Mindset & Planning Tips to Get Through the Chaos | Ep 10

Speaker A

00:00:00.560 - 00:36:30.200

This is episode 10, and I share the game plan I'm helping my clients with through the coronavirus chaos, as well as updates on the SBA emergency financing that's being rolled out. This is the Bottleneck Breakthrough podcast.

I'm Josh Long, and this is all about helping you find and fix the biggest challenges in your business to unlock growth and profits that last. Hey, welcome to the podcast.

I don't know about you, but this whole quarantine thing is starting to wear thin, and it feels like we're just at the start of it. It's Saturday, April 4th. As I record this, I feel like I've been a trauma surgeon on the battlefield the last three weeks, dealing with clients.

Thankfully, none of my clients are in that bad of a spot. Some of them are actually growing. Some of them are looking to take over market share through all of this.

But I got to say, the conspiracy theories are piling up in my head when I look at the amount of hospitals that are empty that when. And then the New York Times says that the death toll and they're moving in refrigerated trailers for the thousands of dead bodies in New York.

And I got a buddy that was in New York City two days ago @ a hospital, and nobody was there. It feels very odd, to say the least. So not turning this into a political or conspiracy theory podcast.

We're here to talk about bottlenecks, talking about business, talk about kicking ass and taking names. And so today, what I want to talk about, hopefully, is something that lasts for a long time. That's useful. His mindset through the chaos.

The reality is that throughout history, humanity has faced ginormous challenges. The ones that are going around now are talking about the 1918 Spanish flu.

It was on the heels of World War I, and it came out, started hitting all of these soldiers between age of 20 and 40.

They were dropping like flies, dying quickly, dying horrific deaths right after they had gone through surviving one of the most bloody, deadly wars of all time. And so there's a lot of fear right now that we're going to face something like that.

And again, I'm not here to comment on what the coronavirus is going to do, or Wuhan flu, as I like to call it. I mean, Scott Adams calling it that, that. What I want to talk about is how do you get. How do you navigate through this uncertainty?

So my outline that I'm giving all of my clients is to plan, adapt, innovate, and reduce the noise. I know I sound like a drill sergeant dealing with battle plans and what to do once the enemy attacks and pivots or whatever.

But the reality is that this is part of leadership. This is part of organizational leadership that works in any market anytime.

We've just gotten fat and happy over the last decade plus and there's been a lot of slack in companies.

A lot of companies I know that have kept poorly performing employees on board or put up with poor clients just because they didn't want to be that strict. They, they didn't want to be viewed as a drill sergeant.

They didn't want to be viewed as greedy or money hungry or irrational or uncompassionate or whatever labels get put on companies as they continue to grow aggressively and keep putting the company and the clients and the employees interests, best interests at heart. So this coronavirus has allowed a lot of companies to take massive action.

Some are required to sustain, to stay alive, but some are now able to feel like they have permission to finally do what they really wanted.

I just got off a call with an attorney out of the Bay Area and he's got a small firm, handful, good sized staff for most of us listening to this, but they are all working from home, even though they have a really nice office in downtown San Francisco. And he's been trying to move more remotely. And in the legal world up until the last three weeks, you were viewed as second rate.

If you were a remote workforce, you were viewed as less than the big, big firms, less than the ideal. I always think of the show suits and Harvey Specter and that giant office in Manhattan, way up in that building looking over all of Manhattan.

I mean, that's what the big companies want to hire, that's what they want to pay for, is that everybody's there working their brains out, committed to solving their problems. And if you're working from home, you're just not taking it seriously. It's kind of the undertone of the legal space.

And this client is able to do that now and move remote and not worry about the blowback or the perception of their status in the marketplace because they work with really high level intellectual property stuff out of San Francisco. That's the core of intellectual property law in the world.

So they have to maintain an identity, have to maintain a certain level of panache, but they're able to pivot and innovate right now to get out ahead of the market and stay profitable and come out stronger on the backside, whatever the new normal looks like.

So planning every entrepreneur's favorite thing to do, I think they would rather go through a 10 hour webinar on some new piece of software than spend 10 minutes planning the execution of something. But that's what I'm advising clients to do right now. The basic framework of planning in the midst of uncertainty is if this, then that.

