The Complete Entrepreneur – EP38
Today we’ve got a great topic and that is removing the sand from the gearbox.
What gets in the way of us scaling our company? What are the cogs that get in their way? I was confused by removing the sand from your gearbox. What’d you mean by that ex. Yeah, it’s funny. I think it must be a Michael ism or something like that. In my companies, we have the same.
We need to remove the sand from the gearbox. What that actually means is that if you’ve ever heard sand or the gears grinding in your gearbox or your car, it’s the most horrific sound. And it just, the car just doesn’t work properly. But ultimately the Cockney can grind down to a halt. And so removing the sand from the gearbox is how do you get your business to actually be flying down the road?
Bruises, grinding the gears where you’ve got people, this frustrated because things [00:01:00] don’t get done. You’ve got people getting like miserable. They’re like that. Any more because there’s a Saturday gearbox. And how do you actually remove those barriers from scale to scale? How do you remove those things?
I think Michael, we call it something different. We said a well-oiled machine, this company’s running like a well oiled machine. That’s the opposite. We have that too, but I think it’s a, I think it’s a case of it must be, like I said, Michael is aware I’ve got along. I create this saying in my company where we need to find the sand, the gearbox, what are barriers to scale, we need to find them.
And it’s a classic case of having a well-oiled machine is great. But why is it well-oiled versus what are my roles as the entrepreneur or the company is to contact the bits of Sam, which has grinding people’s gears. And with result, we [00:02:00] have a team in one of my companies that we’ve been together for 14 years.
The reason why is I’m constantly seeing now with a mistake. Okay. So please explain to me what you’re doing and how do we go along and remove the sand from your work schedule? How do we automate these things? Or, oh my gosh, I can’t believe you’re still doing that. Like I remember I had a conversation with one of our team members and E’s incredible operations guy at amazing guy.
And I discovered he was doing the same process for a particular activity that he did like over a decade ago. And he just did it faithfully every, since. And you could say that’s a well-oiled machine, or you can say, hang on a second. Why don’t we just automate that frees up your time to be able to do something else?
And he said that’d be great. I didn’t think it would be possible. So we then had a little mini-project off. Okay. We’re going to automate that task. That’s just ridiculous. And what you quite often [00:03:00] find, particularly with really good operations people there’ll be like that. They’ll just continuously do things and there’ll be a well-oiled machine, what eventually gets to the point of too many tasks on their list and things like that.
And they ended up sitting down and having the conversation of look I’m really not happy in my job anymore. And there’s the entrepreneur we’ve got to stop. We’ve got to go ahead and stop that happening to our team and God, the particular, the good people against those sorts of activities. It, against doing that sort of thing.
And that’s why I find one of my jobs for instance, is finding that Sam, the gearbox, because quite often these people can’t see it, or they didn’t realize something was possible because they have skills in one area. And you suddenly, as an entrepreneur brings skills, which is across the business and getting rid of those things is the number one priority I find for entrepreneurs.
So if you’re in the audience and you’re sitting there saying, oh my gosh, I’ve got some stories to share [00:04:00] about. I’ve got team members that I’d be doing the same thing, and I didn’t even realize it or yet, I sit down with my team or something like that. They please stick your hand up. We want to have you on stage.
Cause it’s not just the color, Michael and Jeff show it’s Michelle’s show it’s. It’s all. It’s all about you guys. You as the entrepreneurs, isn’t it called? It’s all about them. It is. And I was just thinking what’s the first piece of sand that gets into the, into that business, the cog. And I was thinking office politics.
And I know everybody here in the offices, everybody here in the audience has experienced those, that the office politics, you bring more than three or four people together. And the politics already started as entrepreneurs. We really don’t care about the politics. We just want to get to the results. But then we’re being hit with this person said that person said that, how do we handle that?
That’s a good question. Maybe that’d be with the first question. How do you handle office politics? Because I think that’s a [00:05:00] big sand that cogs the wheels. I know. Yeah, it absolutely is. And I’m going to come back to you rogue at, in a second here, office politics is one of the things which will kill your business.
Absolutely kill your business and you need to be able to root out any sort of office politics. I’d like to say that in my company, we don’t have it. We just do not have office politics. And we’re very focused on the end re end result. And the reason why is because we’re constantly on the lookout for it, but it’s not just me.
It’s the other members of the my co-founder as well. We just don’t give a stuff about office. As we would say in Australia, it’s all about how do you move the company and the team forward that is removing those barriers to scale. If you’re looking for venture capital, let me tell you in many cases, venture capitals will knock at an investment for one or two reasons.
Number one, there are [00:06:00] significant barriers to scale and it could be marketplace wise or just in the organization itself, barriers to scale. The second thing is quite often they knock something out because it requires selling to large corporates with which case the sales cycle is like humans. It just goes like it goes and blows right out.
So if you’re in a business, you’re saying, I want to raise capital, then ask yourself, what is the sin in your gearbox? It could be a relationship with suppliers. Yeah. It’s really slowing your business down. Or in, in one of my cases right now, we’re looking at you in a completely different way of approaching customers.
And what we found was we have a really good triage process for customers right now, w what we want to do is not have a really great triage process. What we want to be able to do is automate that process because the really good triage process right now is [00:07:00] intentionally manual and requires humans review things.
Wouldn’t it be great if we could have computers review a new account application and automate that process out of sight. So now we can scale to thousands and thousands of customers in that business rather than a hundred. And that’s an example of sand to gearbox, but anyway, I just want to hear, I’d love to hear from rogue at it’s great to have you on the stage of the complete entrepreneur.
