#243 Unpacking The Pre-requisites to Building a Successful Business
May 29, 2021
Caveat: No one has been thrown under the bus in the telling of this story. Harry is a fictional representation of a typical client.
Harry came to me for one reason and one reason only - he was working himself out of business and there was no way that he was ever going to be able to retire. After putting in more than 20 years, he hadn't put away a cent for retirement and every year, his debt load increased.
Harry wanted me to show him how to attract more clients.
Harry is pretty characteristic of most of my clients - they believe that the solution to their problems is more clients. What I have learned over time is that they are mistaken. What people like Harry really need are skills - the essential skills for business success that I like to refer to as The Pre-requisites.
Harry was only charging 1/3 what he could have been charging for his service. I found this out by doing a little mystery shopping. We call it market research. Harry was surprised when I told him - he knew that customers thought he was very affordable but he had no idea he was that much lower than the competition. The reality was that these other businesses didn't see Harry as a professional or as competition.
"Let's raise those prices Harry, it will give you more money without having to find more clients."
I do what I do because I used to be Harry. My pre-requisites and the apprenticeship model to business success were born out of my own painful journey into business. I didn't want anyone else to ever get taken advantage of because they didn't have these basic attitudes that support skill development.
There were certain jobs that Harry was doing for his clients that he could have charged 10X what he was charging and still not been on the high end. It was a little consulting revenue stream where he showed people how to do something that he knew how to do. There were a certain group of his clients who knew that he was easy to take advantage of. Harry had a good heart and a terrible head for business.
Harry was dead set against calling his existing clients and raising the prices. That suggestion was a "no go" at this time. But things would change later.
Adult Learners
Here's the deal - there are always pre-requisites to learning. It seemed that Harry had missed some of those pre-requisites. Here is what Harry learned and the order in which he learned them:
1. How to do market research to determine where your prices are in comparison to your competition;
2. How to raise prices for new clients;
a. Understanding biases that keep him charging less
b. Understanding assumptions that impact the pricing model
c. Understanding attitudes that impact your ability to upscale your network
3. How to communicate assertively;
4. How to raise prices for existing clients;
Pay attention to #2 and #3. Anything stand out for you? That's right - I talked Harry into raising prices for new clients first because he was adamant that he wouldn't raise prices for his loyal client base because he was convinced that he would lose them. Harry's existing clients fit into a certain class of people. Harry needed to market to a new client avatar but he was intimidated by his ideal client.
The Apprenticeship Model
You can't force a client to do something that he doesn't want to do. We have to coach them into it. The apprenticeship model is all about showing someone how it is done and then supporting them as they do it. We support transfer learning. I could do what I was suggesting that Harry do but he didn't feel confident yet. The best way to support Harry was to apprentice him into new skill development.
The next client that came in was directed to me and I did modelled the sales conversation. We had discussed it beforehand. We got one new client at the new price.
We broke it down, analyzed it and when he was ready, I supported him until he could do it on his own.
Inspired by the positive outcome as new clients came in and didn't bicker on price, Harry decided it was time to tackle the existing clients and we did. We used the same process and I modelled the behaviour; when he was comfortable, he made phone calls to have the tough conversations himself.
Here's the thing - the most important pre-requisites that came out of this encounter were internal. The conversations we had behind the scenes were all about attitudes around money, who is in your network and communication styles when you're communicating with people with affluence.
Where's Harry now? He didn't lose one client - found a way to make the increases work for both himself and the existing clients. He could finally take himself off the front line, treat his business like a business instead of like a " J O B" and start to think about a realistic plan for retirement. Harry isn't the same person. He emerged as a confident business man.
This type of learning can make a client feel vulnerable. Looking at what's going on below the surface takes courage. So many business people don't have the pre-requisites for success. No one has ever walked gently with them through the nuances of first generation success and the unique learning that is required, the biases that hold them back, the resistance to connecting to people outside your social strata. The good news - it's never too late.
Reach out for a free consult.
