Small business success isn’t just about what you sell today; it’s about understanding your clients’ future needs and staying ahead of the curve. In this week’s power-packed episode, we have special guest Melinda Emerson, the renowned “SmallBizLady” herself and CEO of Quintessence Group—a marketing consulting firm that serves Fortune 500 brands that target small businesses. Join us as we discuss the world of small business success. Melinda shares the 12 P’s every small business owner must master, the strategies for prioritizing your marketing efforts, the secrets to keeping your top list for business connections, and more. Tune in now and discover how to make your small business flourish.
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From Product To Prospects: The Keys To Small Business Growth With Melinda Emerson
We are so delighted to bring you another special and amazing guest. In this episode, we have Melinda Emerson. We will give away three chapters of my book Exit Rich. Melinda Emerson is known as the SmallBizLady. The SmallBizLady is America’s number one small business expert. She is a bestselling author, keynote speaker, and marketing expert. How many of you ask me about marketing every single day I talk to you all? All of you.
She’s the CEO of Quintessence Group. Her marketing consulting firm serves Fortune 500 brands that target small businesses. Her advice is widely read, reaching more than three million entrepreneurs weekly online. She’s an online school and a host of The SmallBizChat Podcast. She is a bestselling author of Become Your Own Boss in 12 Months. She told me that that’s an old book she wrote a long time ago and nobody bought it but since COVID, everybody’s buying it like crazy. Melinda, welcome to the show.
Thank you so much. Thank you for having me.
Tell us a little bit about Melinda. What were you like as a little girl?
I was wearing little business suits by the age of nine. I always wanted to be an adult. I was very interested in business. I was the president of my junior achievement business when I was in high school. I have always been about the business. I’m the oldest of four. I have three younger brothers. I like to tell people that I have been the boss my whole life.
Did you grow up in a family of entrepreneurs?
That’s not true. My father was a career salesman. He worked for Kraft Foods for 30 years until he passed but my mom was a serial entrepreneur. She was always getting into these multi-level marketing businesses that she never made any money but she did everything. She did Tupperware, Melaleuca, and Avon. She did cover and artistic impressions. At one point, she took classes and reupholstered people’s furniture. She was somebody who was always hustling. She was a hard worker but always had a soft heart for people. She was always a sucker for a sob story so she always gave away more product than she sold
A soft heart does not always go well with entrepreneurs because we all give away everything.
My dad was a killer salesperson. That’s where I got it from. He could sell ice to an Eskimo. I learned my sales acumen from him but I got my entrepreneurial opportunity buzz from my mom.
You have the best of both roles, entrepreneur and salesperson, because not all entrepreneurs are salespeople and not all salespeople are entrepreneurs.
Most entrepreneurs are salespeople. That’s the problem.
How did you become the SmallBizLady?
I have been an entrepreneur myself for 24 years. I started as a television producer and got my dream job when I was young. I hated it so I became an entrepreneur. 5 to 6 years in, I started to get these calls from my friends, “I want to be like you. I want to quit my job today. I want to be an entrepreneur.” I was like, “No. You love Prada. You can’t quit your job. You have two brand-new cars in the driveway. Your lifestyle is fantastic. You can’t become an entrepreneur.”
It started when I wrote this eBook called 44 Things To Do Before Going Into Business back in 2006. It went viral on the internet. It was the precursor for my bestselling book Become Your Own Boss in 12 Months, which was originally published in 2010 but it’s in its third edition with Simon & Schuster. We have sold a whole lot of copies of that across the US and the world. It’s one of those things where I wrote this book to get people off my phone and then it went from there.
When the book was originally supposed to be released was right around the time the market crashed in ’08. My publisher was like, “We don’t think anyone is thinking about entrepreneurship. We are going to shelf your book until March of 2010.” This was September of 2008 and I was like, “What am I going to do? This book is not coming out.” A friend of mine was like, “If I were you, I would start publicizing that book online and figure out this new social media thing. Everybody says it’s going to be the biggest thing in business.”
You have to realize in 2008, Twitter was only one year old. It was new. Not a lot of people knew what it was. I hired a publicist who knew as much as anyone knew about it at the time. She was like, “No. What we are going to do is build your author platform on Twitter.” I remember saying to her, “What is Twitter?” I didn’t even know what she was talking about. Finally, the day came for me to get my Twitter account. I went to Twitter.com and put in Melinda Emerson. I got this polite note back that said, “This name is already taken.” I was like, “What do you mean? I don’t have a common name.”
I didn’t know that was a thing on Twitter. I don’t even know that somebody else has your name.