I noticed you got your padded Papa. They issue a new to club has. It’s fantastic to have you I’d love to hear your thoughts. What does it mean for you to remove sand from the gearbox? So welcome to the stage. Got,
okay. I think you for your good presentation, for sure. It is a building as youth, but also as a younger generation from Africa and [00:08:00] specifically from Tanzania. Yeah. I’m from Tanzania and founder of a key platform a volunteer red cross, but also a human right to defeat. Currently I’m serving people with different disabilities, but in, in a serving people is a different disability.
I’m looking for, empowering them about in different skills will make different intrepreneurs to be, to become an according to their respective area. So facing some can I just say what a fantastic thing you’re working with the red cross and you’re serving the disability community. And and you’re looking at those people becoming entrepreneurs.
Is that, would that be right?[00:09:00]
Yeah. So it’s what a tremendous thing to do. And I think that one of the challenges with doing something, what you’re talking about, if you’re really talking about huge humans and how do you scale humans for instance, is a really big challenge. And it’s all very well talking about computers and things like that, but how do you scale humans?
Cause you’re going to be dealing with individuals of how do you teach them? What can you do to go along and power them to be entrepreneurs like Colin, it just hearing what rogue just said there. Do you have any thoughts for him on what he could be? Like what an amazing thing is Julia in Tanzania and in Africa, do you have any thoughts on that?
Yeah, I think I do. And if we talk about politics or we talk about, issues with the company scale. Normally, really it’s all about, everybody’s not on the same page. So the question is [00:10:00] how do we get everybody on the same page? And I think there’s probably, three areas we might want to think about here.
One is core values. If, have you established core values, which are really the rules of the game here, hire people, we, it’s, we need to fire that person. So it’s really all, I’m having wifi problems again. Here. Are you able to hear me, Michael? Yeah. You faded in and out just then. Switching Wi-Fi now.
Yeah. I’m switching wifi networks. Yeah, no, I was just as call it switches, wifi networks. I’d love to hear from yourself, Michelle, like you, you’re an incredible manager and an entrepreneur in your own right. Into different businesses and identifying the sand, the gearbox, but rogue, it highlights something really interesting there with his business in Tanzania, which is how do you scale the human side of it?
Is there a ways of [00:11:00] using technology to scale the human side, Michelle?
Michelle. Okay. Can you hear me now, Michael? It looks like Michelle’s going, we’re get, come back to Colin, calling her. All right. So I’m hoping this take worse. I switched wifi networks here. Oh, geez. I think I talked about earlier, it’s about establishing core values so that everyone can play. By the same rules and understand that these core values are set up and each of us as employees, or as an owner, we all can operate by those core values.
That’s the first key I’m having wifi problems here, Michael, I’m sorry if I’m just interrupt me if it, if you don’t hear me, but yeah, it’s working fine. It’s working. Okay. Second is we all want, if we’re flying blind on an airplane, we ain’t going to succeed. You got to have KPIs.
And if we set up establish those KPIs for our company, key performance indicators[00:12:00] then we can track exactly how we’re doing. The last thing I will say is goal setting. If we can set goals and we all know that the annual goal for the company is this and the quarterly goal for the company is that, and we’re all targeting and focused on those goals that can make a difference.
So think about Corvette. KPIs and goals. And by the way, maybe the app is crap is doing something wrong today, but I’m getting bad internet and I’ve switched multiple networks. Yeah. Not a problem. It looks like I’m hanging in there. That’s for sure with that. But yeah, it’s an interesting question, how did.
How do you find that stand the gearbox? And one of the things that quite often happens though with human capital is that is the interactions between the different people create sin in the gearbox. In other words, one team member doesn’t really work well with another team member or something like that.
I did an interesting exercise just recently. I’d like to [00:13:00] share about it. It was my, it was one of the things I sometimes do to be able to root at Sandy gearbox and hopefully enlighten the different team members of the differences between one another. And it was this and already encourage you to do this.
You’re an entrepreneur in the audience. I would encourage you to do this, but just before I share the story and we come to a man in a minute if you’re in the audience, you say. I really want to scale my business. I got some questions that I need to ask, like about scaling. What am I going to do to scale my business?
Then please put up your hand because that’s one of the most critical questions you can ask as an entrepreneur is how do I scale my business? How do I take it from where it is now to the next level? And what have I got to do? You got some people up here who have, I hate to say been there, done that.
And we understand a lot of things about scaling. So if you’re in the audience, you’re saying our scale of business and you’re not sticking your hand up, then you’re going to ask yourself the [00:14:00] question. Yeah. Do I really want to scale because there’s nothing like. Picking the brains of people who have done it rather than trying to reinvent the wheel yourself.
So I just want to share the story that one of my things about about what I did with my team. Just recently I did an exercise and the exercise was this and it didn’t take very long to do it was really. I S I share with the team, the fact that ancient cultures, many ancient cultures, they had two tombs that they represented each individual member.
And as an example of this, you had the classic dances were bulls movie that were Kevin Costner’s character was, that was his name. He is his total massage was dances with wolves, or then have one of the other characters stands with a fish, a sustained with a fish story, not a fixed and so forth. Yeah.
And there was something that represented who they [00:15:00] were. And I shared with the team this, and I said I’d like you to to share who you think your, what is your. How do you view yourself? And I could some really interesting feedback. We have a, it’s just an, a zoom session. And and the interesting feedback I had, like one team member who was developer, he says, I’m a Boulder, I’m a great big rock.
And I just roll down the hill and I squished one bag at a time, but you know what? I just keep on going and all that, you set the direction and it’s gonna be very hard to move me. I admit that he give me my work schedule and I’m a Boulder, that’s what I’m doing. And another one said, oh, I’m an ox. And you know what?
