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Welcome back, young and profitors. Have you ever wondered what separates successful small businesses from those that struggle to gain traction? Today on Yap Classic, we're showcasing an interview I did with Donald Miller, the host of the Business Made Simple podcast, as well as a bestselling author and CEO of Story Brand. In this episode, we unpack the secrets of building a thriving entrepreneurial venture.
This conversation was back in 2023. It was the third time that Donald came on the show and he had so many incredible tips for building out a small business. We talked about everything from crafting the perfect mission statement, when to be financially transparent with your team and why most businesses fail today. He also explained why you should think of your business as an airplane.
Okay, gang, make sure your seats are back and tree tables are in their full upright position because this episode is about to take off. So Donald, my team tells me your new book, How to Grow Your Small Business has already sold more copies in a pre-sale than any other book that you've ever written. So that's incredible. And I think it's a hot topic, right? The economy is not doing so well. I think a lot of businesses are struggling. So let's begin there. Why are so many small businesses failing?
Well, I'll tell you how it all started for me and it started with failure. So failure is only a bad thing if you let it take you down. But if you let yourself learn from it, you can get somewhere. I actually 11 years ago lost all of my money, my entire life savings and a bad investment. I had paid off my house. I sold my house to buy another house. The other house sold. So I was sitting on a pile of cash, put it into an investment, woke up one Monday morning and my entire life savings was gone.
and it was devastating eleven years later i had a seventeen million dollar company with more than fifty percent profit thirty employees and life was very very different and one of the main reasons it was different and one of the main reasons i think business is either succeed or fail is i want hundred percent took one hundred percent ownership of my career in my life in my business.
Everything that negative happened. I took ownership of everything. Positive happened. I took ownership of I didn't trust other people to make me money anymore by that. I mean agents and speaking managers and then the market. None of that stuff. I took ownership of it. And so as you talk about the economy, struggling, that's the economy. Your economy is different. So the economy has factors like trade wars with China, the war in Ukraine.
all those kinds of things, your economy is hardly affected by any of that. It might be slightly, but most of us is hardly affected by any of that. It's actually more affected by our attitude. And if we take ownership of our economy, our economy can do incredibly well. So as I went from $0 to $17 million, I did a rough count, Hala. I think I did 572 things wrong, and I did six things right.
So the book how to grow your small business is about the six things i did right so the book really walks through and i turn those six things into six steps that you need to overhaul your business and optimize it for revenue and profit and i just laid it out so nobody has to make the five hundred seventy mistakes that i made.
Yeah. And I love your work, Donald, because you always just like tell things in a way that's easy to retain. You write so clearly it's no fluff. So I was reading through this book and I'm like, this is great. I want to align like everything I do with my business for this book, because I also have a small business. So I really related to it. Let's go back to this question of why businesses fail. You talk about an S curve in your book. And essentially it's a growth pattern that a lot of small businesses fall into. So can you explain to us what an S curve is and what we need to look out for?
Yeah, well, the escrow explains why most businesses fail and they actually fail because they succeeded. And here's what I mean by that. Nobody gets into business to run a business. Nobody, not a single person in the history of the world's ever started a business because they wanted to run a business. They started a business because they loved their customers, they loved a product.
They wanted to be financially free. That's why we start a business. If that business takes off, the business owner then finds themselves doing something that they never thought or never even imagined or didn't realize they were going to have to do. And that's run a business. So the S curve is you love this product. It starts taking off and you start going up and up and up.
And then all of a sudden you're hiring people, you're firing people, you're trying to figure out health care benefits, you're dealing with customer service. All of a sudden you're taken out of the sweet spot you were in when the business grew and you're put into a different role and that role is running a business. And almost none of us have any education. Even if you've got a master's degree in business, you don't know how to run a business. Most master's programs train you to be chairman of the federal treasury. They don't train you to run a business. And so we don't know what we're doing.
And because we don't know what we're doing, customers realize it. Our products aren't as the quality is not as good as it used to be. The relationships we used to have with customers are now strained because we turned those over to account executives. We ended up falling on hard times a little bit. So we ended up giving 90 day terms to a customer in order to get bigger profits. Then we ran into a cash flow issue and you know what happens after that. You just kind of you bomb.
So that's the down part of the S curve. Now, that's where those 65% of businesses, that's where they crash when they hit the ground. The rest of us, though, we do something. We figure out how to run a business. We figure out how to install the systems and processes that are necessary in order for a business to not hit the ground, but actually come back up and start climbing again. Those are the 35% of businesses that actually make it and go on to make millions and millions of dollars.
So those systems and processes are what this book is about. It's the six systems and processes that you need to install in your business in order to avoid crashing your business. It will teach you how to run a business so that it is a predictable, dependable revenue machine.
I love that explanation. Thank you so much for covering that. Before we get into the six steps, I want to talk about your experience because we see you now. You're leading a $17 million company like you were just saying. You're hosting one of the most popular business podcasts in the world. You're a business guru. But when you first started your business, you were actually drowning in your day to day. So I want to do a little bit of comparing contrast. What was Donald like day one or like year one of his business? How did you spend your time?
And then let's contrast to this to Donald now with his six steps, all the knowledge, all these like, you know, you've had so much experience since then and you have a whole framework around running a small business. So what was your day to day like your one versus now?
Well, about six years ago is when my business really experienced a transformational moment. It happened in my driveway. Before then, I'll get to the driveway in a second, but before then I was what I call diving for dollars. We were just trying to find money anywhere I could get. If you paid me to speak, I'd go speak. If I could get a book contract, I'd get a book contract.
