Next Level Pros - #109: 5 Brutally Honest Business Truths

Episode Date: June 14, 2024

Welcome to a new episode of the Founder Podcast. Today, we're diving into five pieces of brutally honest advice that took my business from zero to $233 million a year. These truths include the imp...ortance of quality discipline, the pitfalls of trying to impress others, and the critical nature of having a compelling vision. Join me as we explore these essential lessons that will help you scale your business to the next level. https://nextlevelhomepros.com/june25thworkshop Highlights "Quit trying to impress others. This is actually the exact reason why your business isn't growing." "Your business will pay you dividends for many years if you choose to sacrifice your own personal self-ego driven interests." "You can't recruit because your vision sucks. The reason you are not attracting great talent is because your vision fails to envelop others." "Your business is a reflection of you. Discipline in all areas of your life will reflect in your business." Timestamps 00:00 - Introduction to the episode and the topic of brutally honest advice. 01:45 - Hard truth #1: Quit trying to impress others. 05:07 - Importance of reinvesting profits for growth. 09:22 - Hard truth #2: You can't recruit because your vision sucks. 13:45 - Creating a compelling five-year roadmap. 14:17 - Hard truth #3: Track your KPIs religiously. 18:32 - The difference between leading and lagging indicators. 19:42 - Hard truth #4: SOPs won't create themselves. 24:05 - Practical steps for creating effective SOPs. 26:55 - Hard truth #5: Your business is a reflection of you. Looking to scale your business? Want to learn directly from the same team that helped me sell my last business for 9 figures? Click this link below to check out how you can work with us. https://nextlevelhomepros.com/grow-home-service-vsl Join my community - Founder Acceleration ⁠https://www.founderacceleration.com ⁠ Apply for our next Mastermind:h⁠ttps://www.thefoundermastermind.com⁠ Golf with Chris h⁠ttps://www.golfwithchris.com⁠ Watch my latest Podcast Apple- ⁠https://podcasts.apple.com/us/podcast/the-founder-podcast/id1687030281S⁠ Spotify- ⁠https://open.spotify.com/show/1e0cL2vI1JAtQrojSOA7D2⁠ YouTube - @thefounderspodcast

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Starting point is 00:00:00 All right, in this episode, we're gonna be covering five pieces of advice, brutally honest advice, that took my business from $0 to $233 million a year. Things like exercising quality discipline, quit lying to yourself, all the incredible pieces that will ultimately transform your business
Starting point is 00:00:17 and help you scale to the next level. All right, so we're gonna dive into five pieces of brutally honest advice that ultimately I have learned over the last 20 years that took me to building a business that did $233 million a year, took me from bankruptcy, and ultimately are going to impact the way that you are running your business. The first piece of advice is quit trying to impress others. This is actually the exact reason of why your business isn't growing. I know that one hurts a little bit when you hear that. You're like, Chris, shut up, man. No way that this is the only reason why my business isn't growing. But let's dive into
Starting point is 00:00:55 this a little bit more. So you got into business. Ask yourself this question. Why did I get into business in the first place? Was it to make extra money was it to get time freedom was it the watch the car the houses what was it there's something that is driving you that is pushing you ultimately this is what led to my bankruptcy in my first business where I lost 2.2 million dollars had to file chapter 7 bankruptcy had car repoed out of my driveway all that stuff and this is the reason why you when you go and you start your business, you start making profits, right? You find something that starts working. And ultimately we rob that growth capital from the business. We want to go buy the watch, the car, the houses,
Starting point is 00:01:35 you know what I'm talking about? You up your lifestyle because now your business is producing money and you fail to have that money to be able to go and grow. The other thing is you're trying to impress your customers and you're trying to impress your employees. And this was a lesson that I had to learn at a very early age that I am in business for myself. OK, I know that sounds very greedy, very egotistical. But ultimately, if you do not take care of the business, it will not be able to take care of your employees, which will not be able to take care of your customers. And so a lot of this is due to pricing, the way that you set your offer up. You're trying to impress your customers. It's the reason why people go and they offer something that's cheaper, a discount cheaper than competition or whatnot.
