niche markets. I think it’s one of the fundamental principles of starting a business or refocusing your business. I said that in 2021, I hope everyone’s objective is to recommit rather than reset. And I think what we commit to our principles, underlying principles of our country. I mentioned like the declaration of independence and the bill of rights serve as fundamental documents that have principles in them on which all of our government rights and all of our rights as citizens of this nation are based. Craig Willett: We can have similar sets of principles that govern our businesses, and I think one of the keys is to determine a niche market. If you’re going to start a business, you’re not going to want to be everything to everyone, that’s really hard to do unless you have an unlimited supply of capital, and I doubt any of us have that. Most of us are trying to figure out how to have enough capital to make it for the next 30, 60 days in business, let alone how to capture the entire market share. Craig Willett: So, as I have mentioned before, one of the key principles is what problem are you solving for other people? Let me share maybe an example that I have experienced with when it comes to solving problems. In fact, I’ll share two of them. One when I started out as a CPA, my father-in-law told me go out and see your clients every week, take an afternoon off and go start to visit some of your clients. One of the talents or skills that I had was the ability to be able to talk to people and hear what situations they were faced with and then offer them some solutions around the financial aspects of their business or their business life. This led to me getting more and more clients because they referred more to me. Craig Willett: It took me from being an accountant that delivered financial statements and tax returns to their bank or to the IRS for them, to being a fundamental resource for the success and the improvement of their business. This is what’s important. Let me take this away from accounting because a lot of you are probably saying, “Oh, I hate accounting.” And you’re like me, that’s how I was in school, but I went ahead and got a degree in it anyway. What I really liked is when I had the opportunity to start a real estate development business, and it became more than dollars and cents in doing some projects that came my way when I was able to articulate the principles of real estate development and solve a problem for a lot of business owners. Craig Willett: Let me tell you the problem. The problem, a lot of people have is they’re business professionals, meaning they have a professional license. They’ve spent a majority of their time prior to them starting their practice or business in school, getting a degree in dentistry, getting a degree in medicine and getting a license, or they may get a degree in law and pass the bar exam. These people have invested a lot of time and money in their future, and they don’t have a high cost to starting their business per se. But what they do have is they have a problem, they want to find a location that typifies and resonates with their customers as to the success they want to have. And that is not too big, but not too small that allows them to grow and adequately serve their client’s needs. But they don’t have the time to go out and buy a piece of property, hire an architect or/and an engineer and a development consultant and go get it zoned and then bid it out three different times and hire a contractor to build it. That process could take up to two years. Craig Willett: The solution I had for them is I would go out and buy the land on speculation, put it in a location that would work for these business professionals and healthcare professionals, and then put all that package together. And they could come to me within months of wanting to open their business. And I will have built shell buildings on that property and they could buy it and just customize the tenant improvements inside, having the ceilings they wanted, having the floor plan they wanted, it was totally doable for them. So I took something that they wanted, ownership, and I took a location that they desired and I made it affordable to them. They didn’t have to spend the three years of time, which they probably didn’t have. They could focus on developing their practice and spending their time at doing what they do best taking care of their clients and patients to make money. Craig Willett: Now here’s where the real solution came in and really accentuated. I talk a lot about in my niche market introduction that I did in the three-part series on starting your business about testing your market. Well, it’s a big test to buy a piece of property and not know who your customers are, right? It was a big task, but I had seen it done in some other areas. So I had a high level of confidence that given the choice of paying rent for 30 years or owning a building and paying a mortgage for 30 years and having your building with your name on it was probably a choice. A lot of people who spent a high dollar amount of money invested in their college degrees, their advanced education and training would opt for. That was a good leap of faith. Craig Willett: But we’re really where it came home to me was the first phone call I got on the first sign I put up on my project when I chose to do the marketing, rather than sub it out to a third party. The call came in, it was a doctor. And he said, “I’m out here looking for a new office. My lease expires in about four months and I need to find something else that will suit my needs better. I see your sign, it says own for less than rent. I didn’t even know that owning a building was an option, I thought I had the lease.” Craig Willett: So when you look at a niche market, you have to not only consider what problem do you solve and what experience do you bring to the table to help them solve it, but what’s unique about you. Now think about it, of all the office space in that town where that sign was, mine at that time was the only one for sale. That made it unique, a unique value proposition to that potential customer and that potential market. I want you to think about what is unique about you as an individual? What experiences do you have that will help people solve a problem that they have in their life? If you can articulate your experience and what is unique about you in that experience, you will be able to craft a very, very narrow market that you can then not necessarily take advantage of, but then captivate. And you will be able to articulate your product better than anyone else who tries to copy you. Craig Willett: During that time, I had a lot of people trying to copy the market that we were doing. They were copying the building plans, but they didn’t get necessarily all the components that we had because what I had is experience as a real estate developer. I had experienced as a business owner. I had experience in knowing what would make a good longterm real estate investment, not just solve a short-term need. Most people when they go to lease only care if this will last for about five years. And therefore, if someone, as a developer has cut the corners on that building, they’ll find that out during the five years and not renew. Craig Willett: But if it’s a great location with easy access from many points of access, good visibility and high ceilings and very flexible floor plans, they’ll probably stay. And if there are other professionals around them that are referring business to them, I guarantee you they’ll stay. So I understood that, and that’s what made my experience worthwhile for me to be able to take that risk and be able to carve that niche. I want you to consider if even if you’re a current business owner, what’s unique about you and then focus on that uniqueness. Craig Willett: The other key point after you figured out what unique? What your experience is? And what problem you solve? Is to look at how are your clients going to access your product or service. You may choose to do it online. I’m not the person to help you with that, but I know a lot of people who are very good at that. Of course my podcast is available online, but I have a lot of help in that. Craig Willett: How are people going to access that product or service? It will determine how you package it, it will determine how you deliver it, it will determine how you market it, how and where you market it. For me, my access point was location. My father taught me at a young age. When I took his real estate course in the business, in the community college, the three most important things about real estate are location, location, location. I knew that just like the first phone call, I got that people usually at the time, now this is tells you how old I am, but drive around and look for signs in an area where they were hoping to be able to open their business or their practice. So access to me meant that my signs had to be, and my locations had to be in areas that were desirable for them. Craig Willett: The key signs that stood out, I hired a company that helps some technology companies really brand themselves. And I was able to put unique signs up that looked like a building was being constructed and they had taglines on them. And some of them said, imagine you’re building here because I didn’t have one yet. And then also had my main tagline, which was owned for less than rent. Your access is important. You need to understand who your customers are. After a while, the internet became more searchable and more of a tool. And then we were able to put our locations there where people could search and find us. And then also we were able to stand out when people search by your own building or own for less than rent, we came out on top every time. Craig Willett: But I would say location is something that’s still important, think about it. Business professionals like to live near where they work and like to live in that community, and they do a lot of things in that community. So for me, the access was still a sign. My dad taught me a long time ago that sign never sleeps, it doesn’t call in sick, it doesn’t take a week’s vacation, it doesn’t sleep at night, it’s up all the time. My signs had reflective tape on them so that the message was still read at night with the lights driving by. Your potential customers could possibly be driving by your location every day. You need to find a way to get in front of them, whether it’s on the internet, but you need to think about where do they go and how can you get their attention? Craig Willett: So access then to your product or service, I had to build them and I had to then create that access for their clients and their customers, which only enhanced but happened. Because those clients and customers of one doctor became referrals to another doctor or from one dentist to another orthodontist or from one real estate company to the title company or from the title company to the insurance agent who are all in the same professional village. This concept created access in community. Think about that because that’s the next step. How do you expand the reach of your product or service? This is everyone’s goal and objective, right? Craig Willett: I’ve said this before growth for growth’s sake is not necessarily the best thing, but when you can expand on what unique about you and tap into additional markets then you can grow your business based on the principles and fundamentals, not because you’re trying to reach some proforma financial objective that you have, but because you’re able to find other users who have similar needs and be able to capitalize on them using you or your product or service to fill that need. Craig Willett: Now, this all comes back to what’s really important, and that is to always test it. It was an expensive test for me, thank goodness it worked. I bought my first project thinking that this might work, having seen something work in another area, but I wasn’t sure. And it was a big financial risk at the time. But whatever you do, you want to test that market and key is to find your first customers. Fortunately, in my very first project, almost all of them were real estate professionals or real estate centered people or businesses that bought from me. That told me I was onto something, if the real estate professionals and the real estate home builders, real estate developers and people in the know in real estate were buying my buildings and it sold out to them then I was really onto something that this would work. But that first test is really important. Craig Willett: Finding your customer. How do you find your first customer? You may ask yourself that, it might be a friend, but they may buy just because they’re your friend. They might use your services because they’re relative. But what’s key is to find someone with the defined need that you have, and then watch their reaction to your product or service. When you’re able to do that, then you know you’re hitting the mark. I remember being a CPA and part of my practice was to be able to help customers who had bank loans. And I remember in particular, one lender who really wasn’t happy because he could never get financial statements from the client’s CPA firm in time to be able to renew the line of credit that his customers have. And he was with the largest bank in the state at the time. And he had a quite a portfolio of clients. Craig Willett: I know I came across one of his clients and I turned the financial statements in early, gave him plenty of time and support for the line of credit renewal with tax returns extensions. I knew what he needed because I had audited banks, not only had I audit banks, I had also started a bank. And so I knew what he needed. Guess what? Over the years, I can attribute about 70% of my new referrals from that bank, why? Not because I was in bed with that bank, but because I met the needs. And guess what? Every customer whose tax returns or financial statements came in late for the renewal on their line of credit got a referral to me. Now it was up to me to earn their business. But I can tell you that if you can figure out how to solve that problem, you’ll be able to find those customers. But it is truly finding the first customers that’s important. You’ll want to reach out to who your likely customer is. Craig Willett: I know we talk a lot about demographics and I can tell you, well, I don’t profess to be an expert in marketing. I’ve been very successful at marketing in my career. And I can’t necessarily demographically describe who the customer is, but I can tell you who it’s not. It’s not everybody, not everybody is going to want your product or service, that’s the first thing we all go to. But my products can be so good, everybody is going to want it. How many times do we think that or have we heard that? That’s a mistake. I would say take time to really figure out who best can use it and then narrowly define that. Craig Willett: For me, in my real estate development business, I didn’t want to build big buildings, so I wasn’t looking for large practices to buy into my projects, I was looking for solo practitioners, or at least two doc, maybe at the most two doctors in a practice. They wouldn’t exceed 2,500 or 5,000 square feet. You can go out and there’s statistics out there for nearly every market that you want to potentially reach. And try to look at some of those studies. And then I was able to find locations based on one secret that I’ll now reveal now that I’m no longer do it. I took the census information and figured out where there was a greater than 15% of the people in that area who had professional license where they lived. And then I would find locations near there so that they would want to buy a building and practice close to their home, it worked. Craig Willett: But finding the customers, it takes research, it takes willingness to get out there and talk to other people and it takes willingness even to go out and survey potential customers. I know that sounds like a college exercise, right? But I would really do it. I would talk to people. You don’t want to take a shot in the dark, this is your career, this is your reputation, this is your money riding on this. And certainly your friends and family, as we talk about financing your startup in another episode. Craig Willett: But once you do that and test your market and find your initial customers then it’s finding additional customers who are like the customers that you got. Now, I would say that that is a proposition that takes care of itself. If you have a satisfied customer, they’re going to tell a lot of people about you. And you’ll earn the next customer because you took care of the first one so well. But think of the opposite, if you don’t take care of them, if your product or service is inferior, then everyone is going to hear about that, not just a few people, everyone, and that’s going to be a barrier to your success. So you want to be sure you’ve developed your product or service to the point where it exceeds the expectations of your customers. Craig Willett: We’ll talk about pricing in another episode. But once you find that customer and truly value them and give them value for their money, you will then find not only them coming back to you as repeat customers, but they will also refer other people to you. I think I told you the story one time on an episode about how Carol came home one day from taking the children to the pediatrician. And she said, “Craig, it was terrible, I had to go behind the grocery store and then I couldn’t figure out where to park. And then when I finally found the building and went inside, the building was old and was worn out. The pediatricians were great.” It was a great referral that she had received from someone else to go meet with these pediatricians. But the level of their service didn’t match the building. Craig Willett: I said, “Well, next time you go in, tell them what I do. Tell them about that. I’m building a new location, about two miles from there, and that they ought to consider that.” You know what? They listened to her. I went and met with them. I helped them get out of their lease early so that they could move in to the new location. Not only did my helping them move out of an inferior location and get out of their lease early, be of great benefit to them, but their ownership proposition ended up being a great thing for their practice. That when I did another one in another location about 10 miles away, they were the first in line to buy. Craig Willett: Earning the business of a customer a second time is not just loyalty, it’s the highest compliment you can get. The second highest compliment you can get as a referral. Now, someone says to get the referral, you can’t be afraid to ask, I would agree with that. I wasn’t afraid to tell my wife to ask for even in the first instance for them to even consider our location. Maybe you might say, well, you are desperate. And I probably was, it was my second or third project, and we certainly wanted more customers and wanted more business there. But you have to be willing to get out, you have to be willing to talk to other people. And then once you do have a customer, gauge their satisfaction, not only gauge their satisfaction, but if they’re satisfied, ask them who else they know who might be able to use that product. Craig Willett: We’ve all heard it, and I hate getting asked that question. But if you really know someone and that name comes to mind, take that name and go visit with them, you’ll find that a very rewarding experience. So to summarize a niche market is where I recommend you start. You’re not going to be all things to all people, that’s a mistake. Figure out the problem that you can solve for someone, but figure that out based on your experience, look at what’s unique to you and your experiences, and then figure out what’s going to be unique to your product or your product value proposition to your customers. Craig Willett: In my case, it was owned for less than rent. It stood out like a sore thumb because no one else offered a building for sale. Everything of my competition was for lease. It was quite a remarkable experience at the time. And then consider what your access points are and how your clients are going to access your information become aware of your product or your service, and then get it in front of them. Craig Willett: Sometimes it doesn’t cost a lot of money. My first sign didn’t cost a lot of money, but it built a multimillion dollar business based off of a sign on a location. And then figure out as you articulate that how you can expand the product or service to help other users meet their needs. Sometimes what you do is very easily adaptable to other markets or other users. And once you figure that out, you’re able to expand your influence and expand your penetration in the market. Don’t forget before you do all this, make sure you test it, make sure there’s a great way to look at someone else’s success, not copy it, but still figure out what unique? Look at and try to figure out why and what will be successful for your product or service. I put the sign up. I got the call. I didn’t know, I could buy a building. That proved to me that my market of own for less than rent was viable because he wasn’t the only one to call. Craig Willett: Of course, finding the customers is important. You’ll get some friends and family, but I would suggest that they’re not reliable, they’ll not want to hurt your feelings. And I promise you, you want to find someone unrelated to test your product or service on. And then once you’ve done that, don’t forget to ask for the referral and then try to earn their repeat business, that’s the highest compliment. Again, the second highest compliment is a referral. I hope that as you evaluate your principles of operating your business that you can focus on your niche market, that if you’re going home tired at night because you’re trying to be all things to all people step back and focus on what you do best, what’s unique about you and what experience you have to truly take care of them? Your customers. It will bring that emotional currency to you of satisfaction of a job well done. Craig Willett: All of a sudden, it won’t be about money, it won’t be about growth, it will be about making a difference in people’s lives. That’s the motivating factor in any market. I wish you continued success and I hope that you’re able to continue forward focusing on a niche that brings great satisfaction to your customers and return. I promise you’ll sleep better and the finances will take care of themselves. This is Craig Willett, the Biz Sherpa. Join me again for one on pricing so that you can learn how to price your market to price to the value you offer. Again, Craig Willett, at the Biz Sherpa. Thanks. Again, this is Craig Willett, at the Biz Sherpa. Thanks for joining. Speaker 1: Be sure to go to our website to access the resources related to this episode at www.bizsherpa.com. If you enjoyed this show, tell your friends about us and be sure to rate our podcast. Craig would like to hear from you, so share your thoughts in the Facebook community @bizsherpa.com. Follow us on Twitter @bizsherpa_co, and on Instagram @bizsherpa.com.

Niche Markets are one of the fundamentals of starting your business. We discuss the questions to ask yourself to help you define your niche such as: What problem are you solving for other people? What is unique to you or your craft? How are your clients going to access your product or service?    CLICK HERE to access our free resources, social pages, and website!

This week Craig joins Art Wing the Co-chairman and President of Little Giant Ladder Systems to discuss the history of the business as well as how it has become the multi-million dollar company it is today. Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn TRANSCRIPTION: Speaker 1: From his first job flipping burgers at McDonald’s and delivering The Washington Post, Craig Willett counts only one and a half years of his adult life working for someone else. Welcome to The Biz Sherpa podcast with your host, Craig Willett. Founder of several multimillion-dollar businesses and trusted advisor to other business owners, he’s giving back to help business owners and aspiring entrepreneurs achieve fulfillment, enhance their lives, and create enduring wealth. The Biz Sherpa. Craig Willett: This is Craig Willett, The Biz Sherpa. I’m grateful that you’d join me today for our podcast. We have a real special opportunity to be at Little Giant Ladder Systems with Art Wing, the son of the founder, Hal Wing. And we’re really in for a treat today. We’re going to get some demonstration of the product. And we’re going to hear a little bit of the history. And hear some keys to success in business ownership. I’m grateful, Art, that you’d accommodate us. And wow, what a setting for this. Art Wing: Well, thanks for coming by. And we go way back a long time. And it’s good to see you again. Craig Willett: It’s great to see you. It’s great to be with you. This is quite the studio. One of the keys that I have always noticed for a Little Giant Ladder’s success has been the ability to demonstrate product. And you’re taking it to the next level with these sound studios. Art Wing: Yeah, we actually started a tad before COVID. And COVID, basically entered a Zoom world, which we didn’t like the fact that 90% of Zoom is people looking up somebody’s nose on a desktop. So, we try to make it more of an event. So, ours is completely interactive. Everyone’s mic’d up, we have a software engine that drives it. But we have done no traveling since the entire thing and then just paid cash for all of the studios out of the proceeds. Craig Willett: That’s pretty cool. I remember the story of the startup of this business. Your dad innovated the product. But he would take it to county fairs. And he would travel and throw it in the back of a station wagon. I think you went with him on a few of those. What was that like for demonstrating? Art Wing: Well, I did it as a job for a long time. And I managed that group. So, the National Hardware Show used to be in Chicago at McCormick Place. And so, we didn’t have the money to actually ship our products. We didn’t have the money to fly. So, I remember we had a Pinto station wagon, and we loaded it up with ladders. And basically, we’d always get a 10 by 10 booth. And so, that would be our display. And then, the object would be while you’re demonstrating it, take orders from exhibitors. So, when you walked out, you could just walk out with an empty booth and go home kind of a thing. It was just a cool thing for me because I think I was 15 or 16. No, I was probably 14 or 15. Anyway, there was a go-kart company there and he actually ended up trading a ladder for a go-kart. So, we brought back a little go-kart in the back of the empty station wagon. Craig Willett: That was your first paycheck, the go-kart? Art Wing: Yeah. Yeah. I started when I was 12. Craig Willett: Really? Art Wing: So, I started with my father. We began as an importer, and then the Deutsche Mark devalued like crazy. And so, it caused us to become a manufacturer. And he just basically threw chop saws and stuff from Sears and different places. Got some used equipment, and we created it. And I helped him get that shop floor off the ground. And we started from there. But yeah, initially, what happened is he brought a sample over from Europe because we were an importer. And he went to maybe 50, 60 friends, showed it to them. They said, “Absolutely, I’ll take one,” kind of a thing. And what ended up happening, he brought his first container in and went back to the same 50, 60 people and they’re like, “Oh, that’d be for a painter. That’s too much money for me.” So, this is back when ladders were $29 and he’s trying to sell it for $200. And so, he sold none of those to any of those people. And so, he did venture on to try a trade show. And basically formulated a demonstration that would stop people, you go into a mass close, you would actually take orders. And— Craig Willett: So, demonstration really became a key. Because if you’re trying to say, “Hey, there’s a ladder,” and somebody else has a ladder for $29 and you want $200, what’s the difference? Art Wing: Yeah, the demonstration is actually so effective. Most people have been to a trade show before or if it’s a home show, you’re just making a beeline. So, even when it was dead, we would just start demonstrating to nobody. And then, they would just stop and then you just launch into what you’re looking at and it would be your demonstration. So, they wouldn’t leave after that. And then typically, there’d be 40, 50 people out there. And you’d write up two or three of them. And then, there’d be stragglers from the last one. And you’d basically start off with, “I know you didn’t get to see the whole thing. So, let me show it to you.” And you just start from fresh and new people were coming up. And it would go crazy. So, we ended up doing specialty shows. I mean, we did like funeral director shows, which seems weird but most funeral directors actually own their own property and take care of their own property. And they have good steady cash flow. Craig Willett: You can’t avoid death and taxes. Art Wing: They love good products. We did those type of trade shows, we did industry trade shows, and we did just about every home show and county fair you can think of. At one point, we were doing upwards of 500 shows a year. Craig Willett: So, is it true, the rumor I’ve always heard that because your mom’s from Switzerland— Art Wing: They have that right. Craig Willett: She could yodel. And your dad could yodel a little bit too— Art Wing: No, my mom was actually from Germany. Craig Willett: Oh, Germany. Okay. Art Wing: My dad is a strange perfectionist. So, before he passed when they would go back to Germany, most people would say, “So, your wife’s from America, and you’re from Germany.” So, when he took something up, he would perfect it. His German was flawless. And on one of their trips, and we did have a home in Switzerland, he really dug yodeling. And he took it up and became super proficient at it and just really random stuff. Craig Willett: But he could yodel at a show and get people to— Art Wing: Oh, yeah. If times got bad enough, he could do that. But I remember when I was about 10, we lived in Europe for a couple years. And that’s where he ran across the ladder idea. And so, I was in middle school. And one of the first things he did was he enrolled our entire family in the talent show. So, we’re up there with these— Craig Willett: Sounds like the Sound of Music. Art Wing: We’re up there with like these nerdy European clothes on with all these kids from Utah and the USA. We didn’t know, started singing and doing—it was just goofy. I’m still going through counseling for that. Craig Willett: Trying to recover. Art Wing: But no, yeah, he was really a visionary guy and grew it. What happened when we began manufacturing was, we actually still bought a couple of key components. So, the original German painting contractor guy that we got the license from would know how many we’re producing. And we just amped up the royalty so he was making exactly the same as selling it to us, but we actually benefited by not shipping air, and it worked out really well. So yeah, it was good. And it dovetailed into innovation. So, that company is still around. They’re in Germany. And we actually have more market share in Germany than they do. And the weird thing is it’s being run by an accountant. And so, to this day, they still have exactly the same literature and the same ladder. They’ve never improved on it once. They do have a website. And as soon as the web takes off, they’re going to launch it. They’re like in the stone ages. So, we continue patenting and improving and staying relevant. And yeah, it’s always been part of our DNA. Craig Willett: And I think that’s part of it to be able to demonstrate it really makes the sale. Now, your family did at one point sell the business. This is back in the ’80s, wasn’t it? Art Wing: Right. Craig Willett: Sold the business. Your dad had built it up to a certain level. Art Wing: Yeah, if I can remember most everything my dad did, they were all great decisions. But in the mid-80s, he brought on two partners that said, “We’re going to take some capital and invest with you.” And I think it hit him later at a board meeting that two guys can out vote one. So, they took their capital back out. And they said, “We want to go and sell it to a VC company.” Anyway, long story short, the VC company ended up