So it's if this happens, if we take a 10% reduction in revenue this month, if we lose 40% of our clients this month, if we our lead flow drops in half this month, then we're going to do X. So what is that X? Well, it could be if we get more than 20% cancellations.

Let's say you're a recurring service company and let's say you're a CPA and you're doing taxes right now. If we get more than 20% of a reduction of clients this year over last year, then we'll do this and that may be.

We may furlough some staff, we may fire this one staffer, we may pivot to try another offer. So it's if this happens, then we'll do that.

So a client of mine, current client, went through this exercise and they did about 1.4 million last year and they saw if our revenue drops by 500,000 back to 900,000 in revenue this year, we will let go of our field crew that does the servicing and will still be profitable.

So that's what they did, was they walked through the math and said, okay, if we lose essentially a third of our business and we don't fulfill on it, we'll still be fine, given our current fixed overhead and internal team overhead. So that kind of planning brings a lot of clarity through this uncertainty.

A lot of takes away a lot of the fear of, oh, bodies are piling up in New York. Oh, this has a 50% mortality rate. Or what's the worst? I think I heard somebody say it has a 12% mortality rate. I don't believe that for one second.

But regardless, until his market, which is a local market in Illinois, starts having bodies piling up and they get massive cancellations on their business, service business, he can move forward with confidence that every day they keep serving clients, they keep billing clients, they keep invoicing and collecting, they have no problems with their accounts receivable. They can keep moving forward with confidence.

And after that discussion, he then said, you know, I think I'd like to buy out my competitors when they go under, because he can buy routes, he can buy their client list for pennies on the dollar. And that's a great strategic position to be in, to be ready to capitalize when the opportunities are there.

Because otherwise, if you're waiting for the government to come out with some grant or loan to pay for your staff and you're just hoping and praying that you can get some banker to respond to you, and then when that money comes in, then you'll figure out what to do with it. You'll just shove it down payroll and then maybe you'll figure out, oh yeah, there might be some opportunities to do something. Now it's too late.

You're so many steps behind my client in that conversation. So planning if this, then that another client is kind of schizophrenic. They also have a long term service based business.

The clients are ongoing, but they thought this market turn was going to kill their clients and kill all lead gen.

The funny thing is they've had clients retract, pause, downgrade some of their services, but they have more leads than they've ever had because their market now has time to work on this stuff. And so March might have been their best month of new client acquisition ever.

Even though they downsized their sales team, they cut all their marketing, they hunkered down getting ready for the sky to fall. And yet their market has money, is interested, has time, is willing to work with them.

So for them again, it feels schizophrenic because they've got clients downgrading or pausing while they also have more new clients coming on board than ever before. So we just look at the P and l and their 30 day billing cycle to see how to adapt.

And so once we got through March, which I told them, I said let's just get to the end of March and see what happens. Then they could feel confident moving further and further into new client acquisition, being more aggressive.

We're still not spending any money on advertising. They've got a good client list, they've got great visitors to their website.

We can do some retargeting which we haven't even started, but that plan around what's happening to their P and L, what's happening in their marketplace is what we have to adapt to. So that's step two is adapt. And you should only be making changes based on reality, not what the news says might happen.

So again, I talked about that, if this happens, then we'll respond by doing X. So both of those clients, we've gone through it.

One of them, the one that if they lose 500 grand, they're still fine, they had eight cancellations in one day. And I said, okay, let's look at that.

What'd you have last March and for the whole month of March, they had 56 cancellations in a normal year of recurring clients. And this March, they ended up with 26. So he's money ahead. Clients aren't canceling yet.

Then he's got more lead flow because we spent time earlier in the year setting up better lead channels for him. So he's got more leads, but they're not closing as well.

So he's frustrated because his staff, they've been closing at like a 45% rate, and that his mark, his goal is 50%. Well, right now they're only like 25%. But there's a lot of those leads that are getting proposals that may convert later.

So that conversion rate may climb, which it does on longer sales cycles. It always goes up over time. But he's got more lead flow and he's got less cancellation. So he's still fine.

In the midst of this uncertainty, if his close rate stays at 25%, it's still fine, it's still profitable. There's nothing wrong with that.

