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Scale Up Your Business with Jonathan Goldhill, Author and Certified Growth Coach
Jenn DeWall:
Hi everyone. It’s Jenn DeWall, and on this week’s episode of The Leadership Habit podcast, I sat down with Jonathan Goldhill. Jonathan is a masterful scale-up business coach and personal strategist specializing in guiding next-generation leaders of family businesses to scale up their business as they take control over the leadership and ownership of the family business. Jonathan left New York for California at age 20, after his family’s large privately held men’s apparel manufacturing company started by his great-grandfather sold to a conglomerate in its third generation of family ownership. Within ten years, Jonathan had established himself as the go-to expert for entrepreneurs looking to find their version of Brita. And today, Jonathan brings 30 years of experience to his clients, advising, coaching, consulting, training, and guiding entrepreneurial and family businesses. Join Jonathan and me today as we talk about how to scale your business to eight figures and beyond.
Meet Jonathan Goldhill, Scale-up and Family Business Coach
Jenn DeWall:
Hi everyone, it’s Jenn DeWall. I’m so happy to be sitting down with Jonathan Goldhill. And today, we’re going to talk about how to scale your business to eight figures and beyond! Now, who wouldn’t want to know how to do that. Whether you’re an entrepreneur, a small business owner, or a family business owner, this podcast is for you. Jonathan. Thank you so much for joining us today. You’re a business coach. How did you come to be? What was your journey like to become a business coach?
Jonathan Goldhill:
Yeah, Jenn, that’s a great question. Do you want the short story or the long story?
Jenn DeWall:
I want the long story. Let’s hear it!
Jonathan Goldhill:
All right. So I grew up in Mamaroneck, New York. My family lived a pretty nice lifestyle. I would call it upper-middle-class. And I was really well aware that my grandfather, who I admired greatly, built a very successful business. My father, who was a son-in-law, joined the business when he was very young. He had to have been fresh out of Yale law school, had a law degree, hated law, went into becoming a clothing executive selling men’s suits. And you know I didn’t get to know my dad. Unfortunately, he died when I was two. And so my life journey has always been about being healthy first and putting that first and, and having freedom and not being stuck. And so what I saw, though, was my grandfather was a self-made man and owned an enormously successful business.
His two brothers – so three of them and their father, built a multi-generational private label men’s suit manufacturing company. It was the largest private label men’s suit manufacturing company in the 1900s. So they started it when they were nine, 11 and 13 as boys. They were peddling. Yeah, I mean, and this is like, these are my clients today, Jenn. These are like guys who started in their parents’ business when they were 12, 14, 16, working evenings and weekends. And so, you know, if you see yourself in this picture, I’m talking to you. I find that I get a lot of clients like that. They’re the next generation leader in a family business, and they want to take the business to another level, and they know that what got them here isn’t going to get them there. And so, for me, my journey was about seeing how successful my family was in this business.
I mean, literally like 2000 employees, 500,000 square feet of manufacturing space. And you know, they made suits for like every major retailer in the United States. And unfortunately, I mean, I would have liked to have gone into that business because I think, wow, what an incredible stepping stone, but in the third generation, the only family members that wanted to go into it were in-laws, and they decided maybe because they got a good offer to sell. They decided to sell it when I was probably 11 years old, as my research says. So going back to 1969, that’s how old I am. Folks, date me at 1958. And so they decided to sell the business, but what they did when they sold it was they maintained lifetime employment contracts as the CEO and this chief administrative officer. And they had swanky offices on 57th street or, you know, like Rockefeller Center, Rockefeller.
Jenn DeWall:
Yeah, in the Garment District!
Jonathan Goldhill:
Yeah. The garment district in New York. And I used to go in there, and they have the showroom, and like, I didn’t know the business was sold. I just figured this was the way the business book, you know, it was a showroom. I never went into the manufacturing plant. So I wasn’t that teenage kid growing up in the manufacturing plant. But my mother’s cousin ran the manufacturing plant. He had a Wharton degree. It was based in Pennsylvania. It was in a landmark building. And you know, I just thought like, wow, this is, this is a success. This is what I want to have. And unfortunately, that opportunity to join that family business and, you know, benefit from the spoils of that, wasn’t there. But that interest in family business always was really keenly with me. And so fast forward I decide when I’m 20 that I’ve got some money in my, you know, whatever I, however, I got, and I don’t know if I was getting social security checks from my dad cause he died early.
Maybe I had some family money, but whatever. I came to California to finish college, and I stayed, and I came here really to California to sort of find my freedom. And I had a lot of freedom and bounced around for a few years, started a couple of things, a couple of businesses. I started an art and clothing company in 1986. I thought it was going to be an amazing success. I reached out to my grandfather to see if maybe he would invest some money into it. Only to find out that, like his, he was too far gone with having had strokes or Alzheimer’s or whatever senility. So that door was closed, and I realized I had chosen really poorly in a partner. My partner was an artist who painted on clothes. I thought we were going to be, and we had really unique stuff. We couldn’t scale it because he couldn’t teach people his skills.