being a Ponzi scheme. And they went down taking—they owe General Electric a credit like $160 million. And my dad actually had a clause in there that they could not cash or redeem any of his stocks for a year. So, he basically just watched it go broke. The sheriff came, locked it up. So, I think towards the end of ’85, we’d set ourselves up a dealer. And we’ve just bought all of the inventory, and we moved to another building. And then on March 6 of ’86, we bought the assets at the sheriff’s, so. And then, we started again from scratch. Craig Willett: What was that like? What was your role at that point in time? Art Wing: On that particular time, I was actually in the customer service department. I mean, I set up the shop with my dad, I’ve run general labor, I’ve done our quality control program, been the Customer Service VP of Sales, President, CEO, Chairman. I’ve sourced all of our international partners. I’ve sourced all of our international factories. And so— Craig Willett: So, you’ve had a key role in it. What was it like working for your father? I mean, sometimes, family-owned businesses take on a negative connotation. People think, “Well, they can’t be successful.” But I’m sitting here today and this really says, “No, they can be.” But what was it like, and how was that an advantage and maybe a disadvantage at times? Art Wing: And there was an advantage in that he had a really good sense for business. And my mom actually ran the books, and she’s wired like Doug, very conservative. And so, that was a good basis to grow on. But I will tell you that some of the biggest arguments we ever had were like, “We have a perfectly good telex machine. What is a fax machine? We don’t need that.” It was a good week of strife. And I finally just went out and bought it, and then they paid me back later. Same thing with PCs. We had an IBM 360 in a room with an air conditioner. He’s like, “Why does everybody need one on their desk?” And so, I went out and bought PCs for everyone. So, we had some disagreements on that. We’ve had— Craig Willett: But you were as visionary as he was then, to be able to keep it moving with the technology. Art Wing: So yeah, I’ve done more of moving forward, like when the internet was just taking off, I mean, I bought ladders.com for $12. I think the last thing we turned down was— Craig Willett: And if you don’t know, that’s the web address for this company. Art Wing: Right. And I had to just turn down $1.2 million, because the employment agency—a company wants to buy it, but we’re not selling it. So, I did that. And plus, at the same time, I bought every other reverse domain you could buy. So right now, we have about 100 domains that are all pointed in different directions. We’re the number one unaided brand awareness as far as ladders. We’re the number one ladder search on Google. And the number one ladder at Amazon. And so, yeah, I did a lot of that stuff. We wrote an infomercial. It was wildly successful. Craig Willett: Yeah, let’s talk about that. So, you go back, you buy the business back in the ’80s—’85, 86—and you’re starting from scratch. So, you had really one product in a couple different sizes, right? One ladder that might look like—something like the one back here. Art Wing: So, most people know what it is. And it was a one trick pony. We actually had it in four sizes, same grade. That’s all we had. And we had an engineer let some IP run out on it. So, I think it was the fall or spring of 2000. There was a full-page ad on the back of USA Today that basically had an exact knockoff of our product at half the price. And we still had a year left on our patents. But if you know the way a patent litigation works, you’re only entitled to the damages. Art Wing: So, by the time I would have got my day in court, they would have been expired anyway. So, there really was no point. So, we wrote an infomercial. Because we had learned from the shows that if you move up the ladder, you move ladders. Craig Willett: Right. If you’re able to demonstrate, you’re able to get attention. Art Wing: So, we just carried that over. Craig Willett: Yeah, but that was a big leap of faith in infomercials, they’re not very successful. Art Wing: They’re not very successful. An infomercial typically will run 18 months then it’s fried and then you’ll be in the Closeout or the “As Seen On TV” bin at Walmart or somewhere like that. The weird thing about this one is my dad’s passion really came across on it. And we had some good talent as well. He was the most difficult talent I worked with and the most expensive because I had to pay him a royalty. Craig Willett: Your dad? Art Wing: Yeah. And I had to continue paying my royalty to my mom. Craig Willett: I hope on some of the B-roll we’re able to get some of your dad because his demonstrations top anybody’s. Art Wing: Oh yeah, we could get the whole show and you could take snippets of it, yeah. But long story short, we just entered our 18th year and January was probably higher than any infomercial that’s in the space right now. But when we did it, yes, you’ve heard of “betting the farm.” He had a little farm down in Springville. And he literally mortgaged it and gave me a million dollars. So, he bet the farm and out of that, I had to write it, produce it, distribute it and hire all the talent. And it was and continues to be a great success, even to the point where— Craig Willett: So, you still use some of that in your infomercials? Art Wing: It’s still running. So last year, I made a little bit on it. I’m not looking to get greedy but last year, we ran 12,000 hours of TV and made a couple $100,000 on it. So, it’s just free advertising. Craig Willett: Right. So, it drives people to the retail locations. Art Wing: And the brand as well. So, there’s some knockoffs out there, they’re inferior, they’re clunky, there’s no innovation in them. And you can stand in front of those guys and they will say it’s a Little Giant because what it is like—you don’t call them facial tissues, it’s a Kleenex. Little Giant is the category on a telescoping articulating ladder. Craig Willett: So, how do you do that? How do you create that brand? Was that brand created before the infomercial or did the infomercial help brand the company and the product? Art Wing: Yeah. We had laid the groundwork. So, there was a lot of pent-up demand. Also have an infomercial for every 10 people that view it and buy—I mean, every 10 people that view it, only one will buy. So, 10 are going away, saying, “I need to get my hands on, and I want to see it.” And so, there’s natural curiosity. And actually, it was compelling enough that they wouldn’t buy another ladder until they could afford—they actually save up for a Little Giant. And we’re still selling at the same price point. And our average order sale is at $600 right now on this loaded TV ladder, which is just unheard of. We wrote the infomercial really well. What happens when you typically write an infomercial is you drive to a call center. So, we were driving it to 15,000 seats, and that’s the call volume. We were buying a million dollars. We bought a million dollars’ worth of media a week for two years straight. And made money doing it. Craig Willett: That’s betting the farm. Art Wing: Yeah. But we wrote the show well enough that most every infomercial, the call time for the guy to walk through and explain the deal and finish the selling is between three and six minutes. And our average time from when they rang in to where they hung up and they’d paid was less than 90 seconds. Craig Willett: Are you kidding? Art Wing: Because they usually were calling to buy, they weren’t calling to be sold. Craig Willett: So, I’m going to call Hal now the king of demonstration. So, that was probably the smartest move is to hire him. He was your costliest move, but he was probably the best demonstrator. Art Wing: He had the passion. And you can show some of the clips. I mean, he had the ability to—super sincere, great sense of humor. And he’d just look right into the camera and look into your soul. And we get— Craig Willett: But he was trying to save his life too. He had bet the farm and this was a really critical moment for him. Art Wing: But after the first one, he was pretty much set for life. And then, there was three more on top of that. So, we’ve continued to refresh with innovation. Craig Willett: Let’s talk about branding. I’m looking at the carpet here. I’m looking at the Little Giant name on the ladders. It’s in orange. And then, your first ladder, some of the key component parts are in orange. What’s the significance of orange? Art Wing: You know what, the original one from Europe had orange plastic parts on it. And we were buying the plastic parts. And so, we used that. It turned out that nobody was using any ladder company to brand or even put their name on it. And so, that established us. You notice a lot of green stuff. So, we’ve invented a proprietary fiberglass system. It’s 25% lighter than anybody else’s, and 25% stronger, and actually getting the patent on the color green. So, it separates us again— Craig Willett: Which is unique and innovative in and of itself. Art Wing: Yeah, I think the last good color patent was Coca-Cola. You have Coca-Cola red. But they don’t do— Craig Willett: So, we got Little Giant green now? Art Wing: Right. So, if you see one on a Century Link truck or a Comcast or Verizon or anyone anywhere, it’s a Little Giant. Craig Willett: That’s pretty cool. So, you can identify your product from a mile away, which is great branding. Art Wing: Yeah. So yeah, we have always tried to stay loyal to— Craig Willett: Who’s the king of branding here, though? If your dad can demonstrate, who in the company really came up with keeping the name, keeping the orange? I mean, where did this sense of brand awareness come from? Art Wing: So, we have great people, and we have a great team. But I would say I’ve always been passionate about it and have the long view. So, I mean, I’m doing an infomercial, and Costco is saying, “We want it in our stores yesterday,” and it was really ticking off the buyer because I just said, “Not now. Why would I sell you and have you undercut me? I have my TV network. I need to innovate a ladder.” And so, for three years, he chased me around the globe trying to buy it. And the weird thing about the principle of scarcity, a buyer—they’re not used to being told no, they’re used to having people sell their souls. Craig Willett: Right. Right. Art Wing: They wanted the worst. So, they just kept coming and coming and coming. And so, eventually, we have enough innovation. We do a really good job with what’s called “channel chatter.” So, where most people have one ladder, if you put it in Costco or Amazon, and then Home Depot, if one of those accounts gets a cold, they all sneeze and they all call you and want a discount, but we configure each ladder unique for every channel. And so, they can do whatever they want. And when someone calls, which they don’t, you just say, “Well, that’s not your ladder, so you don’t need to worry about it.” So, I’ve always had the long view on that, the brand. We’ve had offers of, “Hey, we’ll buy a couple million pieces, but you’ve got to drop the price 40% and whatnot.” And we don’t join the race to the bottom on pricing. So, we— Craig Willett: So, you’ve never done that? You’ve stood alone and here’s what it does, and here’s why it’s worth it. Art Wing: Yeah. And if you add enough value—our brand equity, it commands a 13% premium just on the name. And then, you start throwing innovation on it and then it just really goes nuts, so. Craig Willett: So, on your original ladder, I’m trying to remember on that infomercial, how many different uses can you get out of that ladder? I’m giving you a quiz here. Art Wing: So, a slogan I came up with is “Buy One and Get 33 Free,” because it did 34 things. Craig Willett: So, this ladder, can we just come over here for a minute? So, this ladder in its infancy days, because I see other innovations from the original, did 33 things, 34 things. Art Wing: It had different locks. So, this is a rock lock, that’s a different invention. This one, you can see back there, that’s actually the same ladder. And it has rapid locks. So, it locks differently. So, we can give it to different customers. And this is actually the same ladder, and it’s fiberglass for electricians. And so, we have it in probably 20 or 30 different versions. Craig Willett: And so, when someone’s buying a ladder, they can’t compare it to anything else. There’s nothing else, unless somebody’s copied your product. Art Wing: Yeah. And they can buy cheap ones and throw them away and hope they don’t fall off kind of a thing. And we’re happy to let him do that. So, yeah. Craig Willett: Do you mind showing us some of the things that you’ve been able to do with it—how you’ve innovated and changed it? Art Wing: Some of the key things that we’ve done that have caused a tipping point is one of them was this extension ladder business. So, we got invited to a telecom conference, and we were flattered. And we went and they basically said, “We want lighter ladders, because we’re having $75,000 per occurrence in injuries, which I thought it was falling and stuff like that. But it was actually strains and sprains when they pull them off the ladder racks. Because— Craig Willett: Because of the weight. Art Wing: These are 80, 90 pounds. And this one actually weighs 62 pounds. And so, it helps solve that problem. And it also helped them make their workforce more diverse because they could hire more women. Because there’s no way that most women can lift a 90-pound ladder. So, we came up with this. It’s actually our own—it’s lighter. We’ve done some stuff. We’ve double pulleyed it on the side, so it’s easier to pull. Most of them have them going up the middle. We have our own locking system. Craig Willett: Yes. So, show us how that works, if you don’t mind. Art Wing: Yeah. It just basically goes up. You go past the rung, and it just locks down automatically. We also have a level on the side. So, you’re supposed to be at a 75-and-a-half-degree angle. If you’re too steep, it’ll come back on you. If you’re too shallow, it’ll kick out. So, you just set it there and you’re 75 and a half. And then, we have another one that’s here on the bottom. So, the number one reason for ladder accidents is overreaching. And so, if you’re off on a 24-foot ladder, I think if you’re off an inch and a half at the bottom, you’re off 18 inches of the top. So, if you didn’t think about going that way, you’re going to go. So, the other thing we didn’t like is if you notice on step ladders, all step ladders have to have an inch of flair for every foot they go up kind of a thing. But on an extension ladder, you can go up to 40 feet, and they can be perfectly straight. And we didn’t think that was right. So, we invented what was called a SumoStance. And this actually adds 600% stability. Craig Willett: 600%? Art Wing: I think we’ve gone to the top. It does do more. Craig Willett: So, you went to this— Art Wing: So yeah, you can actually go to the top and hang 150 pounds off the side, and it will not move. But the other thing that is important is— Craig Willett: So you don’t mind if I climb up here and test— Art Wing: Hang on a second. Let’s make sure it’s leveled because you do also have the ability to level it. Craig Willett: From side to side? Art Wing: Yeah. Craig Willett: So, if I’m on uneven ground, I’ll just— Art Wing: So, this is a little low here. So, we’ll make it a level there. So, you can have it level or whatnot. And we’re pretty close to there. I’m going the wrong way. Craig Willett: Keep going. There we go. We’re getting there. Art Wing: Yeah, you can climb that. Craig Willett: All right. So, I can go up and check this out. Now, there’s a click when I stand on it, what’s that? Art Wing: Well, what that is, it’s called a Ground Cue. Craig Willett: So, I can get up here, and I can reach out here and not worry about it sliding. Art Wing: It’s super stable. Craig Willett: Cool. Art Wing: So, the ground cue, as you come down, everyone’s missed the stair in their house going either up or down and they fall on their face. The ground cue basically just lets you know that you’re on the bottom step and it’s safe to get off. We had one customer that, I think a third of their accidents were people climbing here and here, and they just get a head injury from falling backwards. Craig Willett: Really? Art Wing: So yeah, that’s the ground cue. Have cage ladders— Craig Willett: Let’s just stop for this one for just a second. So, you went to the teleconference or the telephone industry. Art Wing: Right. So, we went to that meeting and we were flattered that we were invited. And they said, “We want something.” And we said fine. And I think 35 days later, they had a prototype. And we got all the business. We took it from everyone. And it wasn’t until after that that we found out that all ladder manufacturers were invited. But the two biggest ones had stopped coming because they would come every year and say, “Yeah, we’ll get you something,” and they would never do anything. Craig Willett: So, you followed through. That’s another key, follow through. Art Wing: Yeah, you’ve got to— Craig Willett: And you captured the whole telecom industry? Art Wing: We’re on our way to getting the lion’s share of it. So yeah. And the nice thing, too, is it changed our whole revenue position too as well. Because this is the ladder that you have at your home. I mean, it’s 300-pound rated, it’s commercial, it’s strong enough that we like to say that when you pass away, your kids are going to fight about it over the will. But— Craig Willett: They all borrow it. They all love it, so. Art Wing: From a revenue stream, I only got you once. This has two things. First of all, all of those crews only work with a safety inspector. So, they’re always looking over their shoulder and being trained and whatnot. And depending on the company, every four to six years, they take everything out of service, destroy it and replace it. And they go upwards of $1,000 a ladder, and they’ll pay the difference. Whereas the competitors are $400, or $300, or something like that. Craig Willett: So, this is your industrial innovation that really took you really deep into industries that you hadn’t penetrated before. Art Wing: Yeah, we did a lot of stuff like on the normal ones. The ones they were using had a swage that came through the rung. And we have a robotics—and I have some B-roll on that for you too. But we actually made it to where you could actually take a rung out if it got damaged and replace it in the field, and not have to replace the whole ladder. So, there’s companies that do that. Craig Willett: What kind of innovations have you done at home for the DIY people? Art Wing: So lately, the coolest thing is what’s called the King Kombo. And this is the 2.0 version. You and I looked at one a minute ago. Remember, I had to push both those things? Craig Willett: Yeah. Art Wing: Well, it’s been 60 days. So now, it’s just one hand. Craig Willett: You don’t let one of your innovations last longer than 60 days? Art Wing: Well, you can do it too fast, and you’ll lose money. But I like to keep it in a drawer like Intel keeps their next 15 chips in the drawer until they’re ready. So, up until a while ago, I mean, a lot of people would just lean and extend a stepladder against the wall. And OSHA says you can’t do that. Because what happens is you can be pivoting on that foot and it’s not safe. We designed a way that it locks in there. And this is a wall pad and you can actually use it straight up against the wall just like that. And then, it has what’s called, I don’t even know what it’s called now. It’s a— Craig Willett: A corner. Art Wing: Yeah. What is that called? You’ve been here long enough? Speaker 4: Rotating wall pad. Art Wing: A wall pad, okay, thank you. Craig Willett: Rotating wall pad. Art Wing: So, what this has is it has a V on it. So, that’s ideal for, and you’ll be able to see this in the footage from the shooting straight down, you can get right on a corner, you can get up flat on a wall. Craig Willett: So, I can get there? Art Wing: Yeah. You can shake for all your worth. Craig Willett: I can come up here. And I can take care of any project— Art Wing: You’re super close to your work. It’ll also do an inside corner the same way. So, it’s super innovative. Little Giant have been known to be $400 pieces. And we are now an exclusive partner for Lowe’s. It’s in all of their stores. And so, it’s just flying off the shelf. This is priced typically between $120 and $180, depending on whether you get an aluminum or fiberglass. And then, you put this away— Craig Willett: And that allows you to reach a lot more of a market than you could before. Art Wing: Yeah. There’s no advertising with it and it just flies off the shelf. So, you can activate that again with one hand. And you don’t have to stop there, you can just keep going all the way up. And you have an extension ladder built in as well. And we have different sizes of it. The nice thing is you also have the Quad Pod at the top so I can now in an extension ladder, position, do this inside, outside, inside or straight on. And it has places for you to— Craig Willett: Get the other ladder out of the way. Art Wing: To put the tools there for you. Craig Willett: Wow. That’s pretty cool. Art Wing: So, that’s the one that’s been selling just like crazy. Craig Willett: So, this is one that I don’t need. I can walk into the store and buy it. But if I want to learn how to use it, I can just scan the video on the side? Art Wing: We’re kind of the gold standard for assets. So, we have thousands of hours of videography on all of our products. But yes, on all of our products, we’ll have a— Craig Willett: That’s right here. Art Wing: Oh, you’ll have a barcode and basically, if you point your smartphone at that, it’ll queue up the instructional video on what it’ll do as far as features, and what you need to do to be safe, so. Craig Willett: So, it’ll give you a safety training. But also show you everything you can do with it. Art Wing: And it’s super light, but super strong. Craig Willett: So, a ladder is not a ladder is not a ladder when it comes to Little Giant. Okay. Art Wing: And then, we’ve done simple things too. You’ll notice that most step ladders have a rung right here. And the only purpose for that rung is to hold the sticker that says, do not climb on this rung. So, it’s actually the gateway to standing on here, which you’re not supposed to do. So, we took them out on all of our step ladders, and we actually got the patent on that as well. Craig Willett: So, you really end up with a standing platform. Art Wing: And you’re in an enclosed space. Very comfortable, very nice. Craig Willett: Wow. That’s pretty neat. Art Wing: We make the world’s tallest step ladder. Yeah, we’re branching out into a lot of different things, so. Craig Willett: So, why all the innovation? I mean, you did the infomercial, and you lived a pretty good life from that, it seems like. And you still run it today. So, what is it that comes back to you? Why the fiberglass? Why the innovations in the industrial market? What’s your concern? Art Wing: So, even when we were selling a one trick pony, we always pride ourselves on doing things differently than everyone else. I like to play apples and oranges. I don’t want to play the apple game. Because when you start talking tonnage and commodity, it’s just a race to the bottom. So, the innovation allows you to obviously over exceed your customers’ expectations. It allows you to create margins and price points that are sustainable for longer, and it gives you the marquee. I mean, I don’t know how many Fortune 100 and 500, 1000 companies that we’re at the top of their speed dial—from Exxon and a bunch of other ones. If they have a ladder problem, they call us and they say, “We have this, can you solve it.” And we’ll solve it and they’ll have a prototype in two weeks, and then we’ll build it for them. Craig Willett: I laughed, because when I followed up with you to make sure we’re okay to come, to this you said, “Remember, Craig, you get what you pay for.” And I’m not paying Art at all for this wonderful studio. And he’s letting us use it free today. But anyway, you really say that they get what they pay for. Really. You’re really about preserving margins and that. And I’m sure that’s led to the sustainability of your company. Art Wing: Yeah, the sweet spot that we’re in is that we have really super innovative products. And we’re now at a point where they’re priced as—it’s 10, 12 bucks next to the cheap thing next to it. So, it’s innovative. It’s like a no-brainer. I think this year on Black Friday, and this shouldn’t happen—it was Lowe’s with no advertising—but we were the number three and the number seven most bought items in the store. Craig Willett: Are you kidding? Art Wing: So, it just rocked. They’d emptied everything and now, we’re dealing with port congestion, shopping and everything else. But yeah, it’s really taking off. Craig Willett: So great. What are some of the greatest lessons now that you learned from your father? I know it’s got to be hard to work for family in a business. And it sounds like he did well, because you’re able to stand up and still continue with the vision you had, at the same time, marrying to his vision. But what did you learn from him? What did you take? Because he’s now passed away, but what is his legacy in your life that helped you be successful as the CEO and chairman of this company? Art Wing: Well, one of the things he used to tell our salespeople all the time is, “You can tell the customer anything you want as long as it’s the truth.” And it makes a big difference. I’ve always strived—and he lived this rule as well—is under promise and over deliver. I mentor quite a few new business people. And it’s frustrating for me because there is no short silver bullet for creating a business. So, there’s no shortcut to success. So, these people that I’m mentoring, they’re 20 somethings and their parents have been successful. And they look at me and said, “You’re successful.” I’m like, “Yeah, I’m into it 40 years.” “And your parents were successful, how long do they do it?” “Oh, they did it 35 years.” And their parents were in it. So, unless you’re creating Snapchat or your last name’s Zuckerberg, there really are no unicorns out there. You have to be committed to have a long view, begin with the end in mind, and just stay the course and just stay to your values. I mean, if you let the market—that basically becomes the tail wagging the dog and you’re just running the business according to their dictates and pretty soon you’ve got all kinds of chaos. So, you have to stick to your values. This is not something I necessarily learned from my father. But I think the number one thing that businesses fail and do a bad job at is they don’t say no to enough deals. Because you’re in the business, you want to grow—a deal’s a deal, right? But there are bad deals, you should pass on the bad deals, and then figure out how to come back and make it a good deal. Because— Craig Willett: But that’s a scary area. I want to spend a few minutes on this. Why were you able to say no? Because that’s scary, you have to come back and say, “Hey, we could have had this big order. But we said no.” And how do you explain that? Art Wing: I don’t know why. That’s the way I’ve always been wired. Because I’m looking down the road 10 years, and if I have something that’s a $200 price point, and somebody wants to buy a million of them at $99, yeah, I’ll sell a million of them. But then, I’m stuck with a product that’s $99 as a thin margin and the volume just dissipates, then you have no business. So, I’m taking the long view. And even when I was running the salesforce and stuff like that, people would come back and say, “I got an order for three truckloads to this new customer.” And I said, “Well, I want you to call them back and send them a half a truckload.” And they’re a little perplexed because that’s counterintuitive to selling. What I wanted them to do is burn through that half a truckload and then get greedy and say, “Okay, we want a truckload,” and then burn through that. The worst thing you can do is deliver three truckloads and then have it sit on your dock and just be saying, “These things suck because—” Craig Willett: Right. Because they can’t sell them fast enough. Art Wing: Yeah. So, I try and get the turns right, get the mojo right. We’ve done that with our international—we’re in, I think, 28 countries. And we do the same thing on the first order. We’ll sell them more. Less than they need is typically pre-sold before it hits their shore. And then, the greed kicks in. And then when they do start ordering large orders—they’ll order two truckloads, and they’re onboard and they’re fans—what happens is since they’re having to walk by it every day in the warehouse, it now becomes a priority of like, “Let’s get this stuff moved.” And then, they’ll blow through it. And then, they do the math on it. And then greed kicks in. And they’re like, “Okay, let’s order four containers.” Craig Willett: Okay. So, it’s the scarcity factor too. Art Wing: Yeah. Craig Willett: I like how you’ve tried to preserve the margin, because so often, it’s easy to get in business and try to do price per pound. You can walk into one store and buy ground beef at this price per pound. And you can go down the street and get it for half that. But what’s the difference? It’s the quality of the beef. And so, how do you know that? And if you don’t price distinguish yourself, you can’t make that differential. And I think that’s the beauty of being able to demonstrate and then be able to preserve the price. It wasn’t out of greed, that’s allowed you to innovate, because it’s costly to innovate. I don’t know if you’re willing to say what percentage of your budget you spend on R&D and innovation, but— Art Wing: It’s upwards of 20%. Craig Willett: Wow. Art Wing: We spend a lot on advertising. And we spend a lot on R&D. I think we have eight engineers in house and our marketing stats—probably around 20-25 people, which we do all kinds of social platforms and everything else. But yeah, the other thing too that is a byproduct that’s helped us stay disciplined and why I had the long view is everything that we sell is also very litigious. And so, you don’t want to be selling something if—in those are not a lot of $9.99 cent step stools in here. We don’t get into that space. That stepstool business likes a 70% margin. So, if you take a $9, $10 item, and you’re now down to $3, and he’s going to toss you a buck 50 to make. So, you made a buck 50 on it. And the first loss that you have with $150,000 SIR has wiped out a lot of step stools. So, it’s good business, it’s good practice, but it’s also, we get sued probably 90% less than anybody in the industry. And— Craig Willett: And has it always been that way? I mean, before you started some of these safety innovations? Art Wing: Yeah. Because even the first one was a 300-pound raise ladder that you had. So, it’s commercial grade. So, we don’t get the suits they have. All of our suits are typically nuisance lawsuits. Some places around the world, they feel like they won the lottery if they fall off. But we’ve never lost a lawsuit either. So, we get much, much better insurance rates and premiums than anybody else. Craig Willett: Wow. That’s great. So now, you learned a lot from your dad. You’ve also run a business where you’ve had siblings in the business too. What can you pass along as secrets to getting along with family but also being able to achieve the objectives of the business and not get caught up in the family business at work? Art Wing: Yeah, it is really difficult because when family members are here or can come, there always seems to be this little tiny bit of entitlement and it’s fun to throw the name around. I know that in my— Craig Willett: And I think your dad was against that. I think he made you do probably more work for less than other people and do jobs— Art Wing: I worked for less and I had to work harder. And that debunked the myth. I never called him Dad once at work ever. I called him Hal. Because I wanted to be like, “Hey, Dad, will you do this for me?” It just sounds so—nepotism. But no, I think if you were going to do it, first of all, I’d just say there’s an easier way to do business than that. It sounds like it’s a pipe dream. But there are a lot of conflicts that goes with you. And then, it doesn’t leave you all the time, because it’s always