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Intro: Welcome to the Smart Energized Entrepreneurs Podcast with JP Stonestreet, episode #16.
JP: On today’s episode, you are going to meet Chuck Blakeman who is a 25-year entrepreneurial veteran. He is also the founder of 3to5 Clubs and also has written two great books. Before I get into that, as usual I am going to do a little promotion for my own website. So, go to JPStonestreet.com right now, sign up for my newsletter, so you won’t miss out on any of these podcasts. I sent out an email once a week with the podcast digest. I also sent out an email once a week, may be every other week with some news and tidbits or something specific to the entrepreneurial world. You don’t want to miss out on those either and I am also starting to speak more and I will let you all know when and where I am speaking, so you can make sure and come check that out. All right, without further ado, I would love for you to meet Chuck Blakeman. He is a fantastic entrepreneur, wealth of information and he definitely belongs to the go-giver generation. He offers so much through his 3to5 Clubs and just individually and personally and through his books. So, I can’t wait for you to hear this interview with Chuck Blakeman.
Welcome Chuck to this episode of the Smart Energized Entrepreneurs Podcast, how are you doing?
Chuck: I am doing great JP. Thanks so much for having me.
JP: Yes, you bet. I was excited that you were able to fit it into your schedule. You and I, we met at New Media Expo, which is kind of ironic considering we only live a few miles apart in Denver.
Chuck: Yes, I had to go to Boston to meet another guy last year. It seems to me the way that happens, he lives down the street from me, but however we have to meet it happen, it happens.
JP: Yes, I know. That was funny I thought because the New Media Expo is in Las Vegas, which is a long way from home. So, let’s jump right into your entrepreneurial journey. I would love to hear how you got to where you are. So, why don’t you start by telling us kind of about your history and how you got to where you are and then let’s talk about your book Making Money Is Killing Your Business and also the 3to5 Clubs that you started. So, let’s just kick it off with your history.
Chuck: Sure. When I was 3 years old – no you don’t want that history. That will take a little too long. I am an incurable entrepreneur, I didn’t know that upfront, but I have started 7 or 8 businesses, I think it’s up to 8 now official ones and then 2 to 3 other things I don’t even count and it’s all across the board. Everything from an IT, website development, database development company to a branding and marketing company, a fulfillment distribution company, printing, direct mail, call centers, leadership development, and I even threw in a landscape architecture from 35 years ago as part of it just for good measure. So, I am all over the map and I think the reason I am all over the map that way is because the entrepreneur in me wants to learn new things and when people told me I couldn’t do that, that was always the number one motivator – “Really that’s interesting, I can’t do that? Then I think I will give that a shot” and so that’s really why I ended up all over the map like I did. I would say my track record in eight businesses, this would be the eight, one of those eight that where we do 3to5 Clubs and business advisory. Track record right now is I had to sell two of them as fast as I could because they were bad ideas or get out of them, they wouldn’t even sell and then three of them – three to four of them were nice incomes for me that I sold off and one of them we sold to the largest company in our industry. So, we had a triple homerun there and then I own two them right now that I wouldn’t ever sell, which is 3to5Club – Crankset Group that does 3to5 Clubs and then a business in the Congo. If get bored, we can always talk about the crazy stuff I am doing in the Congo. So, that’s my history. I just can’t help myself; I start businesses as a way of life.
JP: It’s a fun way of life, isn’t it?
Chuck: It sure is. It took me a long time to realize that I like running businesses, I just like starting them and building them, but after they get to maintenance mode, you need to get me out of the way because I will kill the business and everybody in it. So, it took me four to five businesses to figure that one out.
JP: It’s good that you are aware of that about your personality; I have determined the same thing about my personality that I loved building and the creation phase and I am not as bigger fan of the maintenance phase. So, that’s part of the reason why we sold our company as well. I was a little bored with it, maintenance mode, but yes it’s not as much fun when you are just doing the daily activities and you are not building and creating.
Chuck: Yes and it takes all types to spin a world and I am so grateful that there are other people who love taking what we built and tweaking it and making it better everyday, so that I don’t have to.
JP: That’s great. All right, I think it’s a nice segway into the 3to5 Club. Let’s talk about that for a minute. It’s a pretty neat concept.
Chuck: Yes, it is. We are excited about 3to5 and it’s something that we started a number of years ago, we planned on doing it huge in Denver only for a solid three plus years before offering it anywhere else in the world, but we were not quite four years in already and we are on four continents. We did not plan that, but it does demonstrate that we are onto something that people need.
JP: It definitely is something people need because it’s hard to go it alone, especially as a solo entrepreneur, you need some outside support and I think that’s what 3to5 Club is meant to do, right?
