How To Prepare Your Company For Recession in 2024

The other thing I've noticed a lot is that entrepreneurs tend to want to have systems in place for the company to run, but they don't want to be the ones to follow the systems. And I think that that's something that employees are starting to call us out on. Maybe not to our face, but I think that's something that's important as well, is that we have to lead by example in living the core values and living our quality focus areas. That kind of stuff too. I want to start off with just kind of thoughts around the economy. Whether we are in any kind of a technical, non technical recession, whether we're seeing businesses cutting back at all. Roland and I talked about a week and a half ago I was on his podcast and after we recorded I mentioned where I thought we were and then boom, the next week he hops on with Ryan Deiss and they started talking about everything that Cameron was saying about the technical recession and we're bouncing it around and they kind of lined up with where I was, which is the signs seem to point to the fact that businesses are being cautious. Businesses are making cuts. It feels like the government is saying that there's not a recession because they don't want there to be one. But it feels like when all a lot of companies are out there making cuts, maybe something else is happening. I spoke with a marketing company recently and 17 of their 21 clients made cuts in the last quarter, which I thought was pretty interesting. And then the last part is just when we see interest rates going up, right? Consumers are absolutely starting to recognize that credit card debt isn't what it was. Companies that used to rely on financing mechanisms, some of the financing companies are making cuts, making it harder to get financing going through even be an opportunity for you guys to take a look at self lending, right? And just actually running the arbitrage and knowing what percentage of your clients are going to default and what percent can you get past a certain threshold, certain point in time that paying 35% to somebody else might not even make sense. If you can get 70% of your clients getting to the nine month mark paying monthly. In the last 12 years everything was just going well, but now there is a lot of fear and I think a lot of business people have heard this adage that in a tough time, in a, like in a recession or in a downturn, when everybody's cutting back on their marketing, that's when you actually want to spend more on marketing because you can actually take over a lot more of that mind share and a Lot less. The other thing, Dave, that I think you said was around hiring and a year ago I remember doing a bunch of the group calls with clients and we were talking about hiring and it was definitely an employee market. It seemed like employees could come to the table and ask for whatever they wanted and we pretty much had to give it to them. And we were always nervous they were going to quit and go somewhere else. And I think that fear is pretty much gone now. It feels like because of the Bay Area starting to fire everybody. That trickle down has happened where other companies are doing layoffs and employees are more nervous about being laid off than they are listening to three different job offers they've got. What I was looking at and seeing that was out there, I wasn't more worried about it. I got more focused, probably maniacally focused on what I needed to do differently and what I needed to get back and focus on. And one of the things I realized was I'd taken my eye off of some of the ball because I'd been traveling so much and I was so into like I'll inspire everybody with what's going on. But I took my eye off a couple parts of the business. I got to get back and get hyper focused again. So it's been good because I don't sit and blame anything. It more just for me, it was highlighting or focusing where we were. I spoke to a CEO of the Mastermind community called Mastermind Talks a while ago and he was saying that he cut his entire advertising budget and took his marketing and advertising budget and put it into his actual in person events and made the in person events really world class so that everybody there would want to come back to the other events, would want to tell people about the other events. So rather than spending money to try to attract clients, he just spent the money on his current clients to blow them away. The other thing I thought that was interesting is a around activating reviews is women will actually share information much more often than men will. So the message here is, and this was very insightful, was target our referral messaging to women. Try to activate women to share the stories. Try to activate women to share the good news. Tell women what you want them to be saying because they're going to share it. But your male customers aren't going to tell other people about any of your services, but the women will. So then get female copywriters to work on your messaging that you target to women to get them to share more. It's kind of like help them spread the stuff they're going to spread. I learned this at college, Pro Painters. And then we also really implemented it pretty heavily at 1-800-GR-JUNK in the home services space. Women make 85% of the household buying decisions. So even if it's like painting your house, the women might not make the technical decision, but she's definitely saying who is allowed on the property and who's not. The other weird data point is she's not only making 85% of her