top of mind. But probably the best way to manage it is to give them enough space, and then have KPI or key performance indicators to where they have to hit certain marks. And most all of our people have an earnout based on their productivity. So, if they win, we win, we share with them. Craig Willett: Okay. So, that avoids having to treat people with favorites based on the name. Art Wing: Right. If you can’t sell, you’re not going to make anything. Or if you can’t perform in your space, you’re not going to get the rewards. Craig Willett: So, I know your dad at one point had sold this—I don’t know, it’s because the partners were wanting to sell. And then, you bought it back. And through a lot of hard work, you lived through that period of time. What was your vision? And how did you adopt a vision for the next 20, 30 years as you grew this business? Art Wing: Really, it’s just one day at a time and just looking at the opportunities and just not living in the present. So, just always shooting. It’s a dangerous lifestyle, because I live it that way myself. And I probably should go to counseling, because I’ve always lived for when I get this, I’ll be happy. And I said something else. And I said—that’s just how I’m wired. So, I’m not the most content business person. I’m learning how to be mellow. But I’ve always had that drive to whatever status quo is not enough. I had a UK partner yesterday said that one of their customers said, “You have the right to push every open door in our factory and our stores.” And so, I’ve never heard that term before. But yeah, my dad used to say if you aim for the stars and you miss, you’re probably still going to hit the moon. But that’s better than not having a goal at all. Craig Willett: I think that’s great. So, what about going into the next generation? I mean, you made a good transition from the first generation to the second generation. I know recently, you had a transaction on the business. Why did you decide not to pass it to a third generation? Art Wing: Well, I did a lot of work on it. I had to rebuild the business from when my dad had it because he basically had a business that didn’t have a lot of EBITDA in it because he lived a different lifestyle. And when he passed, we never took any dividends. We didn’t take anything. We just poured everything back in it so we could start building EBITDA. But we’ve just completely changed and just kept pushing. But there’s a big element of just measuring things. He used to also say that which is measured is improved. So, when we went through this transaction, it’s pretty arduous. I mean, it was a killer. Three years and the very last two months was a big deal to find the right partner, find the right agreement. But the thing that we spent zero time on them saying, “Can you beef up your finances?” Because we measure every vertical on every skew on every product on every day on every month. And so, we know exactly where we’re at. So, it was easy for them. The reason I moved away and didn’t embrace the third generation—one of the Wall Street banks, their number is third-generation businesses are failing about 97% of the time. Craig Willett: Wow, that’s huge. Art Wing: It is huge and it’s something you have to deal with. And it’s not really the third generation’s fault. I mean, I can tell you to this day, I’ve not had a peanut butter sandwich since 1980 because we didn’t have any money and we ate peanut butter sandwiches five days a week. So, I’ve never had another peanut butter sandwiches. But you raise a family and you vacation in Hawaii, you live in nicer homes because it’s changed. And that’s their starting point. So, a lot of times with a third generation, when they come into the business, now, “Where’s my office,” no, “Where’s my corner office?” So, the 3% that make it, I think, are very, very good companies and strong, but it’s just not something I wanted to do. Our CEO has a small ownership position. My sister and brother had an ownership position. And I just started, again, beginning with the end in mind, how do you want to wind it? So, there had to be a crystallization event. And we found the right partners. It’s great. They love the legacy. They’re actually from the Midwest. They’re not New York slick guys. They’re just really great guys. They love the legacy of the company. And it’s been a really good partner. And they’re actually looking at doing bigger and better things than we were doing before. And— Craig Willett: It’s nice to be part of that, because I think you stayed in to keep innovating and keep growing the business. Art Wing: I’ll be in three to five years. One of the things that I’m most proud of about this company, which is when you consider we’ve had times where we’ve grown 100%, and we’ve had times where we’ve grown 600%. We’ve never taken any outside capital; it’s all been financed out of cash flow. Craig Willett: Wow, that’s amazing. Art Wing: So, it was a tightrope. Craig Willett: There’s a big lesson in there. And it’s a tightrope at times— Art Wing: Most people can’t tell the difference between cash flow and profit. Craig Willett: And I think that’s really key to understand. Art Wing: If you don’t have the means to operate—I’m in a little different financial position than I was 25 years ago. My dad used to say, “Working with a bank is like an umbrella. If it’s raining, they’re not going to sell you one. If you don’t need one and it’s sunny, they’re going to hand you umbrellas all day long.” So, I have more people offer me stuff now. And I’m like, “I don’t need it.” So, you have to make sure that you don’t run out of cash. You anticipate and you understand growing too slow will kill you because inflation will eat it up. And growing too fast will gobble your cash, and it will kill you just the same as well. So, there has to be a balance. Craig Willett: There’s a balance in there. I think that’s really wise advice. Wasn’t it hard to sell it? This is the third generation, I mean, it’s your baby. So, how do you feel about doing that? And the reason I ask is not to delve into your personal life, but more for business owners who want to know, “What’s at the end of the day for me? I spent all my time, sacrificed for this business, how do I have an exit to this? When does this end? And how do I do it in a way that I can capitalize?” Art Wing: So, I always had some goals for getting EBITDA to a certain place, I had goals. Mainly, out of respect for my dad, I had a digit number that I had in mind that I thought if I did a transaction in that space. When my mother and father passed away, they left me a certain amount. And I had this personal goal that I wanted to leave each of my three children. So, I wanted to leave three times that much so I could pass that on. It was easier because when you make the decisions in advance, when they occur, they’re a lot easier to pull the trigger. For example, the fee on the transaction, the bank that I did it with was 16 days away. And if I would have waited 16 days, I wouldn’t have had to pay them a fee. But I gave my word and they pulled it off in that time. And I didn’t negotiate with them and hold them ransom, I just embraced it, but I made up my mind I was going to do that. But letting it go at the right time, I just want to make sure the stewardship was in place, the values are there. Everybody loves the brand. I mean, I still own 20% in different various forms and vehicles. And honestly, it’s almost less stress and more fun and I really don’t want to leave because we’re at yet another tipping point to where we’re going to grow. We’ve grown double digit for the last eight years. And— Craig Willett: And you said it was fun and less stress more now. What’s more fun about it? Art Wing: Just the day-to-day stuff doesn’t wear on you as much. I don’t know, I can’t really explain it. There’s just a feeling of peace. I know I’ve picked the right partners and we’ve got really, really great people. I got great marketing operations. Our CEO is top notch. And they’re all staying on board and we’ve groomed them to be part of this transition. And so, now, it’s really a good ride. Craig Willett: It just didn’t happen out of the blue. This happened over a period of time. Art Wing: Eight years ago, it started. Craig Willett: Eight years. Art Wing: And then, five years I started getting serious about it. And the last three years has been like a full-time job in my spare time. But— Craig Willett: I think that’s interesting. I think it’s important to recognize that as a business owner, that it’s not just going to happen. Someone’s not going to knock on your door. Although, I think people have knocked on your door through the years asking to buy the company. But to do it right, it takes the right time, the right partner, and it takes an intentional effort. Art Wing: Yeah. And you need to get some good financial advice. Because I’ve had friends over the years that when they clear a million, $2 million, and they came over to my house and use my color copier, so they can make a copy of the check. And they were out of money in nine months because a million or $2 million, if you put in T-Bills, it’s not spinning off anything. You’re actually taking a cut in pay. I started eight years ago doing my estate planning, and where it would go, and was set up enough to—I don’t need insurance or anything like that. But it was all orchestrated. So, I knew what the numbers have to be. But it’s definitely not something you want to guess on, you want to be really well prepared. Craig Willett: Right. So, what is the greatest thing at the end of your career—whether that’s in three to five years, if you retire from this—what’s your biggest takeaway from having run a company of this size? It’s an intimate company because as I watch you walk around in the halls here, call employees by name, they know you, you know them, it is like a family. What do you take from this? What is the mark on your life that this company has had? Art Wing: I think the thing I’m most proud of is that we were always the best, and we will always be the best. That and just the way we conduct ourselves, the way we carry our brand, the way we carry our promises. Most companies would guess we’re 10 to 15 times larger than they think we are. Craig Willett: That’s interesting. Art Wing: But to that point, if you take a ladder that started in 1972, and it’s just a one trick pony, that should be a nice niche business for a long time. And presently, we’re getting ready to pass the second largest ladder company in the world. And we will take that spot. No desire to be the biggest because you have to build a lot of junk that goes with it, and they can have it. But the fact that that actually happened, and just what we’ve built, and there’s just the respect that the industry has for us. And I mean, I’ve had manufacturing arrangements on a handshake for 20 years. I’ve had agreements in Australia and UK on a handshake for 20 years. I mean, we started off with an annual contract and it would evergreen and you’d sign again. And after about the fifth year, they’re like, “Well, you don’t play any games, and we don’t play games, and we just run with no paperwork.” Craig Willett: That’s interesting. So, one other thing, and you can’t escape The Biz Sherpa Podcast without answering this question. It is a tough one. Probably the toughest one. What is your greatest failure that you experienced? And then, what did you learn from it? Art Wing: The greatest failure that we learned is when we launched the infomercial in 2002—a wild success. So, we had capital. And we decided we were going to innovate and branch out. And we designed a line of beautiful products. And then, we went to market with them. And nobody bought any of them. Because what we did was, we built stuff that was cool to us. And so, we basically— Craig Willett: So, you thought, “Hey, we came up with this cool ladder. So, we’re going to come up with something cooler.” Art Wing: So, we basically just took our lumps and took two years’ worth of R&D and all the money that went with it and just dumped it. And then, what we did is we went out into the field and said, “What are your pain points?” And everything that we do, everything that we innovate, everything that has any mojo on it all, we use the voice of the customer. It solves their problem. And then, they just resonate with it really well and it takes off. Craig Willett: And I think that’s probably one of the greatest lessons you can learn. I mean, to demonstrate—you can demonstrate and wow anybody, but if it doesn’t solve a problem, they’re not going to buy anyway. They may be wowed by the demonstration but if it solves a problem that they face on a regular basis, they’re going to buy your product. And I think that’s one of the hardest things of starting a business for business owners is they have a hard time trying to decide, “I can’t be all things to all people. But what can I be and where can I enter?” Because I think it’s the niche. And you mentioned it’s a niche market. You might be becoming the second largest ladder company, but you’re still a niche ladder company. Art Wing: We just have a lot of niches. And I know from your experience in real estate, you’ve done the same thing. You added value in it and you commanded more rent than the guy that’s sitting right next to you. So yeah, we’re able to do that. And to your point as far as pleasing everyone, my dad also used to say that, “There’s many paths to success, but one sure way to failure,” and that is trying to please everyone. So, just please the customers you’ve got, and it’ll grow. Craig Willett: I think that’s great. One of the things that I take away from today, and I appreciate your time. I mean, just to be sitting here in this studio is amazing to me. To know the history of this company and to see where you are today is a great combination to your vision, your family’s vision, and your commitment to product and safety and to the customers. And I think putting customers first is very important. The other thing that I love about things that you talked about today is being able to have that vision and be able to carry it out. To be able to find people’s pain point and be able to solve that for them. Because that really brings satisfaction. Not just to them but I’m sure to you. When you have people call you up going, “Hey, this week, it saved this many lives, or it helped this many people,” that’s probably more rewarding than the dollars it flowed into the bank. Art Wing: Yeah. If you’re selling a commodity product, and you’re not adding any value, the only thing that moves the needle is price. And you will lose at that game. If you have something that’s innovative, or you can add some more features or safety or whatnot—even with your real estate things—price moves secondary. It sounds really small, but it’s a huge advantage when you can do that. Craig Willett: Right. And the other thing I liked about what you said is your dad said you can sell them anything. You can say anything you want, but you have to tell the truth. And you know what, I think the truth resonates. And that’s what I think really sells. When the customer can identify with your product and realize that you care about them, all of a sudden, price does become secondary. And I’m glad because it’s a philosophy I’ve had most of my life. But boy, you’ve done it in a big way here. And I really appreciate that. Art, thanks for taking the time— Art Wing: My pleasure. Craig Willett: —to spend the afternoon with me. Art Wing: Good to see you again. Craig Willett: It’s been wonderful to get to see you again. This is Craig Willett, The Biz Sherpa. I’m glad you joined me today at Little Giant Ladder Systems. What a great company. What a great story. And I hope there’s a lot for all of us to learn from this. Thank you for joining us. Speaker 1: Be sure to go to our website to access the resources related to this episode at www.BizSherpa.co. If you enjoyed this show, tell your friends about us and be sure to rate our podcast. Craig would like to hear from you, so share your thoughts in the Facebook community @BizSherpa.co. Follow us on Twitter @BizSherpa_co and on Instagram @BizSherpa.co.

This week Craig joins Art Wing the Co-chairman and President of Little Giant Ladder Systems to discuss the history of the business as well as how it has become the multi-million dollar company it is today.   CLICK HERE to access our free resources, social pages, and website!

One of the main reasons business fail is a problem in their pricing strategy. Craig dives into one key fundamental, what do your customers look at as the perceived value of your product or service? Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn TRANSCRIPTION: Episode 27: Pricing Strategy Speaker 1: From his first job flipping burgers at McDonald’s and delivering The Washington Post, Craig Willett counts only one and a half years of his adult life working for someone else. Welcome to The Biz Sherpa podcast with your host, Craig Willett. Founder of several multimillion-dollar businesses and trusted advisor to other business owners, he’s giving back to help business owners and aspiring entrepreneurs achieve fulfillment, enhance their lives, and create enduring wealth. The Biz Sherpa. Craig Willett: This is Craig Willett, The Biz Sherpa. I’m grateful that you’d join me today. Today, we’re going to talk about pricing strategies. It’s one of the main reasons businesses tend to fail. There are several different philosophies in pricing. Some people say, “Boy, I want to start out cheap so that I can get as many customers as I possibly can.” The question then becomes when you get the customers—and because you’ve sold it so cheap—that your product costs more. How do you raise prices so that you can be profitable? It’s not always possible to make up profits by volume. You really need to look at one key fundamental and that is what do your customers look at as the perceived value of your product or service? Someone told me a long time ago, “If you don’t value yourself, or your product or your service, how do you expect someone else to value it?” So I think one of the best ways is maybe to start out on the higher end. Some people have started businesses and never felt that they could price it high enough because they felt they needed to apologize for their pricing. That’s one thing you should never do, apologize for your pricing. You need to believe in it. If you don’t believe in it, then you really need to think about your business strategy. I really like the thought of trying to perceive what that value is. We had Becky Veltema as one of our guests that you saw in December. She’s a good example of setting pricing for her product. As you recall, she does custom riding apparel for the equine industry, especially Arabians, Saddlebreds and Morgans for the competitors. Now, she wants to have premium clothing, but more importantly, she provides a service with that and she has to price in exceptional service going above and beyond the expectations and not have to nickel and dime them for little things later. I think she’s a great example of being able to effectuate a value-based pricing mechanism. Now, some of you may say, “Well, I don’t know where to start.” Well, you may want to do a little testing, but I’ve known companies that have spent hundreds of millions of dollars on testing a product, such as New Coke, only to find out that the customers really didn’t receive it very well. So you want to be careful. And I know none of us as small business owners have that kind of money to be able to test our products out. A lot of people start out and say, “All right, what I’m going to do”—and this is an easy way—”I’m going to go and sample what similar products are selling at my competitors.” The danger with this is you may have a competitive advantage. You may have features that your competition doesn’t have. So then it’s important for you to figure out what the differences are. You may use that as a start, and I’m not saying to totally ignore that. But when you have additional features, you need to make sure then you have a marketing and a communication strategy that goes along with your pricing that adds that additional value. When you only take into consideration someone else’s price and assume your potential customer is going to go out and price shop and not look at features that add additional value, then you’re discounting yourself. Now, you may say that some of your features don’t really add value and therefore you have to ask yourself, Why are you producing potentially a more costly product with features that no one else values? But I would say, look to see what those values are. When I developed office buildings, one of the things I looked at is location. Where is the location that has multiple points of entry? Where are they so that the building is visible from the street and that customers and patients and clients can drive right up to the front door and walk in? There’s value in that. I know that because I had a project that I built right next to another one that had an interior courtyard and only signs on the outside. People had to park and walk inside to try to figure out where it was. I sold for over 30% more and sold out in half the time of my competition. That goes to tell you that there’s more to value than price. Otherwise, why did JC Penny fail? They did its pricing strategy like Walmart. Walmart says, “Everyday low pricing.” That was their start from the beginning. JC Penney switched theirs to everyday low pricing instead of giving coupons and sales. And I think what it did is it took away the people that they attracted through their marketing, because they could just walk in and get it. Not every t-shirt is a $7 t-shirt. Go to a Gucci store and buy a $500 t-shirt sometime and ask yourself the question, “Why do people pay that?” There’s a perception of value and you need to be careful that you don’t try to copy someone else’s pricing strategy when you’re set up differently. Another way to base your pricing is cost-plus. This is a dangerous one too, but I think competition and cost are important. You want to price at a point that is high enough that you have profitability or gross profit, which is the difference between your selling price and the cost of each unit of product. So if you’re selling a t-shirt at $10 and it costs you $5 to make, you’re making $5 in gross margin on each t-shirt. Or maybe a better example, it costs you $4, you’re making $6 of gross margin. Now, you shouldn’t apologize for that because that’s not your profit. You still have all the costs of operating the business so that you need to make sure you cover that as well to get to your profit. The problem with cost-plus pricing is it lends to you narrowing your margin unnecessarily. I think it’s important because it’s a place to start and maybe it becomes a base price that you consider. But then you have to start to look at, what are the values? What are the value propositions you’re going to offer to your customers? And I would say one of the best value pricing strategies that you can do is, like I said, communicate well what your product does that’s different than what the perceived competition may be. Cost-plus does work in some instances. There are some government contracting situations where you have a certain cost and they allow you a certain margin on a government contract, and you’re entitled to that margin and you have to account to them for each of your costs. That’s a valid method, but just make sure your margin portion is enough to cover all your other operating costs and overhead. Now, another way is dynamic pricing. You’ve seen this and we’ve all experienced it. Right? We buy an airline ticket well in advance and we get a pretty good price. As we wait closer to the time to travel, all of a sudden that $100 airplane seat is now, in most cases, $200 or $300. Same thing at hotels. When you book in advance, you usually get a pretty good rate, but as it comes closer and there’s more demand and fewer rooms available, they start raising the price. So if you’re in that type of business, you better understand the dynamic pricing model so that you don’t just have $100 per room; you have to raise it as it becomes more and more scarce. I think that’s an important thing to consider, but most of us in our businesses probably don’t do that. You also see it with rents. When you have a certain amount of vacancy, there are incentives given or prices come down. But when there is a high occupancy rate, the cost to renew goes way up. Now, there are also incentives that companies do for giving free access to certain software. We’ve all probably done this, right? You get the free version that works a little bit, but it doesn’t do everything that you want. And then you get the email saying, “Hey, to get the full effect, you can upgrade for $100.” And I think that works if you can convert people and if you want them to become familiar with what your product can do to a small degree, then that works. But for a lot of us that aren’t in the software business, that probably won’t work. Another strategy that you’ve all seen is hourly pricing. If you’re a consultant, a CPA, or a lawyer, you don’t know how much time it’s going to take to do a certain job, so you may put a price on there that just says you’ll pay back per hour of the hours spent to do the job that you’ve asked them to do. They don’t know how the other party is going to respond, or they may not know how complicated the task is for you to do. Now, for accountants out there, I do recommend to put value pricing or what I call menu pricing. It’s something that I successfully did as a CPA. I got tired of trying to just figure out how to justify the number of hours it took to do a tax return. Not that that ever was a situation, but if you don’t want to sit there and say that you were inefficient, or maybe you logged your hours incorrectly, maybe you should consider and look at the complexity of the tax return, the number of schedules and the complexity of each of the additional schedules and put a price on it. My experience was that that allowed me to charge 30-40% more than what my standard hourly rate was for the tax returns. Tax season was always the most profitable time of year for me. I think that kind of menu pricing really works because it allows you to capture value for the work that’s done. When the client comes and picks up the tax return, they look through and see each schedule and then see the cost or charge that you did for each schedule, it’s a little hard to argue with that, because then it points out the complexity of the tax return that you gave them to do. Now, that doesn’t always work in consulting, but sometimes it really does work. And some people throw in some additional value on top of that, such as a success fee. Oftentimes, a good consultant who comes in to solve a particular problem will not only charge an hourly rate, but will charge a success fee based on the adaptability and profitability of what you’ve asked them to do. So what I’d like you to consider is to look at that hourly pricing, but also look at other alternatives. Another pricing strategy that works—and I’ve always said this—you’re better off starting out a little bit high. You can always lower, you can offer premiums, you can offer discounts, you can offer sales if you’re not getting the volume that you think you should get. Now, you need to be careful. You need to make sure you’re educating the marketplace and marketing to the right place and reaching your potential target market. But once you’ve done that, there’s always a possibility of reducing the price. Sometimes a new product loses its novelty and then becomes less and less valuable. We see that with Apple and the iPhones. They put out a product and then all of a sudden the prices start to decrease over time where they launch a new product and a new version. And I would say that’s important. We see that all the time in the grocery store. New and improved every time you go down the aisle and you notice the box gets smaller or the can gets lighter. But I think we need to look at being honest with our customers, but also making sure that we are capturing the most value there is. Again, I mentioned a strategy that sometimes is called penetration pricing. Penetration pricing is to try to capture as much of the market as you possibly can get right from the beginning. These methods allow you to capture market share but a lot of times small businesses can never survive that initial launch. It’s hard to get the kind of funding it takes to do that, to capture market share. I think one of the best methods is to get the referral. That is probably the best method. If they perceive great value and that you’ve exceeded their expectations—I’ve said this before—they’ll go out and tell their friends about you. If you don’t exceed their expectations and actually fall flat on your face, which can happen too, you need to make sure your value proposition is such that you can deliver on it. You want to be sure then—once you deliver—that they have a good experience. And if you’re able to deliver that and communicate properly, business will take care of itself. I’ve always said that. It’s not an issue if you’re taking care of your customers. And I think Becky Veltema is a great example of that in her episode that we did in December. Now, I think it’s important when we talk about pricing to think about how you can give that service. Going above and beyond. What does that mean? I’ve given the example many times of my father-in-law when I started my CPA firm said, “Craig, will you do me one thing?” I think he was worried about me providing for his daughter. “Will you go out once a week in the afternoon, take the afternoon off, don’t work in your office and go visit your clients. Show them that you’re interested, show them that you care.” And there wasn’t a time that I didn’t go out—that when I did go out that it didn’t come back with additional work to do. I think it meant something to my clients that they knew I cared about them and I took an interest in them. Other ways that we might see this are when we have customers. I experienced this in the real estate development business, selling multiple buildings, not just to the same owner, but also sometimes to family members and friends. And when they had such a great experience with us, we didn’t just sell them a building, we kept them in the loop all the way across the process. When we started it, we sent them a measuring tape and asked them how we measure up. We sent them a hard hat when it was under construction, to let them know that they can own for less than rent, then to go out and visit the project. There were a lot of things we did to stay in touch with the customers. In fact, even a year after we sent them a gift. And usually, each Christmas we invited them to a party of some sort. We also did other events for them to show that we care, that we wanted to get to know who they were and that things worked out well for their building. I think it’s that type of caring where we go beyond the dollars and cents transaction and turn it into a relationship. So I would consider, how does your touch point in your business create an opportunity for relationships. In service businesses it’s simpler, right? You get to see your customers, you interact with them on a one-on-one basis, you get to talk to them about their needs and their problems and then you’re able to then work on solving those and delivering the solution to them face-to-face. I would suggest that you look at, if you’re in a different type of business, how you can be face-to-face more often with your customers, whether that’s in a message, whether that’s in a video that you send to them, whether that’s in greeting them when you run into them on the street or provide opportunities to be in front of them. I think it makes a huge difference. Again, pointing to Becky Veltema in the DeRegnaucourt episode that we had in December is really important because she likes to build that relationship with her customers and they become her friends. Think about that. How can your customers become your friends? You’ll want to deliver a good product. You’ll want to take care of them. I think about it, not necessarily as friends because the Nordstrom family has gotten really big, their stores are everywhere. But one of the things that I always felt good about in buying a pair of shoes from Nordstrom was that if they didn’t work and I had them even for several months, they didn’t question that when I returned them. They allowed me to exchange it or get a refund. And I think that’s