Thanks to Facebook. I found out that there are seven other Melinda Emerson in the United States but I’m the only Black one and I own MelindaEmerson.com. They all know who I am but long story short, we had to come up with a nickname for me. We were kicking some around and then finally she was like, “How about SmallBizLady?” I was like, “Okay.” I had never had a nickname in my life. All of a sudden, I had a nickname that honestly became a moniker. It was the best branding thing that ever happened to me because there are thousands of small business experts. There is only one SmallBizLady so it has worked out for me.
That always goes to my point, why is this happening for us and not to us? If you could use Melinda Emerson, you would never be branded as the SmallBizLady.
It helped me immediately stand out from the other competitors. We later created @SmallBizChat on Twitter, which was a weekly tweet chat that several years later was a very successful podcast.
I’m going to be on.
We are going to have you on. Everybody wants to exit rich. I want to have you on my podcast. Our thing was we wanted to figure out how to find small business owners who had questions. We created SmallBizChat so people would come and ask their questions. We would have one guest and do it on Twitter as a tweet chat. I did that for ten years and then we switched it over to a podcast a few years ago.
I can’t wait to be on. I’m excited. You have been around business a long time. I have been around business for a long time. I have been doing this for many years. I was an entrepreneur before and even got into M&A. You guys reading, fasten your seatbelt. It’s going to be a quick ride. Hold on tight. We are going to talk together, Melinda and I. We are going to share a lot of the same philosophies. What do you feel are some of the biggest challenges that small businesses face?
The biggest challenge is people do not niche their business. People chase anybody they think has money. They don’t do enough research on a specific customer. All small business owners have the same problem and that’s limited time and resources. You need to pick a marketing target that you can hit. People spray money around.
Get to know a specific niche target customer intimately, not just their basic demographic information but their aspirational information. What are their barriers and beliefs? That’s how you can create marketing messages that will resonate with them. You don’t have to spend $1 gazillion when you are talking to a very specific target audience. I tell people all the time, “Niche to get rich, please.”
Give an example of that. You saw someone throwing a bunch of stuff up against the wall. How did you get to focus?
I will give you my example. In the early years of my business, I did exactly what I was talking about. We were trying to chase government contracts, video production for pharmaceutical, and nonprofits that needed videos for their annual events. It got ridiculous. It got to the point where we spent almost $50,000 in 1 year chasing government contracts, going down to events, trade shows, and all this stuff, and did not win a single contract.
It was not until we focused on where we were. My company is based in Philadelphia, Pennsylvania. Twenty-two of the top pharmaceutical companies in the nation are between New York and Wilmington, Delaware. When we finally said, “Look at where we are geographically. Look at a niche that has done business with us. What if we push all our chips in on them?”
Once we focused on the pharmaceutical industry with my first company, we started killing it. We spent three years out here in the wilderness chasing anybody and almost went out of business doing that. I’m not telling you what I think. I’m telling you dumb stuff I did myself. My mission in business has been to end small business failures. I’m out here telling you what I did so that you do not do this.
What company or product was that? What were you selling?
Originally, my company Quintessence Group was a video production company when I first came out of the television industry. Later on, we morphed into a marketing consulting firm because we were developing content. It changed who the content was for. We transitioned to social media and marketing content about 7 to 8 years into the business but we were a video production company at first.
Everybody gets that. You need to niche it down because you can’t be everything to everybody. You can’t throw a bunch of stuff up against the wall. I do believe in multiple profit centers and congruence revenue streams but you cannot be everything to everybody. If you look at the Ritz-Carlton, who do they cater to? You have to look at different companies like that.
Look at Planet Fitness versus Baileys. Planet Fitness serves pizza in their exercise facility product. They don’t even want super buff and crazy people that go five days a week. That’s not even who they want. Everybody has a customer that they serve and you need to know that.
I didn’t know that Planet Fitness serves pizza.
They are not these buff muscleheads. They are for people who want a little bit of exercise.
I will go to Planet Fitness just for the pizza. A huge plug there. I hope I get some royalty. What other mistakes do you see small business owners make, niche?
Just not knowing their numbers. You have to know how much profit is in every sale. It’s not about what you make but it’s about what you keep. If you are not focused on tracking profitability and making sure you are focused on your most profitable line of business or products, you will not be making sales. The other issue I see a lot of times is people do not price themselves properly. They go on the internet and see what their competitors are pricing at. They price a dollar above or a dollar below them. You need to know what your costs are before you start stacking what your pricing is.
You have to make sure that you have a profit margin in your pricing strategy. If you don’t, you could be making sales and not making any money. I read a Harvard study a few years ago that said, “Sixty percent of small businesses in America are not profitable by any measure you could use.” That is ridiculous. We got to mind the money. You have to know your numbers. You cannot let your fear of math be the reason why you don’t know what’s going on in your business financially. You put yourself and your family’s financial future on the line with this business. You got to focus on the money.
