Three Dollar Man & The Million Dollar Lunch
There I was with the coffee I bought with my last $3.
Steve and I had hit rock bottom. Later that day we would need to tell our team that we still couldn’t pay them. I wanted to puke. I felt like a failure. I looked at Steve and muttered:
“I think we need help.”
Painfully so. I had tried to run my business on my own for too long. I’m not sure when I acquired this belief that I needed to succeed on my own. “Trial by fire!” I thought to myself. Steve said:
A client’s husband was a very successful entrepreneur. He ran a multi-million dollar tech services firm in Boulder, Colorado. I figured it couldn’t hurt. I called Joe. Booked a lunch.
Little did I know, this lunch would transform the following twelve months and years to come.
I was so excited I got a speeding ticket.
- I laid it all out for Joe. I told him about how:
- Each project we sold was for less and less
- Clients weren’t respecting us or our time
- Projects were spinning wildly out of scope
- We didn’t have any regular source of new leads
- The business was losing money every month
- I hadn’t paid myself or my team in months
And Joe listened. Joe instructed me to do three big things immediately in my business:
(And in the following twelve months, we DOUBLED our revenue.)
#1 – “Increase your hourly rate.”
I was billing “about” $60 per hour. I say about because I had different hourly rates for different customers. I believed
I needed to reward my long time clients by not increasing their rate. I had some clients paying me as low as $30 per hour. After I had crunched the numbers, it COST ME to do work for them.
Joe suggested I raise my rate to over a hundred dollars per hour. The crazy part is that I pushed back hard on this. I said things like:
- I’m going to lose all of my clients!
- They are going to be so upset with me!
- I’m not worth that much yet!
And then Joe brought me back to reality:
“Brent, you just got done telling me about how you weren’t making any money, and you are about to go out of business. Why are you fighting making more money? If you don’t raise your rate, you’ll be out of business.”
So we raised our hourly rate from $60 to $100. For all clients. Not only did we not lose any customers, but people started taking us WAY more seriously. And we did too. This effect ended up INCREASING our demand. I couldn’t believe it.
#2 – “Track your time.”
I never thought about it like this, but when you sell services, you are selling your time. I remember telling Joe, “that sounds tedious and painful!” He then compared my time to a valuable resource like diamonds at a jewelry store. He said:
“What would happen if the jeweler refused to do regular inventory on his diamonds? I’ll tell you what: THEY’LL START WALKING OUT THE BACK DOOR!”
Point taken. It didn’t take long before I learned several POWERFUL lessons when tracking my time. For example, how much non-billed client support I was doing. Clients would call and ask for small tweaks and changes. I thought I was so savvy because I would complete the tasks in just a couple short minutes. Then I would go on with my day thinking, “I don’t need to bill for that.”
Turns out I was spending almost twenty hours per week on these types of non-billed tasks. Not only that but this support and maintenance was small potatoes compared to what I was best at: selling new accounts on big projects!
So we started tracking all time and billing with a baseline 15-minute interval. I also delegated client support to another member of my team that was able to focus on it. Within a couple of months, the billings added up to thousands of dollars, and I had my time back!
#3 – “Divide your responsibilities.”
We were a small team of four back in 2007. Several key responsibilities floated around from one person to another. I kept telling myself:
Entrepreneurs have to wear a lot of hats.
Sometimes I would sell. Sometimes Steve would. I
would manage projects. Steve would. I would design and code. So would Steve and our two employees. I would do support. Then Steve or Erick or Waller would. I remember even talking about why everyone in the company should know how to: invoice, deposit checks, manage support, lead projects, and so on.
“Sounds like chaos.”
And it was. He says, “Brent, you are good at selling. Steve is good at man
aging and operating. You should be 100% focused on going out there and finding great projects to bring to the business. When the client signs, build a process to hand off the scope of work to Steve. Then go out and find another project.”
My objection: “What if I bring Steve too many projects?”
Joe says, “Steve will solve that problem. Make him solve it. Bring in so much work that it makes his head spin. Give him the authority and responsibility to hire and expand to keep up with demand.”
So I did.
Not only was I able to fix the demand problem in our business, but by focusing on one key part of the business, I got good at it. I hired sales and marketing coaches. I read books. I built processes. And so did Steve. I added demand. He fulfilled the supply.
These three tips aren’t the end of the story.
It was only the beginning. This one lunch added well over a million dollars of value to our business. But I needed more. I built an army of advisers. I sought out Mentors from around the world that had been there, done that.