important. When someone really wants to stand behind their product or service, that they would allow you to return it later. Bought my loyalty. And I think that’s really what it’s all about. We want to have loyalty. Now, one other consideration in pricing is you want to create a brand. There’s a story of a shop in Sedona, Arizona, who when the shop owner saw that it was a bunch of turquoise jewelry that wasn’t selling, told the employee to mark it down 50% and sell it. By mistake, the employee doubled the price and it sold out. Think about that. I want each of you to think about it for a minute. Sometimes when we have an excuse, sometimes the bargain’s too good to be true. Do we really want to put something out there that makes people question the value of what they’re getting? I think that’s important when you have a premium brand that you’re trying to create. You need to have a premium price. That’s not to say that there aren’t different segments of the market and different levels that you can achieve in your pricing model and in your product rollout. Sometimes it’s important to find a product that’s an introductory product to get people familiar with your company. But if you’re really truly a luxury brand or want to be perceived as the highest value, then you need to take that into consideration in your pricing. Oftentimes, we want to look at other strategies that really play games with people where it’s a bait and switch. I recommend against that. I think it’s important to be honest from day one with your customers on what it is you’re delivering. One of the greatest experiences I ever had was a customer who really appreciated what I did that they told their family, their friends, everybody they golfed with and everybody that they went to the bowling league with about me as a CPA. And you know, it wasn’t that they all came right away, but through the years they started to come and I was able to have a relationship with them like I did their relative or their friend. I think that’s what’s important. We live in a society now of “make a fast buck,”—which I don’t think it’s important, but we live in a society of infrequent touching, not only when I talk about that infrequent contact not just because of the pandemic, but infrequent contact with our customers who are trying to do things for as little cost as possible. When I say relationships are not efficient, relationships take time. You need to build that into your pricing. Are you going to take time with your customers? There’s an episode coming up with UWM Men’s Shop. And I think what you’ll see with UWM Men’s Shop is that they really understand the value of building that relationship with their customers because they rely on that year after year and it started in their fifth and sixth generation—I’m sorry, in their fourth and fifth generation. You’ll see that they rely on that because they’re in their fourth and fifth generation of doing business. And I would dare say that there are children and grandchildren of some of their customers that still frequent their business. Now, I think it’s important that we look at really, what are we giving for value? You can always lower a price, not only in sale, but if you really did miss the mark, lower it. There’s ways to produce a product possibly for less as well. But I think it’s important when you’re novel and new to make sure you capture that margin. What’s the right margin? It depends on your business. I think there are statistics available and I recommend that you research what those are for your industry. But you don’t have to match those if you have something new, and exciting and that people really want. It’s important to have integrity across the value proposition from the quality of the product, to the level of service, to the message and marketing, to the packaging and to how you present yourself and your product. I think it’s important. I’ve heard this many times and I’m grateful for our listeners on The Biz Sherpa podcast. There are cheaper ways to produce this podcast, but I chose to go a more premium way because I think I’m giving something for free. And I know it’s hard for people to imagine that that Craig’s giving away the secrets to the store. Well, my objective is to inspire entrepreneurship. I think it’s the greatest expression of our freedom as Americans. And I think that also is something very important to me that there’s a perception of value that I care, that it’s packaged properly consistent with the research and the resources that I post on my website. They’re there to inspire entrepreneurship. We need more entrepreneurs. We’ve found that even during the pandemic many people have lost their jobs and permanently. And there are values that they have, there are experiences that they have that can allow them to start a business. And I think it’s a great alternative to them rather than just looking for another job. Now, that leads to how do you start a business? And I’ve had a three-part series, and this is a continuation of that. Each month I add some more in depth on a segment of that, and today it’s pricing. But I’m going to talk about—and next month I’m going to introduce an episode about how to effectively finance the startup of a business. Now, there aren’t a lot of alternatives out there, I’ll grant you that, but we’re going to discuss some ways that will work. And I’m also going to talk about a report from the Kauffman Foundation, which I think is a great asset to small businesses where they’ve done some studies and they’re actually working to try to get some other institutional money be made available to smaller businesses in the startup stages. It’s important. It’s important to our economy to create new jobs, not just for ourselves to keep ourselves busy, but also for the people that we can hire and give them opportunities also to provide for their families and make ends meet for them. I really think that the greatest value I get is to have feedback from you. I love hearing from you, and I would hope that you would share if you’ve benefited in some small way from something that I’ve said. I ran into someone just today actually who has been watching the podcast and the YouTube videos that we play and said, “I always get a little nugget of something that I’m able to apply in my life and it makes a difference.” That’s what I’m hoping for. I’m hoping that each one of us can improve ourselves, be better, do better and be more successful, happy at the end of the day, happy that we have time together. I look forward to this time together. I love doing the interviews and it’s fun to spend time with people who really at the end of the day—and you’ll see a common thread through my guests—they become friends of mine in my life. I do business with them, or they’ve done business with me, or vice versa. But first and foremost, we become friends. Think about that when you develop your product or service. If you were to sell that to your best friend, what would it mean to them? What would they be willing to pay? I know you want to give it to them as a gift, but I would hesitate to do that. You have to make a profit. You’re taking a lot of risk in starting a business, and you’re going to have to take from your savings, or from a bank, or from a credit card to do it and you need to be able to repay that. I wouldn’t be shy in starting a business if you really feel that it’s going to make a difference in people’s lives, make their lives easier, make them happier and be able to solve a problem that they have. That’s at the core of it. So when you do your pricing strategy, look at the problem, figure out how it’s going to solve it and then what value that might be to have someone solve a problem. Think about it in your life when you’ve had a big problem to tackle and you’re sweating, staying awake at night, worrying about how you’re going to solve that. When someone comes along with a solution and offers that value, all of a sudden you have peace and you have calm, and the price to pay for that doesn’t seem to matter anymore. I remember someone told me—because I like to do a lot of work around my own home— say, “Why don’t you get some help?” I did. I hired a pool service and it’s been great. I haven’t had to worry about it. I also remember, and I love it because the handyman that I use is great. Lance, when he comes, he always says, “I’m here to do something for you, so you don’t have to do it.” And you know what? He solved some of my problems. One of the things I’m not good at is organizing. You can ask anybody who knows me well. I am good at organizing in my head, but to physically organize stuff in my garage, I’m terrible at it. Lance came in and in a day took a five car garage and had it organized with everything on its shelf, everything by product or by type of tool and I’ve never had it look like that. I know my family’s stunned and it still looks good. I think you need to look at how do you solve that problem. And when you’re able to do that, your pricing all of a sudden doesn’t matter as much because you’re solving that problem. I hope what I’ve said today is useful to you. I think you’ll find some good tools on our website BizSherpa.co, and I hope you’re enjoying and sharing this with other people. That’s what’s important, that other people have the opportunity to improve their lives and be inspired to start a business or become better at running and operating their business. That’s my hope. This is Craig Willett, The Biz Sherpa. Thanks for joining me today. Speaker 1: Be sure to go to our website to access the resources related to this episode at www.BizSherpa.co. If you enjoyed this show, tell your friends about us and be sure to rate our podcast. Craig would like to hear from you, so share your thoughts in the Facebook community @BizSherpa.co. Follow us on Twitter @BizSherpa_co and on Instagram @BizSherpa.co.

One of the main reasons business fail is a problem in their pricing strategy. Craig dives into one key fundamental, what do your customers look at as the perceived value of your product or service?  CLICK HERE to access our free resources, social pages, and website!

Bill Toon is an expert in sales and marketing. Craig and Bill discuss some of the common traps that business owners face, systems and processes you can use, and how to grow revenue. Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn TRANSCRIPTION: Speaker 1: From his first job flipping burgers at McDonald’s and delivering The Washington Post, Craig Willett counts only one and a half years of his adult life working for someone else. Welcome to The Biz Sherpa podcast with your host, Craig Willett. Founder of several multimillion-dollar businesses and trusted advisor to other business owners, he’s giving back to help business owners and aspiring entrepreneurs achieve fulfillment, enhance their lives, and create enduring wealth. The Biz Sherpa. Craig Willett: This is Craig Willett, the Biz Sherpa. Welcome to the Sherpa’s Cave. Today, I’m really excited to have with me, Bill Toon Jr. Bill is a good friend of mine, but he has a lot of experience in sales and marketing. Today, we’re going to be focusing a lot on that. I’m grateful that he’d take the time to be with us and open up the secrets to success that he has experienced in his life. Bill, welcome to the show. Bill Toon Jr.: Craig, thank you for having me. I’m really excited about this. Craig Willett: Glad to have you. So, tell me a little bit about—tell us all about your background, where you started, if you have some education insights you want to give. Because sales and marketing is something I think you can’t learn by a textbook. So, experience is a real teacher, I believe. But— Bill Toon Jr.: I agree with you. I’m a Southwest kid born in New Mexico, raised in Arizona. But in my career of working for Dow Chemical twice, General Electric twice, in different businesses, I’ve lived in Connecticut, New Hampshire, Michigan, Atlanta, Arizona three times, LA. Craig Willett: So, you could say if you’re in sales and marketing, be ready to move around. Bill Toon Jr.: Yeah, be ready to move. Be flexible, if you want to move up the ladder, especially if you’re in Corporate America. Craig Willett: Yeah. Well, speaking of Corporate America, you have a lot of experience, as you mentioned in Corporate America, but recently you made the move to be a business owner, tell me a little bit about that. Bill Toon Jr.: I did. My career spans about 30 years, it’s always been in sales, in some form or fashion of an individual contributor of all the way up to a large P&L as a senior vice president. But in that, it was customer-focused, and it was selling product to them, and then just doing it in a profitable manner. But that 30 years has involved, as I said, Corporate America, but I also worked in a small family business that my father had started and I actually helped an injection molder with his sales and marketing plan and spent about 18 months with that person who happened to be my mentor. Craig Willett: So, you got a little bit of flavor for entrepreneurship and small business in the process. Bill Toon Jr.: Exactly. And now, I’ve started my own which was a—and I’m blessed to be able to have those two small family businesses that I worked in. But there came a choice in my life where I needed to do something different. Did I go back to Corporate America? Did I get back on the road? I was traveling 75,000 to 220,000 air miles a year. Craig Willett: Wow, that’s a lot of time away from family and from home base. Bill Toon Jr.: Exactly. And that took a toll on the life as well as my relationship with kids and my wife. Craig Willett: And so, now, what’s it like to go and blaze your own trail? Bill Toon Jr.: Well, my wife doesn’t ask me anymore like, “Are you going to go on a business trip,” and get me out of the house. So, we’ve normalized that at the house. Craig Willett: That’s good. Bill Toon Jr.: But now, it feels good, because you’re able to finally get into balance in your life. You’re finally able to enjoy. Living in Utah, it’s wonderful, especially with the Jeep that I can go a lot of places and both in the winter as well as the summer. And I’m really enjoying this beautiful state. Craig Willett: I think a lot of business owners might say, “What are you talking about having time on your hands?” When you start knowing a business, it monopolizes your time. How do you view that? Bill Toon Jr.: It’s a forced balance that you have to do. And obviously, there’s a lot of late hours, there’s a lot of time when everybody’s asleep that you sneak into the office and you’ve got to do your QuickBooks, you’ve got to do other things that you probably didn’t have to do in Corporate America. Craig Willett: Oh, okay. So, yeah, you take on a lot of different roles other than your specialty. You have a lot of different hats as a small business owner. Bill Toon Jr.: You do. Craig Willett: Great. Well, I’m glad you’d come today. I really want to know and help our audience know what some of the common traps are in a business owner’s face as they try to grow their businesses. But what do you find as things that typically trip up business owners? Bill Toon Jr.: I found that owners that trip up, the trap is they don’t have a rhythm. They don’t have a cadence that has processes and tools in place. You also find that an owner will try to wear many hats, will try to be the operations person, the CEO, the accountant, the HR person. Craig Willett: By necessity, sometimes. Bill Toon Jr.: By necessity sometimes. Craig Willett: So, that inhibits developing the rhythm or an expertise in sales and marketing, even though they may have skills? Bill Toon Jr.: Exactly, exactly. And there comes a time when they’re going to have to hire somebody, they’re going to have to delegate and allow them. And I call it the “delegate and elevate,” where you can finally work on your business and not be in it. And they probably say that the other thing is not having a clear sales strategy. And a lot of people are like, “What do you mean—” Craig Willett: Yeah, what is that, a clear sales strategy? Bill Toon Jr.: Yeah, exactly that you’re in the sales world and that’s all you believe. But no, it’s the days of Henry Ford, and a black Model T—which color would you like, black or black or over. Having a great service and a great product only goes so far, and then competition is going to come in, and you’re going to have to get aggressive, but you need to have that sales strategy that will further and make your product or service that you’ve got sustainable. Craig Willett: That’s a really good response to have something be sustainable. What can a business owner do to better manage growth and all the other aspects of the business so they can keep a focus on sales and marketing, so that that doesn’t die out? Because if you’re not selling, then you’re dying, right? I mean, everybody has—people say, “Well, I don’t have to sell.” Well, even if you have one contract, and that’s all you work on all the time, you have to renew that contract. So, you have to be selling, finding out the needs to be able to renew a contract, even if you’re just in a service business. So, I don’t think there’s a business owner out there that could dismiss the fact that sales and marketing is a key component. Bill Toon Jr.: Right. Craig Willett: So, what can they do to manage the other aspects and balance personal life, but keep the business growing? Bill Toon Jr.: There has to be a non-negotiable forced balance of life. And there’s four quadrants. It could be your faith, it could be your family, personal life, and then work. And I’d probably say that that ought to be the order, at least in my world, and really try to bring balance to your life. But I also have something I called SAMO, which is strategy, analysis, methodology, and organization. And I’ll talk a little bit more about that, most likely in our conversation, but it’s a matter of having those four pillars in your business and then just executing. But I think that there’s some in it— Craig Willett: So, putting some processes and some systems in place that don’t require you to reinvent the wheel every day and make you spend even more time in the business. Bill Toon Jr.: Yeah, and have a foundation that you’re not building this profitable revenue management on quick sand. That you’ve got this foundation and these pillars, but you know what, and I also find that small business owners really missed the boat when it comes to who they hire. And I’m a strong believer—and it’s probably by necessity—I’ve always hired people smarter than me, which I try to— Craig Willett: You’re trying to imply that wasn’t hard? Bill Toon Jr.: Yeah, exactly. And that they really need to surround themselves with great people, create a vision, and then get out the way, let them do what you’ve hired them to do it and— Craig Willett: But that’s hard. It’s your baby as a small business owner. You want to get in and say, “Hey, wait, let me show you all the things about this. Here’s how I did it.” Bill Toon Jr.: Right. But I have to challenge you to go back to the traps, go back to the balance in the business, that if you aren’t hiring great people and giving them the vision and the right job description and getting out of the way and letting them, there’ll be times you’re going to have to put in controls and pulse measurements of what they’re doing. Craig Willett: Right. Bill Toon Jr.: That’s all just, again, this cadence or this rhythm of running a business. Craig Willett: I like that idea. It takes a little bit of capital to have, to be able to hire people and allow them to do that. What are some of the key tips? I know a lot of business owners want to know, how do you grow revenue? I mean, that seems to be, right, the thing that gets measured most. You go to renew your bank loan, they want to see, did you grow last year? They don’t want to see sales down. And they don’t want to just see units up, they want to see the dollars of sales up too. And so, you can’t lower the price to get the sales, as far as units up to last year, but have the profits be lower. So, what’s the key? You obviously have worked in that your whole life, so you have to know some tips and some tricks you can share today. Bill Toon Jr.: Well, I go back to that phrase, I said SAMO—strategy, analysis, methodology and organization. But my organization that I’m part of, the Sales Xceleration, we’ve been around for many years. And if you look at—we’ve surveyed thousands of small business owners, when we start an engagement with them. And in that time, if you look at strategy, only 12% of small businesses actually develop a written revenue plan that has a knowledge of competitors, has strategies around margin and these other things. And so, only— Craig Willett: So, pricing, profitability, who’s your competition. Bill Toon Jr.: Exactly. Craig Willett: And where is your customer. Bill Toon Jr.: Yeah. Craig Willett: What are their needs? Bill Toon Jr.: And then, he goes on further. You go to analysis—only 11% of our clients when we start actually have sales goals, quotas, KPIs, metrics, compensation, time about that. Craig Willett: What’s a KPI? Bill Toon Jr.: Key Performance Index. And I would say, it’s just the metrics that as you have a cadence and you’re looking at that strategy down the road, and are you going to meet your number for the year, then, yeah, then you should be doing certain actions, like calling X number of customers a week, visiting this many customers, have this many lunches, and all these metrics that you might have that are pre-determined. Craig Willett: Wow. Bill Toon Jr.: And then, you go down to one step that really blew me away when I started, was that only 7% of our clients when we started actually had any type of CRM or customer relationship management tool, and had it to where they would put sales process into it and use that as a tool. Craig Willett: To follow up and— Bill Toon Jr.: As to how you’re going and as a database for your customers, and allow you to do digital marketing campaigns from that database. Craig Willett: Wow. Bill Toon Jr.: So, only 7% of thousands of clients that we’ve worked with. Craig Willett: Wow. So, you could say the small business world is ripe for that. I remember, somebody told me you get what you measure one time. And so, if you’re not measuring activity, you’re not measuring sales, you’re not measuring margin, then it’s a wish. So, if you’re measuring, then you have the behaviors or the activities that lead to sales, right? And that’s what you try to get people to do. Bill Toon Jr.: Right. And there’s the old saying, trust but verify, inspect what you expect. But then, the last one on the O, only 12% of our customers or clients or small business owners actually have a job description for their salespeople, onboarding process, continuous training. They don’t do any of that— Craig Willett: Somehow that comes as no surprise. I mean, Corporate America, right, has the ability to do that and has to to standardize things. Small business, it’s hard for the owner to sit down and write the book on it. So, maybe that’s where somebody like you comes in. You can come in and help with whatever that manual is, or have outside training, because it’s hard as a business owner to be balancing the books, negotiating with the bank, hiring the people, negotiating the contract to purchase your product, ship it, and then you’re supposed to have a sales manual and manage the Salesforce? Bill Toon Jr.: Exactly. Craig Willett: So— Bill Toon Jr.: And you’ve got to juggle it all. But again, I go back to somehow you have to figure out, how do you afford to hire a few people around you that are specialists in this? And it could be a fractional basis. It could be a full-time employee. But there are roles out there that you need to have to be able to run these businesses. Craig Willett: So, I guess you could really say that, quite frankly, there isn’t—you can’t afford not to hire somebody in these areas. Bill Toon Jr.: Exactly. Whether it’s full-time or it’s fractional or part-time or consulting. Craig Willett: Great. If you’re growing revenue, there’s a lot of ways to do it, right? I mentioned one, you just cut prices so much that people are calling you up because you’re giving it away. And that can generate sales as far as unit volume, and potentially dollar volume. But how do you know as a business owner, how do you know as you run a sales organization that you can protect profitability? Because I think that’s one of the concern business owners have is, “Hey, I’ve hired somebody, and I’m afraid they’re going to give it away. And I don’t want them to give it away, because I’m used to this good profit margin.” Bill Toon Jr.: It’s all in the details and the planning. And there has to be a specific plan as to what your revenue is, what your products are, what the profitability is going to be around that. And then, you’ve got to build—once you have your margins and your product and your sales plan built, then you build your compensation to reward your sales people for selling those higher margin products. Craig Willett: Oh, I see. Bill Toon Jr.: And send them down that path that this is what’s important, but then you take a step further is to where you’re actually having regular reviews of what your revenue is, what your margins are, which products you’re positioning. So, that way you can pivot or adjust and if it’s going down that wrong path of profitability. Craig Willett: So, that’s why I have the checks and balances in place and have a system that allows you to maintain that profitability. How much leeway do you give a sales force on pricing? Bill Toon Jr.: Each business in each industry is different. And it really depends on how much margin they have in the first place, how much competition is out there, what the market pricing is giving you. It depends on what you’ve defined as your value proposition in the marketplace and how many people have an illness—companies have an illness, that you’re the only one that can provide that cure. Craig Willett: Oh, okay. So, you have a lot of ability to maintain pricing. Bill Toon Jr.: You have. Craig Willett: When you’re unique. Bill Toon Jr.: But the two additional points on that, I think that are real important is you’ve got to avoid that slippery slope of discounts. Of always meeting them on price, because all that means is you don’t have the right value proposition. Craig Willett: Right, because you’re not valuing your product enough, how is somebody else going to? Bill Toon Jr.: Exactly. And you’ve got to stand firm on what your value proposition is. You’ve got to do your homework in advance, which is a key component of marketing. And the last point I’d make on this subject, is that you really have to have the courage to be able to walk away from that unprofitable customer. And I know back, when I first started, that customers were King and that you do whatever they said. And that’s because there was always plenty of margin, and there weren’t a lot of competitors. But today, it’s okay to shake hands with a customer and say, I love you, but I don’t have the ability to meet the needs that you have as a company. And maybe we can do business in the future and walk away from it. Craig Willett: That takes a lot of character to do that, not everybody wants the sale. So that takes a lot of leadership to be able to do that. Now, you have a lot of experience in Corporate America that probably gives you a pretty good track record in growing revenues and growing profits in divisions. Tell me a few stories that you might have about those experiences that you’ve had in Corporate America that can translate into something practical that small business owners can use. Bill Toon Jr.: I have two, I have Dow Chemical and General Electric. And the Dow Chemical, I just love Dow. I love the people, their current President CFO was in my training class at a college. Craig Willett: Oh, really? Bill Toon Jr.: And, and he’s a great leader, and he belongs where he’s at. But what I loved about Dow is that you had a lot of high IQ people that you were surrounded with a lot of PhDs and chemical engineering, chemistry scientists. And I was blessed to be part of a group that actually went out and invented products that were needed based upon demand, three years, five years, 10 years out. Bill Toon Jr.: And that was a global job in two different business units within Dow Chemical. And— Craig Willett: So, you learned early on the need to innovate based on future customer needs, so that you are bringing unique product to market. Bill Toon Jr.: You’d have channel partners. You’d have other organizations like IBM, who has a slew of PhDs that are working on intellectual property, and that we would bundle with our intellectual property. And if we could build those together, then we could solve a solution. And we did. The PlayStation 3, five years before it rolled out with those great graphics, it was done because of an invention where we had disruptive technology to replace chemical vapor deposition in the semiconductor manufacturing process with a spin on dielectric, which is completely disruptive. And that was done years in advance and at board level decision-making at Sony, Toshiba, IBM and Dow Chemical. Craig Willett: Wow. Bill Toon Jr.: So, it was wonderful that you could work with such high IQ people and solve what you knew were going to be the illnesses in the future. Craig Willett: I think that’s great, because I hear time and again as I interview people on this podcast that one of the secrets to business success is knowing what your customer’s problems are, and being able to solve them, sometimes even before they really realize what they are and you provide a better way for them to do that. And so, that uniqueness allows you to build revenue and growth. What are some other experiences you’ve had? Bill Toon Jr.: The customer intimacy that you just described, second to none back in the GE Plastics days, led by Jack Welch. And I was— Craig Willett: What a great business leader he was. Bill Toon Jr.: I was there in the early parts of my career. And you knew certain things that you were going to absolutely work 24/7, but you were also going to play 24/7. And it was to the point where, you would have that experience of playing hard, working hard with not only your peers, but also the customers were involved in that. And you knew, you would never get out hustled on a deal. And that you would throw every bit of resources into that deal to be able to solve that customer’s need. But on the other side of it too, is you knew you would never lose a deal. due to a lack of a relationship and your targeted customer. Craig Willett: Really? Bill Toon Jr.: There was that much determination and resource put behind it, that you would know that customer, and we’re talking about down to who’s sweeping the floors, up to who’s the CEO of that organization. That you had relationships throughout there, and you were aligning your resources at GE, to the resources of the customer at each level, which is a wonderful experience. Craig Willett: I like how you put it because I think that’s really key, it’s the intimate relationship. I think we lose track of that. We think we live in a world where you click to order nowadays, and I think for some commodity-type products, that probably is the best way. But there has to be in the world of small business where you’re offering some unique proposition, whether it’s a service, whether you’re a dentist, or whether you’re a consultant, or you have a new product that you’re manufacturing, you have to intimately understand and know your customer to be able to fulfill their needs. And I like how you put it to know from the person that sweeps the floor to the person that’s sitting in the boardroom. If you know them and develop that relationship, then you’re going to be able to respond, and you’re going to be able to be evolutionary with your company and continue to develop the product to suit the need. Bill Toon Jr.: As an account manager, I was able to change a territory in two-and-a-half years, from 4 million in revenue to 17 million in revenue. Craig Willett: Whoa, whoa, wait a minute. Let’s hear about that. Bill Toon Jr.: And then, I— Craig Willett: How did you do that? Bill Toon Jr.: That was a wonderful experience. The first when I walked in there, I called customers and they would hang up on me the minute I told them I work for General Electric. I was so proud to work for them. And I’d call them back and I’d finally get them to say, listen, I’m not the guy that they fired before me, I’m a different person. And then, I found out that they had this productivity