Valuetainment - Episode 289 - 10 Questions Every Entrepreneur Should Ask

00:00:00.000 30 seconds, one time for the underdog, ignition sequence start, let me see you put em up, reach

00:00:09.260 the sky, turn the stars up above, cause it's one time for the underdog, one time for the

00:00:16.240 underdog.

00:00:17.280 I'm Patrick Medevi, host of AITEM and today I'm going to talk to you about 10 questions

00:00:21.040 every entrepreneur should ask themselves.

00:00:23.800 If you work closely with me, you will hear me talk about two different types of people

00:00:27.160 that are the most dangerous people you'll face in business, so let me explain to you what

00:00:30.860 they are.

00:00:31.780 The first one are people who are lazy but ambitious.

00:00:35.100 These are people that are very ambitious.

00:00:37.460 They want the power, they want the fame, they want to get to the top, they want control,

00:00:40.520 but they're not willing to do the work.

00:00:41.960 So in order for them to get to the top, they do by backstabbing, manipulation, games, all

00:00:46.180 that other stuff, as long as you don't get there, they want to get to the top.

00:00:49.280 But the second most dangerous, that are way more dangerous than these guys, are people

00:00:54.580 who are clear on what they want.

00:00:55.900 Let me explain.

00:00:56.400 These guys are clear on their vision and they're clear on who they want to be.

00:01:00.580 What ends up happening when you're clear on who you want to be and you're clear on your

00:01:04.220 vision, 1 year, 3 year, 5 year, 10 year, 20 year, you end up attracting the best talent

00:01:09.700 and you end up maintaining the best talent because your vision is that crystal clear.

00:01:14.680 So question number one for you is, what is your vision on where you want to be and who

00:01:18.860 do you want to be in that vision?

00:01:20.940 The second question you have to ask yourself is, who is your ideal customer?

00:01:24.460 Let me explain.

00:01:25.140 I have many CEOs and entrepreneurs that will sit right here and I'll ask them, who's your

00:01:28.820 ideal customer?

00:01:29.560 And they'll say, everybody.

00:01:31.140 I said, that's the wrong answer.

00:01:32.380 You can't say everybody.

00:01:33.460 Well, no, Pat.

00:01:34.260 We're holistic.

00:01:35.760 You know, we're hybrid.

00:01:37.060 We want everybody.

00:01:38.580 It's just not how business works.

00:01:40.340 Let me explain to you.

00:01:41.740 Rolls Royce knows exactly who's their customer.

00:01:44.240 The guy buying a Focus, you are not buying a Rolls Royce.

00:01:46.680 Louis Vuitton knows who's their customer.

00:01:48.020 Sam Walton, Walmart knows who's their customer.

00:01:50.120 Apple, you know, you go to AT&T, even Lululemon.

00:01:53.800 If you've ever seen this interview, it may be the best interview on YouTube for entrepreneurs.

00:01:59.380 I interviewed Chip Wilson, the founder of Lululemon, who's worth $3.9 billion.

00:02:03.360 I asked him, who's your ideal customer?

00:02:05.300 He said, a 32-year-old female who's career-oriented, making six figures, isn't married, has a cat, 0.96

00:02:12.240 but is thinking about getting married.

00:02:14.120 That's my ideal customer.

00:02:15.520 No wonder he built a $12 billion business.

00:02:17.540 So for you, who is your ideal customer?

00:02:20.060 The third question you've got to ask yourself is, how big do you want to scale your business?

00:02:23.320 This is a very important question, and a lot of people say, well, I don't know.

00:02:26.380 I guess I'll find out when I go through it, and we'll see.

00:02:28.720 It's kind of like getting married to somebody and not having a conversation about having kids.

00:02:33.200 And then she tells you, I don't want to have kids.

00:02:34.940 We should have had that conversation.

00:02:36.520 Business, you've got to know how big you want to build it.

00:02:38.240 You want to be a small shop in a city where everybody knows, and they come to you for bread,

00:02:42.660 your bakery, and you're happy with that.

00:02:44.400 Maybe you want to be big in a region.

00:02:46.720 Maybe you want to be big in a state.

00:02:48.040 Maybe you want to be big in a nation.

00:02:49.860 Like, I want to be number one in China.

00:02:51.680 I want to be number one in Slovenia.

00:02:53.640 I had a guy that flew in here from Germany.

00:02:55.660 He was number one in selling batteries in Germany.

00:02:58.180 That was his vision.

00:02:59.000 That's what he wanted to do.

00:03:00.080 And maybe you want to be global.

00:03:01.740 The sooner you know your vision, everybody around your wife, your husband, your kids,

00:03:06.080 your family, anybody that's around you knows what you're doing,

00:03:08.820 which means you know the level of sacrifice.