You see me smiling. I kept saying amen because it’s so true. In Exit Rich, my sixth piece or last piece is profit. What Melinda is saying is so true because most business owners, rather than small businesses and even sometimes larger businesses, don’t know their numbers, KPIs, and profit margins. A lot of them think they are making money until I get a cashflow statement to find out they are three months away from going out of business and going into bankruptcy. You have to know your numbers and profit margin for your specific industry because there are different profit margins for every single industry.
Your bank can tell you this information and what the profit margin should be for your industry because that’s how they are tracking and evaluating you so they know.
There are also other resources that you can get for that as well. It’s not just tracking your money. Know your numbers and KPIs but it’s also having those checks and balances because 3 out of 5 businesses will be embezzled every single year. You want to make sure you have those checks and balances. There’s over $1 trillion that are stolen by employee theft every year. You need to have those checks and balances in place. You need to make sure whoever gets the mail isn’t making a deposit and you always have those checks and balances and inspect what you expect because of embezzlement.
First and foremost, if you don’t know your numbers, it’s going to be very easy for someone to embezzle money from you. You always have to have your financials under a locking key and get savvy in financials. A lot of times, that’s the business owner’s weakest part. I always say to focus on your strengths and hire out your weaknesses. I have seen it to where even CPAs have embezzled money from their clients. Have your checks and balances. Niche, know your numbers, and what was the other one you said, Melinda?
The other one I said was to make sure you understand your pricing and there’s a profit margin in your pricing. Don’t price what the competitor is pricing. Price what you need to charge to pay your bills. The biggest thing that I see is people don’t put a percentage of their overhead in G&A in their pricing. It’s the things you can’t bill for like your marketing, legal, accounting, and light bill. A percentage of that has to be included in your pricing. You can’t just go on labor material, shipping, and packaging. It’s not just that. It’s the other side of your business that you can’t build directly for.
I agree 1,000%. A lot of clients are like, “Michelle, I’m better in revenue.” I’m like, “What about the profits.” You are spending all this money to chase more revenue but you haven’t even figured out which profit margin and how much overhead is that going to take. At the end of the day, are you going to turn a profit and see an ROI or Return On Investment? Know your pricing strategy and financials. Have a niche. What else?
People. Your business can only grow as far as your two hands can reach so that means you need some more hands but I’m not talking about your cousin who needs a job. I’m talking about writing a job description, putting it out, having criteria, and interviewing at least 3 to 5 people for any job. Don’t just interview people. Prepare an onboarding process for them.
We are small businesses. We love to hire people and then throw them the keys and say good luck and then get mad because they are not delivering how we need them to deliver. That does not make any sense. The more time you spend onboarding and getting to know your employees, the longer they will stay with you. The more you get interested in what they care about in their personal life, the harder they will work to take care of your customers.
All of us as entrepreneurs have to be coaching leaders in our businesses. We have to be interested in our employees. If you treat them like an hourly employee, that’s how they are going to treat your customers. You want to be clear about not just giving people tasks to do but giving them opportunities to grow and think, and giving them time with you so that they know exactly how you want it. Later on, if they don’t deliver, it’s a short conversation because they already know they didn’t deliver based on how you taught them.
This is how in sync Melinda and I are because she talks about people. The first P in my book Exit Rich is People. You can’t build a company with one and your aunts, cousins, and uncles, or even on interns or independent contractors. You can do that in the beginning. You can start with interns or independent contractors but you still must build that company.
Is there always room for contractors? Yes. Is there always room for interns? A thousand percent but you got to build that team. You have to build the seats and the whos to identify who answers the phone, handles quality control, and handles manufacturing and distribution, the list goes on and on. Who is handling that seat? You got the seats and the who. The biggest issue why businesses aren’t sellable is because the business is too dependent upon the owner. Owners are working on it and not on it.
If you cannot take a laptop-free vacation, you can’t go away for two weeks, and your business not still be making money while you are gone, it’s time to look at that. My book Fix Your Business is all about that. In it, I talk about my twelve Ps of running a successful business. It looks at all the areas of a business that could close line you.
All of us, nobody wants to be a slave to your business. The whole point of having a business is so that you can live your dream life. If you are working 60 or 70 hours a week, your kids are barely seeing you and your partner is resenting you because they are doing the heavy lifting, you are always at the office trying to make this business work, you have to look at your business model and figure out how you can work smarter and not harder.You have to look at your business model. You have to figure out how you can work smarter and not harder. Click To Tweet
You have to ask yourself, do you have a business that works for you or are you working for the business? A glorified job is all you have.
I was with Michael Gerber at an event in Texas and he talked about this. He said, “Some of you are out here haven’t created a job for yourself. You don’t have a business.” He’s all talking about turnkey, building a business that can run without you. If you can’t do that, you have to think about what you are doing.