Chuck: Yes, 3to5 Club was my answer – I always worked – my businesses were always small. The businesses I owned, a big chunk never got to more than 9 million. I was involved in 100 plus million dollar businesses, but ones that were my babies really never grew big, but I always had giant cluster, giant clients as my customers, Microsoft, Apple, and Oracle and lot of technology and there are lot of pharmaceutical companies, but along the way, I have always had a heart for the little guy and the guy who doesn’t have the skids greased for him and figure out how we can make the world spin for them and I also believe firmly regardless of what a lot of the venture capitalists are throwing out there these days that small business owners really do make the economic world spin. There is no evidence to the contrary. All the evidence points in that direction that businesses, new businesses especially with 1 to 19 employees are aware of the whole thing, the whole foundation of healthy business climate and an economic client goes. So, I want to help the little guy and I want to help small business owners and that’s where 3to5 Club came from. I have been doing consulting and business advisory and coaching and other things for larger companies as a part of doing all these other things, always going and trying to help folks, but my desire was to figure out how could we find a model that would help small business owners get the kind of help they need, the kind of help that bigger business owners get that the small business owners just can’t afford and it has always been the eternal struggle of coaches, consultants, advisors, any of those guys. If they are helping small business owners, what that usually means is that they just lost their job and they want to become a consultant, but nobody bigger than a small business owner will hire them. So, they claim to be small business consultants and as soon as they get a mid size company that will hire them, they disappear from the small business climate or landscape because again, the money is upstairs. So, we wanted to figure out how could we bring that kind of help to the small business arena and I started in 2006 mocking around with this idea and we spent three – about three and a half years before we landed on the 3to5 Club concept having done a bunch of other stuffs first and that’s how successful businesses always get started. You think you have got it and you get it through four, five, or six iterations before you finally get there. So, it wasn’t until just under four years ago that we put this 3to5 Club concept together and we know that we have got something that works like we set it on four continents already and we have got people making healthy six figures as facilitators working 15 to 20 hours a month doing this. So, we have hit on the right combination of we can help small business owners and you can make money doing this and it won’t cost them an arm and a leg.
JP: I think it’s fantastic that you are doing this and I totally agree with you that the small business is what drives our economy. In fact, I just read, I think it was last week that in 2013, small business created more new jobs than any other sector, most of the new jobs created last year were by small business owners.
Chuck: That’s the worst case research. Kauffman Foundation, which is a foundation for entrepreneurialism, they put a study out in July 2010 based on brand new government data that had never been available in the past about job growth and their report said and I have almost got it memorized that 100 percent of new job growth of net job growth in America comes from companies under one year old.
Chuck: The fact is that 99.9 percent of them will never have more than – one year old companies will never have more than 19 employees. So, if you want to find out where the job growth is, it’s in those brand new companies who are for – 98 percent of which will never become, will never have more than 19 employees and don’t want that.
JP: Yes, and that’s especially with the new healthcare law. There is definitely incentive to stay small.
Chuck: Yes, it has made a lot harder for anybody “Why wouldn’t I go over 59 when it’s why would I go over 50?”
JP: Yes, I know, it is. That’s a big leap in expense when you go from 49 to 50.
Chuck: Yes, but most small business owners 98 percent of who will never get past 19, they don’t want to, they want to have a healthy viable business that can be bought, sold, and inherited not working out of the trunk, but something that can provide a lifestyle as well as an income and that’s 28 million businesses in America that is our target for 3to5 Club.
JP: Great. So, let’s talk about what 3to5 Club does for these small business owners.
Chuck: Yes, great question. As I started to work with people seven years ago, I just started taking one-to-ones; I had 15 to 20 plus one-to-ones with business owners with businesses under million dollars every month and I was charging these folks. We were having a good time learning how to build a business and I was doing it specifically to figure out what does a small business owner actually need to build a business. I shut my ears, I did not do the research, I ignored everything on the internet that told me here is the 10 things you need to build a business and gee what a surprise the four main things I found weren’t even on the list with all of the things that the sages and the MBAs and then the SBA and all the other A’s tell you here is what you need to start a business and so we found those – we took those four building blocks – foundational fundamental building blocks of building a business and used those as the bases for building what we call 3to5 Clubs around the world and 3to5 Clubs have 24 business owners in them – a maximum of 24. They meet twice a month for two hours each time and we have about 14 months syllabus right now that we take people through and they repeat it, we have people who have been in 3to5 Club now from the beginning now for four years and they are hearing the stuff for the fourth time and they are fine with it. Every 14 months, it comes around again and by then the world had changed, their business has changed, their view of the world has changed, when we get to that topic again, it’s a brand new fresh application. The reason we only have 14 topics is because there aren’t that many things that make people successful in a small business. We can easily have a hundred topics and never wear it out, but all would be is interesting. We don’t want it to be interesting; we want it to be transformational. So, every two weeks, twice a month, people come to their 3to5 Club and we invest some time and the facilitator invests some time in doing some training on the topic and then they go away with an assignment and they come back the next 3to5 Club, the second one that month and they share assignments with each other and we do wisdom of crowds betting of them and bottlenecks and a bunch of other fun stuffs and the objective of the 3to5 Club, the reason it’s called 3to5 is because we expect these business owners no matter where they are, if they just printed a business card or they have been in business for 15 years, we expect them in 3 to 5 years to be in a place where they can regularly get away from their businesses and their business creates both time and money for them to go do something significant with their lives, doesn’t mean that they are away 7 days a week. It might mean that at the end of three years, they have gotten where they have every Friday off and they have money to do something with that. Our objective for a lot of these people we talk about, they can do whatever they want, but we give them a vision for it, we talk about a day a week, a week a month, and a month a year, and the objective would be to get to where they have a day a week like every Friday where they have that off a week a month like the last week of every month and a month a year where they can get up in the morning and say “What do I want to do today?” And that requires them tuning into the business owners’ game which is what we focus on with these 14 topics over 14 months. The business owners’ game is – the one objective of the business owners’ game is “How do we make more money in less time? So, as these people take these Fridays, and weeks and months off, their businesses should be in a position where they are making even more money than what they were working six days a week, 12 hours a day. So, that’s the business owners’ game “How do we make more money in less time?” And we can get into the how to play that game later if you want, there is really only two questions JP. That’s essentially what 3to5 Club is, help people build a business and get a life they will also love to.
