Dan Martell - What To Focus On When Starting A Business (And What To Avoid)

00:00:00.080 I've seen companies double if not triple their price and not have it affect their win rates

00:00:04.560 on sales conversation. Okay. So if you think about that.

00:00:21.680 Jill, how are you doing? I'm doing fantastic. I'm excited to chat. I believe you've got a new idea

00:00:28.720 that you're working on and you want some thoughts advice on how to kick this off in the right you

00:00:33.040 know with the right steps forward um tell me about the idea how long you've been working on it where

00:00:37.920 did you get the inspiration for well i've been i have a partner and we used to work together

00:00:45.360 and we worked in diversity and inclusion we are now working in different

00:00:52.720 jobs, but we still want to do this type of work. And we get called all the time from different

00:01:03.160 companies to go in and speak. So we thought, well, we're doing this for free. We might as well make

00:01:08.700 a business out of it. We're both still working full time. We want to turn this into a business

00:01:14.320 so that when we retire in four to five years, that it will be up and running and that'll be our new

00:01:20.400 job but basically what our what what it is is we promote inclusive inclusion in the workplaces

00:01:27.680 and we do that for organizations who are looking for social equality equity education

00:01:37.520 for their employees to create a diverse and inclusive workforce our we we do think that

00:01:44.480 we do have a niche in the market right now with everything that's going on in the world

00:01:49.280 but we do this through our keynote speaker series.

00:01:53.660 We have workshops, we have coaching circles

00:01:58.400 and we create inclusive frameworks

00:02:02.600 when they want to create an employment equity

00:02:05.140 and diversity committee in their organization.

00:02:09.240 And we deal with in the areas of inclusion,

00:02:12.320 wellness and conflict mediation.

00:02:16.200 Cool, let me ask a few questions, Jill.

00:02:19.280 Is the business operating today and generating revenue?

00:02:23.080 It is generating revenue and it is operating today.

00:02:27.460 Okay, but early stages in the revenue, I'm assuming not enough to support either one of you guys to go full-time?

00:02:33.260 No, no. Within the next four months, our revenue will be $15,000.

00:02:40.580 Cool. Congrats. I mean, that's real money.

00:02:42.900 But what what do you what are some of the questions you might have for me to kind of help you move forward?

00:02:50.900 Well, we're getting lots of advice on what we should do.

00:02:54.260 We're thinking like maybe what is a pitfall that we should avoid when we start up?

00:02:59.140 What's something what's something we shouldn't do?

00:03:02.260 Yeah, I mean, that's such a great question.

00:03:03.660 The the biggest thing, Jill, I would say is not doing too many things at once.

00:03:09.660 When I look at my career, I've had the privilege of talking to probably 5,000 entrepreneurs at

00:03:20.780 this stage of my life. And it sounds like a lot, but I did like 1,300 clarity calls when I built

00:03:27.100 my company, clarity.fm. I coach hundreds of SaaS founders around the world. So yeah, about 5,000

00:03:34.300 calls, speaking at accelerators, et cetera. So I've seen the pattern of people starting off to

00:03:40.420 the ones that were successful. And the ones that were successful triage quickly the things that

00:03:46.080 were needed by the market that were bought quickly and produced the most gross margin or profit,

00:03:53.740 right? Because if you have too many things you're selling, then it adds complexity to the

00:04:00.100 conversation. And most people do that because they feel like they don't have enough opportunity in

00:04:04.640 one thing. So they add, you know, here's the menu and we can do these three things or five things

00:04:09.640 because they want to get the sale. And the best entrepreneurs say, hey, we've got this widget.

00:04:15.500 This is this thing, this service, this product, this object that we sell. And for the right person,

00:04:21.940 it's amazing. And for everybody else, it's not no forever. It's just no for now. Does that make

00:04:27.320 sense. So I think that just that idea of saying, I've got this thing that's really valuable that

00:04:31.100 we love to do, that creates a tremendous amount of value for our customer, that creates revenue

00:04:36.360 for us in a way that's, you know, sustainable, et cetera, and that we can then reinvest and grow

00:04:41.020 the business because we had that focus, right? So selling one thing over and over and getting

00:04:47.480 really good at it is incredibly lucrative. Trying to do that with three things or five things,

00:04:53.860 It makes every conversation a consultative sale, which is more complex and hard than a pure, here's an offer, what are your problems? I can solve that. Here's how it works. Do you want to buy or not? Right? So doing too many things at once. You know, I always say that companies usually die of indigestion, meaning they do too many things at the beginning, then starvation, meaning they do too few things or have too few opportunities to actually execute against.