I put out an online course and people would buy the online course anything i could do i would do and that started getting very successful true to the to the s curve the initial rise in the s curve and we got to about three and a half million dollars or something like that. People were loving my marketing framework the story and framework we were consulting with giant brands proctor and gamble for Lincoln.
Yeah, even the NSA in the government, we began, we began consulting with everything was going really well. I had a mentor who is still a very good friend. His name is Bill and Bill scaled up his company, his father's company into the billions and then took some of that money and bought other small companies and was mentoring some of those CEOs. He didn't buy my company, but he was mentoring me nonetheless. And I mentioned him, I'd love for my business to get to a hundred million. We were standing in my driveway after having met for a couple hours.
And for the first time in my relationship with Bill, he just kind of looked at me a little bit puzzled. And I knew that the $100 million number was really big and he didn't think I was going to hit it. That's the first time I'd ever seen that expression in him as he looked back at me. And I said, Bill, what's going on? He said, Don, in order to hit $100 million,
you are going to have to quote professionalize your operation. That's what he said to me. I'd never heard the phrase professionalize your operation before, but it rang absolutely true as it's ringing true to almost all of your listeners right now. What it said to me was what Bill said to me basically was you're making it up.
You're making it up as you go along. And he also said this. He said, Don, if you leave this company, the company is going to go down because you haven't installed the systems and processes necessary for somebody else to come and buy this company and run it, right? And that rang so true to me that I spent the next about three to four years figuring out what the systems and processes needed to be and how the company needed to run.
And the framework that I came up with is actually really simple, and that's kind of what was missing in the market. Everything was very complicated. It took more time to sort of professionalize your operations through other systems than it did to actually build your company. You spent more time working on your company than you did catering to clients, which doesn't work. You lose money that way.
I wanted it to be really simple and the metaphor that I came up with after I did all this stuff when I was trying to sort of have a controlling idea to bring it all together was the metaphor of the airplane and every airplane has every commercial airplane has six very important parts to it and they have to work together.
The leadership is your cockpit. The people in that cockpit need to enter data into the flight computer that says where this airplane is going. Everything is reverse engineered from that leadership in the cockpit. The right engine is your marketing and that marketing needs to produce thrust to get the plane moving. The left engine is your sales. It needs to produce more thrust to get the plane moving. Your products are your wings of the airplane. Those need to be in demand and profitable. The wings need to be big, light, and strong in order to get lift.
the body of your airplane is your most expensive heavy part that's your overhead and your overhead needs to stay lean that's why when you get into a smaller commuter plan you're ducking your head because they need that thing to be small and they're squeezing you into those tiny seats and then the.
Fuel tanks of your airplane are your cash flow and if you can actually keep the six areas of your airplane in proportion to each other, you're going to do just fine and it's the same with business in order to get a business off the ground and keep it from crashing. You've got to enter the right coordinates in your flight computer those are going to be economic coordinates.
You got to clarify your marketing message and run a really good sales funnel. That's going to get your ride engine humming. You've got to be able to invite customers into a story and close deals. And I've got a formula for you to be able to do that in your sales. You've got to have products that are extremely profitable and in demand. Those are going to be your wings. You've got to manage your team so it's lean, efficient and productive, which is an incredibly hard thing to do. That keeps your body, the airplane small, and you've got to
Get very clear optics on your cash flow so you never run out of cash or get surprised by a tax bill or can't make payroll. If you can do those six things your business is going to do just fine. Holly, you've interacted with as many business owners as I have. I'm sure there's times when you've walked into a business and they have a really nice facility and they're handing you all sorts of swag and 20 minutes into visiting their business. You have no idea what they do because they can't
State it clearly and you're asking yourself how in the world of these people making money and you realize they're not making money. They're actually just living off private equity or venture capital money and all they're doing is living off somebody else's dollars and this plane is going down. It looks successful, but it isn't successful.
I have zero interest in helping anybody listening to the sound of my voice look successful. I have no interest in that. I have enormous interest in you opening up your bank account and seeing a ton of money. That's what I'm interested in. And so these are the basics of how to actually run a successful business without lying to ourselves. This is how it has to be done.
Yeah. And so back to my original question. I guess when you first started your business before you had this six step framework, the business really revolved around you. That's why you were drowning every day. Too much. So what's the problem when you can't actually be pulled out of your own business and the business revolves too much around the owner?
Well, the problem is your business isn't worth anything. You know, if somebody comes to buy your business, one of the first questions they ask is what happens when you leave? What somebody wants to see if you want to value your business at four, five, six, seven, eight, X, EBITDA, is they want to know that you can go to Turks and Caicos and lay on a beach for two months and never answer your phone and the business gets stronger.
That's what they want to know. So the problem in my life at that time was this business depended completely and totally on me. I was the guy who was actually necessary for this business to go and grow. Today, we have close to 800 certified facilitators, coaches and guides who go out and teach these frameworks. Now, if I left, we would need a new host for our podcast. And that's about it.
We would need a new host for the podcast. And quite honestly, I think we could find a better one pretty easily, but I'm not willing to give up the job at this point. So we're way further along than we were about four or five years ago. Yeah. So with this analogy of the plane, I'd love for you to explain the rule of proportions. Why is it that we sort of have to look at everything at the same time and make sure we're being balanced and not just focus on one area and another area at a time?
