The Fundamentals For Business Start-Ups To Succeed With Sean Castrina

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It has been found out that nine out of ten start-ups fail within a decade. How do you stop yourself from falling into the 90% and rise to that top 10%? In this episode, Penny Zenker sits down with a great entrepreneur who has the answers. The best-selling author of the 8 Unbreakable Rules for Business Start-Up SuccessSean Castrina, is on the show to share with us those rules that have since helped many succeed. Why are a plan and marketing a must? How do you go about hiring? How can you protect your business? What is productivity? Why is a partnership a way to succeed? Sean gives his answers and more, showing you that being an entrepreneur is not that daunting as long as you follow the fundamentals. Whether you are a start-up or not, this conversation will surely be a value to you.

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The Fundamentals For Business Start-Ups To Succeed With Sean Castrina

I’m excited about this episode because we have a value-added gift for you. Sean Castrina is the bestselling author of the 8 Unbreakable Rules for Business Start-Up Success. He’s a great entrepreneur and he’s been featured with all these famous people and everything. What’s important that you want to know is if he’s going to add value to you. The truth is absolutely. Without further ado, I want to introduce Sean to you and get started. Welcome, Sean.
It’s great to be on the show.
I did want to mention your book because I think it has an interesting title, the 8 Unbreakable Rules for Business Start-Up Success. A lot of people reading are not necessarily startups, but they’re entrepreneurs. There are these unwritten rules that people either know or don’t know about. I wanted to talk a little bit about that. Tell me why there are eight and how you came up with them?
I was on vacation with my roommates from college and I had a legal pad taking some notes. I was trying to figure out why my companies had statistically done so much better than most startups, because 9 out of 10 startups fail within a decade. One out of two fails within 2 to 5 years give or take the statistics you read. At the end of the day, too many fail. I went back and started writing one sentence axioms, little principles that I had used over the years, and why my businesses did well. When I got to the end of that, I started putting them in little blocks. What I found is there were patterns. The first pattern I found is that you need to know why you want to be an entrepreneur in the first place because there’s nothing wrong with being an employee if that’s what you’re wired to be. There’s nothing wrong with being a school teacher, a nurse, a doctor, whatever the case may be. Some people are wired better to be an employee.
Do you think that some people started their businesses with the wrong basis? They’re not really entrepreneurs. They were just pushed in.
I think that you better be motivated. Your why has to motivate you. I don’t think people start it necessarily for the wrong reason, but you need to know why you started it so that when the uphill climb starts, you remember, “I did this so I can have a flexible work schedule. I did this so I can go to all my kids’ events. I did this so I could be home at a certain time. I did this so that nobody limits my advancement. I did this so I’d never get laid off. I did this so I control my own income.” My only thing is that I started the book and the first rule is know why you’re doing this and it has to motivate you. When things get difficult, you know why you did it.
Marketing is not optional. If you want to be a successful company, you need a budget for marketing. Click To Tweet We’ve got to have that higher purpose that’s going to carry us through and make things easier. I think that’s important.
You need to have a plan. I wrote the book, World’s Greatest Business Plan, so I believe in having a plan. You have to have a strategy on what you’re going to do and how you’re going to grow this business. I always tell people if I gave you a $5,000 free vacation. You wouldn’t probably just go in your car and head out West. You’d probably sit down and go, “Do I want a summer vacation or winter vacation? Do I want to ski or do I want to be at the beach?” We spend less time on our business plan than that. It doesn’t make any sense.
I think I saw 60% of entrepreneurs don’t create business plans whatsoever, no marketing.
If you don’t plan, you fail. You need to have some type of plan, what you’re trying to accomplish, what your competition, who your competition is, how you’re going to be different, things of that nature. The other thing is that marketing is not optional. It’s amazing how we think because of social media, we’re going to have a word of mouth business. I find it very funny that Budweiser spends $25 million during the Super Bowl to remind us that they sell beer, though every one of us knows exactly what Budweiser sells. When you watch the Super Bowl commercials, we’re familiar with every one of those companies. We know that GoDaddy sells websites. We know GEICO sells insurance, but they spend the money because they want to constantly own that position in your brain. Marketing is not optional. If you want to be a successful company, you need a budget for marketing.
There are people who are like, “I can’t budget for marketing.” Would you say that it should be a percentage? I know there are a lot of people who don’t know how to go about that. They say they don’t have the cashflow. Can you give them some guidelines?
Out of 10% starting out, it should at least be 50% of a quality employee, whatever you would pay a quality employee.

