In this episode, Stacy sits down with Josh Patrick, who is a certified Financial Planner, the host of The Sustainable Business Podcast, and the founder of The Sustainable Business­­  a coaching and mentoring company for private business owners.  The two discuss how you can be strategic and create a business you love where not only your work is valued, but you’re creating extreme profits.

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Facebook:  askjoshpatrick
LinkedIn: askjoshpatrick
Twitter: askjoshpatrick

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Transcript For This Episode:

Stacy Jones (00:01):
Welcome to Marketing Mistakes and How to Avoid Them. I’m Stacy Jones, the founder of influencer marketing and branded content agency, Hollywood Branded. This podcast provides brand marketers a learning platform for topics for us to share their insights and knowledge on topics which make a direct impact on your business today.While it is impossible to be well versed on every topic and strategy that can improve bottom line results, my goal is to help you avoid making costly mistakes of time, energy, or money, whether you are doing a DIY approach or hiring an expert to help. Let’s begin today’s discussion.Speaker 2 (00:31):
Welcome to Marketing Mistakes and How to Avoid Them. Here’s your host.Speaker 3 (00:35):
Stacy Jones.

Stacy Jones (00:36):
Welcome to Marketing Mistakes and How to Avoid Them. I’m Stacy Jones and I’m so happy to be here with you all today. I want to give a very warm welcome to Josh Patrick. Josh is the founder of the Sustainable Business, a coaching and mentoring company for private business owners. And he’s also a certified financial planner.

Additionally, he’s a regular contributor to outlets such as the New York Times, Forbes, the Huffington Post and American Express OPEN. He also hosts the Sustainable Business podcast. Today we’re going to talk about a challenge many, if not the majority of business owners face. How to be strategic and create a business you love where your work is valued, while you’re having tons of fun and creating extreme profits. We’ll learn what works from Josh’s perspective, what should be avoided and how some business owners miss the mark. Josh, welcome.

Josh Patrick (01:23):
Thanks so much, Stacy. Happy to be here today.

Stacy Jones (01:25):
Well, very happy to have you. Could we start off and chat about how you got to where you are today, where you are now coaching and mentoring other business owners?

Josh Patrick (01:36):
Well, like most people my age, it’s a long and winding road. From the first 20 years I was in business, I owned a food service and vending company. We fed people in factories essentially. And I knew absolutely nothing about business. So since I knew nothing about business, of course, the first thing I did was volunteer to teach other people about how to run a business. And what I learned by doing that idea is that when you volunteer to teach something, you actually have to learn it before you teach it. So that was my start.

I also was a history major in college. So the course I was on was basically most of the courses you read one book a week. So if you had four courses, you were reading four books a week, and I learned to read a lot and read relatively quickly. And for the past, well, since 1974, I’ve been reading 50 or more books a year, most of them around business.

And then I have attended a zillion different seminars on how to be good at business and I’ve run businesses. I made every mistake that was possible to make while I was building my business, especially the first seven years. I tell people a lot, I said, “When I first started in business, the worst thing that could possibly happen to a 24 year old happened to me.” And they say, “Okay, I’ll bite. What’s that?” And I’ll say, “I was really successful.”

So what happens when you’re 24 and you’re really successful in business? You don’t think it’s luck. You think it’s because of your innate wonderful skill and brilliance that you got there. Well, after a bunch of good luck, you usually are followed with a bunch of bad luck. And if you don’t learn to manage that, you don’t have a certain amount of humility, you become a target for everyone in the universe. And that was me for the next five years.

And then finally around five years down the road, when I was pretty close to 30 years old, I went to one of these new age seminars. And I learned to look in the mirror and stop blaming it on others and justifying my way through life. So I guess it’s probably my fault if things are going well. And it’s also my fault, if things aren’t going well. So maybe I should stop whining about things, not going well and learn from that. So that’s the 30,000 foot view of how I got to where I am today. There’s a lot more to it, but I don’t want to bore your listeners.

Stacy Jones (03:57):
That’s a good background. So with the improving of cashflow, that’s your specialty. You work with business owners to come in and figure out how they can run their businesses better and improve cashflow and find more profit. Does that basically sum up a core [comoncy 00:04:16]?

