Bottleneck Breakthrough Audiobook - Chapter 1 - The Bottleneck | Ep 22

Speaker A

00:00:01.760 - 00:15:31.450

Chapter 1 the Bottleneck Henry Ford said that most people spend more time and energy going around problems than in trying to solve them. 30 minutes until the plane lands and Tim can finally get home to unwind for a day or two over the weekend.

Maybe he'll shoot over to the beach house tonight to make the most of it. What's the point of owning it anyway if he never uses it?

The week long trip to meet with two worthwhile prospects and a long standing high maintenance client seems to be the norm now. At least that's how it feels since Tim is the best closer in his company, outpacing his entire sales team and both of his partners combined.

Running a 20 million dollar company was supposed to be more glamorous and fulfilling than the struggling startup from 25 years ago. That was what he convinced himself of when merging with his two partners nearly a decade ago.

Now it seems like the only way to really get what he wants from this business is to keep the throttle down to grow profits so they can get acquired by another company, allowing Tim to bail out with his pile of cash. Like so many business owners have succeeded at creating a sustainable business, one that manages to pay the bills month in and month out.

Tim is trapped on a hamster wheel. He's gone from being an innovator to being a closer and manager.

And like most business owners, he's discovered that closing doesn't bring the rush it used to and managing the day to day business grew old a long time ago. Every business goes through this pattern, assuming they survive long enough.

It's the classic trap of success, achieving what so few can, only to be stuck in the end doing what you never really wanted to do.

And like most business owners, Tim is trapped, flying to every corner of the country and putting out fires that should have been prevented in the first place. Tim's manufacturing company is stuck at a plateau. Every business in every industry hits them and they come at fairly similar stages.

For Tim, it's at 20 million right now and like most businesses that has stalled out on a plateau. The business has been there for a few years.

If Tim were reading another book like Built to Sell by John Warrilow, he'd focus on reducing the options they offer clients so sales and fulfillment could be streamlined.

Michael Gerber of the E Myth would have him focus on documenting all of their systems so his staff could serve clients more effectively by having checklists to follow for most of their day to day tasks.

As an experienced business growth consultant, I agree with these general principles which have been proven to work over the years, helping to solve problems that are common in many businesses. In fact, I often recommend them to my clients and we'll discuss them at various points in this book.

But instead of a blanket prescription that will generally help every business at every stage of growth, I prefer a specific solution that hits the bullseye, creating as much of an improvement as possible with the least amount of effort and risk that creates leverage.

So let's find the levers that move your business mountains the Levers that Matter the single most reliable method I've found to uncover these levers is finding and fixing the bottlenecks in your business. The great news is that you can learn to do this to unlock massive growth or make your business run more smoothly without you.

Bottleneck Hunting A bottleneck is any point of friction in your business that prevents you from generating more revenue or generating the same revenue more easily. When I talk about bottlenecks, business owners always ask for examples of what they look like so they can find them in their own business.

There will be plenty of examples throughout this book, along with checklists and tools online@bottleneckbreakthrough.com book. I use the short link bbg li for bottleneckbreakthroughgroup link throughout this book to make sure links are always current and easier to type out.

For young companies, the most common bottleneck occurs when the owner no longer has the capacity to keep everything running. Crossing the chasm from doing everything herself to finding someone she can trust and then delegating to them can be a daunting challenge.

Then there are companies right at the one million dollar plateau. They've got a good team in place and the owner is out making deals and keeping everyone fed.

But he's probably holding back on closing as much as he could because he knows the overflow would fall back on his shoulders. In both of these cases, there are clear, proven steps the business owner can take to remove these bottlenecks and unlock more growth.

This type of growth can be very fast occurring in the six growth levers which we will cover thoroughly in this book. They are strategy, marketing, management, systems, vision, and mindset.

As we go through each section, you'll learn to see each bottleneck and how to fix it. Plus you'll develop the foundation for a very powerful skill in the process.

Master this one skill and you'll be in the top 1% of business owners in the world that grow companies. Instead of simply owning a job, breaking through bottlenecks is the most effective path you'll find to create sustainable growth.

I'm talking about the kind of growth that makes your life easier and increases the value of your business at the same time. As for Tim, not having a director of sales who can level up the sales team is his bottleneck right now.

The return from investing in talented sales leadership won't pay off immediately, but within 6 to 12 months the momentum will be visible. By this time next year, Tim will have cut his travel time in half while watching revenue break through the current plateau.

Plus he'll spend more weekends at the beach house Theory of Constraints after seeing the power of fixing bottlenecks in a business, I was pleased to find that it was similar to the theory of constraints proposed by Eli Goldratt in his book the Goal.