00:05:21.940 um so that would be the biggest thing as you when i look or hear the different things you have the

00:05:29.840 workshops you have the the circle the coaching etc i would ask you if you had to pick one

00:05:36.100 to generate you know a hundred thousand dollars in revenue the fastest that would create the

00:05:41.360 most value for your customer out of everything you do what's that one thing workshops perfect

00:05:47.140 so then yeah yeah yeah you already know so so i would encourage you to to not do the rest of it

00:05:54.860 and even when you say workshops with an s i would do workshop right and get really good at selling

00:06:01.660 that workshop and maybe there's a part of the workshop because this is where the economic

00:06:05.940 model kind of has to be considered maybe there's because selling one-off things is uh great if you

00:06:13.420 get them to pay up front and get a schedule going but having something that pays ongoing so maybe

00:06:18.540 there's a component of the workshop where it's like it's a certain amount for the workshop but

00:06:22.620 then they there's a fee they pay every quarter to get access to you to jump on a call with the

00:06:29.260 participants to answer any questions and then it becomes a multi-year engagement even if it's a

00:06:34.780 lower revenue point ongoing just to create that consistent revenue base because that that's the

00:06:39.980 hardest part for a lot of businesses that don't have you know subscriptions are really hot term

00:06:44.700 lately right because you know netflix and amazon prime and all these services are getting these

00:06:50.140 incredible multiples and like you know software obviously has a subscription component but you can

00:06:54.860 build a subscription component in every business from sign shops with an insurance program to

00:07:01.180 cell phones right cell phones have their you know coverage that they're gonna sell you apple care

00:07:06.620 those are all subscriptions to get you paying a little bit of money long-term over to build that

00:07:13.580 revenue base because with the predictable revenue base you can hire easily you can invest in marketing

00:07:18.220 easier you can invest in the product design so that would be my first suggestion is figure out

00:07:23.900 what's that one workshop that you know when people hear it's easy to sell gets them in the door and

00:07:29.020 then when they're there or shortly after right before how can i sell them an ongoing thing

00:07:34.940 and that would be the offer and stick to that and just try to scale it up that would

00:07:40.300 that would work really well yeah and i can actually see that happening with our first

00:07:44.780 client that we're working with right now so that yeah that's great advice thank you

00:07:50.380 awesome what else you got um well we're trying to decide whether we should incorporate right away

00:07:56.380 um we're we just we're just we don't know if we should do it now or see what our revenue is for

00:08:03.900 the first year or yeah i mean my rule of thumb for anything in business is um you know cross the

00:08:10.860 bridge when you get to it i think a lot of people waste time and energy investing in things that are

00:08:17.260 not now things it's not that they're not important right like having a world-class website is a great

00:08:22.860 idea but is that really the thing you need to do now when most of your sales are going to come from

00:08:27.580 referrals or word of mouth right and nobody's really going to your website they're getting an

00:08:32.060 email introduction they're getting on a phone call they're getting a proposal and they're buying they

00:08:36.220 may never go to your website as an example when it comes to incorporating it's the same thing you

00:08:40.940 know like until you do over i think 30 000 in canada i don't know what it is in the u.s um

00:08:45.980 you know and the u.s has different corporate structures but you don't even have to get an

00:08:50.780 hst number you don't even have to charge you know uh hst so i would say until the revenues are there

00:08:58.220 don't there's no reason to do it right i mean as long as you know that you're protecting yourself

00:09:02.940 and liability and all that but always always cross the bridge when you get to that problem

00:09:09.580 you need to be strategic you might say okay well i can see where if we follow this trend line we're

00:09:14.220 going to get there in the next nine months so maybe in three months we do it as long as we're

00:09:19.180 on that trend line still and that that gets us ahead of it but trying to do it i always think

00:09:25.100 of businesses kind of like, I have certain amount of resources, and I have to deploy them across the

00:09:31.500 business, right? Marketing, sales, customer success, support, delivering the product. And

00:09:37.660 there's 100 things I could do that are all really important that nobody would argue, you know,

00:09:42.460 shouldn't be done. But I got to decide what is relevant today versus later, right? Today, as in

00:09:48.140 like, what needs to get done this week versus this month, this quarter, this first half of the year,

00:09:52.860 this year right and that skill i would argue is the differentiator between great entrepreneurs

00:10:00.220 and not great entrepreneurs not great entrepreneurs invest in things that are not now things and then

