As an Entrepreneur, Learn to Thrive not Survive - Part 2 with Ross Paterson

TRANSCRIPT

Mike Pine: [00:00:00] So, Ross, for a lot of our listeners that maybe haven't tried to start a business yet, but it's something they want to do. Most people who haven't started a business, have no idea how hard it is, but..

Ross Paterson: If they did, they probably wouldn't.

Mike Pine: Probably!

But for those who are considering it, what would be your words of wisdom on - Should

you

do this?

What should be your motivation for doing this? And what to do first,

or for the first year?

Ross Paterson: Yeah, I think I'll go back how you started the question and, it's just this ideal - we imagine business ownership to be this freedom moment, like - I get to do it the way I want to do and I got the autonomy, I don't have a boss, but then you realize quickly that all that freedom of autonomy comes with this heavy burden of being responsible for it all, and it's just, 'Oh..' Sometimes it's heavy.

We see business owners and we imagine we think we know what they're going through and what it's like to be a business owner, and you just don't know. So, it can be kind of heavy. [00:01:00] So, a couple of things for startups - was working with a family member who has started this businessbit,

and I'm trying to coach him a little on what to do next. So a couple things - one is I always tell people, unless you got a rich uncle who's going to invest in your business (which is almost as dangerous as starting from, scratch),is that- work on your side hustle and really figure out the marketing and selling and how to get clients and what great clients look like,

work on all that on nights and weekends before you quit your day job. A lot of quit their job, and then they start their business from zero. You see those stories of the guy who went from zero to 10 million in a year, but they're outliers, right? and that's why they write books on it.

Our experience is - it takes two or three years even just to get some steady revenue coming in, and then somewhere around the five year mark, we can start creating some breakthroughs. Just, there's no short cutting some of those things as you grow your business. I would say, if marketing and sales is not your background, start reading some Seth Godin and some Donald Miller and [00:02:00] start learning about marketing and sales.

I think that's pretty critical to starting a business. The second thing is, life's too short to create a business for yourself that you think can make money doing work you don't enjoy,  and so, the work I enjoy of unlocking human potential, of solving messy problems, of new stuff coming in on a regular basis, is really fed by the XM Performance business model, right? and so I don't have to do that, but there's a lot of people who are probably even, maybe better consultants and trainers than I am, but they haven't spent any time mastering the business development side of that. They never get to do maybe, the kind of work we get to do here as a team because of that. So three things I tell somebody - you've got to have a good business plan. It doesn't matter if you're the best VCR repairman in the world. There's no demand for that. So, what problem do you solve? Who has that problem? How much is it worth for them to have you solve that problem for them?

There's just some basic business model things [00:03:00] you have to imagine, and the things we imagine at our desk, at our day job, are almost never exactly true when we test it in the marketplace, and so, there's this iterative process of experimenting with this, and trying that, and adjusting down to here,

and pretty soon we do have that ideal client and we know what problems we solve with them we're really good at, we raise our prices a little bit, add some profit, put an SBX (small business accelerator) in place, it's just a bite at a time, and I would say there's a lot of free help out there.

A lot of times around college campuses, there are score advisors, and these are retired guys who will help you with some small business planning and strategy. You get what you pay for. Some of those guys are really good, and some of them aren't very helpful, They've never started a business from scratch.

They're great businessmen and women, but they've never managed a startup before.And then I think somewhere out there, there are great business coaches and consultants that can help you with the basic business planning, and marketing and sales 101, and delegation and building the team, [00:04:00] and putting an administrator in place.

I think those are things you don't have to figure out the hard way, and usually there are some pretty affordable solution for those kind of things. So, get help where you're not the expert, just like people do, just like people come into Pine & Company for their hidden money.

Kevin Schneider: Yeah, and I like how having a business plan is important, but for Mike and I, we needed a written business plan. The business plan was in our head, and not all the time was Mike and I on the same page with the business plan, but now we've learned that we need to actually put pen to paper, put it down, and then communicate that to your team.

So now, we have a mission statement, which I always thought was a staff member or something you're, like- Yeah, 'mission statement'.. but as a leader, you can really see the importance of it, because who are we and where are we going? What are we about? As you grow and you hire people, they need to know what the mission is.