Josh Patrick (04:16):
Yeah. I mean, literally every business I ever worked… Well, not every business I work with. But almost every business I work with, their issue when you get right down to the core thing is they don’t have enough excess cash running around their business to do what they need to do. So we need to learn how to create excess cash.

A friend of mine, named Mike Michalowicz, has a wonderful book called Profit First. And I’m a big fan of Profit First and I’m sure a lot of your listeners have heard of it. And I’ve modified it a little bit in saying that, okay, if you want to run a business, you want to be successful, there’s four buckets of profit you have to fill. The first bucket is your lifestyle. You have to have enough money to live and hopefully live a reasonably good life.
The second thing is you need to have an emergency fund. And we’re recording this on April 24th in the age of the coronavirus and those businesses that have an emergency fund are doing a happy dance. And those that didn’t are thinking about how they’re going to close down. So you don’t think you need an emergency fund in good times. And that’s probably true, but we never know when the bad times come and they always come.
I mean, this is the fourth total economic meltdown I’ve lived through as a business owner. So it’s not new. We act like it’s new. This is the worst of the four I’ve gone through most likely, but it’s not something we haven’t seen before. And if you go back even a few more years to 80 years ago, we were in the middle of the Great Depression, which was another huge societal structure.

The third thing you need to have, is you need to have a fully funded growth program. Most people think a fully funded growth program is money for marketing and sales. Well, it goes past that. It also goes, you need to have enough money to fund receivables that you’re going to have. You need to have enough money to fund extra equipment you’re going to buy. You need to have enough money to fund extra people you’re going to need to hire before you need them. You need enough money to go out and afford more payables. So you have to buy inventory.

Then the final thing is you need to have a fully funded retirement plan. And this is something that most business owners don’t realize. They think at the end of the road, they’re going to sell their business, get all this cash, ride off into the sunset and they’re going to be happily retired. Well, the sad news is that almost never happens.

Just I’ll give you some numbers. There’s 28 million businesses in the United States. Only 6 million of those 28 have any employees at all. So that 22 million with the solopreneur businesses, and I’m sure there’s a lot listening, your businesses aren’t really sellable. You might get a little bit of money for it, but you’re not going to get enough to retire. I can promise you that. So you need to create enough excess cash so the retirement plan becomes a major source of funding when you decide to stop working.

Now, the other side of this, which is my little side project I’m working on now, I’m calling it the 100 year project. And the 100 year project has two questions to it. One is, if you knew you were going to live to 100 years old and you’re going to be healthy to you’re 99, how would you be living your life differently today?

And the second part of that question is if you knew your business was going to last for 100 years, what would you be doing differently today about running it? Now, Stacy, you’re pretty young it looks like to me.

Stacy Jones (07:46):
I’ll take that. I will just take that. Thank you. Yes.

Josh Patrick (07:49):
That question is a valid one for you because there’s a really good chance you’re going to live to 100 and be pretty healthy right up to the end.

Stacy Jones (07:57):
Sure.

Josh Patrick (07:58):
So you’re likely not going to retire at 65.

Stacy Jones (08:01):
Which means I have almost 20 years left.

Josh Patrick (08:04):
Okay. I said, you’re likely not to retire at 65.

Stacy Jones (08:06):
I know. I would, though. Yes. Okay.

Josh Patrick (08:10):
And you’re likely, when you get to be 65, you’re going to say, “Well, I really don’t know what else I want to do that’s more fun than this, so why would I stop?” Especially if you structure your business in a way where you become operationally irrelevant. By the way, that’s the number one driver to a successful business or a sustainable business.

Owners who get out of the way of the business and learn how to delegate effectively are going to be way more effective and create a lot more excess cash than owners who have to be involved in everything. They often become the bottleneck of the business because everything has to flow through that owner. So I don’t know if that makes any sense or not, but that’s been my experience.

Stacy Jones (08:51):
It makes perfect sense for me. It’s something that I think my own agency combats on a daily basis. I am the cog. I end up, oftentimes, stopping things. We put a lot of emphasis in the last couple of years of making changes to that. Because I saw the future where I would never be able to sell this agency because I was the agency, otherwise.
Unless you can get out of that, then you’re going to sell your company and have to work for that new person who’s actually buying your company. You’re still going to be the company and now you just don’t have the freedom to make the choices you had before. So, that’s not a good path.

