Lessons From 2021 Business Coaching - Part Three

For the past six months, the majority of my time has been spent in coaching calls, mostly with businesses overseas as they pivot and rebuild from Covid’s devastation.
Here are some of the recurring themes and conversations from the last few weeks…

Am I nervous, stuck or bored?
Each of us have tasks on our plates that have been sitting idle for a while.
We know we should do them…and yet…they’re not going to get done under the current circumstances.
A useful question is to check whether you’re nervous, stuck or bored.
Nervousness is an emotion, stuck is a technical barrier, bored is a lack of drive or interest.
These might sound like trivial differences, but it totally changes where you go next.
Nervousness might be fixed by talking to friends, going to the gym or changing your perspective.
Stuck might be fixed by Googling, talking to an expert or ordering a piece of equipment.
Bored requires a re-investment of energy, through inspiration, obligation or a change of scenery.
By naming the problem accurately, a range of good solutions will appear.

Expensive vs Too Expensive
On a recent call, one client was talking about changing her pricing.
She kept using the word “too”, as in the sentence “I know I’m cheap, so I guess my options are to go for mid-price or too expensive”.
I counted them up, she had five “toos” in 15 minutes.
Too is interesting in that it makes any following word sound bad.
e.g. Too tall, too bright, too professional, too friendly, too cheap.
That makes too a heavily biased word, ruling out whatever comes next.
My suggestion was to stop using the word and see what difference it made.
It creates the option of being expensive rather than too expensive.

Premium vs Rip-Off
On this same theme, expensive is a very vague word.
Is expensive good or bad?
We get a better mental picture from two different versions of expensive: premium and rip-off.
Premium is a great word, it describes high quality, trust and enjoyment.
Rip-off is a powerful label, it describes a price out of sync with quality, and the feeling that someone is taking advantage of your lack of knowledge or lack of options.
Both are expensive, but only one is desirable.
e.g. a $15 glass of wine might be a better product/experience than a $6 glass, but a $7 Coca Cola is no better than a $3 Coca Cola.
We have no premium Coca Cola, so the raised price feels unjustified.

Sometimes we like things to be expensive, price can be an indicator of quality.
I use an expensive phone every day, but I love using it, so it feels like a good deal.
To others, that same phone might seem like a rip-off, since they can get one with better specs for a lower price.
We’re both right.
The important things is to see us as different types of customers, and understand how we differentiate between price and value.

I also believe that every company should at least consider creating a premium version of their product/service.
It won’t be for everyone, but it can be a cash cow that delights your customers with higher budgets.
You can use the margins and the insights to improve/subsidise the more affordable items on your menu, or improve your equipment, or reinvest in growth, up to you.

Who is the judge of your prices?
The first response I usually get to this question is the founders saying “me”.
That lasts about two seconds then: “oh, maybe the customer?”.
This is all well and good until these two perspectives disagree.
What happens when customers judge your prices as being too high, too confusing, suspiciously cheap or incomparable to other options?
What happens when the market is willing to pay more than you anticipated?
You’re responsible for delivering great products and services, but you’re too close to the business to be a fair judge of prices.
My suggestion is to learn how the market assesses different pricing options – both yours and your competitors’.
You can do that through market testing, customer interviews, A/B tests, reading online forums, etc.
The point is, your opinion of “the right price” is secondary to the opinions of your customers.
In the interests of transparency, I have long felt that my charge-out rates at my day job are too high.
I have also been oversubscribed and overutilized for the past six months, and customers have happily paid their invoices.
Therefore, my opinion is secondary to theirs and I should relax.

Stewardship
Stewardship is an old fashioned word for a timeless concept: careful and responsible management, usually of something valuable.
e.g. the land we live on, institutions and old buildings, generational wealth, a pool of investor/donor funds, etc.
Some new business owners see it as their responsibility to start a meaningful business by accepting as little money as possible from customers.
i.e. charge the bare minimum to cover costs, run really lean, make up any shortfall through their own labour and assets.
I have a counterproposal: run the business like a business, then be an incredible steward.
Charge market prices, take the deals you can get, run everything to a high standard.
Then as a steward, you can ensure that your resources, systems, products and partnerships are all making great/inclusive/powerful contributions.
i.e. reinvesting in growing the business, paying fair rates, buying sustainable materials, hiring staff underrepresented groups, donating surplus funds to important causes, advocating through popular products and services, supporting other good businesses, etc.
If you’re a good steward, the more resources we can get into your control, the better outcomes we’ll see.

We don’t need your generosity, we need good stewards
The difference between lean generosity and stewardship is longevity.
Businesses without margins are vulnerable and easily broken.
With proper resourcing, a profitable company can consistently employ good stewards, making them resilient to shocks and surprises.
The causes you care about don’t need more microbusinesses that struggle to stay afloat.
They need sustainable businesses, not necessarily large ones, but ones that can pay their own way and have cash in the bank for a rainy day.
Sustainable businesses can be generous over a much longer timeframe, offering things like employment or a supplier partnership rather than an occasional modest donation.
In other words, while we appreciate you donating your golden egg, what we’d rather have is you set up a golden goose.

Stewardship is good judgement with compound interest
This is the essence of why stewardship works as a form of generosity.
Compound interest (the so-called eighth wonder of the world) works by constantly growing and reinvesting in something, and the benefits accelerate over time.
i.e. donating $50,000 of profit, versus reinvesting that money into your business and growing to 5x the current size within five years.
Rather than giving away your free cashflow for a year, you’re setting up a perennial source of impact that will continue to thrive and evolve over time.
A bigger social enterprise, rather than a small business that makes donations.
 

