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Summary of Business Lunch Podcast Episode: Scaling Your Business: 5 Steps for Entrepreneurs with Paul Lemberg

Podcast: Business Lunch
9 min. read

— Description —

Discover the 5-step formula for business success with Formula 5 Improve lead generation, conversion, margin, monetize the customer, and master systematization and prioritization Learn how to improve monetization by creating more value for customers and explore the importance of testing different conversion paths

Master systemization and prioritization to scale your business effectively Dont miss out on maximizing your business potential.

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Scaling Your Business: 5 Steps for Entrepreneurs with Paul Lemberg

Table of contents

Key Takeaways

Books Mentioned

Intro

Formula 5

If Paul were to take over a random business, how would he tackle things?

LTV | Long-term (NOT Lifetime) Total Value

Mastering Monetization | If Paul were to examine a car dealership..

How to Improve Conversion

Systemization and Prioritization

Wrapping Up

Additional Notes

Key Takeaways

  • Formula 5 | The 5 Step-Formula for Business Success:
    • Improve lead generation
    • Improve conversion
    • Improve margin 
    • Monetize the customer
    • Master systematization, prioritization, and use of time
  • How to Improve Monetization:
    • Every business needs to constantly be asking – “Are we doing the most to create value for the customer”
    • A few more good questions to ponder:
      • “What value is a customer trying to satisfy when they purchase our product? Is there anything else I can provide that would help them obtain that value?”
      • “What else does a person who’s thinking about X need that I can also help them with?”
    • The main point – Most businesses sell 1 product to 1 group 1 time… and that’s it. They’re missing out on a lot of money!
  • How to Improve Conversion:
    • Always be testing a different conversion path
      • Where do you start testing? – Attack the step in your sales process where you’re losing the most leads by volume
      • You DON’T have to test just one thing at a time
  • How to Master Systemization & Prioritization
    • Ask the following:
      • “Am I using my time as best as I can?”
      • “Across the board, are things being done in a way that allows me to produce a consistent result with the least amount of time?”
    • The two requirements for scaling a business:
      • Make it so the business can run without you
      • As you grow your business, the costs associated with certain processes/systems should go down

Books Mentioned

  • To learn more about improving conversions, Paul highly recommends Always Be Testing by Bryan and Eisenberg
    • Bryan is also the co-author (with his brother, Jeffrey) of Be Like Amazon (which Roland recommends) and Waiting for Your Cat to Bark?
  • Roland thought Henry Ford’s autobiography, My Life and Work, was a great read

Intro

  • Paul Lemberg (@Paul_Lemberg) is a business coach who, simply put, helps entrepreneurs make more money 
    • Paul has consulted with Fortune-100 companies like Cisco, Adobe, IBM, Goldman Sachs, JP Morgan/Chase, Mass Mutual, and Accenture, but his real and true passion is helping small business owners and CEOs double and triple their profits, and sometimes grow their companies more than 10-fold
    • Check out his website

Formula 5

  • This old product of Paul’s is a 5-step recipe for business success:
    • 1) Improve lead generation
    • 2) Improve conversion
    • 3) Improve margin 
    • 4) Monetize the customer
      • Most businesses sell 1 product to 1 group 1 time. That’s it! They’re missing out on a lot of money!
    • 5) Master systematization, prioritization, and use of time
      • The main premise: gain more leverage so you can execute the first 4 steps
  • Let’s dig deeper:
    • Before worrying about leads, just like Reid Reid Hoffman (co-founder of LinkedIn) has famously said – “In the beginning, you have to do things that DON’T scale”
      • AKA you have to do things that don’t systematize
    • Step 1: Get leads any way you can
    • Step 2: Figure out your closing process (which then allows you to go and get more leads)
    • Step 3: Once the money starts coming in, begin to think about raising prices 
    • Step 4: Figure out the overall monetization strategy
    • Step 5: When all of the above is working, implement a system

If Paul were to take over a random business, how would he tackle things?

  • He’d first examine prices (and very often think about raising them)
  • Then he’d examine monetization
    • Every business needs to constantly be asking – “Are we doing the most to create value for the customer”
      • Creating that value often involves upselling, which many salespeople don’t like to do because they view it as sleazy 
        • Paul recalls this line from Jay Abraham – “What you’re doing when you’re upselling is helping your customer get the full value of the thing they were trying to get that they’re typically too cheap to buy”
          • Paul adds – Most people don’t get the full value (utility, fun joy, satisfaction, etc.) of what they’re looking for and they don’t get it simply because there’s a part of every human being that tries to conserve resources (AKA $)
          • As an example – If you’re buying a new suit, the salesperson’s job is to help you figure out what it is you’re trying to achieve by buying a new suit in the first place and help you get there
            • If a new suit costs $5,000, your survival instincts will lead you to believe spending that much money on a suit is utterly ridiculous – the salesperson’s job is to help you overcome that through an upsell

LTV | Long-term (NOT Lifetime) Total Value

  • “People talk about LTV… lifetime total value or lifetime customer value. Lifetime is a really stupid measure. How long does that lifetime take?”
    • “If lifetime is 6 months and then the customer’s out, that’s fine. I can count to 6 months.”
    • But on the off chance a customer will be a 30-year buyer (or even a 5-year buyer), there’s just no way to forecast that 
    • So… Paul thinks of the “L” in LTV as “long-term” – NOT lifetime
      • “Long-term is how long you can afford to have the money out”
      • For example – If you have 6-months of runway capital, then your long-term perspective should be 6 months (so you’d ask – “What’s the value of my customer in 6 months?”)

