5 DEADLY mistakes business owners make that put them OUT OF BUSINESS...

What is up? In this video today, what I want to share with you are 5 ways to break your business. This actually came about because Alex and I were at dinner the other night with somebody and they were asking us, they're like, how do you grow your business? And this is obviously a question too that like, you know, when we're stopped by people and they're asking us things, they're like, can you help me grow my business? I just have a question about growing my business. And Alex and I like to actually frame this a different way. And we actually do this with each other a lot, which is, okay, well, if I wanted to break my business, what would I do? And then let's look at what the opposite of that looks like. And so I wanted to break down with you 5 things that I have done that have broken my business and what I've learned from them to then actually grow it from understanding those lessons and failures. Okay? So the first one is making changes in your business based off of emotion, intuition, opinions, rather than stats, data, et cetera, like survey data, statistics, your financials, all that jazz. And this is something that actually happened in, I want to say late 2018, which is we're at one of our quarterly meetups and we were talking about our pricing. And our team came to us and kind of sidelined the two of us and said, you know, we really think we need to reduce our prices. We just think that we're too high for the marketplace right now, etc., etc. And it was for one of our top-level programs at one of our companies. And we had no stats. We had no numbers. We had no surveys done. We hadn't asked our clients. I mean, like, who wouldn't want the product to be cheaper? Like, that's ridiculous. So even if you ask, it's like, duh, people want it cheaper. Faster, better, cheaper, always. But instead, we just kind of listened to the opinions of others based on their gut intuitions. And a lot of them, their feelings, like they just didn't know how to solve the problem. So they felt stressed about it and they wanted to solve it. And so we actually did reduce our prices. And instead of having happy customers, reducing churn, increasing our profit margins, everything actually did the opposite, which is we lost, you know, I want to say, I don't know, I think maybe $5 or $6 million in top line that year because we cut our prices. Did it reduce churn? No. Did it increase customer satisfaction? No. And if I look back now and I look with the lens I know and having done like pricing workshops and reading books and such, It wasn't enough of a price increase to make a fucking difference. It was just based on everyone's gut. They're like, "Maybe if we cut it by, you know, 15%, people are really going to, you know, stick longer and they're going to be happier and all that." Nobody gave a fuck. And so that was the first thing that I learned is if I ever see, or especially when we're advising an entrepreneur or CEO and they're making a decision, I'm like, "Where's the data to back this up?" Okay, you want to hire this new position. Okay, you want to do this new customer flow. Okay, you want to start this new product. Line. Where did you acquire that information, or is it just an emotional urge that you have, or it's a gut feeling that people on your team have? Like, we cannot make decisions based on that. Now, when we make decisions, and even when we started our software company, we priced that. We did pricing surveys. We learned from Patrick Campbell, who has a great little mini booklet on basically how to do this, and we rolled that out. And because of that, the business is very successful just based on the fact that we used a framework to figure out how to price our product. That is the first thing I would say is, if you want to break your business, just go with your gut on what to charge, what to make decisions based off of. Don't use data, don't use statistics. The second thing that you would do to break your business is I would open up more product lines. I would open up new levels of customer service and I would add more complexity without paying any mind to my infrastructure. Here's what I mean by this is that when we started Gym Launch, we had a team and there was a core team there, right? And then we decided that we're going to start Prestige Labs. Prestige Labs was a fueled by Gym Launch essentially because it was— they are products that the gyms sell through their facilities for the most part. When we're looking at that, you know, we're new and we don't understand all this and we're like, well, couldn't we just like split the teams? Like they can do like half Gym Launch and half Prestige Labs. And we didn't do that to the fullest extent, but we did do it with about 50% of the teams. We said, okay, you've got bandwidth because they did. A lot of them had bandwidth. Take that other 50% of your bandwidth and work on this company. And what I learned through that process is that focus is more important than time. So when it comes to teams, it comes to employees, this is one of my biggest lessons of all time, is that they may have the time but they don't have the focus or the bandwidth mentally to focus on two things. Now if we start a new product line, if we add a new level of customer service, We have to look at what