Michael Gerber, in case somebody knows, wrote The E-Myth for pretty much every industry. It changed a lot of businesses exponentially. We talked about the biggest mistakes, which tie into why businesses fail. Not knowing your numbers, not having a niche, spreading yourself too thin, not having the right people in the right seats, and not knowing your pricing structure. Any other reasons that you have seen businesses do?
This might be the biggest one. People don’t nurture their existing customers. It makes me crazy. A new customer is only going to close 5% to 20% of the time. An existing customer will close 60% to 65% of the time if you ask them in a timely irrelevant.
Repeat that because that’s important for everybody.
People don’t understand that the first sale they make is always the most expensive but existing customers are gold that people do not mind in businesses. They’d rather go out and chase new ones as opposed to nurturing ones that have already said they love you. Those people will buy 60% to 65% of the time. They will spend more typically and give you a referral potentially if they become an evangelist for your product or service.Existing customers are gold that people do not mine in businesses. They rather go out and chase new ones as opposed to nurturing ones that have already said they love you. Click To Tweet
People don’t realize that the relationship starts after the sale, not before. That’s why you have to build that relationship and rapport, make those people feel special to say, “Thank you,” and ask them their opinion. Do they have any suggestions? Give them a sneak peek into the things that are coming. There are so many easy ways you can love your existing customers. It’s such a missed opportunity, especially for a lot of small business owners.
There are so many ways you can love your existing customers because a lot of business owners, while they are staffed, have their sales team, might have a big company house and a whole sales team. They might not know this. Many people forget about their customers after they sign them up. They don’t continue building that relationship, rapport, or trust, and then getting that client to refer business to them. It’s always less expensive when you can retain a customer versus having them.
It’s like a divorce. It’s cheaper to keep. It’s the same thing. Divorce is expensive. Freedom is not free. Know that you have to think about how you can develop nurture campaigns for your existing customers. What special things can you do for your existing customers? Start by saying, “Thank you for your business.” Try that.
Many people don’t say thank you for your business. Many people don’t even say thank you anymore. They don’t say thank you for anything. It’s insane. We have to go back to the basics. “Thank you.” Melinda, what are some myths about entrepreneurship you have heard?
The grants are going to help you start your business or you are going to be able to get a loan for your startup business. Banks do not want you until you have been in business for two years with positive cashflow. The first thing they are going to give you is a line of credit and they are only going to give you 10% to 50% of your gross revenue. The money to start your business is going to probably come from your right or left pocket. Get your savings together.
Also, your friends or family.
That’s an option but it’s not going to come from an institution.
There are so many individuals starting a business who think that. I always tell them that it’s better to buy an existing business than to start a business in my opinion. They have already got a built-in clientele, people, my 6 Ps, and your 12 Ps hopefully. They have a built-in business versus trying to start from scratch and learn everything.
If you have the resources to buy an existing business, that will shorten your learning curve. Always find out why the owner is selling the business because you don’t want to buy somebody else’s problem but more people should buy existing businesses. There are plenty of Baby Boomer folks out here selling. Look around. Think about what it is you want to do. Make sure you get some industry experience. Join the industry association. Go and learn so that you don’t end up like a fish out of water in a business you know nothing about.
That’s why it’s so imperative to go to an M&A expert to help you find the right business for you and then make sure it crosses the Ts and dots the I’s because training is always built-in to the sales price of the business. You want to make sure that you are trained by the owner or management team. It’s always better to align yourself with an expert. Melinda is an expert in fixing businesses. You want to make sure that you find that expert and help you buy the business that you train.
Michelle is your girl for that. If you need help with that, better call my friend Michelle.
If you have businesses to sell, I’m your girl. If you have a business to buy, I’m your girl. If you need to fix it, go to Melinda.
If you want to fix it so you can sell it, call me. When you are ready, call Michelle. You should be calling me 5 to 7 years before you think you want to sell too so we can get it ready.
Ed says, “I started my business. What marketing tactics do you suggest for a small budget?”
Without question, your number one sales tactic has got to be your website. It is the welcome mat into your business and your number one sales tool. After that, you have to create social media content to engage people but you have to have email marketing. Social media is great but email is trackable. I want you to think about how you can leverage your website, a great lead magnet on that website to build that email list, and then use that email to build that relationship and trust so you can earn the right to pitch for business. Those are the best three things you can do. I teach all of those things at SmallBizLady University. If you want to know how to get started with selling online, social media selling, or an ultimate guide to email marketing, we teach that over at SmallBizLadyUniversity.com.Your number one sales tactic has got to be your website. It is the welcome mat into your business. Click To Tweet
Email is always better than social media too, not only for tracking but also for getting them into your ecosystem. On social media, people come to me and say, “I have two million followers.” You don’t have anything. Your platform has that. You have to create a drift campaign or something to make them respond to you to get your free eBook, a few chapters, a free consultation, or whatever it might be because you want to capture those leads. You don’t have anything. That’s such a misconception when people are like, “Somebody called me the other day and I got two million followers.” I’m like, “You don’t have anything.”