Mastering Monetization | If Paul were to examine a car dealership..

  • The question is always the same – “What’s the customer trying to accomplish and how can I help them accomplish that?”
  • If the customer’s dreams are already satisfied, the corollary question is – “What else does a person who’s thinking about X need that I can also help them with?”
    • Here are some possibilities:
      • Package some sort of car service with the car purchase (i.e. free oil changes)
      • If it’s a luxury car, upselling a set of designer bags
      • If people who buy a certain brand of car enjoy going tailgating, why not upsell a complete tailgating package?
      • Packaging a year of Uber/Lyft rides with the car purchase
      • Securing a discount on your next car purchase (or a car purchase for a family member) with the current car purchase
        • Why are car dealerships not asking if you want another car for someone else in your family when you buy a car for yourself???!!!
  • In general, ask – “Where’s the utility the customer is trying to get to and how can I help them get there?”
    • OR – “What value is a customer trying to satisfy when they purchase our product? Is there anything else I can provide that would help them obtain that value?”

How to Improve Conversion

  • Always be testing a different conversion path (AKA how you turn someone who indicates interest in the thing you have to offer into a customer)
    • If you have a 5% conversation and you discover a different conversion path that results in a 6% conversion… that’s 20% more money!
    • Where do you start?
      • Look at the space where you’re losing the most customers in your process
      • Expanded: Attack the step in your sales process where you’re losing the most leads by volume – start by testing this area
    • What do you test?
      • Test anything you can think of. A few examples:
        • Changing the background color of a sales page
        • Changing the font
        • Altering the headline
      • Related to the above, Paul highly recommends Always Be Testing by Bryan and Eisenberg
        • Bryan is also the co-author (with his brother, Jeffrey) of Be Like Amazon (which Roland recommends) and Waiting for Your Cat to Bark?
        • (Certain people, like Bryan, prefer not to test anything they don’t believe has the potential to result in at least a doubling of sales)
    • One thing to realize:
      • You DON’T have to test just one thing at a time (many prefer to do this as it’s easier to see what specifically made a difference)
        • Instead, create a whole new sales page – if it works better, who cares what made the difference?
        • Go for impact, not the excitement of knowing what made the difference

Systemization and Prioritization

  • The real questions:
    • “Are you using your time as best as you can?”
    • “Across the board, are things being done in a way that allows you to produce a consistent result with the least amount of time?”
  • The two requirements for scaling a business:
    • 1) You want consistent and predictable results so that no matter who’s running the process/system in your business it works out roughly the same way 
      • (Make it so the business can run without you)
      • But what if you’re an artist?
        • Perhaps you can have other people paint certain parts of your paintings?
        • Ask yourself – “What can be outsourced or delegated?” (there’s always something)
          • Then systematize those things
        • Lastly – only do what you’re great at/what you enjoy doing the most 
    • 2) You want your expense for operating a certain process/system to go down with higher levels of revenue (or at least stay flat) 
      • (As you grow your business, the costs should go down)
      • Anything that’s not based on individual people or rare/scarce raw materials should drop in cost as the business scales
      • “Anywhere you have a process you can repeat, test, and make better… all of this automatically makes things more efficient, reduces costs, and allows you to do more without applying more input”
      • Whenever Paul helps someone scale a business, he’ll ask – “What is the capacity of this business to deliver more of what it’s got without investing more in?”
        • The fact is: most things CAN be scaled

Wrapping Up

  • Some people don’t want to scale or grow their businesses – that’s okay!
  • Most people aren’t your customer – that’s okay!
  • Not everyone wants to be an entrepreneur – that’s okay!
    • People who work a 9-5 get to FORGET about work when they walk out of the office – the benefits of this can’t be overstated
  • Check out Paul’s Formula 5 update – Formula 5 Hyperdrive

Additional Notes

  • Someone recently sent Roland a bottle of Pappy Van Winkle aged hot sauce
  • Pau’s favorite hot sauce: Tapatío – “It’s not fancy, but it works”
  • Paul has started to work on a book which he plans to title, How to Sell at Higher Prices Than Your Competitors
  • Roland thought Henry Ford’s autobiography, My Life and Work, was a great read

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