← Unemployable with Jeff Dudan
Unemployable with Jeff Dudan
The $50,000 Mental Block Every New Business Owner Faces (And How to Beat It) with Jeff Dudan
00:11:27
Loading summary
Transcript1 lines
- [00:00]
A
Hey, everybody. Welcome back to Unemployable Podcast. I'm Jeff Duden. It's Franchise Friday, and today we are going to be talking about fear. Many of you are out there right now considering a franchise business maybe for the first time. And this episode is going to walk you through a question that I had a $50,000 question that I had at the end of training last week. Look, there's a moment that happens at the end of almost every franchise training when all the manuals are closed and the slides are done and we're done with the coffee and sometimes a real question will come out, and generally I can tell it's fear based. So last week at the end of training, a newly minted franchise owner pulled me aside and asked a question I've heard many times in many different forms. And he said, hey, how do I get over my mental block of investing another $50,000 in inventory? I know I need to do it. I understand it, but I'm fearful of it now. This wasn't because he didn't understand the math, because he clearly did. It's not because he was reckless or because the money felt heavy to him. He knew the upside. He knew that there would be higher margins, there'd be faster job wins, a stronger launch into the marketplace. But knowing something on paper and believing it in your gut are two very different things. Instead of telling him exactly what to do, I gave him three things to think about because this wasn't the last time that he was going to face a decision like this. And he needed the tools and maybe some perspective and experience to help him through. And if you're building a business franchised or not, these three ideas might save you stress and possibly a lot more than $50,000 if you make the right investment. So first, business is an infinite game. This always makes people uncomfortable because we like neat timelines. We like near term things. We like certainty and guarantees. We want to know that if we put more money in, success comes out on a predictable schedule. But business doesn't always work that way. And when I say business is an infinite game, what I really mean is this. As long as you don't quit and you know right now if you're a quitter or not, then time becomes your ally. I learned this the hard way when I bought out my last partner at advanticlean. I was 37, 38 years old, and on paper it looked insane because I was signing up to go $4 million in debt. We had an insurance loss with a $2 million receivable but it was in dispute. And I wasn't sure if or when we were going to collect that money or how much of it we were going to collect. I had payments that were due to buy out a shareholder, the shareholder that I just bought out, plus my previous partners. We had zero franchise owners at the time. Franchising was just an idea, and we had very few hard assets. So if you looked at the snapshot, you'd say, what are you buying? This guy's going to get in trouble. But here's what I believed. I believed in the business. I believed in the 10 years we had already invested in building it and what we had learned. I believed in our team. And more than anything, I believed something very simple about myself. I knew that I would never quit. I didn't know how long it would take. I didn't know what the plan would look like in a year, But I knew I would go as long and as hard as it took to make it work. And that is the belief that you need, and that is the belief that matters. Because staying in the game doesn't mean blindly charging forward and doing stupid things and saying, oh, look at me, I'll do it no matter what. It means understanding that the plan's going to change. People are going to have to change. You might outgrow them. Strategy is going to change. The market shifts. But if you keep building on what you started, if you keep learning and adapting and exploiting real opportunities in the market, the odds will bend in your favor. Time covers a lot of mistakes if you stay in the game. Now, let's be clear. This doesn't mean grinding yourself into exhaustion, chasing something that's never going to work, being too stupid to fail. I've seen people do that, too. They work hard on businesses that can't scale or can't scale more often under their leadership or sometimes it's the business model. But these people usually end up broke and tired. And I've always said, if I'm going to be broke, I don't want to be tired too. I want to be relaxed, comfortably in my brokeness. Now, productive persistence requires curiosity. It means reaching outside yourself, outside of your business, to seek better information, better people, better systems, to evolve the business. And it requires something most entrepreneurs struggle with. Put your ego aside. Small businesses stay small. When owners fall in love with their own ideas and they refuse to call their baby ugly, everything in a growing business gets outgrown. And I mean everything. Products, processes, people. The only thing that can't be outgrown is your Leadership and you as the leader. Because that's when the business stops growing. And if you don't let the business outgrow you, you'll cap its potential before it ever has the chance. Second, very few investments are all good or all bad. Most investments live in the gray. Some portion will work, some portions won't work. And the part that doesn't, just consider that tuition. Now, tuition can hurt. Let's not pretend otherwise. Anytime you permanently impair profitability, it stings. But every experience, if you're open to it, is an education. The key is, what do you do with that pain? You have to go back and deconstruct