TBT 135 | Business Start-Up

8 Unbreakable Rules For Business Start-Up Success

That’s a good way to put it. I want people to be able to wrap their heads around it. What amount for a starting business or even an established business is the right amount to give them a basis?
You’re going to spend $10,000 or $20,000. Just thinking the logic of it, if you don’t attract customers, you’re out of business. It’s that critical. When people say, “I can’t spend that.” I’m like, “You have to spend this because if you don’t attract customers, you will be out of business.” Businesses go out of business for one reason 99% of the time. They stopped selling enough of their products to stay in business. That’s because they’re not attracting customers anymore. Marketing is not optional.
One more thing on that point. There are a lot of people who get sucked into long-term marketing campaigns that are harder to produce. How do you look at that?
I don’t like long-term marketing. I don’t care what anybody tells you.
What would you consider long-term marketing?
Anything over 90 days. If you’re a startup, they want to tell you, “You’ve got to build traction.” I know all the little things that they tell you. I’m going to let you on a secret, a marketing tip that I’ve learned. Marketing either works or it doesn’t work. It works faster or it doesn’t work. You’re better off trying something for 30 days, 2 weeks. Don’t sign any long-term contracts. This is like pay as you go. If you find something that works, then put more money into it. I’ve seen too many businesses start their business. They do all these little twelve-month contracts for everybody. They think they’re getting such a good deal, “I bought twelve months.” I should be 30 days at a time, 2 weeks at a time. If I could do it a day at a time, I would because I want to find out what’s going to work for me. Anything that doesn’t work is wasted money.
People should be calculating their return on their investment around their marketing.
Take this from me. Track every single lead you get, every call you get. Find out how they found out about you because then you’ll know where to put your marketing money.
Don't try to be a master of a bunch of things. We only know Tiger Woods' name because he does one thing well. Click To Tweet How about another one of those rules? We talked about the why the plan and marketing is a must.
Hire a great team. Don’t hire family and friends, unless you come from a better genealogy than I come from. My family reunion, I look around, I love them all but I’m not hiring anybody. I think that our default position is to hire family and friends. The problem is that you’ve got to hire the best people. When you understand the statistics that 9 out of 10 fail, why would you hire average people? That doesn’t make sense to me. A startup is a daunting task. You pay peanuts, you get monkeys. Pay good money and hire decent people. I always say there are no sevens in hiring. Hire eights or better. The next response is, “I can’t afford to hire great people.” I go back to, “Then you shouldn’t start a business,” because if you don’t market and you don’t hire talented people, you’re going to be in that 1 and 2 that fail. You’ve got to hire some talented people. Sales is critical. That’s one of those where they hired their Uncle Billy. Everybody likes Uncle Billy. He’s great at building a rapport, but he can’t sell anything. You’ve got to hire sales professionals.
You have to get somebody that has a proven track record.
Who you hire is critical, and the tendency is to hire family and friends. I’m saying that’s not the best place to start.
It’s hugely expensive to make that kind of mistake because the time, energy and effort to have to let someone go that isn’t working, especially if they’re connected to you, is high, and the cost of replacing them. Unfortunately, people say it’s hard to do that. I always say pick your heart. It’s hard to do that but it’s even harder to go with the alternative, which is wasting time and money.
What I’ve learned twenty years of doing business is that I’ve never overpaid for talent. It’s always been the person who under-performed. It’s always been the sevens that I hired that ended up being sixes and fives. When I train my partners, we’ll go through some interviews. At the end of it, I’ll go, “What do you think?” We’ll step into another room. They’d go, “Pretty good.” I go, “Give me a number from 1 to 10.” “Seven.” I go, “We’re not hiring.” He goes, “Why?” I go, “A seven is a seven, and a seven is probably a six. If you thought he was good, tell me he’s an eight and I’ll hire him.” He goes, “I don’t think he’s an eight or I don’t think she’s an eight.” We’ve got to get out of the average pendulum unless they’re just opening the doors.

TBT 135 | Business Start-Up

Business Start-Up: Businesses go out of business for one reason 99% of the time: they stopped selling enough of their products to stay in business.

