Dan Martell - February 20, 2017


How To Turn Around a Failing Business


Episode Stats

Length

11 minutes

Words per Minute

218.6662

Word Count

2,528

Sentence Count

120

Misogynist Sentences

1


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

Transcript

Transcript generated with Whisper (turbo).
Misogyny classifications generated with MilaNLProc/bert-base-uncased-ear-misogyny .
00:00:00.000 Am I in frame?
00:00:03.000 That's exactly what I need you to do.
00:00:12.000 How to turn around your business.
00:00:14.000 This is a very serious video.
00:00:15.000 If every month you're looking at the numbers
00:00:17.000 and it's going slim, alright?
00:00:21.000 If you're feeling embarrassed because you don't feel like
00:00:24.000 you've made some great decisions or you're arguing
00:00:27.000 or frustrated or you have loved ones that care about you
00:00:29.000 that care about you and have been telling you this.
00:00:31.000 If you know in your heart that if you don't do something today
00:00:36.000 that you might sacrifice the whole business.
00:00:38.000 And a lot of you guys may even have personal lines of credit
00:00:41.000 or personal guarantees in your business.
00:00:43.000 I wanna teach you guys a very simple, here's what I do, you
00:00:47.000 know, to turn businesses around to the point where they're
00:00:49.000 profitable again.
00:00:50.000 They're actually generating cash and you know what?
00:00:52.000 You're getting paid a great salary.
00:00:55.000 I mean, that's one of the first things that goes.
00:00:57.000 I'm not gonna take a salary.
00:00:58.000 That's not gonna solve the problem.
00:00:59.800 I'm gonna walk you through exactly how to do it
00:01:01.800 so that you have the financial optics
00:01:03.700 to understand how your decisions impact revenue,
00:01:06.800 impact expenses, and profitability, all right?
00:01:10.300 That's what we're gonna share today
00:01:11.300 because a few months ago, I was working with one of my clients
00:01:13.900 and they had great growth.
00:01:14.800 This is the challenge is most entrepreneurs
00:01:16.300 are growing really well, right?
00:01:17.600 They were doing a little under a million in revenue,
00:01:19.400 but they're up from 300,000 the year before.
00:01:21.700 So when they're looking at it, they're thinking,
00:01:23.000 we've doubled or tripled the business in the last year,
00:01:27.000 But they didn't look at their profitability.
00:01:29.160 They didn't look at the expense structure
00:01:31.040 to say, where's the profit?
00:01:32.440 Do we have the cash to actually scale the business?
00:01:35.640 And are we charging what we need to
00:01:37.340 to actually grow and continue this rate of growth, right?
00:01:40.540 That is the challenge that most businesses run into.
00:01:43.720 Or they make a decision and they go off
00:01:45.980 and open up a new location
00:01:47.880 or a new division in their business
00:01:49.660 and they don't ask themselves,
00:01:50.720 what's the capital requirement,
00:01:52.160 the cash that we need to do this?
00:01:53.560 What's my timeline and horizon?
00:01:55.100 What's my marketing program to make sure
00:01:56.620 that I get those new clients to support that new business
00:01:58.680 and it's always this game.
00:02:01.520 And then once it's out there, how do you shut it down, right?
00:02:04.640 So the first thing I'm gonna encourage you to do
00:02:06.560 is get the numbers.
00:02:07.540 Here's how it works.
00:02:08.340 You call the accountant, okay?
00:02:09.620 Most of you guys probably don't have great accounts.
00:02:11.820 Here's what I want you to know.
00:02:13.180 Accountants don't give a crap if you fail as a business owner.
00:02:15.640 They don't and it's not because they're bad people.
00:02:18.220 Their job is not to run your business.
00:02:20.460 Their job is not to understand your decisions.
00:02:23.000 Their job is to take the numbers you give them
00:02:25.260 and post it based on GAAP accounting practices
00:02:28.740 and to give you back the reports
00:02:30.660 and for you to understand the financial literacy
00:02:32.620 to make the decision.
00:02:33.560 So you might be upset with your accountant.
00:02:35.440 Say, well, I have the dumbest accountant in the world.
00:02:37.020 Why didn't they tell me things were this bad?
00:02:39.120 Trust me, it's not their fault.
00:02:41.060 It's yours.
00:02:41.780 You should have built some financial literacy
00:02:43.600 into your understanding of running a business.
00:02:46.060 But the number one thing you need to do
