Valuetainment - January 09, 2019


Episode 243： Why Most Entrepreneurs Fail - The Survival Phase of Business


Episode Stats

Length

10 minutes

Words per Minute

185.03401

Word Count

1,904

Sentence Count

154


Summary

There's a reason why the graveyard of entrepreneurs is so jam-packed with billions of people that didn't make it. It's because of what we're going to talk about here today. The rule of a brand spanking new entrepreneur is that the person that just starts a business, goes from becoming an employee to becoming an entrepreneur. You took this risk, perfect. Your number 1 outcome is to survive as an Entrepreneur.


Transcript

00:00:00.000 I'm Patrick Medebi, your host of Value Team, and today we're going to talk about why most
00:00:20.240 entrepreneurs fail.
00:00:21.360 The number one rule of a brand spanking new entrepreneur, the brand spanking new person,
00:00:25.960 someone that just starts a business, goes from becoming an employee to becoming an entrepreneur.
00:00:29.800 You took this risk, perfect.
00:00:31.620 Your number one outcome is to survive as an entrepreneur.
00:00:36.080 There's a reason why the graveyard of entrepreneurs is so jam-packed with billions of people that
00:00:41.160 didn't make it because of what we're going to talk about here today.
00:00:43.860 So remember, your number one outcome of an entrepreneur is survival.
00:00:49.300 Everyone knows you have a shot clock.
00:00:51.440 As an entrepreneur, everyone has a shot clock.
00:00:54.260 What this shot clock is, your resources, how much money you have in the bank.
00:00:59.080 If you got $60,000 that's going to help you last 10 months of expenses, 9 months of expenses,
00:01:05.300 6 months of expenses, it depends on how much money you have here.
00:01:08.360 And that's your shot clock.
00:01:09.440 Just like in basketball, there's 24 seconds.
00:01:12.460 Football is 35 seconds.
00:01:13.600 You also have this.
00:01:15.020 If you don't use the time that you have diligently to make your business survive, you will be out
00:01:21.240 of business going back to getting a job because you didn't use this time the proper way.
00:01:25.480 So let's talk about that.
00:01:26.480 A lot of times when somebody goes from becoming an employee to entrepreneur, there's two things
00:01:33.040 that everybody must focus on as an entrepreneur.
00:01:35.480 Okay?
00:01:36.500 One is front end.
00:01:38.760 It's very simple.
00:01:40.160 The other one is back end.
00:01:42.420 So now front end is customers, getting customers.
00:01:46.420 Back end could be systems, support, et cetera, et cetera.
00:01:51.980 A lot of times people come through and they say, I'm going to try to find a way to become
00:01:57.460 more efficient on the back end.
00:02:00.740 I'm going to try to make it more efficient, but I'm going to find ways to make it better.
00:02:06.080 My systems are going to be better than somebody else.
00:02:07.980 I was thinking that's the reason why they're going to survive as an entrepreneur so they
00:02:12.060 can graduate that survival mode, but they don't realize efficiency is irrelevant when
00:02:17.940 you're a rookie entrepreneur.
00:02:19.140 It really doesn't matter.
00:02:20.740 You can do whatever you can to try to find shortcuts.
00:02:23.960 It doesn't matter.
00:02:24.920 Think about it this way.
00:02:26.600 I have a three and a half year old and I have a two year old son.
00:02:29.460 Two boys.
00:02:29.860 What's the first thing a coach teaches a kid when they go to a basketball practice?
00:02:37.340 What's the first thing?
00:02:38.380 How to shoot.
00:02:39.520 What's the first thing you learn when you're playing t-ball?
00:02:41.680 How to hit.
00:02:42.660 What's the first thing you learn when you want to go play soccer?
00:02:45.540 How to kick.
00:02:46.900 All those three things I said, are they front end or back end?
00:02:50.120 It's all front end.
00:02:51.500 Then you learn the system.
00:02:53.940 Then you learn what a screen is.
00:02:55.560 Then you learn how to pick up the guy that's trying to steal second base.
00:02:58.740 Then you learn how to hit, you know, go out there and catch the ball and then you'll learn
00:03:03.800 all that stuff.
00:03:04.680 But the first thing is front end, okay?
00:03:07.320 Front end is what makes you graduate the survival mode.
00:03:10.380 The sooner you can graduate the survival mode, the sooner you can scale your business, okay?
00:03:14.940 So let's talk about what it is to focus on front end.
00:03:18.220 On the front end, you really have two customers that you're worried about.