Josh Patrick (09:27):
When you sell your company, in doing that what happens is you’re going to hold a whole bunch of paper and you’re going to be a huge risk because you no longer own the company, nor do you control the company. The new owner can do whatever they want, whether it ruins the company or not. Too often, it’s the ruin the company that happens.

Stacy Jones (09:45):
Yeah. I’m sure there are many listeners who find themselves in that place because I can see that with our own agency in many ways. I can see that with other agency owners I know, other corporations, brands we work with, so it is a true issue that’s out there.

Josh Patrick (10:01):
Yeah, absolutely. Now, something that’s really important for your group to realize, because you’re on the marketing side… I’ve done a lot of work with a guy named Michael Port, who wrote a book called Book Yourself Solid. I consider the illustrated version of Book Yourself Solid the very best marketing book I have ever read in my entire life or ever used in my entire life.
If you go through all the exercises, you are going to have a well-defined marketing program. And as Michael likes to say, “Marketing creates awareness.” As I like to say, “Sales creates customers.” They are not the same thing. Too many people, especially in the online world, are taking sales and marketing and pretending it’s one activity. It’s not. It’s two completely separate activities. You need to make them work well together, yes, but they’re not the same thing.

When you’re looking at a marketing program, what you need to do… I’m sure, Stacy, you’ve talked to clients about this a zillion times. They need to build an avatar of who their perfect customer is. They need to know what, not the demographics are of that avatar because that’s easy to do, they need to know the psychographics of that avatar.

They need to know what is that avatar thinking? What are they feeling about? What are their pain points? What problems do they need to want to solve? The only way you ever really learn that is you become a niche-aholic. A niche-aholic, very essentially, means you are obsessed with a particular small part of the business world and you know more about that than anybody else. When people put their hands up, they know you’re the right person to go to.

Now in your particular case you have this great niche, is that you’re doing product placements in Hollywood and your name even talks about it. I mean, you told me you have 30,000 people on your mailing list. The reason is you’re so specific of who you’re talking to, people have an easy time of finding you. I, on the other hand, break all my rules almost all the time in the fact that I am an expert in literally anything that happens in the business, but nobody believes that. The reason I can say that, I’ve read 1,500 business books.

Stacy Jones (12:20):
Sure.

Josh Patrick (12:21):
I’ve done all this stuff. In 1984, we had a process control thing in our vending company using W Edwards Deming’s 14 points, which became the Toyota Production System, otherwise known as lean manufacturing. I was so far early into that, that when I sold my company in ’95, there still were no vending companies in the country except us that were doing that.
So me right now, because I’m 67 years old, I’m looking at my business saying, “Okay, what’s interesting to me?” I’m not trying to build an empire to sell. You have to be really clear on what your business goals are, also.
Luckily, I’ve done relatively well and I can afford my little side roads I go down. Now, my specialty is when people say, “Okay, what is it that you really specialize in?” It’s blue collar businesses, which are manufacturers, distributors, and construction companies. I can walk into one of these companies in 10 minutes, have a conversation with somebody, come up with at least one idea that will make their company increase their profits by 30% to 50%.

Stacy Jones (13:31):
What are some… Oh, go ahead.

Josh Patrick (13:33):
Go ahead. It’s typically the same thing. Is that I am a huge fan of process control improvement, taking waste out of what we do. Now, there’s four main schools of thought in the process improvement place and only two of them are really applicable for small businesses. Unfortunately, the other two they tend to look at.
The four very simply are, from simplest to most complex, is the theory of constraints, which Eliyahu Goldratt wrote about in a book called The Goal. The second thing is Scrum, which Jeff Sutherland has written about and it’s the way software’s designed today. If you notice with Google every couple of days, you have to restart Chrome because it’s not working the way it used to. That’s because Google has pushed an update out to the browser and they never tell you when to do it so you just have to restart.