The Path to Becoming a Family Business Coach
Jonathan Goldhill:
And it turns out that he wasn’t a person of great integrity. He was really just an opportunist looking for people like myself, who could put some money into it, open up a store, sell the stuff, and then he’d move on to some other, you know, beautiful place that like Aspen or South Hampton or, you know, Bali or wherever. So, that sent me back to business school to get an MBA. And I was particularly interested in entrepreneurship and consulting, and I found a guy named John Davis, who is a family business coach. And he was like getting his Ph.D. in some corner office there. And I thought like, this is what I want to do. So fast forward, I got into consulting right out of business school. I built an agency of 30 to 40 people that provides consulting, training and financing to small businesses. We got funding from the city, the county, the state, the federal government and private individuals and entrepreneurs.
And so, after doing that for ten years, I got involved in another dot-com startup that went dot-bomb. And I said you know what? It’s, it’s B to C for me. It’s back to consulting and back to business. And I’ve been on my own ever since then, that was 21 years ago, and I’ve been consulting, training, financing. And about 14 years ago, I switched to just being a coach because I realized that consulting was really useful because it’s good people need advice, but I was very opportunistic, always looking for a company that had a problem that I might be able to solve and trying to figure out what I could do until I realized that, you know, coaching is like having a playbook. And when you start to recognize that entrepreneurs all have similar- many entrepreneurs- have similar problems, they have similar problems, managing people, they have similar problem problems managing their time and their priorities and their, their, their mindset.
And, they have similar difficulties with execution and getting people to be accountable and holding people accountable and putting measures in place. And I thought you know, what, why don’t I just find a good playbook and start to run that playbook by each company. And lo and behold, here I am 20 years later with my own playbook that I decided to run. And I decided to go back to my, you know, my roots because I recognize that my best clients were next-generation leaders in family businesses. Like I was saying earlier, people who were 14, 16, 18- grew up kind of watching mom or dad or mom and dad in the business. And, you know, maybe they built a million-dollar business, maybe a built a $5 million business. Maybe it was even larger- 10 million. And my goal is to take those people and help them to scale up to two to 10 X their business because my passion is about helping people find their freedom.
I found mine at an early, I was a gifted mind at an early age, and out of a no bill, like noblesse oblige, you know, the, like the obligation of the noble is like give back, help others do the same thing. So I, that’s a long answer maybe to your story, but I think it’s a full circle and it gives people an idea of like the importance of purpose and calling in your life. Because that’s the first P in my framework is you gotta know your why. You have to know what it is that you’re called to do. And you, you know, people struggle with probably all their lives. I think to find that I think I was blessed at an early age. I don’t know how I think it came from my mother- the sense of purpose, the sense of doing good, doing well, and you know, doing for others. And so that’s my story. And I’m sticking with it.
What are The Challenges to Scaling-Up a Business?
Jenn DeWall:
That’s a beautiful story, though. And I love it. The foundation of your business was this observation when you were younger of your families, starting this business, scaling this business, growing this business. So you have it from maybe more of that observer point of view, but then it went to your own trial and error. You had, I’m sure, so many wins and losses, you know, you had the dot-com or dot-bomb as you called it. And then also learning, oh my gosh, we can’t scale. If all of the talents are within this one individual, we can’t educate anyone else. So I love that you not only have the foundation that’s rooted in just seeing why you want to help family businesses succeed and do well, but then you also have that historical knowledge that people need. Because I think there are a lot of people, whether they are new to the family business or whether they’re new to business in general, that actually just, they have an idea, and there’s just too much around them to actually figure out what to do, which brings me to the first question. So what challenges do you see that maybe family-run businesses or entrepreneurs run into when they’re starting to scale?
Jonathan Goldhill:
Well, let’s take a page out of Marcus Lemonis’s book, from The Profit on CNBC. Many people have probably watched that show with great enthusiasm. He goes into family businesses mostly and turns them around. And you know, I think his tagline is People, Processes and Profits. I mean, those are probably the cornerstone is like, if you don’t have the right people and they’re if they’re not in the right seats and that they’re not doing the right things, and if they’re not doing the right things, right, which means like being effective and being efficient, both like you can’t build or scale anything. When I was in business school, we had venture capitalists parade through our entrepreneur classes, one after the next, after the next, I mean, it wasn’t literally a parade, but it seems like they were coming frequently enough. And they kept saying over and over again. I heard it drilled into our heads. It’s like, you know, an A management team can execute on a C business plan concept much better than an A concept with a C team. So, in other words, get the right people. And so very oftentimes in family businesses, they just take the family that is there because they sort of fit, but they’re not always in the right seat. Maybe they get, you know, I know every business I ever joined, as I would start in what I call the troubleshooter position, which means that I was like run around and find stuff to do that I was good at, where I could add value. And then eventually you’re like, oh Jonathan, you know, this guy he’s pretty good at communicating with our customers. And he’s pretty good at picking up the phone, and he’s really persistent. And so let’s give them maybe a sales position that that’ll be a good place to put him.
So too often, family members don’t have the family member kind of like in the right seat, or they’re not trained so well. And then, the conflict can oftentimes ensue because it already exists in the home. Perhaps there’s dysfunction. That’s normal. And then maybe there’s entitlement. In one family, one sibling feels that the other sibling gets more fair treatment or one sibling is cut out to be the president and wants to be a leader. And the other just wants to be kind of like I’ve seen it where literally, I just want to be like a mechanic in the shop, you know, or like, you know, being what I call a wrench and you can’t pay that person as well. And so, you know, then there gets conflict, like, Hey, my brother’s making, he’s making 150,000, and I’m making 42 like this doesn’t look fair. So you’ve got to deal with this people issue.