You can just load me up. You sent me down in a once, again, a direct from the field and all the plow, that field. Yeah. And another developer, another guy said I’m an exception. That’s what I am. I’m an Explorer. And what I love doing is getting messy in spreadsheets and trying to understand what’s [00:16:00] going on in them with the data and all that sort of stuff.
And I love exploring all that sort of stuff. And then we had one of the sales guys say I’m an Eagle. I love swooping down, getting the client, dropping them in the nest back home, and then going out and getting in another one. That’s what I love doing. And what it did was it gave an insight into not just how each person viewed themselves, but also how they interacted one to another.
So I went along and said, look, I’m like a pillar of fire. I blaze away forward and hopefully shed light as I’m going way. But you go along and say something can’t be done and I’m going to go straight through it. And that’s where I am. And I then related at an interaction I had with a couple of, with the Boulder and the ox.
And I said, can you see that in this interaction? It was a pillar of fire speaking to a Boulder or Knox. And we began to understand that retraction, which was not necessarily a [00:17:00] really positive interaction. It was. Ah, that makes sense. Now that’s getting rid of sand at your people. Gearbox is actually shedding light, and as an entrepreneur, our role quite often and call on you, put your finger off as politics.
Our role quite often is to shed some light on the interaction. So people have that aha moment. They go, ah, that’s why you react to that. You are the Explorer. All you will do is get best in data. Ah, that’s why you responded that, Hey, this is my work schedule. I’m going on my work schedule. And this is what I’m doing.
That’s why you respond to that way. Cause that’s who you are to, how do we interact with those? Do you know how I deal with office politics at my office? Yeah, probably not the right answer. It’s I use the prime directive from star Trek. Could you use anything Knight? Noninterference not [00:18:00] interference. I just don’t get involved.
I just walk away. It’s probably the totally the worst way to handle it. Maybe somebody in the audience who has dealt with politics can share with us what they do as well. That would be great. And it’s an open session team. Everybody in the audience it’s open here. We want to have open mic. Yeah. It’d be great to have you guys up there.
So if some of you are sitting in the audience say, oh my gosh, that was a bad thing, too great thing to do with your team. Yeah. You can go along and find that what’s how do they view themselves? And as a part of the session I couch that you had not only understand yourself, but it’s not the, what we do at work.
It’s not even the, how we do at work, doing it. Very furnaces, ask the team members, why are you doing that? Why is the business doing what it’s doing? And there’s a great book by Simon Sinek and I highly recommend you read it. It’s called. Start with why. And there’s a handbook that goes with it.
But start finding your whys [00:19:00] or starts with why’s one of those two just look up Simon Sinek, S I N E K, I think it says his name, but it’s a fabulous book of trying to find out why you do something. Why is your business doing what it is doing? And by the way, you say it’s obvious it’s to make money.
No, that’s an outcome. The outcome is to make money, but why are you doing it? What is that inspires you to get up each day? What is it inspires your team to get up each day is so critical for a business. Like you look at businesses like Holly Davidson and Holly Davidson. Sure. They make motorcycles, but why do they do what they do?
It’s for freedom. It’s for freedom of the road. You too can be a wild hog out there on the road. You two can go along and journey and be free. Just all your dues is by this Holly Davidson. And you know what, [00:20:00] we’re going to back. You. We’re going to make sure that your free, yeah, it’s a classic thing. Like why do you do it and find that.
And when you begin to drill down and by the way, this is not in the bed, this is going to be a process and may even take you as the entrepreneur. It may take you. A year or so to try to determine what it is that you are doing and why are you doing it? Every business can tell you what they’re doing. They can always tell you how they’re doing it, but why are they doing?
That’s a deeper question. And that’s a challenging question. So I’m going to jump here to, oh, sorry. Jeff fire away. Yeah. So I just wanted to get back to the sand and the gearbox for a minute, because I’ve been thinking, a lot about what I would refer to as sand in the gearbox. And the thing that pops in my mind, Michael, is that sand is very.
A grain of sand is tiny. And sometimes, a few grains of sand, they could [00:21:00] be in the gearbox, but they’re not going to be big enough for you to notice. So you still might think that engine is running and everything’s happening smooth, but there’s sand in there. And eventually it could cause a problem.
And I think a lot of times for startups, the sand in the gearbox is also invisible. And you may not realize that you’re going down the wrong path. And a lot of that I think oftentimes has to do with focusing on the right things. So you might have the team. Running smoothly. And everything seems to be going great, but you’re actually on the wrong path.
And so that’s that invisible, the invisible sand in the sandbox there is that you’ve actually got the team focused on the wrong things, and you’re not actually focusing on the core things that are actually going to move your business forward and allow you to scale and achieve your goals. So that invisible sand to me is more common in many respects than the [00:22:00] sand that causes things to break down.
So you clearly know you have a problem. Yeah. Jeff you were just, so right in that is I think one of the roles of the entrepreneur. The founder of of a business is to try to find the invisible, the intangible and remove it from the gearbox. And that’s a really tough job like doing that is one of the toughest things you can do.
And just getting those things out of there. The number one question I think that every business needs to ask is what are my key metrics? You touched on that, Jeff, what are the key metrics that I need to look at and know in my gut, every single day that I’m looking at this, I don’t care if it’s the weekend, whatever I want to know what that key metrics.
Is it billable hours? Is it hourly rate? Is it number of widgets sold? What is the key metric that you are monitoring day in, day out. So when it goes wrong, you can say, ah, it just, [00:23:00] something’s going wrong here in my business. You can drill into it and you can find that sand out of that could get rid of that standard out of the gearbox.