And so that's again, adapting his expectations so that he doesn't feel like his staff screwing up or that there's anything wrong or they need to close harder, any of that stuff. So you plan, you adapt, and then third, you innovate.

And for him, he doesn't really need to innovate, maybe change some of the packages if it stretches out some of the payments. I don't suggest him finance anything or carry credit for anybody. That's definitely not something.

If you've been doing that in your business, do not do that going forward. That is the fastest path to bankruptcy, is doing work for free with accounts receivable that you can't collect on.

My past client, one of my past clients had a deal with the Veterans Administration for financing, and he would get all of these students into his program, and then the VA would just drag and drag and drag.

And he had his most profitable year, had the highest revenue ever, had tripled since we started working together, but went under out of insolvency because the Veterans Administration was slow on payment. And so do not think that you could build up some war chest of accounts receivable going into these uncertain times.

The chance that the companies you're doing this work for go under is relatively high. Very, very uncertain times.

The last thing I want you to do is do a bunch of work for free and then never be able to get paid on it, even if they're not out of business, working with a factoring company, who knows what the Collection industry changes through these times because normal is no longer normal. Whatever was the standard in your industry before is no longer the standard on payments, collection, any of that stuff.

So innovation, if people haven't been buying what you're selling, then you've got to innovate. And that means to try new offers.

And you do that even if you're not 100% sure how to fulfill or even price them, what the profitability is, the opportunities to help others will always be there.

But if they're not buying what you've been selling even months before this, now is the time to innovate because there's always opportunity to help others. That's what the economy is based on. It's based on delivering value in exchange for payment.

Unless we go purely communist, which April feels like our trial run on communism, because everything's shut down and the government's printing checks and making people stay home. But I don't think this is going to last unless we move communist. The economy is based on delivering value. It's in exchange for payment.

So my favorite thinker around business, Peter Drucker, says there are only two basic functions in a business. To innovate and then market that innovation. That is it.

And so if you've been marketing or you've been following up with prospects and they're stalling out, they're not converting, or you're in an industry that your conversion process is out of your hands, like, say, real estate, you can't get lenders to approve your clients. And I just read today that I think it was Wells Fargo is canceling all jumbo loans.

I think that was if from my mortgage days, I think that's over 650,000 or 700,000 is the dollar amount. So they're canceling that. So if you're in an industry that somebody else can't approve your clients, then what do you pivot? What do you change?

How do you innovate there so that you're able to help your market and still get paid? I don't have answers right now for real estate agents.

I think that in the mortgage renegotiation, real estate owned, that market's going to grow again.

The foreclosure market, there's going to be opportunities because there's no way that stopping the economy for 60 days plus through March and April doesn't cause the whole flywheel of the economy to stop. And means people can't make their mortgage, means banks aren't getting paid, means foreclosures happen.

But then if the government's now saying you can't foreclose, there's a stay on foreclosures. Then the banks become insolvent. So the government has to pump up those banks with emergency financing.

And it's a huge domino effect that's going to happen.

So I foresee that the real estate market is going to be severely hammered going forward because banks are already tightening their lending two weeks into this. And the ability to get a home sold is going to be infinitely harder when there's less buyers, because less people have money.

So figuring out, okay, that's the reality. What do I do to survive? Well, you have to innovate.

Means maybe you change your business model, maybe you've been a listing agent and that's all you've done up until this point. And so now what do you do? Do you get into evictions? Do you get into property management?

Do you get into representing buyers and helping buyers navigate getting approved for buyers that are qualified and partnering with a mortgage broker that has some channel that can still get approvals? I don't know. But you have to innovate. So if you can't innovate, then you have to cut so significantly. Do not cover payroll with lines of credit.

Do not cover payroll with savings. Do not try to refinance something to cover payroll. If you can't cover payroll out of the revenue coming in right now, cut payroll. It's horrible.

It's the worst feeling in the world to let people go that have done nothing wrong.

But you as the business owner, have to sustain your finances, have to sustain your net worth that you've built so that you just don't go down in a ball of flames. I've been there, I've done that. In the mortgage crisis. I was on the front lines. Mortgage industry was the first hit in the finite in the recession.