Another one of mine is protect yourself and your business. Partnership agreements. I don’t care if you sit down in the kitchen and write some bullet points. You both sign it and get it notarized if you’re going to do a partnership agreement. I love partnerships but you need to know what everybody’s responsibility is. What happens if they failed to fulfill their responsibilities? I’m going to save people a lot of money right here. If somebody failed to fulfill the responsibility, it comes out of their profit to get somebody to do it. For example, if somebody is in charge of sales, and then they’re not good at it or they fail at it, you’ve got to hire somebody to do it. They’ve got to pony up.
Let’s say somebody in the first five years of your startup wants to walk away. They get nothing. That’s the best piece of advice they’re getting here. Nothing stings worse than writing a check for somebody who was with you for the first year, and then life brought other things they wanted to do, and you’ve got to buy them out. No. If they walk away in the first five years, they don’t get a penny. The first two things are if they don’t fulfill their responsibility and list each person’s responsibility, they need to pay to get it covered out of their profit. Number two is if they leave in the first five years, they don’t get a dime.
Number three is, how are you guys going to argue? It’s going to happen. If both of you look at something differently, who breaks the tie? Find a mentor, find somebody or one of you two need to agree that, “John’s going to break the tie or Suzy.” You can split profit 50/50 and still be a 51/49 business, which is typically what I do. Protecting yourself, intellectual property, incorporating, using a payroll service. I’ve seen too many companies getting major tax problems because they want to do their own payroll. I think it’s important. One of my unbreakable rules is to protect yourself and your business.
It’s important to anticipate and be proactive as you’re saying to what could go wrong. It’s not negative. It’s being smart about your risks. I think that’s the difference. I had somebody say to me once because I have similar feelings that you do. I’ve also been burned and therefore I know how to do it differently, “It seems negative.” I was like, “It’s not. It’s just you’re making sure that your expectations are in alignment even when things go wrong. You have to anticipate what could go wrong.”
If everything goes great, this disagreement won’t matter. I have gone into partnerships where I would have bet you my very life, we would have never broken up. When 2008 hits, we have to take 50% pay cuts. He walks in the next day and says, “I’m out of here.” It’s a recession. I’ve got to write them a check to get rid of him because if not, he can sell his stock to Uncle Billy. That’s what it gets scary. You can’t afford to buy it out. He sells his 50% of the company to who? That’s another thing, you’ve got to first write to buy somebody out. Partnership agreements are absolutely critical, intellectual property, owning your name, owning any patents and things like that. These are serious things and they’re in my unbreakable rules.
The show is called Take Back Time. I want to talk a little bit about what I believe. If cashflow is the number one reason why people go out of business, I believe the number two reason is because they don’t spend their time in the places that they need to be spending in order to grow their business, which is why they don’t have any cashflow. It’s a Catch 22. Let me ask you, what’s your definition of productivity and why for the entrepreneur?
Nothing moves a business faster to scale than two people relentlessly running after something. Click To Tweet Entrepreneurs are not as talented as you think you are. Let’s start with that. You probably do 2, 3 things extremely well within your business. I’m being kind but no more than three. You need to stay in your absolute area of strength where it would be too expensive to pay anybody else on the planet to do what you’re doing. It needs to be at that high level. Anything from $40 and down, that’s just giving a quick dollar figure. You pay somebody to do things of that nature. You want to be in your area that you are productive and gifted that everybody around you wants you only doing that.
When I go in my office, my staff says to me, “Sean, what can we get off your desk?” Why? They want me to do nothing but market. They want me to do nothing but negotiate high-end clients. They want me to do nothing but recruit and hire high-level talent. That’s my superpowers. I fall out of those three things. I’m not helping my companies. Know what you do well. If you’re not sure, what’s fun for you? You know the old thing, time go by fast. Do other people tell you you’re good at it? Don’t try to be a master of a bunch of things. We only know Tiger Woods’ name because he does one thing well. We only know LeBron James’s name for one reason. He does one thing extraordinarily well. Find that one thing that you do well. Maybe you can add to no more than 3, but you’re not doing 10 things.
We’re fooling ourselves. We want to be that person who can do everything, but that’s the worst thing for entrepreneurs to think that you can do everything. Know your strengths. What would you say is your shortcut to success if there was one?
My shortcut to success in business is partnering. That is my superpower. That’s the thing that I do. It’s like breathing to me. I have the ability to identify talent and people before they see it in themselves. I see them. They’re an employee somewhere. However I came into contact with them, my brain immediately starts going, “Talented person.” Ideas are a dime a dozen. I find the person than the idea. It’s never the idea than the person. Typically, I find the person and then my ideas start going where I feel like I can fit that person. I always say one plus one equals done. Me plus one other solid person who can put the time and they have an expertise, and they’re going to run the day-to-day. I can get a business off the ground. I can make the phone ring. I’m good at creating systems and structures, but 1 plus 1 equals done. Partnering, nothing moves a business faster to scale. Two people relentlessly running after something, you create momentum. The collaboration is great. I don’t think there’s any way to move faster than a great partnership.
The other thing I like about partnering is its skin in the game. You’re both being compensated and moving it forward. There’s something in that too that sometimes when you’re working with a great team, if they don’t feel like they’re well-compensated and have in some shape or form skin in the game, then you’re not their partners. The difference is between ownership and a transactional.
An employee at the end of the day, once they leave the parking lot, they’re not required to think about your business again until they show up the next day. A partner, I want him or her to be worrying about it too. If I’m worrying about something 2:00 in the morning, I want them to be worrying too. It’s a totally different level of commitment. They have skin in the game so the upside is huge, but you’re sharing problems with somebody who has a vested interest in the outcome. It’s a much different level of commitment. When you’re in the fire with a partner, it’s a different level. Everybody is fighting, nobody is running for cover. Employee is going to give you 8, 10 hours a day and they can be great. You’re paying them to give you 8 to 10 hours. When they go the other 14 or 16, they’re not obligated to you. They shouldn’t be worrying about your business to be perfectly frank with you.