The third is lean manufacturing, which is known as the Toyota Production System. You need to have a business of probably 500 people before you even consider using lean and you have to have the right type of business. Then finally, there’s Six Sigma, which is what 3M and GE were obsessed about. Unless you have an advanced mathematical degree, you’re never going to figure it out.
The first two is the theory of constraints I call whack-a-mole for business. What you do is you wait for a bottleneck to appear, and then you keep banging that bottleneck til it goes away. Then, you wait for the next one to do. Now my buddy Mike McCall, which has a new book coming out on Tuesday, which is really a brilliant combination of taking the theory of constraints and then having a methodology for figuring out what’s next you should actually work on.

The name of the book is Fix This Next. I really like it a lot. I actually got an advanced copy because I’m interviewing Mike next week. So, I’ve read it. But anyway, it’s a really good strategy. Then the next thing is, if you do projects and almost everybody in the advertising world is project based, you really should learn how to use Scrum.
Scrum, essentially, is you have your work in a backlog, you put it into production, and over a two-week period or three-week period, you produce something that’s a product til software’s done. Now the key was Scrum and why it works so well, there’s two pieces that most people don’t realize are as important as they are. The first is what’s called the retrospective. So after the two or three-week period, the team that did that project needs to look back at what they just did was say, “What went well, and more importantly, what experiments do we want to try the next time?” And what you find is that you get these five, six, 2% improvements.

But if I get a 2% improvement and I do that 30 times a year, I’ve improved my process by 60% in over a year. Every once in a while, you’re going to say, “We want to try something new or something different,” and you get a home run. And let me give you an example where that worked. I didn’t know, Scrum didn’t exist when I owned my vending company, but we used to do experiments all the time, and my mantra was, and still is “Fail fast, fail cheap,” which means small experiments and we’ll see what happens.

So one day I was walking around my vending company, and it was this bank of vending machines. There was a food machine, a coffee machine, snack machine, soda machine. It was sitting there ready to go out in the location, but we didn’t have a location for it. We had just hired a new route driver. It usually took us six to eight weeks to hire, to train a route driver, and we would lose 40% the first two weeks, they went by themselves because they were never really trained properly.

So I said, “Let’s try an experiment. I want you to train this new person in-house, just you and the trainer for the next two weeks, and then we’re going to let them go out in the field.” So what happened was we took our training period from eight weeks down to two weeks, and when the driver went out in the field all by themselves the first day, instead of spending 14 hours out there and coming back frustrated, they spent 10 hours out there and they did basically the work of somebody who had been with us for eight or 10 years. So our turnover went significantly down, our time to train what significantly down, the happiness of the trainer went way up because he wasn’t trying to train into a route at the same time, and the new person we hired wasn’t frustrated the first day they went out in the job. Now that was all from a small experiment.

Stacy Jones (17:59):
And they learned your company culture at the same time.

Josh Patrick (17:59):
They did.

Stacy Jones (18:01):
Which they were not getting necessarily before.

Josh Patrick (18:04):
They were. And it was more consistent with our company culture.

Stacy Jones (18:08):
Yeah.

Josh Patrick (18:09):
So those are the sort of things, if you look at process improvement, which I put as one of the four drivers of sustainability, which is systemization, and you’re always experimenting on your internal process, as well as your external process. You know I’m just blathering on, but stop me if you want me to.

Stacy Jones (18:09):
No, you’re great.

Josh Patrick (18:36):
One of the most important things in the business, to create excess cash, is you have to have an ongoing innovation process. Most people think innovation is about creating new products, and yes it is, but there’s also innovation about how you run your company, which is where Scrum and the Theory of Constraints comes in, and even lean if you’re big enough. But for our listeners, I’m going to guarantee that Scrum and the Theory of Constraints is all you’re ever going to need. And if you’re really small, if you’re a solo, start with the Theory of Constraints, don’t even think about Scrum. If you have a team, then think about putting Scrum in place. Both run training programs, you get certified, and I highly recommend it.

Stacy Jones (19:23):
Well, I want to dial back real fast for just a second, where you mentioned Michael Port and Profit First, and just say he and his wife, Amy are fantastic and so nice. They have a program called Heroic Public Speaking, that I’ve actually gone through, and I’m into now for a bigger part of it to learn how to be a better professional speaker. They are just such great people. So his book, which is fantastic, they have all these other resources that are also fantastic. I’m giving them a free plug because I like them as people, and I’m glad you like his book.