JP: Yes, it’s fantastic. So, you have a – you get the community support from your 24 fellow business owners plus the facilitator, but it’s more than that too, you actually get educated because you have the 14 topics that you discuss, so it’s more than just a community of people, you are actually teaching them the things they need to know to be able to step out of their business and have their business still run without them at the helm, which is great because for most entrepreneurs that’s the hardest part, their success ends up killing them because they don’t know how to create a business that will run without them and that’s where you are basically, that’s what you are doing with the 3to5 Club.
Chuck: Yes, there are three reasons people – three benefits that come from being part of 3to5 Club, but before I address those, I just wanted to address that idea that you just said that their success kills them, it’s one of things we found in working with small business owners is that, it’s actually – that’s the number one reason they quit. There’s a lot of research out there that says, we have all heard the staffs, they vary, but 50 percent of businesses are gone in three years and 80 percent of them are gone in 10 years or something like that, they all fail, they fail, it’s not that they are gone, they fail in three years, five years, ten years, and I am absolutely convinced that very, very few businesses actually fail. What happens is the business owners get tired and the more they get successful, the more tired they get to the point where they either draw their hands up in frustration and sell the business so that they can go sit on a beach for two years and run through the money they got from that business before they start over or they just quit and retire or they just – the business they are so tired that they can’t pay attention to their business and it falls apart, but it almost always comes back to the idea that business owners think that in order to be successful, they have got to give their lives to this thing and they do upfront, but if they do it right, in three to five years they can be in a position where they have got a day a week, a week a month, a month a year to get up in the morning and say “What should I do today?” And they have more money to make a decision with than they had three years earlier. So, the three reasons people, three benefits come in that people find here, you hit on two of the three. One is what we call the training and the transformational training. We expect everybody to change as a result of this. So, it’s not stuff that we want them to put in their heads. They all go away applying things every week. So, there is training. The second thing is community. Probably 40 to 50 percent of the magic here is that we get in a place, the one place in business where you can say three magic words “I Don’t Know.” There is nowhere else in business that these guys get to say that, not with their clients, their employees, their spouse, nobody. Where do you go to say “I Don’t Know?” This is one of the most valuable things that comes out of this. It’s like Alcoholics Anonymous. We all get the razor hands and say none of us know. I am on my eight business and I do not have this figured out yet, none of us know. So, we are all in it together, hugely valuable. We get to pounce on each other and we all have one-to-ones outside of the 3to5 Clubs and we use that to rub off on each other and that involves the wisdom of crowds where we are all dumb enough to ask great questions. I don’t need to know anything about your business; in fact it helps me to not know anything about your business because I am going to ask much better questions than someone who knows your business inside and out. The third benefit of 3to5 Clubs is people get to build a network which is very different than networking. Networking is a good thing, but we have kind of lost our way in networking. People sell it as if it’s the Holy Grail and it’s not, it’s a stage you go through. First you build chairs in your basement and they pile up because you don’t have anybody to sell them. You just assume because you make great chairs, they will sell and then they are piling up your basement and you figure out you have to get out of your basement and start selling the chair and so you join some networking groups and those networking groups help you sell your chairs and the problem with that is that the networking groups you will sell enough chairs, you will get really busy and you will get on the treadmill and there you are for the next 30 years and you sell that job to some fool who will do the same thing for another 30 years. You are just step above that and it’s called “building a network” not networking, but building a network. How do we know that this is a stage above that? Because when people go to networking groups, they are always looking for those 4-5 successful business owners who never go. So, either those guys have it wrong or they figured something else out. What they figured out is once you have a successful network of people who will buy from you, to get off the treadmill, you have got to build a small network of strategic alliance partners, 3, 4, 5 up to 10 or 15 people who will regularly send you clients and will never buy a thing from you. So, a mortgage broker would want to find five real estate agents. A financial planner would want to find five CPAs and a guy who sells software would want to find five website designers and on and on and on and we teach people to stop networking and build a network. So, those are the three benefits of 3to5 club, the training, the community, and the network.
JP: So, how do you teach them on that last one? That is such an important concept and I have written about that on my blog several times, I have talked about it, I have reviewed books that talk about this concept of building a network. So, you teach people how to do this, but what’s one good tip for building a network that you are comfortable giving away?
