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Student Hotseat

Lesson 10 from: Sparking Business Growth

Mike Michalowicz

Student Hotseat

Lesson 10 from: Sparking Business Growth

Mike Michalowicz

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Lesson Info

10. Student Hotseat

Lesson Info

Student Hotseat

Harrison Creek tussled about your business. Sure, Rochelle is a company that makes an infant carrier cover that covers your little babies infancy like a tent to keep them all nice and protected and snuggly away from the germs. You know, everybody wants to touch your baby, and so it makes it like there's a shield so that people just kind of looking, Um, and then when it's cold outside or windy or sunny, then it's like a little tent protective shield. But then you can use it in the nursing cover and a shopping cart cover and a swing cover and a little blanket on the go if you forgot one or you know lots of different things. So it's a good value for months because you don't want to buy a lot to stop my stuff. And, no, I love it cause I can just, like, use one thing and it just goes away. It's interesting. So you, as you're talking to, it's often the true Bible. Progress revealed after you. People explain a product when the motor and she's like care, stuff like OK, like now I have the esse...

nce of what your product that does. It's a shield. It's Ah, cover. It offered all these things, but it reduces the necessity of carrying millions of different things. Right? Right. And it doesn't even take up space in your diaper bag bag like put it on the thing and then it's there all the time. You forgot your nursing cover. Oh, well, you just pull up the thing, you know. There you go. That's why I love it. I have three kids, so I've used it a lot myself. So yeah, so let's talk about your customers. But I want to dig into what you just said with reducing clutter. But maybe a plane's your customers. Now this is This is free part of the package of you by the packages. You get this whole set for download and a lot of detail here, so it's hard to see. I'm sure on camera, but I'll explain it. First, we list the customer's names, then we sort the clients by revenue. Now I know you don't have. When we were having lunch, she had to spreadsheet Phil that all this stuff by Monash edu from recollection, especially can Who would you say are your top 45 customers Amazon. Um is the number one customer by rep, right by revenue. Right. Um, Zulily, which it's an online marketplace where you can still stuff. It's like a deal site. Okay, so start writing this down a little bit right here. So for our customers, the best customer and revenue wise, Amazon and Zulily. Okay, we don't I mean, we love Zulily. Um, but we have to discount a lot because they discount a lot. So it's less than our wholesale. So I don't love selling their, but we So you know, more volume and get it out to more people. And it's brand recognition. Like a lot of people sell on Julie. Um, who else is your best customers? A store called the Baby. It's a baby boutique. Okay, way Have a couple of that? You were saying? You have, like, 2010 2060 way Dio, and they're all, like, maybe boutiques. Okay, so all the rest of all boutiques How many? Total. Probably like 70 70 Boteach, 70 customers now. One thing You were kind of I asked you about your red revenue. You shared it. Would you be willing to share it again? Appear? Sure. Yeah, So what's the revenue from Amazon? Amazon roughly is about 2000. A year, maybe 2000 years. Yeah, Lily, we've just done it. This year it was like the Babys are best boutique and they're like and then they go down from there. Teoh 705 100 you have a lot of single item. Mostly, they order like six pieces at a time, so it's about 1 50 And that's a huge number. Like 30 customers, 40 customers, our customers air 1 50 or less a year. Now. The important thing is, um, you know a lot. You'll see numbers and say, Well, this is a is a small business. You know what you do annually 50,000 like 15 or 15,000. It's interesting because I know people that do million and they use that as a pound. Their chest undergone background and you I get so tired of. And I was one of the participants in this, always saying the size of the revenue and never considering the profit. So it's interesting as you analyze the business of any size revenue the same process. The same theory applies, and the profitability is always the king. We should be pounding your chest on how much profitability we have, and I know we'll work on that. To with this is due to the quick cringe equivalent Amazon. Great, because everybody goes their right to do all their research and to look at reviews. And it's super quick and fast, like they ship it to like we're talking about. So I would probably buy it from Amazon to if I was somebody else. But Amazon just pain toe work with because vendor wise like behind the scenes, it's just time consuming. Teoh process orders, OK? Really kind of process order. But there's your top revenue. Okay. Zulu. Really