But I think you touched on a real interesting thing there. Jeff, I do love to hear from Michelle, hopefully your Internet’s working. I know you’ve been trying to come in there every shelf and love to hear from your perspective on this topic of how do you find that sand
over to you, Michelle? It looks like you still got some problems there. Michelle, I feel like the app is like going weird today. Cause I, my internet test them 150 bucks. And here’s where I got shell. Maybe. I don’t know. Yeah. It looks like Michelle’s got some problems. Yeah. Yeah, she’s flashing, they’re saying, yeah, I’ve got some problems.
So if you’re in the audience right now, you’re listening to the complete entrepreneur and we’re taking a look at a really interesting topic is as an entrepreneur, how do we get the [00:24:00] sand or the gearbox, and as will be afraid in this and discussing this so far in the first half of today is it’s all about what do you need to do so that your business can truly scale?
How do you get rid of those things out of the engine of your business, which stops you from scaling and how do you scale? If you’re in the audience and you’re sitting there again, my gosh, this is really important for me. And I know some of you have. This must be important for this topic, because let me tell you how many of you are saying I need to raise capital or something like that, or I need to go along and really grow my business, have your saying that yourself, you need to be sticking your hand up and asking questions.
And it’s just so important to do but so please raise your hand up. Love to hear from you. We’ll invite you to the stage. It’d be great to hear from you there, but I want to come back just for a second to a great Tanzania and friend rogue at Roquette. You’re [00:25:00] there working with people. If you can keep it really short and your questions while we wait for other people, stick their hand up and so forth like that.
We’d love to get them a chance to stage, but rugged. So what you got to share on this? Okay. I wanted to share thumb something. It is like a question. Poor you or members from different country that, how do you work with people with disabilities? Like those who are not hearing or visually impaired, how can you teach him or a business to become a business man or a woman in a given context?
I think that’s a great question. How do you embrace the entrepreneurial spirit of people who may be disabled? Yeah. And because, you know what, the stabled [00:26:00] people have goals and ambitions, just like all of us and as entrepreneurs, they can not only be great entrepreneurs in their own.
But that people with a disability can be fabulous employees as well. Call it in your businesses. Have you experienced like working with people with disabilities and what has your experience been? Anyone, all the different businesses that you have. And what’s your experience with that bank?
Like when we built our office here, we went out of our way to make certain, everything was handicap, accessible, everything. We have a shower in the office. We have the restrooms, we have the front door, like everything has to be handicap accessible because let’s be honest, 60% of what we all do is on the computer.
And it doesn’t matter if you’re in a wheelchair, it doesn’t matter if you’re deffer or you have other issues too. You can get over those challenges and you can be very productive. And in fact, I [00:27:00] think sometimes you can find people who are more productive because they’re dedicated. Once you make a commitment to them, they’re committed to you.
I completely agree with you. In fact, I would go as far as to say Colin, that probably 90% of my works in looking at a computer and it would really make no difference to a person in that sort of profession, whether they’re disabled in any sort of fashion, sitting at a desk. Yeah. There’s not much to it.
And I think that as entrepreneurs, we need to open our eyes up to a, an incredible group of people which just want many of them just want a bright, they want to be. They want to be able to get along and have that opportunity to be able to express themselves in they’re in a job. Yeah. And I think it’s fabulous.
What you had done with your own workplace. They’re calling it. It’s great. But I want to jump across to Joe here, Joe. It’s great to have you on the stage of the complete entrepreneur. We’re [00:28:00] talking about like, how do we scale our business? How do we get that sand out of the gearbox? So welcome to the stage jug.
Thank you. The first thing that I’m trying to get the sand out of my business right now is I’m building my CRM from dynamics 365. I know there’s tons of CRM products already out there, but every time that you need a customer relationship system, it almost ends up being nuanced to your trade and you need your own trade kind of embedded within it.
So Microsoft is I guess they and Google are combating for your total amount of data for all your connections and context. Customizing a CRM. Preemptively in order before I’m deploying my minimum viable product, that’s where I’m debugging the system. I’ll take any advice. If that’s a just go get traction on minimum viable product, or should I be spending as much time on debugging the sand and making sure that my quote process is easy, making sure that my sales process is easy and having all the [00:29:00] traction or KPIs that I can measure from a system.
Cause if I do it all manually and then in word documents and Excel documents, then I’m not going to go through back. We’re not going to go backwards and find my KPIs. It’s just not worth the labor to do that.
Yeah. Joe, look, I think you bring up a really interesting point and what you’re saying is. But it is worth having a really big CRA like that and putting all the effort into it and that sort of thing. And it’s a bit of a double-edged question some way I can just share with you my experience and there’ll be two extremes of this.
I remember back in the noughties, there is a CRM called act. And so we got into my business and got the sales team work, working it. And I, in the process, I watched our sales drop to scratch my head and said, what’s going on here? What is occurring [00:30:00] was that they were spending so much time filling out everything in the CRM that they weren’t actually talking to customers.
Yeah. Like filling out all the fields and all that extra stuff. And it was crazy. There was a huge amount of stuff going on. And I said, that’s it. I want my sales team to be talking to customers. That’s what I want, but I need to go along and have them serve record stuff in the, in our system.
So I want to sat down with them and I said, okay, what are we, what is the bare minimum we need? We said, okay, we get to know like the suburban, see they live when you’re their phone number, the email address and their name and their position. It was something like that. I said, okay, so that night I went home and I built it online system.
So they could actually use it and they came back to, oh my gosh, all you’re do is spend like 10 seconds filling this out. Then I said like a few days later, look, what we need [00:31:00] though, is somewhere to keep notes. What are we doing discussing with them and any meetings and I, not a problem. So I went home that night and I will own built a.