Chuck: Sure, we give it all away. If we had four hours, we give it all away. You can read my blog and never have to hire me. I would say that the central thing here is that we have been taught by 100 years of industrialized nonsense to chase the next sale when what we should be chasing is the next strategic alliance partner. So, let me put in different analogies. We as a woodpile analogy; we are taught to go to the forest, which is the networking environment, and we go to the forest and we just start chopping down trees and we pile them up and we tie and lie them and what happens to the green tree, nothing, because it just sits there and smolders; it’s a green tree, you have to dry the wood first. The same thing is true for relationships. If you go to a networking group and you stab someone with your business card and try to sell them something right then and there, it’s not going to work because they don’t know you from a hole in the world. People buy from people who they know like entrust. So, stop chasing the next sale and start looking for a strategic alliance partner where you can build some credibility, have a few cups of coffee, do something together, build confidence in each other and eventually you can throw your clients at each other. Find people who have your clients who don’t do what you do, only do 80 percent of what you do, get in the strategic alliance with each other and you can lob clients at each other for years to come. So, stop going to the forest, figure out how to get into your own database, which is cut, stack, drive, delivered and give that to other people and let them get into their database and give you their cut, stack, drive, and delivered wood, it will burn a lot easier. You will be much more likely to get people through relationship. May be two other better very quick analogies for this one concept is stop chasing the golden egg and chase the golden goose. Why in the world are you chasing great clients when you should be chasing the one person who has all the great clients you want, what if that person gained confidence in you and they would simply send all of their clients your way. The last way to do it is what we call “Finding Oprah.” I have written a number of books and there are two ways to sell book and this relies back on Oprah having had her old show with bazillions of people watching, but this happened all the time. Two ways to sell book, you can go to every library in America and have a 30-minute spill with 18 people and sell five books or you can get on Oprah, which one makes more sense? That’s the difference between chasing the next sale and finding that strategic alliance partner. Who are your Oprahs? Who are the people who have all the clients you already want? Go find 20 of those because only three to four the lights going to go on and eventually you will find three to four people who live in a world of abundance who actually want to share their clients back and forth with you and then you will be that guy who no longer shows up in the networking events.
JP: So, how do you go about finding those people? Do you just call them up? Do you ask your existing network for referrals, how do you find them and then how do you convince them that they want to take their time to have a cup of coffee with you and start building a relationship?
Chuck: Yes, the first piece of this is first to make a list of the kind of industries and the kind of vocations that have all the clients you want including your own, the people who are the closest to what you do will be your best strategic alliance partners, just the opposite of what networking teaches you. Networking teaches you that you can only have one of each of everybody in the room because otherwise you are in a competitive situation. We have in some groups two real estate brokers in a 3to5 Club. We have two mortgage brokers, we have two financial planners, we have two guys selling software because they figured out that they still don’t do everything the other person does and they can help them and they can help each other. So, get that mindset that you need to find out who are all the people, who are all the industries? Then list people you know in each one of those vocations or industries that you already know who have all the clients you want and if you don’t have a lot of those then list people who you think might know those people. So, I am a mortgage broker, I don’t know any real estate agent. Who do I know who might know a real estate agent? Go find that person and say “Do you know a real estate agent, can you refer me?” I would never do any of those stuff cold call because that’s one of the problems with the networking environment. What we are doing is the cure for the common cold call and for the common networking, stab somebody with your business card stuff. So, find, make a list of the industries, make a list of the people you think match those that you already know, call them and share this with them “Hey, I want to help you, you want to help me, let’s throw clients at each other for years to come.” It re-humanizes sales in a way that networking never does.
JP: Yes, I love that. That’s great advice and I tell people that all the time to building your network. So, one of the things that’s hard for entrepreneurs and small business owners is to find the time to do this. So, what are your advices for as what time of day should you do this or how much time in a day should you spend doing this?
Chuck: You mean build the network part?
Chuck: Yes, it really depends on where you are in your business. If you don’t have any clients, 100 percent anytime. If you have clients, you have to have a drip system so that you don’t stop doing this because that’s one of the problems with small business owners is that they live on a rollercoaster. I don’t have enough clients, I have too many clients, I don’t have enough clients, I have too many clients and so whatever stage they are in, they stop doing the other stuff. If they are building chairs for a lot of clients, they stop doing sales and all of a sudden they don’t have any clients. So, do they do? They go into sales again for three months or two months and then they have enough people to sell chairs to. So, they stop doing sales. So, there is no amount of time that I would say “If you are making chairs 60 percent of the time and you need 40 percent more clients, well then you spend 40 percent of your time doing that, but never spend less than 10 or 15 percent of your time going out and building relationships with your strategic alliance partners. That’s why this is easier. You can invest time and strategic alliance partners and probably one-tenth of the time in a strategic alliance partner will bring you 10 times as many clients as going to networking events. So, it depends on where you are in your stage of business, but the biggest mistake we make is “Wow! this really worked. I don’t have to go do sales for a while.” No, you just lost your pipeline and three months to now you are going to wonder where your clients are.