resources we have to acquire. You know, are we going to go hire people? How are we going to build this team? And how is it not going to take away from any of the existing resources we have in the company? And what you see a lot of the times with newer companies and where people break is that they just stretch the current that they have. And they're like, well, you have an extra 15 hours a week, 10 hours a week. Why would you not be able to focus on this? I'm able to focus on all of this. It's like, well, clearly you're not well enough because you're breaking your fucking business, right? And that's just the truth. Most people can't focus on multiple things. And especially if you are a newer business, there is a very small likelihood that you have the systems to even make it easy for someone to do multiple things at once. And so that is the second way to break your business is that you open up and you expand without adding the infrastructure needed, right? And so you split everyone's focus even if they have the time and you just can't do it. The third is that I would ignore my customers' feedback. Okay, and so when I say ignore my customers' feedback, I'll tell you a story about this which is In 2018, we decided that we were going to invest in technology for Gym Launch. And that technology was going to be a CRM for gyms that helped retain customers. And it was proactive and it had some smart technology and all that jazz. And it was also going to upsell customers. It was going to sell them products. It was going to help with a lot of things. And during the, I want to say the 8-month development process while we were amid doing this, a lot of our customers kept saying, they're like, You know, we just really want more leads. We just really want more customers. And at this point, the cost of Facebook ads were rising. And so for them to acquire customers, it was getting harder and harder. But we were working on this project, which was retention-based. And so we get really far down this path. And I remember there was one customer particularly, he was making like an uproar in the community. And so I actually ended up meeting with him. And I said like, what is going on? He's like, do you guys not get it? He's like, we don't care. About retention. He's like, we just want more leads. The way he said it was obviously like he was being actually kind of a dick, um, and the whole conversation was kind of stupid. But what I took from it was that there is truth to that. And so we went and we talked to other customers, we talked to other people, and we realized that we were focused on what we thought the customer wanted rather than just going and asking the customer, is this what you want? And a lot of the times it's also not just asking the customer, customers that are necessarily your best top customers, but it's asking all levels of customers that you have. Because if your top customers are only, you know, 4% of your business, then asking them is not going to be useful because the rest of the people just want more leads. And that was actually the case for us, is that, you know, our very top customers, which are a small percentage of the business, wanted the retention system, wanted the upsell system, etc. But most of our customers just wanted more leads. And so we would have saved a million dollars if we we had just asked our customers, what do you want? Rather than thinking we knew what they wanted for them. And so that was the lesson learned there. If you want to break your business, ignore your customers. If you would like to lose $1 million like we did, ignore your customers. Don't get feedback before you start something. The fourth piece is that I would, if I wanted to break my business, I would neglect systems for clean data and clean financials. And this is something that I think in the beginning of business, I don't even think you understand what that looks like, and that's okay. But you have to bring in someone at some point who does. And I'll explain why that's very important is that we had— I had known that we had issues in our, you know, our finance department for, uh, you know, since the business had been conceived. And I kind of, you know, was like, well, we're getting by and it's just finance and how important could it be. And, and then it came to a season where I remember our finance team, uh, I got the reporting one week and it was like all of a sudden churn had gone up to like, it was like 27%, and I was like, what the hell? I was like, oh my gosh, should we call like an emergency meeting? We took an entire week trying to figure out what was going on. At the end of that week, what we found out was that someone had just entered the wrong reporting numbers and that our churn had actually been staying the same. And it was crazy because we were going to make some huge changes as a business. We're like, this is insane if it's happening like this.. And for the next 3 months, as I— then I started to realize that that department needed more infrastructure. But through that time, they were still feeding us all this false data. And so it felt like, you know, Alex and I knew that we needed to make data-based decisions and that the company needed to make decisions based off of surveys and metrics and numbers. And this— the department just couldn't keep up. It couldn't provide it to