Defined Roles and Accountability
Jonathan Goldhill:
And the way I address it is by putting an organization or an accountability chart defining what the roles are. So like, you know, map out an ideal picture of what people, you know, looks like. And, and kind of like Marcus does go in, do an assessment of who’s doing, what are they doing? The right roles? You know, what do I need to mediate between people if, if that’s in existence and then what are the processes look like to manage this business? Because you can’t scale any business beyond yourself. If you don’t have processes that people can follow, so you need to have processes. And so that’s pretty obvious to scale, and people say, you know, profitability, well, that’s just an obvious, but it’s not so easy because first of all, as you scale, your fixed costs change. So your break-even goes up.
So you need to manage the profitability at different sizes of your scale. You also have to balance profitability with the balance sheet, which is equally important, which is, are you building an asset that’s valuable and, and maybe sellable or, or transferrable to the next generation. And so managing profitability as a company, scales become different because your costs keep going up. And at sometimes you’re really profitable, and other times you’re less profitable. And hopefully, you’re following that, you know, that stair-step, if you will, with an S curve going up as well, and it’s not that easy to manage that. So those are probably the three pillars of the biggest challenges in scaling a business. Does that, does that, does that sit right with you?
What Happens When You Don’t Scale Up?
Jenn DeWall:
Yeah, I’ve even when I think about the people component, you know, it’s obviously challenging for people, whether you own a business or not, to be able to assess someone’s readiness or skill level. And I think it’s just interesting because you do add in that tension, that conflict, the maybe ego that people are probably going to be a little bit more vocal if they don’t get the position, or there’s going to be a little bit more conflict, whereas that stuff you may not see in a corporate setting or a traditional business setting. And so it sounds like you almost have to be a family therapist when you’re a business coach, initially, when you’re peeling back the layers to figure out what is really going to work for the sake of the business, but also, you know, making sure that everyone can work and run it together.
And yeah, I think even as an entrepreneur myself, when I think about the processes piece that is still, and it was the most challenging thing thinking about where do I start? What process do I need to even have? And really, how do I self-structure? I guess if I look at my own journey, initially, it was self-structuring. It was very easy to do everything when someone was telling you to do it. It’s a lot different when you’re in the pilot seat, and you maybe had someone else do that, and you have to flex your skillset. And then, of course, profitability. So let’s talk about the consequences of not scaling. What happens if we don’t scale? What do you see as maybe the challenge or consequence, or outcome of not scaling?
Jonathan Goldhill:
You know, that’s a really good question. And I used to do a seminar like 10-15 years ago. Maybe it was called if you’re not growing, you’re dying. And I really believe that there, it probably the laws of physics are, you can only stay in one place for so long before you either move up or down. And so I think one of the consequences of not growing is that you’re going to end up losing people because, or good people. Good people, like A players, want to be challenged, and they want to be challenged by learning opportunities, growth opportunities, by, of course, income-earning opportunities. But that’s not the first thing they’re looking for. They want to be challenged as people. And if you’re not growing, then you’re not adding to not only the profitability, but you’re not improving people.
And so, like, you know, corporations are basically people. And people need to be working on themselves. You were talking about being a self like you didn’t say self-starter, but you had to manage yourself, right. And it’s not easy, by the way, it’s not easy for a lot of people, even when they’re told what to do, how to manage themselves. You’d be, you know, maybe surprised to know that some people struggle with attendance, getting to work on time, or having a good attitude. And so you constantly have to be coaching people. And like, if you look at people the way, and one of my favorite companies that do this really well is Lululemon. They really are all about developing their people. I think everyone who works at Lululemon or used to like had to go through a landmark education forum, which is basically a communication workshop. And it’s a program that helps you elevate yourself.
So if you’re not scaling, then you’re dying. You’re losing employees. Your profitability is going down. You know, processes that maybe should be put into place start falling apart. You’re not keeping up with technological advances, which make your job easier, but it’s, of course, more difficult to implement these technological software programs. I mean, they’re, they’re a beast for some clients to put in place, but the value that you get from them is robust. And so it really separates the A-players from the B and C players. And you end up falling off. I mean, I think you know, growth for growth’s sake isn’t necessarily the right thing. Like in my business, we have in coach the coaching industry, we have a saying revenue is vanity, profitability is sanity. And it makes sense because you have to manage towards that profitability. So, you know, I think each company is going to have a different set of consequences, but I think some of them is just going to be that you’re going to lose your people and that you’re going to lose your best people first. Then you’re going to lose more people next. And, you know, things go into a state of decline.
Scaling Up in a Talent Drought—Become a Destination Employer
Jenn DeWall:
Yeah, absolutely. You don’t have the right people to be supporting the mission. And even right now, I, you know, listening to the news every single day, hearing about whether it’s issues in the supply chain or whether it’s the fact that we just can’t find employees for certain positions. I know here in the United States, I was listening. I think there’s still cargo ships, you know, off the port that they can’t even bring in. And you think about that. And just in terms of what are you doing right now, where there’s this talent drought, and how are you protecting that? How are you being intentional with being able to preserve your people? So this is why you need to scale. And in a second, we’re going to talk about Jonathan’s tips for how to help you scale. I’m curious, what do you think would be the starting point? So now that we’re going into this, like, what is the starting point for how you even look at scaling? Because I think that, you know, I know you talked about people, processes and profits, but where do you, what avenue do you go down? Because there’s likely a lot of problems that a business owner or a CEO sees within their business, right? How do they determine which one is their starting point?
