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In this quick-fire episode, Matt and I share 4 mistakes we made that stunted our business growth in the past. Had we known these back then, Matt says just fixing one of these would have tripled his business in 6 months.
These are lessons we learned the hard way, so hopefully you can learn from our mistakes and avoid them so you don’t stunt your business growth.
Highlights, Takeaways, Quick Wins
- When starting a business, establish a budget in the beginning.
- Focus on things only you can do that require your voice and your vision.
- Don’t try to grow your business too quickly.
- What is something you could do this week that will increase your business by 10%?
- When you find something that works, don’t immediately switch to something else—keep doing more of it!
- If you make any extra money, think about what you can put it toward that’s going to help you long-term.
- Once you have something that’s working, keep going and systematize it so it can be an asset.
- 03:16 Sean: Matt has made a couple mistakes in business; he talked about trying to grow too quickly but also not hiring, so I want to hear how he conflates those. He said that his number one mistake was trying to grow too quickly.
1. Trying to Grow Too Quickly
- 03:32 Matt: I didn’t think I needed a budget—I thought I could just wing it. Since I was still in a day job, I had that extra money flowing in and then I had savings. I used my tax refund to start one of my businesses, savings, and then extra money coming in every two weeks to help me with that business. I thought I was good with money, so I was buying all this stuff, hiring people, several different marketing strategies, and a lot of it didn’t give me much of a return. When it came to getting one of my first big contracts, and I needed a $2 million insurance, bigger equipment, and more people, I didn’t have enough money to cover that growth, because I spent too much money in the beginning.
- 04:42 Sean: What would be your advice to someone like me? How can I know if I am growing too quickly? What kind of warning signs should I be looking for ahead of time?
It’s important to establish a budget in the beginning.
- 04:54 Matt: Set aside everything and itemize it as much as possible. Random things are going to come up, and that’s why you have a rainy day fund. Once you establish that, I would push the business. That’s something Sean and I both do—we try and push the business as much as possible and invest as much as possible in the business. That can be a little scary at times, because you or the business may run low on money and you have to come up with some new contract to bring in that money to pay payroll.
2. Not Delegating
- 05:52 Sean: For me, a common mistake that stunted my business growth was not delegating. I was too caught up in thinking that I knew how things should be done and that I could do a good job, that someone else wouldn’t do it as well as I could. I convinced myself that it was because I cared about the quality. I thought, “I care too much. I guess other people don’t care, but I care.” It was a pride thing for me. That was something I had to learn the hard way, and it took me years. Now, I can’t imagine going back. It’s so much better when you bring other people in to specialize in certain areas, even areas you enjoy.
- 06:32 Maybe you enjoy editing your own podcast or shooting your own product photos, but maybe you shouldn’t be doing that. You should be focusing on things only you can do that require your voice and your vision. Other people can take care of those other things for you, and they will eventually do them better than you. That was one of my biggest mistakes, not delegating. With my computer repair business, I had one guy, and I thought, “I’m starting a web firm so I can’t do this work anymore,” so out of necessity I brought on this guy but I didn’t hire anymore. It was a chicken-and-the-egg thing; I didn’t want to get more work because I didn’t have the guys, and I didn’t want to get more guys because I didn’t have the work. I stagnated.
- 07:15 Matt: The same thing happened to me. Lots of times, I would want to grow because I had the contracts right there and then, but I didn’t have the people. I would get scared and think, “Oh crap, in a few months I don’t have any contracts set up, and I don’t want to leave these guys in the dark, so we’re just going to run with three guys instead of six, which we really need.” It ended up working out when I took that first step and hired more people.
- 07:46 I’m one of those people who needs to have a little burn at the last second. I was that kid who would cram before a test. I find myself doing the same thing now; I will take a risk, but just to push myself. I’ll hire six guys even though I know I don’t have the work in a couple of months, but it will push me to get the work for those guys. Somehow, it works out to where we need more guys, we have a secure contract, and we hire more people.
- 08:28 Sean: That’s the part I’m wondering about balancing, because I try to raise the ceiling proactively. If you put a plant in a box, the plant will grow to the top of the box, and to prevent that, you want to open the box first. Give it room to grow before you get to that point. How do you balance that with your other common mistake of trying to grow too quickly?
- 08:56 Matt: Balance is something you learn over time. You have to figure out where that ceiling is and know how much you and your business can take to raise that ceiling.
Don’t try to raise the ceiling too quickly, because you won’t go very far.
- 09:22 Sean: I have wanted to hire someone—I’m speaking about a specific person—but the numbers just don’t work right now. They could. We have a certain runway we could shorten if we hire another guy, but we just went through a season where we had to really hustle to cover payroll. I don’t want a repeat of that in just a few months. I would like to have six months of payroll set aside so we’re good no matter what dry season comes along.
