Breaking Through Bottlenecks in Your Business
Taking a business from 1M to 10M is filled with common obstacles. All of these obstacles can be avoided, but only if you have the formula. Regardless of market dynamics if you’re looking to break through and make this year your best, you’ll never find more sound advice than what is being shared by Josh Long.
Josh is the author of Bottleneck Breakthrough – The 6 Levers of Business Growth, and in this episode, he’s sharing his strategy for helping businesses experience wild success. In this episode Kyle and Josh discuss:
- The growth levers
- How to apply the levers
- Where to turn when you’re in a rut
- What are the signs you’re missing an opportunity?
- Why business owners don’t need to feel tethered to their business
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TRANSCRIPT
Intro:
Welcome to the summit. A podcast focused on bringing you the knowledge and insights for industry leaders. I’m your host Kyle Hamer, and I’m on a mission to help you exceed your potential. As a sales guy, turned marketer, I am passionate about building sustainable businesses. And if there’s one thing I’ve learned in my 20 year career, that you won’t find an overnight growth scheme, a shortcut to success or way to hack yourself to the top. Nope. Success is the by-product of hard work, great relationships and deep understanding done over and over. We’re here to help you unlock that success with some secrets from other people, one conversation at a time.
Kyle Hamer:
Hey, welcome back to The Summit. I’m your host Kyle Hamer today. I’m here with Josh long. Josh. Welcome to the show.
Josh Long:
Thanks Kyle. Glad to be here.
Kyle Hamer:
We’re super excited to have you for those of you who don’t know Josh, you probably should. Josh is a author, a podcaster, and a consultant who focuses on helping B2B companies in their one to $10 million range breakthrough their current bottlenecks inside their business. He’s worked as an entrepreneur marketing director and consultant for groups like Chad Holmes , people like Tony Robbins and his developed his own method of helping entrepreneurs, small business owners, breakthrough break through their bottlenecks in their life. He’s a dad. He’s an average adventurer. I mean the guy’s kind of been all over. Is there something else we should know about you, Josh, that would make this conversation more interesting?
Josh Long:
I can say the alphabet backwards, real fast.
Kyle Hamer:
That’s at least a party trick. Well, we’re really excited to have you on the show. Thanks for being here. To date today’s topic we’re going to talk through is really kind of this the six power levers of exponential growth or, or helping a business breakthrough. And it’s your, it’s your own method? It’s your own strategy and things that you’ve come up with before we kind of get into the history. Can you just at a top level, what are these big things, these big levers that people need to hit on?
Josh Long:
Yeah. So I just go around the wheel and we start with strategy that if your business doesn’t have the right business model or the market position strategy, or the big idea there that you got to work on, that if you can’t, she can’t cut through the noise and he can’t get people to pull her wallets out and give you money. Then you got a problem. So it starts with strategy, strategy leads to marketing without marketing, you have no business, you have no way of getting clients. So it’s all about the communications and the ways that you get in front of qualified prospects, ideal prospects that are fit for your product or service. And then we move around the horn to management, because you gotta organize, you gotta set standards, set deadlines communicate what, what you expect of your staff and then from management, their systems those are the things that everybody has to follow. And these are the two areas that most small business owners, loath management and systems, because they’re visionary, harebrained idea creators. And one , I want to go tackle the world and solve problems, but don’t want to get stuck in the weeds. So we go through systems and how to delegate, how to automate, how to get the , the things documented so that it’s not stuck in your head as the owner all the time. And then we finish up with a vision and mindset. And so vision is really important because like Alison Wonderland, if you don’t know where you’re going, it doesn’t really matter which way you go next. So if you, to me, there’s only three outcomes in a business. You either grow it to sell it. You grow it to turn it into a cash cow or you grow it to pass onto your kids or your employees. And so without clarity around those, each of those have different outcomes. All of the plans that we make don’t really matter if we don’t know where you want to go and it’s okay to change your mind. And a lot of business owners do change their mind over time. And then finally we finished with mindset, which I think is the most important lever, but I put it last because most I’d say over half of my clients over the years, haven’t wanted to deal with this. This is around not positive thinking. This is around getting into the weeds of why you hesitate to confront an employee, or why you always say yes to that client or vendor that is so toxic for you or why you go to so many conferences, but don’t implement any of it. So that’s all mindset. And I think it’s the most important bottleneck or lever lever to pull that is worth more than all the other five levers combined. But it’s can be hard. It can be painful to go through, to deal with the beliefs or emotional traumas you’ve had growing up that got you to where you are, where you’re at.
Kyle Hamer:
Well , I mean, it’s really interesting. You have these six levers in your , your life experience and the things that you’ve done in the past have kind of brought you to this, you know, to this realization, give a little context of how you came up with the , the, you know, the power five and then added your own, you know, swizzle on the sixth.