nice. Like working with them? Um, it was easy and okay. Better than Amazon. Yeah, because they're faster, Easier. I don't have to process orders and face. And what about the baby? Lovely baby. I get on the phone to talk to her for, like, an hour. Okay, so that's the superstar client and anyone else. Unless they think this superstar, um, there's a couple of other stores that I can't think exactly which ones there right now. but I like them. Okay? There's not many that I really do not like. So it's fascinating, you know, I think the fault of many people say, Well, Amazon's my key customer. They're all the revenue I got. But they're found face, they don't give you join and they give you 2000. If we could get from the baby, your favorite customer, right? Wouldn't that be like heaven? No. Much better. Okay, so that's what we need to dio. Here's some other factors. So we talked about revenue. Cringe factor pays fast, and maybe no topic had pays fast. Is the management cash flow? The quicker we collect money, the more valuable days. If I say I'm gonna give you a $1,000, that's exciting. If I say it's gonna take a 1,000, years to get it not so exciting if I said to give you 50 bucks, but I mean even 50 bucks right now in my pocket, it's more exciting than a $1,000,000 a 1,000,000 years from now. That's called cash flow. How quickly do you get your money from these clients? Amazon and zeal earlier, 30 days 30 30 and the other ones were right away cause we do credit card immediate zero. Okay, Huge. It's a huge deal because the suspect that you have the outlay money expenses may be buying insurance stuff. Shipping costs started families on it with 90 days. It was killing us. And so Okay, like a little while ago, I negotiated like we can't. Okay, There you go. And repeat revenue. This is the next com. These clients. Anyone been with you over a year? Yeah. Yeah, all of them. Including the baby. The baby has been with us for like, probably like three. Okay, three years. They continue to buy about $1000 a year. You love working with them and they pay you immediately. Okay, so once we go through this process we identify are our top clients. Then our job is to get in the phone and interview them and ask him why they love us. And I know when we're talking about you saying talk to him. What have you discovered? Um, they like us because they can put us on baby registries, and it does really Well, um, we have fun prints that they like, though they're always wanting us. Teoh, come up with new, more interesting fun over the top stuff. They've requested things like specifically, like ruffles and bold and glitz and glam and bling, I guess, basically, is what their clients really like there in West Texas, that makes difference. But because they're located West Texas, uh, they ask you for Boulder designs. Damn. Missed Prince, Um, they like ruffles. They wanted, like Rhinestones or bows or things like that on it. I'm like, I don't really know how we could put a ruffle or a bow on it, but, um, we have chosen fabrics before based on what they have suggested because, you know, they are our best customer and we kind of want them to be handed. Do they sell more? Put them. They consume more of what they suggest they dio. So when you told about your business rendered beginning, you said we make a protective cover, protects germs and stuff, and then the energy kicked up when he said, It's this convenient thing into all these different things. Are they buying it because it's a protector? Are they buying because it's a fashion statement? That's awfully convenient. Um, maybe because it's like a fashion statement that's convenient. Okay, I think is what their customers want and wise Amazon Zulily buying it. Um, do you think those people problem? Maybe the convenience factor like there? When we started, we were the only cover like that. Right now, there's a lot of companies that are a lot bigger than mass that we're like Who could do that, too? And they're all different. Ours is the only one that's like the exact same as ours. Um, but there's other ones that are cheaper, So we definitely don't compete on price because they're made here in the US So we're not so that people and ideas volume downward price pressure. Right? But would I here and tell me if this is an actor assessment that you have a price you're selling as a protection device from weather germs, Grimy fingers, right. But it's also really a convenient fashion statement to some degree, but you're saying, Are you selling this way? But it also does this. Yeah, we're like, it's the cover for the baby carrier, but it's a nursing thing in the shopping cart, being in a convenient thing. Teoh. Right? So what are? And this is a classic I think you might be in the classic trap. Most businesses position their primary offering is what they thought it was and stick with it. And the customer just think knows your secondary offering. I'm saying I wrote a book for males, and women are saying, No, you didn't And I was like, No, I did