Starting point is 00:02:23 They're trying to impress others. And they think that by impressing them, the customer is going to be more likely to buy your product or your service. But the reality just isn't the case, right? People are willing to spend money for quality service. We see it with Louis Vuitton. We see it with any type of high-end luxury type product or service. And so when you go and you try to impress by cutting, what you're doing, let's go look at this, okay? So let's talk about price index here. So if this is where you're charging,
Starting point is 00:02:55 and this is what you are paying, all right? This is to your employees. If you charge less and pay more, this is your margin. Okay. So the goal has to be, how can I charge more and pay a little bit less? Okay. Be okay with not impressing your employees. Now I'm not saying that you shouldn't pay your employees fairly. What I'm saying is don't just put together a compensation package that you think is going to attract people and you only pay them through money right one of the best things you can do as a business owner is actually pay them through benefits through culture through creating all different types of value propositions
Starting point is 00:03:38 that are outside of compensation so that you can keep that margin high and when you charge more you have more to spend on the employees more to spend on the customer experience and those type of things so quit trying to impress others and then going back to robbing the growth capital when you start making money right don't immediately increase your salary don't immediately jump in and say okay what car can I buy? How can I improve my house or those types of things? Your business will pay you dividends for many years. If you choose to sacrifice your own personal self ego driven interests for what you can go
Starting point is 00:04:18 and invest in the business. And so this is a little rule that I have. It's invest profits monthly. Okay. And this is the way that you do this. This is a pretty, pretty easy way. Okay. So take last month's profits. Say you made $20,000 last month, or you made $200,000 a month. Take all of that and invest to growth rather than taking money off the table and going buy that new car or watch or whatever it may be or just keeping in the bank and driving up your ego of like oh i got a lot of money in the bank take it and invest it towards growth and the rule that i have is take 75 percent towards marketing and 25% towards fulfillment. Okay, so when you do this, when you take 75%, you should be getting a 10 to 1 return on every single dollar you spend.
Starting point is 00:05:16 That means that 10% of your overall budget is used towards marketing. And so that's how you can measure whether or not you're getting a 10 for one right and so the the reality is if I made $200,000 and I take 75% of that which is a hundred and fifty grand and I'm going to get a ten dollars of revenue in return for every dollar spent that means I'm going to do an additional a million and a half by investing that hundred and fifty thousand dollars okay and this should be the way that you analyze your business am I still getting a ten for one and if you're doing well you're getting a 15 for one a twenty for one so that means twenty dollars of revenue dollars in the
Starting point is 00:05:59 in in through the door for every dollar that you spend in direct marketing. And so typically this type of marketing, you want to actually do call to actions. It's not just billboards. It's not just branded trucks. Like these are social media ads, call to action that are going to generate leads for your home service or product. So rule number one, piece of advice brutally honest advice stop trying to impress others number two you can't recruit because your vision sucks think about this the reason why you are not attracting great and quality talent talent that's better than you is because your vision fails to envelop and get other people to fold into it.
Starting point is 00:06:48 Ultimately, we fold into whoever has the greater vision. Think about this for a second. If Elon Musk were going to call you up right now and say, hey, Chris, or hey, Larry, I want you to come work for me and be the executive X, Y, and Z, I guarantee you're probably at least going to think about it, if not take that job. Why? Because Elon has a greater vision. He's got a greater vision for you, greater vision for his company. He's going to take this thing to Mars. He's going to re-electrify the grid, whatever it may be, right? This is the reason why Elon is winning is because his vision is absolutely incredible. And the reason why you are not attracting quality talent into your organization is because you don't have a great vision for them. So you need to ask yourself a couple of questions. Where do I see my business in the next five years?
