Planning for failure? Use the Pre-Mortem technique to test your project or business concept– Small Business Show 105

The Small Business show, episode number 105 for Wednesday, February 8, 2017. Greetings, folks, and welcome to the Small Business Show. The show by, for and about small business owners here in Durham, New Hampshire, I'm Dave Hamilton.

And in Concord, California, I'm Shannon Jean. How goes it, man?

It goes. It's a little crazy. You know, I think if, if you could. If you went back and counted, that's a common. Yeah, yeah, that's probably the thing I would normally say. So everything's normal. It's totally fine.

Yeah, I think so, too. I'm the same way. I feel like I should buy a boat because there's. It's. Like I mentioned a few minutes ago, it's. We've had more rain out here than in the last 22 years. And you. It's just nuts. It's funny how you get so used to everything being dry, and then when everything is soaking wet, all these other problems show up.

Yeah, it's one extreme or the other.

Yes, yes, absolutely.

Well, that's fun, isn't it?

Yeah, yeah. It's different.

It's good.

It's good. When my swimming pool is like, hey, it's an infinity pool. But it's not supposed to be.

But we didn't design it that way. That's right.

Then you know, there's something going on.

It's less that you didn't design the pool that way. It's more that you didn't design your house to be next to an infinity pool.

Well, well, in our case, it's, we. We live on a hill and the pool is above our house.

That's even worse.

Yes. So, I mean, and there's a ton of drained and all this kind of stuff, but I'm always like, okay, well, this, this. We got to make sure this thing is draining good.

Oh, yeah.

But it rarely happens. But of course, it's happened a lot this year.

But that's being proactive before problems start. Which, yes, ironically, ironically is sort of the topic that I, I wanted to talk about today. So we do this thing at the Mac observer called the Apple death knell that Brian Chaff started years and years ago. It really started, like, for those of you kids, ask your parents. There was a time when Apple was like, the word beleaguered came before Apple in every sentence, Right?

Yes.

Because they were doing terribly. And that was right about the time that Steve Jobs rejoined them. And then we've all kind of experienced some. Some portion or perhaps all of that track since then. But over time, there have been many people and By Brian's count, 70 people that have declared Apple dead. And so with that in mind, I'm always, we are all always on the lookout now. It's harder than it used to be for people declaring Apple dead. Like, you know, because there's less and less of that because it's sort of the largest company in existence or top two ever. Yeah, ever. Right. So it's little difficult to find those. So we scour and we've expanded our definition a little bit, but not quite far enough for the article I'm about to mention. But I did find back in January an article on Medium by someone named Dan M. And it's not anyone that I know. I originally thought it was Dan Moran who used to write for Macworld and now writes for Six Colors, but it's not him, it's some other Dan M. Which is fine. And he did what's called a pre mortem of Apple. And I thought, what's this? I'd never heard of a pre mortem before. So I went and read the piece. And the concept of a pre mortem is brand new to me and it is something that companies sometimes do either for the entire company or for a project. You stop where you are for a moment, you take a timeout and you talk about why your company failed before it actually fails. And sometimes that can help you identify problems.

Yeah.

What's going on?

Yeah. And I had never heard of it either until you brought it up. So I read a few articles and looking at it and especially as it pertained to projects, especially longer term projects that really can go off the rails, Right. And I would say like a software development project. Anyone who's ever been involved in building something that takes like months and months and months or even years, it's easy for it to go off the rails. And so this is, it is an interesting concept. You know, how do you feel about it when related to, you know, this whole positive thing we talk about and creating your own reality?

Well, see, that's the thing is, and I'll tell you, you know folks, the concept that Shannon and I have for the show, and I'm curious to see if we get there, is to do a pre mortem of this show live. I mean, we've both thought about it, but so that's the concept. And then as soon as we decided to do that, right. I think we both started having thoughts about, okay, what are the reasons that this project could fail, you know, and that's fine. And then those were, I mean, I'M always, I'm a. I'm a logistics guy, right. So I'm always identifying inefficiencies and sometimes I'll make a bigger deal out of those inefficiencies for the sake of solving a problem. Then they might actually be like, if we don't fix this, it's going to be the end, that kind of thing. But that's not actually true. I don't necessarily believe it quite so strongly. But when you stop and think about what actually is going to cause your business to fail, it sort of goes against that whole concept for me of being totally positive, the eternal optimist. You have to believe. And so I feel like if you're going to do this, you have to do it in a way. You have to trust that you don't worry about anybody else. Trust that you can compartmentalize what you're about to learn.