household's buying decisions, but she's also spending her parents money and she's helping her husband's parents make decisions. A woman over 40 years old is making decisions for six people. That's a very, very influenceable market, which really doesn't impact any of our businesses here. But I think there is something there about the messaging to women, targeting women, activating referrals to women, and also asking women for help, asking women leave reviews. You can definitely kind of supercharge all parts of the business doing that for sure. So I think we need to think about how does this apply into our businesses? Right. How can we target our marketing? How can we target some of our positioning? At 1-800-GOT junk, one of our best performing ads pissed off the men, but the men weren't making the decision. And the ad was, if your lazy husband won't clean up the garage, call us. Just point and we'll haul it away. And so they did. So like the women were making all those phone calls. We can be targeting to both as well. Right? So you can have all of your normal messaging and marketing would go to the mail. You can have a whole separate section that could be targeting women to then get the males to be customers. Women and men don't speak the same way, they don't think the same way, they don't make buying decisions the same way. The other part of that was that women, because they share, if you feed them with the sound bites that you want them to share, that is what they'll share. And it's kind of like when somebody asks you to blurb or do a testimonial for a book. Our customers are more apt to make the referrals if they know how to make a referral. Like, you have to teach them how to refer you. You have to teach them what to put in a testimonial. You have to teach them what to say to their husband to get their husband to become a buyer. When there's a job posting. If you put down like the seven criteria, like, you must have this, you must have this, you must have this. If guys hit three of the seven, they're gonna apply for the job. If women don't hit six or seven of the seven, they won't apply. They take those rules very seriously. Yes, Dave, you do have to be very, very careful because we're turning people away without knowing we are Demetri on your side. My thought though was to polarize even more and write job postings that absolutely push away the dead weight. The other thing I've been doing a lot of now as well is I put a hoop in place with a video submission that the first thing they do when we get the resume, we send them back to Vivid Vision. We say, please read this Vivid Vision. If this sounds like the kind of company you want to work for, reply now. Put group interview. We'll bring you in for group Interview. Now what I say is, if you love our Vivid vision, send me a two to three minute video of why you want to work with us and how you can make our vivid vision come true. If I don't get a video, I won't even be reading your resume. So my approach is to cast a really big net and to only spend time interviewing the people that really are clear on what the job is and are really excited about it. And what I like with the, with the video submission is I can watch it and in 30 seconds I have a good idea whether the person's the right candidate for the job or not. I don't need to do a 30 minute interview or a one hour interview. So what I'm trying to do is instead of spending time screening out a hundred people, I'm spending time really screening out seven and spending the rest of my time going out and recruiting to get seven other really good people. So now we're spending all of our time trying to chase the wrong people instead of just trying to chase new ones to give us business videos. Resumes are very quickly becoming a thing of the past because so often we put the range in and the range is including all the low people that are going to get fired are going to quit anyway. And if we keep the range in, what's probable, like the top 50, it's probable you're going to attract better candidates who are probably actually going to have a better chance of actually hitting it. So imagine if you made your recruiting bonus and anybody who recruits someone in Europe, we're going to give you a $15,000 bonus for the next five years, we're going to give you a $75,000 recruiting bonus and we're going to give you 15 grand at the 12 month mark, 15 more at month 24. 1536. If the payroll clerk finds a salesperson, they're going to make that money provided both people are still working for the company and it's paid out at month 12. Month 24, month 36. The bonus should be equal to 50% of their first year's comp. So if they're going to make 100 grand, make the bonus 50 grand, 10 grand a year for five years paid out at month 12 24. It becomes a built in retention program, it becomes in built in remuneration and it literally will strip anybody away from working for the competition. They're going to be recruiting three other people because now they can be making another 100 grand a year just from showing up to work. Two of the founding members of the CEO Alliance, Zach Morrison and Matt Woll, both went from COO to CEO. What is more likely is that a company gets to a point when they're at the 100 to 300 employee range where you're building out your really first true pure leadership team of very seasoned executives that come to the table not only being able to run their functional area, but they can do it with a lot of autonomy. They come in with a lot of strategic insight that managers don't have. They come in with