And more of the system, which made the notes. Yeah. And I kept everything absolutely minimum. And with the results sales skyrocket because if they’re talking to customers versus talking to a machine now flash forward to 2000, about 2010. And my, one of my business, which is in operation now, we w we went to Salesforce.
Salesforce is like a, obviously a huge CRM, and we still use Salesforce. This. And it does amazing thing for us. It really does. And it’s fabulous. And we become like experts in Salesforce and there’s lots of fields to fill out those roles. Also tracking, reporting, you name it like w th that [00:32:00] particular client had eggs and bacon for breakfast.
It’s almost like that. Yeah it’s crazy. And it’s been really good for us to use Salesforce. So there’s the two extremes quite often in a startup. What you’re accurate is the bare minimum amount of information. You can get the maximum amount of information from clients. If you’re still developing a minimum viable product, I would recommend you don’t have some massive CRM system, but you have something really cut down.
It could be a bloomin’ spreadsheet. Cause you’re asking information from customers, call them. What do you think about? I think that carries over in a lot of areas in it. Because these it installations can be very expensive costs. And what I’ve done to the companies rightly or wrongly between Jeff and Michelle know about this is I say, just do it manually.
And if it’s viable, we’ll automate it later. And if we get the business starts coming in, then we start to automate those processes, those technologies. And yeah, the problem is when it does start to [00:33:00] take off, you gotta play catch up, but at least we know it’s, it’s something that we can do.
What do you think, Joe? The position that I’m in right now is that I’m a nested within another company. I get a great salary and I can have commission on everything. I said, great. I got strategic partnership, access to manufacturers. Fantastic. So what I’ve found is that the salespeople at that existing station, they don’t have a great way to make the quote for the technical equipment or make that quote in time.
So I haven’t hired my own salesperson because frankly, I don’t want to lose that much time. On it. So I’m not at an overhead yet, but the moment this tool’s done, I feel like, alright, it’s time to pay someone now because their time can be used very well. Now they can actually go make me money.
Whereas if I didn’t have the tool belt, I’m like now I’m paying for them. And their time. And every time they have to remote, dial up a cell phone, get their cell phone to be the mobile hub, [00:34:00] then log into a computer in order to get access to CRM, to the existing CRM system. It doesn’t work. So I really want to just make it available on their phone.
Yeah. It’s an interesting question. And we can’t fully answer for you Joe, other than to say, like I’ve been involved in technology for 40 odd years. And I can just say I absolute agreement with Colin is keep it really simple. And do things manually. Cause that’ll teach you a couple of things which is they’ll teach you.
It’ll teach you what is required in a process before you go along and leap into say some great big online system. And I’m not saying the decision’s wrong or anything and stretch the imagination, but it teaches you. What is the process? For a client, like what did they have to go through? And things like that.
And there’s nothing like [00:35:00] a shared Excel file sitting in a Dropbox for a bunch of people. They can just manage everything from that. For the first little while, while you’re going along generating and hold a whole lot of sales and things like that from it. And then you can migrate that into a CRM. I’m a strong proponent of do it manually then automate, and this is creating.
In your gearbox, but it gives you a greater understanding of what that piece of sand is. And Jeff said it before. He said, there’s invisible sand. This is an example of, you’re actually building some invisible sand by doing things manually initially. But the thing that’s incredibly valuable for startup is actually getting an understanding of what the market’s reaction is to whatever your product or service, whether it’s technical or not, or what’s or stuffy is that is gold and understanding that I, I know that Michelle you’ve been having some hassles with your wifi and things like that.
Are you able to flash your microphone? So I’d love to [00:36:00] be able to get your input on that. Okay. Can you, are you able to talk or not? Nah, it doesn’t look like it. Okay. All right. If you’re in the audience right now, you say, okay, I need to get some new ideas for. How do I scale my business? Then this is the place to ask the question.
This is the place it’s not oh my gosh, I can’t ask this question. This is the place, you know what? You can ask, whatever question you like, and we’ll do our best to answer it, to help it help you out. But you’re going to do one thing. And that thing you’re going to do stick your hand up. If you want to have you stick your hand up.
And the bottom right hand corner is a bunch of, there’s a bunch of tools on the bottom of your clubhouse app and the ones that firearms, demographer, and the one just next to that’s your hand. So if you click on that, you can actually request to go along, come to the stage and we can invite to the stage.
It’s like Joe, Joe’s asked a really good question. Yeah. So what does it mean to remove the sand from the gearbox [00:37:00] and how do you identify. Sandy gearbox. I think this is an interesting question. And Jeff and you both touched on it in different ways, identifying San new gearbox. And one of the things I’ll look at is what are the key metrics of my business and are they fluctuating?
Like how are they going down particularly, or how they go, what’s going up and what’s causing that to happen and keeping on those key metrics. So coming to yourself Jeff, I know you, you do a enormous amount. As a marketing guru around identifying key metrics, there are these things that you set up and you look at on a daily basis to take a look at those key metrics, and then you say, ah, there’s something going wrong there.
Is that something you keep a focus on? There’s certainly KPIs. We track on a daily, weekly, monthly, quarterly, and annual basis. And obviously you’re looking for [00:38:00] things falling off a cliff or anomalies, so that you can, you’re looking for leading indicators of problems in the business in different ways.
Sometimes it’s hard to pick KPIs that truly are leading indicators. It’s a lot easier to choose things to measure that are trailing indicators, meaning it’s telling you what happened, but it’s already happened. So there’s not much you can do to fix it going forward. So you want to try to find leading indicators, things that if you see big discrepancies are gonna, raise a red flag that there’s something here that’s going wrong or something that needs to be fixed.