Josh Long:
Yeah, so I, I was fresh out of grad school. I had a mortgage brokerage like half a California. And before the recession and I had gotten an MBA in entrepreneurship and learned how to network learned how to do financial projections, but didn’t learn much more than that on , on how to run a business. And so I was overwhelmed and I just, it was about 2006. I had piles and piles of paperwork on my desk that I wasn’t getting to . And a million, got a minute meetings a day with my staff and in just a kind of a flash of clarity, it was like, you know, we’ve got to get this underwriting thing sorted. If we can just get loans, underwritten and approved quickly, all of my headaches go away. And at that time it took us about 30 days to get a loan approved. And so we worked on it, we worked on it, worked on it. And in short order, I don’t know , a couple of months we got it down to loan approvals were in three days. And like everything got easier and we could get more clients through and there was less just stress. There’s less headache. And I realized, gosh, if I work on the next bottleneck that, and I drew it out, I drew a pipeline like from left to right. And there’s this constricting point. That’s what a bottleneck is, is just a constricting point in flow. And I saw, gosh, if we get more, if we can get loans approved faster, we can get more loans through in a month. So now more money can go through. And I’m like, okay, so behind that or in front of it, where is the next constraint? And for me at the time, the constraint was lead flow. So I didn’t have enough lead sources coming in. So we sat around and twiddle their thumbs a lot. Once we got to three-day approvals because well, it wasn’t much else to do so I needed to work on marketing to get more clients. And so that kind of set the anchor of gosh, if I just work on the next bottleneck growth will compound. And of course I didn’t get a chance to perfect that with that mortgage brokerage, because August, 2007, Andy Mac bank goes under and I can’t get a loan approved. And we filed bankruptcy in 2008, met with a bankruptcy attorney in February a week after my firstborn was born. So I was 29 and have a newborn and sign a bankruptcy papers. So I I didn’t get a chance to work out my theory there, but I held onto it. And over the years, then about 2012 started having clients of my own. That would let me just do whatever. And I didn’t have it formalized. I didn’t have a methodology outlined. I just would go in and ask questions and eventually figure out what their ultimate bottleneck was. And so I had a handful of clients that just said, we need help. What do we do? And I got to ask lots of questions and find their biggest bottlenecks and then growth happened. And I took an engineering firm from 2.2 million in 2012 to 4.7 million in 2014. And they’re now over 10 million. I think they crossed 10 million in 2018. And so like, just examples like that from just figuring out the bottleneck unlock significant growth.
Speaker 4:
Why do think that so owners or business
Kyle Hamer:
Owners get into a spot where they struggle with their with their bottlenecks, right? It’s it seems to me like you got to a spot with the mortgage brokerage where you’re starting to get a little bit of your own dog food and you’re understanding what you need to do to improve, but that took some, some moments of clarity and some moments for you. Where was it? Was it the goal? Was that the pain? Why were you stuck before and what changed to move you forward?
Josh Long:
Yeah, and I hate to make it seem mysterious or, or difficult to replicate, but I’ve realized since then, and being a consultant for more than a decade now that it’s a unique ability. I, I just see the world and in a way that many others don’t. And so I still have suffered from solving my own bottlenecks at times. I think we all suffer from seeing our own issues and I think that’s part of how we’re created to be in relationship. We’re not meant to be an Island. So I think, I think that’s the beauty of it. I think for most business owners, the real issue is like you said, they don’t have space. They don’t have time there wake up, strap on their fire extinguishers and then walk around and putting out fires all day. And they’re professional firefighters. And the irony is most of the fires are ones they’ve created mostly inadvertently, but they, they just don’t realize that they’re just overwhelmed and that they, if they stop and step back for a couple of days, they can get clarity. But the other piece is a lot of them just don’t have the reps. They don’t have the experience to see the patterns. So when I worked for Chad Holmes , helping start his consulting firm in 2008 on the heels of my bankruptcy, I got to talk to lots and lots of business owners. And I started seeing patterns and I started picking up on revenue plateaus. And again, I had other guys making the same calls and making the same conversations that weren’t seeing these patterns. That’s just a gift I have. I can connect the dots and see patterns and disparate information. So I saw these revenue plateaus and these patterns, and then started saying, Hmm, wonder what they have in common. And then lo and behold, there’s common bottlenecks at each revenue plateau.
Kyle Hamer:
So what’s that first plateau look like. I mean, it , it , you start off with strategy and you say, well, you don’t have a product market fit, or you don’t have a go to market strategy . What are the common bottlenecks that you see? And when does that happen in revenue when it comes to the first level around growth?
