In this episode:
02:00 – The underlying motivation
03:10 – So, what do you do?
04:20 – What does success look like?
06:44 – This one’s powerful
08:05 – The importance of surroundings
09:24 – That thing called fun
10:45 – Routine and effective hourly rate
12:04 – How the business is structured
13:53 – Scoping out the team
15:03- What’s the business model?
15:44 – Products, services and pricing
17:20 – What’s the best hook?
18:16 – Looking for solid systems
19:18 – The competition involved
20:11 – Cash flow and marketing
22:45 – Owning the racecourse
23:21 – Costs versus revenue
23:46 – Affiliates and presence
24:44 – The sales view
25:09 – Understanding the owner
Making $10,000 to $500,000 a year? Reach that next digit with James’s help inside SuperFastBusiness membership
Making more than $500,000? Check out the SilverCircle high-performance coaching group
James Schramko here and welcome to Episode 627 of SuperFastBusiness. This podcast is going to be just me today. I want to share with you some insights behind the scenes of when I’m coaching a business, and what I’m looking for as I’m doing the diagnostic process.
Now, I recently ran a training inside SuperFastBusiness membership for members, where I went through a diagnostic that I go through when it comes to my highest-level program. And using that diagnostic checklist, members are able to now tune up their business and see where the big gaps are because this is a gap analysis exercise. You can see where you’re at, you can see where you should be, and you can see what the gap is. And that provides the opportunity for you to make an action plan to achieve that gap.
Now, you will need some expertise, of course, along the way. And this is where I help members by coaching them. But in this episode, I want to share with you why I ask some of the questions I ask and what I’m looking for. And you might get an indication as to what some of the green flags are that would help you know if you’ve got a great business that’s just doing okay. Maybe you’ve got a $500,000 a year business that should be a $5 million a year business. Maybe you have a $10,000 a year income that could easily be $100,000 a year. That’s what I want to go through in today’s episode. It’s a solo podcast episode today, just me. I hope you enjoy it. So let’s get into it.
The underlying motivation
So in my diagnostic, I usually ask students to answer a few questions. One of the things I’d like to know is why they do what they do. I want to know what’s the motivation. And what I’ve found here is a strong association between people who are adamant about what they do, who are extremely driven to do what they do, they’re going to have a lot more chance of overcoming the obstacles. Maybe they have an external driver, they need to make a certain income, or maybe they have an internal driver, maybe they need to prove themselves to themselves. Quite often it might be a parent-figure or a partner or that bully at school. Who knows?
“The most determined people will be unstoppable.”
But I know if someone’s very clear about why they want to do something, the most determined people will be unstoppable. And they’ll have that momentum to go past the points that inevitably happen, which cause friction and chaos. I had a mentor describe this to me as the phase of walking over broken glass. And he said, sometimes you have to eat beans.
But this client of mine, the mentor, was so driven, he ended up making an empire of properties that probably numbered past $100 million in value. And he started with nothing. But he was so driven. He had a strong purpose.
So, what do you do?
I also ask my students how they explain what they do when they meet strangers. And I found this is an interesting one, this starts to indicate how clear and strong the marketing message is, if they actually know what they do, if they know where they bring value, and if they know how to explain it to someone who has no current understanding.
For example, if you’re out and about and you bump into a stranger, let’s say, you go to a barbecue and you meet somebody that you’ve never met before, and maybe they’re a school teacher or a forklift driver, and you’re very savvy with your online business, how do you explain what it is that you do? This starts to help the marketing message.
And then beyond that, I look to how do you explain what you do when you’re talking to prospects? Because these people might already know what they’re looking for. They might be in the market for what you sell, and you’re probably going to have a different answer for this one. And how you answer this is going to be a green flag as to how easy it will be for you to convert business. So it’s worth thinking about that, your messaging.
What does success look like?
I then ask what would it mean to be successful, because success is personal. And we’ve talked about this on previous episodes. Some of my students want to make $10 million a year, and that’s the success goals. Other ones are happy to make $100,000 a month. In fact, in my case, that’s enough to have a great life. A hundred thousand dollars a month is a really fantastic business. And if you can have enough cash in the bank, and live the rest of your life without having to work too hard, for me, that’s certainly a nice outcome. If I can have my health and family and relationships and I can surf every day, that’s even more important to me than adding an extra five or $6 million.
And then, of course, some of the numbers are misleading. You might find a marketer who’s making a couple of hundred thousand dollars a month is probably spending 130,000 in ads to get it. So the revenue numbers can be a bit misleading. You really want to look at net profit when it comes down to it.