JP: Yes, it does take consistent effort over time, a little each day.
Chuck: We call it the drip system, having a drip system.
JP: Yes, exactly. Okay, I want to switch gears a little bit and I want to talk about your book, Making Money Is Killing Your Business. Now that is obviously something that somebody is going to look at and say “How is that possible? Making money is what keeps my business alive.” So, explain the title and let’s talk a little bit about the book.
Chuck: Yes people – this is one of the first things I learned about myself many years ago because again most of my businesses never got above million dollars and only of them got to nine million that I owned and I learned that very early on that my problem was I was trying to make money and people who try to make money tend to make very little of it. People who have a bigger reason to do something than make money are the ones that usually make more money. If you look at Bill Hewlett of Hewlett and Packard and Steve Jobs and Richard Branson and millions of small business owners who have a bigger reason to make money than just make money. They tend to make a lot more of it. We call that the Big Y. It’s one of the four fundamentals – four building blocks of a business that we discovered in my early years of trying to figure out what it is that helps the small business owner? The Big Y is something that drives you – that get you out of bed everyday that’s bigger than making money. Your family, non-profit, golfing every golf course in the world, solving world hunger, you get to pick it, but what’s that driving force that burning desire that what we call the Blue Flame coming out of your backside that gets you moving every morning. If you have one of those, it doesn’t matter what you are doing because making money is no longer your focus. It’s like of course I have to pay my mortgage. That’s just something I have to do along the way to doing something much more significant with my life. So that’s the number one thing that people need to understand about building a business is that making money does kill your business. If you are in business to make money, you will get tired. Even if you make it, you will get tired. You need to make time and money and you need to make time and money so that you can build a business or to make money when you are not around. We created this idea of a business maturity date to help business owners put a date on when they would get to what we call “Stage 5 business ownership.” Stage 4 is where you are making money and you can make a million dollars a month and be stuck in Stage 4 because you don’t have time to do anything with that money. Stage 5 is what a business owner is making both time and money and you can be making 50,000 dollars a year and have every Friday off, would be a Stage 5 business owner. You get to make the rules if 50,000 is enough for you. You can also make million dollars, you won’t have every Friday off and be Stage 5 business owner. So, the question is – and then we have Stage 6 and 7, but the key turning point is Stage 5, where your business begins to give you both time and money. So, we ask business owners to ask themselves how long should it take me to get to where my business regularly makes money when I am not around so that I can take Fridays off, I can take may be a week a month off, I can may be even take a month a year off. A day a week, week a month, and a month a year, how long should that take me? And we believe that it should never take more than three to five years and that’s why 3to5 Club is named 3to5, from the printing of the business card, shouldn’t take you more than 5 years to get to where you can get every Friday off, may be begin together week here and there, but certainly by the 6th or 7th year, you are getting all of that, but you get to Stage 5, where you are ready to get at least Fridays off in three to five years. That’s the concept behind Making Money Is Killing Your Business.
JP: I love that. It is very true that if you get into a business to make money, I think your odds of success are actually very low. If your whole point of starting a business is to make money because you have to – and I tell people this all the time, I wrote about it in my book that you have to find something that you love to do, something that you are passionate about if you really want to maximize your chance of success because if you don’t, if you are just doing something to make money like a lot of people do, especially a lot of people in MLM, the multilevel market or network marketing, they do it just to make money, they don’t necessarily like what they are selling and most of the people that do that are not successful with it.
Chuck: No. There is a second element to that JP. One is, people do need to fall in love with what they do, but then they need to fall out of love with it in order to build a mature business. That’s part of the irony of this. People say if you find something you love, you will never work a day in your life. The opposite is actually true. If you do something you love, you are likely to be a hostage to your business the rest of your life because nobody is as good as me, nobody loves this as much as I do, nobody is as committed as I am, nobody is as experienced and on and on and on, I am special and that’s the purview of the craftsman who says wouldn’t it be great if I could do something I love and make money doing that. So, that’s a great way to start a business, but then you have to be willing to believe there actually are other people out there who are as good as you are, who are as talented, who are as committed; you need to hire those people and you need to get them involved in your business and until you do, you will be a stage for making money business the rest of your life and you will come out empty.
JP: Yes, that’s what 3to5 helps people do, is avoid that rat race because they get out of the rat race only to create their own rat race.
Chuck: Yes, that’s exactly.
JP: All right, I want to switch gears a little bit now and talk about marketing, specifically how are you marketing your 3to5 Club because that’s a large part of the focus of my podcast is on marketing so that people can help drive traffic to their website or traffic to their business. So, we don’t need to talk about the building your network piece again because I think that is the best way to drive traffic to your business. So, what about marketing in general? What do you do to drive traffic to your 3to5 Club website and to get people to sign up?