us. We were just kind of shooting blind and we made some decisions that I think, you know, were not helpful to the business at all because we didn't have any data. And it's funny because then we brought in financial leaders, we turned around the finance department, and now it's like every decision is made off of data. Every single leader uses the data. We all use the reporting that we have. We all use the dashboards that we have. We make decisions based off that. And that is how I can monitor the health of the business. And I look back now and understand how blind I was without that information. Looking at the decisions I made, I'm like, well, of course you made those decisions. You didn't have any data or the data you had was wrong. And so if you want to break your business, don't pay attention to the data, don't make sure it's correct, and just again, kind of like number 1, use your gut to make decisions. Really good idea. And then lastly, number 5 is if I wanted to break my business, I would allow inexperienced people to hire always. And this is something that as our first company Gym Launch was growing really quickly, I literally didn't have the time in my calendar unless I, you know, set sacrificed everything else in life, which I was already working 18 hours a day at that point. So it didn't really— I don't know what else you would sacrifice besides sleep, which, you know, I was like, eh, not, not going to happen. I was like, I have to teach other people to hire. And I did that, but I did it too much to an extent. I almost placed too much faith in them. And it wasn't because— I think that here's the thing is that it's good to trust people and hand that off to a competent leader or manager. But the key piece was that I handed off to inexperienced leaders and managers. And so I had inexperienced leaders and managers hiring. And what happened with that is that they overhired and they hired the wrong kinds of people for the business. The worst one was our marketing team. In 2018, you know, I let go of the director who had been in there, who was just too inexperienced to run the team. And we were essentially running it, you know, behind him playing like puppeteer. When I really got to dive into the team, I was like, holy crap. I think that we had 17 people in that department. I ended up cutting it down to 5. And it was because it was so inefficient. There was so much excess. And the team and the people that were hired were not the kind of people that were going to do well in our company. And so it's really funny because through the process, I felt terrible because, you know, anytime you go and you flip around department, you let people go, it just, you feel like shit. Um, but I remember we had hired, uh, two graphic designers, and it was like a month later, and I'm looking in our Canva account, and these graphic designers have been making like all our social media posts and all that stuff. And I'm in our company Canva, and all of a sudden I see all these like purchases for all these posting things. And I look and the damn graphic designer had literally been going to Canva and then purchasing their work in Canva with our company credit card and then presenting it like they'd done it. Crazy. That is what I learned from that. And that like completely screwed up our marketing department for like a year. Um, and it was really obnoxious to bounce back from. Um, and we did. And obviously, you know, the department's great now, but it was just a complete freaking mess. And it's only because I did everything right except for remembering that these people were also inexperienced and so that they could not They didn't have, you know, conditioned lenses to see hiring through. And so that is how you can break your business. It's just let people who've never hired people hire everybody for your business. It just sucks. If I were you and I was watching this video, at least what I hope you get from this video is that you can take this and apply this to any tactical or strategic decision you're making right now. Which is one, if you're trying to ask, how do I do this? Instead, say, how do I do the opposite of this? If you're like, how do I lose weight? Instead of asking that question, you would be like, how do I gain weight, right? And then oftentimes you can then just look at what the opposite of that would be, and that will help you become more clear about how to grow your business. Because I think a lot of people think it's this elusive thing and you have to be really smart and all the stuff. But in actuality, just think, how would I break my business? And then do the opposite of that, right? Look at somebody who has a terrible business and do the opposite of it. And a lot of the times that helps me is if I think of of a friend I have whom maybe I consider them to be at the same level business acumen as me. And I think, if I were them, how would I absolutely fucking destroy my business? And I think about that and then I'm like, okay, and then how would they absolutely fucking dominate this business? And that helps me think a lot more clearly when I'm trying to make decisions around how to grow a business and how to make tactical and strategic decisions along the way. So I hope that video is useful. Use it. Do the opposite of everything I just said there, and I will see you on the next one.