Let's look at the airplane and talk about the airplane analogy as a decision making filter. We know that we've got a good sales team is a couple of people who are selling a lot of stuff for us. It's really great, but we've got this product that and we're getting many calls, many calls customers can't figure out how to log in or something like that. And the sales team is answering those calls. That's a common problem in a small business. So we decide, okay, we need a customer service representative.
The customer service representative is for a really good one. You're going to pay between 60 and $80,000. You're going to be right in there. You want somebody who can grow and run a management, manage a customer service team. So you're going to go ahead and spend a little more money on that. That money, you've got to say, okay, is that money going to the right engine, the left engine? Is that money going to the wings or is that money going to the body, the airplane?
A normal customer service, they're going to save you some sales. They're certainly going to save you some negative chatter, but it's pretty hard to put that money on the wings or the right engine, the left engine. So what we're going to do is we're going to say, well, we're going to pay you a base salary of $50,000, but we're going to give you some incentives.
For every retainer purchase, that is a subscription service that sticks around who we know calls you and talks to you or emails you or chats you, we're going to give you 10% of that. And we think you can save X number of sales a year, which is going to get you to between 65 and $85,000.
What did we just do? We just put a big chunk of that person's salary out of the body of the airplane and out onto the right and left engine. And we can spend a lot more money on the right and left engine than we can on the body of the airplane. Whenever you go into a business and they've got this great facility with really beautiful furniture and all sorts of great swag, everything that I just mentioned is the body of the airplane.
And what really what you're looking at and you can see it within about 10 minutes of a conversation with a business owner. What you're looking at, imagine how let's say that you and your friends are going to do a great week in Hawaii and you buy the plane ticket and you're at the airport, you walk out on the tarmac and that plane has a giant body, two tiny little wings, some little rubber band propellers on each of the wings.
and fuel is pouring out of the fuel tanks onto the tarmac. Are you getting on that airplane?
No. No. That's what so many businesses look like. And people don't realize it's happening. The, well, I hired my uncle. Well, we clearly need a new logo and some swag. Well, let's create this website that isn't very clear and doesn't actually close sales and it's kind of passive aggressive. All those decisions are how you engineer a really horrible, horrible airplane. If you look at every single business in history that has crashed, what you're looking at is an airplane that wasn't engineered very well.
I love this analogy. It really does help you get give a framework to kind of think of it intuitively. And I'm sure that as you're making decisions, if you learn this framework, you'll start to remember these things and not try to make your plane crash, you know, do everything you can to keep it flying.
That's right. I agree with you. That's how we got there. In 17 million, there's a lot of people listening to have a bigger company than that. We're still very, very committed to growing this one to try to get to that hundred million. But the way that we will get there is we'll continue to engineer a really great airplane. If you're on my sales team or my marketing team, you're probably going to be paid a little bit more than if you're in the body of the airplane. And even anybody in the body of the airplane, we're trying to figure out how to incentivize you to actually have you participate in the profitability of this business so that you can make more money.
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So let's dive in. You gave a great overview of the six steps. It's leadership, marketing, sales, products, overhead, and operations. And the last step is cash flow. So let's dive into some of these steps. I want to dive into leadership, which you say is the cockpit of the airplane. And leadership is basically in charge of getting everybody to an end destination. Your businesses have a clear mission. And so a lot of people, they don't have a clear mission, right? That's something that they're missing. When they first started, like I'll give myself for an example.
I have a company, Yap Media. We scaled to $7 million in three years. And this year, we're on track to do $8 million, which is amazing. And so my company is doing great. And when I first started, it was a team of volunteers and we were so tight and everybody had a mission and I was hand training everyone and everything was great. And then year one, it was like, boom, we blew up to 60 employees. And it's like all of a sudden,
Like things were not smooth anymore, like we're still running a great business, but it just wasn't like before, like things just like happen like magic, because we were so aligned. Everybody had the same values, all that kind of stuff. And so now I'm actually resetting my organization. I just went through a whole workshop where we set up new core values, we're having a new mission, all these things that you talked about in your books. I'm like, oh my gosh, this is just so relevant to everything that I'm doing right now.
Let's talk about mission statements first. You say there's three components that make up an effective mission statement. I love this because I'm literally developing my new mission statement now. And the first component you say is containing three economic objectives that you can actually measure. So I'd love to understand why three is it only three? You can be more than three. Why three? And why do we need to have some measurable objectives in our mission?
I think the best formula for a mission statement is we will accomplish X by Y because of Z. We will accomplish X by Y because of Z. If you can write that down because it really will align your entire team, the X we will accomplish X are three economic objectives. And the challenge is we've got to figure out the three ways that we make money the most.
What are the three ways that we make the most money? Most businesses somewhere fall in line between that and that paretta principle of 80% of their money comes from 20% of their products. 80% of the money comes from 20% of their audience. It's almost true for every business out there. Those 20% can usually be defined with three economic objectives.
Now, I only give you three not because you only have three or because because I only want you to have three. I give you three because the human brain has a limitation and it's usually three priorities. It's very hard for a brain to prioritize more than three things. It can do four. It cannot do five. So three is very important, not because any other reason other than your brain's just not going to focus on any more than three things. So you want to figure out what are the top three ways you make money. Then you want to have numeric goals.
So, when I say we will accomplish, here's our actual mission statement at Business Made Simple. We will have 500 certified coaches, 900 certified marketing guides, and 18,000 people inside of our online platform. That's it by January 1 of 2024, because every small business owner deserves an education in growing their business. So, here's what's really cool about the three economic objectives. The second we stated and wrote in our mission statement, the three economic objectives, we had a filter.