Chuck: Yes, I had a lot of background in this, a lot of experience doing it wrong, but one of my businesses was a marketing agency and we did marketing for very large corporations like Sun and Microsoft and top pharmaceuticals, Eli Lilly. So, I have some background in this stuff and I am a natural marketer, I didn’t realize that until many years in. I just thought everybody saw the world this way, but as you get into small businesses, you realize that it’s a whole different game. Big business marketing and small business marketing play by two different rules and one of the biggest problems we have is that we look at giant corporations and we try and mimic them and it’s like basketball player trying studying a football rulebook and trying to apply football rules to basketball; it’s not going to work. So, the first thing is stop reading books about how Schultz built Starbucks and Gates built Microsoft and Jobs – stop reading that stuff thinking it applies to you. It has nothing to do with what you are doing as a small business owner; in fact, it will confuse you and make it harder for you to build a business. The second thing is – not the second thing, once you get that behind you, the best thing you can do in marketing; number one is build a great product and people miss this all the time. They are so busy selling what they do that they are not working hard at making what they do or what they sell, their product itself making it world class. If you have a great product, your marketing will take care of itself. If you don’t, you have to get involved in all kinds of crazy, tortured marketing at extreme levels because the mantra is this JP, people buy great marketing once. So, even if you have great marketing and you don’t have a great product, you will be stuck in a never ending loop of having to find brand new people who have never experienced you because the other people who have experienced you are never going to refer you; in fact, they are going to tell other people they know to stay away. So, you are in this eternal fight to find millions or thousands of new people who have never heard of you so that they can experience your bad product. So, number one, make a great product and focus all of your energy into making an even better product, the insatiable, secondly deliver it hilariously, deliver it with the best customer service possible. That’s the second best marketing thing you could do. You will notice so far I haven’t asked anybody to spend any money on newspapers, radios, or anything else. Make a great product and then secondly deliver it with the best – exceed everybody’s expectations doing that. Those are the two best things you could do in marketing. The reason for that is 90 percent of our future customers come from our existing customers, even online JP, the statistics on this are mind-boggling, but they are valid with people over 35, I think it’s 91 percent of all conversations about a product start offline by someone who is familiar with the product and then they go online to research it. With people under 35, it’s 85 percent, it’s hardly any different. So, it’s still going to be people who have touched you and experienced you. That’s why [inaudible] build a little tribe of few people and those people will become your missionaries for you, but the way you build that tribe is not by marketing to them well, it’s by getting people to fall in love with what you do and they can help themselves. They have got to spread the virus. In a marketing context, the first mechanical thing you should do is make a list of everybody you know. I call that the best marketing tool that isn’t a marketing tool. Make a list of everybody you know as soon as you go into business and then ask yourself “How do I find my lumberjacks to these people, my clients to these people?” It’s one of those steps everybody thinks is a big dob but nobody does it and then lastly for me and this relates to the big business versus small business thing. There are four quadrants of marketing that we have identified. Quadrant number one is advertising. That’s the…approach takes lots of money, every once in a while you hit a client. Quadrant number two is direct marketing. That’s a rifle approach where you know you are going after people who could be your right target market and you get a few more of those people. The third quadrant is public relations and you can do it or you can hire somebody else to do it. Do crazy stuffs, wear purple, have a weird name, do a what JibJab does and have lions and tigers in your commercials, that’s public relations, things that make people talk. Then the fourth quadrant is relationship marketing and when I do marketing seminars with people, I have a hundred people there, I will ask them to write down or just to raise their hands, which quadrant do you get majority of your clients from and 99 of them will raise their hands for relationship marketing and one guy didn’t understand the question. So, the point that is we can spend money on marketing, but all we spend it with the idea that you can build relationships. The last principle that I share in marketing that’s kind of is an uber principle is principle of recency and frequency. Everything in marketing and this implies to big and small businesses, the only way to get someone to test you is that you are recently in contact with them or you are frequently in contact with them and you are doing it in a way where you are not stalking them; they actually want to hear from you. So, think of it in terms of relationships. If you go into – a guy goes into a bar, goes into 50 bars and comes out complaining and you ask him what’s wrong and he says “Well, I went into 50 different bars and I asked 50 different women to marry me and none of them would.” That was recent, but it wasn’t frequent. You might have to have a few dates first and vice versa; if you have a few dates and you start telling the person you love them and you date for a year and tell them everyday you love them, then you get married and at the altar you say “I love you and if it ever changes I will let you know,” well, that was frequent, but it’s no longer going to be recent. Neither one of those are good marketing strategies. That’s why small business owners can’t put out a 5000 dollar ad once in a big newspaper and expect results. It wasn’t – it may have been recent, but it wasn’t frequent. So, keep those two things in mind whatever you are doing, they have to be both.
JP: So, let’s talk about that as far as practical implementation goes. So, let’s say that I have a database of all of my contacts and how often should I be contacting each of them and when I do contact them what should I talk about because I am not going to call them up and try and sell them every time. So, what do we talk about?