Josh Patrick (19:59):
I was actually there at the beginning of HPS, and in fact I’m doing a “book yourself” style of program next Friday, about disaster planning in the coronavirus for marketers.

Stacy Jones (20:11):
There you go, that’s perfect.

Josh Patrick (20:14):
I’ve been involved with Michael, and I actually have consulted with Michael a bit over the years. They’re awfully nice people. HPS is, if you want to be a great speaker and a great keynote speaker, there probably isn’t a better program in the world to do.

Stacy Jones (20:32):
Yeah. I went through a few day program with them already, and it really is, it’s a nice company to work with. So there, there’s their free plug. But going beyond that, when you were saying, you know the smaller organizations and you’re talking about lean, you’re talking about Scrum, are you a believer in EOS? Are you familiar?

Josh Patrick (20:53):
I’m a huge fan of Gino Wickman. I mean that’s why I’m going to talk to Mike about. I think that if you take EOS, which stands for the Entrepreneurial Operating System, and you use EOS and you combine it with Mike’s Fixes First, you’re going to have a company that, because part of EOS is IDS, which calls for, what’s it? Something you discuss and solve. Identify, discuss, and solve. And the problem with IDS is you’ve got this whole laundry list and you don’t really have a process for choosing where you want to go. And if you use Mike’s Fixes First, which is a Theory of Constraints and combine that with IDS in a weekly meeting, that you’re going to do, the level 10 meeting that Wickman talks about, then it’s a really good combination.
My experience is you never want to just do one thing by itself, you’ll always want to add things on. I mean back 20 years ago, the world was in love with Michael Gerber’s E-Myth, and E-Myth is great, if you’re an engineer and you like huge spreadsheets with lots and lots of detail. That’s not most entrepreneurs. However, having said that you can take pieces of Gerber stuff and apply it to your business and you should. So what I recommend to people, you know there’s probably 20, 25 books, which are absolute must reads, and take pieces of them and apply them to your business in a way that makes sense for you, which is a fair amount of work and you have to be pretty curious to do that, but to be successful, and you’re not a lifelong learner and you’re going to live to a hundred, it’s going to be a very boring life.

Stacy Jones (22:46):
Well, you certainly are a lifelong learner. And I hope you mentioned that you were in the midst of writing a book. I book it’s either that book or a future of book that you take all of your knowledge and you write the “best of” from every book that you’ve written to build a Bible of sorts for businesses. That would be something you’d be phenomenal at, I’m sure.

Josh Patrick (23:02):
Well, the books I write are parables.

Stacy Jones (23:06):
Okay.

Josh Patrick (23:06):
So I’m writing the second in a series of my parable. The first book was Sustainable, a fable about creating a personally and economically sustainable business, where we talked about the four drivers of sustainability, and then The Four Buckets of Profit, which is a result, not a purpose. This book takes it into the next level where our founder, John Aardvark wants to retire, and we’re trying to figure out how to get him to transition out of the business, and have his children transition into the business. We’re talking about what we call that book, the Sale Ready Business, which is one of our processes we do, and it’s essentially eight steps the business owner needs to go through, to create a business that’s ready to be sold, whether he wants to sell it or not. And if you do those eight steps, you’re going to have a ton of fun running your business.

Stacy Jones (23:56):
There you have it, and I will say that I read your book and I really ensure I had our entire team read it as well.

Josh Patrick (24:02):
Well thank you so much Stacy.

Stacy Jones (24:04):
Yeah. We do a book club and I had forgotten that until right this minute, when you said John Ortberg. I’m like, wait, I know that. And so I remember this. And so we’ve had at our agency for years, a book club that we do either monthly or quarterly, depending on what year it is. And you were a featured book of the moment. So yes.

Josh Patrick (24:27):
Oh cool. Well that made my day.

Stacy Jones (24:28):
There you go. You learn things all the time. You said something before we started this podcast, that business owners who have companies of five to 10 employees are really stuck.

Josh Patrick (24:41):
Yes.

Stacy Jones (24:42):
Basically. Can we dive into that a little bit more and where that stuckness is and why they’re stuck?