And I was paying payroll with lines of credit because I thought, oh, this is going to turn around. Oh, IndyMac bank, they weren't as big in August of 2007. It wasn't that big of a deal. The banks will get it sorted out.

And it was the beginning of the end. And I just buried myself further and further and had to file bankruptcy in 2008.

So if you cannot innovate your way out of this and you cannot find a new way to get revenue, you have to cut, you have to stop the bleeding and you have to figure out how to preserve whatever wealth, whatever equity, whatever reserves you have to get through the next season.

So I know not enough of us have years and years of reserves and emergency fund and low debt and everything paid off and all the places we want to be financially to be as bulletproof and stable as possible. So you have to adapt quickly as things as reality keep setting in.

So a client of mine the other day, a friend that I've helped kind of from afar, had a bunch of clients cancel, had a bunch of prospects not convert. And I did not realize that he had been floating essentially his team for a number of months.

And so I told him, you got to let everybody go and you just got to maintain it yourself. And that's a hard thing to do and a hard thing to go back to. But it's reality. That's how you come out of this.

Without being set back for years from having to file bankruptcy, having to rebuild from scratch, having to find a new market, maintain what you've got, it's a lot easier in most places to sustain that and then grow on the backside of whatever new normal looks like. So we've planned, we've adapted, innovate again. All it is is come up with offers and put make them to people.

So you know this price that you turned down six months ago for this scope, what if we change it? What if we try this for this other price? So if they're not getting set up, if your setup fee is too high, waive the setup fee, break it in half.

If you've had a six month project that was 30,000, can you make it a month to month project at 2,500amonth and have more fixed deliverables around the scope? What is it that you can go back and innovate, make offers, see if anybody takes you up on them, make them fast.

Go to everybody that said no to your proposals, come back with something new. And if they're not taking you up on it, then we look at reality, we're not going to change.

And I'm not trying to be chicken Little, I'm not trying to be a cynic. I think all of this is unnecessary.

Shutting down the economy to save some lives, the purely economic view of how many lives are saved in the end will never be known.

Because if we get people that commit suicide that go without, that have huge downstream ripples through their families and their lives for years and years. People die over that. Will the cost savings analysis of preventing people from dying from coronavirus have paid off? I don't think so.

I think this killing of the economy to save lives is foolish because the math says all lives are being saved across the board from motor Vehicle accidents, to gun shootings, to everything else, those have all gone down. So, yes, we're saving more lives, but we could have always saved more lives by killing the economy. So that, to me, is not the answer.

But reality is, they've put a massive wrench in all of this. Unemployment numbers are up to, I think 10 million was the last number I heard in the last two weeks.

So it's going to be a long time until normal comes back for most industries. So we adapt to reality, we innovate, and then we adapt if that innovation doesn't pan out. So the final piece of advice, reduce the noise.

Now, us adhd, brilliant entrepreneurs have a high tolerance for information way more than most people. We love reading, we love listening to podcasts, we listen to audiobooks, we listen to the news. We can do multiple things at once, usually.

And it's part of the magic that allows us to run fast and adapt to whatever the market throws at us. Unfortunately, there is way, way, way too much information coming at us.

And I think most of it, not only is it negative, but it's unreliable from my perspective. I do not trust any of the data coming out right now. It is too conflicting. There's too much quote, unquote, fake news, in my opinion.

And I don't know what the agenda is. I don't know what's really going on behind the scenes.

Everybody that I know in every major market that says death rates are skyrocketing and all this stuff, they're walking around on the streets, they're going to the hospitals, nothing is happening. So something's off.

But reducing that noise is important because even I, positive guy who encourages everybody I can, found myself getting hopeless, getting cynical, wanting to throw my hands in the air, all that stuff because so much negative stuff was coming at me. So I'd suggest not watching the news and not scrolling through your Facebook feed. I've deleted Facebook from my phone multiple times.

I reinstall it because I need to make a post or I need to do something in an update with something on it and then I delete it. So I'd suggest doing the same. The reality is that if a significant update comes out, I guarantee other people are going to tell you about it.

I've not watched the news since 2004 and I've never been in the dark on anything important or meaningful. Unfortunately, I still hear too much drama.

I still hear too much chaos and noise of gossip and pointlessness from the news because people talk about it. But that is my recommendation.