Chuck: Again, here is another principle of marketing and sales and we teach this in our 11-week Double Your Income challenge. We say serve, don’t sell. Stop selling, stop talking about your business, figure out how you can help that other person even if it has nothing to do with your business. So, the way to contact them, the way to make them want to talk to you is as they open your emails or that you talk to them in person whatever it is, you serve, then you figure out what they need and then you give them that and over time they get used to that and they want to listen to you, they want to hear from you. We did this as a workshop one day for 30 minutes. We had about 20 people in the room and we said “All right, let’s pick the vocation that none of us would want to hear from ever” and the majority response was – no surprise – used car salesman, and we said “Okay, let’s workshop that one – how could we get it to where you would actually want to hear from a used car salesman?” First principle is don’t sell, serve. So we figured out 12 different ways you can hear from the used car salesman once a month, simple stuff like knowing people zip codes and emailing them and saying “Hey, your high school is having a carwash at our used-car lot this Sunday, come support your team.” That’s it. Twice a year the clock changes, email out “Hey, if you don’t know how to change the clock on your car, we know it only happens twice a year, nobody knows how to do that, bring it by and we will change the clock for you, no strings attached” and birthday and you just go on and on. We found like 35 ways that you would want to hear from a used car salesman and as far as frequency; it depends on where you are in the relationship. I would say that you want to be recent and frequent but never stalking and the more you serve them, the more frequently you can email them. We send out – this is really a lot and I wouldn’t encourage people to do this, but we built relationships over long period of time. We probably send out one email almost everyday to the 3500 – I think it’s 4000-5000 people in our database and we don’t get a lot of people unsubscribing those. We get a pretty high open rate and that’s because those emails are designed in a way that we are inviting them to stop that would serve them or we were just serving them in the email. So, that’s the tap dance. Figure out how well you can serve them and the more you serve them, the more they will want to hear from you.
JP: That’s great advice and wow – so basically what your advices on the marketing front is to do relationship marketing and may be some public relations, but skip the advertising pretty much all together as a small business.
Chuck: Yes, there are always exceptions to the rule. For instance, I know a good carpet cleaner who did direct marketing. She got into the Valpak stuff – the little blue envelope that comes to your house and that’s direct marketing because she knows she is going to people with carpets and that worked and then she also advertised in the local once a week newspaper, weekly newspaper for 300 bucks and that worked and she always had to call to action. So, she knew exactly where this stuff was coming from. If you read this in the newspaper then tell me that and I will give you 10 percent off of fill in the blank. So, she knew exactly where her responses were coming from. That’s another thing that marketing should be for small business owners. Never do branding and recognition marketing as a small business owner. Do call to action “I clean carpets and here is a coupon, cut this coupon out and call me or call me within three days and we will give you 10 percent off” or it’s always to call to action. So, that would be another piece of good advice for them to run with.
JP: Yes, you were talking earlier too about that we look at big companies and try and imitate them. Big companies spend all of their money on branding. There are very little, very few big companies have any kind of call to action, they just want their brand in front of us as often as possible so that when we are at Walmart or the car dealership, we recognize their brand and we are comfortable with it and we are more likely to buy it. Small business owners can’t afford to do that. We have to make sure that we convert all of our marketing dollars into revenue because there is not enough – there is just not enough to do branding.
Chuck: Yes, we actually have our small business owners, we try and get them to get rid of the word “marketing” and use in its place “indirect revenue” because we want them to get clearly in their heads that the reason they are going to go and Valpak or anything else is that that money should come right back to them as revenue. They should put a buck in and get ten bucks back. They cannot, like you said, cannot afford to do brand recognition marketing that remember the rule of recency and frequency. In order to be able to say “Just do it” like Nike does and have it stick, the number of times you have to see that and the millions of dollars that go into that, we cannot afford to do that kind of brand recognition marketing, but on a personal basis when we get into relationship marketing, it’s still the same. Recency and frequency do not expect to chop some guy down at a networking event stabbing with your business card and expect him to become a client. We find that it takes three to five invites to get somebody to come – even begin to think about coming to one of our events when we know we will serve them and it’s 5 to 7 before they actually come and those are people we know in our building relationships with doing things to serve them, they don’t have anything to do with our business. So, that’s we have – I guess one of the ways to say, the small business owners unfortunately have more time than money. Big businesses have more money than time. They can afford to build relationships through that kind of recency and frequency. So, they threw money at it. We can’t afford to throw money at it. So, we have to build recency and frequency by making friends.
JP: Yes, I love it. Okay, so you own or kind of run a coaching mentoring business. So, do you have a coach or a mentor yourself for your own business?
Chuck: That’s good question. Yes, I have got a guy that we have been talking back and forth for years and once a month, Eddie, who lives in Virginia and I always tell Eddie that he is no smarter than I am, but he seems to come up with a lot better ideas than I do for me and that’s because Eddie – it’s one of the four building blocks of the business. What we found that business owners need is outside eyes on their business. I know my stories, I like my stories, I believe my stories and until somebody comes along and challenges my stories, I am going to run with it. So, I have Eddie, I have John Heenan in Ireland who I rely on heavily, we talk a lot and a few other people like that and then I just I am always looking and learning, I get up every morning assuming I know less than I did the day before. That helps me stay in the mode of being coachable and teachable everyday. So, yes I would encourage everybody to do that.