Goldratt was attempting to refocus manufacturing production in the early 1980s when manufacturers were obsessed with efficiency at every stage in the process. You might be wondering what could possibly be the problem with making everything as efficient as possible.

Well, the problem lies in the fact that certain stages of production are more time consuming or costly than other stages.

For example, a cell phone has a number of parts from a screen to a microphone, a case, a processor, and so on, and they need to be produced individually. Before gold rat came into the picture, the manufacturer would aim to make each step of the process as efficient as possible.

However, if a cell phone's microphone is the easiest piece to build and the screen the hardest, then the manufacturer will quickly end up with a backlog of microphones. If they only focus on efficiency, microphones will be produced much more quickly than the screens, which is the bottleneck.

But they can't do anything with the excess microphones since they need both items to produce a phone. According to Goldratt, instead of focusing on the efficiency of every step in the manufacturing process, they should focus on fixing the bottlenecks.

Goldratt proposed that instead of running a manufacturing stage 247 simply because that provides the lowest cost and the most output they could get from that process, manufacturers should instead focus on producing items only when they are needed. This strategy would introduce the concept of just in time manufacturing instead of persistent manufacturing.

Although Goldratt's book focuses on manufacturing, the theory of constraints can be adapted to any business when attempting to grow yours, there are specific bottlenecks you'll face at every key stage of growth, which you will learn throughout this book. The best part about fixing bottlenecks is that they have a system wide effect.

When you fix them, they can ripple through the whole company to improve numerous areas at once.

I'll provide plenty of examples as we Go along Sales Bottleneck in order to help you develop your own bottleneck breakthrough skills, each section of this book covers one of the six growth levers and the related bottlenecks that I have helped clients eliminate.

As an introduction, here's a great example from the marketing lever to help you see the power of breaking through bottlenecks One of my preferred areas to blow out bottlenecks is the sales process. Closing prospects is the single most important part of every business, but it is typically very inefficient when I review it in real life.

You might think it would be more streamlined or use more widely known best practices by now, but you'd be amazed at how much of a mess it is in many companies, Even those doing $100 million a year in revenue on the front end of the sales process is the qualification step. Most businesses waste a lot of time here since they don't have any way to filter out unqualified prospects.

They end up taking calls from anyone, creating proposals without uncovering their budget, or submitting bids on jobs they have no chance of ever winning. The list of ways to waste energy around closing is long.

Enter the pre Qualification for most of my clients, we implement this through a questionnaire on their website built with a tool named Typeform. You can find out more at BBG Li Typeform and it requires all prospects to complete before they go any further in the sales process.

I know you might be scared to implement something like this, especially if you're not getting enough quality leads as it is. I get it. When cash flow is tight, anyone with a pulse can seem like the next meal ticket.

But when you put up a filter, those prospects that can afford your solution end up appreciating this process and are easier to close. Plus, it weeds out all of the tire kickers that waste your time.

A prospecting questionnaire does not need to be overwhelming, it just needs to target the key factors that you want your clients to have in order to determine if that prospect is the right one for you. We'll go into more detail on a specific case study using this bottleneck solution in Chapter 4.

Onboarding Bottleneck 1 more example bottleneck occurred in a company that offered a great piece of software that helped their small business clients improve their marketing. Amazingly, they were already getting 1,000 new subscribers a month on a $1 trial.

The trial went for 14 days and then it switched to a $97 a month subscription. The software worked extremely well, delivering results for their clients very magically.

They approached me to find more affiliates to promote it to scale their growth while performing my due diligence. I asked them how long the average person used the program and was shocked when they said it was only 2.4 months.

This meant the average client value was around $214. Their product should have easily had an average client lifetime value of 6 to $700, if not more, based on how effective it was for their clients.

We discussed the problem of the low retention and I told them they didn't need more traffic or leads from affiliates, but instead needed to work on retention levels first.

Like many new software programs, its weakness arose from the fact that it was overwhelming to use, the onboarding process was horrible and the user interface was even worse.

While making my pitch to improve their retention, I walked them through an example of another marketing company, let's call it Company B, that had just invested heavily in improving their onboarding.

Company B had struggled with retention for years, but recognized that when new clients actually put the software to use, they stuck around for the long term. After researching their retention issue, I estimated we could quadruple their profits by simply addressing this bottleneck.

Once that was solved, we could move on to recruit more affiliates, attracting them more effectively with the improved client lifetime value.

When I presented the analysis of my recommendations to fix the low retention, I was shocked when they said they weren't interested in working on that. The data was so clear to me and the benefits, both short and long term, were massive.