it. Where did I go wrong? Was it people? Was a process? Execution, research, Insufficient information, Timing. And you have to do it objectively, not emotionally. You're just not looking to find somebody to assign blame to. You're looking to figure out, what did we do that didn't work? What could we do differently? Just not to prove that it wasn't your fault as the leader. Now, if you're looking for someone to blame, you're not going to learn anything, and you'll make the same mistake again. Entrepreneurs take action with imperfect information. That's not reckless. That's just reality. And perfect inaction kills more businesses than imperfect action ever will. If you don't move the ball, nothing breaks. And if nothing breaks, you can't fix it. And if you can't fix it, you can't grow. So the trick is institutionalizing the lessons. And that's why great organizations run on strategy processes like traction or scaling up, or what you learn from Jim Collins and Good to Great or Jack Stack and the Great Game of Business. These aren't just books. They're memory systems. They create guardrails. They capture the lessons, and they institutionalize them. And they turn those mistakes into processes. Your culture is just your organization's memory, and it lives in the stories. And as a franchisor, that matters even more because we've already traveled these paths and made these mistakes. So when a franchisee has a genius attack, we can say, hey, here's why that didn't work before. Or here, you might try it differently. That's how education compounds results. Third and final, ask yourself this question. How fast can you liquidate the investment? And this is where emotion meets math. Now, I borrow this idea from online marketing. When you run ads, you don't just ask, will this work? You ask, how quickly do I get my money back? Is my offer that I'm for this online? Whatever you're Selling? Is it self liquidating? Can I spend $100 and generate a thousand dollars back within a few days? Inventory works the same way. When do you pay for it? Half up front, half on delivery. What's it going to cost to storage? What's the cost of the capital that's invested in it during that time? What is the time value of money just sitting on the shelf? And how fast does it move to a job site? How fast do you invoice and when do you collect? Then what's the margin improvement? Did you make more money having that level of inventory than you would have if you were job lotting? So once you run that mental math, you can ask better questions. How long is my money on the street? What's my return per inventory turn? And then how many times a year can I turn that inventory? Can I do this? That tells you whether capital is working or if it's just sitting still and could be better used somewhere else. Now, some investments are much harder to measure. I gave you two easy examples, Online businesses and inventory. But what about training? What about investing in your culture or people or experiences? Those require some judgment, which is why budgets and forecasts matter. Real ones, 12 months looking forward, not shoebox accounting. But if something consistently misses margin targets or it gets stopped, if it, if it, it gets stopped immediately. And when you put together a well thought out and well researched budget and forecast, you also then have the ability to say, well, companies only spend x percent of revenue on training and you can put some more guardrails upon these investments to say, is it too much? How do companies get this money back? But it's thought through in advance. Now, like I said, if something consistently misses margin, it gets stopped immediately. Because if you lose money on one widget, you'll lose 10 times that on 10 widgets. So your patience has a limit. You have placed a bet and you have to let that bet play out. But you only get to be as patient as your assumptions allow you to be. And sometimes you put an investment on a performance improvement plan. Look, investment, it's not you, it's me. But this isn't working. I'm going to watch you closer. We're going to let it go for a little while longer. We're going to add some measurements and then if it still doesn't work, you kill it. You learn from it, you pivot, you move on. That's not failure, that's just discipline. Every company makes mistakes and they put bets on the table that don't work out. Back to this franchisee and his $50,000. The question really wasn't about inventory. It was about belief. Did he believe in himself that he wasn't a quitter? Did he believe in the business that it worked with a hundred examples that it did? Did he believe that he would wouldn't give up no matter what? And once you answer those questions honestly, the math becomes a lot clearer. Because business rewards the people who stay in the game, learn fast, and move capital with intention. Everything else is just noise. I know you're probably fearful, and I just want to encourage you not to be. Look, life is short. These mistakes are shorter. You'll be fine. Take whatever action is you're thinking about it. Give it some critical thought. But if you can't find a good reason to say no, then you should probably say yes. So with that Jeff I'm Jeff Duden. This has been Franchise Friday on the Unemployable Podcast. I appreciate you listening and if you want to learn more, go down into the show notes, click on the link, get a free copy of my book the Business Athletes Regimen for a Great Life Through Better Decisions. Check out all the brands@homefrontbrands.com and follow us on this podcast here. Give us a like and subscribe. We got great content coming out that's tailor made just for you. You will learn more here than anywhere else. It's all about education. Have a great day again. Thanks for listening.