Many businesses lose tons of cash despite giving close attention to profit optimization and marketing. It’s because they keep adding unnecessary things to their already sufficient productivity drivers. Penny Zenker sits down with Scott Hallman, two-time Inc. 500 Company Founder, CEO, and best-selling author. Scott shares how business leaders can accelerate growth and maximize profits by focusing more on incremental improvements that spell productivity. He also discusses how to eliminate business metrics that do you more harm than good instead of stacking brand new technologies and sales tactics that only give false hopes of growth.

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Listen to the podcast here:

 

Understanding Your Productivity Drivers With Scott Hallman

I’m working smarter by finding great guests for you. That’s going to help you to work smarter and Take Back Time. I’m super excited to have Scott Hallman with me. Scott and I worked together a number of years ago with Business Breakthroughs. It was a joint venture between Tony Robbins and Chet Holmes. He shared his profit now a strategy and trained the entire coaching staff on just that, how to help entrepreneurs and business leaders work smarter so that they can profit more.

A little bit about Scott, he’s focused on helping rapidly growing companies by helping their CEOs to accelerate growth, maximize profits, build business value, as well as create great companies. I know he’s got a new book coming out, and he’s going to tell you about it. He has also been named to the Inc 500 list of America’s Fastest-Growing privately held companies. Without further ado, Scott, welcome to the show.

Thank you, Penny. I love the theme. It’s great. We all need to learn how to take back our time more than ever.

I’m working on also taking back our focus because we are in a focus crisis at the moment. That’s part of it as well. You are the profit guy to me. I’ve always known you as the profit guy. I want to know, is it something you were always born with to hone in on what’s most important in optimizing profitability? How did you get this skill that you have?

It’s thrown on me. I graduated from college. I started a job, and things were going well. I had dreamed of starting this business. I left all at once and jumped in, and I was an entrepreneur overnight, with no experience, no money, and didn’t know anybody with money. My idea took off big. We began to scale. I didn’t have money to hire the right people and to be able to float the receivables that we had. I had to focus on optimization to get every dollar out of everything we do from day one. It’s more, quite honestly, a survival.

That’s a quality problem. There are probably people who need to focus on optimization because they are not succeeding as well as they would like to be succeeding. There are a lot of drivers behind it. It’s interesting.

It’s interesting because when businesses come to work with our consulting firm, and if we talk about optimization up front, and I will share what that means more in a moment here, I was wondering if we got that. We want to know how to get more customers and leads. We want to solve a problem. I laugh and think I’ve done as through BBI, hundreds of clients to work through the profit optimization elements of things, as well as our own firm. We begin to ask questions. Similar to what you do when you start talking to somebody, “I got the to-do list. I got David Allen’s book. I’m doing all those things.” There’s so much more that needs to be done. There’s an assumption that they get it.

We always begin to talk about this concept of profit optimization. In 98% of the cases, it’s not an actual statistical number but in a huge percentage of those, there’s an enormous opportunity for an entrepreneurial business to generate significant amounts of cash from their business. Don’t spend more money on marketing. Don’t change your marketing. Don’t hire more salespeople. Just do things a little bit better. It’s the fast track to adding profitability.

It’s crazy how much money people are leaving on the table and they are like, “We’ve got to put more money into marketing.” Not just more a little bit of money, time, thought, and effort into things that would save them so much more money that would drop to the bottom line. Don’t you want to optimize before you scale?

Scale better. It’s more effective. It’s a key because people can’t understand, “I’m like on a hamster wheel.” They are on a hamster wheel. They are busy. I’m thinking, “I can help you solve that,” along with the tools that, Penny, you teach, and your folks teach but I can help you solve it. They say, “What do you mean?” I said, “You are working a gazillion hours. You don’t have any time for strategic thinking. You don’t have any time to plan out your business. You don’t have time or the money to hire people and put the right technology in place.”

A CPA looks backward while a finance person looks forward. Click To Tweet

“Step back and eke out 20%, 30% or 40% more profit from your business. You can take that and hire the best talent to free you up. You can get the best technology to free you up. You can invest in the best marketing people versus you trying to figure it out for yourself.” The money is there but the vast majority of business is to take back their time that way.

I find it’s also a focus shift as I started to think more about companies that are caught up in growth. That’s their main focus. They are income-driven. They are focused on marketing, new products, and new customers but they are not paying attention to the profit side. Growing but not necessarily being profitable. What’s the point of that? I don’t know.