00:10:04.460 they don't have the capital the resource to invest the things that are now things but because they've

00:10:09.260 depleted their resources they don't have the resources invest in them to get the return today

00:10:13.340 so i'm always looking for what do i need to spend money on that i can get a return on as fast as

00:10:18.300 possible and not even just a revenue return gross margin or profit right because the more profit i

00:10:25.020 can collect faster today the more resources i'll have to redeploy tomorrow to be able to grow the

00:10:31.740 business and that's you know it's compound interest it's no different than you know trying to stack a

00:10:38.620 bunch of compounding returns as an investment over time that will build like a hockey stick

00:10:44.540 but if i you know where a lot of people do is they make an investment early and then stop so it

00:10:50.460 doesn't produce any returns and then start it again in the future right like you know compound

00:10:55.980 interest only works if you keep the investments going so some people you know invest and then

00:11:01.260 pull their money out of the market invest and pull their money out of the market you know as an

00:11:04.940 analogy well all of a sudden you reset every time you do that so there's no compounding growth

00:11:09.900 same thing with business if you invest too early into something that's not a now thing all that

00:11:14.860 potential compounding growth gets depleted until it's actually relevant so hiring a salesperson

00:11:20.380 today when you don't have a marketing function generating leads or an ability to teach that

00:11:25.100 salesperson to go out there and get deals that that you've taught that you know works

00:11:30.620 then paying that person a base salary even if most of it's going to be on the commission side

00:11:35.660 is probably not a good use of your capital as an example right so then you waste it instead of

00:11:41.180 having it invested in you know freeing up your time hiring an assistant because you're delivering

00:11:46.140 workshops and you're doing the sales calls which are incredibly high value and having an assistant

00:11:51.100 take care of administrative accounts payable receivable legal reviews contract signing

00:11:57.180 calendar scheduling your inbox right as an example okay good cool great question thank you

00:12:06.060 What else you got? Well we're struggling with determining how to cost our services.

00:12:14.940 We work on contract basically for our workshops and we work with well non-profits and then we

00:12:22.060 work for provincial governments and municipal governments so we're costing them out totally

00:12:29.980 different um but we really don't know if there's a specific formula you're supposed to use or

00:12:36.860 we don't know so here's an interesting thing um few few little um nuances let's not use the word

00:12:44.860 cost and let's use the word uh price okay yeah because even that psychology of like what does

00:12:50.860 it cost i when somebody says what does it cost i reframe it for them like if jill you said hey

00:12:55.500 hey, Dan, what does it cost to hire you as a coach?

00:12:57.640 I would reframe and say, the investment is.

00:13:00.860 So I want you to practice that on your next call.

00:13:03.480 If somebody says, what does this cost, Jill?

00:13:05.180 I want you to go, the investment is,

00:13:06.960 with confidence, say the number.

00:13:08.800 And you can even say, the investment is only,

00:13:11.120 and then the number.

00:13:12.160 So it's a little nuance in word,

00:13:13.660 but it's really important because I think in business,

00:13:18.760 the words we use kind of communicate confidence

00:13:21.600 in our services.

00:13:22.440 So that's a little thing.

00:13:24.320 The reality for pricing is,

00:13:26.400 and it's a topic I'm incredibly passionate about

00:13:28.640 because a lot of people starting off

00:13:31.120 want to compete on price, right?

00:13:34.000 Like, I don't wanna lose the deal.

00:13:35.840 I don't have this huge overhead.

00:13:37.740 So I'm willing to price myself below

00:13:41.200 what I know this person's doing this at, right?

00:13:43.740 Or I've heard this person's doing it at,

00:13:45.540 or even like what I think it might be worth.

00:13:48.940 I'm willing to do it because I want the customer, right?

00:13:51.940 Here's the thing about pricing

00:13:53.540 is that the race to the bottom

00:13:55.840 can never only have one winner.

00:13:58.420 You can only ever have one low cost leader.

00:14:00.600 There's only ever gonna be one Walmart.

00:14:02.140 There's no other Walmarts, Walmart's Walmart.

00:14:04.480 And that's why Walmart's the largest company in the world

00:14:06.680 with hundreds of thousands of employees.

00:14:08.460 And it'll be really hard for anybody

00:14:09.800 to compete against Walmart.

00:14:10.940 Maybe Amazon's giving them a run for their money,

00:14:13.020 but to be the lowest cost leader,

00:14:14.820 there's only ever gonna be one

00:14:15.940 because it's the lowest price.