Josh Long:
Yeah. And I know this is hard to believe for a lot of listeners, but it really kicks in at a million dollars in the unfortunate part is 93% of companies never reach a million dollars. So if you’re under a million dollars, give you a little nugget right now, the key is to start developing your employee assignments because when you’re under a million dollars, it’s really easy for everybody to just kind of be all hands on deck. Everybody just rolls up their sleeves and picks up the Slack, but then things start falling through the cracks and you end up with finger pointing of, Oh, I thought she was going to do it. I thought he was going to do it. Oh, I assumed you had that because you did it last time. So that’s really for smaller businesses, under a million dollars defining roles and giving assignments and responsibilities that for each critical outcome in a company , there’s gotta be one person in charge of it. But the biggest bottleneck is it a million dollars and the biggest behavior or common feature of that bottleneck is that the owner starts throttling rainmaking. They start slowing down how much business they can close because they don’t quite have the systems and infrastructure for fulfillment. And so they know that if they close more business, it just means they’re going to have more headaches on the backside to solve. And so a hundred percent of the time they need an operations manager, a little Napoleon, that’s going to be back at the shop, cracking the whip and making sure everything’s go, went out on time and everybody’s taken care of. And so it’s really magical once you find that, that little Napoleon that you can trust as an owner, because they preempt things that you just don’t want to do. And they are so detail oriented and thorough that you realize, gosh, I’ve been putting up with this crap for so long, and I’ve been putting up with this stuff, falling through the cracks for so long that you feel rejuvenated. And now you feel excited to go back and close more business. And now you can, and you grow to 2 million rather quickly, once you get that little Napoleon. And so a great example is a client of mine. She’s got a great manufacturing company. They make a metal clear coat , a product for all sorts of applications. It’s on the Sears tower, eliminant panel walls. It’s on the copper dome and Arizona or Wisconsin at their state capitals . And she’s been in business for 25 years now. And we got her. She was doing about 900 grand when we started working together back in 2015. And we finally developed an operations manager about two years ago for her. And in 2019, they did about 2.2 million. And she took 12 weeks of international vacation that year. And nothing went wrong while she was gone. So she could never do that previously because fires would happen. Something would go haywire and she’d get called while she’s on vacation and spend a half a day putting out that fire.
Speaker 5:
It’s amazing to
Kyle Hamer:
Me, the things that as business owners will put up with, right? It , the , the , the things that we feel like we need to put on our plate are there commonalities that you see that are, are issues, and you talked about capacity and creating a little bit of a Napoleon, but from a strategic standpoint, are there, are there items that we just won’t let go of on that first lever?
Josh Long:
It’s more around management that, and I see this for companies that really get stuck in the $5 million range. It’s not that they don’t let go of it. It’s they don’t know how to develop other managers, other decision-makers . And so that’s probably the biggest Achilles heel for small business owners is because like you said, they put up with a lot and they are really resilient. I mean, entrepreneurs, small business owners are tough. Like they have to be there. They’re mentally tough. Yeah. They are emotionally tough. They , they can take on risk. So they’re really survivors, right? They, they really just have a whole lot of fortitude that mere mortals don’t have, but that becomes an Achilles heel, especially as they get into the three to five, $6 million range, because they’re used to managing by whack-a-mole. And so they have these moles pop up every day and they just whack them. But by the time they get to three or 4 million, those moles are a lot bigger and you can’t just whack them out of the way. So for example, it could be that I’ll just use my client Teresa as an example, cause it’s an easy one, but they have some aerosol spray cans for their metal clear-coat well, their vendor decided to change the fad , the neoprene washer that’s inside those compressed cans, those high pressure cans, and they cans would start leaking and spraying all over stuff. And so one, one user had it had the seal around the aerosol nozzle crack and it sprayed all over their brand new kitchen cabinets and it didn’t destroy them , but it was a giant headache. And so Theresa , there’s no way she could give anybody else that task to go figure out what went wrong. And it took months to figure out that it was the manufacturer of the bottle or change the neoprene washer and the quality wasn’t wasn’t sufficient. And so like if she was at five or 10 million, she would have somebody in charge of manufacturing and fulfillment that could get to the bottom of that. But for her, because she’s at 2 million, she doesn’t have that and it’s fine. She’s turning her business into a cash cow and staying in the 2 million to two and a half million dollar range is and sustainable. But that mole that came at her that time was massive. And you can’t just knock it out and say, Oh, go find a new vendor or go find a new whatever. Because finding aerosol manufacturers in the U S is really, really hard because of EPA guidelines and compliance and the type of products she’s got is unique. And so it w it, it, she was really stuck with that vendor. And thankfully that vendor wasn’t belligerent, but it took a long time to get to the bottom of it and realize what went wrong in the manufacturing process. So like, those issues are, are that the owner doesn’t learn how to develop managers over key areas. And doesn’t let that go because it’s just easier for the owner to keep doing it. And so of course, then the owner becomes the ultimate bottleneck, and that’s why I’ve never met a $5 million business owner. That’s happy.
Kyle Hamer:
You’ve never met a $5 million business owner. That’s happy, even if it’s a cash cow,
Josh Long:
They can’t be a cash cow at 5 million. So you be a cash cow, two to 3 million, or you’ve got to grow to 10 million because of the economies of scale, the infrastructure having management. And so at 5 million, the owner is truly the bottleneck because they don’t have managers to help solve the problems because if they did, they’d be going to 10 million. And if they, and so when they’re there, every problem every day is as big as that washer going bad on the aerosol cans.
Kyle Hamer:
So your second lever, it sounds like your second lever in, in, when we think about marketing, a lot of business owners and people think, Oh, I just have a marketing problem. That’s why I can’t grow. I can’t get to the next level because I’m not generating enough leads, or I’m not telling my story the right way. When you look at growth lever, number two, which is marketing. When is that really a bottleneck or a problem for a business? Is it, is it zero to one? Or is it one to 10?