JP: Yes, that’s a common denominator of all the people I have interviewed is that they all have coaches or mentors or both and/or masterminds or a combination. It’s so important to get that outside perspective.
Chuck: Really think about the great athletes, the really good ones, we think a coach or we call it a business advisor that that’s something you should do for three to six months or may be a year, but all the great athletes, they have got swing coaches and dribbling coaches and fitness coaches and they are just doing that all the time. So, we always need outside eyes.
JP: Yes, we do. Is there a book besides one of your own which I will put links of your books and to the 3to5 Club website on the show notes for this podcast, but is there a book that you can recommend other than the ones you’ve written?
Chuck: Yes, I always go right back to Self-Made in America by John McClintock, Self-Made in America, kind of a clever little play on the Made in America thing.
JP: Okay and what’s it about?
Chuck: I like that book, I am not a big fan of motivational speakers or motivational books, but that’s one of the reasons I like this motivational book because it was written by a guy who build hair salon. In the trenches, he learned – it’s a story of how he became successful and because it’s real, it’s authentic, it’s not somebody telling you to go chant at a vision board or walk on coals, and both of those can be good too by the way, but I think Self-Made in America should be mandatory reading for every potential small business owner. The second one would be – I forgot the name – Bo Burlingham’s book Small Giants – how to be a giant as a small company and it’s about significance in building a business that does something for you and your community around. So, those would be two – I tell every small business owner who is starting or who has been in business for 15 years, run out and buy Self-Made in America and read down first and then read Small Giants.
JP: Very good. I will put links to those on the show notes page. All right, we have time for a couple of more questions. The first one is – looking back from where you are right now, you have been an entrepreneur a long time, but would you do anything differently?
Chuck: Gosh, that’s a great question and the answer is if I knew at the time the mistake I was making, I would never have done that, but looking back I wouldn’t change a blessed thing and that’s something I had to learn over time because I am a little bit of a perfectionist at some things and it’s easy to get in the regret game and boy, could, should, would, but the reason I have gotten to the point where I will never change a thing is if I did something really great, the only thing I should take out that is fascinating “How did that happen?” And I should learn from it and if I did something really stupid, the only thing I should take out of that is fascinating “How that happened?” So, I don’t do it again. So, in either case, I am learning how to repeat the things that we were good and to avoid the things we were bad and if I was to go back and change some of the things that I did that were really stupid, I wouldn’t be the person I am today, I wouldn’t know what I know today, I wouldn’t be equipped to not make that mistake. Eventually, I would end up making that mistake, so I might as well just go ahead and be thankful I made it, ask myself fascinating, learn from it, and get better.
JP: Yes, I feel the same way especially about my failures. I feel like I learned far more from my failures than I did from my successes. We try to learn from our successes too, but for some reason those failures, they really stand out.
Chuck: That’s why famous athletes are rarely good coaches, they didn’t fail enough. They were so good they have no idea what to do. We call it practicing. Stop failing, stop succeeding, and just practice, just get better all the time, fascinating “How that happened?”
JP: Yes, it is a journey and once you appreciate the journey and accept it as a journey and not a destination, it becomes a lot more fun and you are more likely to be successful.
Chuck: Yes, I couldn’t agree more.
JP: All right, Chuck, last question for you. What is your single most important piece of business advice that you would give to someone who is just thinking about starting a business?
Chuck: Well, I am not going to say get my book, but find the word “conation to conate” and study it. I know it sounds really weird. It’s the most important business word you’ve never heard “conation.” Conation means the will to succeed that manifests itself in single-minded pursuit of the goal or shorter version, committed movement in a purposeful direction. Conation replaces cognition. Conation is much more important and includes cognition as one of it’s faithful servants and conation basically means figure out what you want to do, get moving, stay moving, and never quit and that’s conation.
JP: Wow, I have never heard that word before, but I am going to start using it.
Chuck: It’s in the book Self-Made in America as well. That’s where I learned that word and it’s also in my book.
JP: Great, I will put a link to the definition of that in the show notes as well.
JP: Because I tell people all the time the most that you got to just start, just start. If you can do one thing, just get started and then you got to keep going, you can’t stop.
Chuck: Yes, don’t stop to analyze. Keep moving, just slow down a little bit; get moving, stay moving, and never quit.
JP: Yes, well Chuck thank you so much for joining me on this episode of the Smart Energized Entrepreneurs Podcast.
Chuck: Always my pleasure JP.
JP: Yes, we will be in touch soon.
Chuck: All right, thank you my friend.
JP: Thanks Chuck.
See, was I right? Chuck is a wealth of entrepreneurial information, very inspirational, lot of great advice. If you are interested in either starting your own 3to5 Club or joining one, go to 3to5Club.com. Check out their website, see if there is one in your area or may be you can start one in your area. Also, the links to his books will be on the show notes page at JPStonestreet.com/podcast. Go there, check that out, and make sure and buy his books because they are fantastic. Well, I think that is it for this episode. So, once again, thank you so much for sticking with it until the end. This is JP Stonestreet with the Smart Energized Entrepreneurs Podcast.