Jonathan Goldhill:
That’s a really good question. And your comment earlier is instructive of what, where the starting point is, and it’s not even in my framework. And so let’s just go back for a second where, you know, currently we see things like maybe interruptions to the supply chain. Where many people are well aware that there’s a drought talent for employees and you have to create, like, you have to be a destination employer and attract people magnetically with like, I don’t know, with a hook or a magnet that grabs them and says, you know, come work for us. Like, we’re the best thing since sliced bread. I mean, it’s not easy. And so I think the first place that one starts and where I started in my coaching career was as a growth coach was working on people’s mindset. We call it the strategic mindset process.
If you’re not thinking, if you’re not working on your business, then you’re stuck in it. If you’re, when you’re working on your business, you’re paying attention to what’s going on in the economy. You’re paying attention to maybe supply chain interruptions. And you know about this stuff because you’re talking to your vendors, your suppliers, and you’re finding out, Hey, what’s going on out there. You’re participating in your industry association. And you’re saying to people who are really maybe collegial, a little more open, Hey, what are you experiencing out there? You’re talking to your customers. And you’re saying, what are you seeing from our competitors out there? I mean, so you have to have the mindset that I’m not going to like bury my head down, but the nose to the grindstone, but I’m going to get up. I’m going to get out and walk around, and I’m going to communicate and connect, and I’m going to do whatever I can to learn.
Never Stop Learning
Jonathan Goldhill:
So I’m going to, I’m going to read books. I’m going to listen to podcasts, but I’ll watch Ted Talks. I’m going to talk to my peers who are going to be part of round tables and peer groups, and industry associations. I’m gonna seek out friendly colleagues who will mentor me and maybe in other parts of the countries, if they’re not, you know, so they’re not geographically competing, perhaps. So your mindset, Jenn, is where you have to start. And what I find is that people who have that kind of a growth mindset, then they can approach the seven Ps playbook, the framework that I’ve given them. And they’ve, they’re ready to scale because they prepared themselves. And not only mentally, but also physically, right? I mean, business is a contact sport. You have to get out there, you have to touch people, but you have to be in good shape for this.
You have to eat right. You have to sleep well. You have to, you know, think positive thoughts. You have to deal with negative emotions that might come up in your life. You have to exercise. I mean your body. I know I used to always read about this with like salespeople. The fittest salespeople are the best salespeople. How about the fitness entrepreneurs are like the best entrepreneurs? I mean, you have to take this on. You have to start with learning and your mindset. That’s my answer to your question. And then once you have that, then you can go into looking at, okay, what am I going to implement as far as like a playbook or an operating system into my company,
Jenn DeWall:
If you yourself are not growing, you are dying. That is what’s happening. And growth is through whether it’s mind, body, spirit, understanding the business climate, and environment or economy that you’re operating in. And I think that’s an important point. Again, it might sound obvious to some people like, of course, you look at the mindset. But I think what I sometimes observe when people are starting a business is that they like to focus on what they perceive as fun to manage, right? And then they don’t want to focus on the not-fun stuff. And the not-fun stuff is relevant, important, essential to being able to sustain that. And so I think it’s important to say, are you looking at that as you, you know, that 30,000-foot view looking down at your business to figure out where can you actually step in and add? What’s really going on instead of maybe sitting within one pocket of that business and focusing on it. So let’s get to your playbook. I’m so sorry. Do you have a comment for that?
Jonathan Goldhill:
No, I just, yeah, I was on a call with a client yesterday. It was a father and the daughter, I’m coaching the daughter, and she and the father are very much alike. They don’t like certain things in the CEO role. They don’t like dealing with the lawsuits that come with the business that they’re in, which are large and sometimes frustrating. And usually, the insurance companies take care of it. They don’t like dealing with taxes. They don’t like the financial strain that comes with having 40 employees that they have to make sure they have a paycheck for each week. And my answer as a coach is let’s start to address each one of these. I mean, it first might start with your mindset around the lawsuits. Like how do we eliminate having lawsuits in the first place by being really effective in our communication, by having really good, clear sales contracts by having well-trained people who the work, right and the quality control is there?
I mean, it’s a joy to run a business that’s running great. There’s nothing worse. It’s a nightmare to run one, you know, where you’re, you know, I mean, look, a lot of people get into entrepreneurship because they’ve got this dream of being independent and then it warps into this like owner’s nightmare. And like, you know, to some degree with this father and daughter. They do not want to deal with the nightmare part, but they’re working at it because they have this positive mindset bias. But you can’t be Pollyanna about this. You have to deal with the heavy stuff, and you have to find maybe a trusted advisor who can take over the stuff that you don’t like. Okay.
Scale Up with Jonathan’s 5 P’s
Jenn DeWall:
Let’s dive into the playbook! So, how can you scale? Let’s talk about you have your playbook for helping businesses scale. What is the first thing they need to do?