I want to know their email list and their average open rate on email. That’s what I would want to know after somebody said that to me.
Especially on Facebook because Facebook has shut down a lot of people.
All of them have. Do you all remember when we used to have Google+? I had two million people on Google+ and then Google decided to get rid of it. This is what I’m saying. You can’t fall in love with property you don’t own. You want to make sure that your email list has the ability to print money so you always want to focus on building your email list above and beyond everything else.
Emily says, “What are some essential digital marketing strategies for small businesses?”
We briefly talked about your website. Here’s the deal. If your website sucks, don’t bother doing social media because the whole point of doing social media is to drive traffic back to your website. Once you have a tight website and you have 2 or 3 ways to attract an audience to give you their email address, the next thing you want to do is figure out the 1 or 2 social media sites you should be on. They should be the 1 or 2 social media sites where your niche target customer spends most of their time online.
For example, if you are selling B2B, LinkedIn is the number one platform for anyone selling business-to-business. If you are selling business to consumers, Facebook, Instagram, TikTok, and YouTube, depending on how you are selling, what your product is, and how visual your product is, any of those other platforms might serve you better but nobody needs to be on more than two.
Unless you sell social media services, you do not need to be on more than two social platforms. It’s a waste of time. The other thing you want to do too is check your Google Analytics and see what social media sites are driving traffic to your site. That’s another way to figure out whether or not the social media sites you have been spending time on are worth your time.
That’s a great tip. Check your analytics and see what social media platforms are driving traffic to your website. Hayden says, “Sometimes I struggle with work-life balance. What advice do you have for me?”
I started my business five years before I had my son. My son was a baby as I was growing my business. What I can tell you is work-life balance is a misnomer. Honestly, you need to work on being present more than work-life balance. You don’t want to be that person at the ballpark with the phone to your ear and not paying attention to your kid.You need to work on being present more than work-life balance. Click To Tweet
If you are in a relationship or dating someone, try to set aside one night a week for date night and don’t let anything get in front of that. If you have to work late hours, come home and have dinner with the family, and then go down to your home office and finish the rest of your work. We work so that we can live our best life. You don’t want to miss out on things or have a real successful business and have your kids resent you when they get older. That’s not a good look.
You also want to make sure that you treat your family like they are your number one client. You cannot act like this business is more important than your family. You want to make your boundaries. I work on being present as opposed to work-life balance. I have a deal with my son. Whenever an event or something comes up, I have him rank it. Is it an A event, a B event, or a C event? If it’s an A event, mommy got to be there. If it’s a B event, it is optional. If it’s a C event, get out of my face with a C event.
I try to understand from him what his priority is and the same thing with my partner. He has a busy job where he travels a lot. He works for a university and on the weekends. He and I have our thing like, “Is this an A event for you? Is this something I need to show up at? Is this something I can get a pass for?” I make sure that the things that are most important for them, I’m there but they also know I got to get out here and make this money. I travel all over the world as a SmallBizLady. What I like to tell my son is, “Did you like that Disney cruise we went on? Did you like that vacation in Martha’s Vineyard that we went on?” Those things happen because of the other stuff I’m doing.
My son is almost grown. We don’t have to have those conversations but you want your kids to know what you are doing. If you can, give them a little job in your business so that they can get invested in what you are doing. Honestly, if you are doing well enough, you should be opening up a Roth IRA in your kid’s name and putting $7,500 a year in it so that you can help them build up a little nest egg so by the time they get to college or if they get through college and they want to start a business, they got a little nugget of cash that they can work with. There are all kinds of little tax strategies and things you can do to support your kids while you are building your business but make sure you make time for your family when they say it’s important.
I love the ABC. I was smiling the whole time because I did a video on balance. I stood on one foot to see how long I could balance. That’s pretty much what balance is in life. We are busy entrepreneurs, male or female, and females even have it tougher.
We got three jobs. We are somebody’s wife, somebody’s mom, and then we own a business, or you are a single mom doing it. There is a lot of stuff going on with people who are parents and business owners or maybe you have elderly parents who need your attention. There’s always something pulling with women entrepreneurs especially. You have to be honest with yourself, your kids, and your partner and say, “Do I need to be there?” I even do this with my friends. “You invited me to that. Do you need me to show up or can I get a pass?” If they say, “I need you to show up,” I show up.
My daughter would mark everything as A. It is important to understand all these books you read about balance and life. I hear this a lot from Gen Zs or the new generation, “What do you mean by work-life balance?” “Let me tell you something.” There’s no such thing as balance. If you don’t learn how to balance, my Gen Zs, and I love them to work with me on my team and I love them, you are not going to know how to balance later. There is no such thing as balance. You have to be present. I love the ABC list. Moving on, can you share some strategies for marketing and selling products or services during holiday seasons and special events?