selling technique where I could bring other resources throughout the whole General Electric Company to my little plastics customer in Rio Rico, Arizona as an example. And be able to go in there and bring in an expert that could do set up time reduction for the injection molding machines and the presses. Craig Willett: Wow. Bill Toon Jr.: And if I could help them save money, then all I asked was for equal, and whatever I saved in competitor share, or can I raise your prices half of what I saved you. And obviously it was a win-win for everybody. Craig Willett: Wow. Bill Toon Jr.: And I started doing that everywhere. And all of a sudden, the value and the relationships at every level in that organization became something that allowed us to generate more revenue and knock out competitors. Craig Willett: I like that thought because people are on new technology, little leery to make a major investment upfront. So, if you offer to partner with them, “Hey, we’ll bring the solution, and if we save you money, we just want to partner then. We’re going to take the risk and we’re going to share in the revenue. So, you didn’t just increase the units of sales or the number of occurrences, you just actually took something evolutionary that was saving them money and were able to grow revenue based on a different way of looking at the revenue model. Bill Toon Jr.: Exactly. And you’d have six sigma black belts that would accompany you and it was all process related. And again, I go back to, if you love your customers, you’ll eventually understand what’s keeping them up at night. And whether it’s in accounting, their books, I even took forklifts off of customer’s books and did a lease—buy-leaseback with them. Craig Willett: Wow. So, you found ways—I like that, because so often I think it’s easy to get stuck in this. Here’s the revenue model. Here’s my revenue proposition to you. But I think it takes more than that. I think it takes being able to look at what is revenue, and why would someone be willing to pay me for this. And sometimes we have to put that model upside down. So, you went from, was it 4 million to 17 million? Bill Toon Jr.: Correct. In about two-and-a-half years, and really set the foundation for my sales career that’s it’s more than features and benefits. It’s a value proposition. It’s a complete package of that relationship between the two of us. Craig Willett: I like that, because I think that’s a key for small business owners to step back and look at, “Am I pricing right for what I do? And am I really delivering a product that is making a difference? And if so, how can I price that best?” Because so often, we think, oh, it’s second nature to us. I’m solving a problem. I know how to do that in my sleep, but to them, they haven’t been able to solve it. So, there’s got to be a way to capture that premium. Now, that leads me, I thought, when you first told me that, and I don’t know who else is watching today would have thought the same thing I was thinking. And that is, “Oh, so you went from 4 million to 17 million.” I thought, “Okay, you went in and hired three more salespeople and trained them.” But that’s not what your answer was. Craig Willett: But I do think it’s important to talk about managing a sales force, because there’s a lot of businesses who have that chance in the first three to five years of being in business to have more than one salesperson. And how do you do that? How do you go through the process of managing a sales team? Bill Toon Jr.: To manage a sales team, trust is number one. There has to be a trusting relationship, no matter what your title is, amongst everybody on that team. And that’s a leader’s responsibility to create that environment of trust. And— Craig Willett: So, you’re talking within the team, or also within the company? Bill Toon Jr.: I’m talking about anybody. As an example, you have a sales leader and you have a sales team. But they’ve got to be able to trust the sales leaders, boss or vice president, they have to be able to trust people that are in support roles. And it just has to build this environment of collaboration, trust, trial and error. It’s okay. And it’s transparent and it’s authentic leadership. Craig Willett: Because we live in a different world today, I don’t think there’s a lot of trust, anywhere. So, how do you engender that from the beginning? I mean, even starting with a sales force of one or two. How do you develop that trust? Bill Toon Jr.: But you know what, it becomes communication, communication, and if I didn’t mention communication, that— Craig Willett: Oh, really? Bill Toon Jr.: It has an open communication. But I also believe—just like I believe that the best salesperson is the one who listens 90% of the time to the customer, and doesn’t sit there and talk. And I think that a leader has that responsibility also, that they talk less than their people. And because they’re hearing, and they’re putting pieces of the puzzle together as to what’s going on in that team or in that individual’s life, both personal and professional, and truly understanding that person, so you can actually give them guidance, coach them, and help them in their journey within their career. Craig Willett: So, taking an authentic interest in the people tends to build the trust. Bill Toon Jr.: Exactly, exactly. Craig Willett: If you’re struggling to figure out how to have people gain trust in you, right, they have to trust you, so you have to take an interest in them to where they feel that you care. Bill Toon Jr.: Exactly. And a spinoff of that communication, though, also is you’ve got to have that, that rhythm of communication of feedback, both positive and development feedback. And I know my cadence and my rhythm is to have a weekly conversation with the sales team, and then have a monthly recap, and then have official documented quarterly and annual reviews that are working on their strengths, given the data. That’s not opinion, it’s factual, here’s the data. And then, on the business development or the development needs of that person, the personal development needs, that they can sit in an elevator with the CEO at the end of the year. And within that elevator ride, they can tell that CEO what their strengths are and what their development needs are and what they’re doing to build upon both of those areas. Craig Willett: Wow. That’s pretty good. So build on the strengths, identify where the weaknesses are and development opportunities and identify, and encourage it. Bill Toon Jr.: And many times, those development needs aren’t because the person’s imperfect and has done something wrong. It’s just where they are in their evolution of their career. Craig Willett: And I think that’s a healthy way to look at it, otherwise it could come back to be a little perplexing. Bill Toon Jr.: Probably the last thing I’d say in this would be have fun, make work fun. And I’ve always told my wife that if I’m laughing and if I’m cracking jokes and having a good time, that means that there’s money in the bank. It’s because— Craig Willett: So, she knows to get serious when you’re not. Bill Toon Jr.: Exactly. And she’s given me guidance in my career before, that, “Hey, you haven’t been laughing lately. How’s it going at work?” Craig Willett: That’s interesting. Bill Toon Jr.: It becomes true. Craig Willett: Yeah, and have fun. Sometimes I think—I had a friend, he told me he started a business and in the business he had—it was a sales organization—but he had a slide that people could slide down. I think of that as fun. But I think the fun you’re talking about is really enjoying what you’re doing, enjoying the relationships you’re building, enjoying the people you’re interacting with. Bill Toon Jr.: Yeah. And a great sales leader will actually develop competitive-type scenarios within the team. And we’ll have contests, we’ll have trips that we’ll go on as a team. I was blessed to go to a lot of Masters golf tournaments when I was at GE. Craig Willett: Hey, lucky you. Bill Toon Jr.: Yeah. Been to Toronto Winter Olympics on GE due to a contest. Craig Willett: Wow. Bill Toon Jr.: I mean, there’s all sorts of things that— Craig Willett: And small business owners probably can’t afford those types of trips, but they can probably do something. Bill Toon Jr.: They can do something. And there’s two things really that drive employee satisfaction. One is just a general recognition, that they’re valued, that they’re loved, that they want them there, and that you appreciate what they’re doing. But there’s also just some sort of reward. And it could just be small. It could be a dinner for you and your wife or something like that, and as an award for hitting a milestone. Craig Willett: Wow, that’s an interesting perspective. Even the small things matter. That little recognition, getting something that maybe others didn’t get, but to you personally recognizing, “Hey, you did it.” I know, I talked to somebody the other day, who was an employee and started out in the factory. And he said that the owner liked him and wanted him around and bought him a whole life insurance policy just to try to show him how much he appreciated him and wanted to keep him there. Something that others weren’t getting, not that he felt he was better than others, but the owner certainly recognized some leadership characteristic. He came to become the president and CEO of the company someday, starting out in probably one of the entry level jobs. But, yeah, you never know what they’re going to become. Craig Willett: And when you trust and believe in someone, that’s a really strong motivation. I like that. Bill Toon Jr.: You do that for your child, why wouldn’t you do it for an employee? That’s putting food on your table. Craig Willett: That’s a great observation. So, I’m wondering, we talked a little bit about sales, I’m wondering about marketing. Marketing is an evasive term, because it’s so all encompassing. And you mentioned some CRM, customer relationship management, tools that are out there. But what role does a marketing plan play in developing or growing your revenue? Bill Toon Jr.: So, I’ve got a marketing degree. And it’s interesting that what I was taught in marketing versus what marketing is today is completely different. Craig Willett: Really? Bill Toon Jr.: Today is more of an IT-type of role, heavy, technical, very digital-driven. And right now, marketing really plays a key role in the top of the sales funnel for the sales team. That they’ve got to bring in qualified leads, they’ve got to be experts in influencing social media, use of AI, use of drip campaigns. I mean, all these different types of digital or electronic marketing that’s involved. But then, marketing also plays a critical role in developing the language that you’re going to communicate to the outside. Craig Willett: So, there’s a message, there’s a brand. Bill Toon Jr.: A lot of that’s branding, and again, developing that value proposition. Because— Craig Willett: So, that takes it a little bit away from the digital. So there is still this creative, come up with what’s going to resonate with your target audience, your target market, but then there’s also the implementation of how do you harvest and identify leads within that target market. Bill Toon Jr.: Exactly. And so, you really depend on marketing to develop that customer persona, that then becomes a qualified lead that is done through the digital marketing side. And once you’ve defined all of that, and man, it’s about messaging. It’s about creating that communication, both internal and external. Craig Willett: I like that in some respects, because I know I’ve been the—I don’t want to say victim—but I’ve been identified that way by people who’ve been able to get me to see messages often enough to where I respond and buy something. But sometimes you don’t want to be overwhelmed by it either, though. There’s sometimes too much contact can be a little bit annoying. What do you say about that? Bill Toon Jr.: And especially when it’s automatic, it’s AI-driven. I’ve got—when I do some lead generation and mining, I’ve got strict instructions on how we build it, that I want to reach out once like on LinkedIn, and LinkedIn Navigator. I want to reach out once, if they connect with me, there’s many software programs that tell you within a nanosecond, then send them a second message and say thank you for connecting and that. And then, everybody knows that that’s like a bot. And that one that— Craig Willett: That’s doing that right. Bill Toon Jr.: So, I want it to be more human. And I’ll either do it myself, the second reach out, or I’ll have instructions that wait a day or two, and let our connection sink in, and then approach them like a human being would do. Craig Willett: Oh, wow, I think that’s great. That’s interesting that you can make it more personable, because I think that’s one of the dangers. But one of the things I’m walking away today as I sit here, and say, if I were starting a small business today, or I owned one right now, I would definitely try to get to understand artificial intelligence. Start to understand and implement—because there are a lot for small businesses of this customer relationship management, CRM software out there. But make sure you personalize it and make sure you bring it to a personal level so that you’re using it as a reminder and as a motivation, not as an annoyance. Bill Toon Jr.: Right. And truly—versus when I’ve got my marketing degree—today, truly is a global customer base, that you physically can’t do it by yourself and get to everybody or do your messaging. That’s why you have to use social media, which is also a global platform. And also your digital marketing becomes that and you can get overwhelmed if you try to do it all by yourself. Craig Willett: Yeah, that’s a lot for a business owner to undertake unless they really, that’s all they want to do all day long. So, how do you develop—what are some keys to developing a marketing and sales program this cohesive? Bill Toon Jr.: You’ve really got to get down into the weeds and you have to be specific and well-defined about what your products are, who your competitors are, what type of margin you want to have, the KPIs that you’re going to use, your sales processes. Craig Willett: So, these are really the fundamentals of starting a business. Anyway, you have to know what problem your product solves and who is going to be your user. It’s easy to say, “Oh, everybody will want to use my product,” but that’s a fallacy. Bill Toon Jr.: It is. Craig Willett: There’s no way you can be all things to everyone. And so, when you define those, you really—once you have those defined though, how do you implement it? So, you get into the weeds, but sometimes it’s easy to stay in the weeds. So, how do you get out of the weeds then to implement? Bill Toon Jr.: We go back to what I’ve been preaching about the over communication. And that’s communicating within your organization as to what products and services you had, and also educating the outside world that you have specific niche that you solve problems in. But that leads into the value proposition. That there’s, as I stated before, not many companies still today, when I’m talking to companies, I asked about their value proposition and they bluntly throw out something of what they do. Bill Toon Jr.: And then, I’ll go and I’ll ask another person in the organization, I’ll get a different answer there. Ask another person, and you get all these different stories of what they think that the value proposition is. But that’s one of the first things that I like to do with my clients is let’s really define what the value proposition is, so we’re on the same page. So, everybody’s customer facing and everybody has the same message. Craig Willett: That’s interesting. You know what I’ve done successfully in one of my businesses, is I went out and I trademarked the value proposition. And it became what we put on our signs, what we put in all of our messaging, and that is “Own for Less than Rent.” And that was for office buildings. But that was the value proposition and everyone knew it. And so, when a sales call came in, the sales force knew how to orient them to understand and walk them through that process of owning for less than rent, and it made marketing messaging easier. It also made the buying properties easier. It made hiring contractors easier because we all had one common goal. And we knew who our target markets were that we were after. Bill Toon Jr.: So, you knew the segments that you were playing in and who the customers were in that. And then, it sounds to me, like the final point I’d have on this is that everything is actionable. And like an HGE leader and then he went allied to Larry Bossidy when he just made it real simple: plan, execute, and deliver. Craig Willett: Yeah. Bill Toon Jr.: If you had a detailed plan, then it’s a matter of everybody pinning their ears back, going out and executing it. And the natural byproduct of that execution is that you’re delivering whatever your commitments are. Craig Willett: Right. Yeah, you deliver your commitments. You deliver results to the company. You deliver exceptional product to the customer. Bill Toon Jr.: Exactly. Craig Willett: That’s interesting. I like that. So, I think there’s one thing to where it really has to start. And I don’t know if this is hiring your first sales person. But when I think of small businesses that I associate with, one of the challenges is going from somebody who might be charismatic, and a good salesperson, as a business owner or entrepreneur, to being able to delegate that to somebody else. And hiring, basically, your first sales manager, somebody that you’re going to bring in, to not only take over your role in selling, but also being able to then recruit and train and execute with the Salesforce. What are some keys to being able to hire? Because I think that’s a stumbling block a lot of small business owners—it’s easy to get sold by somebody coming in, a sales person. But how do know it’s the right fit? And how do you find—what are the characteristics of a good sales manager? Bill Toon Jr.: That’s a sales leader, as people work for people. And if you keep that in mind, that sales leader has got to be a great recruiter. They’ve got to be great at cultivating and developing relationships. They’ve got to be able to mentor, coach, and have almost like the sports background of a football coach, where you have that mentality that you have a bunch of players. You’re going to have to communicate with them, you’re going to have to cultivate them, you’re going to have to mentor them, you’re going to have to coach them. But you also need to set a vision. So, that sales leader has got to be able to stand at the forefront and say, “This is where we’re going, this is why we’re going there and enjoy that we’re going to be on this journey,” and then set those goals, be able to hold people accountable for those goals. And while they’re holding them accountable, they’re still inspiring them. They’re still leading them. And they’re still making it fun in this whole journey of selling, which really is just another competitive sport event in my mind that it has all those attributes, right? Craig Willett: Right. Bill Toon Jr.: The people that are playing as well as the people that are coaching— Craig Willett: Isn’t that what you help do, though, now with your sales acceleration program? Your ideas to be able to help business owners identify the talent, the direction they need, but it also helps identify talent and bring in, help them hire these types of people, right? Bill Toon Jr.: Yeah. There’s almost not a word for what I’m doing. Because a consultant will come in, ask a bunch of questions, write a report, hand it to the owner and say, “Hey, good luck.” Craig Willett: Right. Bill Toon Jr.: And here’s the bill. Now, with what I do is I go in and ask the same questions. But then I say, “Hey, owner, if they want to stay involved in the business and want to still lead the sales team, let me just spend three or four months here, and work on the infrastructure.” Everything we’ve talked about, the SAMO, right, the strategy, the analysis, the methodology, the organization, which includes the people. Bill Toon Jr.: And I don’t believe anybody wakes up in the morning and kisses their spouse, their dog, their friend, or whatever and says, “Hey, I’m going to go to work today for 12 hours, and I’m going to absolutely be terrible and I’ll see you tonight.” Craig Willett: Right. Bill Toon Jr.: I think people get up in the morning, they want to achieve, it’s the human nature to be successful. And so, they go to work, they want to be in an environment that’s fun, that has great organization, has a great value proposition to their targeted customer base. But then, has a leader that has all these people skills but isn’t afraid to hold people accountable. Because I think that’s the key to this whole thing is that you’ve got to set the processes in place. And then the last two things that really make a key sales leader is in today’s world, you’ve got to be technology-minded. You’ve got to be able to understand the CRM, understand how to gain insights on it on your KPIs, and metrics— Craig Willett: So, I’m taking notes on this. I know now I’ve got some characteristics. They have to have experience in these areas. Bill Toon Jr.: They do. And they have— Craig Willett: And they have to be willing to hold people accountable for activities and actions and results. Bill Toon Jr.: Yup, exactly. And then, the last thing that I’d say is that, that sales leader has got to be somebody that has a thirst for knowledge, for continuing education. And why? Not only to keep up with all the tools and the processes, and the inventions that are happening throughout different industries. It isn’t just a high-tech description I’m giving you. This has happened in the chemical industry, real estate. It’s happening in many locations. But they’ve got to have this thirst for new knowledge and be a sponge, so they can teach and coach it to the people. The sales manager gets into a car, goes on an account call, they’ve got this windshield time that they can educate and coach and teach after they find out that they may be struggling with a certain technology. Craig Willett: Oh, wow. So, they can help identify and help bring them along with the tools that are out there that can help them increase their performance. Bill Toon Jr.: Exactly. So, I work on the infrastructure three or four months, but then there’s a lot of times it has an owner that says, sales is not my expertise. It isn’t something I enjoy. It’s not sales. And— Craig Willett: Sales, I hate rejection. So, can you find someone who will take it for me, right? Bill Toon Jr.: So, what I’ll do is I’ll stay a total of the year. I’ll work three or four months on the infrastructure, then I’ll run on a fractional basis, part-time. Be there weekly. I’ll work on their sales team, and that’s from hiring salespeople, holding them accountable, making strategy, comp plans, sales processes. Craig Willett: I like this fractional thing, because it seems easier for a business owner to take that on as a, financially, when it’s not looking at making a full-time hiring decision. And then, how do you hire your replacement, though, when you go, because at some point, the company is going to become dependent on you for that leadership. And I’m sure you don’t have time to work for them full time. So, how do you go about bringing somebody along? Bill Toon Jr.: Well, I think that if you’re doing the proper job internally while you’re there as a fractional sales leader, that you can develop talent to be able to take over for you. And then, in the chance that you’ve identified something or someone, then I’ve got a program to where I actually put them through a certified sales leadership program, and start grooming them and giving them these opportunities. And at the tail end of my engagement, I empower them and I’m more sitting back watching them and giving observation as they start going. So, I transition from coaching just to salespeople to it becomes a coaching a sales leader, and then allows me to transition. And on the other end, we may have to go out and hire somebody and bring him in that I would do that with plenty of notice, because it takes a good three months to find the right person and bring him in, onboard them and get that cadence going, that you’ve worked so hard on that infrastructure to get into place. Craig Willett: Right. And if you don’t hire right, then that drops off and you start all over again. Bill Toon Jr.: Exactly. Craig Willett: And that’s the risk, I think, to small business owners is, sometimes one of the keys is to bring in outside expertise on a part time basis to help get there. And it’s like putting the training wheels on. Like you said, get a cadence, get things up and going smoothly, and then try to maintain that and keep it and grow it. Bill Toon Jr.: Exactly. Craig Willett: Very good. Well, no one can come on the Biz Sherpa podcast without being asked, probably the most embarrassing question that I always ask. And that is, what is your greatest failure? But there’s a follow up to it—what do you learn from it—because I think in their lives, a lot of secrets to success. Bill Toon Jr.: Absolutely. But when you asked me that question, I can come into something that’s near and dear to my heart in the last several years. In 2015, I moved my wife and a couple of kids from New Hampshire to Utah, and thought that it would just be a year. That I’d get transferred out with my company or find another job. And then, all of a sudden, our business exploded, which was positive. Bill Toon Jr.: All the changes that I put into place for three or four years of hard work were now coming to fruition. And we were making a lot of money. My division became one of the top divisions in the company. And our turnover went from 78% on the sales team down to 30%. Craig Willett: Wow. Bill Toon Jr.: Which was below industry average. And we had all these great things going. And I just kept commuting for another four years. But in that time, my father passes away in 2016 and I had to say goodbye to him on FaceTime, because I couldn’t get back to Arizona in time because it happened so quickly. And then, at the end of 2017, and I share this without shame, I share it so that parents can really pay attention and understand that it could happen anywhere, but at the end of 2017 while I’m in a hotel in Indiana, I get a call from my wife at 2:00 a.m. telling me that my daughter is on life support. My 25-year old daughter. Craig Willett: Oh, wow. Bill Toon Jr.: And she’s dying of a heroin overdose. Craig Willett: Oh, no. Bill Toon Jr.: And it’s not an addict. It’s not somebody that stole. This was a beautiful woman that was going to school and was working and went to a party and just didn’t come home. Craig Willett: Wow. Bill Toon Jr.: So, you ask about a failure, that especially when that happened, knowing that I was commuting, and putting work over my personal life, it causes all these what ifs in your life. What if I would have been there? What if I would have been more intimate with the situation? What if that night, I would have called her from my hotel room? All these things that you ask yourself, when it’s such a tragedy, and I’m telling you that, that took three years to get out of that funk of the death of a daughter, and especially in a manner where you possibly could have really helped out. Craig Willett: Wow. That’s life changing. Bill Toon Jr.: It is. Craig Willett: And sobering. Bill Toon Jr.: It is. Craig Willett: To think about. Bill Toon Jr.: Then you ask the question of what do you learn from that? I’ll go back to what I said about the non-negotiable part of a balance in life, that you’ve got that quadrant of faith, family, personal, and work. I let that get out of balance. And unfortunately, it cost me something pretty, pretty dear to me. And it took me a long time to get out of that mental part of it. My work never suffered. In fact, I jumped into work more than ever to hide from it. Craig Willett: Right. Bill Toon Jr.: Instead of addressing it. And I was blessed to have great leaders at my employer that finally came to me and said, “Hey, you need to go home and here’s a package.” Craig Willett: Wow. That’s a blessing right there. Not many people can be that honest. And I think it’s really great that you’re honest about that. I know, you said almost a forced structure in there to where you get that balance. And I can understand that it’s really easy, especially for business owners having been one. My wife tells me—I spent a lot of time. One time, she said, “You’re going to spend more time with the important people and your children are going to grow up and not know their dad.” And so, I can relate to what you say. I changed. I resigned from a lot of different things and scaled back and changed some of the focus of my life. But it’s real easy to get out of there. And whether it’s forced on us, or whether we view it as an opportunity to bring that balance because things are more important than the business success, more important than the money. And I’m sure as I listen to you, Bill, it’s a heart-wrenching moment to think about a daughter that you wonder, what could I have done? What if? And could I have had a better relationship, would she still be alive? Bill Toon Jr.: Exactly. Craig Willett: I’ve never had to face that. But I think it brings a whole different level of intimacy, a whole different level of engagement with the people you do interact with. That personal level you talked about. That intimate relationship with the customer, with the people you work with. How has that made a difference in the last two or three years? Bill Toon Jr.: Yeah, it’s made a big difference. During those days of GE, where you were working from 7:00 a.m. to 11:00 p.m., and then working really hard but playing really hard and everything, I always had in the back of my mind that if I ever ran a team, I would force balance. And I did do that. When I became a leader, I forced where, when I was traveling, and I traveled a lot to my sales team especially in my last leg of Corporate America with Schwan’s Home Service, that I would travel to all of our remote locations. But I would not let the leader go to dinner with me. I made them go home or go to the gym or go do whatever they want. That I just wanted them during the day. We work really hard, we get everything done. And then, I would go back to the hotel by myself or whatever. I didn’t need them. I wanted them to have balance in their life. Craig Willett: Oh, wow. That’s a great concept. And I think it’s something we can all use. Bill, I’m grateful that you’d take the time today. This has been a wonderful insight into what it takes to be successful in sales and marketing, and how to build that inside of a smaller organization. And I think you’ve offered some great tips. I know it’s taken a lot out of your time and schedule, but I appreciate you doing this. Bill Toon Jr.: And I want to thank you for doing this, for giving back to the community with what you’ve done and taking your experience and allow people to have some platform to share best practices and help others, so they don’t have to reinvent the wheel. Craig Willett: Well, I appreciate that. You got the gist of the purpose of the Biz Sherpa. It’s to inspire entrepreneurship and business ownership and to do it in a successful manner. Or if you’re a business owner already, sharpen that saw so that you can do an even better job. And I think the experiences of others, I think are the greatest teachers. We could put together a book but I didn’t want to write a book. This is really about real-life people and experiences. And I think as you, as business owners connect with others, you’ll find that. You’ll sense that there’s a human connection that transcends dollars, cents, products and services. And people feel that and people—and you said at the beginning, people want to do business with people. Bill Toon Jr.: That’s right. Craig Willett: And so, I appreciate you being here today, you’re a good friend. And I’m grateful that we had this opportunity. This is Craig Willett, the Biz Sherpa. Thanks for joining us for this episode. Speaker 1: Be sure to go to our website to access the resources related to this episode at www.BizSherpa.co. If you enjoyed this show, tell your friends about us and be sure to rate our podcast. Craig would like to hear from you, so share your thoughts in the Facebook community @BizSherpa.co. Follow us on Twitter @BizSherpa_co and on Instagram @BizSherpa.co.