So what does success look like? And again, the clearer the vision on this, the more likely it is that you are on the path to getting it. So this is another green flag that I look for, and not just a monetary goal. What would you like your life to look like from a financial perspective? Sure. But what about health? What about relationships? What about spiritual or philosophical? What about giving back, what about other goals, contribution, those sort of things? These people who are very driven are more likely to succeed with it.
If you don’t really know what you want, and this is pretty common, because I certainly never really knew what I wanted to be when I grow up and I’m probably only just started to figure that out now, which is quite funny, the clearer you can zoom in on it, the more likely you are to get that goal.
What does success look like in a year from now? For me, this is an indicator of what progress I’m needing to achieve with my client for them to feel that they’re getting a great return on investment. This is sitting a line in the not too far distant future that we can just obliterate. I usually want to achieve this within three months, and certainly within six months. I want to well and truly get further than we expected to, way quicker.
But this is a green flag again. If someone can have a clear idea of the next few steps that would be successful, then that’s what I want to achieve. So this is about alignment. How aligned can you be? If you’re coaching and you can align yourself with your student, it’s very important to understand what they think success is, because I can assure you it is different for every student.
This one’s powerful
This next question is a really important one. And that is, what do you already know you need to do? And it’s so powerful, because I can get a great gauge on where someone’s at in terms of business experience, and business maturity, if they have a good honest relationship with themselves. Because generally, someone’s got to the point they get to with whatever they’ve done prior to speaking with me. And maybe they’ve been following some of my stuff, some podcasts or read my book, and I’ve helped them in some way, but not personally at this point. And now we’re going to that next relationship stage.
“What do you already know you need to do?”
I want to know what they already know they need to do, because this is going to be an indicator of where the blockages are. If they know they need to do Facebook ads, or they know they need to update their logo, or they know they need to create a new offer, but they haven’t done it, I want to know why. I want to know what’s been stopping it. Often it will be time. Sometimes it will be lack of how to do it exactly. Sometimes, a more advanced answer is a lack of who can do it. And these answers will indicate to me what I’m dealing with and how I can successfully remove blockages and get those things achieved.
The other thing is they kind of lean into the previous question. If we can achieve the things that we already know we need to do, and we can do it quickly, then this is a great proof of concept and it builds massive confidence in our process.
The importance of surroundings
So beyond that, I’m looking for where someone’s at in terms of their environment and the way they’re living. And this is somewhat counterintuitive, but I’m looking for a rating around aspects of life. I want to know how they’re at with their wardrobe, and with their transportation, and their storage areas, and whether they travel or not, and if they want to, or not; whether they play or have fun every day, whether they get enough sleep and relaxation, whether they’re fit and they exercise, and what they’re eating and drinking. And also if they read, listen or study. I want to know the foundations.
For example, it was pretty rare, when I was a sales manager and I was interviewing someone for the role of salesperson, it was pretty rare that they would have actually read any books on sales. Occasionally, I’d find someone who had done a training course on sales, but it was pretty rare in my industry.
So I want to see what has the foundations been built with. If someone’s already at the point where they’re doing this kind of discussion with me, they’re usually making several hundred thousand dollars a year. And that’s a green flag I look for. In fact, my perfect client for SilverCircle, for example, is already making $500,000 per year. So I want to know, where can we get to, if we can fix some of these things?
That thing called fun
A very common one at this level is the business owner has forgotten to have fun, and to play. They’ve stopped having fun. Somewhere along the way, things became very serious. And then they got consumed with this never-ending game of growing a business, especially in the online business where the internet is always on. There’s always more money on the table to get. The tragedy is, some people just get obsessed by it. Some pretty common advice these days is to be basically donating your life to social media and using that marketing methodology as the prime and only source for getting traffic and leads and making sales. But where does it stop? Where’s your personal life stop, and where does your public life start? Does it encroach too much?
And I’ve found by prescribing both fun and fitness, people can have a drastic transformation in how powerful and effective they become, how clear-thinking and how potent they can be when they are actually doing their work. It’s certainly been the case for me. I wrote the whole book on it. Work Less Make More covers this in great depth. And usually when I’m finding a business owner who’s making $500,000 a year plus (and the average student of SilverCircle is making around $3 million a year) often they’ve cut corners on the fun part, sometimes on the fitness. And certainly, occasionally, they don’t have their house in order in terms of being in a great environment. So that’s one thing I look for.
