Author: johnhooley

Hidden Revenue Opportunities

May 25, 2022 / johnhooley

I spoke with an agency owner a couple of months ago who revealed that he had recently acquired a small web development business. As a part of integrating that business, he had grown his team by two developers. It was stressful because it meant that he had to figure out how to raise revenue. He said, “I have to find $70,000 before the end of the year.”

He had expanded capacity, but he didn’t have the pipeline to support it. To address this, he was doing what a lot of businesses do, beating the brush and looking for more customers.

For most contexts, marketing is a long term game with lots of challenges for any channel you develop. It’s an investment over time.

I asked him, “Are you taking full advantage of your past customers? When was the last time you had a meeting about their goals?”

Moonlight shadow of a photographer on a dock

Subtracting Shadows to Grow

May 24, 2022 / johnhooley

When we think about growing, we think about adding. It’s intuitive because the result of growth is more capacity or capability to do something. However, the path to growth often includes subtraction.

For example:

If you remove service offerings you can increase perceived relevance to a subset of customers that you become more efficient at serving at a higher profit.
Firing a customer that is expensive to service frees up existing resources to deliver value to more customers.
If you have an employee in a role that you don’t need, letting them go can free up cash to hire someone in a role that you do need.

Antifragile Crypto Cats

May 23, 2022 / johnhooley

Nassim Nicholas Taleb’s book, Antifragile, proposed a new idea- that there are certain things that improve from disorder. To give a short example of how this concept works: if you dropped a vase on the floor and it shattered, it would be fragile. If you dropped a vase on the floor and it didn’t shatter, it would be robust. If you dropped a vase on the floor and the impact caused the vase’s walls to become more durable, we would consider it to be antifragile. The disorder made the vase better.

In the book, Taleb lays out an antifragile investment strategy that he dubs, “the barbell strategy.” You put 90-95% of your investment in safe vehicles in predictable environments. The other 5-10% you invest in chaotic environments that contain the possibility of dramatic positive swings. In this way, you avoid ruin, but still gain from the occasional upward spike of fortune.

I’ve often wondered how you might employ this strategy in a business. This past year, I benefited from a front row seat on an application.

Only Work With Winners

May 20, 2022 / johnhooley

A bulletin board in a coffee shop I frequent is covered in business cards and flyers. It’s a wonderful organic mess, a kaleidoscope of unique rectangular designs. I doubt that it’s created much business for any of the people who posted their card.

There are hundreds of channels your business could get customers through- including a bulletin board in a coffee shop near you. However, most of them won’t do a thing for you.

Instead, there are likely less than five effective channels. And of those five only one or two will be the primary means your industry gets customers.

Decentralizing Decisions

May 19, 2022 / johnhooley

When I was in high school I read, “7 Habits of Highly Successful People.” I come back to the principles proposed in this book again and again. One of the most powerful habits is, “Begin with the end in mind.” As it pertains to small business growth, an application of this is creating a vision for your business.

I’ve created at least four visions over the course of fourteen years. I did this mostly because it’s considered a “best practice.” None of these ended being much more than a thought exercise. Because of these experiences, I considered visions to be stock advice that people bandied about with little link to actual impact.

However, I reconsidered the importance of having a vision last fall when I was setting employee goals. We had shifted gears to work on a six week cycle of objective setting. It took me a couple of days to plan, delegate, and communicate these objectives.

Overcoming a Murderers’ Row

May 18, 2022 / johnhooley

I’ve been a mixed martial arts (MMA) fan since I was a teenager. One of the beliefs that gets thrown around among fans is that, “to be the champion, you have to beat the champion.” This means that the challenger for the belt must not only win against the champion, but must do so convincingly. Their victory must be so obvious that none can dispute it. If they don’t accomplish this and the champion wins a decision before the judges, it’s the challenger’s own fault and they have nothing to complain about.

Markets function the same way. Consumers are risk averse and will congregate to whoever is the perceived market leader. For many markets, the size and age of the market has evolved it into what fight fans would call a, “murderers’ row.” In other words, an ecosystem with serious competition.

For your business to grow, you have to figure out how to tap into some form of energy to sustain that expansion. If that energy is going to come through new customers, out competing some form of murderers’ row is a reality you’ll likely face.

The Hank Hill Problem

May 17, 2022 / johnhooley

I’ve observed an interesting pattern when it comes to small business teams. There are several poor or mid skill level employees and one high performer that the business owner relies heavily on. This person is the business’s “Hank Hill.”

If you don’t know who Hank is, he’s the protagonist of a cartoon series titled, “King of the Hill.” Hank lives in Arlen, Texas and works at a propane reseller. He takes great pride in selling “propane and propane accessories.” He’s extremely conscientious and extremely conventional.

Hank’s boss on the other hand is a ne’re-do-well named Buck Strickland. He’s lazy, cheats on his wife, gambles at work, and is the opposite of high integrity Hank.

And Buck’s propane business is completely dependent on Hank.

I first noticed this pattern in my own business and then began to notice it in other entrepreneurs’ businesses.

The Inherent Power in Basics

May 16, 2022 / johnhooley

I watched a webinar on the financial management of agencies last week. Over the course of an hour, a consultant took us through a byzantine spreadsheet that forecast profit based on how your agency was configured. It was filled with numbers, tables, highlighting and took up every millimeter of screen real estate.

Using the spreadsheet you could model changes to your business. What if you hired a new developer? What if you changed your pricing? What if you decreased time off? This impressive spreadsheet could tell you what the result would be.

At the end of the call, he asked for questions.

I asked, “What are the top changes that your clients come back to again and again?”

Expanding & The Iceberg Fallacy

May 13, 2022 / johnhooley

I was intimidated by the cost when I hired my first couple of employees. Each time, I hit a wall in the work that we could take on. I would drag my feet in hiring because I anticipated the obligation of regularly paying someone else. Eventually, I would pull the trigger and was surprised each time when I discovered that our revenue nearly doubled.

There’s a psychological effect that comes into play when we think about these sorts of investments. We tend to evaluate a decision based upon what’s apparent or easy to understand. It’s like we’re looking at an iceberg and assuming that nothing exists beneath the surface of the ocean.

Magic Reveals Your Limits

May 12, 2022 / johnhooley

I sat in a dim conference room in a fancy hotel in Mexico City listening to Paul talk about his business. Around the table, other entrepreneurs listened carefully as he laid out his challenges. We were at a group discussion that preceded a business conference.

Paul shared that he was a solopreneur who was a remote version of a real estate agent. He would go through a specific process that took two months and would generate a predictable number of sales each time. He said that he was stuck and couldn’t grow because the process required his involvement and he had finite time and energy.

When he finished explaining his situation, everyone was silent as they thought about what they would do.

I asked Paul, “Do you think you have fully optimized this process?”

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