And then we have our core values now. We have a written review process. We have goals [00:05:00] for each individual staff, and they're checked on a weekly basis, a quarterly basis and an annual basis. We don't just do one year end review and we're like- 'Hey, remember that thing you did in February, and it's December- you messed up.'

Yeah, okay, I could have known that and not made that mistake 20 more times. So, these small, fine tuning things have really helped us, and I think it's also helped our team tremendously because I remember we had a luncheon, and I presented our mission and our core values, and one of our staff turned to go 'Thank you,

this was what I needed to know who we are and what we are about at our core,' and we had some..

Ross Paterson: Yeah.

Kevin Schneider: really some things that we're not budging on. Not every client's a good client for us, and we relayed that to our team, because a lot of business owners are like, 'Who's your client?'

'Everybody! Anyone who has a pulse and a wallet.' And in theory that works, but you're going to really find that you have a set target that you're going to need to [00:06:00] go after, and when you hit that target, your revenues are going to be higher, your stress is going to be down because your're working in your wheelhouse, and you're not expanding your services to everybody.

So, that has been a huge eye-opening through working with you, and I'm looking forward to more tips and tricks you have. We solve one problem, now we're onto the next, so it's like, the more we solve, problems don't stop.

Mike Pine: No, they don't.

Ross Paterson: I think that's really the, benefit our team has is, we're watching 30 or 40 businesses just like Pine & Company, go through these processes every year.

Right now I've personally been doing that for 12 or 13 years. Obstacles that are so overwhelming to the small business as it grows,

we've literally solved that problem a hundred times. So, we can shorten that learning curve, and accelerate some of your progress by making a small investment. Anytime you invest with a consultant or a coach ask them if they got a money back guarantee, and I always tell people, 'Hey [00:07:00] if, we suck, you can have your money back.'

We've done a really good job of mastering our marketing and our prospect assessments, where we know that we can do this, and it's very rare.. One guy asked me for some money back one time, because I told him he wasn't ready, and he started anyway. So then, he asked me for some money back, and my office manager said, 'I can't believe you gave him that money back.'

I go, 'Well, I said I would give him the money back.' but then a year, two years later, he was ready and he came back, and not only has he been a great client, but he refers business owners to me all the time. Right. So, take care of that right thing, and if they're a high price consultant, and they won't put their money where their mouth is, then you can come call us, right?

We'll see if we can help you. And then the other thing I think, that's really important for us is there's some things we're just not good at. If you need some detailed HR administration stuff, we can't help you with that, but I'll give you a great referral to a client who can, and just like you guys said, you [00:08:00] can't do everything for everybody.

Matter of fact, that's the worst marketing strategy in the world - you want to spend a lot of money on marketing that's not going to give you an ROI, try to market to every business owner everywhere. You're never going to get there, and I think it's interesting one of the things that, you know, broadly, are happening in the marketplace is,

the work is here (at least in North Texas and Arizona, where we're working currently), the work is right there in front of all of our clients and they don't have enough of the right people to get it done. And I think you guys have been experiencing that a little bit, right? But that strategic focus you were mentioning Kevin, about here's our mission, here's our culture, here's the values we want to live out -

people are looking for that. They want to be part of a higher calling, that purpose, that mission- Hey, we're here for a reason more than just doing taxes and making money. They want to be part of a team, a community where they can engage and do this meaningful work with them.

They want to see the results, so a lot of times we can put all of our tax preparers in remote offices in their home, and they never get to see the finished result and the impact that [00:09:00] has on the client. So remote, hybrid, in person, whatever that looks like, if you can create that kind of environment where your humans are getting that kind of fulfillment out of the work,

then they'll be engaged, one, at a much higher level, and two, your turnover will be significantly positively impacted, so that, that leadership work that seems intangible, like you said it yourself, Kevin, when you were in a big practice, what is this mission, values bs?

We ain't got time for this. I'm stacked up, I got 45 hours of work to do this week and it's Thursday, but somewhere it does become important, especially where you guys are. You're starting to recruit leaders into your business, and leaders always ask those questions, I'll challenge any business owner that's trying to recruit leaders.

If you don't have good answers for those questions, you won't be successful recruiting leaders into your company with you. They'll go ask somebody else.