00:02:47.460 to start the turnaround is get all the information.
00:02:50.480 Get all your credit card transaction.
00:02:52.120 Get all your lines of credit transaction.
00:02:54.080 Get your bank accounts.
00:02:55.040 get everything, get the expenses, get all the numbers,
00:02:58.880 your P&L, your income statement, your cash flow statement,
00:03:00.920 whatever you can get from the accountant.
00:03:02.820 How much tax do you owe?
00:03:04.140 How much payroll stuff?
00:03:05.260 Like, all your exposure, your liabilities,
00:03:07.720 get all the information, the real numbers,
00:03:09.560 not what you think it is because a lot of entrepreneurs
00:03:11.400 when they're watching this video and they're like,
00:03:13.060 that's where I'm at right now,
00:03:14.660 you're probably worse than you think
00:03:16.900 because you probably don't want to look at it.
00:03:18.800 You need to get all the numbers.
00:03:20.440 Number two is create a financial model.
00:03:22.700 A simple, I'm gonna give you the simple financial model
00:03:25.940 is essentially a cash flow projection.
00:03:27.940 It's saying, what's my income, what's my expenses,
00:03:30.380 what's my profit, and then what's my liabilities?
00:03:32.980 Like, understand how your business operates.
00:03:36.240 How much money does it make?
00:03:37.280 What's the profitability level?
00:03:38.940 Most businesses, because they have so many decisions
00:03:41.320 they've made, they don't have this in one spot.
00:03:43.180 It's a spreadsheet.
00:03:44.560 Each month, it's projections, right?
00:03:46.860 Wherever you're at now, this month,
00:03:48.420 just get the information and then start a new spreadsheet
00:03:51.560 and put it there.
00:03:52.560 Look at the customers, look at the previous year's revenue
00:03:55.060 to get some estimations, but don't make it up.
00:03:58.400 Make sure that it's real numbers,
00:04:01.000 because I don't want you to end up back in this position.
00:04:04.100 The worst thing you could do right now
00:04:05.240 is put the time and energy in and make half-ass decisions.
00:04:09.940 That's not gonna support you.
00:04:10.980 I really wanna help you turn things around.
00:04:12.820 So you get all the numbers,
00:04:14.140 you have those uncomfortable meetings,
00:04:16.120 you talk to your accountant,
00:04:17.060 you give them a sense of urgency and say,
00:04:18.660 look, I know you haven't finished the books
00:04:20.520 and we're only halfway, we're at the end of the year,
00:04:22.260 you only get halfway done.
00:04:23.060 I need the numbers.
00:04:24.120 I'm gonna come to your office with my shoebox of receipts,
00:04:26.840 and we're gonna get this worked out,
00:04:28.020 but you gotta get the numbers.
00:04:29.500 Creating that financial model is gonna allow you
00:04:32.160 to understand how bad it is.
00:04:33.980 You know, and unfortunately, every time I've been asked
00:04:35.960 to come in and turn around a business,
00:04:37.380 it's always worse than the entrepreneur thought.
00:04:40.140 They're always losing money.
00:04:41.620 This new division is sucking the profit from this business.
00:04:43.880 This new software initiative, I get that one all the time.
00:04:46.440 I've got a service business, I want to start a software company,
00:04:48.520 and I'm funding it, and it never occurred to me
00:04:51.420 that even though this is highly profitable,
00:04:53.300 that new business or division or department
00:04:55.760 is sucking the profit out of the business.
00:04:58.120 So we need to get real on where we're at.
00:05:01.640 Then you gotta do number three, which is the toughest one.
00:05:04.100 And I always encourage entrepreneurs to just get ready
00:05:06.480 for the worst case scenario.
00:05:08.440 Like, you're not gonna lose sleep anyway.
00:05:10.380 You might as well just get ready for the worst case scenario.
00:05:12.840 And that means cutting deep.
00:05:14.820 When you do layoffs in your business,
00:05:17.160 you can't do surface level things.
00:05:19.520 You can't do surface level expense cutting.
00:05:21.400 You need to go deep.
00:05:22.740 You need to cut through the fat and hit the bone.
00:05:25.500 Like, it needs to cut all the fat off the business
00:05:27.680 and say, what do we absolutely need to run our business?
00:05:31.180 Okay?
00:05:31.640 If you're not profitable, it's only a matter of time.
00:05:35.300 If you look at a cash position in your bank account
00:05:37.000 and you go, okay, we have a few thousand bucks,
00:05:38.640 but all that's accounted for,
00:05:40.180 you're weeks away from insolvency.