Unfortunately, they were just fixated on adding more affiliates to pour leads into their leaky bucket. As a result, we parted ways because they knew getting affiliates would be 10 times harder than it needed to be with such a low client lifetime value.

And I'm not a masochist looking for battles that can't be won.

The punchline to the story is that the company has stagnated over the six years since stuck at the same plateau, while Company B's improved onboarding helped them continue growing into the stratosphere. And in the same time frame, they even raised $125 million of capital to accelerate that growth.

Action Items Below is a list of the most common bottlenecks I see over and over. There are chapters or sections of a chapter in this book devoted to each one.

If one jumps out to you as being a major problem right now, read that chapter and get it fixed. This book was written to walk you through the key leverage points in every business, equipping you along the way to find and fix your bottlenecks.

It ends in chapter 13, where you create your own bottleneck breakthrough plan My hope is that this book will become your growth manual and that you will come back to it anytime you need to tackle the next bottleneck in your business. Traffic Pillars in Chapter five Getting more prospects is the siren song of business owners.

Every client comes to me thinking this is their biggest bottleneck, especially when they consume constant hype about the latest and greatest marketing channel like Facebook ads or chatbots. Most of the time, it is a novel distraction from bigger bottlenecks they should be dealing with.

If you don't have a consistent source of quality leads coming in, you likely have a traffic problem. Developing traffic pillars is a key method for scaling revenue as an incredibly powerful when your business is ready for it.

The beauty is that most traffic pillars can be started small and expanded as your company develops the capability to handle the added lead. Volume Chapters two and three Strategy is a word that is abused and misused regularly.

Playing off the definition of a plan of action designed to achieve a major aim. I try to use it properly with two specific bottlenecks, Big Ideas and optimization.

The Big Idea helps you differentiate yourself from the competition, makes it easier for prospects to know what they'll get from you, and boosts all of your marketing communications to work more effectively.

Look into the Big idea if you're losing prospects to competitors or you aren't getting a worthwhile response from your current marketing Closing In Chapter six this is my favorite bottleneck to work on because the revenue improvement is almost instant and there are so many ways to quickly optimize the closing process.

Dig into closing if you aren't winning at least 30% of proposals, your sales team isn't hitting quotas, or you're spending significant time just qualifying leads. Management Chapter 7 to 9 Every business owner hates this topic, equating it to bureaucracy.

This ends up being one of the biggest bottlenecks to significant growth since each revenue plateau requires additional management skills to succeed, I've boiled management down to the most effective hacks used by my clients. Those running companies under 20 million. Dig into management as soon as you can stomach it.

It will always be a bottleneck you can improve, whether it involves recruiting better talent or getting the most from your staff. McKinsey, Bain and Boston Consulting Group are all billion dollar management consulting firms for a reason.

You may not know of them, but they silently serve Fortune 500 companies in order to help them keep growing and stay competitive. Systems Chapter 10 this is another topic very few business owners enjoy.

The result is that they end up operating as a firefighter, filling each day with putting out fires that could have been prevented if systems and checklists existed for their staff to follow.

This is another area the Fortune 500 get right by documenting how to fulfill their clients, allowing them to recruit and upgrade their staff anytime it is necessary. One massive bottleneck can show up.

When your staff finally learns by trial and error how to do their job but never documents it, they can end up holding you hostage with poor performance or attitude because they know you can't replace them.

Dig into systems if you have staff you can't fire because of their deep experience and the lack of documentation detailing how they perform their job, or if dealing with unprofitable projects or quality control issues, reinventing the wheel on every new hire or project is a massive opportunity cost holding your company back mindset in chapter 14, as the leader of your business, you set the strategy and direction. You also establish the culture and attitude that it develops.

If you still find the company stuck at key plateaus even after fixing the bottlenecks above, then looking internally is likely the best bottleneck to tackle.

Dig into mindset if you're tired of business owners who do not appear to be as talented as you somehow managing to grow more profitable companies, or if you find the same unexplainable issues repeatedly cropping up. I found that dealing with my bad mental programming has produced the greatest improvement in my consulting and the rest of my life.

That was the biggest bottleneck waiting to be tackled. Want a shortcut? Go to BBG LI Assessment and take the Bottleneck Breakthrough assessment.

Your answers will go through the bottleneck matrix and generate a report with predicted bottlenecks as well as recommendations on how to remove them.

It is continually being updated as more businesses get results from using it, so my hope is that it will become a useful tool for you anytime you need clarity on what to tackle next to unlock more growth.