Josh Patrick (24:48):
Yeah, it’s really quite simple. They haven’t learned how to delegate. And delegation is not a skill anybody does well out of the box. It is the hardest skill for business owners to learn. There’s a whole bunch of reasons for it, but I’ll give you two.

To delegate you have to have high trust in the people you’re sending a job to, and you have to have a high tolerance for mistakes and understand mistakes are learning experiences. If you don’t get those two things, you’re never going to delegate. Now here’s what typically happens with a business owner.

They try to delegate. They give a job to somebody and then they either become a helicopter manager where they just are micromanaging, or they completely abdicate and walk away. Now, neither one of those is going to work as a strategy for a delegation. If you’re going to be a micromanager, you might as well do the darn job yourself. And if you’re going to be an abdicator, I can guarantee it’s not going to be done properly.

So my first mentor had a great system. He called it EIA, which stands for expect, inspect, accept. So when you delegate, you set up an expectation for what you want, and then you’re going to go back, you’re going to inspect to make sure it’s done the way you wanted. And then, assuming it’s done well, you’re going to accept it.

Except here’s what happened when you first delegate. I set up an expectation, which probably isn’t very clear. It’s clear in my mind, but it’s probably not clear in the person that I’m delegating to. And then I’m not going to inspect and I’m going to go and I’m going to finally figure, well, I’ll go check on what’s going to do. And I’m going to hit it and say, “Oh, that wasn’t what I wanted at all. What’s the matter with you? Are you an idiot? I told you what to do.”

And then you’re going to go back and you’ll say, “Well, delegation doesn’t work so I can’t do it anymore. I’m just going to put a bunch of helpers around me.” And you run out of bandwidth at about 10 employees with helpers. You have to be able to delegate and people have to go and be able to do the job without you being around them.

So first you have to say, okay, the question you want to ask when someone makes a mistake isn’t, “Why was that made?” You want to say, “What did we learn?” And you have to realize that if you’re having a hard time with trust with delegating, I can’t delegate to this person because I can’t trust what they’re going to do.

There’s a book called the Trust Formula, which I highly, highly recommend. And in there, basically it says intimacy plus competence, plus doing what you say you’re going to do, divided by self-interest, will tell you how much you’re going to trust somebody. Now, typically when a business owner doesn’t trust to delegate, it’s usually because they don’t think the person they’re delegating to is competent enough to do the job.

So they’re not likely to do that. And they’re going to be always testing their competence. Well, instead of doing that, why don’t we have a conversation about what competence means and systematize the process? You also want to realize if you’re an owner of a business, yeah, we don’t like mistakes. No one likes making mistakes. It’s now something, but it’s how you learn. And the truth is if I’m making mistakes, I’m learning. And it’s almost impossible for one of our employees to make a mistake that’s big enough to put us out of business.

Stacy Jones (28:15):
And you’re innovating. A mistake means innovation because, if you’re learning from it, you’re able to actually keep moving that needle.

Josh Patrick (28:23):
Yeah. So, here’s, what’s really important about when someone makes a mistake because this is a typical conversation that happens. You go up and you say, “Gee. That wasn’t what we expected to have, was it?” And usually the person you’re talking to will be studying their toes by that point, because they know they’ve made a mistake and they’re about to get yelled at, or they’re convinced they’re going to be yelled at. So you say, “Okay, well that didn’t work well. What did we learn?” And what do you think the first thing that employee is going to say to you?

Stacy Jones (28:53):
Well, I’ve heard lots of different things around the way from, I’m sorry, to I won’t do that again. To I’m going to make this change in the future.

Josh Patrick (29:02):
Okay. Well, I’m going to make this change in the future is like the advanced thing that happens after you’ve tried [crosstalk 00:00:00:05:10].

Stacy Jones (29:02):
Okay. Depends on your person. Yes.

