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Controls Without Levers Are Worthless
I am the Cofounder with my beautiful bride, Kerri, of Income Store, a now six-time Inc. 5000 company. All that means is that of the eighteen million US companies, we have grown faster than all eighteen million except maybe a thousand, six times in over a four-year time span. With that, we have a lot of knowledge. We have 3,100 clients since 1992. We have coached a number of businesses to some pretty decent growth, 400 to 600 handwritten one-page testimonials thanking us for saving, resurrecting or regrowing their company. All of that to say we have a tremendous amount of testimonials, case studies of real-world examples of how to grow a business. An intangible asset like a website, a Facebook page through our roughly 30 years in our 200 employees. We have been put in front of a lot of growth challenges.
This is a very interesting episode. I am titling episode 438, Controls without Levers. A lot of business owners think because they’re putting certain controls in place. They have a handle on growth. I want to give some definitions so that this blog can make some sense. First of all, controls which are absolutely necessary to grow anything, you need to view a control as a wall. Some people call them sticks, start and stop barriers. I’ll give you a simple example I’m going to use on this is a Facebook ad budget over an eCommerce store of any kind. If you’re going to set up a Facebook ad budget, the controls would be we are going to spend $50 minimum to $500 in maximum a day, a week, a month. The time doesn’t matter. The controls are what is the dollar volume that you will allow as a minimum and a maximum?
The time does play somewhat of a factor, but it’s not necessarily the control. The control is strictly as if you got a memo from accounting, your budget is X. However, controls without levers are physically worthless. I want to rip through an example of three levers that no matter what you’re trying accomplish, these three levers are always in play. If you have ever witnessed an airplane takeoff, even in the movies, with their camera, they zero in on the thrust panel in which the pilot puts his hand on this horizontal bar. He pushes that lever forward. More gas goes to the engines and away that plane goes. Your gas pedal in your car is a lever. The more you push it down, the more gas, the more energy, the faster you go. When you combine multiple levers inside of a start and stop control, you control growth. It is not an accident that Income Store a few years ago did $1 million to $2 million a year, the next year, $2 million to $4 million, then $4 million to $8 million then, etc. Now, we’re in the $50 million to $100 million. It is not an accident that as we grow, we set new controls, we set more levers, tighter levers and bigger levers. Controls without levers are worthless.When you combine multiple levers inside of a start and stop control, you control growth. Click To Tweet
Lever number one that can be used on any project at any time in between the two walls of a control is the degree or quality of the talent or the team. We were tasked with the project say a customer said, “Here’s a $500 budget.” We know we can go from $50 all the way up to $500 a day on this eCommerce website. One of my levers could be, I’m going to give them a rookie copywriter for the ad copy. Another one of my levers could be, I’m going to give them the most professional copywriter I have. That is a lever at the highest level. We were able to pull the COO of TD Ameritrade out of retirement to come run Income Store. Our CEO has already trained our team in less than a month that all things considered an $80,000 employee does not produce twice as much as a $40,000 employee. They produce three times as much.
There is a multiplier and the reason you always want to lean towards a more expensive employee is because what you’re buying is their resume. You are buying their witness to history of mistakes they and others have made but most importantly, you are paying for their witness to success. What they and others have done successful. The greatest cost in businesses is doing something wrong. The biggest lever you can use inside of any control box is the degree or quality of the talent you put on a project. Many people believe in the philosophy, “I’m going to hire inexpensive people and train them in-house.” That’s great. It’s going to take you forever to take off. Some people believe, “I’m only going to hire super expensive people.” That’s great too. It’s going to take you forever to take off because there are no doers. They’re all thinkers. You need a balance of both. When it comes to very specific projects, you want to put the best talent and the best team at the top of that organization for maximum thrust.
Lever number two. This one is the most painful because most people don’t want to do the work. It is time spent pre-study and time spent post-study of results. Let’s stick with the Facebook ad spent. Could you imagine, I take a small lever. I put a rookie copywriter. I’m looking at a hat and it’s a hat eCommerce store. They sell ten different hats, ten different sizes and this rookie jumps in. He looks at the budget and says, “I can spend up to $500 a day. I’m going to go $250.” Some ad copy that he or she thinks is going to be successful, makes five ad sets because they know they have to split test in some capacity and away they go.
They look at the results quickly of the five and they say, “This one performed the best.” They dropped the other four and they split test that. The best one, they redo the copy a little bit. That’s okay but could you imagine if a professional copywriter was put on that task? I think everybody reading this knows. The first thing they’re going to do is they’re going to take the time. It could take all day, but they’re going to back study and look at history of what are the most successful Facebook ad campaigns for hats. That data is out there. It’s all over the internet. You just have to know where to look. They’re going to take so much time and study what has worked so far. They’re going to go into their brain and say, “I’ve also been on similar projects that were not necessarily hats, but they were clothing or scarves.”
They’re going to look at the data of what time did they run the ads? They’re going to spend a lot of time in pre-study. That professional is also going to do at least five different ad sets and they are going to take a very long time looking at the results. They’re not just going to take the one that worked the best. You might have the one that came in third out of five that overall came in third, but there might be a timeframe difference where maybe that one ran at midnight or 6:00 AM. They’re going to factor in everything that’s called time pre-study and time post-study.
Lever number three is the number of attempts. 80% of businesses fail according to the SBA after attempting one main source of revenue. That is almost scary. We are a six-time Inc. 5000 company and I can say with full confidence, we have done it with three completely different business models. Three completely different product sets. What we sell and move now doesn’t even faintly resemble what we used to do. We have made so many attempts at generating revenue and adding value to clients. I can’t even begin to think how many fits and starts we’ve had, how many attempts we’ve had, how many runs we’ve had at the wall, how many times we’ve gotten crushed and pushed back. The reality is lever three is simply the number of attempts. I don’t know anybody on my team that when given a task of five attempts stops at five. They know they’re scratching the surface and they’re just beginning.
Let me give you a great example. There was a store for a site partner, a client of ours, that was trying to sell a very specific knife. It was selling in other places so we knew this thing can motor. Apparently, we had done eight attempts, all produced almost virtually nothing. We brought in another person, different set of eyes. This person was a little bit younger than anybody that would typically buy knives for a home. They weren’t a homeowner, but what they noticed immediately was they said, “The pictures, these knives are set on all these countertops.” These are real photos. He says, “Is there a reason we used somebody’s kitchen with a Formica countertop that looks like it was installed in the late ‘80s, early ‘90s?” I immediately knew, “He’s right.” Here we are trying to sell this incredibly expensive set of knives and we took that Formica countertop out. We Photoshopped an expensive-looking granite countertop into the place of the Formica countertop. We ran the exact same campaign as our first or second campaign and it exploded in sales.
Lever three is how many times are you attempting something that you know in your gut should work? Because everybody reading this has had an item, a service or a product they think they’ve invented and they know that it’s going to work. They tried it, you did try it, but it didn’t work. From now on, you realize there are controls: starts and stops. There are budgets but there are levers. Lever one again is the degree in quality of your talent or team. I’ll bet you when you first launch your project, you would have been considered a rookie with very little vision. Now, you’re not a rookie. You might want to attempt that project again. Lever two, my guess is when you made your first run at that product, you didn’t have a ton of pre-study or post-study. You just tried it and then you quit. Lever three, how many attempts did you make? Did you go like Colonel Sanders 1,009 times until someone bought your recipe for Kentucky Fried Chicken or did you try one or two or three times and then quit? This is podcast 438, Controls Without Levers are Worthless. I hope this helps.
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