00:14:17.980 So what I always do in every business is ask myself,

00:14:21.760 how do I create a premium service?

00:14:24.980 How do I make sure that the price to value

00:14:28.140 or the investment to value

00:14:30.300 is at least three times the investment minimum.

00:14:33.160 If you can get to 10X, that's great.

00:14:35.260 And it's perceived value, right?

00:14:37.700 So what I would do is say, what would be a premium level?

00:14:41.020 Not what everybody else does,

00:14:42.320 not what like off the shelf, e-learning,

00:14:44.600 diversity training company X, Y, or Z does.

00:14:47.420 Cause that's not what you're giving them.

00:14:48.640 You're giving them the Jill experience

00:14:50.540 the experience and knowledge and it's customized like it's really potent and valuable so you want

00:14:56.300 to price it because another thing is you know your price tells a story it tells a story of quality

00:15:05.500 of confidence of uh of completeness right if it's too low people can go wow you know i i've seen

00:15:12.940 people you know tell me about their service and i'm like amazing what does it cost and then they

00:15:17.340 And they go, oh, well, it's only this price

00:15:19.000 and it seems too low.

00:15:21.200 So that tells me, A, you're not charging enough

00:15:24.020 to make money, which is never a positive experience.

00:15:25.960 B, if you're that low, a lot of people are using you,

00:15:29.320 which means you're probably over capacity,

00:15:31.420 which means I may not get the best level of service.

00:15:34.660 And if I want you to be around, right, Jill,

00:15:37.660 if I want you to be the person I turn to

00:15:39.520 every time I have a diversity challenge

00:15:41.160 and I want you to be in business,

00:15:42.280 I want you to love what you're doing,

00:15:44.060 you need to make money.

00:15:45.140 it's too low then there's also this calculation i'm going to make that maybe uh you won't be in

00:15:51.700 business for a long period of time and i see this all the time in the software world 10 bucks a

00:15:55.380 month 20 bucks a month look i'd rather pay you 50 or 100 a month knowing that you're making money

00:16:00.660 so that in five years when i'm still using your product you're going to answer my support emails

00:16:05.300 right so the cool part is is being a premium product is available to multiple people

00:16:13.780 right so you can have multiple people teaching inclusion and diversity and what what what makes

00:16:21.380 them unique is their positioning okay so positioning is one of the most powerful things

00:16:26.580 in marketing positioning allows you to be a premium service for non-profits or government

00:16:33.060 or this kind of organization right because you're not only do you do a workshop for diversity and

00:16:38.340 inclusion but you do it for this vertical this industry right so if i'm making a decision and

00:16:43.780 i've got like these options and i've got this one company that says they only do it for people like

00:16:48.740 me and it's more expensive i'm going to do the calculation in my head well yeah but it's because

00:16:54.580 you only do that right if you go to a mechanic and you drive a volkswagen and the mechanic only

00:16:59.700 works on volkswagen but he's 10 more but you can go to somebody else and he works on all cars

00:17:06.180 If you value having your Volkswagen managed by or worked on by a mechanic that understands your

00:17:11.940 ins and outs, you can assume it's going to be way easier. They probably have the parts. They've done

00:17:16.260 this a hundred times, right? And somebody that cares about that is probably a better customer.

00:17:21.620 And they're going to go with the mechanic that's willing to, that focuses and it's 10% more, but

00:17:27.380 they're not trying to price shop, right? Do you want a customer that's price sensitive or not

00:17:32.180 sensitive not right you want people to care about what you do as much as you care about what you do

00:17:37.540 right so you want to price it so i would say the easiest way to do it for now at this stage jill

00:17:43.700 and the cool part is you should be putting your prices up every six months sounds crazy right

00:17:49.860 yeah every six months yep here's what i mean by that every six months could be a price increase

00:17:57.700 for the overall workshop maybe all of a sudden you have it's changing of your prices every six months

00:18:02.740 maybe you have an upsell for the back-end thing the coaching maybe you charge for that now you don't

00:18:08.660 in the future you will so it's just one element of your packaging your plans or your pricing that

00:18:13.860 you're going to tweak and change maybe you have an add-on you know for an extra thousand dollars

00:18:18.900 we'll do this thing right so that's what i mean by changing your pricing but the easiest thing

00:18:23.700 is yes put it up minimum three to five percent every year because you're just trying to combat

00:18:28.340 you know inflation with the dollar right yeah yeah so i would say um wherever you're at today

00:18:36.740 go up 10 and then see if it changes the conversation with your prospects my gut tells

