Dan Martell - February 20, 2017


How To Turn Around a Failing Business

Hosted by
Dan Martell
How To Theme Your Work Days For Productivity How to Build Your Startup Team Full of A Players

Episode Stats


Length

11 minutes

Words per minute

218.67

Word count

2,528

Sentence count

120

Harmful content

Misogyny

1

sentences flagged

Toxicity

6

sentences flagged


Summary

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

If you're looking at the numbers every month and it's going slim, this episode is for you. If you're feeling like you don't feel like you've made some great decisions or you're arguing or frustrated, or you have loved ones that care about you and have been telling you this, you need to do something about it. If you know in your heart that if you don t do something today, that you might sacrifice the whole business, you might have to shut it down.

Transcript

Transcript generated with Whisper (turbo).
Misogyny classifications generated with MilaNLProc/bert-base-uncased-ear-misogyny .
Toxicity classifications generated with s-nlp/roberta_toxicity_classifier .
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
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. 0.55
00:02:13.180 Accountants don't give a crap if you fail as a business owner. 0.94
00:02:15.640 They don't and it's not because they're bad people. 0.97
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. 1.00
00:02:35.440 Say, well, I have the dumbest accountant in the world. 0.98
00:02:37.020 Why didn't they tell me things were this bad? 0.99
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. 0.96
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