00:03:10.920 You know the level of details.

00:03:12.060 You know the level of teammates you need, support, board.

00:03:15.380 All of these things has to tie to the vision that you have.

00:03:18.420 So going back to it, this is slightly different than the vision of who you want to be

00:03:22.080 and how you want to be in your industry.

00:03:24.280 This is about how big you want to scale your business.

00:03:26.240 The sooner you know that, the sooner you'll be able to get the team around you to help

00:03:29.660 you scale your business.

00:03:30.760 Number four is technical, but I hope this makes sense to you.

00:03:33.540 A lot of people struggle with number four.

00:03:35.160 Here's what it is.

00:03:35.840 Do you know what formula drives numbers in your business?

00:03:39.520 What do you mean by this, Pat?

00:03:40.620 Do you know what formula produces results that drives numbers in your business?

00:03:45.520 For example, if I advertise here with this commercial and I say this, it produces the

00:03:52.180 highest results.

00:03:53.200 If I make this many calls and I have this many salespeople who sell these three products,

00:03:58.120 this is the biggest profit margin that I have.

00:04:00.360 If we lead with this product and we have this product as a secondary and we sell during

00:04:05.680 this time, it produces this much numbers.

00:04:07.440 Just yesterday, I took eight hours.

00:04:09.280 It was myself and Teakram.

00:04:10.420 We sat there and I went through numbers.

00:04:12.080 I had stacks of data on my desk and I kept pulling everything and I pulled out formulas.

00:04:17.400 We have 12 vice presidents all around the country, right?

00:04:20.580 I took everybody's formula and I saw how much money was left on the table for each individual.

00:04:26.440 And then I gave them the formula.

00:04:28.060 If you do this behavior times this behavior divided by this minus this, you would have made

00:04:34.080 an additional $2 million last year.

00:04:35.880 And that number was given to them.

00:04:37.880 Why did that happen?

00:04:39.060 Because I know the formulas.

00:04:40.480 The more you know your formulas that you teach everybody else, you end up increasing your

00:04:44.600 profit margin.

00:04:45.600 But the less you know your formulas and the less you teach it to other people, you end

00:04:49.520 up leaving millions, if not billions of dollars on the table.

00:04:53.160 Next one is kind of tough for the people that are A-type, cocky, confident, maybe semi-arrogant,

00:04:57.300 which is good for business.

00:04:58.920 But this is kind of tough for you to accept.

00:05:00.600 Here's what it is.

00:05:01.300 What are your weaknesses?

00:05:01.980 Let me explain to you what I mean by weaknesses.

00:05:03.760 If you're an A-type personality, you're winning, you know your strengths.

00:05:06.920 You absolutely know you're good in certain areas, right?

00:05:09.520 You may be great in sales.

00:05:10.880 You may be great in technical.

00:05:12.520 You may be great with coding.

00:05:14.180 You may be great with operations.

00:05:15.640 You may be great with biz dev.

00:05:17.140 You may be great with design.

00:05:18.380 You may be great with a lot of different things.

00:05:20.060 But I guarantee you, there's a lot of areas that you have weaknesses in.

00:05:22.840 The reason why I wanted to know ASAP what my weaknesses were, which was operations, HR,

00:05:29.800 payroll, systems, all of these things were my weaknesses, I immediately went and hired

00:05:36.580 people that were strong in this area.

00:05:38.500 So my weakness was no longer being highlighted because I hired the right people that were

00:05:43.900 10 times smarter than me in these three or five areas that I was weak in.

00:05:48.380 Next question is very simple.

00:05:49.680 Where is time being wasted within what you do on a daily basis?

00:05:52.120 Let me explain to you what I mean by this.

00:05:53.220 There's a lot of people that are doing business.

00:05:54.940 You come to work.

00:05:55.580 You're like, okay, I worked 12 hours today.

00:05:57.460 I worked 14 hours today.

00:05:58.340 I did this.

00:05:58.800 I did that.

00:05:59.200 I did this.

00:05:59.600 But where is time being wasted?

00:06:01.440 When you take a moment and you actually take a sheet of paper, right?

00:06:04.300 You sit there and you say, this week I spent this many hours here, here, here, here,

00:06:08.320 here.

00:06:08.980 And then you notice those six hours that you put into XYZ activity is what gives you the highest

00:06:15.340 return, but you only put six hours in there.

00:06:17.160 And the 13 hours that you put in area that doesn't give you return, wasted.

00:06:22.680 Why don't you put 13 hours in there?