Mike Pine: One of the things that I found quite interesting about your practice, and I think it's very [00:10:00] relatable to anyone that is starting a business, is you're really selective with the type of prospects and clients that you take on. You've got these, it's three words that you insist on.

I'm sorry, I forgot, but I'm sure you're going to share it here.

How important is it to be selective and why have you chosen the terms that you use for selection, that you all have chosen?

Ross Paterson: Great question. So, we can't serve everybody, right? it's not like I started this business 13 years ago and I understood exactly who makes our best client. This is something that's evolved over a decade, really pinpointing who we're really having an impact with, and at some point early in the process, my criteria is a little bit like Kevin described- do they have money?

Will they write a check? Will they clear the bank? They're my ideal client, and then later, we get better and we can be a little more selective. We look for four things, and the initials we use are V G H T. Do they have a big Vision? Our prospect's got to have this vision of what they want to [00:11:00] do with their business.

And it's compelling, right? It's compelling enough for them to put in 50, 60 hour weeks at times to go make it happen, And then, somewhere they have to be able to see that, here's the vision and where I wanted to be, but here's where I am. We call this the Gap. They can see this gap of where they are and where they want to be,

and they recognize that there's a big gap there. The 'H' stands for Heart. Do they have a big heart? There's two things there. The first is are they in this for something more than just the money? Listen, we have to make money, have to be profitable to grow your business.

So that's always part of it, but is it just the money for them? Do they want to go get a private equity cash out and buy a yacht and live in The Bahamas? If that's all they're working for, I don't particularly want to work with them because I'm not interested in that- money for money's sake. And the second part of the big heart is this idea of emotional intelligence.

Are they self-aware enough to know when we look at this gap between where they are and where they want to be, and I say, 'Hey, business owner, how much of that is you?' I'm looking for the guy who says, 'It's me, Ross. The gap is me. [00:12:00] I'm the one who's got to change,' because from there we can do some big work.

And the last thing, the 'T' is Thirsty. The word we use is thirsty, and that is, have they spent money on a seminar? Do they read books on a regular basis? Are they listening to podcasts and things like that? And I've started asking that question mostly because I needed to be a little more reproducible out there in the ground game,

and as I train my rookie business development team, if they have a big vision, ask them what they've read this year. If they haven't read any books in the last 2, 3, 4 years, they're not good prospects,' and one young woman asked me, 'How can you know that, Ross? How can you know that?' And I said, 'Well, at some point by default or by decision, they decided they know enough already.'

and, they won't be open to the things that we're going to teach them, and challenge them to go do to create the next breakthrough. They think there's some easy button. They think they're hiring me to come run their business for them, and that's just not the case. That's not our model, we're looking for that person who [00:13:00] goes- It's me,

I'm the problem, I have to change to get to the next level. That business owner we'll do great work with.

Mike Pine: So more generically though, how important is it for any business to try to figure out what is the most profitable, most valuable type of client that you can truly add value to? I think that applies to almost any industry, any business, right?

Ross Paterson: Yeah. Any business, I think Mike, in the back, goes back to those three questions- What problem do you solve? Who has those problems? And how much is it worth for them for you to solve the problem for them? You go back to any business model that's not working- the VCR repair man, there's no demand.

It doesn't matter if you're the best in the world, there's no demand there at all for that business model, so it's not going to work. Some businesses- the barrier for entry is really low, so anybody could come in there, right? That's probably the most pressing problem with my industry is, you could be a high school counselor and say, 'Well, I want to coach,

I want to counsel adults [00:14:00] now. I'm a business coach,' and you can start your business- put a website up, and start your business next week. Yeah, I think counseling is part of the process.. we're not that great at that, right? but a lot of business owners, especially family businesses, they're bringing all this, not just head trash, they're bringing some relationship trash into the business, and they can't get around that, and they need to get that cleaned up too. I'm not sure if that answered your question.

Mike Pine: I think so, but I.. I, the one thing I want to tie into that is, it's important to find your lane of good clients or good customers that you can add

value to, but also, if they happen to align with your values and your motivators like the big vision and the big heart, then it makes your job

a lot less of a job and just more fun and living. Right?