It was the next day we were in a meeting and we were about five minutes into talking about an initiative when somebody raised their hand and said, Hey guys, this doesn't have anything to do with our three economic objectives. Do we still want to do it? And everybody in the room just went, actually no, we're wasting our time because those are the three ways that we make the most money. We're talking about something that's actually not going to make us much money at all. We just had a customer bring it up and we're trying to answer the customer question. We need to just answer the customer's question saying we actually we've decided not to do that.
So you get a filter that alone will cause a massive sort of forward thrust in your organization because now everybody in the organization is trying to support three things. Then the why we will accomplish x by y because of z the y is actually your deadline. I recommend setting a two year deadline. You can go three years anything beyond three years is not going to motivate anybody. So we set our goal.
over a year ago, and now we're about what 10 months away from hitting it and we're on track to hit it. So what a deadline does inside of a mission statement creates a sense of urgency. You say, Don, mission statements don't have deadlines. You know, you're right. Most large corporations don't put deadlines and mission statements because those corporations have mission statements written by lawyers on behalf of shareholders.
You don't have a team of lawyers and you don't have shareholders. You have the luxury, and it is a crazy luxury that you should take advantage of, of writing a new mission statement every two or three years. And usually in your mission statement, all you're going to do is adjust x and y, and that's really it. If you don't like it as a mission statement, just call it a goal statement and let these two statements be parallel to each other.
Finally, the Z. We will accomplish X by Y because of Z. Z is the Y. It's the reason that you're in business. And it's usually customer centric. We are doing this. We're going to accomplish these three things by January of 2024 because and then you want to state the problem that your customer has and how you're going to solve it. That mission statement aligns your team. And first of all, it's memorable. Every single member of my team knows that mission statement where most people write a mission statement and nobody remembers their mission statement.
Even the person who wrote it can't remember it. You know, if you've forgotten the mission statement, you've forgotten the mission. So that mission statement is really, really key. And it's the first part of your leadership. Those would be the economic coordinates that you're entering into the flight computer.
Yeah, I really like this framework because I think giving some measurable things that people can align to. It helps people understand their progress. Like, guys, we are way off our target and we have only this amount of time to get there and we better hustle and step on the gas. So I feel like it gives people a measuring stick in terms of how they're doing towards the mission where usually, like you said, missions are usually like vague.
and fluffy. They're just sort of like directional. This is like very specific, which I think anything more specific is going to get people closer to an actual goal. That's right. And then you align your team around those objectives and people know whether or not they are winning or losing. When you actually state three economic objectives, your whole team knows in real time whether or not you're hitting them, whether you're behind them, whether you're ahead of them.
And by the way, if you're behind them, it bothers everybody, which is exactly what you want. You want this bothering everybody. So they're going to come to you and say, Hey, can we either adjust the economic objectives or what's our plan to fix them? Or if you didn't have economic objectives, nobody would even know that there's anything wrong with the business. And you wouldn't have those that instrument data on your dashboard to be able to know that you're actually flying upside down and heading straight toward the ground.
So those three economic objectives are, you're not always doing well with them, but if you're not doing well, they still serve you because you know you're not doing well and you're not confused. Yeah. So this is really good advice. How about getting this mission statement to stick within the organization? Let's say you've got over 20 employees, you're not able to one on one, explain it to everyone. What are the ways that you can distill this information to get it to stick with your workers?
Well, one of the absolute hardest things to do is to get a team aligned around the economic objectives of the organization. And we have a framework. It's actually on chapter five of the book to help you do that. And the framework is five meetings that you want to have with your team.
And some of the meetings will happen every week, some of that meetings happen almost every day, some of the meetings happen once a quarter. But those five meetings are the all staff meeting, the department stand up, the personal priority stand up, the quarterly performance review, and then.
You will have an occasional revenue meeting also the three economic objectives and the mission statement need to be talked about during every all staff meeting you actually open up the all staff meeting with that those three economic objectives that happens on Monday once a week.
Then the next meeting is your department stand up. The three economic objectives get repeated at the department stand up. So you are instilling these economic objectives in every single team member. Then also at the department stand up, the five priorities of that department, which have to serve the economic objectives are also discussed. And the team in about 15 minutes discusses whether or not they're hitting their five priorities so that we can hit these economic objectives.
Not only that, but in the personal standup that every single employee has with their department leader for about 15 minutes, they discuss their five priorities that serve the departments, five priorities that serve the three economic objectives. So you are constantly, constantly, constantly meeting, talking about
What the economic objectives are what your department is doing to hit those objectives and what every person is doing to hit those objectives and if you actually install those meetings into your organization, it's impossible to forget where we're going and why you're so important to actually help us achieve where we're going.
What about the business owners who are scared of being like transparent? Because I could imagine that there's a lot of business owners that are like, I don't want to talk about our financial goals or what we're making, especially with like maybe the lowest level employees and things like that. What would you say to them?
I am personally am a fan of not hiding the numbers, not hiding how much money we're making, not hiding how many orders came in. I don't want to hide any of that. The reason that small business owners don't like exposing the numbers to their team members is because it exposes the fact that the company is making millions and the team members making $40,000. All they see is that disparity. But the way you actually get around that or get over that is you actually give the entire team a really great economic education.