Josh Long:
It’s just to get to a million dollars. Once you’re at a million dollars, you don’t have a marketing problem. So it’s, it’s getting that alignment of strategy and marketing sorted out, out of the gate in the zero to half a million dollar range. Then once you get that sorted marketing really is not a problem to grow to 10 million. So it, and that’s the problem, like you said, every business owner thinks they have a marketing problem because marketing is so critical out of the gate without good marketing. You’re not getting off the ground without any way to identify ideal prospects and tell them a compelling story that gets them to say, Oh, tell me more or take my money. Then you’re, you’re not going anywhere. So they, the small business owners get conditioned that everything’s a marketing problem because it’s been a marketing problem since they were born, since they were founded. And because of business, doesn’t grow like a kid, like a kid, I’ve got three kids, they’re nine and 11 and 13, and a kid can start walking. A kid can start talking. A kid can doesn’t have to use diapers. Like you see these clear progressions because it’s this little tiny package of a human and you’re interacting with them daily. And they are transforming right in front of your eyes. Well, business doesn’t change like that. You just get a few more people. The bank account gets another zero on it, but you’re not really sure what’s changed. And you’re still putting out the fires of the day. You’re still showing up and doing your routine, but the businesses drastically changed. And so I think that’s where getting into the seven figure desert, I call it like, once you get past 2 million, you’re , you’re in no man’s land until you get to 10 million and business owners, nobody talks about this. Nobody trains on it. There’s no literature anywhere that I’ve ever found that covers this stuff. So as a business owner, you just don’t know what you don’t know. And so you think marketing because it’s, it’s, it’s like you’re crack cocaine out of the gate. It gives you the fix, but you don’t realize you gotta, you gotta move on beyond that. Otherwise you’re just spinning your wheels on more promotions, more marketing gimmicks that just create bigger downstream effect, downstream problems. So what do you mean by no man’s land or the seven figure desert? Like, what is , what is that? Yeah, it’s it’s, it’s just, when you get past 2 million and you’ve got bigger clients and bigger headaches, and there’s no companies out there created to service, you there’s agencies, that’ll say, Oh yeah, we’ll handle your marketing for you, but , but you don’t have a marketing problem at 3 million or 4 million. And they’ll say or you’ll go to a training like with the rocket fuel guys EOS they’re the modern version E-Myth group. And they’ll say, Oh, you need to implement or an integrator. And that’s just your operations manager. And then they say you need to document things, but who’s going to document it. And so it’s just, there’s very little support for companies between two and 10 million. And the owners don’t realize that they need to become an organizational leader. They need to communicate about four times more often than they think with their staff and their key, key employees that they need to transition to closing bigger deals because it’s easier to manage them and they pay better and they’re less headache. And so it it’s like this really giant transition point from two to 10 million that there’s just nobody out there helping these companies owners. So it really is a no man’s land in my opinion. Unless of course they come across me cause I’m seriously like the only person talking about this. So it’s I really think the seven figure desert really epitomizes it. Well, you’re muted.
Kyle Hamer:
Talk about the seven figure desert and in the way that it impacts, but really as you’re , as you’re bridging from marketing into the next piece it’s management, so management is, is more than just communicating or making sure stuff’s getting delivered. Talk about what the , the third growth lever here is as it relates to management.
Josh Long:
Yeah. I mean, it’s really a four letter word for small business owners. I mean, they just, they , I hear it all the time. Cause they, they say, I don’t want to micromanage people and I’m like, well, you’re not any managing people right now. So whether it’s micro or macro or perfect or whatever, like you have no concept of what management is. You’re not, and you’re not managing your avoiding. Right? Yeah. I call it abdicating. And that’s where they say they take the responsibility, they throw it over the fence and they say, go get it done. And they give them all the responsibility, but none of the authority and that’s purgatory for any employee. When, for example, you’ve got to do a marketing campaign and you’ve got paid traffic coming from Google and you’ve got landing pages, but the owner’s nephew is managing the website and he’s throwing a temper tantrum and won’t update the landing page. And so you’ve got this crappy landing page, but you’ve got good ads. And so because you can’t fire that nephew, you are, have no authority to get done what you need to get done. And so then that campaign doesn’t work, but you get blamed for the poor outcome because you’ve got all the responsibility and none of the authority. So that’s typical management by abdication that most business owners go through. And so the few quick rubrics that I go through is your key, your staff don’t do things for only two reasons. They don’t know how, or they don’t want to. And so if somebody is not getting something done, it’s up to you as the owner to confront why they’re not getting it done, are they, do they not know how, or they didn’t do they not want to do it? And so if they don’t know how that’s a training thing, you’ve got to provide training. So that typical business, small business owner says, well, it’s so common sense how to do this. It’s so obvious. It’s like, well, yeah. To you because you’re the owner and it is your baby and you’ve created everything. So I call that common sense, Citus . I mean, it’s a disease we all suffer from. And then the it’s or they show them once and they expect them to memorize it. And it’s like, well, I , I view, I say, if you view all of your staff like eight year olds, and it’s not that they’re incapable or whatever, but if you look at an eight year old child, they’re intelligent, they can communicate. They’re eager, but they need a lot of repetition and they’re going to make mistakes. And you’re never mad at them making mistakes because they’re just learning. Well, it’s no different for most employees there . They can communicate, they’re intelligent, they’re eager and they’re going to make mistakes and they’re not trying to make mistakes. They’re just learning. And so a number of my clients when they get that eight year old shift, when they start looking at employees like eight year olds, all their frustrations go away because they get rid of their common sense, Citus . They get rid of their frustration that this is so obvious and stuff like that. So it’s really simple stuff like it . I mean, it sounds to any manager, any management think thought leader out there, like this is way down the totem pole on management theory or philosophy of what’s getting printed in Harvard business review and stuff like that. But I mean, it’s these kinds of little things that really help small business owners get unlocked and get more, more, more potential out of their employees.