# 1 – Purpose
Jonathan Goldhill:
The first thing is they need to understand why they’re doing what they’re doing. They, you know, to build a culture in a business, you have to know your why, and you have to attract people who are attracted to your why. Think Apple, think differently. Think, you know, we challenge the status quo, right? That like people became Apple evangelists. Apple became the biggest company in the world at one point, close to still is because they thought differently. They challenged the status quo. They were imaginative. They had a great design, and they attracted people who believed in the calling that Steve Jobs, who was like a prophet, was right. Not the nicest guy necessarily, but a prophet of sorts in the world of business. I mean, look, he was like a success in what, five or six different industries. I mean, that’s pretty amazing.
You have to get your purpose down, too. And you have to know what it is. What’s your, why? What’s your calling. You have to establish a set of core values or operating behaviors that everyone will pretty much play by, and you’ll hire and fire and reward by those core values. Purpose is really critical to the founding point of what is your vision.
# 2 – Planning
Jonathan Goldhill:
Second thing, right? You need to have a vision. And with that purpose in the vision, you develop a plan. And so my second P is planning. You have to know, where will you be in 90 days? Where do you, where do you want to be in 90 days? And you need to communicate. What’s the first thing. And the only and the major thing that we need to focus on and what our second and third and other four things that we’ll get to that are also important. But what’s the message that you want to communicate a great leader, a great president, communicates a message over and over and over again until everyone believes in it. And look. Hopefully, it’s a true message, but you know, and it’s not a false message, but you, because if you lose that credibility, then people won’t continue to follow you. But you’ve got to plan beyond the 90 days. What does one year, what does three years, heck, what does 10 or 25 years look like? If you have that big vision, you have to get people to follow along, and you have to put it down on paper. So you can create some alignment around the vision, and you have to share it, and you have to communicate it widely within your company.
Jenn DeWall:
Jonathan, I’ve got a question about the plan, and it’s something that, you know, as a coach myself, I have watched, you know, I started my business in 2013. And one of the things that I watched my peers kind of do in terms of the planning about their business is just throwing money at everything. And I, well, I just didn’t have that. I didn’t have that starting bucket that I could throw $30,000 at something. So I, in the beginning, was really just learning. I did my own SEO. I did my own marketing. I did all of this so I could teach them how to do it. I did my own taxes until I could get an accountant, and it was challenging, but yet I would have rather done it that way instead of just throwing money, like $30,000 to do this $50,000 to do that. And now, when I see them today, their businesses aren’t even open anymore. And so when I, I’m just curious what your thoughts are and where people get the planning piece wrong in terms of throwing money at everything.
Jonathan Goldhill:
That’s a really good question, Jenn. And I think, you know, I, I think back to the time when I hired my very first employee in my own consulting firm that was my dollars. It wasn’t someone else’s dollars. And I remember taking a lot of time to think about, like, what’s the worst-case scenario? What’s the downside? What’s the best-case scenario? What’s the upside? What’s the likely and probable, you know, probability. And back then, when I did business plans for clients, I would always do an optimistic, a pessimistic and a realistic scenario. And so I still believe that that’s really important when you make an investment in equipment, in training, in people, in a person, in an office or a factory or industrial space, you have to think in terms of how can I minimize my risk? You have to try, and as entrepreneurs, contrary to what some people think, they’re not risk-takers, they’re risk-averse, they are adventurous, and they’re venturesome, and they’re innovative, but they do everything possible to minimize the downside risk.
And you’ve got to look at every investment as a value proposition and figure out, you know, what’s the worst-case scenario. Can I still survive? You know, can I sustain? If I can’t sustain a 30,000 to 50,000, a hundred thousand dollar investment, then I have to be, you know, then I have to be absolutely certain about my investment. You know, look, there are many companies, I probably couldn’t name one off-hand that have failed because they, they believed in one. Okay. Let’s pick, let’s pick some companies we know. Lycos, AltaVista, Ask Jeeves. I’m just thinking of some search engines back, back in those days, right. They state, you know that you know, they staked their vision on one thing that they thought was going to be like, this is the way search was going to be done on the internet. And, you know, and then along comes this company with this crazy look- like there was nothing on the page.
I mean, Yahoo was like the bomb back in the day. That was where you’d go. And then along comes Google. And it’s just like, it’s just got a search bar. And it became like the searches came super fast. And that speed was, and the fact that they had like they had digitized the universe and figured out how to deliver up information. The information that you wanted. It was quite brilliant. So we don’t think about the failures, but I guarantee you, most of those failures were made by professional investors with their money, and, you know, not everyone can always be right. I know I’ve heard of people who passed on the investment in Yahoo and Google cause they thought that’d never work, you know? And like, they’re like, you know, and then there are those guys who’ve made those investments that are, you know, billionaires. So but I think that the answer is really thinking through and planning it out. And that’s what entrepreneurs do is they really, they think through the upside, the downside and what’s the likely scenario.
Jenn DeWall:
And I, I, I think that’s so important to just say because I think there’s a lot of people, as you had said earlier, that get into entrepreneurship because they want the freedom. They want independence. You are managing a business. And that is, you know, so you have to look at the business, and you can’t just get caught up at the potential of freedom and X without understanding those logistics.
A Message From Crestcom:
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#3 – Products and Services
Jenn DeWall:
So, purpose is number one, the planning piece is number two, what’s number three?