Josh Patrick (29:12):
It’s very rare that someone will take responsibility right out of the box. So, this is what happened with me all the time was I go to somebody say, “Why did that happen?” And they’d say to me, “I don’t know.” So, if you get into the, “I don’t know,” “Well, what did you know?” that’s a stupid conversation. So the question I’ve learned to ask when someone says, “I don’t know.” I say, “Okay, well, if you did know, what would it be?”
And that usually will get an answer of some sort, which you can start a conversation around. But sometimes, and not infrequently, people would say, “If you did know, what would it be?” And they’d go, “I don’t know.” I said, “Okay, here’s what we’re going to do. I want you to pretend you know what we should be doing now. So just pretend and pretend that you know the answer and just say anything to me.”
That usually is what they’re really thinking. And again, it allows you to start the conversation. The point is, when you say, “What happened here? What could we have done differently?” And you don’t get an answer from it. You haven’t learned anything from the mistake, so it’s a wasted mistake. Mistakes are great in one particular instance. When you learn something from it. If you don’t learn something from it, then don’t bother.
Just have a bunch of helpers. And by the way, there’s nothing inherently wrong with a company that stops at 10 employees. Now I had a client that had 14 employees, it was wealth management client. They made $2.7 million a year with 14 employees. The owner, the president of the firm would not learn how to delegate. She just doesn’t trust people.
Everything ran through her. The business is stuck where it is, but frankly, she seems to be happy. The business is doing incredibly well. I mean, their profits are now down to about $2 million for a bunch of reasons before the coronavirus. But it’s still a lot of money to make. And this is on top of her getting a salary of $600,000 a year. So it’s not like… So you don’t necessarily have to build a huge business to be happy.

Stacy Jones (31:30):
Right. That’s fair enough. What is additional advice you would give to our listeners? Any… Well, because I could keep on talking to you probably for the next three days and have all of the different learning experiences you have accumulated be shared. But what are some last bits of parting advice you would give to our listeners today?

Josh Patrick (31:50):
Oh, this is my new obsession these days, besides the 100 year project. Which is, I always have obsessions going on, but the 100 year project actually is my next pivot for an obsession. We’re not nearly vulnerable enough in business. We, as owners have this front and facade we put up. Now, Stacy, I’m going to assume that when you were working with HPS, you had an origin story that talks about all the terrible things that you did before you jumped into what you really want to talk about.

Stacy Jones (32:25):
Of course.

Josh Patrick (32:26):
Okay. There’s a reason we do that. The reason we do that is because we’re making ourselves vulnerable. We’re making ourselves vulnerable to the audience, and by making ourselves vulnerable to the audience, what are we really doing? We’re becoming human. When we make ourselves vulnerable to our employees, and tell them about all the terrible things they did, I’ve been to a hundred Grateful Dead concerts, and people will often ask me, “Well, gee, did you do drugs?” I said, “I went to a hundred Grateful Dead concerts.”

Stacy Jones (32:59):
Even if you didn’t do drugs, they did you.

Josh Patrick (33:02):
Yes. My first concert was 1971. When I had hair, I used to have hair down to the middle of my back, and a beard like this. And all you could see is my eyes. And I was 6’6″, and I weighed 165 pounds. That’s a pretty scary person you’re looking at.

Stacy Jones (33:23):
You have changed over the decades.

Josh Patrick (33:26):
Well, I don’t have any hair, and I don’t weigh 165 pounds anymore.

Stacy Jones (33:30):
There you go.

Josh Patrick (33:31):
But I’m told I’m still pretty scary to look at.

Stacy Jones (33:34):
I wouldn’t say that.

Josh Patrick (33:38):
Vulnerability really leads to a whole bunch of stuff. It leads to transparency, authenticity, all the things that we say that we should do, but I really believe it starts with being vulnerable. And if I had my druthers, I would love to see business owners stop pretending that they are like God’s gift to creation, and tell the folks they work with about what could be done better in their life, and what were the mistakes they made along the way. And then you look at anybody who’s successful. They’re usually an instant success after 20 years. And talk about what happened up in that first 20 years, that makes you a little bit vulnerable. It makes you more real and relatable.