Routine and effective hourly rate
I also look for routine. I want to know what’s the routine, and what’s the effective hourly rate when we start out. And most people have an indication. But they’re quite surprised when we do it by product item. It’s good to do effective hourly rate across the entire business, but certainly worth drilling down into products. What I’m looking for here is, I want a green flag on a strong product. I want to see what’s the strongest product, the most profitable product, the winning product, because that’s where we’re going to find the most leverage to start with, is by enhancing that winning product. Generally, we’re going to cut the losers and not try and spend too much time and energy to make a bad performer good. We’re going to make a good performer great, or outstanding. We want to find that benchmark and enhance it.
When it comes to routine, people with no routine are generally just getting slopped all around the sides of the week and just being eaten up in a reactive state. And that can be devastating. So I like to put in some boundaries. And you can use tools like scheduling tools, you can have your assistant start doing some things for you, you can certainly fix up your inbox and get some better habits around that. And I usually like to build in at least a half a day to a day of no appointments when someone’s starting out, so that they can wean off the workaholism that is typically displaying.
How the business is structured
Next, we’re going to structure. When it comes to the structure of the business, I’m going to have a look at things like the name of the business and if they actually like it. I’ve found another green flag is if someone actually loves the name of their business and their brand. If they love it, they’re probably going to be more successful.
“Ownership and control are really the strongest things you could have.”
I look at who owns the business and what type of structure it is. Because if there’s a partnership, this can often spell trouble. This is definitely a red flag. If there’s too many partners, or the partners are moving at different speeds, or have different requirements, they often ends in disaster. Many partnerships become sinking ships. So I’m looking for the green flag here of ownership. Ownership and control are really the strongest things you could have here.
In terms of the structure type, I want to make sure that it’s geared correctly to not overpay on tax. That if it was sold, it would get the benefit of being in the right structure, that it’s in the right country, the right currency, that it has insurances, and it owns the IP or trademarks for the business. And there are sometimes some extra layers of cross-licensing between different entities.
And I then delve into whether we’re buying or selling. Are we looking to sell this business? Because if we want to sell the business, there’s no point branding it around the person and making it owner-dependent. If we don’t need to sell it, then it could be a great cash cow and much easier to differentiate if we do brand it around the person. If we’re planning on buying other businesses, often I find a client hasn’t considered this option, but it’s often a really fast way to accumulate a database, is to go and buy and roll up other people in your marketing space.
Strategy-wise, I’m going to be looking for the primary purpose of this business. What’s it all about? What’s it trying to do? And what was the genesis story and where’s the trajectory going? I want to make sure that it fits and makes sense.
Scoping out the team
I also look at the environment – are we working from home? Are we in an office? What sort of team do we have, and who does what? I’ve actually uncovered some really interesting ones here. A red flag is if you are completely dependent on one supply source for your team. So I’d rather that you have full control of your team and that they’re on the books directly to you. That’s nice to have. If you’re dealing through a service business or just one point of contact, there is a risk of loss, and certainly, you’re paying more, generally.
Team size and who’s doing what? Often there’s plenty of opportunities there to reorganize this. I have found a green flag is that someone has a team of at least three to five people. If you don’t have three to five people, you’re probably a micro business and you’re probably doing most of the jobs yourself, or you’re task-sourcing to jobs boards for little knick-knack tasks that are just eating up your schedule. In my business, we can generate a few million dollars a year with a little team of five, and we can get most of the things done that we need done in-house, and we have a fantastic team.
So typically, I’m looking to see that there is a team, that we have people who can do things other than the business owner, because that’s going to give us leverage.
What’s the business model?
I also then look at the business model. There are certain business models that fall within my sweet spot of being able to help. Certainly, I’ve helped people with ecommerce and software as a system, and most definitely info products, memberships, services, agencies, and expert influences. Those sort of business models are great, very easy to work with, in hot demand, and are quite known.
When you start going a little bit left field, then it can move into areas that become a little more awkward. I’ve had some very interesting clients over the years, everything from funeral celebrants through to people who sell clotheslines, and everything in between. So the more known the project is, the more mainstream it is, probably the easier it is.
Products, services, and pricing
I then want to look at the products, services and price points. And here, I’m looking for very strong products. There’ll usually be one or two products or services that knock it out of the park, and then usually a bunch of stuff that’s not that useful. And this is going to provide a mass of opportunity to rearrange pricing, to tune the product line and services, to integrate them, to spin them out, to roll them up, to adjust who we’re selling them to, to add products on top, to remove the bad ones. So there’s a lot that can be done in this area. So the green flags, I’m looking for a strong leading product and a client base who like the products.