Starting point is 00:07:38 How am I going to be able to portray that to my employees, end users like so when i started soulgen and we grew this thing in four and a half years to 233 million dollars in revenue a year i had the vision day one that in five years we were going to be doing a hundred million dollars a year the crazy thing is we outperformed that by 2.3 x but when i started a hundred million dollars a year seemed ludicrous i'm sitting in a garage with three or four employees and telling them hey we're going to be the biggest the solar provider in the nation we're going to be the gold standard this is how we're going to do it this is the road map of how we're going to accomplish it and they're thinking about me and they're like man this guy is either one nuts or two I want to get behind what
Starting point is 00:08:25 he's doing and so understand that the reason you are failing to recruit is because you are not portraying this type of vision because as soon as you start portraying a big vision like that people are gonna be like I don't know if I necessarily believe in what he is saying but I believe what that he believes this is what we call an evangelist the goal is to be a an evangelist that doesn't get others to believe but they get others to believe that you believe right that is your goal that you can evangelize they're like hey I believe that we are going to go become the largest solar provider in the nation we're gonna be worth 10 billion dollars
Starting point is 00:09:04 we're gonna do hundreds of millions of dollars a year or whatever it may be. And you evangelize that enough and you speak with conviction and you actually have a roadmap. So a key to this, to create an incredible vision is you actually have to create a roadmap that justifies that vision. So when you start off in your business, you got to have a five-year roadmap of exactly what that organization is going to look like. These are a lot of things that I teach in my course or in my community. We have a free community on Facebook that you can join, the Next Level Home Pros community. We teach a lot of things like this, the five-year roadmap, so that you can go in and dial in, okay, if I'm going to be doing a hundred million
Starting point is 00:09:45 dollars a year in five years, what is the average sales rep do per year? If it's a million dollars a year and I need a hundred million, that means I need a hundred sales reps. And the law of management says I need a manager for every three to eight people. And on the lower end of the accountability chart, I, they can manage more people. So my initial managers are going to manage seven to eight people. And then they're going to have a regional manager. And I build out my sales organization. And then in order to fulfill, I need to have installers. How many can one install crew do a week?
Starting point is 00:10:16 They can do four a week. Okay, if I, in order to do four a week, how many is that a year? Back that in. How many crews do I need? How many foremen do I need in how many crews do i need how many foremen do i need how many locations do i need this is the way that you create a five-year structure so that you can go and you can portray that vision to your people and get them really excited like this is i know we only have four people right sitting down this is the the roadmap to 500 employees. And ultimately I need you guys to either step up
Starting point is 00:10:49 or step out. Okay. So there's going to be a lot of opportunity. And this is the way that you create vision for me. You get them really excited and you say, look, I, you know, six months from now, I'm going to need management. 12 months from now, I'm going to meet upper level management. The question is, is that going to be you or is that going to be your buddy? Or is that going to be somebody that we bring from without the organization to come within the organization? And so this is the way that you create the vision, that you get them amped up, you get them excited about what you are building. And then people want to be a part of it. This is like one of the foundational steps to create an incredible culture that automatically attracts in good talent then all of a sudden you're gonna be able to go and attract people that are higher quality
Starting point is 00:11:32 than even you in fact when I started Solgen I had people coming and working for me for $40,000 a year they had previously sold their businesses for millions of dollars think about that for a second. Can you believe that somebody that had sold a business previously for millions of dollars would have been willing to come and work for me for 40 grand a year? Why? Because this, my vision was incredible. And I showed a roadmap in which they could fit into the whole vision and ultimately get a piece of the pie.
Starting point is 00:12:02 They didn't initially have equity, but I said, hey, look, if you come and you prove yourself out and you go and you plug into this ultimately 500 person organization, there's going to be a piece for you. And guess what? That individual took off millions of dollars when we exited to private equity in 2022.
Starting point is 00:12:19 This is what I mean by you have to up your vision. So think about it. Get clear. What is your goal? The more clarity that you create around what you want, what drives you, what are the determining factors that is going to ultimately determine whether you're a success or not, and get very clear around that. Put it on paper.