On November 1st, if you don’t have your holiday Black Friday offer out, you are late. I heard an ad on the radio that major retailers are talking about their Black Friday offers. You need to make sure that in the late summer, you are planning what your Black Friday offers and promotions are going to be. You first want to tell your existing customers in email what you have cooking and going on. Are you going to do a special bundle deal? I’m a big fan of if you are an inventory-driven business, put something that’s a hot seller with something that’s a slow seller. Make it a bundle, a basket, or something like that for the holidays so you can move some of that excess product you are dealing with.
You should be selling directly online through social media platforms like Facebook, Instagram, and TikTok. You need to be learning how to do those ads directly on those platforms. Get your salespeople on the phone calling people. Magic happens over the phone. People think, “Let me send these ads.” No. You have to work the phones, call people, and find out if they are interested in what you have to offer. It’s a full-court press. A lot of people make their money in the fourth quarter. If that’s you, you need to be planning in the third quarter to make your money in the fourth quarter or second quarter.
Your graphics, ads, and all that stuff have to be ready 3 or 4 months ahead of time so that you can get the slots you want. Facebook knows holiday time is hot and it costs a lot more to advertise during that time. You want to get your ads in and make sure that you are importing your email list into Facebook so that you can market to your email folks or so you can create a lookalike audience on Facebook so that you can find people like the people who already follow you. There’s a lot of cool stuff you can do on Instagram and Facebook because of Facebook’s platform but it’s expensive. I want you to test 2 to 5 ads and then see which 2 are translating the best and then push more money on those 2 ads. Don’t put all your money on one ad praying it works. Test, please.
Let’s compare Ps. I got the 6 and you got the 12. My 6 Ps are what you must have to exit a business rich and build a sustainable, scalable, and sellable company. Melinda has twelve Ps. She’s an overachiever but I am too. Hers are all about in the weeds sometimes running the business. Mine are like, “You have to have people.” Melinda, that’s one of your Ps.
My third P is People.
People is my first P because, without people, you got nothing. You got a job. What’s your first P?
My first P is Preparation. The reason why my first P is Preparation is because I don’t think people don’t know what’s wrong with their business. They haven’t made a decision that they are ready to fix it yet. Preparation is, “Is your mind right? Are you ready to fix your business?” If you are, I’m here for you. I’m going to tell you how to do it but you have to make a decision. That 800-pound gorilla customer who pays you late and is super demanding needs to be fired as a customer. If you have a pain-in-the-neck employee who antagonizes you and the other people who work for you, you need to get rid of them but the pain of replacing them is what’s keeping you from firing them. You need to go ahead on.
Dr. Ivan Misner, the Founder of BNI, says, “I have never lost sleep over the people I fired. I lost sleep over the people I kept.”
Say it. That’s a fact.
You want to make sure of these things that are out here that you haven’t taken care of, like those taxes you haven’t gotten done in two years. That’s the stuff that you have to fix now and make a decision to be ready to do that.
Melinda is right because I won’t even take you on as a client if you haven’t fixed those things and you don’t have your taxes in order. I remember back in the day when I first started, I took these businesses and they were five years that they didn’t file taxes. Back in the day, I took them. I won’t take them now. To qualify as a client for us, that preparation has got to be done. That’s number two.
My second P is Purpose. Sometimes, you have to remember why you started your business and then you have to get clear about why you should still be running it. Businesses run their course. Sometimes if you are tired or you have lost your passion, you have to reconnect. I use purpose instead of passion because I believe your mission, vision, and passion give your purpose.
You call it purpose. I call it why.
All of it is the same. It’s like, “What’s your mission? What’s your vision? Who are you passionate about serving?” If you have those three, then you have got your purpose and that’s what it is. My next P is People, which we have already discussed.
It is my first P because I can’t sell your business unless the business can operate without you or at least 60% or 70% without you.
My next P is Profit. We have already talked about profit too. It’s not about what you make but what you keep. You want to be clear about your profit margins in every sale. The next P for me is Process. You have to document how your business runs. The other reason why this is important is because a lot of entrepreneurs confuse what I call queen bee work for worker bee work.
If your time is billable at $250 or $500 an hour, why would you ever input your data into QuickBooks? Why would you do that? That’s not a task you should be doing. You as an entrepreneur need to always work on your most high-valued activities. Sales, following up with sales, and talking to more people about sales is your number one job as an entrepreneur I believe.
I call that the ABC list. A is you focus on what you do better than anybody else and you can’t replace yourself. B is what you can do like QuickBooks but you should be delegating it. C is what you 1,000% should not do. I want to go back to profits. The other thing about profits is you might think, “I’m profitable.” Maybe you are but when I go to sell your business on paper, you are not because you are running through personal expenses and non-reoccurring. We need to get clear on what those add-backs are so that we can do what we call adjusted EBITDA, Earnings Before Interest Taxes, Depreciation, and Amortization. The process is I agree with 1,000% because the people don’t run your company, the processes should.