Yeah. And I think it's also really good. Case in point. I had a meeting last night. I'm involved in a real estate project right now and it's the beginning. We haven't really started. We're working on this deal and I started to think about this thing and I've like said, read about it and we'll link a few articles, articles in the show notes and from that aspect it makes a lot of sense. But since I'm kind of the visionary guy that's pulling everyone forward, I'm leaning on some of the more, well, let's just call them realists and pessimists, which is a good. I'm not saying that's a negative, but I'm leaning on them a little more to poke holes in this project. And I think guys like you and I who, you know, believe in creating this, you know, our own reality in this charmed life. The concept of focusing on what can go wrong is just, you know, so foreign to us. I think that's the problem we have with it. But I still think it's worth doing and I think we should do it. Yeah, I think we should. We should.

The good news, and perhaps we are now starting the pre mortem even by saying this, but the good news is at the moment, this project does not provide for either one of us in a financial way.

Yes.

So there is some safety in doing this because it's not like we have to head down the path of deciding why we're going to be broke in six months. Right.

So we could just start. I will tell you, that is one of the first things I put on my list that's sort of one of the problems, though. Yes, yes, it is a problem. It is a problem, but maybe in a different way than you're thinking. I came to you with the concept of doing the show because I love talking about small business and I love meeting people and talking, and you and I talk about it all the time before we do the show, and it's been very rewarding and we've met some great people and I've learned a lot, and that's kind of my motivator. But what happens if we lose our motivation to do this show?

Right. It will happen.

Yes.

Well, and it's not that we'll, I mean, I think we're obsessive people. Right. And so, first of all, I think that's one of the risks of doing a pre mortem is now we're going to expose all these things that we might wind up obsessing about when generally we try to steer our minds towards the positive things. But we like dissecting small business. Anybody that listens to this show knows that. So I think that enjoyment level or that factor will always be here. But the reality is time is a commodity, and it's a very precious one.

Yes, it is.

And so it's very foreseeable to me that we could get to a point, either one of us could get to a point where we say, look, I love doing the show. It's so much fun.

I have a blast. But, but that's right.

Yeah. And so to me, that, you know, I just don't have, either one of us could say, I don't have time to do the way I know it needs to be done. So let's just kill it. Right?

Yeah. And that's the, you know, it's a blessing and a kind of a curse to not have to rely on it financially because it's kind of this side project that has been very successful in different measurements, different ways.

Right, Right.

But because we both have other things, many other things going on, it is the, the thing that drives me the most is when I'm done with the show, I, I feel great. I love it. I, I, it's like, okay. And it challenges me to learn more each week before I sit down on Wednesday and, you know, and we chat for a while. But I would be remiss in not saying that some financial reward eventually does need to happen. And it could be little or small. I'm a very, you know, I always talk about, I raise my hand, my arms in victory when I make 50 bucks, and I just Try to do that hundreds of times a day.

That's right. Yeah, yeah, yeah.

Okay. So, you know, it could be very nominal, but it's almost like you're just getting recognition. So, I mean, one of the things on my list for this pre mortem was, okay, the small business show failed because we were unable to grow our subscribers, which leads to. We were unable to secure sponsors and. Which is a rubric. You know, I always ask our guests that, you know, how do you measure success? Certainly it has to be in there. Has to be in there. And you know, that that's. That's definitely something that's, I think, important in the future for us.

So. Okay, so I, I totally agree that. And, and we can drill down on this here, and maybe, Maybe we'll never get to whatever step two is, and that's fine. But. So we drill down on this. I totally agree that the number of listeners that we can attract to this show on a regular basis will. Could be directly proportional to the amount of dollars that we can earn from this show on a regular basis.

You can't even say it. You just have that positive thing.

Well, no, no, no, no.

I'm the same way.

Well, could be. Actually, I was thinking about it as a pessimist. It's only related if we do something to earn dollars based on the number of people that listen to the show right now, we've done. I'm gonna say very little. I don't want to say nothing, because a few months ago, I told the guys at Backbeat, okay, sure, we're at a point where we can, like, we can put together a small business show package that's not so cheap. It hurts our other business.

Yes.