00:03:21.600 One are potential customers, okay?
00:03:24.440 One are existing customers, okay?
00:03:27.360 Potential customers are people that you keep adding to your list of names.
00:03:34.080 List of names of people that could buy, list of names of people that you want to sit with.
00:03:38.380 You want your list to constantly be growing.
00:03:40.640 50 names, 100 names, 200 names, 300 names, 1,000 names, 10,000 names.
00:03:45.440 It doesn't matter.
00:03:46.520 You're adding a database of potential customers on this side.
00:03:50.820 But the biggest mistake sometimes we make is we have no clue how to treat our existing customers.
00:03:56.920 There's three things to do with existing customers.
00:03:59.560 One of them is maintaining.
00:04:01.040 Second one is getting referrals from them.
00:04:05.260 Third one is upselling.
00:04:07.040 Very simple, okay?
00:04:08.800 Amazon upsells us all the time.
00:04:11.580 eBay upsells us all the time.
00:04:13.840 Groupon upsells us all the time.
00:04:16.200 And what they do is Amazon says, if you share this link, we will give you, give us a referral and we'll give you this, okay?
00:04:23.800 Affiliate program.
00:04:25.000 eBay, if you do this, we'll give you this.
00:04:27.280 You know, if you share this bank account and have somebody open it, we'll give you $25.
00:04:31.220 Equinox Gym, if you get somebody to open up a membership, we'll give you one month free.
00:04:35.100 This is all learning how to get referrals from existing customers.
00:04:38.120 I've been using the same recycling services for six years now, okay?
00:04:43.660 We pay them a lot of money every year.
00:04:45.820 And it's a very big company.
00:04:47.700 I went and spoke.
00:04:48.280 They invited me to talk to their executives of California.
00:04:50.480 It was a regional event.
00:04:51.360 And I spoke to their event and I said, listen, what percentage of your customers are customers you're maintaining?
00:04:57.600 And what percentage of your customers are customers that you're getting new?
00:05:00.880 They said 90-10.
00:05:02.380 I said, that's your problem.
00:05:04.920 90% they're just trying to maintain.
00:05:07.120 Then I asked a follow-up question because this was my experience.
00:05:10.180 I said, how often do you take your existing and find ways to get referrals and upsell them?
00:05:16.060 Pause.
00:05:16.460 There was silence.
00:05:17.160 You know how I know that?
00:05:18.360 Six years I've been a customer.
00:05:19.660 Do you know how many times they've asked me for referrals?
00:05:21.780 Zero.
00:05:22.460 Do you know how many times they've tried to upsell us?
00:05:24.560 Zero.
00:05:25.420 Do you know how many people we have that we would give them referrals with?
00:05:28.940 Hundreds.
00:05:29.680 But they've never asked.
00:05:30.760 So they don't have referrals.
00:05:32.320 That could be compounding effect of hundreds of thousands of dollars of revenues to the company.
00:05:36.880 But because they don't ask, they lose out on accounts.
00:05:39.040 Why?
00:05:39.260 Because they don't know how to treat their existing customers.
00:05:43.580 Maintain.
00:05:44.100 That's all they're doing with me.
00:05:45.660 If somebody else calls me with a better service, better opportunity, they don't call me anymore.
00:05:50.160 They no longer even maintain.
00:05:52.180 So if you don't try to get referrals and upsell, you lose maintaining the client.
00:05:56.500 The only way you maintain is if you're constantly trying to get referrals and upsell them.
00:05:59.800 Why?
00:06:00.340 Because in order to get referrals and upsell, what do you need to do?
00:06:03.380 Call the person and get together with them.
00:06:05.000 Right?
00:06:05.580 That's the part that's constant contact to the people.
00:06:08.240 Constant contact.
00:06:09.200 Constant approach and contact to them until you get something out of them.
00:06:12.900 Okay.
00:06:13.480 Until they decide to do something with you and get referrals from them.
00:06:16.340 When you look at this, if you as the entrepreneur, whatever you do, real estate, insurance, sales,
00:06:21.320 pharmaceutical sales, software, it doesn't matter.
00:06:23.340 You've got to focus on front end.
00:06:25.480 There is no business that without front end, customers survives.
00:06:29.480 Everybody has some sort of a subscribership.
00:06:32.100 Some sort of a user base.
00:06:33.480 Facebook has users.
00:06:34.760 Instagram has users.
00:06:36.540 You know, Amazon has, you know, how many prime users do I have?
00:06:40.380 eBay has how many people are selling?