00:05:42.440 If your line of credit's maxed out,
00:05:43.900 if your credit card's maxed out,
00:05:45.000 of all these things,
00:05:45.680 You know, if you only get a small percentage
00:05:47.580 of available potential borrowing,
00:05:50.180 like that's just bad.
00:05:51.580 Your business shouldn't be like that.
00:05:52.980 So you're going to have to cut the expenses.
00:05:54.680 You're going to have to cut deep.
00:05:55.880 And I always say, cut past just the fat.
00:05:58.280 Get into the bone.
00:05:58.980 You want to hit the bone.
00:06:00.380 You're going to have those uncomfortable conversations.
00:06:02.380 Look, the reality is if you got to lay somebody off
00:06:04.480 and you're not obligated to pay them past that point,
00:06:07.980 you have a business to save, right?
00:06:09.780 And I know that you want to do what you can and do right
00:06:12.380 and these are family and these are people
00:06:13.780 and you care about, and I totally get that.
00:06:15.640 But the truth is, is if you're at this position,
00:06:18.020 the decision's made for you, right?
00:06:20.060 If you just logically look at the numbers and say,
00:06:22.160 you know, every month I'm losing thousands of dollars
00:06:24.760 in revenue, then you're giving that up.
00:06:28.260 You're causing potential for your family
00:06:31.500 to lose their home, especially if you have
00:06:33.560 personal guarantees.
00:06:34.500 That's the part that hurts me the most,
00:06:36.200 is when I see these businesses, and they don't realize,
00:06:38.580 like, that credit card's personally guaranteed.
00:06:40.600 That bank loan, that line of credit,
00:06:41.740 those are personal guarantees.
00:06:42.740 If the business falters, it's not the vendors
00:06:45.060 that you owe money to, it's the fact that the bank's
00:06:46.800 gonna come for everything else.
00:06:47.840 And you're putting your family and your children's
00:06:50.500 lifestyle at risk, and that, to me, should be enough
00:06:54.060 for you to make those tough decisions.
00:06:55.640 Look, if you feel bad about laying people off,
00:06:57.780 just think of it this way.
00:06:59.380 Go in and serve them by trying to find them
00:07:01.660 their dream job.
00:07:02.720 That's what I always do.
00:07:03.740 If I gotta lay somebody off, you know,
00:07:05.060 I'm gonna make the decision, I'm gonna follow the law,
00:07:06.880 I'm gonna give their termination dose,
00:07:08.300 and then three days later, I'm gonna sit down
00:07:10.180 and I'm gonna do the work to find them a dream job.
00:07:11.900 If that's hurting you from making this big decision,
00:07:15.500 that's the way you can approach it.
00:07:16.900 If you have a new division or business
00:07:18.400 and you're feeling embarrassed of cutting it off
00:07:21.000 or shutting it down, it just is what it is.
00:07:23.500 Look, at the end of the day, when you turn this around,
00:07:25.700 and I know you will if you follow this process,
00:07:27.900 nobody will remember the failures.
00:07:29.700 They only remember the success.
00:07:31.000 You could be, you know, you could have to lay off
00:07:34.100 more than half your team and turn the business around
00:07:36.900 and people only remember that part.
00:07:39.000 And I know it's tough to see today,
00:07:41.200 but that's what you gotta do.
00:07:42.200 Number three is go deep, get the cuts.
00:07:44.600 Four is focus on your customers.
00:07:46.040 If you have customers still around,
00:07:47.900 you need to get on the phone with them
00:07:49.200 and just ask them, how can I create more value for you
00:07:51.440 in the work we're doing?
00:07:53.480 You need to make sure that the current customers are happy
00:07:55.920 because if you've been in that spot,
00:07:57.220 you've been probably putting out fires,
00:07:58.380 you haven't given everybody the right attention,
00:08:01.020 and they might feel neglected.
00:08:02.280 So you wanna get on the phone, schedule the calls,
00:08:04.600 make sure they're happy,
00:08:05.720 because the last thing you want at this point
00:08:08.060 is to have somebody not pay an invoice
00:08:09.960 or have somebody fire you, or have a bad customer experience
00:08:14.200 moment within your service business, your product company,
00:08:17.500 whatever it is, make sure the customers are happy.
00:08:20.240 That's number four.
00:08:21.000 I think that that is the best way, and if you're a great
00:08:23.940 entrepreneur, you probably have customers that want to tell you
00:08:25.980 how much they appreciate you.