You know, and sort of positions the show in a way that is realistic, but enough money that it sort of makes sense in the world that we deal with. And so they've started doing that, and it's entirely. And so Small Business show is actually out on a few advertising proposals for podcasts. Yeah. Awesome, right? That's one way, but that's not the only way. And of course, this is horrible because we're doing this in front of you, our listeners. I mean, look, I've been podcasting for almost 12 years. A not insignificant portion of my income comes directly from listeners of the podcasts that I do. So I am. I don't say it here as often as I probably do on the other shows. I am eternally thankful for anyone that invests for you to invest your time in listening to what we're doing here. Really, that's what drives me to do a better job each week. That said, I'm just going to be a little bit brass tacks about this here. So we're the small business show. We can do that. Even though we're talking about you. That's one way. Sponsorship is one way. It's sort of an indirect way of earning money based on the number of listeners that we have. There is a more direct way, and that is simply earning money directly from our listeners by asking our listeners to contribute. We're not. I don't think we're there yet. This is the first time I've brought this subject up. Literally. We've never talked about this.

Never talked about it.

Right. So. But we. There's no reason. Well, there's plenty of reasons not to ask you to contribute. One of them is if I. If we ask our listeners to contribute and we don't give and we don't put a system in place that actually gives you something, gives you a reason to continue to contribute, then more than likely everyone that wants to will contribute once.

Yeah.

And that's it. And because of that, we really held off with MacGeek Gab from allowing listener contributions for a long time. People got really creative. They would find ways to send us Amazon gift cards and things like that, but we just kept the walls up because we knew we have to do this the right way. And so we did wind up doing. And this was five years ago with Matt Geek Gab that we brought in money directly from the listeners. We called it our premium program. It still exists. It's changed a few different ways, but we do have some things set up that encourage people and reward people for continuing to contribute. With macgeekab, one of the biggest ones is in addition to that warm, fuzzy feeling you get from supporting your two favorite geeky podcasters, is you get a premium email address that you can email and your questions are prioritized. We do a lot of Q and A. Right. Sure. If we were going to do that. And I'm, of course, I have no problem with the concept, but we need to. We need to. I would want to spend some time coming up with.

Yeah.

What we can do for you. You know, well, it.

It leads me to all the. This concept of the thousand true fans. You know, there was a. Oh, gosh, what's the name? What's the guy's name? I'm blanking on it here, but I'll. We'll post it in the show notes so you can read this. This article. But you know, a couple of years ago, I read this concept of anyone can make a good leave a good living if you really find a thousand true fans that are willing to pay you for what you create, whether you're an author, you do a blog, a newsletter, whatever it is. And one of the guys that really introduced me to this concept was Ben Thompson, who I in turn pay to subscribe to his newsletter that comes out every day. And it's valuable to me. It's 10 bucks a month or a hundred bucks a year. And he really laid it out and built it over time, and he was able to build. I think he's probably well beyond a thousand people now, but. And I'm sure it comes and goes, but it's an interesting concept, but I believe you're absolutely right is you really have to hone in on the value you're giving your members, if you will. And that would be an interesting discussion to have, and I certainly think we should have it.

Yeah.

Especially if you're going after small business owners that have value. Like, one of the things that. I don't want to segue too much, but when people always bring up price to any of my businesses, I always ask them, what do you do? What's your. What's your business? And then I ask them about their pricing structure. And it's amazing how quickly they stop asking you why you're charging so much. Yeah. You know, or something like that.

Interesting. I gotta talk to my sales team about that.

Yeah. Oh, I'm an attorney. Oh, what do you charge per hour? Well, we charge, you know, $400. Oh, okay. And then you can just see it. You don't have to point much out. Oh, I'm a car mechanic. I'm a plumber. I char 185 bucks that come out and I really gonna. Well, okay. And then they kind of slowly. Oh, yes, yes. And small business people, in my opinion, are the most adept at realizing value because they're getting, you know, hammered on.

It every day because they're in the same boat.

Same boat. Same boat. Yeah. Yeah. All right. So that's one thing.

Yeah. So. Right. Revenue. And I think we do need to make sure that we put not a goal, but a system in place that allows us to earn revenue either directly from our listeners or indirectly via sponsorships. Or both. Or both.

Yeah.

I'm fine with that. Before we move on to the next thing, I will say. Feedbackusinessshow.co. if you have an idea about what we could deliver to you that would make it Worth your while to contribute some amount on a regular basis. And it might be once a year or once a month or anywhere in between, but whatever that might be, we'd love to hear it because this is the first small business show that I've ever done. And so, you know, the needs of everyone are different.