So you actually say look you know we're making two million dollars this year our overhead is about one point two million that means there's eight hundred thousand left and we're gonna give half of that to the government so that's four hundred thousand dollars this left.
We have to put X amount in our rainy day fund. So at the end of the day, this is about what I make and this is about what you make. But if you can help us make more and if you have ideas to help us make more, your salary will go up as well. And I just love teaching all 30 of my employees, how a small business really, really works. They by the way, no.
they pretty much know exactly what i'm making which is a lot of money they also know that we're incredibly generous with that money they know that we bought a building that houses the business that building is incredibly expensive yes it's an asset that my family will be able to own fifty and sixty years from now but i don't get that cash i bought that
building so that we could all live inside of this building. I just don't hide the numbers. And then if somebody gets upset about that and resents that, they don't belong on my team. Or if they get upset about that and resent that, I sit them down and I say, would you like to run a business? Because if you leave me and you run a business, I will do everything I can to help you because I want you to experience this too. Let me tell you what also happens.
Everything stops with you. If that business fails, it's your fault. The government doesn't come for my employees. They come for me if I don't pay taxes. Somebody slips on a banana peel in my parking lot. They don't sue you. They sue me. And I just want you to know there's an enormous amount of risk in starting a business. But if you can make it work, it's worth it.
and I will help you do it. But at this point, you work for me and I need you to produce more. And that conversation, why not just tell them the truth? I think one of the reasons that Americans feel like victims, especially the generation behind me and the generation behind them, are not going to make as much money as their parents, is because they don't actually understand how money works.
And I want to teach everybody I can. This is how money works. And I don't want anybody excluded from being able to participate. It's high risk. It's high stress. But if you want to go for it, I'm all for you. Let's go for it. I'll help you.
preach, Donald preach. That was great. So let's talk about core values sticking on leadership. So like I said, I'm doing a lot of core values work. We just came up with our new values that yap media. So we're scrappy hustlers. We're obsessive with excellence. We step on the gas together. We win. We have all these different like headlines that we created for our core values and we did a lot of work around it. And I'm really excited to roll it out.
And you talk about similar things in your book related to core values and how everybody needs key characteristics defined for your team members. So why do you think core values can help United team and how can they help leaders actually make decisions more quickly as well?
One of the great things about core values, I think, is it helps you define an aspirational identity. This is who we're going to be. We're going to be people who love our jobs. We're going to be people who care about each other, have each other's backs. Those are core values. And so when you point to core values, you're basically pointing to what's expected if you were going to work here. Now, one of the downfalls of core values is they're always vague. And if somebody says our core value is integrity,
If you caught a bank robber in mid bank robbery and you said, explain to me why you're doing this. They're, I promise you, they're going to defend their integrity. These rich people have all the money and I'm taking it to whatever. They're robbing a freaking bank and they think they have integrity. So it's just too vague. So I like core values, but more than that, I like two other things.
key characteristics and critical actions. Now key characteristics are the characteristics that you need to have in order for us to hit our economic objectives. If I run a pet story, I need you to love pets. If we run a software company, I need you to obsess about the
Easy, simple user interfaces. And so now I know who to hire. I'm not just hiring somebody with integrity. I'm so hiring somebody with integrity who loves animals. So those, those key characteristics are more true to your team than they are to anybody else. It's where you actually dial down into the uniqueness of your culture. Now, critical actions go even further.
Critical actions are the things that we are all going to do together to hit our economic objectives. If I have a restaurant and one of my economic objectives is we're going to sell 35% for every client, for our customers to come to the restaurant, 35% of them are going to get a dessert. Well, we're at 15%.
So what we're going to do is we're going to say our critical action is we ask every single person eating, have you tried our world famous brownie? We're going to ask every and so as soon as you make that a critical action, guess what's going to happen to your brownie sales? They're going to go way up. So if you have three core values, three critical actions and three key characteristics, your entire culture changes.
If you go to Chick-fil-A, a fast food place in the American South, and they're spreading all over, and you say, thank you, they say my pleasure. That's a critical action. When somebody says thank you, the critical actions you say my pleasure, and you've positioned yourself as the servant of the person that you're actually talking to in a humble way, those are the sorts of things that create a culture. And you need at least three critical actions that, one, stimulate
your bottom line and help you achieve your economic objectives and to actually support and empower your culture to be defined. You say there's three kinds of leaders that you normally find at the top of successful small businesses, the artists, the operator and the entrepreneur. I thought this was fun because I have three main executives on my team and I thought we each fit in those buckets and I thought that was exciting. So tell us what those mean. That's why you're doing so well. Yeah.
Normally, if your business gets past four or five million, you need to have three people, three personalities, and they're very different helping you run the team. So once your business gets past, again, three or four million, these three personalities are necessary in order for the business to actually grow. And this is what if there's three people on your leadership team, I hope you have one of each. And one is the artist.
And by artist, I'm not talking about like a poet or a painter. I'm talking about somebody who obsesses about products. They love the products. They love making them. They love supporting them. They love marketing them. They love talking to customers about them. They love improving them that the artist, my guess is, Hala, that you are an artist. I am also an artist. Now, the other personality that you need is actually the operator.
