Ep 736 | Don’t Let Your P&L Lead You

Thank you for joining me today. It's Brian Gubernick, and welcome to the No Days Off podcast, where we believe that every single day brings a new opportunity to get better. I have spent a fair amount of time over the years coaching business owners and coaching sales leaders, and, and there's a pattern that I see over and over again. When their profit is up, it seems like they're a bit more confident. They're certainly more patient. They're, they're more generous. They make long-term decisions. However, when profit is down, everything seems to change. I see them become a bit more emotional. Their decisions tend to get rushed. I think their leadership overall starts to get really reactive, and suddenly the numbers are running the business instead of the other way around. Today I want to talk a little bit about how to better manage that, both for yourself as a business owner, but for maybe some of the commission-based people that you lead that may be experiencing the same thing as their personal income fluctuates. I think that this is one of the quiet killers of good leadership. So here's the, here's the uncomfortable truth. Most business owners say that they're pretty rational decision makers, but in my experience, the reality is that their emotional state is oftentimes really tethered directly to their last month's profit. When they have an up month, you see more confidence, more swagger, they feel smart. And when they have a down month, they start to question all that they do. They're questioning everything. See, the problem isn't that profits fluctuate. I mean, it's kind of the way it goes as an entrepreneur. That's pretty normal. I think the problem though is when temporary financial data, starts to dictate permanent behavior. Because that's when leaders overcorrect and when they abandon, you know, their good strategies that they spent a considerable amount of time mapping out. It's when they start to micromanage because of the stress, or they even pull back at the exact wrong time. So, what do you do about this? How do you handle this? Well, I think the first thing that you can do if you find yourself being the person I just described The first thing you can do is learn to distinguish between signal and noise. What do I mean when I say that? Well, your monthly profit is noise unless it's actually part of a trend. Because one bad month does not mean that your strategy is broken or that everything in your world is failing, your people are failing. It doesn't mean that you suddenly become a a bad leader. On the same token, one great month doesn't mean you're a genius. It doesn't mean you've cracked the code. It doesn't mean that discipline no longer matters. I think the best leaders, the stable leaders that I have an opportunity to work with, they do a great job zooming out. They ask things like, hey, what does this look like over 3 months? Or over 6 months or over 12 months. So they pull back and look, expand kind of the time horizon and look at it from a 30,000-foot level. Because if you react emotionally to these monthly swings, you're going to create instability even if you have, in fact, a healthy business. So the first thing I think we could all do is make sure we're separating signal from noise. Now, the next thing I think we can be doing is, is managing our business P&L a little bit differently. See, a lot of emotional velocity comes from one core issue, and that's that the business P&L is too tightly connected to the owner's personal security. So when every dip in profit occurs, it feels like a threat to identity, to safety, to lifestyle. And when you have that experience, you're going to lead emotionally. I mean, you're human. So whether you want to or not, if you feel like your identity or safety or lifestyle are under attack, you're going to lead emotionally. Now, practically speaking, this means that you should work hard to maintain adequate cash reserves. We've talked about cash reserves many times here at No Days Off. It means that, you know, you should keep— you should start or you should keep paying yourself consistently, not reactively. So maybe that means create stable income for yourself, a baseline, let's call it a salary, versus your pay being 100% attached to the profit of the company. It also means structuring your life so that one month doesn't define your stress level. Leaders with no buffer, leaders with no cushion are going to lead from a scared position. And scared leadership can end up being really, really expensive. Now, the third thing that I think you can do, and I shouldn't be biased, but this is the one I probably like the most when I'm thinking through our options. I think the best leaders make certain decisions before they even see the numbers. In other words, they decide well before the numbers show up, you know, in the wrong direction. They decide how they're going to respond to a down month. They decide what won't change. They'll be very clear on what metrics actually matter. And most importantly, they'll decide early on, in the event this happens, what levers they're going to pull and which ones they won't. So that way, when profit dips, you're not deciding emotionally. You've already baked this into your decision-making. You're going to end up executing a plan you already agreed with when you were calm, when you were in a better state of mind. I think this is how you stay in control. You don't negotiate with yourself when you're stressed. It rarely works out favorably. Now let's talk about, you know, if you have some commission-based people in your world, let's talk about them and how you can coach them more effectively. Because these individuals may feel this, you know, what I'm describing here even more intensely. Because for them, their income volatility is maybe a bit more personal. So here's what doesn't work. What doesn't work is telling them, hey, just stay positive. What doesn't work is pretending that these ups and downs, these swings, don't matter. Tell you what else doesn't work— tying their self-worth to their last paycheck. Now, what does work is reframing how they interpret the numbers. So you could coach them to focus on their controllable inputs, like calls and inputs and follow-ups. Excuse me. You could coach them to focus on consistency of behavior and not necessarily being tied to the outcomes. And you can focus them on long-term averages, not just last month. So in other words, you normalize that variability, and you of course remind them that good months don't make you elite, but bad months don't make you broken either. I think your job as a leader is to help them stay process-focused, especially when emotions want them to be more outcome-obsessed. I think here's the reality that most people don't want to admit. Leadership is not about intelligence. It's not necessarily about vision. It's not even about strategy. A huge part of leadership is just simply emotional regulation. So can you stay steady when numbers move? Can you think clearly when profit is down? Can you avoid letting fear or excitement or ego drive decisions? If you can, you'll probably outlast most everyone else. So in conclusion, as we wrap up here today, I really think your profit is going to always ebb and flow. It doesn't necessarily mean it's going to be in the black and in the red, but Some months you'll have great profit, some months you'll have less than great profit. That's just, that's just the way business goes. I think the real question is, does your leadership ebb and flow with it? If it does, your business is likely to never stabilize. Even if your numbers stabilize, if your leadership is going up and down with the variability of your profit, things are not going to stabilize. So stay focused on the trends, not so much the moments. Like, stay focused on process and do not panic, do not waver. Make sure you maintain control, control the controllables, and let's not always be so reactive. I think that's how you lead through financial variability, and I think that's how you probably teach others in your world to do the same. That's all I have for you today, the No Days Off podcast. Thank you so much for listening. And remember, every single day brings a new opportunity to get better. So let's get after it.