It's a great experiment to try different things as well and to see how they received and to do it transparently and talk about on the air.

That's it. You got it. Yeah.

So let me talk about another thing that I see that as part of this pre mortem is one of the things that I find frustrating on a lot of this, the podcast stuff. And I'm a new podcaster. I've been doing it for, I guess.

This is two years.

Two years. Okay. And all my other ventures and businesses, I have a very clear dashboard. And what I mean by that is I'm able to dip in and pull out some measurements that tell me how things are going. Whether that's the number of sales, number of customers, number of good reviews, number of shipments, kinds of things that. And some of them we've kind of created ourselves and pull out of different databases and stuff and put it in a, you know, in our internal website and. Okay, great. You can look at that. I don't have anything like that, really. I have a little bit, but I have to kind of rely on you, Dave, to tell me. And I'm the kind of guy you mentioned, obsessive. I would look at it every day, like with this, you know, social media experiment that we started in June with this handbag business. I look at those numbers every single day. You know, we hit 38,000 followers. That makes me happy. The next day I want to see, oh, we're at 38,350. That makes me focused.

Right. What did we do to get from A to B and then A to C and then A to B?

Little increments. My whole life is structured on all kinds of successes spread across small things. And if there was a better dashboard for me, that would help keep me motivated to. To achieve those small successes that ultimately grow into larger successes.

Yeah. Yeah. Okay. So this is great. Yep. Let's talk about it. Because the problem is part of the benefit, right. Is that we serve all of our shows out through Cash Fly. Right.

Okay.

It provides all the bandwidth for all the backbeat media shows. And we owe great thanks to Cashfly for this arrangement that we have with them. They do a great job. They have all of their. They don't Just have one server. They have like 35 servers worldwide. They're our content delivery network. So it means that if you're listening to this in Australia, you're actually downloading the show from something local to you in Australia as opposed to some server in Virginia or wherever else that might be. But we have all our shows in there, and Cash Fly doesn't provide us a way of sharing, of compartmentalizing the logins really is what it comes down to. Right. So we have one login for all of the podcasts that we do. And just not that I really care if you get to see this stuff.

Oh, no, I get it, I get it.

I can't. Conscience. I can't. Of course, yeah.

You have other partners and different business things and it's not relevant to our podcast that I see all this other data, but it's definitely something to put out there to figure out how we.

Can tease out some of. We do some of it. We use a third party engine or two that track numbers in an imperfect way.

Yeah. And that's the other thing you said. Well, it's not very accurate.

It's accurate in relation to itself.

Yeah.

Okay. So at least we have that. Sure.

Yeah. So it seems like to me looking and I spent a lot of time this morning trying to figure out in this pre mortem exercise, okay, you know, we're, we're pretending that it's already failed, which is the, the concept of the pre mortem.

Right.

And, and we're talking about what made it fail versus doing the. Doing a project or starting a business and then really failing and looking back at it and saying, oh, how do we screw it up? How do we screw up? No, we're trying to learn, you know, make all these assumptions and, and one of the, the things that really struck me as I was reading up on this pre mortem concept is, and I think it may be the most powerful aspect of, allows people to stand up, figure, you know, not, not literally, but, but voice a doubt without being thought of as like a naysayer. Yes. As a super positive person. I really think that's a powerful. Because I've. Looking back on my thoughts, you know, life and make the decisions that I've made, I could see myself kind of criticizing this. Oh, this person's just a naysayer. They always want to say no. Well, I believe that does happen, but that doesn't mean they don't have something valuable to add. So if you spin this on its head and you say, okay, the exercise here is that we've already failed or this project has already failed. How did it fail? Well then you get that person who's really good at kind of teasing out things to you. Give them a voice where maybe before they didn't feel they, you know, because they weren't rah rah on board with everything. A good example of this. I'll bring this up last night. So I'm at this meeting last night with these potential partners in this real estate venture and the one person who happens to be in the real estate business says, okay, well we have this problem because we need to make sure this is exit strategy works. And whatever happens with this piece of property, it's a unique piece of property. We need to make sure that whoever buys it from us can get it financed.

Oh yeah, right.

And I'm like, you know, and inside of me I'm going, what are you talking about? We're going to buy this and it's going to generate so much revenue, we're going to keep it forever and hand it down to our kids. I mean, you know, I'm already multi generational success down the road because that's just how I think. But I sit back, I was like, man, that is so important. And I had, you know, I didn't really think about that from that perspective because there's some wonkiness that could keep them, you know, someone from getting financing if they needed to get a financing. So, you know, creating a safe, you know, zone or whatever for a person that's maybe a little pessimistic to speak out loud I think is a great exercise or a great part of this pre mortem concept.