There is a point if you are in different types of business models. That’s why when we met, and I was learning your principles, it resonated with me because if you focus on profit, you are focused on the return on investment, customer lifetime value, and optimization. You are going to ask different questions and approach your business in a different way.

One thing I didn’t put on my resume was I built a billion-dollar valued company with my partner in 2000. We were going public for $982 million. It was amazing. I go, “We are not worth $982 million.” That was this crazy, the dot-com era. You watch the market crash and why the market crashed because nobody was focused on profits. All they cared about was driving up revenue. It was bad.

I had one of our vendors contact me and say, “Give me a check for $500,000 a couple of days before the quarter closes to buy the software. I go, “I don’t want your software.” He goes, “I know. Just give it to me anyway, and then I will give it to you back the day after the quarter,” so he could record the revenue to meet their numbers. That’s how crazy it was.

I saw that and I thought, “What matters other than profitability?” If you can drive up your profitability, then you have more money to invest and scale. Why go and run new marketing campaigns? You are only going to need to get a conversion of X when you could drive down that marketing cost and acquisition cost. It’s a bit crazy.

How does that change the questions that you ask? Having this filter of optimization profit, what’s one of the core questions that you ask to get people to shift into the right mindset and focus on the right area?

I will apply it to business and personal. I have these things called drivers. I have profit drivers for the business. I have relationship drivers for relationships, team-building drivers, and value drivers for the businesses that we are looking to help increase the value of their company. There are always around 5, 6, or 7 things that, if you can identify those, think of the missteps in your process of getting better.

In business, you generate leads, and then people would look and say, “Generate leads and convert this many to customers.” I said, “What about all the steps in between? How many of those leads that came in did you get on the phone? How many of those people come to your website? How many people came to your website and filled out a form? How many that fill out a form did you ever speak with?” I began asking those questions. The answer, by the way, is resounding, “I don’t know.”

Isn’t that insane? How can you optimize a business if you don’t know the steps of conversion or the steps of the process?

 

The new book I’m working on is about how you optimize as an entrepreneur in all areas. When you began looking at your team if you can’t identify the 5 or 7 team drivers, what about your culture? What about your hiring process? How long do you leave new hires in a place that isn’t performing, which is costing you a lot of money? There’s a handful of things. What are you doing about compensation and motivation, and learning? Once you identify those things and you can break them into small little steps, and this is the whole key of everything that we do and of optimization, is they are small little steps. They are relatively easy to do.

You make incremental improvements when they stack one on top of another until you finally have a result you never thought possible. That’s the premise of what we do. It’s what we do in our consulting company and with our clients. Whether or not we are dealing with profit optimization or a problem culture or dealing with that, they need to reinvent themselves or pivot in the marketplace.

It’s all about looking at, “What are the small steps,” because quite honestly, the issue is we learn all these big things. We learn about all we know going into this whole social media initiative. We have to create this whole marketing campaign. It’s hard, and we don’t know how to do it. We fumble because it’s difficult to do when the small incremental things give you predictable outcomes. It may not give you the big bang. Like I always say in the baseball theory, you don’t win games trying to hit the homerun every time.

Predictable outcomes. That’s what we would bet on. If I had to go in and put money on something, I’m going to put it on the predictable outcome.

Jay Conrad Levinson, the Guerilla Marketing genius, before he passed away, he and I were doing a book. It was going to be called Predictable Marketing. He loved it because it’s what it comes down to. We all want a little bit more predictability in our lives.

We have to have that balance, some predictability but also some opportunity to stretch beyond. One of the questions that I ask every guest and am interested in from your perspective is, what’s your definition of productivity and why?

At the end of the day, productivity is getting things done that need to be done. That’s the most important thing. What we do in our coaching world is have clients create quarterly plans. They can only have three initiatives, not 4, 5 or 6 but 3. Where do you want to be by the end of the quarter, 9, 30 of whatever date that is in? It keeps them focused on the things that matter because once they say, “Here’s where I want to be.” The 10s of the other person that you interviewed spoke about making things a 10, which I liked. “These are the must-haves, the must-dos.” We have labeled those things out. There are thirteen weeks in every quarter. We have them lay out over thirteen weeks, just what needs to get done, not a detailed plan, on a sheet of paper.

It’s, “Here are the milestones,” because then you can look and say, “Did I get that done this week or not?” If you didn’t, you are not moving the marbles forward. As they say in Chinese checkers to, “Get to your goal.” To me, it’s about making sure we are doing those things that are important and that are going to take us to the goal we want to achieve. That’s how I would define it. I, like most everybody, it’s easy to start wiping out your emails and cleaning them all up because it feels good to get them off the list. It is not going to move those initiatives forward to achieve those ultimately.