So that’s really hard to really determine what are true leading indicators when you’re determining KPIs About your KPIs are most of your KPIs used to say, this is where I am preventing myself from hemorrhaging money, or most of them saying this is the key performance indicator to say, I needed to grow at this rate.
What are, flip a coin at which which fraction go in each bucket?[00:39:00] They’re there, they’re all valuable. One of the, one of the key metrics and. Instead of sanding the gear. You need money in the bank, for a startup. One of the key things is to really be fully aware of your cash, your burn rate, and how much runway you have with that cash.
And that’s, especially for a young startup that’s of critical importance, because you might have all the best plans and the best team in the world. But if you run out of money, you’re not going to get from point a to point B. That’s certainly a metric that’s really what it’s fair.
I think it’s fair to say that we don’t often focus on that metric though, that side of the business, we are always saying, okay, number of leads with generate to sales. So we always tend to think of KPIs as growth, but I’m just now making me reflect upon this and think about, other KPIs about, there is the average revenue per employee, there are some things like that, but I think that’s not really a leading indicator.
But that deserves some more thought. I think you’re onto something. I think it’s in [00:40:00] the early days too, because when the young, in the early days of a startup, especially if you might be pre-revenue or pre meaningful revenue then you know, that cash flow in that burn rate and that runway number becomes critically important.
So in the chemical engineering process, there, they have something called the failure mode error analysis. And I’ve heard often that there’s a business failure mode, error analysis, but I’ve never heard of anyone. That’s completed a business failure mode, error analysis. And really if they’re done well, that business failure or error mode analysis should be the repository of every KPI that you should be measuring in your company.
It should come from that. Hey, did you see how it could break? Or when this isn’t doing it properly, this is why we have to measure it. So it’s like the requirements for the business to monitor is in the business failure mode, error analysis. Yeah, I think you bring up a really interesting question. [00:41:00] And I think that in many businesses they they describe it differently.
They’ll describe it as what are the KPIs or something like that or they try to zero, you know what the key metric, because quite often, if you’re trying to monitor like 20, 30, 40 different metrics, it’s really difficult. And the thing that I’ve found is that there’s normally two to three key metrics for every single business.
And they’re the ones you’ve got to keep an eye on. I like I know with my own businesses, I’ve got two to three metrics maximum for each one of the businesses. And it could be like, not just number of sales, it could be the value of sales. Okay. So the value of sales is going down. Why is that?
Because our product mix is actually inadvertently. We actually made it. We have cheaper Sheever products we’re selling, therefore the value per sale has gone down or the value for sales growing up in that. Great. So you begin to focus in on a number of [00:42:00] key metrics. Quite often. You’ve got people look at the sales funnel and they say like, how many leads and have had that convert and all that sort of stuff and comes out the bottom?
Or should you just take a look at the bottom and just say, okay, the outcome, what is the outcome? Is that really the key metric here? How many leads we have and all let your stuff, as long as the outcome is going in the right direction. And so you got to synthesize everything down because otherwise you get information overload.
There’s one thing I found in this day and age is there’s no shortage of information. There’s a shortage of qualified. Good intuitive and revealing information. And that’s, there’s not enough of that, but trying to find those KPIs for every business is, can be a challenge because it’s often not what you think it could be like, Joe, it could be that the number one thing you should be looking at in a chemical related [00:43:00] business is the orders of sulfuric acid, the Ford orders.
So as Jeff talked about before, is that you wanted to become predictive with your metrics, not just looking at historical ones, therefore predictive would be like the volume of sulfuric acid that you’re ordering from a particular supplier could be that yeah. You want to measure your derivatives of your process?
What can you change with your process? Yeah, but quite often you’ll find there’ll be a key in-group. If that key ingredient was going down and you didn’t care about all these different boffins and engineers and all that shit. Our staffers say, you can put your finger as the entrepreneur on that one key ingredient say to them, I hear what you’re saying, but why is that key ingredient order’s going down, everyone will look at you and go, how did he actually come to grips with it so fast, I’ll be going to, we’ve had a big problem, blah, blah, blah, blah.
Yeah. It’s the [00:44:00] key ingredients. The key ingredient. Yeah. To me, the most important is the cost of acquisition per customer and lifetime value of a customer because everything else is an equation beyond that. If you can acquire customers for X and your lifetime value is X, then it’s simply a matter of if, of course, sometimes in a subscribers scenario.
Or if you have a product that you sell on a repeatable basis, your cost, your cost of acquisition. Could exceed the, the initial payment. So then that case you need to simply get funding to accelerate your business. But I think those are the two key metrics that generally are KPIs that you want to really watch out for in companies.
The great part is if you’re doing your cost of acquisition for a customer, then that means that all of your margins, all the other math that’s around that calculation before you can even get there. Yeah. Th there’s lots of things around there. Sometimes it is cost of acquisition of customer Colin, as you’re saying, but other times it’s cost of the [00:45:00] value of the customer because you can maybe get into lots of customers, but they’re all doing stuff, all revenue and what you need is valuable.
Yeah. So there’s the cost of the value of those customers. What they’re bringing in, but Edna you been sitting there really patiently and it’s great to have you on the stage once again, of the complete entrepreneur Edna. I’d love to get your thoughts on this topic. Welcome to the stage Edna
Edna you there. Oh, okay. She’s not there at the moment. I tell you this app today’s really wonky, but I know I got poor connection to try to find a stronger signal. I’ve changed to three different wifi in any case. If you can hear me, it’s still on right now, but if you can hear me, I think also that when you do your KPIs, would you do your KPIs?