Starting point is 00:12:41 Get as much detail as possible. Then go start preaching it and you will automatically be able to sit down in a recruiting interview, be able to attract. You won't no longer be knocking your head and be like, there's no talent. Nobody wants to work for me. Everybody wants to run their own business. That is a bull crap excuse for people that have terrible vision. Hey guys, I just wanted to jump in here and invite you personally to a one day workshop where we are going to be covering thisday workshop where we are going to be covering this exact strategy. We are going to be working with 25 entrepreneurs on building out their
Starting point is 00:13:10 five-year roadmaps for their businesses. This includes creating the positions, the roles, goals, responsibilities, and creating an exact roadmap on how you're going to be able to attract the right type of talent into your organization. You won't want to miss this. It's a one-day event on the 25th of June right here in Pasco, Washington. You will work directly with me and my team, hands-on, side-by-side, shoulder-to-shoulder, sharing good food and great results as we build out this incredible strategy for you. We are limited to only 25 seats, so click on the link below to grab the exact details and reserve your seat today number three track your KPIs
Starting point is 00:13:51 religiously first of all what is a KPI this stands for key performance indicators right so this actually indicates whether you're not your business is performing some of the easiest things that you have to do is dial in what are your leading indicators and what are your lagging indicators a leading indicator would be something like people that show interest whether that's in the form of a lead someone fills out a form and says yeah I want a free quote and what you're doing. A lagging indicator would be an install or money in the account. So a lot of business owners run their business off of lagging indicators. How much money do I have in the bank account, right? They're not looking at actual
Starting point is 00:14:39 financials or whether or not it's penciling out, like what are my margins or anything like that. No, they're just saying, do I have enough money in my bank account? Well, then I can afford this. That is when you are measuring off of a lagging KPI. Lagging KPIs are good, but those aren't really telling the story of what's going on in your business. You need to understand what the leading indicators are, the top of the funnel, right? When you're talking about a funnel, down here is what spits out dollars. What leads to spitting out dollars? And I use that word, pun intended, leads, right? Leads ultimately. And then if you know your conversion rate from someone who's interested to someone that gets an appointment, someone that
Starting point is 00:15:24 gets an appointment to somebody that is sold, someone that is sold that ultimately gets installed and exactly what an install is worth to you on a regular basis. What your average ticket item is, is it 5,000? Is it 20,000? Whatever else it is, but you need to track these things this is the way that you make decisions in your business every single position in your organization needs to have three to four KPIs no more no less okay that you can individually track and what I mean by that is you have to be able to say is this person successful at their job so like for a salesperson you would look like, how many phone calls do they make? How many sales do they make on a monthly basis?