How are you going to onboard your employees if you don’t have processes documented? That’s the other issue.
I put profits last because I always say profits are not the problem. It’s a symptom of not having the right people in place, not having the right products, and not having your processes in order.
After you look at that, it’s time to look at your productivity. What productivity tools should you be using to move faster? You can automate a lot of stuff in marketing and accounting. Your invoices and follow-ups to your invoices, that stuff can be automated. Look at your CRM tool. Is it tied to the email marketing tool you are using? A lot of us are paying for software we don’t even use or that we don’t know how to use.
A lot of people are guilty of that.
We need to stop all that. That’s foolishness. You are giving money to people just because. What’s awesome is we have all these AI tools out there that can make us move even faster. My favorite new app is TheresAnAIForThat.com. They catalog every AI tool on the internet every week and it is amazing. They have over 400 to 1,500 tools on there.
Before it is There Is An App For This and now, There Is An AI For That. Productivity, what number was that?
Productivity is number six. Number seven is Performance. Performance is about measurement in a business. What I mean by that is, “Do you know what your open rate is on email? Do you know what your sales cycle is? Do you know what your cost per lead is? What’s your cost per sale?” There are also a lot of ratios around marketing that you need to know as well.
It’s important for you to sit down with your accountant and make them show you how they calculate it so you can calculate it so that you can understand. If you are buying ads on Facebook, they are good about telling you how much you are paying per lead. Between $4 and $7 a lead is pretty normal depending on who you are trying to attract but you have to understand what your cost per lead is and the other things you are doing.
How much money are you spending on developing social media content and pushing social media out there? What is the return on that? If you are doing marketing that you don’t measure, you might as well drive down the street and throw money out the window because that’s tantamount to what you are doing. You want to make sure that you are measuring how your business operates so that you have a bar to get higher and better.
There are lots of other ratios that you can look at productivity per employee. Especially, if you have a billable hour type of company like if you are an accountant, lawyer, architect, or people that bill by the hour, you want to be able to know which architects are killing it and which architects aren’t billing by the hour. You want to be able to track all this stuff and pay attention to it. All of those things are things that you need to be looking at and measuring in a business. The next P is Product.
I’m going to ask you for time purposes because we want to make sure everybody can find you and look you up. Let’s name them quickly. What’s number seven?
Number seven is Product.
Product is my number two.
Presence is my number eight. Prospects is my number nine.
I call those Patrons, which is my number five.
Planning is my number 11 and then Perseverance is my number 12.
We got the twelve Ps there. Let’s take a few seconds and talk about what your product is versus what my product is because we have been doing that with people and patrons. Tell me about your product.
My product is about looking at what you sell and thinking about whether it is going to be relevant 3 to 5 years from now. It’s not about what you sell your client, it’s about your client’s future needs. You need to be looking at your industry trends and talking to your customers. When I was in graduate school, the one thing I remember my strategy professor saying is that strategy in a business is about creating something about your business that is not easily duplicatable by your competitors.Strategy in a business is about creating something about your business that is not easily duplicatable by your competitors. Click To Tweet
It is important that when you start thinking about what you sell, how easy is it for somebody else to put a shingle out here and sell it two minutes later? If it’s easy, then it’s time to regroup and think about what’s next for you. It’s too easy to buy purchases from Temu and sell them on Amazon. You need to make sure that you have a unique value proposition and some secret sauce going on in your business that makes your business special and uniquely your business.
My product is you must have more than 1 congruent and 1 revenue stream. That’s the number one reason why restaurants went out of business during COVID. They have one way that they get paid. Somebody comes in and orders or they take food out. They don’t have private labels or food shows. The list can go on and on. Mine is, “What is your product? Is it relevant? What are your congruent revenue streams?”
We have a lot of companies who have plumbing, heating, and contracting, and who are looking for electrical to add. It needs to be congruent. You should have 4 to 7 ways that you get paid. You have one way you are going to get paid. You can find yourself out of business. I agree with Melinda. It’s got to be relevant. You have to look into the future. This is the number one reason why it used to be startups that fail. Startups are not filling at the same rate they used to. It used to be that 90% to 95% of startups would go out of business. Guess what it is now? Only 30% of startups are going out of business.
Seventy percent of existing businesses are dropping like flies because of the lack of aim. AIM is Always Innovate and Market. Look at McDonald’s or all these different fast-food chains. They are always innovating and adding different things to the menu. You shouldn’t just learn from your industry. Go out to other industries and see what they are doing. You must innovate and market. That’s the biggest thing. That’s why I say you must have 4 to 7 ways you get paid. Tell us about the recession. What should we be worried about? What should we not be worried about? Small businesses and recession, let’s see if you and I are the same on this.