00:06:42.740 How many people are buying?
00:06:44.460 Everything has about a user base, right?
00:06:46.780 So this is what makes Amazon have the best quarter they've ever had in their history,
00:06:52.120 their company, and stock goes up 10%.
00:06:54.200 This is the reason.
00:06:56.040 Meanwhile, they're trying to find ways to become more efficient here.
00:06:59.620 They're trying to find ways to make it faster.
00:07:02.180 They're trying to find ways how to deliver in 24 hours.
00:07:05.040 Right now, they're trying to get droids.
00:07:06.380 I don't know if you seem to know Amazon drones, where they want to deliver the package to you
00:07:11.680 on a drone and drop it off.
00:07:12.880 If you haven't seen, it's pretty intense what they're trying to do.
00:07:14.840 They're working with the government and shipping companies to actually be able to be approved
00:07:18.920 to deliver packages to you on a drone and drop it off in front of your house.
00:07:22.480 Pretty amazing what they're trying to do.
00:07:23.720 But they didn't do that 20 years ago when they first came out.
00:07:26.640 They focused here.
00:07:28.020 This allowed them to do this.
00:07:29.640 If you don't do this, you will not survive.
00:07:31.780 You'll go back to getting a job.
00:07:33.340 And eventually, you run out of money.
00:07:34.860 And you're going to wonder and say, this entrepreneurship is not for me.
00:07:37.840 So what is your goal?
00:07:38.620 If your business and living expenses are $8,000 a month, you need to get to $10,000 a month.
00:07:48.860 Now you've got $2,000 plus that you're making.
00:07:51.540 And then guess what you have the choice to do?
00:07:53.300 The more you increase this, the more you can invest that here to have somebody help you
00:07:57.340 become more efficient here.
00:07:59.060 If you get to this part and you start profiting, and then you try to take the time to do this
00:08:03.340 yourself, this goes back down to $6,000, $4,000, $2,000.
00:08:07.680 Again, you run out of money, you're going back to job, you run out of business, right?
00:08:12.580 So regardless, whatever you ever do, you have to always be focused on this.
00:08:16.880 Let me show you the last thing here.
00:08:18.820 And then if you've got any questions, pose the questions or email me, patrick at patrickbedavid.com
00:08:24.400 and I'll respond back to you.
00:08:25.460 Here's what it is, okay?
00:08:26.760 This is how it looks like, okay?
00:08:29.400 This is how it looks like to give you an idea, okay?
00:08:33.200 This is systems and efficiency.
00:08:35.800 This is front-end sales, okay?
00:08:43.200 Front-end sales is also existing in potential customers like I explained, right?
00:08:47.560 Remember the whole maintain, upsell, referrals, that whole thing we talked about earlier?
00:08:51.640 This needs to always be here.
00:08:55.820 Systems, gradually, you work on it.
00:08:59.120 And you get better, and better, and better, and better.
00:09:01.760 However, if this outdoes this, you're not going to explode.
00:09:07.240 This needs to always be around for you to have the possibility to all of a sudden have a compounding explosion.
00:09:15.720 But if you don't maintain this and work this constantly, you're out of business.
00:09:19.880 And then you'll be buried at the cemetery with billions of entrepreneurs who also didn't make it because they spend way, way too much time focused on shortcuts, efficiency.
00:09:32.280 I can do a better way.
00:09:33.200 I can do this.
00:09:33.760 I can do that.
00:09:34.660 Instead of focusing on this side.
00:09:36.480 And somebody who's doing this eventually passes this person up.
00:09:39.260 Very simple.
00:09:40.460 Borders here.
00:09:41.760 Amazon here.
00:09:42.920 Very simple, okay?
00:09:44.700 Starbucks here.
00:09:45.900 Dunkin' Donuts here.
00:09:47.280 I can give you plenty of examples of what happens with businesses who focus here versus focusing here.
00:09:52.980 Thanks, everybody, for listening.
00:09:54.260 And by the way, if you haven't already subscribed to Valuetainment on iTunes, please do so.
00:09:58.860 Give us a five-star.
00:10:00.180 Write a review if you haven't already.
00:10:01.760 And if you have any questions for me that you may have, you can always find me on Snapchat, Instagram, Facebook, or YouTube.
00:10:07.660 Just search my name, Patrick MidDavid, and I actually do respond back when you snap me or send me a message on Instagram.
00:10:14.700 With that being said, have a great day today.
00:10:16.440 Take care, everybody.
00:10:17.140 Bye-bye.