Starting point is 00:16:11 What is their closing ratio? These are very important KPIs in which you would actually track. And then as a business, once you get really big, you need to have a scorecard of eight to 10 KPIs that if somebody delivered to you on a private island you to have any internet connection no phone you couldn't call and verify anything or anything like that you would say you'd be able to determine on this piece of paper is the business successful or not so ask yourself those questions like what things do I need to track and if I
Starting point is 00:16:44 can't verify anything else what are the eight to ten things that I need to track if I can't verify anything else what are the eight to ten things that I need to know that are going on in the business and then at every position level what are three to four things to determine whether or not this person is winning at their job and then track these religious you've got to create dashboards you can create text messages one of the best practices that we ever did in creating soul gen was we created these text messages and we and we set them up where you had like zap you're communicating with the CRM where then when somebody got a sale in the CRM
Starting point is 00:17:18 like it was marked complete it would generate a zap that center sent out a text message that came to our phones and said, okay, this is how many sales today. This is for the week, the month. For me, I love real-time KPIs, the way that I can know the heartbeat of exactly what's going on in the business. This is the way that you're going to be able to make decisions on what levers to pull okay so if for whatever reason you're not getting enough sales go one step higher in the in the funnel okay do i have enough appointments okay i have enough appointments that means i have a closing problem or a quality problem in the appointments that are being set if i don't have enough appointments, the next question would be,
Starting point is 00:18:10 do I have enough leads? If I have enough leads and not enough appointments, either one, I have a lead issue problem, the quality of the leads, or the person that's qualifying the leads and setting the appointments, I have a quality issue there in which they can improve. And so now you begin to understand what are the levers. Okay, I need to either improve my training with my setters. I need to improve my training with my closers, with my install. Like, is it, is it a quality issue on my install or is it timely manner that on my install, like understanding all the different KPIs, what are the different levers that I can pull so I can go and impact the business? This is ultimately your job as an executive of this going to you're going to go back to looking at looking at lagging indicators like dollars and you're like oh man i don't have enough money yeah the reason you don't have enough money is because you weren't tracking
Starting point is 00:19:16 the fact that you weren't getting enough sales and your sales don't lead to installs for 90 days and so the money from the installs are literally a lagging indicator of something that was happening 90 or 120 days ago this is the problem that I'm talking about that you've got to make sure that you are tracking both your leading and not just your lagging indicators track them religiously this will greatly improve your business number four SOPs won't create themselves I know you've heard all the facts about SOPs won't create themselves. I know you've heard all the facts about SOPs, standard operating procedures. Like, yeah, yeah.
Starting point is 00:19:54 You know, the reality is a lot of us don't even know what an SOP is. Most of our business exists in our heads or in our employees' heads. If we lost somebody, like if I got hit by a bus tomorrow or an employee got hit by a bus tomorrow, would your business still be able to function no matter what without them okay SOPs are ultimately what is creating value in your business because SOPs are not dependent on people people are dependent on SOPs right you come in you train them to the SOPs they quit they die whatever happens you know heaven forbid that were to take place but you can always train somebody up because you have it well-documented. Now, a key thing to understand with SOPs, tools are not SOPs, right? Like, so your CRM or ways to improve your SOPs are just tools.
Starting point is 00:20:41 An SOP is literally a procedure or process that you follow they can be documented handwritten on a piece of paper like for example if the the procedure would be call a customer after install and you'd be like okay first dial the number or first look up the name of the customer second dial the number third follow this script that says hey mr. customer it looks like we're following up with you this and the other if they have a concern about this and you have a bunch of if-then statements if they say this then you do this if they say this then you do this if you check all the boxes
Starting point is 00:21:15 right you have all the checklists all the way down then you do this then it's completed and so on and so forth this is an example of a standard operating procedure they can be as basic or complex as possible. And here's what I would say. Start with the basics. Just understand what is my customer experience? When somebody first reaches out to my product or service, how do I want them to experience from then to the time that they put money in my bank account to then refer my service or my product to somebody else? What does that look like? Okay. And then within that experience, what are the other interactions, right? Like how does the install go? How does the sale go? How does resolving their concerns? How does it go when they're on the website? Then you start building
Starting point is 00:22:05 these out. And here's the key thing. They will not, they won't create themselves. This is your job as the business owner. Okay. I've tried hiring employees, high level executives to come in and say, Hey dude, can you create SOPs for me? But the reality is they just don't. They come in to follow SOPs, not create SOPs. Your job as the business owner, as the visionary, as the CEO, the president, the founder is to spend as much time possible creating that experience for the customer exactly how you do it. Now, you may not have all the technical information. You can go to your technician and say, okay, what does a perfect install look like?
Starting point is 00:22:49 And they can write it down, and then it's your job to take that and to create a procedure around it or a policy that needs to be followed, a checklist that needs to be followed. Once again, you don't have to have all the technical, but it is your job to create a flow around it so that ultimately employees can be
Starting point is 00:23:07 trained up to this. Once again, they will not create themselves. This is your job, but you have a lot of tools out there that can help you. You have employees, you have AI, right? ChatGBT is one of the most phenomenal ways that you can go and you can create these things. You can ask for ideas or whatnot, but at the end of the day, when the rubber meets the road and the value that you're creating in your business, SOPs will not create themselves. And this is the hardest one. This is the one that's going to blow your mind and is really going to be painful. Number five, your business is a reflection of you.
