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Show Notes
Background
Owner of The Cleaning Authority – Fishers, MBA, CPA, Todd Krause, grew his business from $1.8M in revenue to over $4.0M with a diverse team. Business revenue and profitability growth expert, author, TEDx speaker, public speaker, and advocate for uplifting, mentoring, and improving lives in my community.
The Culture Advantage
When it comes to business, we focus heavily on people and technology that we don’t notice the missing piece: culture.
You would be amazed at the impact culture has on profitability. When people bring their heart and soul to work, they perform better, faster, and with fewer mistakes. There is less rework, expenses go down, and profits increase. Customers stay longer because they receive a better experience.
When customers stay, you are not constantly replacing them. That means your top line grows faster because you are spending less effort filling gaps. Culture is an undervalued, hidden advantage that many business owners and coaches overlook.
For example, gyms, in particular, often get it wrong. The focus becomes getting more and more clients. But if you can retain clients and look after them, they become your biggest source of referrals. You also spend less replacing them, and their lifetime value increases.
So, naturally, profits increase too.
Culture and Customer Experience
So if you are just running it by yourself, if you are a solopreneur, then what kind of culture should you be wrapping around it to bring those clients in? And also as you start to expand.
One of the simplest ways to think about it is what all of us want from anybody who provides goods or services to us.
We want 3 things. We want consistency, meaning it is the same experience every time. We want the experience to be a high quality experience.
But we also know that there are times when we need to talk to somebody. We have questions. Sometimes it is just not working the way it should. And we want customer service. We don’t want to battle our way through a call tree, or we get lost off in some corner and can’t find our way back.
We don’t want to talk to robots or chatbots. We want somebody on the phone who can fix our problem. So we put those 3 things together, but that is really 1 side of a coin. So if you flip that coin over, the business owner and the coaches, they want to deliver those 3 things efficiently.
That means that we do everything we say we are going to do.
And if you can meet those 2 together, then you have a winning combination.
If you can either deliver on what you have promised, then that is also a bonus because everybody wants to feel that they have got value for money. So if you are being consistent, you are doing high quality work and you are either delivering, then that is definitely a winning formula.
How Poor Culture Creates Profit Leaks
So when you see businesses that have got their cultures sorted, what kind of profit leaks are they experiencing? The ones who do not have it sorted first, they have high turnover.
When you have high turnover, you have higher expenses. Searching for, finding and acquiring new talent. Then you have to train them. They are going to go through that learning curve and they are going to make all the mistakes that a young, unseasoned person on staff would make.
Maybe they are not young, but a new person on staff is new to the work and new to the clients. They will make those mistakes. You are losing the efficiencies and the knowledge that you have in the staff that you have retained over a longer period of time. The people who can see a problem coming and solve it before it becomes an issue.
The ones who know where there are likely problem areas and they know what the workarounds are so they can avoid the problems.
They have fewer problems, there is less rework, and you are not paying to hire new people. You are not paying to try and train them, and you are not paying for them to work their way through the learning curve.
All of those expenses go down. Your operating expenses actually are lower than if you have high turnover and you are constantly searching for the next inexpensive hire.
Your customer base is happier. They are staying longer. You are having fewer complaints. Every time you have a complaint, you have to spend time and you have to spend money resolving it.
Hire the Right People
So if you are thinking about your first hire, you are thinking about replacing some of the things that you are doing. What is a good runway to do that? And do you have any tips on it?
Your first few hires are your most critical hires. You really want somebody who has at least a basic level of experience in the industry that you are in. You need to be able to hand something off to them and trust that they can do it.
But find somebody who is full of passion and full of excitement. When you are talking about those early hires, you are still in the very early stages of growth. You need to have people who are flexible and adaptable. When in those early stages of growth, things change a lot.
If you talk to the younger people, somebody who is 2 or 3 jobs out of college, a lot of them will act like deer in the headlights when you get into the real world and things change and they are not able to think on their feet. Finding those people who are excited and don’t mind change, who actually are very comfortable with it, are important for your first hires.
Communication, Direction, and Expectations
So is there anything that we should be putting into our businesses, especially as coaches, to help that first hire along?
Clarity of communication, clarity on what direction are we going? What are our goals? They need something that they can anchor in their minds as this is the direction we are going.
And how do I know if we are headed in the right direction? Well, you can look at what you are working on, and can compare it to what we are attempting to achieve. It is less about do this and don’t do that. It is more about direction and communication.
It is a very good place to start because quite often as coaches, we have the mission and the values in our head, but we don’t always have them written down. And then trying to articulate that to our first or second hire can be more difficult.
For exampe, you some very capable people helping you. But we had to work through a few things at first.
You found out you really did have to take some time, and you had to write out some of the very important steps. It can felt tedious initially writing all your instructions. But by writing it, we have something we can point back to and say, here are the basic steps that I want you to do. Over time, they started to understand me better. Their ability to help me and to anticipate what I wanted grew by leaps and bounds.
So don’t underestimate the importance of listing out some of the key steps and criteria. Having those guidelines is really important even more so now with ChatGPT. Because it is the way we want to talk, the way we want our clients to see us, and the way we want to deliver our service.
Remember, your hire and even AI are not mind readers. You have to tell them. And if you want them to work independently, making things clear and understandable is even more important.
People Are the Biggest Profit Lever
People have the greatest amount of variation in how they perform. When we spend money on machines and we spend money on technology, it performs within spec over and over and over again. It is designed to do that.
It is designed to produce something at a certain thickness over and over again, or designed to repeat copies without fail until it runs out of ink. But sometimes people are the top 2 or 3 expense lines for almost every business, with few exceptions. It is people.
So if you get them, they bring their heart and soul to the office and care about the work they do. You are going to see a measurable difference in profit. You are going to see a measurable difference in quality. Your customers will see that difference.
That is how your top line grows faster, and that is how you drive down operating expenses. And the gap in between is the profit. When you focus on the cultural side, that is my primary focus with my client base, because we know every industry has their tools and they all have their systems. But when you wrap this culture around it, that is where you get this hidden advantage.
It is literally hidden in plain sight. But most people are so busy focusing on systems, on technology, that they are not paying attention to something they have a huge amount of control over.
Absolutely. And quite often those systems need people to run them. So that can be a major advantage by having the correct people in the correct seats, as they all say.
Links
Contacts
Profit Leaks, Where Are You Losing Money in Your Business?
when you want a thriving workplace and you want to build that culture, you need a caring workplace that is positive and is also culturally competent. Because we live in such a diverse world today.
Listen to the full episode of Small Business Talk episode 349.
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