The other one is if possible, I'd also suggest batching your difficult conversations, whether that's dealing with frustrated clients, fearful employees, freaked out friends and in laws, whatever, batch those so you're not brought down by them every day.

I don't think there's any industry or any business right now that a frustrated or fearful client that wants to cancel or not be billed has to be called back immediately. You can respond to them, give them your calendar, make a calendar availability around a batch time and you shuffle them all into that stack.

I just had a call this morning of a prospect that completely misunderstood something has been a long term client of my friend and partner, Perry Marshall, misunderstood everything on Thursday.

It was very hurt and offended by our conversation and we just spent two hours reconciling it and finding the silver lining and trying to help him and his partner and their two businesses to make something out of it. And like we just pushed it to Saturday so we had the space, so we had time.

There's no reason to jump on the phone yesterday or cancel calls or whatever. And we got it resolved.

And batching difficult or negative such situations is hugely valuable because what you'll find is when you go one after the next, after the next, after the next, you build this kind of immunity to them. You realize, man, they're not really that bad. Hey, I'm kind of dealing with these all at once. This is great.

Or one goes really bad and the next one right behind it. You practice something different, you try something else.

And at the end of the day, as long as you behave like a human and you don't attack people or try to belittle them or make them look like a fool, 99% of people are going to be understanding, 99% of people are going to resolve their issue with you quite well. Now, firing employees, I batch that as well. I rip the band aid off. I find that walking in, sitting them down, say, hi, Steve, I have some bad news.

I need to let you go and I want to spend the rest of the time figuring out how to do that so that you can be set up as best as possible. And if it's true, tell them that there it's not anything you did wrong, just our cash flow is in a bad situation.

And I'm happy to talk it out and I'm happy to be here and support you, but I just ripped the band aid off. I walk in, I have some bad news. I'm sorry, but I need to let you go. And let's work out all the details from here.

I'm Happy to answer any questions, yada yada. So batching those is great. And doing them rapid fire, back to back is the best way I've found. So that way they are all dealt with quickly.

The gossip train is reduced as much as possible.

You let them know that you're not leaving them in a lurch in the conversation, in pain or anxiety, like, hey, you know, you've been a good employee, I really like you.

I know we're in hard times and you drag it on out and the whole time they're just waiting for the hammer and it's almost like torture and I never want to put somebody in that torture. So batch those difficult conversations, difficult things you've got to face. And then finally on reducing the noise, I'd say find a positive outlet.

I have a group of friends I chat with regularly that fills this for me. So I'd encourage you to foster your network for this. My Facebook group, Bottleneck Breakthrough Method is a great outlet for this.

I've got so many friends online.

My friend AJ Murzad, he's a fantastic, started out as a fitness pro, started out coaching fitness pros how to get clients and now he just helps so many brilliant minds to have online coaching businesses. And he's had meetups on Zoom the last couple weeks and I've shown up to him just because I need some community.

I'm an extreme extrovert and I'll tell you, I had so much fun and the first one I was on two weeks ago just recharged me and just snapped me out of my funk. And I thanked him for it. I told him, I said this group is fantastic and he's got a great program going on right now, a seven day challenge.

I'll find the link for it and tell you right now while we're talking. But he has, he's built a great community that is able to help.

He's just investing in helping improve everybody's attitude and everybody's environment. He's not even selling anything. And this program he's given away for seven days is fantastic.

It's a seven day intensive that go check it out if you're trying to figure out how to get online and how to build your coaching online that it's able to. He's just giving back and it's a great community. So his, yeah, his group is called Conscious Connection Community.

And then at the end in brackets says love. And his seven day challenge that he's launching, I'm just getting the link for it because I can't find it go to ajmerzad.

So AJ M I H R Z A D Mirzad M I H R Z A d dot com seven and that'll take you to the seven day challenge that he's launching to help you get into online coaching if that scratches your itch. Regardless, he's a fantastic human that encourages people and is part of, to me, the opportunity to reduce the noise.

So as you go through navigating the coronavirus and all the lockdown and everything that's going on, figure out how to get through it with as little trauma and chaos, in my opinion. And that's you plan, you adapt to reality, you innovate to try to grow through it and reduce the noise.