Kyle Hamer:
It was speaking with a small contractor probably eight weeks ago. And they were incredibly frustrated with the productivity of their crews. And I said, well, tell me about your, tell me about your process. Tell me about what’s happening. And they’re like, well, this is just simple. They just do this, this, this, this, and this and this. I’m like, great. So where’s it written down? And they’re like, well, it’s not, it’s just all up in my head. And I’m like, okay. So how many of the people that are on your crews have the same 35 years worth of experience as you? And they kind of looked at me like I was speaking in German or Dutch, or like I was from, you know, from Mars, like, what do you mean? I’m like, well, you’re expecting them to think and see a project the way you are for a crew of eight. They’ve never been on this team before and they’re supposed to function together. How does that, how does that mean if you’re frustrated, totally understand it. But is this a hiring problem is as a communication problem in this particular singular their business owner, just again, kind of looked at me and said, well, let’s write down the process. And so we started writing things down and what we found just through that little exercise was even in their own mind, they were adding additional things in, into the process because of the way their mind worked, that, that it wasn’t linear. So if you were learning it for the first time, like were an eight year old, you would never be able to do that because it was too complex. So he was, he was like trying to assemble a computer versus putting together a a rubber band windmill. Yeah ,
Josh Long:
Yeah. Right. Yeah. And I saw this, I added civil engineer that civil engineering for my help scale, their , one of their founders that had been in business for 35 years. Brilliant guy. Great. He couldn’t even outline his process for managing projects because it was so second nature. And so we we’d start outlining that. We’d give it to a senior engineer, senior engineer , it hit a roadblock come back and the owner would say, Oh yeah, I do this. And I was like, well, that wasn’t in the list. So it just keeps getting added to over time until they had a comprehensive onboarding process,
Kyle Hamer:
You know? And , and you would think, you would think that it would be obvious, but I think sometimes, like you said, it’s so second nature that we forget that other people don’t think, well ,
Josh Long:
The Michael Jordan effect, I think it’s the Michael Jordan effect that the he’s the greatest basketball player of all time, but he’s never been able to teach anybody else out. It would be great. He gets an eight, but he’s not a great teacher. And that’s why you get guys like Steve Kerr, who wasn’t the greatest basketball player of all time, but is a great coach and can get more potential out of his players than Jordan ever could. They were on the same team. They had the same experiences, very similar experiences. And so I think that’s, that’s the part that I learned that early on was I had some mentors that were really great in their field, but couldn’t quite translate their greatness to helping me connect dots. And there were all these holes that like, I see what you’re saying, and I know where you’re at and I want to go that direction, but I can’t get there with the roadmap you gave me.
Kyle Hamer:
Well, and by the way, I think that’s a fantastic analogy because I think also in your, in your management lever here, oftentimes people will promote the top performer. Oh, you’re elite at what you do. Let’s put you in a management position and that’s not necessarily good management strategy.
Josh Long:
It’s called the Peter principle. Yeah. And so I don’t know who, who Peter is, but it you promote your great, you get promoted to your level of incompetence. So the easiest example is you get a superstar salesperson they’re out closing. Everybody tend to one, you promote them to sales manager. They have the Michael Jordan effect. They get frustrated, everybody gets frustrated and instead of demoting them, you fire them. And so essentially what you just did was you just fired your greatest salesperson for being great. And so, yeah, it’s, it’s very common pattern
Kyle Hamer:
That leads to that leads to the, you know , w we’ve touched on a little bit in the management piece, but that leads to the fourth lever, which is, is systems, at least in your, you know, your chronological order, talk about the common challenges or common issues that people have when it relates to systems and why this is such a big lever that gets missed.