- 10:04 Matt: That’s exactly what I was saying. Sean said he wants to have six months of payroll set aside; you need to figure out whatever that number is, whatever dollar amount or time length, that your money will cover you for.
- 10:21 Sean: That’s your zero. It’s like saying, “I don’t want to go into the red. I’ve got to make sure I have some money in the bank.” You’ve got to define what that new baseline is for you. If you’ve got two employees, what does six months of payroll look like? Find that number. Let’s say it’s $100,000. In that case, $100,000 is your baseline—that’s your zero. If you have $102,000, then you have $2,000. That’s how you need to think of it. Put that money in another account or something, and that’s all done. That’s not your play money. If you’ve got $94,000 or $92,000, it’s time to hustle. Think of that as your new red. That’s how I’m thinking of it. I want to hire someone and I could, if I think of that as play money, but I think it encroaches on growing too quickly.
- 11:20 Matt: You have to think realistically. In Sean’s situation, they just finished hustling like crazy. That’s a good thing; we have to hustle like that, but don’t kill yourself. Don’t do it to the point where you just finished this, you take a month off, and then you’re back to it again. No, give yourself a little more time to focus and come up with a little more creativity, so whatever you’re launching is so much better because you’ve given it time to stew and put it out there.
3. Shiny Object Syndrome
- 11:52 One of the things I still struggle with now, which is why I have an accountant that watches every dollar I spend, is the Shiny Object Syndrome. You see something you think is going to help you, and maybe it could, but it’s going to shorten that runway, and that’s not necessary. You have to keep that six month runway, because that’s our bare minimum. Once you get that runway stretched out, go ahead and get those things, whatever you need or want. I’m always telling my employees:
Save money where you can so you can spend it on what you want.
- 12:43 That’s one of the sayings we use for the flip house. A lot of times I’ll bring on partners who want to knock a wall out, or get stainless steel appliances and granite counter tops. Woah! Just because you have money doesn’t mean you have to blow up the budget overnight. Let’s save money where we can so we can buy the stuff we truly want that will appeal to our buyers. I’m not saying not to go to Starbucks every day so you can save $5; I’m talking bigger picture here.
- 13:20 Sean: Maybe the customer really cares about one thing more than the other, and if you get too caught up and don’t think about the big picture, you’re not going to have the money to spend on the things the customer actually cares about. That translates to a bunch of areas. Sometimes we want certain pieces of gear—“I would love to have this. I would love to buy another Mac Pro so Cory could edit videos faster.” That’s a very expensive investment for us. There are smaller examples, too, like wanting a new lens for a GoPro.
- 14:06 For four people’s shows, we’ve got our main cameras and a room cam, which I want to keep there—it’s important to keep some context—and then we have another GoPro, which we call the “Cory Cam.” I wanted another GoPro to do a four-person setup. Between the GoPro, HDMI cord, the USB extension with a wall adaptor, the HDMI to Thunderbolt converter, Thunderbolt cable, the clamp, the custom mount, and the case around the body that attaches to the mount, to add another camera—the simplest GoPro version—it would be $800.
- 15:41 That would be fun. We look at our bank and we think, “We’ve got all this money! We can do this! It will be so great. We can add another person and not make people scoot together. We can be pros about this.” I can start to justify it, but that’s $800 that isn’t going into something that’s super important. If someone hasn’t joined the Community, then they must not care about watching live video anyway. Where could that $800 be spent where it could have a real impact?
What is something you could do this week that will increase your business by 10%?
- 16:27 Every single week, increase the business by 10%. What one thing could you do? Stop worrying about the silly little things that need to be done. Sometimes it’s hard. Sometimes you have 300 emails in your inbox. I’m trying to put out the fires and respond to the most important ones, but some of them are time sucks. It’s not that I don’t want to engage with people; I do want to connect, and I will at some point try to go through all of those emails, but right now, I need to focus.
4. Not Doing More of What Works
- 17:32 I need to focus on what’s going to make a real difference in my business. I have some talks coming up. We’re bringing on people and working on projects, there’s different time-sensitive things. How can you increase your business by 10%? Find out what you can do that is going to have the biggest impact and do that thing. Not doing more of what works relates to the Shiny Object Syndrome, where you want to release another product or start another business, or start a new line because it’s fun. You get distracted with all of this stuff.
Don’t find something that works then go do something else.
- 16:59 Matt: I like what Sean said one time, that whenever we find something that’s doing 15% better than than everything else, we always stop and try something else. Why do we do that? Why don’t we focus on the 15% and grow it to 30%? That really hit home to me. With a lot of things we’ve been trying, we know what works. Why aren’t we focusing on those things? Get to where we want to get to, and then we can start trying things out.