Starting point is 00:23:42 What do I mean by that? Okay. Discipline is impossible to be compartmentalized if you are disciplined in your physical economic your associations and your spirituality it will reflect in everything and this is why i focus so much with my clients with my people that you have to take care of the physical body. Now, everybody's physical body is completely different, right? I struggle being able, like I've been off sugar, white flour, fried foods for almost a year. And I still have a little bit of a gut, right? Like that's, but this is the best version of Chris Lee that I am working on every
Starting point is 00:24:19 single day. When I go and I exercise discipline at the dinner table, discipline at the gym, discipline in my interactions with my wife and my kids, it's automatically going to flow over into my business. I will make that additional phone call. I will make that additional door knock. I will sit down and write that additional SOP because I did the hard thing in the morning by working out or whatever it may be. Okay. So ultimately how you do anything is how you do everything. This is a hard pill to swallow, right? In fact, whenever I see somebody that's extremely overweight and successful, the question that goes to my mind is, is this guy cheating somehow? All right. Because I believe this principle so much that I think it's virtually impossible to have success if you are not showing
Starting point is 00:25:15 discipline in success in other areas of your life, right? If you are not addressing your spirituality, if you're not addressing the relationships, right? like I've seen so many like messed up marriages go and impact business right like somebody is really struggling at home with their spouse and then they come and it's being thrown up on the business this happens all the time and vice versa right if things are struggling in the business it's rolling over into the personal relationship with a spouse or they're being stressed out. So they're no longer working out. They go and they eat their feelings or whatever it may be.
Starting point is 00:25:49 Ultimately, like I said, your business is a reflection of you. And I have so many countless experiences. In fact, 2021 was one of the most phenomenal years of my business ever. We went from netting 2.2 million in a year to netting 19.6 million. So in 2020, we netted 2.2 and 2021, we netted 19.6. It was literally, what is that? 8X growth in the bottom line, 8, 9X, which is absolutely like. And one of the biggest things that I reflect on and I attribute this to was I woke up every
Starting point is 00:26:23 single morning at 4.30. I went to the gym and I was in to was I woke up every single morning at 430 I went to the gym and I was in the office at 7 I'm not saying that you have to do this but I'm telling you that the momentum that I created from doing this morning routine on a daily basis reflected in my business so when I needed to stay later I stayed later when I needed to work harder when I needed to be more disciplined I made it happen in my business and I told my partners and my management team I'm like look this is the reason why we're having success they're like rolling their eyes like yeah right but man this is my brutally
Starting point is 00:26:55 honest advice like if you want to go and change your business you have to understand that your business is a reflection so how mentally tough are you are you doing the hard things and if you are struggling right now start with one thing 1% better every single day go and do one push-up go and eat one less cookie drink one more glass of water tell your spouse that you love them one more time have the hard conversation when you are struggling in communication with your kids, your wife, your friends, your family, your God. If you haven't prayed in a while, go and pray. These are things that you can do and get the momentum going in the positive direction.
Starting point is 00:27:35 And I don't believe in perfection one bit, but what I do believe is in momentum. And when you have momentum going in a positive way, things tend to flow positively. And when you have momentum going negatively, things tend to flow negatively. So recapping, quit trying to impress others, right? You are in this business to go and be successful. And that doesn't mean personally successful. Make that business successful. Build tons of value in it. Don't waste the growth capital on your own personal obsessions start creating an incredible vision you're gonna automatically attract incredible people track those KPIs SOPs you got to do them and ultimately realize that your
Starting point is 00:28:17 business is a reflection for you let's go until next time

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