Josh Long:
Yeah. So they try to jump to automation right out of the gate. And so it’s one of those funny things that if you don’t know how it’s done, and you don’t know if it works, why automate it? In the, so when I came up with bottleneck breakthrough concept back in 2006, for myself, I knew that I hadn’t invented something. I knew that I had just stumbled onto something that it wasn’t an original idea. And so in 2009, while I was teaching at Fresno state, one of my students gave me a book called the goal by Eli gold rat. And it , he , he like gold rat is the father of a theory of constraints. And it’s used a lot in the manufacturing world. And he wrote this in the eighties to talk about his experience in the seventies and eighties of helping make manufacturing more efficient. And theory of constraints is the same as about like breakthrough method is you’ve got to , you’ve got to supply a manic manufacturing line and there’s one machine that can’t hang. And so how do you build around that machine to be more efficient so you can get lower costs and throughput. And so when I was going through that, I realized like, okay, these systems that, that people want to fix or need to work on when they, they have so many ideas of, Oh, we need to automate this. We need to do that. If you automate something or improve something that doesn’t really move the needle, that isn’t focused on the bottleneck and the theory of constraints world, it’s called a false efficiency. And so there’s lots and lots of business owners going around creating lots and lots of false efficiencies that they’re improving things, but they’re improving things that don’t change. The bottom line, don’t change revenue, don’t lower, their stress don’t improve client customer or employee satisfaction. And so the that’s the biggest problem with systems is knowing what system to work on and what stage it needs to be worked on. So automation is the kind of the , the peak level of, of systems development. But a lot of times you can have things done manually and things work great, and you can get a lot of growth through manual systems, but you need to document it. So I say, in my book that you delegate first, then you document, then you maybe automate. Now that might seem backwards if you’re paying attention to the nomenclature, but you delegate because you, as the business owner are not going to document things well, you’re just not wired for it. You’re not structured. Just like I said, the engineering partner who skipped steps and all this stuff there are, I know it’s hard to believe. There are employees that really love documenting things. They really love getting things sorted out and detailed and meticulous. And I know that sounds crazy for business owners that they , that person probably thinks they have brain damage to enjoy it, but you got to delegate it and get people that enjoy the systems, enjoy the process, enjoy the mastery of their craft mastery of their role, and to have them document it. And then if they are the bottleneck, because they just can’t get through it. There’s too many steps. There’s too much duplication. Then try automating it, automate parts of it, automate pieces of it. And does that improve, improve the process? So that’s what I see in the system side of things is they work on the wrong ones. They try to jump to automation out of the gate. And if you automate a flawed system, you just have more flawed results.
Kyle Hamer:
So your point of false efficiencies, right in your, in your, in your book, there was a , there’s a gentleman I worked with about five years ago, four years ago. And we were working together on some projects and I would come in and I would whiteboard stuff out, or we would, we would, we would discuss things and we would leave the room and it was all stored in my head. And he’d come back later and you’d go, Hey, where’s that written down at th w where’d you document that at H can you give this to somebody else? Like, how can you, how can you hand this off? And I think that’s one of the things that either when you’re a survivor or a creator or a business owner, somebody who can look at things and can solution immediately when you own it, when you own the outcome, right? It’s very easy for you to do it. But to, to think about how to document it for somebody else, how to recreate that process is a big, it’s a big challenge. It really is. And I see a lot of folks that go immediately to these coming back and picking on marketing. But I see a lot of people that go to these just incredibly complex marketing, automated landing pages and email, like it’s this whole generic flow of how things move to the right and the left and go through stuff. They have no idea what’s happening. The person who automated it, didn’t write it down. It’s not somewhere where they can visually see what’s happening. And they can’t see where the leaky pipes are in more often times than not. They have leads that are sitting in their database that are not making it over to their sales team because nobody documented and thought, Oh, Hey, by the way, did somebody check over there? What Pete did on , on pipe number four and make sure that that’s actually being ported in for our sales team to see,
Josh Long:
Well , the worst example I’ve ever, I was when I worked for Chet Holmes , we were doing satellite radio ads and getting leads at $18, a pop business owners. And he had this developer, and this was 2008. And we had this developer that had built all these databases, custom SQL databases that leads are coming into. And it was before landing pages tools existed. And so we’re creating forms from scratch with this developer. And so the CEO and I mature. So we fly to Atlanta to go meet with the fulfillment team. And that’s where the developer lived in, in the office there. And going through these databases, I mean, we’re paying $18 a lead for these business owners call in from satellite radio ads. And it was profitable. And we were making, I think we’re doing about 10 million a year at the time. And I’m going through databases on this guy’s workstation, and I’d never had access to this. And I said, what’s that database about? And he says, Oh, that was from a promotion with Tony Robbins. I said, well, what happened to it? He says, Oh, Chet said we couldn’t email them. I said, why? He says , I don’t know. I said, how many people are in there? He says 10,000. I mean, it was $180,000 worth of leads, just sitting there. And it’s probably worth more. Cause they were a referral from Tony Robbins and I’m like, can he , Mitch, can we start interacting with them? And it had been too long and they were cold and whatever, but it was like, that kind of stuff happens everywhere. And so the , and , and we didn’t even have to spend for those leads. Those were referral leads. And those were through a warm, warm referral. And I mean, it was literally a minimum of $180,000 in lead value right there. And , and to put perspective, we pay $18 a lead, but we probably generated $250 in revenue per lead or something like that. So it , it , it w it wasn’t just the cost of the lead sitting. There is the opportunity cost of unread , unmet revenue that we could’ve gotten out of that list. So, yeah, it happens everywhere.
Kyle Hamer:
It does. I mean, I was on, I was on a phone call two weeks ago and the person said, Hey, you know, you’re going to hop into our marketing automation tool. I have concerns that these leads aren’t even making it over. There’s a large portion that aren’t even making it over to our sales team. And I was like, well, didn’t you turn on the email notifications just to let your sales team, when they came in in the, the, you know, the person was like, wait, there’s email notifications that you can send to sales reps . And I thought, huh . Yeah. Well, and then here you are. Right. So I , I completely understand that now. So, you know, we’re, we’re, we’re popping through the, we’re popping through the growth levers when we picked on marketing a lot, but you talk about kind of the last two is being critical and critically intertwined with vision and mindset. Why is, why is it that those are so important in where’s it, the businesses or business owners, entrepreneurs, where’s it ? That they struggle around those elements?