Bill Toon is an expert in sales and marketing. Craig and Bill discuss some of the common traps that business owners face, systems and processes you can use, and how to grow revenue.    CLICK HERE to access our free resources, social pages, and website!

Are you wanting to start a business but unsure how to finance it? Craig discusses capital sources and how to borrow. Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn TRANSCRIPTION: Speaker 1: From his first job flipping burgers at McDonald’s and delivering The Washington Post, Craig Willett counts only one and a half years of his adult life working for someone else. Welcome to The Biz Sherpa podcast with your host, Craig Willett. Founder of several multimillion-dollar businesses and trusted advisor to other business owners, he’s giving back to help business owners and aspiring entrepreneurs achieve fulfillment, enhance their lives, and create enduring wealth. The Biz Sherpa. Craig Willett: This is Craig Willett, The Biz Sherpa. I’m wearing a dotted shirt today, and the reason I’m wearing it, is because you need to be spot on when you start your business. The reason you need to be spot on is you need to figure out how much capital you need. If you get too much, it could be too costly. Your borrowing costs or the equity you might have to give away could cost you. The other thing is, if you don’t get enough, then you’ll be out of business before you know it. So there’s a fine balance to determining how much capital you need. Next month, I’m going to talk about examining your cost structure and try to understand and forecast your business. But for this month, let’s talk about borrowing, and let’s talk about capital sources. You know, the Kauffman Foundation did a great study, I think, that summarizes the access to capital. And one of the things they point out in their study is that between 90 and 95% of business startups require some sort of financing to start their business, of those who hire individuals. Many people may start a business where they’re the sole owner and operator without employees. In that case, I think it’s far less. But consider that, 90 to 95% of business owners who start their business require some sort of financing. And you may ask, “Well, where do you get the financing?” In my three part series of how to start a business, I talked about some of those methods to get it. And one of the top ones that the Kauffman Foundation said that people use was 64% used friends and family. Or a variation of friends and family takes it up to around 70% of business owners did that. 9% carried the balance that they needed to on their personal credit cards. And some 6.3% used home equity of their home or a family member’s, and only 0.5% were financed by venture capitalists. And get this. Bank financing accounted for only 16.5% of business startup capital as a source for starting. Now, I know we talked about— in my three part series—about SBA loans and they’re designed typically to help get a business owner who has experience in an industry and with a product financing. But typically in the first two years of a business, you have to prove yourself. And so it’s very hard to find a bank to do that. When you think about it, it is debt financing, and you have to look at the two major types of financing: equity, giving up ownership for money to be invested in your business—which means you’re giving up a share of future profits and ownership to someone else—or debt. I’ve always said the financial institution is your silent partner. What a great partner to have though if you’re able to repay it back. One discouraging factor that I read in their report was that there was a good number of people, over 35%, who decided not to start a business when they looked at it because they thought the cost of capital was too high. So what can we take from that? If you have an idea and you’d like to be a business owner, now is a good time to start saving for that startup. Given the fact that 70% of all businesses that start use their own capital to get started. Craig Willett: Now, this may mean that you are creative in how you do it so that you maintain ownership, but more importantly, it’s about having adequate savings to give you the opportunity to be successful. You don’t want to give yourself such a small amount of capital that you end up going out of business before you have a chance to really hit your market and prove yourself. So, what are some of the ways you would approach friends and family? Some of them will give it to you just because of the relationship. Others—you may have a wealthy uncle—and he may require that you put together a business plan proving to him or her, your aunt, proving to her that you have the ability to articulate your business well, and turn enough of a profit that you’re able to compensate yourself and to repay the investment that they make and you can give them a return on their money too. After all, there are options for them as well. I once had a business partner who was funded in part by a trust, and the trust derived their money by borrowing on margin from a large stock portfolio. When the stock market took a turn for the worst, they got margin calls and needed cash. My partner came to me and needed to be bought out to get the return of capital that they had invested in the business. The business was in the early years and it was tied up in the real estate project. The company didn’t have the money to pay back the partner. Now this wasn’t a loan, this was equity and they were offering to sell their interest in it. Fortunately, I had saved money. I had money set aside personally that I used to put in the business and retire that partner’s interest in the business, getting them money they needed to desperately keep the trust afloat, and allow me to have 100% control of the business. Now, having 100% control isn’t what it’s all about, but having a savings set aside to give you a cushion to be able to take advantage of opportunities that come your way is really important. You know I’m an advocate for—no matter what you’re doing—setting aside 20% a month. In the early stages of a business that’s next to impossible. But if you’re in a career and you’re thinking of starting a business, setting that money aside with the purpose of being able to own your own business someday, I think is a great idea. Some of the other sources of capital that you may want to consider are credit cards. Now, I’m not a big proponent of borrowing on credit cards. If you think bank money is expensive at six, seven, 8% interest rate, credit cards average around 21% interest rate. That’s a huge amount to carry. Yeah, I get it. You get some rewards, cash back, and you get some travel benefits potentially, but it’s not a long-term sustainable idea. But I had to eat crow one day when I had a client as a CPA who came in, and he needed some help with some tax returns. And as I talked to him about his business, he shared with me where he got his idea. And then he told me how he was financing it. And he said, “I have three credit cards and the credit limit is $37,000.” He borrowed almost to the max on those credit cards to get it started. Eventually he sold to a national company. And I guess I was the one that was embarrassed. And I’m the one that ate crow because while I didn’t discourage him from doing that, I certainly went home at night thinking to myself, “I sure hope he can make it. I sure hope he’s profitable enough to repay such a high interest rate to do it.” Now, each one of us has different levels of risks that we’re willing to take. And I’m not here to discourage anyone from doing anything, but think about it. If you have nothing to lose, I guess, what does it matter? But your credibility is important. And so in the early days you need to be careful where you go for that capital, because you may be able to successfully get it started, but take a bunch of hits on your credit while you miss payments. And I suggest that that’s not a good idea, because to grow your business properly, I would think that eventually as you hire people, you’re going to need bank financing. Whether it’s a line of credit to help meet payroll, to time your cash receipts with your cash disbursements, it’s going to be important. So to do that you’re going to need to have a good credit rating. Because the bank’s not going to make a loan to a new business startup without a what’s called a personal guarantee. A personal guarantee means that they look to you and your assets and your creditworthiness and your ability to repay that loan. So the pressure’s on you, and how you’ve handled your credit in the past is a great prediction of the future, regardless of your source of income. So I would definitely look to that area to really manage your finances well. Now you might say, “Well, what can I offer to a business partner if I have to bring in a friend or a family, other than on the fact that they’ll give me a loan and say, ‘Repay it when you can.'” That’s the best type, right? You hope that somebody will say that to you and you don’t want to take advantage of them. And I would suggest that you give them a rate of return on their money, whether they ask for it or not. And maybe you don’t commit to that, but as you’re successful, always remember where you got the funding. The other thing that I think is important is, how do you know what to give up? There are a number of ways to structure financing a business. You may not want your friends and family to be receiving financial reports to see how you’re doing, whether you’re doing well or not doing well. Another way to do it is if you have a great product that’s innovative that you have a patent on, you may finance the acquisition or the manufacturing of that product by borrowing from a family member. And what you may do, and you see this often—I think this is a method sometimes proposed on the Shark Tank—and that is, pay a royalty, where you pay them so much per unit that sold. So let’s say you’re in the business of selling cameras and you have a whole new lens and a new idea, and it’s innovative. And so you need to buy your first order and it’s going to cost you $50,000. You may take that $50,000 and you sell the lenses at $100 a unit, you may offer—and they cost you $50 or $60 to make—you may offer $3 or $4 per lens until you’re able to repay the money back to your friend or to your family member. That way, the only thing you have to report is how much your sales are. They don’t get into your business as to what your cost structures are, what it costs you to innovate. They may want to know what it cost to make it, but it’s usually less intrusive. Another way to structure it is to form a partnership, but there are different types of partnerships. And one of them is to bring in a limited partner or you set up an LLC, which allows them to be a limited member. In other words, you’re the managing member and they don’t have much of a say or vote on much of anything. And you may have to provide some type of reporting to them, but typically they won’t be in managing and working in the business. I recommend that. Unless they bring a particular skill, and I’ve done this before with many people who’ve approached me who’ve needed some money short term to be able to get something off the ground, where l’ll offer either royalty financing—and with that, I always put that I want a board seat, or I want to be a strategic advisor so that they come to me with their questions and problems. Not that they can’t solve them themselves, but I think it’s always good to get another opinion. But you want someone qualified in your industry or someone qualified financially. And I think in addition to either of those, it would be helpful to hire a good attorney to help structure whatever the agreement is so that you make sure it’s well-documented. It’s one thing to shake a hand and trust people, it’s another thing to remember two or three years later what you agreed to. And therefore, I think a good document is helpful to remind us all what we’ve agreed to. The other thing that I think is important is to hire an accountant. You’ll find that an accountant can help you put together the right kind of projections that you need to be able to go to a bank. I won’t say that the bank’s automatically going to say, “No,” you need to find a bank that’s a community bank. Let’s talk about banks for a minute. One of the things that I love are community banks. Now, you may say, “What’s a community bank?” Well, there may be a lot of banks in your community, but if they’re in every community you go to in the United States, they’re not a community bank. They’re a national bank, such as Bank of America or Chase Bank, Wells Fargo, you see them everywhere. But usually they’re locally owned, they’re locally operated. Some of them are credit unions as well, and they operate on a different structure. But they’re set up to try to help the community in which they’re located. They have a vested interest in the success of the businesses and the owners of those businesses in their community. As your business grows, you’re going to become more and more important to that bank and become more and more source of their profitability. They’re always proud to help the local community. And then it’s important within that bank to find the right kind of loan officer. You know, you want to find someone who you can sit down with and talk to and relate with that understands your industry, or is interested and will educate themselves on your industry. I remember one time I went to a bank and I was starting into a new segment for me in the marketplace. And I don’t know if they were just checking it out, but certainly the loan officer—I saw him at a trade show and he was checking out my booth and how people were receiving my product at that trade show. It was really interesting to me to see the kind of interest that they took to determine my ability to penetrate that market. I think it’s important to find someone who’s interested in your success, not in your failure. You want it to work out. They want it to work out. But understandably, a bank makes a very small margin because they charge a small amount of interest, really, at the end of the day for the money they give you. So they take a lot of downside risk. But I wouldn’t take “No” from one bank. I would submit to three banks. I would put together a good package and sit down and find the right kind of loan officer, not just any. And the way to find them is to talk to people in the community. Sometimes your local chamber of commerce, sometimes other business owners who are either your competitors or are just your neighbors, and ask them who they do their banking with, and then get acquainted with them. You’ll get a feel. And if you’re not able to discern what they’re able to do, most CPAs should have a good feel as to what banks in their area might be best for the size business you have and the type of industry you’re in. And when you’re able to find that, you’ll see that there’ll be a synergy that will allow you to get approval and get adequate funding. I’ve told you about the banker before who told me when I was a CPA—he came to pick up his tax return and I was working for another firm. And he said, “Craig, let me tell you a story. When I first started my CPA practice, I took my business plan to the bank and I thought I had it really good, right? I’m a CPA. I gave it to them saying I needed a line of credit to help me during the slow times of year, and I’d repay it during the good times of the year.” And when he saw the banker again, the banker said, “I’m not approving your loan.” And it kind of shocked the CPA. He knew he had a good credit rating, a good reputation in the community, but he said to me, he goes, “Craig, you know why I got turned down? I didn’t have anything budgeted in my plan to take a vacation. He didn’t want me to be burned out. He knew and must have known that other people in that industry burn out. And when they burn out, it’s hard to get them to make good decisions.” So, I would say you can learn a lot from your banker, but you need to gain their trust. And they also need to be able to provide you with some insights as to what, how, and why they make their credit decisions. They shouldn’t go to a back room where no one knows what’s going on. You should ask them what the weaknesses are in your business and how you can strengthen them. This becomes a dialogue that’s important for the future. When things are good, they’re going to be happy. But when things get tough, they’re going to want to hear from you. You’re going to want to establish that relationship so that you don’t end up in a situation where you’re contrary to them without having given them some kind of heads up as to what might be happening in your life. Now, there are other sources too, and I mentioned venture capital, but only half a percent of all businesses that start, start out using venture capital. And so it has its place in certain industries, technology and in life sciences for sure, because those are big markets that require a lot of capital to try to penetrate those markets. There are groups of angel investors. You can find them in your community. Investment clubs—they’re another source you can go to. But again, it’s important to understand what their objectives are and probably a referral to them would be important. And then to be able to feel comfortable with who they are. You know what it’s like. There’s always a honeymoon at the beginning. Everyone’s excited for the prospects of the success of the business. But what’s important is to forge a relationship early on and understand what the fundamentals are that they’re going to be analyzing on your business so that you can achieve those objectives. These fundamentals should be ones that you want to achieve too anyway that would make you successful. It’s not always profits. It might be margins. It might be certain operating costs. It might be certain receivables, days of collections, where they don’t want you to exceed certain days because they feel that that’s dangerous to give too much credit to too many customers, or that they don’t want you to have a concentration. One big contract and no other source of revenue, because you know what can happen. If you lose the big contract, you don’t have any business to sustain yourself. So there are things to be aware of. There are incubators in towns, and while they may not always have money, but they know some access, they may know angel investors and they have access to grant programs that they can tell you about. But where they really help is how they helped one of the businesses that I helped start. In the early days of a biotech company, I was approached by a friend and asked me to invest in it. I told him I would invest, but I needed to look more—I was interested in investing, but I needed to look more into the details. As he answered my questions and gave me more and more information, it became apparent to me that one of the costs he had was to operate a lab, and to equip that lab was very expensive, whether he leased the equipment or purchased it. It just so happened that in the city that he was living in that one of the large international companies set up an incubator lab for biotech companies. And guess what? In that lab they had access to all the equipment he needed and just charged him on a per diem or per use basis. All of a sudden his business model became way more viable to me as an investor, and it gave me the confidence to invest. So you may look at that. What are the ways you could start out so that your costs are low? We’ve all seen it. Steve Jobs in his garage or Michael Dell in his college dorm room, right? No overhead at that point, or low overhead. And it’s something that you need to watch for. We all plan for success. And while we hope for success, we also need to be careful to manage our costs. I remember starting out my CPA firm, and believe it or not, this is how old I am, in the days where there was a 10-key calculator with a tape that ran through it. I needed one of those. I didn’t have one. And when I was starting my business I went to a business machine store, which doesn’t exist anymore anywhere. But I went to a business machine store and there were all these refurbished business machines, whether they were typewriters or whether they were calculators or 10-key pads, I looked at one and it was more expensive than what I wanted to pay. I had just used—if you remember my story—my last savings for a down payment on a house. And so I had very little when I wanted to start my business and I had painted the office building to pay for the security deposit. So when he told me how much it was, I hesitated and I could sense that the owner of the shop knew that I probably didn’t want to pay that kind of money that day. And he said, “You know, you need to plan on success, Craig. I’m going to finance it for you. I believe in you.” And he did, and I paid him off over the next four months. I think it’s important to find people who believe in you and then be honorable in repaying what you’re able to borrow, whether it’s from friends, family, or banks. It got to the point in my career where I was with one particular bank that each year, they would meet with me and have me come in and make a presentation to their senior loan committee. And in the senior loan committee, I was asked all kinds of questions for what I needed the next year. I finally one day asked my loan officer. I said, “Why do they have me come every year?” And they said, “Craig, you’re one of the only borrowers who ever did what they said and usually exceeded your projections. Not only that, they needed to set aside the capital to lend to you as much as you wanted, because you were one of the better customers.” I don’t say that to pat myself on the back, but to make the point that you want to establish that kind of credibility. And I know, I’ve been there. You’re discriminated against as a small business owner. Nobody wants to believe in you. The failure rate is high. Why is the failure rate high? We have high expectations and sometimes our expectations don’t match the results. Other times we haven’t allowed for enough capital, or we don’t have adequate experience in that area. I’m not suggesting that you be afraid to start a business. I’m just suggesting you surround yourself with the right people who believe in you and that you develop your expertise, like I said, in a niche market, find out what you’re good at and know how to solve someone else’s problem. As you do that, the capital will become more apparent, because you’ll be able to take the profits from that business and reinvest it. While I’m on that point, this is something very important to always remember. And that is, look at your living costs before you start a business. Look and see how you can scale back to live on as little as possible so that in those initial years you can plow as much as you need to, to expand and grow your business. I promise you, you won’t regret that. I think of the times where I’ve really stepped back and focused and didn’t become a draw or a drain on my business. There’s nothing more difficult to discuss with an investor, a friend, a family member, or a banker than, How are you going to pay back their investment when they watch you draw out so much to live on? I remember somebody I know well telling me about one of his top sales managers, and the sales manager called him and said, “I need a raise.” And he said, “Well, why do you need a raise? You’re doing well, and you get a bonus.” He said, “I need a raise because we want to buy a new house and the house is going to cost more than what we make right now to be able to make all of the payments we have.” The need for capital is not always the reason someone’s going to lend it to you. You need to prove how you’re going to repay it. Just because your living expenses are high doesn’t mean others should wait. So you need to be careful and manage that well. I think it speaks to your integrity. It speaks to your understanding of your business when you’re able to do that. Again, access to capital is important. When you hire that first employee, 90 to 95% of the time, people need some sort of financing for their business. So make yourself creditworthy and then search out for that capital. Make sure you go to a number of banks and make a number of applications. Make sure you search for all the resources in your community. You may say, “I don’t have time.” But I would say you can’t not afford to take the time to see what’s available. I know there’s a company today worth 1.3 billion because they took the time to apply for an incubator. And they were one of 20 companies of 400 that had applied and got approved. And they were in very early stages with hardly even a concept of a product. And now they’ve developed that product out well over the last eight years. I promise you that as you seek for all those resources, you’ll identify the ones that you can take advantage of, or that were meant for you. Establish relationships with your banker, with your customers. Sometimes you can get a large order from customers and they’ll wait for delivery and pay you deposits upfront. That’s another way called bootstrapping, where you can do that. But you have to be careful. Remember, they gave you the money upfront and then when it comes time to deliver, maybe they pay you the other 50%, but you’re not going to get a 100%. And so make sure you’re running it profitably. There’s a lot of ways you can use your expertise to help you in that. I hope that none of us allows capital to be the barrier to entry. There’s sources of it out there. Be careful, some of them can be expensive. But I think if you find people that believe in you and you have a product or service that solves problems for other people, that you will be able to find someone to support you in that. This is Craig Willett, The Biz Sherpa. I’m glad you joined me today to talk about sources of capital to start your business. Speaker 1: Be sure to go to our website to access the resources related to this episode at www.BizSherpa.co. If you enjoyed this show, tell your friends about us and be sure to rate our podcast. Craig would like to hear from you, so share your thoughts in the Facebook community @BizSherpa.co. Follow us on Twitter @BizSherpa_co and on Instagram @BizSherpa.co.