Well, and it gives us the, the eternal optimists the permission to dabble in that a little bit. Again, like I said, initially though, there is a danger.

Yes.

Right. Because especially for those of us that are always working to be optimistic that you could, you know, it could be like an addiction. Right. Where you're like, oh, it's way easier to be a pessimist than an optimist. I mean, maybe.

I think it's very easy to poke holes in things. You know, some old saying. I'm sure it's certainly easier to be a critic than an artist.

Right, right.

You know, and the world is full of critics and the artists. Or you could flip it and say, well, the small business owners that's, you know, grinding it out day in and day out to make their vision come to, you know, become reality, they're few and far between. And the vast majority of folks that that work somewhere else and get a paycheck, are glad to poke holes in whatever it is you're trying to do. That can be valuable.

Totally.

That can be valuable. But you gotta make sure you don't embrace it. I mean, you mentioned when we started the show we started talking about Apple. My first business was all based around Apple and it was right at the time where people would look at me and go, well, how can you make money when Apple's going out of business? And I was just a young kid and even my parents and my partner's parents were like, well, you guys are crazy. You know. And turns out by ignoring those people, it was a very profitable and has been a very profitable business for decades. Because you're able to ignore the folks that you know were already doing a pre mortem on your business.

Right, right. Yes, yes. There are people that are doing this in fits and starts without, without actually stopping and doing it as an exercise.

Yeah, yeah. So I think maybe that's a, that's a great thing about this is like you say, David, it allows you to get outside yourself. You know, the one article I read says, hey, you should really give yourself two hours and just get with your people in the room if you can and just rip apart whatever it is you're doing and lay all those things out, don't try to solve them. And the interesting comment that I had read over and over was if your team is full of talented, solution based, solution oriented people, it becomes very difficult. And we've had it just on this show.

We have been incapable of following that rule.

That's correct. You're not. The way the exercise really is supposed to work is for the first hour or two, it's not about solutions. You want to really dig deep into. Here's what I'm quote, went wrong with this project or this business and you lay all these things out, then you come back and really revisit the top 10 or whatever.

What are the ones that we want to, that, that we find important to solve. Ah, that's very interesting.

Yeah, yeah, so, so from that aspect I, I definitely agree that there's some value here in doing it and I'm going to do it with this, this real estate project that I'm involved in because, well, it brings up an interesting thing. I think everyone may value my optim optimism a little bit more if I open this window of negativity for only a couple of hours, you know, and then, and then do that because I think maybe they may look at and go, okay, well you're really thinking around this whole thing, not just, hey, I'm a vision, you know, I've got this vision and I can pull this thing and make it work no matter what. Because you can't always do that.

No, you can't. Yeah. That's a good attitude to have. It is for a while, yes. But the time comes when that ends.

Yeah. Yeah, that's right. That's right. I would love to hear from anyone that has used this technique before or what you love about it, what you don't like about it. Feedbackusinessshow co or businessshow co. Facebook will take you right to our small business support group on Facebook and post your comments and let us know what you think.

Yeah, I know. Even just after doing this, I need the support group and especially after doing for like two hours. Yeah, yeah.

Just think about it. Yeah, yeah. It's. It's not part of my charmed life definition, but I, I do think it has some value.

Yeah. As soon as I, like, like I said, I mean, I think it's a testament to how optimistic and positive and just driven I am that I've never even. That the concept, not only had I not heard of it, but it, like the word didn't make sense to me. So much so that I had to go and research what it means meant. And then, and then, of course, my curiosity took over. Like, wait a minute, this could be actually a really good thing. And that's how I approached it. It's like, I don't want this show to fail, of course. So we've identified two things and unfortunately we've worked to solve them already. So we really screwed up. And perhaps that's the first thing we've learned is when we, when we do this the next time, either for this business or this project or any other project, we know what not to do. And, you know, that's half the battle. In fact, that's like 98% of the battle is knowing what not to do.

So you got it. That's right. Well, thanks for joining us, folks. We've enjoyed chatting with you for a half hour or so and let us know what you think.

Yeah, yeah. Keep living that charmed life, even if it means taking a break from it for like two hours.

That's right.