The operator is not going to help you make any products. They're just not what they're going to help you do is manage the team. They're going to help you manage the priorities and manage the people and make sure everybody's working really hard because the artist normally doesn't like to do that. They want to obsess about the product and then the third personality is the entrepreneur and the entrepreneur is looks at what the artist did and looks at what the team is capable of doing and says how can this machine make more money.
period. If we segment an audience and send them this sales funnel, then we can make more money with this. If we actually run a live webinar, we'll collect more leads and we'll do this. The entrepreneur is thinking up that way. If you have an artist, an operator, and an entrepreneur on your leadership team, you are going to win. And here's what's actually very interesting. It doesn't matter if the artist, the entrepreneur, or the operator is actually the CEO. It doesn't matter.
Any of those, if you look at somebody like Tim Cook, he's an operator. Somebody like Steve Jobs would be an artist. The company has done extremely well under both of those. But I guarantee you, surrounding Tim Cook are really good operators and, well, he's a good operator. Surrounding Tim Cook are really good entrepreneurs and really good artists.
So you need those three personalities in the cockpit of your airplane using the metaphor of an airplane to run your small business. You need those three personalities in order to really scale the company and reach its full potential.
I really like that analogy. It's really cool. So the second step is about marketing. We're not going to cover that guys. If you listen to episode 120, which I'm going to replay on this podcast, me and Donald cover the seven step story brand framework in detail. So it'll be right on the feed for you guys. Easy to find episode 120 will be a YAP classic.
So check that out and we're going to move on to sales because offline, Donald told me that, Hey, we got to talk about sales. He said, I can really help your audience if we, if we talk about sales. So you said step three, left engine of the plane is the sales step. And in this step, you got, you have to make the customers a hero during the sales pitch. And so from my understanding, you actually didn't like selling when you first started your business. So why didn't you like selling and then how did you learn how to sell more effectively?
I didn't like selling and I've, I've learned to like it because I basically stopped selling and I started inviting customers into a story and I realized I didn't have to sell anything. All I had to do is make my offer extremely clear and I sold a lot more of whatever it was that I was selling. You know, the problem with sales training and sales education is you don't get adoption. Big companies play millions and millions of dollars to bring in sales trainers and up to 70% of their sales force will ignore it.
They're only getting 30% adoption if that. And so I don't love the idea of sales training. What I love though is to teach all sorts of sales account executives, all sorts of small business owners. I love teaching them a formula to do one specific thing. And that is this, write a follow up email to a customer that will close the deal.
So let's say you spent a day with a customer, maybe you were at a workshop and customer, there were 5,000 people in the audience and a bunch of them gave me, gave you your email address. You know, whatever it is, what you want to do is you actually want to go back to your hotel room or go back home, open up your computer and you want to email whoever you just had a conversation with, a email. And this is what the email needs to do in order to close the sale.
First, start with the problem. Earlier today, we talked about how we all struggle with X, and I know that can be very painful. Start with the problem. Step two, position your product as the solution to the problem. Nobody has to deal with this anymore because we have created X.
And if you buy X, your problem will be solved. That's step two. Step one, define the problem. Step two, position your product as the solution to the problem. Step three, give them a three-step plan to buy it. Now, three-step plan, don't overthink it. In order for you to engage this, all you need to do is have an intake session with me where we talk about it. Second, I'll give you a custom strategy on what I think you should do. And three, if you want to move forward, you and I can move forward.
You want to remove the cognitive dissonance by giving people baby steps. Then step four is actually to paint the negative stakes. I don't want to see you struggle with this anymore. And I know if you don't buy my product, you're going to keep struggling with it. And a month from now, a year from now, this is going to be even more painful. Let's deal with it now. So step four are negative stakes. Step five is positive stakes. However,
With my product, this is the life that you're going to experience and here's how great your life will be. And then finally, step six, ask for the sale. I think you should buy this product today. It's the right product for you. Click here and enjoy this special offer. Let me just summarize it.
Start with the problem, position your product as a solution, give them a three step plan, paint the negative stakes, paint the positive stakes, and call the customer to action. If you write that follow up email, you will close way more sales. Not only will you close more sales, but you will have just learned how to sell. And the way you learn how to sell is you find out what the customer's problem is and you position your product as a solution. If you do it five times,
In an email, you will never have a sales conversation. Again, that's the same. For instance, if you work at a mattress store, because we work with temporary to train some of their salespeople, you don't want to go up and say what brought you in today. You know what brought them in a day. They're looking for a mattress. You want to go up and you say, Hey, welcome into the store. Let me just ask you. What do you hate about your current mattress?
If you say, what do you hate about your current mattress, they're going to say, well, it's too soft in the middle or it's hurting my back or it's too warm at night and whatever. They say, great. I've got three things, three mattresses here that will solve that. Let's take a look at them because they're at different price points and they have some different. You are a mile into the sales conversation and when you ask what brings you in today, you're nowhere. You're absolutely nowhere. They're going to try to avoid you. That's how you sell and it's all you need to know. We'll be right back after a quick break from our sponsors.
You know, it's interesting, Hala. I just spoke to 250 sales reps for a big, probably $1.4 billion company. 250 sales reps in the room. And I said, hey, raise your hand if there's a customer that hasn't made a decision yet. You've been interacting with them, but they're sitting the fence.
250 hands go up. That's a sales rep's job. So everybody in the room had that. I said, open your computer. We are literally going to write them an email right now. And we spent the next hour formulating 250 emails. I said, hit send. And then I needed to get off the stage because I had a flight. So the chief revenue officer got up said, Don, thanks. And I rolled my bag out of the back of the door, got a call two days later to my staff. Chief revenue officer said, I've never seen anything like it. We closed $2.4 million worth of sales in the room.