“A really good product is easy to work with.”
A really good product is easy to work with. There’s no excuse to have a crappy product. I’ve seen people who are 11 out of 10 for sales and marketing, but the product lets them down. That’s going to attract you a world of hurt. You’re going to get negative reviews, you will have to get new customers on an ongoing basis, and you will have a frustrated team on your hands. So for all it’s worth, I really suggest, make sure you focus on having an amazing product. I certainly pour my heart into having the best product that I can.
In fact, I’m dealing with a major corporation at the moment. And it’s taking them 11 days to get back to me. And I often find this with large companies, whereas my support team will respond to clients very quickly. We man our support seven days a week, and we have same-day, often same-hour and sometimes same-minute response. And that’s the standard that we want. That’s part of our product offering, is the way we support it.
What’s the best hook?
I then want to know what is the best converting sales hook, what brings the leads in, what’s getting the conversions? And then I want to know what’s the best-paid product or service and I want to know what risk reversals and guarantees are in place. So the green flags I’m looking for here are a really good conversion device that works well, something of good quality that can bring the right kind of customer. I’m not talking about a free iPad contest, because that doesn’t bring in good customers, that brings in people who want an iPad. I’m talking about a very specific target market-related product or service that is just perfect.
So when I had the SEO business, for us, we had an SEO audit. We had a free check, originally, and then it turned into a paid one. And that was our sales hook, and it was fantastic.
What guarantees or risk reversals do you offer? Or what kind of demonstration do you have, or proof that helps people know that your products or services are good?
Looking for solid systems
I think on to systems, and I’m having a look at what kind of systems are in place already. Are there webinar systems? What sort of personal email, what sort of company email systems are in place? What sequences and segmentation and triggers and opens and close and testing and emails and cart and other affiliates? And is there a survey? Is there a reporting mechanism? A dashboard of sorts? What kind of support do you have? Do you use live chat or messenger? Is there a telephone number on the site? How do you handle cancellations? Do you use videos, audios, etc.? This is all in the category of systems, and the green flags here are, I’m looking for some solid systems that can be enhanced and improved.
If there are no systems, then it’s just going to be a lot more work. I mean, the good news is that there’ll be profound improvements possible. The bad news is they’ll be slow and difficult, generally. So that’s what I’m looking for there.
The competition involved
In terms of people, in this section I’m looking for, who are our competitors? And what are their rates and offers? Have we purchased their products? Do we have a training library for our team? Are we using standard operating procedures in our business? And do we have decision-making filters to help us know who our best opportunities are? And do we have core values for our business? Do our team know why they’re here, what our business is all about, and what it means for a customer to deal with our business?
“Do we have core values for our business?”
So the green flags here are, I would like to know that we have a position in the marketplace amongst our competitors, that we’re at a good price point and premium price point to our competitors, generally, that we definitely have standard operating procedures in place. And that we have a really good sense of the type of business we should be dealing with and the type of business we should not be dealing with, and that we have a good strong team culture.
Cash flow and marketing
When it comes down to the cash flow and marketing, I’m having a look at all sorts of things here. I want to know how we collect the money, are we getting transfers, credit cards, PayPal, Stripe, cash wire offers? And do we have a good low refund rate? Are we paying how much to our merchants, and have we asked them for a better deal? Do we get paid upfront or in arrears? The green flag here is, I want us to get paid upfront.
Do we use credit cards to buy things on points for the business, so that we can use points to upgrade flights when we fly to conferences and things? Because this is an easy win. When was the last time we checked supply costs? And are our products one-time or recurring? I want to know that we’re keeping an eye on the numbers, because if we don’t, and we’re a large company, we will have fraud. And if we are the only person who signs off on the money, then it will reduce that significantly.
I also want to know that we have recurring products, that would be a green flag. If we don’t, I’d look for what we can invent or put into the business that would be recurring. You’ve seen what Netflix has done to Blockbuster. It’s the same for many other businesses.
I want to know the most expensive product that someone can actually buy from your company. And the green flag is that we’ve got something, and then I’m going to look for what can go on top of that. In my case, currently, SuperFastBusiness is $200 per month, and SilverCircle is $3,000 per month. So there’s a significant difference in the price. There’s a significant difference in the type of client who comes into the program. And of course, the SilverCircle client can probably make back a massive return on investment very quickly that would dwarf what the average SuperFastBusiness member would make, just because of the way the program works and the access and the personalization to me, but all in good time. Certainly, SuperFastBusiness is a good way to get the leg up to become a SilverCircle member. But it doesn’t always work that way.