TBT 135 | Business Start-Up

Business Start-Up: Track every single lead and call you get. Find out how they found out about you because then you’ll know where to put your marketing money.

It also comes down to people’s personality.
We’ll always have the over-achiever. I’ve had people that would sleep on the floor in my business. We’ve all had them. I’m just saying, you can’t build a business around thinking everybody is going to think like that. We get blessed and have people like that. I’ve always had at least 1 or 2 people on my team that was over-achievers. You felt like they would die for you. All I would say is twenty years later, none of them are with me. I would say they served for a season and then life and whatever, they move on. They’re great but they’re not there forever.
I like what you said and I think it’s important because entrepreneurs do feel that when they have this small team, they feel like everybody should give the same effort and the same care about it in the same way that they do. I see often people are disappointed and they think that people aren’t good because they’re not working at their level. Quite frankly, that’s not what they’re there to do. How do you help somebody with that mindset?
I tell my team straight up. I solve problems that you choose not to solve or you cannot solve. I joke and I said, “There’s a reason why I make an extra zero.” I’ve got to think about problems at 2:00 in the morning, on the weekend. There’s a different level of that. I’m open. I love partners. I bring people on five years into the game that were maybe employees of mine that I’m like, “I want them.” I don’t mind sharing. It’s unrealistic to think that an employee is going to be as loyal to you as a business partner. To me, that’s not realistic.
We could talk all day and I would love to. Maybe we’ll have to do a part two. Before we close off, I think you’ve got a free gift for people. Is there anything that we missed that you feel like you want to share with this audience before we get to the next?
Anybody can start a business. It isn’t rocket science if you do the right things. If you move the things in your favor, you hire a good team, you market well, I’m saying to you that you can do it. It’s not that daunting. To me, it’s not that hard anymore because I do the things correctly. The life of an entrepreneur is great. It’s worth it. I have never missed a school function in my life. I’ve never missed any event that mattered to me. I can afford to go to anything. I took a limousine to the Conor McGregor fight four states away because my son wanted to go on a spur of the moment. I could afford to buy tickets to make that happen. The things you’re able to do is well worth it. It’s worth the fight, but go through these rules. I give them away for free. I’ve been talking about this book, but I’m not even selling it to you. If you go to my personal site,, you can get the 8 Unbreakable Rules. The digital version is right there. I’m giving it to you for free. We talk about my book and I’m giving it to you.
It's unrealistic to think that an employee is going to be as loyal to you as a business partner. Click To Tweet Thank you. It’s a great gift for people because those principles are like the fundamentals. It doesn’t matter whether you just started your business or you’ve been in business for five years, just like in football. You say, “We’re going to go back to the fundamentals.” Because those fundamentals, sometimes we get away from them or we forget about them, or we’re not implementing them as purely.
If your business is struggling, my suspicion is there’s 1 of these 8 that you’re skipping or not putting any attention to.
I want to highlight, no matter whether you’re a startup reading this or anywhere in your business, these are going to be valuable roles that you want to refresh and checkout. Your fresh perspective, Sean, is valuable.
If you like the way I talk, you’ve got a pretty good idea of how I teach. I host The 10 Minute Entrepreneur Podcast. If you like hearing about how to start a business or the type of conversation I was having, that’s how I am on my podcast. It’s real short to the point. It’s like an MBA for people that don’t have the time to get an MBA.
Thank you for all the knowledge that you’re bringing here.
Thank you for having me as a guest.
Thank you all for being here. It’s a huge value. Go check that book out. Take a step back and take some time to take a look at how are you approaching each of these areas in your business, whether it’s a startup or whether you’ve been in business for many years. We’ll see you in the next episode.

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About Sean Castrina

TBT 135 | Business Start-UpSean Castrina is a bestselling author of 8 Unbreakable Rules for Business Startup Success and the fictional tale The Greatest Entrepreneur in the World. His new release is World’s Greatest Business Plan written for those who cannot afford to fail. Sean is an active entrepreneur and CEO having started more than 20 companies in the last 25 years. He has guest lectured on entrepreneurship at some of America’s finest colleges. He hosts The Ten Minute Entrepreneur, a top 10 business podcast on iTunes. He has a large social media following and is verified on FB and IG. He has shared events with Tony Robbins, John Maxwell, Jon Gordon and others.

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