Josh Long:
Yeah. I think vision so many of us start an idea, start with an idea some way to either change the world or help a certain population or make a pile of money. And we start out and we get going, and then we get to six figures and then we maybe get to seven figures. And then our goals change, maybe that takes five years or 10 years to happen. And life happens and your wife gets cancer, or your parents die, or something changes. And your goals are no longer the same as when you started, but you’ve not ever revisited that. And so to me, vision is really critical to stop and take a break and say, what do I really want? Because when I started this, I thought I was going to create a hundred million dollar company and be on entrepreneur magazine and be on the Inc 500 list. But, you know, I don’t care about any of that anymore. We’ve got a good life. We , our kids are out of college, my wife and I want to travel more or whatever the scenario is. And unless you revisit that and figure out what in the world do you want, you’re just going to keep doing the same thing and you’re going to be stuck in the business. And I think that’s where the, the vision effort of, you know, the things have changed. I want something new and being okay with that and accepting it. And a lot of times you trap yourself because of your own commitments and the word you said to your staff and , and the honor, and , and integrity that you have and loyalty. And so maybe you’ve got somebody that has been wanting to be a partner and you just don’t want to grow anymore , or they just keep pushing. And now they’re a Burr under your saddle, and you’ve got to let them know, Hey, I really want to change this. I know three years ago we talked about this is you could come in and, and partner somehow. And it’s just not a fit anymore. And that’s really scary for a lot of business owners because their care for their staff, they care for their people. They don’t want to pull the rug out from under them . They don’t want to change. And so I think that’s where the vision is so critical to just keep refreshing and making sure that your business is serving your life needs as much as possible, because that’s the only point. The ultimate reason to start a business is to give you the lifestyle you want. That’s it, time, money, freedom, stress, focus, creativity, all of that. The business should be serving you a hundred percent
Kyle Hamer:
Well. And I think that that’s, you know, you, you hit on a couple things in the in these two particular pieces that are really, really important. Not only for businesses that are mature, but businesses that are starting out, right? Because there are a lot of entrepreneurs that think I’m going to become the next Uber. And so they burn through cash and make business decisions that don’t actually build a business. That’s one of the three that you talked about at the beginning, right. Build it to sell it, build it, to make it a cash cow, or build it to hand it down to your family. And if you don’t start with that, I mean, to your point coming full circle, if you don’t start with that end in mind at the beginning, you know, it’s like, well, without a map, any road will do.
Josh Long:
Yeah. Yeah. I’m working on an adventure right now and with some partners and we’ve got very clear objectives and it’s making everything so easy to execute on. And I mean, we’ve got our strategy, right? The business model is sophisticated and proven, and I know it’ll work. We just gotta make sure it fits the marketplace. So, so the business model is sound and our differentiation strategic differentiation sound, but will the market respond? And so we will find out the next few months and our , our goals are very clear of how we want it to serve our lives and how we want it to generate revenue and what our multiple objective to grow it, to sell it is. And yeah, it makes, it makes everything so much easier. Now I’m fortunate that I’ve got 10 plus years of experience looking at other businesses that have worked. And I think this is the perfect reason why consulting is such a great precursor to entrepreneurial success is because I can, I’ve seen a million different businesses and business models and what’s worked and what hasn’t and figured out how timing works. I mean, timing is so much of the luck of being in the right place at the right time with the right market with right idea. And because so many of us are so far ahead of the market, or so far out ahead of the rest of society, but that’s costly. You just end up educating everybody on why they need to be looking that way.
Kyle Hamer:
Yeah. The bleeding edge, they , they say that the bleeding edge companies are the ones that fall flat. The leading edge companies are the ones that, that make money,
Josh Long:
Scoop it out . And yeah , they come up right behind the bleeding edge and they scoop up, all right,
Kyle Hamer:
They take a good idea and they turn it into a cash cow. And then as the market matures, a lot of those, either entrepreneurs or people that started will start to exit the business and move on a really good example of that is Google. You had Larry Page. And Oh , I could see . Yeah, Sergei. They came in, they helped grow it. They brought in management, they continued to grow, but as their mind realized, Oh, Google is maturing. This is becoming more competitive with cloud products. Amazon web services is coming. Microsoft is building a competitive set of, you know office products. They moved into alphabet, right? Like they, they moved there, they moved their selves to stay ahead. But there , the stuff that Alphabet’s working on is stuff that we still have 15 or 20 years before we see it in our everyday lives.
Josh Long:
Yeah, exactly. I mean, it’s just like, Merck’s the eighties back in the seventies, creating new innovative products, antilock brakes, and whatever that now every car has. And these, these innovators get into these spots where they just are so far ahead of the rest of the world, but without the resources or the horsepower and money that small business owners, when we get out that far ahead, we just fall flat.