It is not going to make progress towards your goals. I’ve worked with this one CEO who said he spent 70% of his time in his email. Through a few questions, he realized, “This isn’t productive, is it?” I’m like, “No.”

It’s funny. My wife gets mad at me all the time. “You didn’t see that on Facebook?” I said, “No.” “Why don’t you check your text?” I said, “If you want to get ahold of me, send me an email. That’s the thing I’m the most focused on.” She said, “Why?” I go, “I can’t have a ding and ding every time a pattern interrupt. Every time takes you away from your focus.” Some people may think that’s not good but from my perspective, I have too many distractions. I have to simplify those things so I can stay focused on the outcome. I let my staff take care of the Facebook and LinkedIn stuff and stay focused on the things that I want to focus on. 70% or 80% on email, that’s not productive.

Do not miss the small things along the way. They may improve you in predictable ways with minimal effort just by being conscious of them. Click To Tweet

You focus on the items that come in that are most important to you. A lot of people have an administrative assistant that will filter them out or other types of automated systems that filter things out. I have all my notifications off. It’s a push-pull question. Do we need to be in an environment where everything is pushed to us versus I will pull it when I need it? Wherever it sits, reduce the number of places that I have to pull from, and then use the pull system, not the push system. That’s your definition of productivity. You talked about the profit drivers, and the new book that you are working on talks about profitability but then moves into team building.

I’m still working on a final title. I have somebody who’s working with me that wants me to call it something I don’t want to call it yet. We will test. The general concept again is that we, as entrepreneurs, want to focus on profitability but the vast majority of entrepreneurs that come to us initially aren’t saying, “I want to make more money,” per se. They want to take back their lives. They want to be able to free themselves up to travel and do other things that they want to do. They want to improve and grow as a leader. You can’t do those things if you can’t take back time, as you well know.

If you don’t have the profitability to do them, you are literally stuck. It’s a matter of saying, “How can we make it simple to build better teams, have better financials, and get those key metrics we talked about without it being a giant project?” You just pull from what you already have, so you could even do your best guesstimates. That’s what it’s all about. I don’t want to use the word easy because everything takes effort but it certainly is a simple approach that can produce enormous benefits and move an entrepreneur to become the ultimate entrepreneur in building a great company.

Let’s talk about metrics. It’s important because you talked about drivers. I like that word because we are talking about the things that move the needle. At least that’s the way I define drivers. Is that the way you define it as well?

Yes, absolutely.

When we talk about metrics, sometimes metrics are lag indicators and not drivers. How would you share with the audience here which metrics are drivers and are lead indicators versus lag indicators that you only know the result after?

The difference between a CPA and a finance person is a CPA looks backward, and a finance person looks forward. This is one of the big differences. When you are getting a P&L from the last quarter, that’s nice but if the recession hits and you are looking forward, it’s not a good indicator going forward. We want to have baseline metrics that say, “Here’s where we have been.” Those historical references and historical baselines are important. We then want to pivot.

This is why it’s important to look at things quarterly. Part of our quarterly process is, “Where do we want to be in revenue and profitability at the end of the quarter?” Here’s a game plan to get there. In that game plan to get there will be the defined metrics that you need to be able to see where you are going. You can’t look at those metrics or key performance indicators. You are tracking the wrong thing. If you say, “What specifically are they?” It’s different for every single business, and it depends on what you are doing.

It is key that the best you can with the knowledge that you have, that whatever you are setting in motion, you are looking at things that are going to get you there predictably. I did a sprint triathlon a few years ago. You swim, you have to bike and run, which I hated running. Every day, I didn’t look and say, “How much did I run before?” I said, “Here’s where I need to get to before the race. How much do I need to run this week? How much do I need to bike this week? How much do I need to swim this week?” to know that I’m moving forward to get there.

For people who are reading, it’s a great example because it’s not business related. People can get that you can apply metrics to anything. You are simply starting with the end in mind and working your way backward. You are identifying how much time you in terms of swimming, running, and so forth you need to spend in each of those to be building the capacity to be able to do the end result. Time is one of those efforts as to how much time you are spending.

You shared a lot of great points talking about three initiatives and focusing on the things that matter, focusing on the drivers, and a number of other things that we started with in the beginning about taking those small steps. What didn’t I ask you that you are like, “I would be remiss if I left without sharing this lesson or this principle?”