- 18:35 Sean: I have a personal example: I’m focusing more on business, building up the Community, we have future courses planned, we’re going to be doing events, and we’re bringing on employees. We’re doing all these new things. I’ve got a book I want to write, actually I’ve got 13 books I want to write. I will write them. All along, the lettering stuff was still doing well, and that’s why I decided to go back and reproduce Learn Lettering, so we have Learn Lettering 2.0. We made a nice six figure chunk of money in a small amount of time because we did more of what worked.
- 19:18 Matt: Sean, if after doing lettering for five years I put out a course and it does really well, how would you suggest getting your mindset straight to think about that money being set for the six month runway? In my company, we do a Rolling In the Money party where we spend a big chunk of money. We were making a joke at the last house about using $10,000 to put on our own rave. Crazy. My partner brought up a good point. He said, “How do you get to the point where, when you’re making these big chunks of money, you start thinking about it as runway for payroll?”
- 20:16 Sean: I have a one step program I would point them to. It’s called, Step One: Stop Being an Idiot. How do you teach the long game mindset? That’s what this is. Do you go have fun and blow all your money, or do you care about having a long-term sustainable business? I don’t know.
- 20:51 Matt: I told him he could stretch that money out and take it easy a little bit. After we do houses, we make a good chunk of money. We’ll take a little break as we’re looking for the next one. I told him, “Think long-term. Don’t think about having fun, buying a car or buying Apple watches for all of your friends.
If you make any extra money, think about what you can put it toward that’s going to help you long-term—take care of your future self.
Triple Your Business in Six Months
- 21:31 Sean: Common mistakes: trying to grow too quickly, not delegating, Shiny Object Syndrome, and not doing more of what works.
- 21:42 Matt: Those are some pretty key things that, if I had known them when I first started, would have helped me tremendously. With marketing and focusing on what worked, for instance, I would have tripled my business in six months. Because I was trying so many different things, I wasted time and money, and it ultimately took longer to be more successful.
- 22:04 Sean: That’s tied with the delegating thing for me. That’s a big one. It takes humility and discipline to do more of what works. We are Shiny Object Syndrome people. We get bored and want to do new things. If you’ve got something that’s working, keep going and then systematize it so it can be an asset. Do more of it, get some more from it, automate it, and let it support the next thing. Then you can go on to the next thing.
- 22:46 Matt: One of the businesses that is always frowned upon in my family is my lawn business. They say, “Why do you keep that thing around? It’s a waste of your time.” I make $240,000 from my commercial landscaping business—why would I want to throw that away? It’s making me $240,000 to put toward another business or help somebody else start a business. It’s more money that we’re able to throw around. I have level one, two, and three businesses. The lawn business is a level one; you don’t say that you’re a millionaire because you cut lawns. I have a carpet cleaning business that does really well, but when I say that I have homes, people put me on a pedestal. It I say that I got started doing lawns, they say, “You can do that?”
- 24:37 I believe in level one, two, and three—think of it as stepping stones. The way I built my businesses and the reason I have this madness is that when I was a kid, I could not afford to start a Subway, and that was my dream. When I found out I needed a quarter million dollars and I only had $250 in my bank account, I said, “I have a problem.” I was always that kid that would find a way to my destination even if I had to make my own directions. I came up with the concept of having levels 1, 2, and 3. The levels are stepping stones to get to where you want to be. I wanted to get to a Subway. I never got to Subway, but it made me come up with this concept.
Don’t get down on yourself when you fail, because that’s when the best ideas come to you.
- 26:04 When I figured out that I didn’t have $250,000 to get a Subway, I had to figure out a way to grow $250,000 in my bank account. I looked at my circumstances: I was working at a snowcone stand, I was 13 years old, and I didn’t have an education. I said, “I’m going to make as much money as I can here and now, and once I save enough money, I’m going to build a level one business.” It starts going into a pyramid.
- 27:04 Sean: You probably have a wide base of lower tier products or services, and maybe you sell fewer at the next level, but they’re higher ticket, and you follow that up.
- 27:18 Matt: Exactly. The level one businesses are recession-proof, low risk, and low startup cost. Once I got that in my head, I realized that I wasn’t making much by selling snowcones, but I could use that money to start another business, and then another. As a kid, I thought of it as a pyramid, but it’s more like tiers. I thought, “What if I had multiple businesses that for sure made money and wouldn’t cost me that much money to startup?” I would get my return back quickly with small payments. I’m not going to have Amazon business overnight, but it would be multiple small chunks of payments coming into my bank account. I started business after business. I wanted to start slow; I was afraid to hire somebody because I was afraid I wouldn’t have the work, so I literally ran multiple businesses in a day by myself as a kid. I didn’t even have a car.
- 29:20 Back then, I was making anywhere between $20 to $100 per business, and I had three of them. I was getting money from three different sources, and my bank account grew from $250 to $500 to $1,000 over the months. Level one was doing good, bringing in a consistent amount of income, paying my bills, and giving me extra money to start a level two business. A level two business is the cost of two level one.