I want to know about pricing – if there are complaints, if we have a bookkeeper in place. Are there any debts outstanding to the business? Do we owe anybody money? I’m looking for a company that has good financial integrity. A green flag is that we’re not hundreds of thousands of dollars in debt, and that we’re on our last runway, you know, just about to run out of runway and hit the trees. I want to know that there’s some provision because operating from a place of desperation is an awful place to be.
I want to know if people come back and buy again, and make referrals. Is there repeat sales, or one time? It’d be great if I can see a green flag of repeat business.
I want to know that we know how much a customer is worth to the business, that we’ve done that lifetime customer value calculation.
Owning the racecourse
I want to know there’s a reactivation program, a retention program, that there are upsells and downsells, cross-sells, that there’s ongoing news. So green flags for me would be that we have some form of segmentation and appropriate offers through systems, and that we have regular news going out. I’ve called this Own The Racecourse for many, many years. And this is a constant communication to clients. Because this works for prospects, it works for current clients, and it works for previous clients so it actually caters for a lot. If it’s not there and we install it, that’s going to drastically transform our business.
Costs versus revenue
I then look for sales revenue and profit margins. And I’ll think about the benchmarks I have across my datasets between all my clients. I know where they should be, and I would be able to immediately start making steps to correct it if it’s out of place. So green flag here would be that the costs are reasonably in line with what the revenue is, and that it sits within a known benchmark.
Affiliates and presence
I look to see if there are affiliates, if there’s any kind of podcast or video show. Are we speaking at events? Do we have guests in our business? Are we a guest in other people’s businesses? Do we have sales, telesales, emails? Do we do cold outreach? Have we got Facebook ads, pay-per-click ads on Google? Do we sponsor anything or anyone? And do we have professional updated branding and photographs? And have we done any kind of segmentation or survey around things like the Ask method that Ryan Levesque teaches? And I ask what was the single most successful campaign?
So green flags here would be that we do have a show of some kind, that we have got multiple income opportunities from different marketing channels, that we have put some thought or investment into the style and the brand and that we are putting across the right impression for our audience. And that we’re focusing on the very important, relevant part of our market, not just anybody.
The sales view
When it comes to sales, I’m going to have a look at how well the sales pages are written, and if customers need to apply or wait. And I also want to know what people complain about, and why people leave. These things would be very helpful. So green flag would be that we have a reasonable level of sales copy, that we have the right amount of process, like a short path where it’s possible or a more developed path if required.
Understanding the owner
And then I’m going to have a look at the profile of the business owner who I’m working with. I want to understand more about them. Sometimes I’d ask them to do a Kolbe, for example, Kolbe test.
And then I like to know, after we’ve done this diagnostic process, what have we learned through going through this? Because this is also instructive. Some people say, “Yeah, I’ve learned that I know all of this, and I just have to do it.” Other people say, “Wow, I’ve just discovered this world of opportunity that I didn’t even think about and I’m very excited about it.” So these different responses tell me a lot about the chance of success. The green flag here would be, I’m looking for a dash of humility, a dash of excitement and enthusiasm and a dash of respect and appreciation for the work that’s gone into this stage.
So if you’re still listening to this podcast, and you’ve made it this far, you’ve really got a nice reflection guide here to think about how you might approach this for your business. You can download the PDF where we’ve compiled some of these questions. So this episode, how to know if you have an opportunity for profound business growth. Then you can go and get this PDF checklist, you can enter your email address.
And of course, I’d love to coach you inside either SuperFastBusiness membership or SilverCircle. You can take your pick depending on what level you’re at right now. If you’re making between $10,000 and $500,000 a year, join SuperFastBusiness membership, and the good news is you can do that today at SuperfastBusiness.com/join.
And if you’re making more than $500,000 per year, then I encourage you to apply for SilverCircle at SilverCircle.com. You can just send me an email once it prompts you, tell me a bit about your business, and we’ll see if we’re a great fit. Because I know I’m able to get you a fantastic result if it turns out that you are.
I’m James Schramko. I hope you’ve enjoyed this episode, and keep an ear out for the next round of episodes. But really, this podcast was about helping you think about what might set you up to be able to generate six figures per month, what sort of things that you might want to think about your business that you would get help from a coach with if you were looking to do this on a proper basis, and give you an indication as to what things might give you the best chance of success. So I hope you enjoyed this. If you enjoyed the podcast, of course, It’d be great if you could leave a review on iTunes and, of course, I do take comments here. Speak to you soon.
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