We covered it. My response would be, for everybody, whether or not you own a business, you are an executive or an individual that works in any industry whatsoever, I encourage you to take part in the message that I’m sharing and be able to apply it to virtually anything you do. When I was having a team meeting, my VP, Craig, who used to work at VVI, said to me, “Scott, what you do is universal. What you do applies to every aspect of life.” If we can say, “I want to get better. I want to be a better time manager. I want to apply the things I’m learning on your show,” break it down into small chunks.

I’m a believer that if you break it down into small chunks, you will achieve that result. If you want to be a better husband, plan one more date night or plan it on your calendar from a guy’s perspective. You are putting down to do something special for your loved one. If it’s about kids, it’s about putting track and saying, “If I spend a little bit more time with them in these different areas, I’m ultimately going to create a relationship I would never have otherwise.” Doing things that are big, giant moods, we all want that. I want this big, old, giant win in a difficult way. I’m not saying those things aren’t great as well, but in the meantime, let’s not miss the small things along the way and the things you can improve in a predictable way with little effort by being conscious of it.

Bringing it back to your own language, date night or special times out. The driver is quality time. I talk about 80/20, thinking to be able to find the 20% that gives us 80% of the results. That’s being clear on what’s that driver and how to give that its attention. I love what you are saying, strategies across contextual. You can use that in every area of your life.

It’s important. We all want to make more money for the business. We want to be better people, I would like to think. We want to be better leaders and create more opportunities for the people that are in our world.

Thank you so much for being here. What good site for them to go to? I know you’ve got a gift for everybody. Tell us the site.

Go to ScottHallman.com. Cruise around there. If you want to set up a fifteen-minute call with us to talk about any aspects of your business, this is a business-specific site, feel free to do so. I encourage that. The gift I want to give is I wrote a book called Hypergrowth. It was cool. I interviewed twelve entrepreneurs that had been on the Inc 500 list three times or more. In other words, they sustained their success over time, the fastest growing privately held companies in America.

It was unbelievable how many inquiries we got. These 12 businesses are from 12 completely different industries, from super technical online to offline as well. I will give a copy of that digitally for you free, whether you are a businessperson or not a businessperson, you pick up a lot of the drivers and the concepts we shared in the book.

Thank you so much. I can tell you, guys, you got to sign up and get this because it’s plain English. What I know from you, Scott, is it’s easy to understand. It’s gold to be implementing that in your business and your life. Thank you all for being here. I’m going to see you in the next episode. Take care.

 

Important Links

• Scott Hallman
• Hypergrowth

 

About Scott  Hallman

Scott is focused on helping rapidly growing company CEOs accelerate growth, maximize profits, build business value, and create great companies.

ENTREPRENEUR
Scott Hallman’s companies have twice been named to the “Inc. 500” list of Americas’ fastest-growing privately held companies (#59 and #106), build each from the ground up.

He also co-founded an IT Consulting company that grew from $0 to $85M in just 21 months, reaching a market value of nearly $1B.

BUSINESS TRAINER, MENTOR AND ADVISOR
Scott has been a coach, advisor and mentor to multiple Inc. 500 company CEOs and industry leaders including Tony Robbins, Chet Holmes and other business celebrities, national franchises, leading Internet marketers and companies in over 250 industries worldwide.

Scott’s company, Business Growth Dynamics, Inc. provides business growth training that includes interactive, self-study programs, customized coaching and consulting services, group training programs, industry specific mastermind programs, and strategy planning.

All programs and services are focused on helping clients maximize revenue, profit, and business valuation – all without making unnecessary additional investments in marketing, sales or technology.

#1 BEST SELLING AUTHOR
The 7 SuccessDrivers to HYPERGROWTH was a #1 Amazon-Kindle Bestseller. Scott blended his experience of building companies with 12 Multi-Year Ranked Inc 500 company CEOs to unlock the success formula for building a great, sustainable company.

INVESTOR
Scott is an active investor in SMB businesses looking to sell in the next 1-5 years, with an emphasis on Babyboomer owned companies. His focus is helping these companies increase profits and significantly increase valuation.

SPEAKER
Scott has conducted Marketing and Business Growth Seminars with Jay Abraham, Chet Holmes, Jay Conrad Levinson (Guerrilla Marketing) and several others.

Scott has been a featured speaker at Tony Robbins Business Mastery, Eben Pagan’s Altitude and Accelerate Seminars, GKIC’s SuperSummit, and has spoken at countless other events and seminars around the world, for audiences of up to 7,000 businesses leaders.