Jonathan Goldhill:
So my number three is Products or services. And the reason why is because most playbooks that I’ve read operating system books, whether it’s EOS, the entrepreneurial operating system, or even scaling up, which are both books on my bookshelf that I really believe in Scaling Up – Mastering The Rockefeller Habits- How a Few Companies Make It and Why the Rest Don’t. Traction by Gino Wickman. These are really important. I think valuable playbooks that most people find really useful. For, well with Traction in the case of EOS, really good with people and execution. In the case of Scaling Up- people, execution, strategy and cash. But what seems to be lacking in even the Scaling Up book, which deals with strategy, is the marketing and selling of the products and services and the value of those products.
And so I felt it was really important for next-generation leaders to evaluate the products and services and the relevance of them to their customers and the way it’s being delivered. So, you know, the advent of technology has made systems and communication tools available to us so that you can manage the customer engagement experience, the delivery, or the distribution experience. And I think that next-gen leaders really need to evaluate their product strategy and their service strategy. So it’s fresh, and it’s current, and it’s meeting the needs of the customers that they’re selling to. So I wanted people to understand also about the threats from like Michael Porter’s, Five Forces Analysis. And understand the threats from industry rivals or competitors or the intensity in the industry. And understand, you know, what’s your position in the market. And so that’s the kind of stuff that I wanted to get into in the product section. I just find some of the basics of marketing have been too often missed. And some people just understand the simplest ways to grow a business.
Jenn DeWall:
What do you mean? If I build it, they’ll come, right?
Jonathan Goldhill:
Yeah, exactly. Exactly. Well, you know, and so yeah, I mean, it’s like the simplest thing I was ever taught that wasn’t in business school is that there are five ways to grow any business, which is, you know, increase the number of leads that you’re getting, you know, convert more of those leads, which is a sales function, measure, of course, that conversion ratio and increase the average sale size, and increase the frequency of the transactions. And so, you know, by following some of those types of things, you can grow any business, but wow, that’s too simple. They don’t teach you that in business school.
Jenn DeWall:
I just wish that more people again would understand these are the essential components of making and running a profitable business and not kind of leaning on the fact, well, I need this and I had this great idea. And because it came into existence that all of a sudden, it’s going to happen. I think that even in the age of social media, let’s talk about when Facebook was really starting to be used for business purposes. You know, this is probably a decade, more than a decade ago. And I think about it. I have an uncle that is a builder, and, you know, and there’s a lot of competition within the building and the area that they are, and he just could not get behind marketing. And I’m like, how do you think they’re going to find you, like, you have to be able to promote your service. You have to show that you’re a thought leader. And I think, again, there’s the piece of, you know, is it then a competence issue? Is it that people are still afraid of selling? Is that, is it that they just don’t understand what marketing is? Shouldn’t they just hire it to someone else? Like, I don’t know what you see in terms of the common one within that? Is it lack of training on how to do sales, lack of a compromise comprehension of that sales cycle? I don’t know what you see most?
Jonathan Goldhill:
My friend calls small businesses that confuse marketing and sales, and he came up with a term, I think he calls it, “smallketing.” So basically, it’s sales-marketing because they don’t understand the distinction. Sales are really one-on-one face-to-face or phone to phone or whatever, you know, conversion. Marketing is a lead generation function that gets people to know, like trust, buy, repeat, and refer. You know, I’m stealing a page out of John Jantsch’s book. It’s a friend of mine who wrote Duct Tape Marketing, and they’re very different functions. And most entrepreneurs don’t even understand it. And, and by the way, because let’s make this relevant to today, marketing today is for many companies in the service businesses that I’m working in. It’s about finding people to join the company.
Jonathan Goldhill:
So I tell most of my companies that are in the, I work with a lot of landscape contractors, and I tell them like, Hey, take your marketing dollars that you’re spending on promoting your services. Like you don’t need more leads coming in. That doesn’t seem to be a problem like homeowners are at home. They’re dying to get their properties upgraded, fixed, et cetera, like turn your marketing dollars to sell your company to the world or to your community to attract better quality people. That’s where your marketing dollars need to go is, is attracting talent. So, you know, when you attract great talent, then great things happen also. And like, you know, publicity starts to follow, and I have a client that gets almost all their work, but all their business from publicity and word of mouth. And it’s pretty amazing. They don’t have to spend much on marketing whatsoever.
Jenn DeWall:
I have never spent a dollar and like advertising. The majority, even as a coach, that the majority of my bookings, my keynotes all have come from just investing in SEO and knowing how to do that. And, but I think back, and so it doesn’t have to be this, you know, I think a lot of people don’t realize that as long as you have a strategy around that, of what you’re trying to do, how you’re trying to, you can make it happen. You don’t have to just throw money at it. I’m curious – what do you-
Jonathan Goldhill:
And by the way, I’m just guilty as the next person, Jenn, right? Like as a guy who’s been in the coaching business since 2004, I’ve thrown money at so many different ways of trying to build my business. I’ve done it. I’ve done workshops, and I’ve done seminars, I’ve done webinars. I’ve done telemarketing. I’ve done outsourced telemarketing. I’ve done, you know got, I could just keep going on. Networking. And the list goes on. And what I found was, Hey, there were like three core things that worked really well for me in my business for the type of client that I’m going after. And by the way, as I move up-market to better bigger clients, those strategies have to change, but I’ve tried these things. Marketing is sometimes a little bit of a guessing game, but you have to have fun, and you have to have to be willing to experiment with trying new things and doing things differently. Right. If you were still doing direct mail pieces, you might not be having so much success, but then again, you might be having success again because nobody’s doing it. But it’s expensive.