There are always people who win in recessions and people who lose in recessions. There were people who won in the pandemic and there were people who lost. People who were ready, knew how to sell online, and had an email list were the people who still made money during the pandemic. Going into the recession, the same stuff is true. You got to know how to sell and market online, sell on the platforms, and how to use email.
There are nine sales funnels every small business owner needs. You need to make sure that you have that in place for your business like a shopping cart abandonment funnel or a transaction thank you funnel. A nurture funnel is when someone first downloads your lead magnet. All of these things are things that you need to have in place so that these things can work for you. They set it and forget it once you put them together.
You have got to make sure that you have all those things in place and keep in touch with your existing customers. In any recession, it’s your existing customers that could save you. You have to get on the phone, talk to them, and figure out what they need, what their budget cycles are, and what’s coming up so that you can keep your name and your business name top of mind. You have to get on the phone and your salespeople on the phone.
Everybody has got to be working on this because budgets are getting tight. People are getting laid off. If they raise interest rates, other crazy stuff is going to start happening. You want to make sure that you protect yourself by making sure that you are not leaving any money anywhere. You want to cover your ground on email and social. You want to make sure that you are touching base with your customers. Offer them special deals and keep in touch with them so that you can have an opportunity to bid on business going into 2024.
I also believe that it’s important to pivot. A lot of businesses pivoted during COVID. We had a restaurant here, Commander’s Palace, in one of the world-renowned restaurants. Do you know what they did? They started this huge global winery, a wine tasting, pairing it with cheese and other things. People would buy packages from them. They would deliver packages to the doorstep if they were out of the country. They would go to their favorite wine store or cheese store. You had to pay money to be part of the group because it was an experience that I created. You have to pivot. The other thing is you don’t cut marketing during the recession.
No. Please don’t do that.
I told my clients, “Let’s cut this and this.” In marketing, you look at what’s working and what’s not. What’s not, cut it. What’s working, double or triple down on that marketing. That’s very important. Let’s talk about marketing. One of the biggest things is marketing has become so complex. What should business owners prioritize with their marketing? You talked a lot about marketing but how do they prioritize that, Melinda?
You have to make sure that you are working on marketing 1 full day a week or 2 hours a day every day. A lot of times, project-based businesses get a new project and work on that project. Two weeks before that project was about to end, they were like, “We don’t have another customer. Let’s start marketing again.” No. Marketing is something you need to do every day, 2 hours a day, or you need to take 1 day a week and that’s all you do.
You expect what you expect. You hire it out. That’s not your expertise. It’s not my expertise. I have a marketing partner, or you get with Melinda and you hire her. Let’s face it. Entrepreneurs are not always marketing geniuses. You need to focus on your strengths and hire out your weaknesses.
You could call 5 people a day, send 10 emails a day, and 10 new connections on LinkedIn a day. That’s marketing. It doesn’t have to be this big ad campaign. No. People do business with people. It’s a numbers game. If 3 out of 10 sales calls close, what does that mean? That means you have to have 30 sales calls a week. If this is a numbers thing, you have to get the calls, sales, and appointments.
If you want ad spending, social media expertise, and all that stuff, and that’s not your area of expertise or copywriting, you hire somebody with expertise. Melinda is right. You can make those cold calls and send out LinkedIn messages. Anybody can do that.
Don’t hire somebody that you don’t give goals to. Don’t hire people that you don’t hold accountable to goals. They’ll drive down the street and throw money out the window because that’s what you are doing when you do marketing.
You have to monitor that. Expect what you expect. That’s what I always say. Start with your top ten list. Who are the top ten people you want to do business with? Grow that. Who’s the top 15, 20, or 50? We are almost out of time here and we got to save the best for last. How can all readers get in touch with you, work with you, and maybe take some of your classes?
I am easy to find. My website is SmallBizLadyUniversity.com. All over social media, I am @SmallBizLady. I would love for you all to connect with me on LinkedIn. I am Melinda Emerson on LinkedIn. If there’s anything I can do to support you with your marketing, we do coaching. We have online programs. We can support you in your business. Come on. Let the SmallBizLady fix your business.
Thank you, Melinda. You have been a great guest. I knew we were going to have great synergy because of tough-talking. We share the same business value. Great golden nuggets that you dropped. I can’t wait to be on your podcast. Thank you so much for coming on the show. My audience, all of you, are probably taking notes like crazy or you are driving. You might read this episode again.
Share it with your friends, fellow entrepreneurs, or as many people as you know so that they can gain great insight and how-tos from Melinda. Make sure you subscribe to the show. I will see you next time for another great episode. Thank you again, Melinda. Thank you to my readers and my followers.
Thank you for having me.
You are welcome.
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