00:08:27.180 They don't need to know about the restructuring, but you need
00:08:30.120 to make sure that they're happy.
00:08:32.080 Then it's all about sitting down and saying,
00:08:34.180 what are the lessons learned?
00:08:35.120 Because at the end of the day, these are tough decisions,
00:08:39.220 and if you don't sit down and reflect and do a post-mortem,
00:08:42.820 then you're very likely to make them again.
00:08:45.160 What caused you to get in this position?
00:08:47.360 Likely, it's taking your eye off the financials.
00:08:50.200 It's not looking at your cost structure,
00:08:52.240 thinking you're doing great top-line revenue,
00:08:53.800 but you're not being profitable.
00:08:55.300 It's not hiring the right people.
00:08:57.340 It's not having the right advisors in position
00:09:00.000 to help advise you.
00:09:00.840 Maybe it's not having the accountant,
00:09:01.940 but I wouldn't blame the accountant
00:09:02.980 because at the end of the day, you hired them.
00:09:05.140 So how did you end up deciding that that was the right person?
00:09:08.340 How do you change that decision and approach
00:09:11.340 so that you don't get another person just like them?
00:09:14.240 Right, so having great advisors
00:09:15.680 to be able to guide you is key.
00:09:18.380 The last step for me, number six, is to build it back up.
00:09:22.160 Right, once you get your top line revenues in check,
00:09:25.360 you reduce your expenses and cut deep,
00:09:27.700 you get the business righted,
00:09:29.460 you start paying off those debts,
00:09:31.060 you put a plan together,
00:09:32.500 and you start being profitable again,
00:09:35.200 giving yourself a fair market salary
00:09:38.060 for the work you do, then you need to start really thinking
00:09:41.020 about how do I build this up?
00:09:42.160 Not doing something crazy, not investing in another business,
00:09:44.860 not opening another division in my company,
00:09:47.200 but doing more of the things that I know how to do that works.
00:09:51.000 Is it repricing things?
00:09:52.400 Is it ensuring that you have the right market structure?
00:09:54.300 It's going after the market and doing marketing,
00:09:56.820 or whatever it is, but building it back up
00:09:58.920 is the next steps to turn the business around.
00:10:01.620 So the truth is, is business is all about expansion
00:10:03.920 and contraction.
00:10:04.760 It's never linear growth, it's always step functions
00:10:07.020 growth and if you find yourself in a spot where you're literally month to
00:10:11.760 month, you have no cash in the business, you've been challenged, you're
00:10:15.700 frustrated, you're not sleeping, you know you need to make those tough
00:10:18.900 decisions, this video is to give you the encouragement, the steps, the process
00:10:22.320 to get the numbers, right?
00:10:24.320 Step one, get everything, all the information, build the financial model
00:10:27.340 and the projections to know what does this really look like going forward if
00:10:30.280 I don't make these decisions and if I do, how does that change my
00:10:33.340 projections, cutting deep, getting rid of the fat,
00:10:36.080 hitting the bone, that's key.
00:10:38.280 Focusing on the customers that you do have left over
00:10:40.480 and make sure that they're super happy.
00:10:42.440 Then figure out what are the lessons learned
00:10:44.320 out of this whole process so that they don't end up
00:10:46.080 back here in another three years.
00:10:48.220 And then finally focus on building it back up
00:10:51.220 so that you can be proud of yourself
00:10:52.860 and rebuild the confidence that you may have taken a hit on
00:10:55.800 as an entrepreneur.
00:10:57.400 So I hope this video finds you incredibly well
00:10:59.740 even though it sounds like you're probably having
00:11:01.660 challenging time, but I wanted to give you that framework to
00:11:04.200 help you get through it, but step one, schedule the meeting,
00:11:07.300 get the numbers, get the financial projection and just
00:11:09.660 look at what it is for really what it is and take the emotion
00:11:12.900 out of it.
00:11:14.900 I want to challenge you to live a bigger life and a bigger
00:11:17.000 business and I'll see you next Monday.
00:11:18.880 If you like this video, be sure to subscribe to my channel and
00:11:21.840 I'd also encourage you to join my newsletter where I share
00:11:23.880 invites to exclusive events and other free training videos and
00:11:27.480 if you're ready to get going, I've got a couple queued up for
00:11:29.320 you.
00:11:31.660 You