Jenn DeWall:
Yeah. It’s expensive. And I wanted to ask about that direct mail pieces and the age of the pandemic because people aren’t necessarily going into their business. They might be working from home. So how effective is that strategy, maybe? Or have you seen anything, or is it just kind of a, for some, it’s still effective, and for some, it’s not.
Jonathan Goldhill:
Yeah. You know, direct mail for me was a highly effective strategy. I’ve only deployed it on a few occasions, and it brought very few leads, but the leads that came in converted. And it was because I was able to put so much in an envelope and give them so much to read. I haven’t tried it recently with the advent of email marketing. It just seems like it’s so much cheaper and faster to do that with less risk. So that works well for me for the type of client that I’m going after. But look, I think it really depends very much on whom you’re trying to reach, how to reach them, when and where with what message- it’s complicated.
Jenn DeWall:
Yeah. So we talked about number one-
Jonathan Goldhill:
And that’s all in the product and services- that’s all in the product section, that piece.
Jenn DeWall:
Yeah. Look, I love this. We’re rocking and rolling. Number one gotta have your purpose and your vision. Number two, you have to have your plan. Number three, make those products and services known to people. What’s number four?
#4 – People
Jonathan Goldhill:
So number four is people. If you aren’t developing your A-team, then you know, it’s really difficult to scale any kind of business. You’ve got to have those core values in place. You have to hire based on those core values because it’s nothing ruins culture more than someone who just doesn’t fit the values. It, you know, it’s like one bad apple, or maybe I should say peach really ruins the whole apple cart. You know, it just, it makes them rotten. So attracting the right people is really important and then selecting the right person for the job to make sure that they, that they fit the position really well. And I spend a lot of time talking about how to find the right person, how to interview them, how to, how to evaluate them during the interview. You know, the old adage hire slowly fire fast. I kind of flesh out more and explain like, how do you hire slowly and why, and what are the tools that you use?
And then once you’ve got that person hired, you’ve got to onboard them into your processes, into your culture. You know you want to create engagement with your people. And so that I talk about as well, you know, what are the attributes of a great leader, because you need to, it’s not just about finding great people. It’s like people want to be led, not, you know, and for you to get people to follow you, you’ve got to level up your skills. And that’s where I get back to like, leveling up your personal, like your health, your wellness, your, you know, your sleep, all that kind of like personal hygiene stuff. But people want to follow leaders of competence, of, of character, of, you know, people who are committed, who are enthusiastic and positive.
And, you know, so you’ve got to level yourself up and in the process of leveling yourself up, especially I find in some family businesses, there sometimes is like old employees that aren’t scaling up with the program. So you’ve got to deal with, you know, people who are poor communicators or have negative communication styles. You’ve got to get rid of unhealthy conflict from the business. And then you need to have a really solid process for making decisions and for like communicating tools. So I’m really big believer that the people part of this- it’s not the be all and end all, but it’s the most important thing.
Jenn DeWall:
Yeah. Well, and if, I think even too, when I, you know, my work with clients is around more of like career and life coaching and the number one thing or the last four years has always been, what’s the mission of that company? And so even just connecting what you do, even if it’s not, you know, something that seems super exciting, like how can you connect that to a deeper purpose? Because of the people that I work with, which are predominantly Millennial and Gen Z, they want that number one. So if you want to attract them, it’s getting really clear on what you’re doing and showing them and inviting them on the journey. And I think a lot of organizations, again, they, they may be operated on that past notion of like, and we’re stable, we’re this we’re that. And that’s not necessarily enough anymore to attract talent. What is number five?
Okay. So number five is priorities. And here’s where I dive into that. Like, time management is really priority management, and priority management is energy management. And so some of the times some of the things that I’ve weaved throughout this talk so far is if you want to first you need to figure out how to prioritize, and you need to prioritize your activities. You can’t do everything at the same time. You’ve got to pick the most important and then get onto the next and most important. I don’t believe that you can multitask. I think Morten Hansen, in his book, Great At Work, talked about like do less, then obsess. So get into your Zone of Genius and figure out, like, what are your priorities and get those things done. And then, then you can figure out what your, where your time needs to be spent because you know, what your priorities are.
Jonathan Goldhill:
Do you know, I like the concept of eating the ugly frog first- Brian Tracy- stealing that page from his book is, you know, take on the most difficult challenges first thing in the day when your energy is the freshest. And so this then gets into energy management, right? Your energy has to be in a good place so that you can tackle your priorities and manage your time. And then you need to help your team be doing the same thing. So they manage their priorities, and they’re working on the most important things first. Otherwise, we can tend to work on the trivial many and forget and ignore the vital few, which are the things that you really wanted to get done, but you didn’t get done because you were so busy with the tyranny of all the other stuff.
Jenn DeWall:
Gosh, and I just want to give like a, a pleading moment for employees- please be clear on your priorities, because the last thing I want is when maybe you aren’t clear. And so you jump on this thing and that thing, you know, that shiny object syndrome, and that’s so hard to add value if things are constantly changing. So that was just my plug for the employees that are like, let me focus on this and help you prioritize on the thing so we can all be successful.