Are you wanting to start a business but unsure how to finance it? Craig discusses capital sources and how to borrow.    CLICK HERE to access our free resources, social pages, and website!

Steve Anderson is the founder of Denco Dental Construction Inc. and author of Dental Ease. Craig and Steve discuss marketing your business as well important factors you need to consider in your office space. Access the FREE first chapter of Dental Ease: https://www.dreamdentalpractice.net/ Action Items: Access our FREE Resources Subscribe to The Biz Sherpa Newsletter Follow The Biz Sherpa on LinkedIn Follow The Biz Sherpa on Instagram Follow the Biz Sherpa Facebook Page Subscribe to The Biz Sherpa Youtube Channel Subscribe to The Biz Sherpa Podcast on Apple Podcast, Spotify, Google Podcast or Stitcher. Connect with Craig on LinkedIn TRANSCRIPTION: Speaker 1: From his first job flipping burgers at McDonald’s and delivering The Washington Post, Craig Willett counts only one and a half years of his adult life working for someone else. Welcome to The Biz Sherpa podcast with your host, Craig Willett. Founder of several multimillion-dollar businesses and trusted advisor to other business owners, he’s giving back to help business owners and aspiring entrepreneurs achieve fulfillment, enhance their lives, and create enduring wealth. The Biz Sherpa. Craig Willett: This is Craig Willett, The Biz Sherpa. Welcome to today’s episode. I’m grateful that you joined me. Today, we’re going to get a wealth of information from one of my good friends and neighbor, Steve Anderson. Steve has written a book, DentalEase, and this is really helpful for almost any business owner—but in particular, dentists. He walks through how to build out your office space and how to save money in the process of doing that. It’s not always the lowest cost bidder that brings the savings. Also, I think he has a lot of insights in where to locate your business and why it’s important. But more importantly, he’s also observed successful dental practices, and what makes a successful dentist also makes a successful entrepreneur. So, I’m glad to welcome today, Steve Anderson. Steve Anderson: I appreciate it. Thank you. Craig Willett: Grateful to have you here and I think this book just came out recently, right? Steve Anderson: Yeah, it’s a labor of love for a lot of years and I didn’t realize how much effort it would be to get it published but it’s self-published and it’s been about a month, and now it’s on eBook and audiobook also. Craig Willett: That’s great. I’ve read your book and it’s really interesting and it appeals to me because you’re a contractor and part of my—a good part of my career was spent in real estate, so I can relate. I’m really curious as to how you figure out how to guide and find dentists, how you market your construction company, and how you find your clients. Steve Anderson: They find me. It’s interesting. Over the years, I’ve worked hard to be a backdoor marketer. To me what that means is first being consistent, working hard to have integrity and be consistent in my pricing, be consistent in everything I do, but at the same time, work hard at being able to market and sell myself. But more importantly, build relationships with symbionic businesses such as—since I’m in construction, a good fit is real estate brokerage and commercial and having and finding those key people that really understand the marketplace and it’s not about just finding the one or two, but finding all the symbionic businesses that can help my business and vice versa. It’s a two-way street. It’s really about giving them value and helping them sell better and be a better professional, and then by doing that, I reap the rewards of referrals and work. Simple things like an equipment person needs an extra operatory and he doesn’t know where to begin for a dentist. So what I do is, I’ll go out and help them figure out how to make it happen and yeah, it might be a simple little job but the one thing that we know is in the dental market alone, every three to seven years a dentist does something and I didn’t realize that— Craig Willett: When you say that does something, means they move, they renovate? Steve Anderson: They maybe paint the carpet. They renovate and move, but what’s interesting is they’re also very solid tenants. Usually once they find the place, they usually stay in that place for an average of 20 to 25 years or more. Craig Willett: So when you say backdoor marketing, you mean you don’t advertise per se. Steve Anderson: No. Craig Willett: You actually make yourself known among the professional community that can be a source of referrals, not just the dentist themselves, you’re marketing to real estate professionals, maybe even certain architects who can then recommend you to know what you’re—You know what you’re doing as far as finish, quality and cost which is information they need in making decisions. Steve Anderson: Well and also, there’s a very important key to that. One, that cost me dearly early in business. The important key is being a referral source to our clients, but making sure that whoever I’m referring has the same standards, someone that you can count on, someone that will return their phone call, someone that will follow up with them, someone that will do what they say and promise, because if you have the reciprocal, it can be as detrimental as—it can actually be worse than doing nothing. Craig Willett: Right, so that’s where you say symbionic is important, that they have similar standards— Steve Anderson: Correct. Craig Willett: —and that they act professionally the way you act. So, that’s what makes it cohesive. Steve Anderson: Yeah, and I want to make sure that you’re on the same page, as far as values. You can recommend anybody but you’re only as good as your word. Craig Willett: Right. Steve Anderson: Then, it just builds from there, and then also supporting whatever area that you’re in. So for me, it’s dentists, so I work hard to support whatever the association is doing. Whether it’s a special event or a vendor fair or something like that, I’m always there to help support it and encourage them in the process, and then get outside my box. I’m really an introvert. Craig Willett: That sounds interesting. So you write a book, and you go speaking at conventions, but you’re an introvert. Steve Anderson: I am an introvert. Craig Willett: How do you overcome that? Steve Anderson: I do my passion. If you’re passionate about whatever it is, you become an extrovert. Craig Willett: That’s interesting. Steve Anderson: My wife is actually the extrovert in our relationship, but when you start talking about dental, you start talking about the business side of things, I started lighting up and— Craig Willett: And you come alive. Steve Anderson: I come alive and it’s interesting, it just becomes a natural affair for me, and it’s something that I love to do, and it’s more important to me than being paid because I just thoroughly enjoy what I do. Craig Willett: I think that’s important and that comes across. I think it’s part of marketing when you’re enthusiastic and passionate about something the people you work with will recognize that and they’ll sense that energy, and also your knowledge. Steve Anderson: Yeah and you talk about—and I mentioned about stepping outside of my box, at the dental convention. I walked around all the booths and everyone is behind the table, and I’m going, “What are you guys doing?” “What? We’re selling,” and then going, “No, you’re not.” So I always make an effort. The first thing I do when I go to a convention is I take my table, and I put it all the way to the back and have open floor space. So, A, I’m inviting and B is then when there’s a lull, go out and talk to the people in the convention, all the other vendors and stuff. It’s amazing how many people don’t do that but it’s amazing, every time I’ve done that something resulted very powerfully from that. It might not be a direct lead, but it might be leaving a good thought or learning something about their business— Craig Willett: Do you have an example you want to share with us? Steve Anderson: We had one that had nothing to do with construction at all and it was a vendor that was selling just apparatuses, and things for the teeth and as I was talking to him, I can see the little light goes off and he says, “You’d be a really good source for my doctor,” and I walked away with a project. Craig Willett: Really. Steve Anderson: It was all because I engaged him. Then, I had another one that comes to mind is I had a video playing over on our booth and the guy across the way was watching it. So, soon as the break is over, he’s coming over and talking to me and asking me all these questions. All of a sudden he became like an ambassador. He’d have people come by his booth, and said, “Well, you should go over and talk to him,” and so you never know. Craig Willett: So they started introducing you to the next lead or making introductions. Great. Steve Anderson: So you really never know who your sales force is. Craig Willett: I think that’s great. I remember a time in my career as a CPA, when I would go to different meetings or conventions, I would always come away with some kind of project. I didn’t go there with that intention, but you’re right. When you meet people, and you carry yourself as one who cares and has a passion for what you do, people sense that. Steve Anderson: People know whether you care or whether you’re about their wallet. Craig Willett: I love that because I’ve always said if you start the business to make money, you’re doing it for the wrong reason. If you’re doing it to make a difference in people’s lives, then the money takes care of itself. Steve Anderson: Actually, when I was teaching over A.T. Still a few years back with another dentist, he was teaching —I had a little segment on how to solve dentistry and man, all the students are sitting up and they’re watching intently. As it unfolded they go, that’s too easy and it just—he had a simple little process of just introducing himself, touching him appropriately on the shoulder, and what he would do is just engage them, and just find a little tidbit about them. Then, he always did a good job of just providing the options but it was about connecting with them. Craig Willett: I think in your book, you talk about him and he listens too. Steve Anderson: Yeah. Yeah, that’s— Craig Willett: He gets real quiet, lays out the options and lets them select. Steve Anderson: Yeah and that’s the key in selling is providing options, but listening and not talking until they respond. Craig Willett: I think that’s great. That’s really very insightful. You said something else that intrigued me early on, and you said offer value. Value is an elusive term, right? Steve Anderson: Yes. Craig Willett: How do you view offering value? What does that mean to you? Steve Anderson: I give of myself and not expect anything in return. Craig Willett: That’s a great definition. So what are some examples that you can think of that really have brought clients back over and over again, you said a dentist does something every three to seven years. So how have you gotten repeat customers from doing— Steve Anderson: First of all, if an issue arises, just take care of it. I’ve paid a lot of money to be right and lost. Craig Willett: Really. Steve Anderson: Big time. Craig Willett: What do you mean by that? Steve Anderson: I had a flooring issue one time and I offered to replace the floor, three, four times and he’d say yes and then he changed his mind and yes, and we went back and forth and I got worn out. That was my key, is I got worn out. So, the battle of attorneys went and at the end, I ended up paying a lot of money for something that I could have resolved so easily. Craig Willett: By just replacing, listening one more time. Steve Anderson: One more time and the issue is things happen. And really, in the big scheme of thing you hear that thing is the customer’s always right and you don’t want to believe in that, but there’s so much truth to that, is when you push the envelope and you really work hard to be right and prove the client wrong and then, you stop listening also. When you stop listening, everything breaks down, and you lose, and attorneys are the only ones that win. Craig Willett: So your recommendation is just to listen and keep the communication line open. Steve Anderson: Yeah, keep it open and when you have those challenges, it’s really—most people just want to be heard. Craig Willett: Right, when it came time to renovate that dental office, did they come back? Steve Anderson: Yeah. Craig Willett: They did. That’s interesting. So what are the things have you done to add value where your dentists want to come back? Because I think a lot of people who do tenant improvements or build out office space think, “Okay, this is a one time thing. I got to make my profit on this,” but you said something interesting to me, that leads me to believe you have a different philosophy. If you know dentists are coming back every three to seven years, this is a recurring client. Steve Anderson: Yeah. Craig Willett: This is not a one-time build out. Steve Anderson: I had an expensive lesson. And I did a 5000 square foot office a number of years ago, and did a great job and helped him through a lot of issues and the project went extremely well. He had two or three other partners and about five years later, they did another office. They chose someone else because—not because of my reputation, but because of out of sight, out of mind and it clicked. What clicked for me is how can I get in front of people and do something different? So talk about added value, so I came up with tidbits for success. I’ve written probably 120 of them now. Craig Willett: Yeah. Steve Anderson: In the process— Craig Willett: I think they’re in here too. Steve Anderson: Well, yeah, it kind of mimics what I do but what I found is by—I started building an email blast list and every once a month, I’d send out tidbits for success. It was a short read and it had usually nothing to do with me or sometimes not even construction. It was just a success thing of things to think differently in business and how could you help yourself? I have a really good opening rate on it and it really amazes me. Then, on top of that, then a few years later I’m going, “Okay, it’d be really be fun to showcase some of the offices that we finished and what things the client said.” So I came up with Dreams Come True. So the alternating two weeks—so they alternate once a month—but they stagger by two weeks, as we send out Dreams Come True. Dreams Come True shows another office that’s just been finished and then it shows just what they say. But more importantly, people love to look at them because they see just the wide variety of offices that can be built and the new styles and things. Craig Willett: Well, I imagine that, the ideas they’re gathering for the three or five years from now when they’re going to renovate. Steve Anderson: And then being of value. On our website, we have 70, 80 offices on our website and people go, “Why do you show so many, you give everything away, Steve,” and I go, “Nobody—I learned an important lesson early on in business, when I tried to mimic someone else’s process,” and I found that nobody else can do it exactly the way they do it. Even if you have the script and what I found— Craig Willett: Like having the secret formula, they can’t mix it quite right. Steve Anderson: Yeah, it’s like, what I share with students when I teach is, it’s like baking cookies and you take all the ingredients, and you just dump them in and stir them up and bake them, it doesn’t work. So the thing I found is being able to—they can firsthand see all this information on our website about offices we finished and lots of ideas and all our tidbits are on there, but the thing I’ve found is it’s really about being an open book and being a resource. People enjoy that, it’s refreshing. Craig Willett: So how do you find yourself helping dentists? Let’s say you get referred to the dentist, whether it’s from speaking at a convention or whether it’s from someone else that has referred you to them, how have you helped save them money and time and made the process easy, because I mean, I think the name of the book is DentalEase, so there’s a way to—you’re taking it and making it simple and this is along the lines of what I did in real estate development, a lot of people wanted to own their own office building, and they should when they spend that much time educating themselves, but they don’t have time to go out and find the right size piece of land in the right location— Steve Anderson: And develop it all. Craig Willett: And develop it all and then get the structure, but what we did is build the shell building and allowed the interior space to be however they wanted it because everyone is unique. Steve Anderson: You did such a great job at that too. Craig Willett: Thank you. Steve Anderson: Just sharing with you the name of the business earlier, I’m shocked and amazed, that was my building standard. When we would have clients go look for a new space, we love those buildings because of all the criteria that were met. Craig Willett: Right, but that was part of our marketing too is that we have your needs in mind and we know what you’re going to need down the road. So we’re going to anticipate that and put it in. So, that all you have to do as a professional is hire an architect for the interior and a contractor to get it done and then, instead of a two or three year process, you take it down to a two or three to five month process. Steve Anderson: Right, yeah. Craig Willett: So anyway, with that in mind, how do you help save them because they really don’t have two to three years to go find a location? Steve Anderson: No. No. Craig Willett: And start from scratch, so they need to start somewhere and then, there’s a lot of decisions that you help them with. Steve Anderson: Yeah, it’s so varied and so wide. So today, I talked with—a dentist called me up and said, “Steve, what do I do?” He was trying to decide, “Do I do a ground-up? Do I do a tenant improvement? Do I buy this whole building? Do I do a stand-up? What is it?” So, we just started talking through the processes and just quick budget numbers. Early on, when I was in business, I would want to get it down to the penny and when people are trying to make the decision, you round it up to the nearest $10,000, $50,000 level because really in the scheme of things, if something is $800,000 and this one is a million dollars, that’s really what you’re wanting to know, or this one is $1.8 million and that’s really what it’s—so just helping them through that and then talking about the visibility and talk about advertising and what are they going to spend more monthly to maintain and gain from. Then, I have the client that comes and one that really comes to mind is a doctor in Mesa that had an office and he already had his permit. He had his plans done. He said, “Steve, I want to build this out. I’ve got a doctor coming on board here in six months and I got to have this done and we’re going to expand.” I said, “Fine. Can I have permission just to set this aside and let’s talk a minute.” He says, “Why? I got all decision—” Craig Willett: I’m ready to go, just bill. Steve Anderson: That was an important lesson I learned a long time ago, is nobody—not nobody—but most of the people, even architects and other contractors don’t ask that extra question. So, at the end of the meeting, he goes, “These plans don’t work,” and then he goes, “So what’s that cost me?” He says, “Well, we’re going to—probably another $3,000 to modify the plans, you lose a month at the city, and go at it and do it right.” He goes “That’s worth it,” because all of a sudden—he shared with me in the meeting, he says, “For 10 years, 10 years ago I hired a professional to help me design my operatories and they’re too tight at the head wall and I hate them for 10 years.” He was going to get a guy, another 50 pounds bigger and six inches taller than him coming on board. Craig Willett: And he’s not going to be able to move around and function on that. Steve Anderson: He couldn’t even function in those spaces and also, you’re going to mimic it over on the other space. Craig Willett: Right, let alone if the doctor is cramped, imagine the patient. Steve Anderson: And what was so sad is the operatories were struggling for space and here, the hallway was six feet wide and you could easily take a foot out of it. It depends on where the dentist is, when we have a dentist that is early on, they’re just in the process and they’re trying to decide where to go. We typically sit down with him and find out—we call it a program meeting and it sounds more terrifying than it is. Basically, it’s just finding out what’s important to them, what are they about, how many operatories are they thinking what kind of practices are there going to be, what kind of demographic? At the end of the meeting, we’re able to go to the broker and say, “Well, he needs 2400 square feet and he wants to be in this general area,” and help him through that, but that’s where we talk about assembling your team and you them together and more than one set of ears are listening to what the dentist wants, and you can help them in that process. Craig Willett: Yeah, I think that’s great. In fact, I think one of the things that your book really brings out that I think is a key, and that is your practice will speak 1000 words when they walk in. Steve Anderson: Yeah. Craig Willett: It’s going to say who you are as a dentist. For any business owner, your office is going to say who you are and you need to be consistent with that. So it’s really important to make that impression. Not necessarily overwhelming and spending a lot of money, but it has to be comfortable and feel right. Steve Anderson: And the key to that is making sure it’s who you are. Craig Willett: So you spend a lot of time with them trying to help figure out who they are? Steve Anderson: Yeah and the reason being is you can build any level of design but you have to be comfortable in your own skin. You have to be comfortable in your surroundings. I’ve always believed that, that if you build at the height of who you are, you’ll succeed. Now, it’s important not to go over it, over design or under design because if it’s under design, you hate going and if it’s over design, then you have an issue where you struggle because people are second guessing and you’re going to think well they’re paying for it— Craig Willett: He’s recommending this so he can pay—yeah, he’s recommending a bridge today, so he can pay for this. Steve Anderson: So what I found is—I think of a gentleman over in East Phoenix, in the Hispanic area. It was the lowest cost per square foot, most basic dental office I’ve ever built in my life, and he knocked it dead. Craig Willett: Really. Steve Anderson: Because that’s who he was. He understood his market and he understood what he was about. I mean it had no soffits, it was just very VCT floor tile, just very, very basic— Craig Willett: Yeah, just vinyl, no tile. Steve Anderson: He started out with Three Ops and then, I saw him at the Expo the next year. He said, “I just added my next operatory and see you at the next show,” and he says, “I’m all built out for all my ops and I’m just killing it.” Then, I’ve gone to a dental office that is just knock-dead gorgeous, very, very pretentious even—rather than one or two soffits, it had like eight layered soffits and it had just all kinds of—especially theirs wasn’t a flat or radius, every ceiling was radius and all kinds of specialties in it, and it was way beyond the doctor. The doctor moved into the space and I went to go see him because he had a little construction issue and he had been in there six to eight months and his production had dived. What happened was, he was very insecure. He had a hard time going to work and just that, he felt that patients when they came were paying for this— Craig Willett: So, you have to have confidence in what you’re doing, and your surroundings have to reflect who you are so that you’re comfortable, and they’re comfortable. Steve Anderson: The key is, so it’s designed for who you are and that’s where found when I started specializing in ’97, that everyone sold Kool Aid. There’s lots of Kool Aids to drink, you can go to this architect, and they’ll sell you their type and I won’t get into the names, but everyone had their package in the way of doing things. Craig Willett: Right, and their signature style. Steve Anderson: Yeah, and I could literally walk in. I could tell you which architect or which firm it was. So what was interesting is, as I started working with them, I’m realizing that it’s not about the client, it’s about them. This is the way you will always do it. Craig Willett: Right, and I don’t want to be detrimental, but I always express it this way. I always say, “Are they building it for someone or are they building a monument to themselves?” Steve Anderson: Right, yeah. Craig Willett: Right, as the design expert, rather than for—and I’ve been through that process with —Carol and I have been through that process in trying to design a home, it kept being designed the way the architect wanted and hence we never built it. Because we never got what we wanted and we spent quite a bit of money and never built it because it didn’t reflect us. Steve Anderson: Yeah. Craig Willett: I think that’s one thing that you can probably help dentists make sure it reflects them. Steve Anderson: That’s really— there’s no greater reward than having a dentist walk in and you see that big smile. Craig Willett: Yeah. Steve Anderson: I go, “Yeah, nailed it,” and just— Craig Willett: Now, you touched on something that I think is important. I don’t want that to go unnoticed, what you just said, the reward you get and the feeling of emotional—I call it emotional currency, that goes beyond the dollars and cents of the transaction, that you can see someone be more successful. That’s how it was and how it is for me in anything that I do. When I did office buildings, when the doctors would say, “Hey, my—” They would write to me and say, “I have more walk-in traffic, and I get more referrals from my location because my office is—” Right? There was nothing that brought greater satisfaction and I’ve talked about that before on my podcast. So, that is key. So many people think business is dollars and cents, but it’s about meeting expectations and then exceeding those. I want to hear more about how you add value. Steve Anderson: It’s about putting the right team together. So, when you have a dentist that’s coming in to look for—or any professional looking for a practice—it’s asking those extra questions and then also trying to match—I work hard to match personalities. The last thing you want is a really good architect, but if they have a conflicting personality with the client, it doesn’t go real well. When you have a meeting, you want to make sure things click, and there’s excitement and it’s fun. That really makes it an enjoyable process, and so they enjoy coming to the meetings, and the key is we also work hard to maximize their time. So we ask for the privilege to deal with a lot of the stuff upfront, because the thing—when I first started in construction, I would notice that most of the contractors is, “Hand me a set of plans and I’ll go build it” and you’re kind of going, “There’s a lot missing here.” Craig Willett: In what way? Steve Anderson: Well, besides just asking extra questions about, “Is the plan right?” but also walking them through that and then helping them envision if—whether it’s a 3D rendering or our drawing or pictures. On my tablet, I usually have anywhere from probably 250, 200,000 pictures of just different offices. But we just share with them just—they’re trying to comprehend what it looks like. So I’ll pull up—I have a category just for waiting rooms and hallways and operatories. So, we can share those with them, but help them with the color process and colorization. We do all that, probably, I would say 90% of the offices that we do, we do all the colorization. Craig Willett: You even have a section in your book on colors and what they mean. Steve Anderson: Yeah. Craig Willett: Yeah. Steve Anderson: Everything has a psychology to it. Craig Willett: Right. Steve Anderson: And it’s about success. Craig Willett: I also noticed, as I read your book, that you keep people from making mistakes. You told me about one just before we went on air today, but one of them that you mentioned in your book is you had lunch with one dentist and she was explaining to you she had an 1800 square foot office and she had found a 6000 square foot building and wanted to get the brokers at the next meeting. You said after the end of the lunch, cancel the meeting with the broker. What happened? Steve Anderson: She first was in shock and then, I explained. I said, “Basically, let’s go back to your office and see what we need to do,” and for what the requests and the needs were, it required $40,000 remodel, and it’s interesting that doctor just shot me an email this week and said, “Okay, now I’m ready for the office,” and it’s going to be about a 3000 square foot office. Craig Willett: So rather than overshoot the mark and overwhelm— Steve Anderson: And they would have been out of business. Within a year, they would have been out of business. Craig Willett: So it’s not just a matter of life is difficult, life could be—business life could be fatal, if you make the wrong decision on location or size. Steve Anderson: It’s huge. I teach a word to dental students and it’s ‘no,’ and they laugh. Then I explain why. I said, “Most of you—” and I said, “In a class of 100, it’s usually one or maybe two that like confrontation.” I said, “The rest of you don’t like confrontation, so