more P and L responsibility and P and L ability than line managers have. They come in with all the soft skills of leadership around situational leadership and coaching and delegation and managing conflict like they have the wisdom of leadership that normal managers don't. So you might be going through a transition where you're actually seeing that guy is stepping into a true leadership team person. Whereas when you were in the hundred employee zone, he was more of a management person. It doesn't necessarily mean that he'll go from COO to CEO because a really solid C level team is just really good. If he's going to move from the COO role into the CEO role, then yeah, he needs to start to learn how to be more of a vision, culture, strategy and not get into the tactical, not get into the day to day. He has to be there to grow people and not solve their problems for them, not answer them for them. Like he needs to learn those skills and he may be learning them already. The role of a CEO is very different. There's not very many CEOs that want to be CEOs. There's a really different DNA. And we profiled all of the members of the CEO alliance and got the CEO to do their Colby profile and got their COOs to do Colby profiles. The profiles are so different between what a traditional COO is and what a traditional CEO is. Most CEOs are high fact finders and high follow throughs. They're very high on asking questions, very high on putting systems in place. Most of the entrepreneurial CEOs are very high. Quick starts, right? So they start now, they plan later. It's the 12 core skills that every manager needs to be really good at basically to run a business. So it's stuff like situational leadership, coaching, delegation, managing people, managing projects, managing conflict, running job interviews, running meetings, project management, one on one coaching, and email management. They're off the top of my head. That's like the 12 core skills. And then I teach all the content via video. Each of the modules has a pretest that any manager that does it will fail the test. Then it shows them they should learn it. So they watch it and then they can read it. And then there's a post test. And at the end, after they've gone through all 12 of the modules, they get a LinkedIn certification badge as well. At Collegepro Painters, I had franchisees that would literally paint their parents house for another 2,700 bucks. And that got them to their number. And then they'd get their credit and they'd write the $2,700 check in as revenue. And technically I guess they're not really doing anything wrong. But it doesn't line up with our core values. And that was what happened back in the 2000 rise. The.com where Redirect Health was buying ads from Pets.com and Pets.com was buying ads from Redirect Health. So Dave would book a million dollars in revenue and they'd book a million dollars in revenue. But Dave also had a million dollars in expense and they had a million dollars in expense. Our revenue grew by a million bucks. Let's buy 10 million next month from each other. Let's buy 100. They were all doing it. So what was happening was they were all showing these revenue gains and they were all flatlining on profit. But the market was rewarding revenue. But culturally, when it got found out, it kind of was like, oh, we don't trust you. So you have to speak to the ethics and the core values and you can speak to the logic of what he's saying, which is accurate. I agree, it makes sense. Mathematically you're totally right. But ethically it feels sleazy, it feels shady. So we need a better system internally to say, you know what, you got pretty close. There's a way to reward you out so that you don't have to act sleazy because it is kind of the right thing to do. But then the core values. So I've always said your core value should be a maximum of four or five core values. They should never be a single word. They should always be a short, easy to understand phrase. And you should be willing to fire people who break your core values. And then the other one was never use acronyms like don't try to turn your core values into an acronym because people then think you're trying to do it for more for the acronym than you are for the core values. If they're core, the company will spend time training and indoctrinating and hiring against it and celebrating them and calling them out and bringing them up at huddles if they're so core. But the problem is that most companies don't actually keep them core. So then we should just call them aspirational values or call them something different or guiding principles and not stress about how to live with them. The thing with core values is either call them guiding principles because of the definition of what core values are. I think employees just to live them. The other thing I've noticed a lot is that entrepreneurs tend to want to have systems in place for the company to run, but they don't want to be the ones to follow the systems. It's kind of like I want everybody to use a sauna, but I don't want to use a sauna. Or I need everybody to show up on time for meetings, but I'll be three minutes late. And I think that that's something that employees are starting to call us out on. Maybe not to our face, but I think that's something that's important as well, is that we have to lead by example in living the core values and living our quality focus areas, not to going kind of stuff too. All right, don't stop now. Click here to keep going. There's lots more videos here with more insights for you, so keep growing.