00:06:24.100 But you have to know about it because the faster you're growing and the more you're in the business

00:06:28.640 and all of a sudden you start making 100 grand a month, 200 grand a month, a million a month,

00:06:32.100 two million a month, 10 million a month.

00:06:33.760 You start becoming $100 million in your company.

00:06:35.740 You start really believing that you got everything in order.

00:06:38.140 I'm doing so great.

00:06:38.940 I'm an incredible entrepreneur.

00:06:39.900 But I guarantee you, there are so many areas of your business that there are leaks in, that

00:06:44.800 time's being wasted, that you have to sit and take an inventory and figure out what

00:06:48.320 those things are and put your time in areas that gives you the biggest return, not areas

00:06:53.460 that doesn't.

00:06:54.300 So that question, where is time being wasted, leads me to the next part.

00:06:57.460 You ever hear people say things like, you know, you're working too much in your business,

00:07:00.800 not on your business.

00:07:01.700 And everybody says it.

00:07:02.720 Yeah, you're working in your business, not on your business.

00:07:04.940 And no one knows what that really means.

00:07:06.840 You're like, what the hell is in?

00:07:08.560 And what it's on, like, am I supposed to sit on top of my business?

00:07:11.360 I don't get what it's on.

00:07:12.680 Can you please tell me what's in and what's on?

00:07:15.420 I'm going to break it down to you.

00:07:16.440 Let me explain to you what it's in.

00:07:17.540 In is, you're the one selling.

00:07:19.460 You're taking orders.

00:07:20.380 You're customer service.

00:07:21.760 You're placing orders.

00:07:22.920 You're doing all the work you're doing because you're in it, right?

00:07:26.160 You're doing all the work within the business yourself.

00:07:28.980 When you're in it, it's growing linear.

00:07:30.820 It's not exponential.

00:07:31.700 It's only linear.

00:07:32.860 Working on the business is the following.

00:07:34.840 Let me explain.

00:07:35.460 What systems, protocols, procedures can you put in place to automate something that runs

00:07:41.220 with or without you?

00:07:42.740 That's automation because that's working on your business.

00:07:45.820 What new systems can you add to one department, the next department, this department?

00:07:49.740 Right now, we're buying a $3 million technology.

00:07:52.760 Why?

00:07:53.160 Because this $3 million technology, four departments are all going to be automated, which means what

00:07:58.760 is taking today 15 minutes to process one item is going to go down to two minutes.

00:08:04.420 That is seven and a half times.

00:08:05.980 That's working on the business.

00:08:07.400 Yes, it costs a lot of money, but it's working on the business.

00:08:10.320 The next one is hiring.

00:08:11.800 Are you hiring properly?

00:08:13.140 The other day, I'm sitting with one of my senior guys, and we're having a conversation

00:08:15.980 together.

00:08:16.860 And he says, Patrick, when we hire people, what kind of people do we want?

00:08:20.840 It was a perfect question to ask because we weren't hiring the right people and selling

00:08:25.540 them our culture, so we kept getting people and losing people in a certain department.

00:08:29.680 Whose fault is that?

00:08:30.440 That's our fault.

00:08:31.400 We had to figure out to hire the right people because we knew who we wanted, so we don't

00:08:35.960 have to keep going through it over and over and over again.

00:08:38.340 This is all working on your business, not in your business.

00:08:41.520 By the way, the list is a long list of things that I have here with standards, protocols,

00:08:45.240 et cetera, et cetera, et cetera, just so you know that.

00:08:47.020 So earlier, I asked you, what are your weaknesses, because you already know your strength.

00:08:50.900 Remember how I asked you that question?

00:08:52.180 This is a slightly different question, but it's related to it.

00:08:54.840 It's like the cousin of weaknesses.

00:08:56.720 What are your blind spots that you currently have right now?

00:08:58.660 Let me explain what I mean by blind spots.

00:09:00.160 I had a guy I was talking to, runs a very, very successful business.

00:09:03.560 He is growing so fast that he's churning and burning through money, and we had a call

00:09:08.100 together.

00:09:08.920 Three years in a row, he calls me at the same season, saying, we grew so fast, we need $15 million.

00:09:14.520 We need $10 million, and it's not like I need $300,000.

00:09:18.120 I need $15 million, $10 million.

00:09:21.640 Finally, we had a conversation together.

00:09:23.280 It was an hour and a half conversation.

00:09:24.420 I said, listen, for three, four years, we've been having the same conversation.

00:09:28.420 Then you panic, then you sell off everything, and you go pay this off.

00:09:31.280 This has happened so many times.

00:09:32.960 This is a blind spot.

00:09:34.380 What are you doing about this blind spot?

00:09:36.240 What's a blind spot?

00:09:37.080 Blind spot is, you're running out of money, but you're not paying attention to it because you're

00:09:40.260 not doing the math.