Ross Paterson: No, I agree a hundred percent. As we've gained more clarity about that over the last five years, work's more fun, and we know who we're looking for, and we know who we can say 'No' to pretty quickly. [00:15:00] And the ones who really do have that big vision in our business model, maybe like yours even, I know, if I can help them grow to the next level, I know what their next problems are too-

Oh, Now they need to train leaders, hey, now they need to do some strategic planning with the leadership team. Oh, Now they have executive leaders that need some training and coaching as well. And so, our business model grows because our clients keep handing us their next problem. And we're like, 'Oh, I can't do that, but

Tosha can, and we hire a marketing expert who can come in and really help people with their marketing. It's a key.. it's a key limitation to a lot of small business owners. They'll sit there, and you guys probably have met some of these guys, if they say, 'Hey, I get all my business, word of mouth.' and we're looking at their finances for the last three years- Hey, it looks like you don't have enough business. Maybe you should work on marketing and sales, and they'll sit back and they'll say, 'But I get all my business word of mouth. I don't have to spend any money on marketing.' I'm, 'Well, maybe you should.'[00:16:00]

Yeah... but I think you guys have probably found that too. I mean, your practice now is really focused in the real estate market. We've developed some mastery at solving that particular problem, and so we can do that even more profitably in a higher level than others can,

and there's a bunch of people, because of the current market scenario where they're investing in these properties at different levels and different reasons, and you're the experts now. We're not the experts for everybody. I left corporate America for a reason. There's been several people who have experienced our leadership training and go, 'Hey, this big company I came from, they need this too, Ross, they're doing it all wrong.'

I'm like- Okay, well, we'll have to give them a referral, because I left corporate America for a reason and I'm not going back. This is our spot, this is our space, and it is fun. I agree with you. I mean, our Team is totally bought into what we're doing as a company,

and if you're a business owner and they don't gush about the mission statement, the values, right at first, just keep repeating them, because at some point they'll start seeing [00:17:00] what the magic that you're doing, and the impact you're having, and they'll buy into it a little bit more.

Fanni Gambero is a great example on our team. Five years ago, she just needed a job, and now she's running half the business, and helping us create some new potential and holding the line for the new employees and teammates to come in here and going, 'Hey, that's not how we do it.' And now I don't have the leadership burden of doing that for everybody. Anyway, that's ultimately where we want to be. And if you want to keep growing that business and expanding and multiplying your impact, and it's kind of biblical in if we have that gift, and we're given this responsibility, and we don't do anything with it, we don't produce fruit and we don't multiply that, then maybe we're guilty of contributing less than we're supposed to, right?

But maybe if we are, then that opportunity to do the next level comes if we're being faithful to use what we have, and tap into the people that are on our team, and take great care of our clients. I've never seen a business model where that doesn't work to grow the business.

Now, business models change, and how we solve problems for people has changed, and the pandemic [00:18:00] changed a lot of things,

but humans are still humans and the government still wants their tax return.

So, you guys are safe.

Kevin Schneider: We got good job security. Yeah.

Ross Paterson: Yeah.

Kevin Schneider: Mike and I, we've always worked in it, and we're kind of, the thought process of what you mentioned earlier. It's just easier if I do it, and you said you're not a counselor, but I would challenge you and say that you really are. It's not your specialty, but even at the family life, think about it as a parent.

After dinner, if your kids are around the table, you're doing the dishes, it's a lot easier for you to go get your kids' plate, wash it all for them, put them in the dishwasher. It's so much more efficient, I guess from the short term perspective- I could just get it done and do it for them, but in the big scheme of things, they're going to be 18, or they're going to be married someday, and they're just like, everyone's always done this for me.

It's not helping in the long term.

And so, actually some of what I've learned here in business, and taken it home just because.. [00:19:00] yeah, it is easier for me to just clean up all the mess, but then I'm stressed out, and I'm working all the time. I'm never taking care of myself either.

Ross Paterson: That's another place I think where there's hidden money in every business. It is going to take a little longer for me to train somebody. It might take me 30 days to train one of my business development people to get better at this basic ground game work, but if I can do that and put three people out there instead of just me, there's your hidden money.