It’s important that you track them very consistently and on a regular basis. So for instance, at potluck, We track our R O [00:46:00] a S we know what our costs basically, cost of acquisition per new customer. How much do we spend on that per day? So we’re tracking these KPIs on a daily basis because that’s how sensitive the advertising market is.
We want to understand whether or not we’re making a profit on a single day. And so I want you to think about that with your business too. It might not be just KPIs that you track once a month or once a week. It might even be daily or hourly, depending on your business. In our case, product comments daily.
I agree with you. They’re calling like getting a number you track daily. And I said this to a new sales guy who joined us. I’d said every day without fail, I don’t care if I’m on vacation. I don’t care what. There’s a particular number on looking at there’s a particular report. I look at every single day and there’s not a day goes by without me looking at that report.
[00:47:00] And he goes, why is that? I said, because it’s not just the numbers is what I’m doing is I’m feeding my intuition. And as an entrepreneur with all of the different information and data and all that sort of stuff, you’re getting, it’s your intuition, which will give you insights into your business, like nothing else.
And I said, there’s one particular report. Has it synthesizes so many numbers that I can actually encompass a, my own thinking and synthesize it down. What I know exactly what’s going on with all of our partners that we have. I know exactly what’s going on with our revenue line. I know exactly what’s going on right across the business and by feeding every single day.
I’m getting a sense of trends. I’m getting a sense of what’s going on with it. And so when something goes wrong and I must admit some of the members of my team they’ve been on the receiving end of this. I’ll just say to them what happened today? [00:48:00] And those are, what do you mean? I said I saw these numbers, particular numbers, and they go, how’d you pick up on that so fast and it could have been just a blip not a great big sort of drop in just a blip, as I say that, the reason why it’s, cause I looked at it every single day and I could pick up on these things.
And I would highly recommend that you actually do that is have a key report like Rupert Murdoch the kid of news limited massive organization. He has his whole business summarized onto one piece of paper that’s put in his desk, every single. He’s got a number of key metrics he looks at. And every single day he gets that one piece of paper because he wants to understand what’s happening with news limited.
Like how can you possibly know what the headlines are on some newspaper on the other side of the world, but he gets that one piece of paper. And that’s a key thing. I think you’re raising their colon, but Aetna, are [00:49:00] you around still or you’re still off the damn I stepped away for a minute.
How are you? How are you guys doing good to see y’all as always, she would love your thoughts on this topic. You know that what you don’t measure, you can’t grow. So you’ve got to definitely keep your finger on the pulse. And I’m curious to know what kind of report you’re looking at on a daily basis that allows you to see things so clearly, because usually companies and the larger the company the more, this is apparent by the time someone in upper management realizes that their sales have fallen off, it’s maybe 30 to 45 days later because they’re not looking at those reports.
And so I always tell people, sales is the driving force. Any business, if you are not making that cash register ring, you’re not, you can’t grow. So you have to constantly that has [00:50:00] been, you have to constantly keep track of where you are and that’s where, you should spend a majority of your assets, developing talent and teaching them how to close and grow the business.
I’m might look, the gears broke down on one of the businesses and I won’t mention the name Meow about a year and a half ago when the individual owned the company prior to Michelle and I owning the company started doing advertising on Facebook and was spending an 80% ad spend. And within two weeks the first two weeks of December in 2019 or 2020, I can’t remember which one it was had spent almost $300,000 yet.
There was no daily. And if there was daily tracking, it would have been very clear in the first day, second day, third day that something’s gone off the rails here. And so we had a gearbox that grounded to a halt and,[00:51:00] we’ve had to reboot the business and everything since there’s doing well now.
But I just look at that experience and think about, had we had a daily metric, had we been aware of what was going on? We wouldn’t have allowed loud that mistake to occur. Yeah. That’s a great example. Call it. Yeah. It’s upstanding and gearbox and where it gets to the point where the gears just don’t move anymore.
And you have to eat quite often recapitalized. Which is never a pleasant thing to go to the shareholders and say, Hey, we need to raise a whole lot of capital. They’re a good thing. One of the great things I love about the internet is that 99% of things are measurable. Exactly how many people have clicked on a particular ad.
If you don’t know, you should know, you know exactly how many people have come to your website from that particular marketing channel. How many people went along and fueled the shopping cart from that particular in channel, you [00:52:00] know exactly how many people then went along and finally purchased those products and you break the whole sort of sale cycle of them, and you should be able to see every single stage of that sales cycle.
The KPI could be the thing that comes out of. Like I say, it, it could be like dollars per sale. Is it training operating down or was it numbers of sales or whatever it is and what that will do, it’ll force you then to look back at your entire sales cycle and then identify where something’s gone wrong.
Maybe you are buying traffic from replace and suddenly it got more expensive or suddenly they turned the faucet off or yeah, there could be lots of reasons, but you can just backtrack it very quickly then what the problem is, but it’s all about getting the same. Out of the gearbox.
And if you’re not doing that as an entrepreneur and we touched on it very lightly about the interactions between team members can be sand and the gear box could be invisible sand. It could be we’re deliberately curating some sand in a [00:53:00] manual process before we automate it. So we can understand what that process it is.
It could be a whole lot of things. What is the key metrics need to be looking at? What are the piece of sand you need to be aware of? It could be that particular business you’re in, you’re going to be creating the same sort of sand over and over again. Got it cleared out. You got to clear that whatever it is, you’ve got to have the engine of your business running smoothly.