00:09:40.820 Realize that you only have nine more months of money to make you last for nine more months.

00:09:45.160 Blind spot, maybe one department is growing so fast, but you don't have enough support

00:09:49.400 that you're not going to sustain it.

00:09:50.620 In about nine months, you're going to crash and burn and lose a few people in that department.

00:09:55.000 Blind spot is knowing there's a certain personality you need that you don't currently have, so your

00:09:59.980 retention of clients staying on the books is lower because they're not happy.

00:10:03.560 There's a lot of unhappy customers you have.

00:10:05.800 These are all blind spots.

00:10:06.760 You have to sit there with your core three to five people and ask, what are some blind spots we have?

00:10:11.380 By the way, the vision, dream, competitive, super competitive, the big thinkers, they don't think

00:10:17.080 they have blind spots, but guess what?

00:10:18.740 Those people are typically the ones that have the most blind spots.

00:10:22.200 All right, next one.

00:10:22.700 This is basic money, basic business.

00:10:24.200 It's what are your conversion ratios?

00:10:25.900 Let me explain what I mean by conversion.

00:10:27.400 Conversion is, I come to your site, what percentage actually clicks on the next link that leads

00:10:32.280 to buying a product?

00:10:33.200 What's the conversion ratio?

00:10:34.180 Conversion ratio is, somebody comes to my gym, what percentage of the walk-ins end up

00:10:39.080 buying a membership, and which membership do they buy?

00:10:41.660 Why?

00:10:42.000 So for instance, if 10 walk-in, two buy, and the two that buy, they buy one gym membership

00:10:48.280 instead of buying sports club memberships, I want to know why are we only converting out

00:10:52.880 of 10, two, and out of the two we're converting, why are we selling the cheapest membership?

00:10:57.120 So three things to study over there.

00:10:59.060 One, what can we do to have more walk-ins?

00:11:01.340 Number two, what can we do to close 40% instead of 20%?

00:11:05.060 And three, what can we do to upsell and just sell these basic programs so our guys maybe

00:11:09.140 are not that good in sales?

00:11:10.240 In every area of your business, you have to look at your conversion ratio.

00:11:13.800 The more areas you have conversion ratios and percentages, the more areas you can improve.

00:11:18.740 And all of a sudden, your profits goes from 18% to 42%.

00:11:23.180 It's that astronomical if you actually study your conversion ratios.

00:11:27.460 Last but not least, very important question.

00:11:29.080 It's something that's on my mind all the time.

00:11:31.620 Who are the next three leaders you're building?

00:11:33.300 Very simple.

00:11:34.040 Who are the next three leaders you are building?

00:11:36.580 Every time I have my executive meetings, whether it's new business, processing, client retention,

00:11:42.260 no matter what department, marketing, sales, every conversation I have is, who are the

00:11:47.320 next three leaders you're building?

00:11:48.320 You know why?

00:11:49.300 Because leadership development in any department helps you exponentially grow.

00:11:54.440 In every single company, you show me that's growing, there are new leaders being built

00:11:59.460 and born because the system is built in a way to develop new leaders.

00:12:03.860 The more leaders, the more you scale.

00:12:05.660 So the question you got to ask yourself, grab a paper and pen, who are the next three leaders

00:12:09.200 I'm really building?

00:12:10.080 And if you don't know the answer to that question, that's a very big problem.

00:12:13.360 You have to immediately have the next three people you're building so your business keeps

00:12:16.760 continually growing.

00:12:17.540 Thanks everybody for listening.

00:12:19.180 And by the way, if you haven't already subscribed to Valuetainment on iTunes, please do so.

00:12:23.740 Give us a five star, write a review if you haven't already.

00:12:26.640 And if you have any questions for me that you may have, you can always find me on Snapchat,

00:12:30.720 Instagram, Facebook, or YouTube.

00:12:32.680 Just search my name, Patrick VidDavid.

00:12:34.580 And I actually do respond back when you snap me or send me a message on Instagram.

00:12:39.580 With that being said, have a great day today.

00:12:41.300 Take care everybody.

00:12:42.020 Bye-bye.

00:12:42.260 Bye-bye.

00:12:47.540 Bye-bye.

00:12:48.100 Bye-bye.

00:12:49.100 Bye-bye.

00:12:49.640 Bye-bye.

00:12:50.740 One, two, three, three, three.

00:12:52.620 Bye-bye.

00:12:53.740 Bye-bye.

00:12:54.340 Bye-bye.

00:12:55.480 Bye-bye.

Valuetainment - April 25, 2019

Episode 289 - 10 Questions Every Entrepreneur Should Ask

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