Wow. And it's not because we coerce the audience into buying anything. It's not because we manipulated anybody. What those customers were doing were sitting the fence because they didn't fully understand why they needed that product. And every sales rep in that room made it clear. And now they tasted that success. I'm sure they've made tens of millions now because that was over a month ago. And they're starting to have very different sales conversations.
and sending out very different proposals and giving very different presentations. That formula works for follow-up emails, works for in-person conversations, works for keynote presentations, works for elevator pitches, works for proposals. That's the formula you want to use to close sales.
This reminds me of something that Erica Dewan came on my show and she's a workplace productivity expert. And so much of our communications are digital now. So much of what we do in our work is reading screens, reading Slack, reading email. And she says that writing clearly is the new empathy. It used to be that speaking clearly was a new empathy and listening was now it's writing clearly is the new empathy. So
You can't write, especially a response email if you've already started a conversation with somebody. You can't write a good email without having done a very good job listening. If I said, uh, holla, you and I had a great conversation. Congratulations on your eight million. I think that's incredible. I heard you when you said you have 60 employees and things have gotten more chaotic. I felt your pain.
Chapter five of my new book will walk you through five meetings that will completely revolutionize your staff and when about three months, you won't feel that pain anymore if you run these five meetings. That's me listening and saying, well, here's the part of my product that would solve how his problem. You start doing that, you're going to sell a lot more books and a lot more leashes for dogs and a lot more nutritional supplements or whatever it is that you sell, you're going to sell a lot more of them.
Yeah, so let's talk about the language of sales a little bit. Why do we need to think in story and how do we speak in story when we're trying to sell to potential customers?
Well, story is the universal language. And when you're having any kind of conversation, whether it's getting together with a friend to catch up or it's a sales conversation, or even if it's a conversation with your therapist, what your brain is doing the entire time is trying to organize events into the structure of story. Your brain is subconsciously figuring out who the hero is, what the problem they're up against is
how they're going to get out of that problem what the happy ever life will look like if they do get out of that problem so because most people are not actually very good communicators. It's very hard to figure out what the story is actually about but if we actually lay out our communication in the form of story.
The person that we're talking to doesn't have to use any mental bandwidth in order to understand what we're talking about, and that gives the brain a really pleasant feeling because the brain doesn't have to work hard to organize the information. We tend to follow leaders who are able to do that, and we tend to buy products from account executives who are able to do that.
Can you give us an example in terms of speaking in story versus not? I don't know if this is too hard to do, but if you were to sell something, try to sell it in a way that's not with a story versus one that is.
Well, we've worked with the number of politicians on the Republican and Democratic side. I'm not a Republican or Democrat. I find myself pretty much squarely in the middle and don't really like either party because I think they're destroying the country. But we have gone in and I've helped some folks and a few elections ago, Hillary Clinton's tagline was, I'm with her. Okay, well, if I'm with her, the story is about her. It's not about me.
I don't know where we're going. I'm with her, but I don't know where we're going. I don't know what we're trying to accomplish. I don't know what's in it for me. If we get there, in fact, I don't even know where there is. She did not effectively invite people into a story. And so it's not that people liked Donald Trump more. It's just that they didn't show up in the polls to vote for her. She had an incredibly low turnout.
Donald Trump also wasn't all that much better. He also had an incredibly low turnout, but he just had more people than she did. And then you have Joe Biden later on, who's running against January six. He's running, or he's running not against January six. He's running against the spirit that led to January six. He's running against, you know, he had all sorts of villainous things that he could point out that he's running. It was a clearer narrative. And so,
It's very important that we understand, unless we're inviting people into a very clear story in which they, they, they, they get to be the good character winning the day to experience a better life, people are going to tune you out. You will see examples of that everywhere now that I just said it.
Yeah. So then the main principle of this step Donald is to make the person that you're selling to the hero of the story. Can you just talk to us about that a little bit of like how you position somebody as a hero when you're selling? Yeah. Well, you know, the reality is
You probably talked to people, Hala, and I may have been one of them at some point because I'm not perfect, but you probably talked to people and you felt like the story was all about them and it really wasn't about you. And we might call that person a narcissist or something like that. That's because they see life through a prism and the prism is they are the hero trying to win.
But the reason that that rubs us wrong, because it really shouldn't rub us wrong, but the reason that it rubs us wrong is because them winning is not helping you win. In order to sit here and listen to this person who's all about them winning means that you don't get to win. And it's not a win-win scenario. It's not a mutual thing. What we're actually looking for is somebody who enters into our story and helps us win. So let me give you an example. Let's say you're at a cocktail party and you meet two people who do the exact same thing.
The first person you meet, you say, what do you do for a living? And they say, well, I'm an at-home chef. I come to your house and cook. You'd probably say something like, really, where'd you go to school? Where'd you learn to cook? And have you ever cooked for anybody famous? And what are your favorite restaurants? You'd make casual conversation. And at the end of the day, you'd think, well, that's a really kind person. Two hours later, you meet somebody, and they do the exact same thing, charge the exact same amount of money, and have the exact same quality food. And you say, what do you do?
And they said, well, you know how most families don't eat together anymore because they don't have time. And whenever they do eat together, they don't eat healthy. I'm an at-home chef. I come to your house and cook so your family can sit around the table, look each other in the eye, actually connect. And at the end of the meal, you don't have to clean anything up and you don't have to feel bad because what you ate was actually really good for you. And it also tasted good. Who's going to do more business, Chef 1 or Chef 2? Chef 2, of course.