all of a sudden, you get sold things that you don’t need, don’t want, but you’re too embarrassed to do otherwise. I share some of my experiences and dumb moves that I’ve made over the years. Craig Willett: That even goes to investing. It can go— Steve Anderson: Oh, everything. I mean, one time I won an award of a spa, and the day finally arrived, and it showed up, and it was in a box, this big. Craig Willett: You were expecting a full size hot tub? Steve Anderson: I had to get over myself, for two years, it sat up in the shelf, and my guys wrote Steve Spa, but I had to get over it and I share that with the doctors, it would have solved so much headache, heartache, frustration, if I just faced up to it and said ‘no’ to begin with. So I tell them, if you don’t have the guts, make sure that you —whether it’s a spouse or a loved one—someone that can help you in your process, that’s always with you to be the bad person, be the person that say, no, this doesn’t— Craig Willett: Right, good cop, bad cop. “Hey, we can’t do this.” All right. Steve Anderson: Yeah, this doesn’t work for me. They go, “Ah,” you see a sigh of relief, “Oh, I don’t have to do this.” Craig Willett: That’s interesting. You also told me a little bit about somebody who you were helping, even recently that was looking at an older building. And I kind of want to talk about location because in real estate, they’ll say location, location, location is important and I think so from a point of visibility, but you’re working with someone now who’s trying to decide between a new building and an old building. Talk about that. Steve Anderson: We got two issues there. So first is—one thing I teach is the importance of understanding what’s important. So I give an example of, is it location, is it your skills as a dentist and most dentists will say, “This is real important.” Is it your staff and how they relate? Is it relationships? Is it the location? We list those five or six items up on the board and everyone goes to location. And I said, “Actually, that’s probably down two or three and number one is relationships.” Craig Willett: You make my dad turn over in his grave saying that, but I like the relationships, but location—yes, relationships. Steve Anderson: In perspective and that’s where—they’re all important. Craig Willett: Right. Steve Anderson: If you don’t have that relationship, and I’ve proven this as I’ve seen two practices, opposite corners, same great location and one flourished and one didn’t. Craig Willett: And the reason? Steve Anderson: Relationships. Craig Willett: So, one dentist—how do you build good relationship? Steve Anderson: And it’s about connecting with your patients and they’re not just a dollar sign. When they walk in, you provide options for them, you help them through the process, you help them understand what’s important and it’s not just dentists, it’s any business. It’s really providing them options and letting them make the choice of what’s best for them at that time, because it’s different for everybody. You go into these really hard-sale, gimmicks sometimes. I remember early on going to some of these seminars, and I’d be overwhelmed with all the information when I come back from it. The important thing was to just grab one or two tidbits. So, it really comes down to relationships, and then part of that—so talking about the businesses, so location came up in that conversation we had just a little bit ago was there’s two businesses, a quarter mile apart. One is sitting on a corner, it’s an old building. It’s going to need some improvements, but the landlord was going to do some refurbishing of the outside of the building. The square footage was going to max him out. He’s not going to quite—he was wanting to do a couple extra operatories, but the location will just kill her, and parking was tremendous. He was going to have to demo the entire inside and start over. A quarter mile down the road, great condo complex, but it was the last one in the very back of the building. Craig Willett: Brand new. New, not built out. Yeah. Steve Anderson: Yeah, never built out, it hadn’t recovered from ’08 and it was done just right at that timeframe, and what was interesting is, there’s very few of those left but it was one of those buildings in which—brand new building never been built out, but it was going to cost them $20 to $25 a square foot more to do that location than over here. What was interesting is I told the doctor and said, “You think about it, you’re sitting on a corner, and three directions, you see it instantly and you’re a standalone—free standing building.” I said, “You’re not going to have to pay for advertising. Though over here, you’re going to spend $3,000 to $5,000 a month.” Craig Willett: It was going to cost him more at the end of the day anyway plus that. Steve Anderson: Yes. Craig Willett: That’s interesting, and that’s why I always say it’s important to have that visibility. You don’t need to have a neon sign, but if you’re in a path of where most of your patient’s potential clients or customers are going to go and they’re passing by, on the way to school, church, home, from work, they’re going to see that name and it’s going to reinforce whatever referral they get. Steve Anderson: Yeah, and it’s so important, but it’s not always location. I’ve seen just the opposite happen and I’ve seen certain situations where it’s not quite as a good location, but because of the demographic and what was in the center. So I’ve had people in a center that have done extremely well, and they ended up renting rather than buying the other building because the foot traffic—because it was a grocery store. Craig Willett: Okay. Steve Anderson: They knocked it dead. So there’s all these things that you have to put into the hopper. It’s not just location or it’s not just the cost per square foot or whether I can buy or sell. It’s always better to buy for long-term investment. I’ve done one off, one client I had, we did six offices for over the years and he never owned any of them. Craig Willett: Really. Steve Anderson: They’re all in someone else’s space, but they made a very good living and I said, “So how can you justify this?” I have students that ask me this and said, “How do you feel comfortable putting in 200, 300, $400,000 in someone else’s building and not own it?” He said, “Well, number one,” he said, “I don’t have to think about the maintenance and the care of the building and I don’t want to have extra tenants because then I don’t have to be a project manager and I don’t have to do all that kind of stuff, and I said, “Basically, it simplifies my life and I do what I do extremely well.” He said, “Yeah, it costs me some money, but in the long term, it’s in a center, in an area where there wasn’t a building available or a site available.” Craig Willett: Right, he couldn’t buy it, probably couldn’t even buy it at that location. Steve Anderson: There’s a lot of situations like that around town and around the country, that land isn’t always available. And really, it’s about your business and making a good business decision, and putting all that together. Craig Willett: I think you said something there too, that I think that—a point that I know you make in your book, and that is that, there’s some advice about getting it stress-free too and being able to eliminate some complications. What advice do you have for business owners and what advice do you give to dentists to kind of help—he said to—this one guy, he didn’t have to worry about the building. So, that doctor went ahead and was very successful, he didn’t have to worry about some of the worries of ownership. Steve Anderson: Well, and what we do, the advice and helping him through the whole process, it’s more like a project manager than it is being a contractor. It’s a design-build and we take them through that entire process and the value to that is tremendous. What they receive, but also having that—being surrounded by so many good accountable professionals, and I can’t stress the accountable portion enough. When you have a good accountable team, they’re taking care of all those details and working— Craig Willett: And working together to make sure it happens timely. Steve Anderson: Yeah, and you can concentrate on your business and they’re accountable to you, you know they’re accountable, because then what they’re doing is they’re providing you with a timeline, “Here’s our timeline, here’s our agenda. Here’s our target dates and here’s how we’re doing on those target dates.” Craig Willett: Here’s our updates. Steve Anderson: Yeah. Craig Willett: I think that’s great. Accountability is really important and I think that goes to all businesses when you hire outside professionals. They should be accountable and they should have similar values, like you said and if they have those similar values, it’s more of a pleasure to do business, right? Steve Anderson: It is, it is and it’s always tough to work with someone that’s not in sync, someone that doesn’t have quite those same values, but by some reason, those cases happen and you have to make the best of them. Craig Willett: That’s interesting. I look through and you would think at the end of the day, that saving money is usually most people’s motivation, and I know you kind of say something in your book that I thought— I think it’s an important thing to talk about and that is, you mentioned that you don’t like to see them competitively bid and someone might say, “Well, yeah, Steve says that because Steve doesn’t want them going out and bidding against other contractors if he’s invested all this time upfront.” More so, what are the hazards to just doing competitive bid? Steve Anderson: Well, just— Craig Willett: For building out improvements. Steve Anderson: It doesn’t matter whether it’s improvements or equipment or whatever it might be. For myself, what happens is, I take a lot of pride in what I do and I always want to give my best. When people start going into the competitive bid mode, all of a sudden, it’s kind of like it’s not as important to them anymore, so it’s kind of, not as important to me anymore, either. Craig Willett: I see. Steve Anderson: I hate to say it, but I have a little bit of an ego there. Craig Willett: Right. Steve Anderson: What’s interesting is when we go— Craig Willett: So, you’re sacrificing good execution for lowest price. Steve Anderson: Yeah and it happens so often, and you can always take all the hard work of someone that’s gone before you and if they’ve done a great job, and you can always undermine it and undercut it. Are you going to get the same thing? No, because the attention, the detail and the value that happens, and what I find and when I have a client that has chosen someone else in the process is usually the next time I get them, because they come back to me and say, “Okay, I understand what you’re talking about now, and I paid dearly for that.” Craig Willett: Right and it usually comes from, well, just allowances being too skinny, and they’re going to pay more. Steve Anderson: Actually, that’s what’s so frustrating. Craig Willett: Then, the changes cost more— Steve Anderson: You can make a number look like anything, and I share this with students. I said, these are actually all identical quotes and they go, “Well, they vary by $150,000. How can that be? Well, you see that little NIC or you see that little mission where it doesn’t say anything about it or you see that PBO or provided by others, you can make any proposal look like anything you want just by pulling it out.” Craig Willett: Just by leaving a few things out. Steve Anderson: Or, you see an allowance here, that’s $30,000 and over here, it’s $5,000. Well, what does that mean? Well, that means that, all the cabinetry in the entire office will probably cost $30,000 but they’re giving you a $5,000 allowance, so they’re going to hit you with a big change order, plus additional markup on top of that. Yeah, it looks great now, but you’re going to pay dearly. In this world, right now, with lenders, what they’re doing is, it used to be standard practice. Remember, the days when they give you an extra 10% over the contract? That was standard practice. It doesn’t happen anymore. If a lender gives you a letter these days, that’s it. Craig Willett: Right. Steve Anderson: If it’s a half million dollars, and all of a sudden, you’re at $650,000, that $150,000 is coming out of your pocket. Craig Willett: Right, the equity in your house or friends and relatives, yeah. Steve Anderson: They will literally stop the project until you pay up. So, it can cause a delay, it can cause a lot of grief, it can cause a lot of problems. I was checking at the end of last year, I’m going, “So how am I doing with change orders?” Because I’m always curious and so, out of all the projects we did last year, if I pulled three clients out and those three clients are ones that, they had no budget and every time they turn around, they wanted some additional work done. So once, I just pulled those out and we were at 0.8% change orders. I said, “So why is that?” Well, if you define the scope of work really well, and you’ve done a good job listening and putting it all together, then it all comes together. Craig Willett: Right, then there are no surprises. There aren’t these big delays and those are what cost people money, right? A dentist is trying to open an office if they have a four or five month delay of anticipated approvals or things not ordered timely or they had an allowance, but they hadn’t gone to pick it out, now, they have to go pick it out and it’s backordered. Steve Anderson: That’s where I found the importance of asking all those questions up front. That’s where we talked earlier about why I ask clients the permission to have those meetings up front, they’re going, “Boy, these are intense,” and so in a matter of three hours, we finalize their floor plan and looked at the ceiling and power plan. We’ve got 80% of their material finishes done, and in the second meeting, it’s not uncommon to have the ceiling plans approved, cabinet details are reviewed and material finishes are approved. Craig Willett: In the end, you’re saving them a lot of time. Steve Anderson: Rather than the stigma, the standard for the industry is you’re making decisions throughout the process, so you’re constantly getting interrupted and all of a sudden you get a phone call and you’re in the middle of procedure, whatever it might be and say, “You know, what color of carpet do you want to go with or where do you want that accent wall?” Craig Willett: What stain did you want on those cabinets? Steve Anderson: Yeah. Craig Willett: Right. Steve Anderson: And asking just stupid questions at the very end. So, before we start, we have all those answers into the nth detail. Craig Willett: I think that’s great. One of the things that I can tell that you really care about your business is—one of your attributes is you’re one of the only ones—in fact, I think you’re the only general contractor that is endorsed or approved by the Arizona Dental Association. Is that correct? Steve Anderson: That’s correct. Yeah. Craig Willett: What was that process like? Steve Anderson: In Arizona, we are the only general contractor that specializes in dental offices. Craig Willett: That’s great. So that goes back to importance of a niche. You told me in 1997, so the name of your company is Denco. Steve Anderson: Yeah. Craig Willett: You decided to specialize, what were you doing before 1997 that led you—or what led you to specialize in dentistry? Steve Anderson: I got tired of being everything to everyone. I was driving to work one day and I’m going, “I am so fed up in being a number,” and I had just gone through a seminar and it was an eye opener and I had this thing that said that I have a need to be needed. Also, I have a lot to give and I have a lot of value, and I’m going, well, they don’t go hand-in-hand, when you’re constantly just being—throwing a number out and you have no value. So, as I was driving to work, I’m going, “Okay, so who needs help and all the different businesses, I had done that part, and you have to understand I’ve done residential— Craig Willett: That’s what I want to hear, so homes. Steve Anderson: Yeah, we’re talking homes, residential, remodeling. We’re talking commercial, we’re talking strip centers, industrial hazardous, I did work at the milk plant. We’ve done work at just every kind of commercial setting you can ask. Craig Willett: So if they needed a contractor you were bidding on it? Steve Anderson: Yeah and dentists came to mind. Craig Willett: Why is that? Why did they—of all things, why would they come to your mind? Steve Anderson: We were doing a walkthrough one day and I still picture it. We were walking through and doing the final punch on the job, and we open up the door and he goes, “God, that’s beautiful. What is that?” He said, “That’s your $750 mop sink,” and his mouth dropped and he got really read, and he was very upset. He says, “I told the architect that I wanted a $50 mop sink, the cheapest thing I could get.” I just kind of—one of many things that hung with me, but it comes back to listening and why I really encourage the team of professionals at each stage, being there and listening and being attentive. So if I don’t catch it, you do or vice versa or the architect might catch it, or whatever it might be. Steve Anderson: So, that stuck with me and I’m going, “Dentists. I see where they’re constantly being taken advantage of, up sold, sold things they don’t need, just all kinds of things. Craig Willett: So you thought, “Hey, there’s an opportunity for me to come in and help. Steve Anderson: Yeah, and make a difference. Craig Willett: Truly help with an eye to make a difference. Steve Anderson: Yeah, so I wanted to make a difference in the dental field and impact them in a unique way and that same time, within a few months, I’m going okay, “I’m going to write a book, and I’m going to teach at the colleges,” and I’m going okay. You have to understand, I never went to college. Craig Willett: But you’re teaching at college. Steve Anderson: I teach at a college, miracles happen but it comes back to the passion and it comes back to what you know. Craig Willett: I like it though too, it’s specialization. You chose a niche and then, you just kept refining and refining. So since 1997, I mean, this book is replete with pictures, examples, floor plans and processes to go through to build out a dental practice of your dreams. I think it reflects your passion for that and in that, we’re not talking just dentistry here today. We’re talking, this applies to any business. When you can narrowly define your market and then, understand that the more you know about that market, the better off you are. You’re going to know your customers so well, your potential customers so well. You’ll know who knows them to refer them to you. You also know what their needs are before they know what they are. You will anticipate that and you can make their life a lot easier, and that’s where you add value. Steve Anderson: Yeah, and that’s the key. It’s fun going to a meeting and my sales pitch has changed over the years. In the past, I start off by talking about me. That’s the worst thing you can do, in my mind when you want to try and get across your value. Instead say, what are your needs or sometimes I’ll just walk in and say, “Well, you really have an issue with this and this right now, don’t you?” He goes, “How do you know?” Yeah, because I can just see some pain points that are in an existing office just by looking at it, and then speak to those and make sure they’re heard. I’ve had offices—another one that comes to mind was one in Yuma. I was asked to go down and they had drawn —the equipment company had drawn like eight drawings for this guy. He was frustrated and he’s about to lose the client. He said, “Steve, would you come down. Let’s just kind of look at it and maybe you can help a little bit, maybe not? I don’t know.” So I just went down and listen to them and just ask some pointed questions about things and I didn’t even want to see the other floor plans. Let’s just see what it is that you’re about. So two days later, I shot him an email with two plans that says, “This is the one I think you’re going to like and this is the one that I would do.” Craig Willett: Which did he pick? Steve Anderson: The one he wanted to do. Craig Willett: Really. Steve Anderson: They were a minor change. Craig Willett: Okay. Steve Anderson: It was just position of the doctor’s private office. Craig Willett: Okay. Steve Anderson: I won’t get into the details. Craig Willett: The equipment company ended up keeping the deal. Steve Anderson: Yeah. Craig Willett: Because of your expertise. Steve Anderson: Yeah. Craig Willett: That’s interesting, because you possess an expertise that’s pretty deep and I think that carries credibility with reputation. People—I asked someone the other day on our podcast, how does someone go about finding a professional to help them? They said, “Ask others in the industry?” Steve Anderson: Yeah. Yeah. Craig Willett: So, I would imagine if I went into a few dental offices, I’d hear about Denco. Steve Anderson: Well, I hope so. Craig Willett: I would imagine so. So no one can escape The Sherpa’s Cave without answering—and I think you answered it once. I’m going to ask you again, though. I didn’t even ask you, but you told me about the spa and having to get over yourself, but everybody has a failure. I want to know one of your biggest failures, besides winning the award for the spa and having to look at it for two years— Steve Anderson: Yeah. That’s just a small little piece of my failure. Craig Willett: Okay. Steve Anderson: I’ve had so many learning experiences over the years and the book is a compilation of taking those learning experiences and help people receive success from them. My pain points. So the biggest, personally, is my marriage and my family. My wife said she had it on two occasions, one at seven years of marriage, and then we put a bandaid on it. At 15 years, it was almost irreparable. Fortunately, what I did as the result of that is I stopped and looked around and I’m going, “Things aren’t working,” by results and that’s an important thing, and sometimes we don’t stop and look around, but I stopped everything I did and realized this is very important to me. I got counseling and then, we counseled together and it scared me to death because I thought that the counseling can go on forever, like Bob Newhart. Craig Willett: Right, I remember watching that show. Steve Anderson: I’m telling my age but we’ve been married over 42 years now. So, I think we did a good job. I worked hard at it and I still work hard at it. Craig Willett: So what did you learn from that experience? Steve Anderson: Priorities. It’s really—I was a workaholic and I learned it well from my parents. My dad worked six, seven days a week and worked late. My mom was always doing something and to be still was not a good thing in their minds. So from that, I realized that, “Hey, something’s got to change,” and yes, I’m a workaholic but there is help. So setting some healthy boundaries and finding the areas that can make me a better person and help me be more balanced in life in that process. Craig Willett: I think that’s so important and I wonder, I just have to ask this question, maybe it’s relevant, maybe it’s not, but when you started to specialize in dentistry, did that help you with managing that time becoming less of a workaholic per se, and more available to your wife? Steve Anderson: It was a dangerous time because it needed more, when you’re just starting something, it’s kind of scary. Craig Willett: I remember those feelings. Steve Anderson: Especially, because, also you have to understand business-wise, my biggest failure is personal and business bankruptcy. What happened was, basically, I put everything into the one basket and I did a number of different things, and we can talk about that, but it was very, very devastating and I was fortunate that I’d fixed the marriage before that transpired, but to survive that and all the other challenges we’ve had in our lives, I feel very blessed. Craig Willett: I think that’s great. I appreciate your honesty now. So often, we’re not willing to talk about some of the challenges we face. As with everyone, we face extreme lows to experience extreme success and when I’m talking extreme success, I’m not talking about dollars and cents, because we haven’t talked anything about what your revenues are and I don’t really care, and I don’t think it’s important. What I think is important is what you said, is when you walk in and that dentist has a smile on his face. I’m sure when you walk home from work, and your wife has a smile on her face, knowing that you’re going to spend time with her tonight, instead of helping somebody else out. Steve Anderson: Yeah and my nature is to always be there for everyone, and so that doesn’t work, you have to have—there’s a balance and it’s going to be different for everyone and everybody’s going to have different criteria, what that looks like and— Craig Willett: Right, but you don’t want your business to own your life. You need to own your life and put those priorities in place. Steve Anderson: What I found going through business bankruptcy was just … not only I’m understanding how important that balance of life was, but also just learning some new words like blind trust versus earned trust. I can say, “Well, my controller put me in bankruptcy. No, I put me in bankruptcy. I chose to go on bankruptcy.” People say, “What?” What it really amounts to is, if you’re mentally not well … and I wasn’t, I had a low self-esteem. So part of my counseling was building on that and learning … Because if you have a low self esteem, you’re open to everyone and there’s times, I can look back and I self sabotage myself. I hate to admit that but it was some very painful lessons, but not only the lessons I put myself through, but my family, Craig Willett: Right, because you set the lower expectations for yourself and you don’t rise to it. Yeah. Steve Anderson: Yeah, and then understanding the accountability portion of that. So as I … and that comes to earned trust, is that blind trust I put into a controller that not only did she … she even did Sewing Bees with a staff at my office, but the results of what we did is I had falsified reports, I had three sets of records, I had my … I found my taxes in the bottom drawer and I’m going “Oh, crap.” From there, the peels kept coming off and I kept throwing money in it personally. Not knowing how deep- Craig Willett: Thinking how to bail it out. Steve Anderson: Yeah, not knowing how deep the hole was and that the hole is a lot deeper than I ever anticipated and it causes personal bankruptcy. So, I have about seven or eight attorneys at one time. It was that big of a mess. Craig Willett: It probably resolved not to have that many attorneys ever again and be careful who you put your trust in. Steve Anderson: Yes. Craig Willett: I think those are all important lessons. I appreciate you sharing those. Those are tough things to discuss, but great when we can learn from them. I think … and I know you because you want to share and make a difference in other people’s lives and I appreciate you sharing it here on the Biz Sherpa because this podcast is about helping other people become or able to be more successful. I’m not just talking dollars and cents because I believe the money takes care of itself, when you’re passionate, you feel your niche well and you add that value. That emotional reward is … it takes you home at night and put you on a cloud. Steve Anderson: Every day I feel just so overwhelmingly blessed and just to be able to thoroughly … and you have to understand as early on, my life as a young married person with children, our relationships for the kids were everything from … far from perfect but it’s really interesting as every time I hang up the phone … 90% of the time, I have my phone with my oldest son is he says, “I love you dad.” What a report. Craig Willett: That’s great. Steve Anderson: I’d like to share one other thing, is that— Craig Willett: Sure. No, go right ahead. Steve Anderson: One thing that I’ve found, and I put it in towards the end of the book was FISTS for Success. That’s one thing that business people should remember, FISTS for Success. It just hit me one day. As I talk to professionals and they’re getting ready to do their job, so often, it’s like, this little wall is there and they don’t realize it. They’re blind to it and it’s keeping them from their future. It’s keeping and it’s holding them back and they don’t realize it. So, what’s interesting is—and it’s like fists. You’re literally—if you’re the lender or the broker or whatever, you’re holding back your own future, how can that— Craig Willett: You’re trying to protect your territory. Steve Anderson: Yeah and you talk about the closed position versus the open position. What’s interesting is you take—so I came up with FISTS. The F is the FICA, the FICO score. In this day of the economy, that’s become so important. Craig Willett: Right. Steve Anderson: I tell people that, really, if you can keep it in the at least in the low 700, 720, right in there and up is really to your advantage, because lenders will look at you more— Craig Willett: Right, and help you through anything. Steve Anderson: Then, the I, intelligent spending, and people go, “What?” Well, what I saw firsthand is people doing their spending in the wrong order and “Well, what do you mean?” Well, dentists, especially, they go from school, making nothing to all of a sudden they’re making some really good figures every month and first thing I want to do is go buy the real nice house and buy the real nice car. Well, what’s interesting, when they do that, they don’t qualify now, to d