Stacy Jones (34:28):
I think it’s also… business owners, agency owners, whatever type of owner you are, when you’re talking about vulnerability to your employees, everyone’s trying to tough it out, and you’re trying to appear like you have it figured out, whether that’s to your clients, or as you said, your team members. And one of the ways that I myself found that I could become more relatable, more vulnerable. It was after joining mastermind groups of other owners in business, where we dug in. And we shared the fact of what our finances were, we shared the fact of what our failures were. We’ve shared the fact of the reality that we don’t actually know what the hell is going on all the time, necessarily, and the mistakes we’ve made.
And those types of groups make you start speaking and opening up, and realizing that you’re not alone, and that you actually have a commonality with everyone else. And it made it a lot easier after I did that, to be able to share more of who I was to my team members as well. So that’s something for our listeners that if there are masterminds, or business groups, or agency owners, Agency Management Institute’s something that I’ve spoken about before. We’ve had Drew McLellan on, and he’s spoken as well. It’s a phenomenal resource. There’s companies like Second Wind. There’s Vistage. There’s so many different sources out there for you to find this, but I strongly, strongly, strongly suggest…

Josh Patrick (36:00):
There’s EO. I’ve been involved in peer-to-peer, I call these things peer-to-peer groups, more than masterminds. And the mastermind group, by the way, was invented by Napoleon Hill. And Think and Grow Rich. And if you haven’t read Think and Grow Rich, you really have to read that book about seven times. It is just a great book. But the peer-to-peer groups, in my opinion, that work the best are the ones that are not professionally moderated. The reason is, when they’re professionally moderated, the moderator tends to have an agenda they’re trying to cover. When you have a true peer-to-peer group, and the chair of the meeting rotates between every member, the member who’s responsible for that meeting sets the agenda for that meeting, and gets to talk about what’s really important to them.
Now, the other thing for making a peer-to-peer group really work is when you’re bringing somebody in, and you’re putting a group together, it’s very useful to have somebody who you know is going to spill the beans out of the box. Because until somebody spills the beans, everyone is on their best behavior, and trying to act like they’re really good at what they do. And they aren’t going to be real. They aren’t going to be vulnerable, nor are they going to be authentic. So it’s the same thing. We often recommend people do customer advisory boards. And I always tell people when I’m putting together a customer advisory board, I said, “These are really powerful tools. I’m going to give you a piece of advice that you’re going to hate, but you have to do this.” I said, “You have to find the largest, most important curmudgeon you have in your business. And they need to be on your board.
Because until they tell you you’re full of shit, excuse my language, which is what these curmudgeons will do, nobody in the group is going to tell you the truth about what they’re thinking.” Once that person opens a space up and says, “You don’t know what you’re talking about,” everyone else is going to jump in and say, “Yeah, you don’t, and here’s why.” And that’s the whole purpose of this group. I mean, I had a peer-to-peer that was working. We were together for 27 years, and selling my vending company was a really tough thing for me to come around and do. They hammered on me for three years to get out of that business. And they were right. And had they not done that, there’s a good chance I would have had a personal bankruptcy that would have been absolutely devastating.
So peer-to-peers, in my opinion, if you’re not in one, you need to be in one. And I highly recommend you do a peer-to-peer with people not in your industry. They look at your business differently than you do, and industries all have Groupthink. And one of the real values of a peer-to-peer, or the best ones I’ve ever been in are when we’re from different industries, because we don’t have Groupthink going on.
And the other thing you want to do, if you can possibly get ahold of it, if you know somebody who’s in Young Presidents’ Organization, try to get the moderator’s guide that they get for forum training and they appear to appear in Young Presidents’ organization is called the Forum. If you’re the moderator of a Forum, you go for three days of training, and they have this incredible guidebook on how to run each forum, peer to peer groups. So they’re great. I mean, I’ve been in probably two dozen over my 40 years or so in business. And I’ve had three or four that work really well, and the other 17, not so well. So just because doesn’t work right, doesn’t mean it’s not right. It just means it wasn’t set up right.

Stacy Jones (39:35):
Yeah. Or it’s just not the right one for you, and you can go on and find another one, because there are certainly options that are out there.

Josh Patrick (39:41):
This is a zillion of them out there. I would recommend you don’t do a mastermind with 40 or 50 or 60 people, because that’s not the mastermind. Napoleon Hill says the perfect size for a mastermind is 7. I would say 7 to 11, with an odd number. I don’t know why the odd number is important, but it is.

Stacy Jones (39:59):
Josh, I want to thank you again so much for all of your insight, your advice, those awesome books that you shared with us. And to all of our listeners, thank you for tuning in to Marketing Mistakes and How to Avoid Them. I look forward to chatting with you on our next podcast.

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