Every time that you can reproduce that process, and take your time and attention and put into that new toolbox again, then we're creating leverage, and I think I always talk about as we learn leadership as a business owner, if you get that revenue going to the next level, we really have to learn how to lead and get a bunch of work done through people,

and as your leadership lever gets longer, with less effort, you get the same work- that creates potential everywhere, and you kind of, stack that. We talk all the time.. Mike was talking about this earlier, but our big mantra is Clarity Precedes Results.

Leaders create clarity - [00:20:00] put it in writing. Put it in writing. Put it in writing. Put it in writing. And you guys shared we thought we had a business plan, but then we're not on the same page because nothing's in writing. It's so common, right? And people think they have, they've created this clear job description that people on their team know what to do.

I've already talked to the people on their team. They don't know what do, somebody's got to show them, and get all this.. unpack this stuff from your head, put stuff in paper, and I think we get confused. We get overwhelmed with - oh, I've got to write some operations manual that's 479 pages, and I'll just tell you, whatever that most pressing problem is in your business, wherever that little.. wherever that little black hole where everything gets stuck every time, just go work in that one spot to start with, and try to figure out what's really going on there, simplify where there's friction, and then the next thing will open up.

And don't overwhelm yourself with having to define everything A to Z in the business, when really what we just need to do is - what does this weekly team meeting need to look like, and how can we get good work done,

and communicate [00:21:00] progress on a weekly basis. Sometimes, we overwhelm ourselves with the complexity of everything,

and the first step is really simple, probably obvious.

Mike Pine: We CPAs never overwhelm ourself with the details. Ever.

Kevin Schneider: No, we're very good at high level thinking.

Ross Paterson: I had a partner who was a CPA, and he could paralyze us with some data analysis all the time. We had a funny conversation one time with those partners in the business, and they go, 'We have to be careful not to get too much sales.' This is very early in the startup of this medical equipment business,

and I said, 'Oh whoa.. wait a minute. Wait. If these margins that we're projecting are true, why would we not want to get too much sales?' They're 'Oh, well, it could hurt our cash flow.' And I was, 'Well, I got $350,000 of equity in my house. If our margins are this good, I'll fix the cash flow problem.'

You know what's never, almost never, a problem the first year of a business? Too much sales - but that mindset was already, 'Hey, we have to be careful not to get too much sales.' Guess what you do? You don't even get [00:22:00] enough sales, because you're trying

not to get too much sales, and I say - Go try to get too much sales if you know your revenue model, because it's a lot easier to hire some people and build the business, than it is sometimes to go get the next clients.

And I find, particularly in my industry, t here's a lot of people who want to do the work but won't take the time to master marketing and sales to some extent.

Mike Pine: Too much business can be a problem, but it's a good problem. It's a solvable problem.

Ross Paterson: I think so, especially if you got a great company culture,

that even your employees talk about. So, when you bring a teammate in for an interview, it's not just the owners of the company saying, 'We've got a great culture.' - it's the leaders and the managers and the teammates are saying, 'This is the best place I've ever worked.'

That's what we want. It almost makes me tear up sometimes. We have a teammate, and she posted for her one year anniversary a couple years ago that, 'Hey, this job changed my life!' and we really have that power as employers. We're tied vocationally to what we do for a [00:23:00] big part of our careers,

and you can either change somebody's life or you can give them a job, but that's the new toolbox work - you've got to be good enough to do that. You've got to be not overwhelmed by the basics to go do that kind of work, where you do have the potential to do that, and those are the kind of business owners we want to work with.

Mike Pine: I love that.

Ross Paterson: They get as much satisfaction in their soul as putting another $100,000 of profit into the bank.

Mike Pine: Yeah.

Ross Paterson: And when we find those people who see both - it's not either-or, it's both, they'll make a big impact. They'll make a big impact on the team, on their families, even on the community where they serve,

and those are the kind of people we want to help create the next breakthrough, right? That's work worth doing. Let's reproduce that as much as we can.

Mike Pine: Amen. Let me change this subject here for a minute, get out of your specialty-wear wheelhouse, but it's, let's see, it's May 30th, 2023 when we're recording this. We're on the other side of the Covid shutdowns. I spent a lot of time [00:24:00] this weekend, besides playing with the kids at the water park for Memorial Day,

reading the news. I had a lot of articles I bookmarked and saved. There seems to be a lot of freaking-out going on in this world right now, especially in the business community, in the Wall Street Journal. People.. Times are changing. We don't know what, whether it's Covid, or just time that has changed, but things are different.