00:18:43.700 me i've seen companies double if not triple their price and not have it affect their win

00:18:48.180 rates on sales conversations okay so if you think about that double the price same conversion rate

00:18:55.940 to customer applied to the last three years of their business it would have transformed their

00:19:01.700 ability to grow so that's why i'm always trying to test what is the price yielding curve and what

00:19:07.060 you'll discover some people will push back some people won't what's true about the ones that don't

00:19:10.740 push back the ones that are yes you know you ever you ever do like yard selling and then uh and then

00:19:17.220 somebody says what's the price and you say it and then they go great i'll buy it and you're like oh

00:19:21.380 man like i wish i would ask for more like though you want to find out the people that like what's

00:19:27.540 true about them what do they believe what's true about their business what's true like because if

00:19:32.660 you can find a hundred of those people your business becomes dramatically different it comes

00:19:37.300 better right and that's where they say the riches are in the niches niching down doing one thing

00:19:43.540 really well for a very specific customer now you need to know if the market has enough customers

00:19:48.260 and enough of those customers are actually looking for your solution but if those are true

00:19:52.820 then you can create an incredibly lucrative business and and you should be um the premium

00:20:00.100 product out there and you should um make money and be incredibly profitable because something

00:20:06.660 tells me jill if you make money you're going to do good in this world and you deserve to make money

00:20:12.260 does that make sense yes thank you cool based on what i've shared with you what are the biggest

00:20:18.420 takeaways for you um well the the fact to to only do one thing do one thing do it good right yeah i

00:20:30.180 think that i think that's it because i think we were trying to um custom customize too much

00:20:36.660 um but we know what we we know what we're good at and um that seems to be what we like that's

00:20:44.020 what we sold for the for the last three to our last three customers and that's what they wanted

00:20:49.620 so and sometimes you need to tell them what they need and that's why you're the expert and that's

00:20:54.740 why they're going to choose you so when they want you to customize you go great i understand where

00:20:58.980 that's coming from but based on our experience that won't be as valuable as this so if you trust

00:21:05.300 me i would encourage us to go down this path and that's how i bring conversations back again my job

00:21:11.780 as a service provider is to get them the thing that they need that i know is going to have the

00:21:16.500 impact and if my customers trying to ask me to go off that trajectory that i need to get really

00:21:23.220 confident and try to bring them back and most clients i've discovered like if i'm arguing with

00:21:28.420 my doctor and he says hey dan i understand that you want to do this procedure but here's what's

00:21:33.220 happened in the past with people that went down that path and based on your age and this circumstance

00:21:36.900 i would recommend why and it's going to have a better outcome i'm going to appreciate that and

00:21:41.300 probably take his recommendation yeah right cool because if they go forward and then you don't

00:21:46.740 have a positive experience you it's a net loss right or if it's too complicated and you don't

00:21:53.380 you know it just gets too hard so i love that so focus on one core offering that you know you can

00:21:58.180 over deliver on what else oh just the encouragement i think uh because i we

00:22:09.700 i don't know we we started off very very slow um and we keep getting the more we talk about it the

00:22:17.540 more encouraged we get to do it and to go forward and just having this chat with you and and you

00:22:25.460 making it sound like it's a possibility we can really do it so oh not only is it a possibility

00:22:31.620 you have to do it yeah i mean the work you're doing is needed in this world yes right and it's

00:22:37.220 easy to dismiss it and say hey somebody else is going to do it if i don't do it i don't agree with

00:22:41.700 that they're not jill they're not going to bring your perspective your lens your approach to solving

00:22:47.140 that problem and that's what makes great artists great artists right it's like a country singer

00:22:52.580 saying well there's enough country songs i'm not going to create another one i'm not going to write

00:22:55.540 another one right imagine if all these incredible musicians that we appreciate decided because

00:23:01.380 other people had already gave their version of that thing that they're not going to create i

00:23:06.100 mean that's the beauty of being in a service-based business that we're creating this interaction

00:23:12.100 this choreography this content that for the right person they're going to respond appropriately

00:23:18.260 otherwise they may not have so i i believe you need to do this you need to shine your light

00:23:23.300 you got to be the example and um and you deserve it thank you awesome well i hope this uh i hope

00:23:31.140 this helps jill appreciate the opportunity and uh looking forward to hearing how it goes i thank you

00:23:36.980 for the opportunity it was great thank you so much you have an amazing day we'll talk soon

Dan Martell - June 21, 2021

What To Focus On When Starting A Business (And What To Avoid)

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