Jonathan Goldhill:
Yeah, exactly. And you know, in family businesses, they have a unique distinction from other businesses because they need to recognize that not everything belongs in the conversation with employees. So there’s, you know, or managers or leaders. So they need to think in terms of like, Hey, which room should we be in to have this conversation? Is this the family room where we’re just dealing with a family issue? This is between you and me, Jenn, and you know, our siblings, we gotta work this out? Or is this a leadership issue? And the leadership team needs to be aware, this is a management team issue, or this is an employee issue. Like there’s a lot of difference, you can have multiple family members that are stakeholders that might just be an employee, but not an owner. And they shouldn’t be privy to those other conversations necessarily.
So you need to know what room we are in? Like, I don’t think it’s appropriate when family members fight in front of each other when it’s something that is not business-related. We should focus on the problem. Not the people might not make it personal and so super important in sorting priorities. Do you want to get to the next P?
#5 – Processes
Jenn DeWall:
For sure! Number Five!
Jonathan Goldhill:
Which is Processes. And I said, it pretty simple before, you know, you need to have processes that can run in your absence- that people can run in your absence, that you can scale the business. And so you’ve got to have some kind of documentation about how things are done around here. You know, I mean, if everything is in your head, then that’s not going to work. And I basically walked people through how, what’s a simple process to start documenting it. And it’s kind of the same process that I took to write my book. I started by asking like, what are the questions that people need to answer? And then, you know, what’s the organization of those questions. And then what are the sub-questions underneath each one of those? And it’s kind of like you write the chapter, and then you write the outline, then you’re writing the pages of the book. And I think that you know, you need to have that same thing in processes.
Jenn DeWall:
And that’s one that I hear about a lot of people may be getting caught up in is they feel like they don’t get the freedom and independence that they wanted because they don’t have processes to be able to delegate, or share, or show someone else. And so then the whole reason they might’ve gotten into business is the one thing they can’t really enjoy because they don’t, as you said, it’s all up here. All right. Our Final P! What’s our final P?
Jonathan Goldhill:
So, you know, there’s no business without profitability, right? As we said, you know, revenue is vanity. Profitability is sanity. Cash flow is security, and you need to understand the balance sheet also, which is the statement that small businesses just don’t even understand or look at. That’s the real value of your business, on paper. And you need to be at least improving the book value of your business. If you’re in anything, that’s certainly an asset-rich business. And so once you understand the three statements, the balance sheet, the cash flow, the P and L, then we have the ability to look at what’s our return on investment because we have choices. We could take our money and invest it in other companies, you know, we’ve got public markets, stock markets, we’ve got cryptocurrencies, Bitcoin, whatever your flavor is. Oil, gas, you know, you have lots of different places that you’re gonna invest your money.
And you have to ask yourself, like, is investing my money, like a really good return, my getting a return on my investment. I like to think that you should get a return north of 50% annually for an investment in your business because or, you know, I mean, 25 to 30%, that’s not too bad, but, and here’s where you use this. It’s called the DuPont formula. Other people might look at it as a critical success formula. It’s like, it’s your return on equity and your return on assets and your profitability, your profit margin. And, you know, so you can look that formula up, but figure out like, are you getting a 30 or 40 or 50%? Because you have choices, you could just throw your money into Apple. And maybe that would have been a better investment. You could sit at home and watch TV or read a book, or, you know, paint a picture. So we have choices. We should understand. What’s the value of our investment in our business?
Where to Learn More About How to Scale up with Jonathan
Jenn DeWall:
Which I think comes back down to, if you’re not growing, you’re dying as you started. If you’re not thinking about how you’re making money, if you do not understand these key documents that will determine the health of your business, you know, you’re doing yourself a disservice, you’re doing your business, a service like you and your business both need to be growing, or you’ll be dying. Jonathan, how, how do people get in touch with you? How can people get your book? Where, where can we send them?
Jonathan Goldhill:
Great, well, so you can get my book at the website, disruptivesuccessor.com. There’s a link to an Amazon page. You can download a free chapter. You can grab some free tools, and you can get in touch with me through that website, disruptivesuccessor.com. I do have a separate coaching website, which is TheGoldhillGroup.com and a great way to get ahold of me is on LinkedIn. I’m very active on LinkedIn. I post a lot. You can see my, listen to my podcasts, connect with me there, and we can have an authentic conversation offline.
Jenn DeWall:
Perfect. Jonathan, thank you so much. How to scale your business to eight figures and beyond. I hope that you are. I hope that everyone listening found at least one nugget of something that they could maybe focus on to just take that next step in stealing their business, getting closer to that freedom. Jonathan, thank you so much for your time and your expertise, sharing it with The Leadership Habit audience today.
Jonathan Goldhill:
Jenn, thanks for being a great interviewer.
Jenn DeWall:
Thank you so much for listening to this week’s episode of The Leadership Habit podcast with Jonathan Goldhill. If you want to pick up Jonathan’s book, Disruptive Successor, you can get that at his website, disruptivesuccessor.com, or you can connect and start a conversation with him by going to TheGoldhillGroup.com. We’re also connecting with him on LinkedIn. It, you know, someone that is running a family-owned business or is an entrepreneur share this episode, share Jonathan’s playbook with them so they can hopefully achieve that ultimate goal of freedom. And, of course, if you liked this week’s episode of the podcast, make sure to leave us a review on your favorite podcast streaming service.