Kyle Hamer:
Yeah. Because there’s no market there, but a lot of, a lot of small businesses really succeed in a mature, a mature market, right. Where there’s, there’s plenty of market demand. Other people have educated, and now you’ve got your particular flywheel insurance doctors, dentists, like nobody has to educate you on what you need dental work for why you would need insurance a hundred years ago. That was a bit different. So w when, when people are working through this, when business owners are working through this, Josh, what, what’s the best way to say, do I need to get help? Do I need to get a consultant? Do I just need to read Josh’s book? What are the, what are the best ways to start identifying? These are common challenges I have, or these are the pains I have, or here’s how I do my own basic rubric to know. I really do need help to, to hit that, to get out of the seven figure desert.
Josh Long:
Yeah. It’s obviously the book was written to help you through that process. So I will selfishly say, just go by the book and March through it and go through chapter 13 and the profit priorities process to prioritize what’s there. But the quick rubric is where are you frustrated regularly on a common theme, wherever that is. That’s a bottleneck, where are you spending an inordinate amount of time putting out fires, solving problems, not being able to do anything proactive. That’s another bottleneck. So those are the two places that I focus on with clients is where are you frustrated and where you time-suck that because you need space to lead an organization. All of my clients, I’ve got to partner with a guy named Perry Marshall. We’ve got a program called advanced mastery network, and we’ve got six to 10 clients a year going through that. And they’re all in the seven-figure desert. They’re all trying to get to 10 million. And the key factor of those that are successful in it are that all the owners have space and time to get to meaningful change and proactive problem solving and implementing stuff that Perry and I recommend for them. And without space, I think novel Robert Kahn , he’s an ex entrepreneur, Silicon Valley CEO, a venture capitalist, or an angel investor. And he says a busy calendar and a busy mind will prevent you from doing great things. And I think that’s the kiss of death for most small business owners. If they just hit the ground running, come home, exhausted, pass out, work, weekends, work nights self-medicate too much. And those are, those are the signs that you’ve got problems and needed help.
Kyle Hamer:
I think there’s Sage advice there. There’s, there’s definitely stuff that you’ve learned working with Chet , Tony , and now Perry, across those multiple businesses. I mean, there’s, there’s just a lot of wisdom in what you’re sharing. So transition year is something that’s always fun. What’s a, what’s a book that you’re reading right now. That’s blowing your mind.
Josh Long:
So it’s funny. I actually don’t read much anymore. I went through such a phase of reading everything under the sun. So I will recommend my favorite book of all time. It’s a obscure, but for business owners, I think it’s really useful. It’s how to fail at almost everything and still win big by Scott Adams, the creator of Dilbert. It just, it’s kind of like a more mature four hour work week, but without the hype and without the unbelievable sales pitch. So to me, I thought Tim Ferriss’s four hour workweek was good to open my eyes to lifestyle design and simplifying, and, and really introduced me to Richard cautious, 80 20 principle, and Richard and I have become friends. And I’m more like pen pals, I’m writing emails. But yeah, I think I think Scott Adams had a fail at everything. It almost everything and still win big is fantastic.
Kyle Hamer:
That’s awesome. Put a bow on it for us. Summarize up the key, the key things people need to know about bottlenecks and then tell them how they can get ahold of you.
Josh Long:
Yeah. I think the summary is you’ve got to make some space for yourself to think, and if you can’t it’s just going to be Groundhog day over and over and over putting out fires and spinning your wheels and not really going anywhere. And so if that sounds familiar and you don’t know how to pull the rip cord and make any space and you feel the pressure piling on and then, then I’m happy to chat, happy to help get you some, some space and freedom if you want to grow through to 10 million. That’s my sweet spot. So I love doing it. I love taking the risk off of the business owners to get there. And we just have fun, fun, scaling it reach out to me. You can go to my website, bottleneck, breakthrough.com. There’s contact forms, application forms. I’ve got a Facebook group that I nudge along at a bottleneck breakthrough method inside Facebook. I’m on LinkedIn, easy to get ahold of there, but otherwise, yeah, I hope this is valuable. Hope you get a ton of value from it, Kyle, this is why you’re one of the best podcasts I’ve ever been on with asking useful strategic questions that add value to the, to the listener. So great job with that.
Kyle Hamer:
Hey, thanks. I it’s, it’s been a pleasure to have you here. I mean, it’s not every day that we get to break down really the six levers in and get into the, kind of the mechanics of small business. Yeah. So I’ve heard so many times people talk about, Oh, we got to work on the business, work on the business, work on the business, but the owner is so busy inside the business. And so I just, I really appreciate your, your breakdown, your, your, your different levers and the way that we’ve made it very approachable for people to fix. What’s broken so awesome. It’s I, I, I think it’s been a fantastic show for those guys who are listening. You’ve been listening to Kyle Hemer and Josh long. Josh is the author of bottleneck breakthrough. And we will have the link for his book as well as how to get ahold of Josh in the, in the, in the notes. Until next week you’ve been listening to some, a podcast. Thanks for coming in, like share, subscribe, do something fun, let other people know. Don’t just keep it all to yourself and continue to grow, push on push forward and be a better you.
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