The marketplace is different. The employees' values are different. Business is very different, and people seem to be freaking-out about it more than not. I see no one talking about the hidden money in the opportunities of a changing world. People are like, 'Oh gosh, the sky is falling. What are we going to do?' I know you're a bit of a history buff,

you definitely like to read. When you go through, whether it's America or world history, and look at all the big times of change, when paradigms were shifting, when the world was changing, is this a great time of opportunity? Is this a 'sky is falling' type of [00:25:00] an event that

we're going through?

Ross Paterson: Well, I remember, I remember when.. so our clients frequently asked us to help them put an annual plan together, write strategic planning, tactical planning, and of course, a lot of our clients had paid good money to do that in 2020, and by the time we got to April 2nd, 2020, all those business plans were thrown out the door,

and while my teammates were panicking, I was - Oh man! This is going to be so fun. What a mess! and because that energizes me. Now, I think as businessmen, particularly entrepreneurs, change is good for us, because we'll let go of stuff that's not working anymore, and we'll adapt, and we're always looking for that next problem to solve.

Where is it? Where can I add value? Where does my skillset, where does my team, where can we still solve a pressing problem and add value? So I think that's more and more the case. The entrepreneurs are the ones who are going to survive. The government can't change fast

enough,[00:26:00] and it's entrepreneurs that really can, and do those kind of things now.

The world is a mess, right? Social media, everything's so sensitive. We're so polarized now in general, that it's even more important, I think, that we have that kind of true North on business, and we're here in business for a purpose. We're going to make a difference with our business.

And then, also being able to frame that in, so that you don't have a political agenda of one of your teammates trying to draw you off into the danger zone. I'm like - Oh man, I want to encourage you to have that passion - that's really not in the framework of what we're trying to do here as a business, but you're welcome to do that in your off time.

They can get sidetracked. I mean, we've seen, particularly in the news right now with some hot button political topics, some large brands taking huge hits from wading into the political debate a little too deep.

If you're an adrenaline junkie like me who likes messy problems, we're going to have work to do, but I also think somewhere [00:27:00] in our small business team with our families, we can create that stability, because I think internally most humans want some dependability, some security, some safety, and we can create a little bit of that inside of our small, medium business teams by trying to as much as possible to create some stability, and some things they can count on, and some processes that they can come in, be part of. There's some crazy statistics out there. One my favorite authors, Liz Wiseman says there's all this latent potential inside of most businesses,

and she uses the terms the multiplying leader versus the diminishing leader. An organization led by a diminishing leader can perform to a certain level, but most of the people will be disengaged. You change that one leader with a multiplying leader, and they can get 2X the productivity out of that -

those same exact people, same exact lineup, just by creating some of that leadership leverage of pulling the humans together and doing those kinds of things. 2X productivity [00:28:00] and engagement. Pretty hard to imagine,

But I think every organization is sitting on some of that potential.

Every human is sitting on some of that potential, and drives some of the passion for what we do at XM Performance anyway.

Mike Pine: Thank you

Kevin Schneider: Ross, thank you so much for your insight today, and if anyone out here wants to reach Ross, you can go to xmperformance.com. You can check out his website there. There's a Contact Us tab, and you can email Ross and his team and let him solve some problems for you. He will put his expertise to work for you he'll put his money where his mouth is.

If you don't like it, he'll refund you. Ross, it's just such an honor and pleasure to continue working with you, and just thank you for being a part of this podcast. Any

closing thoughts from you?

Ross Paterson: Well, we appreciate you guys. We appreciate you guys - this opportunity for us to share some of our wisdom with some of your constituency, and we look forward to continue to work with you. Just when you get comfortable, we'll start asking bigger questions.

Kevin Schneider: I know, I know,

Mike Pine: I believe it.

Kevin Schneider: [00:29:00] Drive me nuts, but it's good.

Ross Paterson: Appreciate you guys.

Kevin Schneider: Thanks Ross.

Mike Pine: Thanks much.

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