You are responsible for framing your value
If you’re creating something new, it is bound to be misunderstood, especially in the early days.
People won’t get the concept, or they’ll get it and assume bad intentions, or they’ll form assumptions about what you’ll do next or how you compare to others in your market.
When this happens to a prospective customer, they are unlikely to engage in a transaction.
Very few people will buy something before they understand what they’re getting and how it compares to their alternatives.
So it’s your job to spell it out for them.
Why wait for them to do all the research and comparisons?
Why not cut to the chase and highlight what makes you valuable?
If you’re cheap, show them how much they save.
If you’re high quality, show them what better results they can expect.
If you’re popular, tell them about who else trusts you.
Infomercials do this really well, as does the Apple website.
A bombardment of explanations of all of the features, how they help you and why this is an amazing offer.
If you genuinely believe in what you’re selling, this isn’t weird.
This is just you being concise and bringing all of the helpful facts to the table, rather than sending customers off to gather the facts on their own.
Remember the old rule – if someone misunderstands you, it’s their fault, but if everyone misunderstands you, it’s your fault.

Obama O’s and Coffee Trees
We’ve previously discussed the story of Airbnb and how their co-founders sold novelty cereal packets to make some fast money.
We call this concept an “Obama O” – a product or service that can be rolled out in a hurry, generates free cash flow and is popular in the market.
Obama O’s are great, but sometimes may feel like a distraction.
Another alternative that business owners pursue is “The Coffee Tree”.
Coffee trees produce a moderately valuable and extremely popular crop, but they take their sweet time.
You’re going to wait at least three years for the first proper harvest, and won’t see the full yield until year five.
No matter how much you water and care for that seedling in the first year, it won’t give you a single coffee cherry.
The question here is “when is the time-to-harvest?” – the gap between execution and reward.
For the Obama O, the answer might be three weeks, the coffee tree might be three years.
Both are good, but they’re wildly different strategies.
What combination does your business need?
Do you need both?
Do you need to stagger them?
Do you want to plant your seedlings, then sell Obama O’s for a few years?

Do I need discipline or excitement?
I totally understand why we don’t always finish the tasks on our “To Do Lists”.
Life happens, work happens, and sometimes we decide to change our plans or deprioritise a task.
Here’s the interesting question: if some things are consistently not getting done (like building your website or updating your prices), do you need to be more disciplined or more excited?
Discipline is doing something even when you don’t feel like it.
Excitement is when you’re really looking forward to doing something.
Both are good, but I see a lot of entrepreneurs lean on discipline, staring down the task like it’s a big plate of vegetables.
Excitement is the interesting opportunity – what if you enjoyed the process of designing and building your website?
Rather than treating these tasks as chores, what if you thought about the reasons that future-you should be excited about them?
Excited people don’t need to-do lists to nudge them, they squeeze their desired tasks into every possible opportunity.
And if you can’t think of a reason to be excited about something, does it deserve to be on your To Do List in the future?

The two big projects for any new website
Websites are a hot topic for new businesses – they bring legitimacy and credibility.
I tell business owners the same thing: you’re going to need to learn about two different projects for this site:

1. How do we inform, entertain and persuade the people who click on our homepage?
Is it easy and enticing to shop with us or contact our team?
This is the realm of service design and copywriting.

2. How do people find our website?
How do we want them to find us in the future.
This is the realm of SEO and traffic funnels.

Both are helpful, and improving either one by 50% is both realistic and powerful.
Realistically, you need to learn the basics of both.
If you have a great page and no traffic, you’re almost invisible.
If you have great traffic and a confusing site, you’ll have clicks but no conversions.
If one of these is standing out to you as a blind spot, my suggestion is to frame it as a learning opportunity, then find some social media pages of relevant experts (long form content on these topics is tough going!).
 

What will you do for “headache money”?
Cash cows are great, but they often come with strings, plot twists and complications.
This brings up the concept of “headache money”, like “danger money” it is the extra compensation for putting up with the unreasonable.
Unreasonable people, unreasonable expectations, unreasonable conditions.
What’s the go/no-go point?
If they tripled the money, would you accept the headache?
For me, the best answers start with the words “Yes if…”

Are my beliefs serving me well?
My colleague Kate Wilson uses this question, and it is a gem.
When you think about your beliefs and the stories/narratives that are holding you back, ask yourself; is this belief serving me well?
i.e. staying small to stay safe – is this actually helping me?
Or staying cheap in order to not upset early customers – is this actually good for the business?
Questioning your beliefs is uncomfortable at first, but good quality beliefs and stories will easily survive scrutiny.
What doesn’t hold up is fake news and outdated worries, and sweeping these out of your brain will do tremendous things for your work and overall happiness.
 
Turning losses into loss leaders
Losses are unfortunate – they drain your cash, energy and resources.
However, losses have a cool cousin – the loss leader.
This is a task or project that loses money or energy or resources, but makes up for it in the long term.
e.g. more exposure, more sales, iron out mistakes, training new team members, building your portfolio, etc.
Smart business owners are good at turning losses into loss leaders, and they do this through their mindset and their asset creation process.
If a project doesn’t make money, then they look for all of the side benefits and reputational enhancements.
If the work gets cancelled or ignored, they turn it into other types of asset – photos, videos, training manuals, social media posts, workshop slides, brochures, etc.
If the work isn’t good, they use it as a chance to identify where they want to level-up, or patch up gaps in their customer service process.