Because the reality is that us entrepreneurs have always figured out every problem on earth we have since the dawn of the modern era. And we're the ones that will lead out everyone into whatever the new normal looks like. We've also survived many, many worse environments.

Like I talked about with the Spanish flu at the beginning is just one. And we will survive this stuff too.

So I think a good reframe is what aa, Alcoholics Anonymous has done by taking it one day at a time, because they've used that framework to kick alcoholism by taking it one day at a time. And this one day at a time thing makes all of us feel like we're swimming through peanut butter because we're so used to moving fast.

And even if we're moving backwards, we're moving fast. And that movement is so much part of our DNA.

But if you just take it one day at a time, you plan, you adapt, you revise, you innovate, you're able to get through this.

And I think if you're listening to this and you're taking action on it, you're going to come out so much stronger than 99% of the other business owners or entrepreneurs out there that are just overwhelmed, that are fearful for their lives, fearful for their families, taking a giant IV drip of negative news every day and feeling overwhelmed. So the other thing I want to talk about is the SBA financing. I've been on the front lines of that, helping clients navigate that.

It was approved last week, March, whatever that was, 27th or whatever. And in the following week, this last seven days, more change has unfolded. And it's because it's the government. They don't do anything clean or easy.

It's dealing with the big banks who are dealing with a liquidity issue. All banks are dealing with a liquidity issue. And so I know that Chase and B of A right now are not giving. Participating in this for new clients.

They're not even participating in it for most of their existing business clients. Word on the street is that they're only working with clients that have already had a business loan that's in good standing with them.

So I've had clients that make tons of money, have huge deposits with these banks, and because they don't have an active loan, they're being shut down. So as of yesterday, April 3, the banks were all being trained on what to do, but by the sba, the Feds.

But because there's no known demand amount, the banks don't know how much money they need, and the Fed doesn't know how much money to shove down their throat or the sba that it's a chicken and the egg issue right now of illiquidity on the banks. And so I'd recommend going and finding a small local bank. My friend Chris Hearn has Fountainhead Commercial Capital.

They are an SBA specialist loan or lender. They specialize in SBA loans. That's all they do for small business owners, but I'm sure they're gonna be inundated.

I'm sure they've got way more demand than they can get to. The other update that's interesting is the $10,000 emergency impact disaster Loan.

That was supposed to be a grant that was gonna go out to about a million business owners. That $10,000 has now been designated to change instead of a grant. It's an advance on a loan. So I've applied for all of this.

I've got all my clients applying for all of this. The paycheck protection program loan that we're talking about with the SBA and the financing theory.

Word on the street is that if you get approved for that and you get lending, that you will be able to make payroll and some rent, overhead and utilities for the first eight weeks and then submit that to the bank to get it forgiven as a grant. I'll believe it when I see it. If you get it, that's fantastic. Let me know. I'd love to just hear this.

Case studies of people that do get the financing and what it's like, but plan as if you're never getting financing.

The worst way possible to set yourself up for massive disappointment is to make plans expecting to get that funding, not get that funding because it's the government, and the government doesn't do anything smooth and easy.

Then you don't get it, and you've put yourself in a tailspin, or you've made decisions based on getting that funding, it doesn't come through and then you're stuck. So I say plan as though you will never get the financing, and if you get it, that's great. You can adapt once you get it.

But plan as though that financing is never going to show up and no lender, no investor, nobody's giving you money. Plan for that and you'll put yourself in a position of strength as much as possible. So I mentioned Bottleneck Breakthrough Method Group on Facebook.

That's where I'm sharing a lot of this stuff. Just ongoing updates on the SBA financing.

It's a great community to get positive encouragement, get uplifted by other people that think like you, that are in your spot, and I recommend that you just reduce the noise in general.

Shoot me an email podcastodelneckbreakthrough.com if you've got questions or feedback or want to touch on a topic in a future episode and look forward to hearing how we all get through this.

I will continue giving updates as they come out and sharing my best advice to help you navigate this so that you can strengthen your business as best as possible and come out this on the backside stronger than you were when you started. Have a great day. This podcast theme music is an excerpt from triptych of snippets by Septah Helix. It's used under Creative Commons.