And as you were saying a second ago, Edna, that quite often the executives high app, they don’t have the right reports. They don’t have the right metrics. They’re not the right information for them to help make decisions or maybe like a month or two months later, are they as crazy in this day and age, you should be able to get access to the right information every single day.
And if you don’t have. Every single day, then you need to reevaluate on what information you’re really looking at. But wow. What a great [00:54:00] conversation we’ve had today looking at written raving 70 gearbox, or what are your barriers to scale? That’s what it is. And I think this conversation could keep on going, but sadly we’ve run out of time.
I just want to jump back to yourself calling what’s going on with startup.club, because let me tell you the people in the audience, you really need to hear some amazing things what’s going on there. Just two really good shows that happened in the last week or two, we had bobbin who started multiple unicorns.
You can go to startup.club and you can listen to his show right there online. But if you want to be aware of when we get, a new billionaire or a yes, yesterday, we had the founder of Reebok. He had some really cool things to say as well, if you really want to be in touch and you want to know who’s coming out, all you have to do is just enter your email address.
And if you enter your email address and we’ll tell you exactly who’s coming on, when we have a big speaker, this guy created a multi-billion dollar company, [00:55:00] he and his brother, and he both of them actually, you can say Bob and Tarkine, he did that. And also Joe Foster from Reebok did that. And they’re available in firstname.lastname@example.org.
Second is tomorrow open mic our number one show on startup club. The serial entrepreneur club hour happens at two o’clock Eastern, and we’re doing an open mic. Why startups fail? What a concept talk about failure. Maybe we can learn from that. Yeah, I’m a firm believer that it’s much better to go along, learn from someone else and to reinvent the wheel.
And it’s great having something like startup club there. I know I put my email address in and I subscribe and I get the messages even down here in Australia. And sometimes quite often, actually I get up at three or four in the morning or something like that. So I can go and listen to those shows.
And you had another one. What was the Jeffrey Moore for? He ended the book crossing the chasm after, yeah, no, we keep getting authors. We’ve had him, we’ve had that, the customer funded startup [00:56:00] author. We’ve got a number of other authors that we’ve been in talks with right now to bring them on. This is all free stuff.
If you go and you listen to all of our shows on startup club you’ll have an MBA in entrepreneurship, but I love your show, Michael, it’s all about the human. It’s not it’s about the entrepreneur himself or herself. It’s not just about the business. Yeah. It’s one of the challenging things is being an entrepreneur is that we have emotions.
We have high days, we have low days, and that’s what we tired. Take a look at also in the complete entrepreneur, but it’s been great having you here today, everyone. Next week, let me tell you next week is we’re talking about interesting topics like this segue from what you just said, color, which is, who are you and what makes you tick?
Who are you? And what makes you tick understanding who you are, is a key to become a successful entrepreneur. It’s not what or the, how there’s transformative, but as I said, [00:57:00] even earlier on it’s the why you do what you do that gets you out of bed each day. Yeah. So what is it that makes you really tick.
What gets you out of bed and that’s something we’re going to be unpacking, taking a look at and digging into. And it’s say, it’s fabulous to have my co-moderator is on, on the stage of me again. It’s great having each and every one of you calling Jeff and Michelle and love to hear from Michelle next week, hopefully her wifi will get fixed.
It’s been really good. Missed you all last week, cause you were at a conference. But so it’s good to have you back, but also for those of you on the stage, Joe and Edna is fabulous and the others were on the stage here as well. It’s fabulous. Thank you very much. Cause one of the things I love about the show is hearing from people in the audience and that’s, what’s so critical, but lastly, just as importantly, for all of you in the audience, you’re the reason why we do.
Yeah, I, you [00:58:00] might say, oh my gosh, these guys are making a great big money. I haven’t heard a penny from this and I do it because I love entrepreneurs. That’s what, the reason why I do it. And I love seeing someone come on fire as I talk about their business, or they talk about some idea, they have their back to do like hearing the commute.
Joe, a few minutes ago was just right. It was it. It’s what I live for. And I love hearing people’s passion and not yet defined an entrepreneur that isn’t passionate. So thank you very much for taking the show. We’ll be back here at 5:00 PM Eastern time. Next week. It’s going to be great. It’ll be 7:00 AM my time here in Melbourne, Australia, but there’s nothing like being here for the complete entrepreneur.
Look forward to seeing you then God bless and have a wonderful week. Thanks, Michael. Thanks.
Thanks everyone. And if you haven’t already done, so make sure that you click on the [00:59:00] little greenhouse up at the top and follow the club. You’ll get notifications for upcoming events as they’re having them. And you can also go to www.startup.club and get more information there as well as always Colin, great room.
Great. I love working with you ed. Now, every time you come on stage, you always have such great wisdom and hopefully we’ll see you in more sessions that I can join some of yours as well. I’m getting back into it more regularly now. So hopefully you’ll have more time. Yeah, absolutely. We’re actually running a series here on startup clubs starting I believe April 15th on renewable energy startups.
Oh, that’s right. Yeah, we’re doing, I think we’re doing that on the serial entrepreneur club. Our, yeah. Yeah. I believe that. Yeah. Yeah. That’s we’ve got somebody from England coming on. All right. We’ll talk later. Yeah. Good stuff, Edna. Thanks very much. And by the way, if you’re in the audience too, I should have said, if you see someone in the stage, you think, gee, they’ve got some really interesting perspectives on this [01:00:00] click, on their profile.
You can always follow them, go ahead and do that. And I think it’s fabulous to go and follow other like-minded individuals that you could learn to respect and reach out to them and have a good conversation. Never know what may happen, a great amount of business. Maybe it may result from that conversation.
Thanks. Love. Bye.