Chef 1 told their story. Chef 2 invited the customer into a story in which they could play the hero buying their product in order to experience a climactic scene. That is always going to win.
So one last question on sales and then we're going to close this out. So something that I read in your book that I thought was really interesting and it reminded me of something that Jay Sammet taught me a long time ago or Jay Abraham actually is the one who taught me about it. He's like a big marketing guru and you actually turn down customers whose products and services they want to buy them from you, but you actually feel like it's not a good fit for them. You'll actually not sell something even though you can sell it. Why do you do that?
I do that to protect my reputation. And also that's the selfish reason I do it. The other reason I do it is because they're not going to get any value out of this. To bring me in for a day, we do these things called strategy sessions where I either come to you for a day or you come here to Nashville for a day. They're really expensive and they're expensive because for me to take a day and not write a book, the opportunity cost on that is very high.
So what we promise people is that, look, I will only do this if we really believe that easily, easily, easily, easily, you can make a 10x return on your investment. So if you're going to pay me X amount of dollars to be here, we need to talk on the phone and make sure you can make a 10x return on your investment. So that means do you have emails, a list of emails that we can email? Is your website pretty messed up so that we can fix it in a day? Can we write some emails? Can we come up with the three economic objectives?
You know, we need to get a massive, massive return. Well, I've never had to write anybody a check, but I do guarantee you're going to get this text return or I'm going to give you your money back. So there's two things that I do. One is if we have that call and I don't think I can make you a pretty enormous amount of money, I just say, listen, I'm not your guy. I just don't think we can do it. Sometimes the reason I don't think we can do it is because you're already doing so incredibly well.
It's like, I can't improve on what you're doing. You're doing well. Or, you know, you haven't released a product yet or it sounds like you've got dysfunction on your team or, you know, whatever. But if I look at it and go, yeah, you've got a great email list. Your website is very unclear. We're going to make a ton of money when we clean that up. We're going to write five emails. They're going to make you a truckload of cash.
Let's go then we do it. So there's people who I say I can't do it for you and people who I say, look, I'm going to do it. You got a honor system here. All you got to do is call me say, Don, we didn't make our money and I'm writing you a check and I'm going to write you a check for whatever you paid me. And the main reason I'm writing is I never ever want anybody to say I lost money on Don Miller. I just don't want him saying it. So I'll give you your money back so you can never say that.
I think that's one of the ways I've built a little bit of trust in the business community, because the bottom line is the bottom line. And we've got to make you money and I'm in the business of making you money. I think you do that to protect your reputation. And also, I just think there's plenty of money out there and there's plenty of people who have the problem you solve.
So your job is to find the people who have the problem you solve and sell them something. And if you find somebody who does not have the problem you solve and they want to buy something from you, I think it's our responsibility to sit down and say, I don't think this is going to work for you. And I never, ever, ever want anybody to buy my product and not have it work. Yeah, it's all about integrity. And by the way, when you have clients that are unhappy, they talk.
Yeah, they talk and it's just, it's, it's a drain for everyone. But then on the other hand, if you have a perfect fit client where you solve all their problems, they're so happy. They're telling all their friends or referring. It's just such a more positive experience also for everybody on the team. So I really think it's a, it's a great point that you made. So Donald, thank you so much for coming on the show. It's always wonderful. Yeah. It's always such a good time. Where can everybody get how to grow your small business?
We'll get it wherever you buy books. If that's on Amazon, grab it on Amazon. If that's at Barnes and Noble, grab at Barnes and Noble. Keep your receipt. You know, they email you a receipt and if you just copy that number, that receipt number and go to growyoursmallbusiness.com and enter your receipt number. We have a bunch of free bonuses that we're giving away. One of them is a past the online sales script where we will actually, you can type in your sales, follow up email and I will color code it for you.
so that you can see where you're talking about the problem, where you're talking about the product is the solution to the problem, where you're talking about the three step plan, negative positive stakes and call to action. You'll actually look at it in four color to see where you're talking about all these parts to make sure it's a perfect email that's going to close the deal. That's free when you buy the book. Just grab the book and then go to growyoursmallbusiness.com and give me your receipt.
I think this is going to be one of those classic business books. So I highly recommend that you go get it. I'm going to be digging in way deeper than I have. I've really only read it like high level. So I can't wait to really go deep on this book because I know it's going to be filled with so many gems. Donald, what is one actionable thing our young and profitors can do today to become more profiting tomorrow?
Set three economic objectives. We talked about it at the beginning of the podcast. What are the three ways that you're going to make money this year and give me numbers. We're going to sell 400 of this. We're going to sell 80 of this. We're going to sell 25 of these. Whatever it is, give me three economic objectives and then reverse engineer your entire strategy to hit those. Awesome. And what is your secret to profiting in life?
Profiting in life, five o'clock, actually more like four o'clock, I go home and I spend time with my daughter and my wife and I don't think about work and my wife and I talk about work for probably an hour a week and that's it. I have a life outside of work and I love it. I know you put family number one by far. It's one of the things that I respect most about you Donald and where can everybody learn more about you and everything that you do?
Well, if you want to see pictures of my daughter who's incredibly cute and my wife who's incredibly beautiful and my dog who is a feisty pain in the rear end who keeps us humble, Donald Miller is my Instagram handle. I'd love to see you guys there. Awesome. Well, thank you so much, Donald. Always a pleasure. Thank you so much, Hala. Wonderful to talk to you.