leave me alone And I'm hearing you saying I make a protective cover and they're saying You're making a fashion statement. That's very convenient, convenient product. And you're saying, Yeah, does that. And I think this may be the opportunity to flip it and saying We make an amazing product. That's convenient. You can carry anywhere. It's a great fashion accessory. Oh, by the way, protects germs and stuff and flip it over. Now, if we go through the review of this quiet What if we went to a baby? I wish we could call on the phone right now, But what way? We contact them now said, You know what? This bold patterns and stuff we're gonna find a way to do it. What do you think? They're responsibly. They would love it. They would love you. Think they buy more from you? probably. Yeah. I mean, they do well, already. So, yeah. Do you think they could? They might double their orders if you cater to them. Probably. Okay. Say they double. There was a W $2000 that would represent a 150. Maybe we could do the math for me real quick, but that's about seven customers. I think one customer could replace seven of these customers just by doubling the Reuters. If you catered. How much time do you spend on these low custom Too much. I don't know. We'll give me example. Um, the past couple weeks, I've been sitting on the phone for hours calling stores that have ordered from us before. So it's not like we're out there trying to get new business, but not working out. So All right, so you're pounding the phone right now with customers that his story, but made 100 50 bucks just trying to sell. Just trying to sell. You need to reorder. Do you need someone? Oh, we're good right now. Oh, we're reassessing our store and seeing what we need and I don't know things. Are you telling me they dance around home trying God you write. How could they? Okay, so you're trying to persuade people that are trying to avoid you basis. OK, but you one customer that's begging you to do something and you're avoiding them. But yes. Okay, okay, try. But yeah, that's totally normal. It's horrible for our business, but it's totally hate today. It's normal and it's back. This is the classic trap, and I've been there myself. Every business I know has been there, and the way out is always identify your top client. You may have a couple other Zulily, maybe one also identify what they're you need needs are and what they're telling you you need to be doing. Then adjust to them is losses alignment with your vision. See, this is where the pivot comes in. Pivoting was we talked about earlier is adjusting to the customers once here's the customer saying what they want. If we adjust to them, we're gonna win more from that customer. The other question we have to do before we just Is that what you want? And I said What you want does it play into your life's purpose? Is you divine for your business, your life mission the prosperity plan that Donna walked us through. Right, If you do it because oh, uh, I that is in line with me because it's gonna be a little more costly or something, I think is a bad excuse not to do it. If there's a short term cost of adjusting but a long term gain, it could be huge. So let me ask you if let baby is in fact 11 your product wanting bigger fashion statements they see as a convenient multi use product for babies. If you could cater to that, would that be aligned with what you want to do? Yeah, yeah, we want. I mean, we want to get it out to moms all over array and them and help moms to be less stressed with clutter and stuff. And todo off like, you know, are tackling the sheikh infant care it covers. So we want him to be stylish and fun and fashionable. Not like, you know, babyish in something you want to hide, right? Right. So if the baby is saying make us more stylish and make it convenient, that sounds like okay, there's your answer. And sometimes it's so obvious when you draw it out. But when we go through the daily routine, we are in a dime. Point out the survival trap. The survival trap teaches us that wherever we are right now, we need immediately need to make money, get on that phone, call anyone you can and sell. And if it works, you saw 150 bucks for one day. You're back out and it drags you back in. If we modify ourselves to do exactly what you want to do anyway, be chic and convenient. The baby I've never seen it not happen will order more. That's what they're begging you for. And I wouldn't be surprised if it not doubles. I would be. Wouldn't be surprised if it went up three or four times. And now you're saying about 40 or 50 of these clients below. If you could go four times May 30 these clients below the revenue has been replaced. The other thing is the time freeze up. When you modify to address what the baby needs all the time you spend pounding the phones and stuff goes away, the room has been replaced. They're gonna buy it, okay. And then the final thing is now. You have an opportunity to go to cloning. You start understanding. Where what's the baby there in West Texas? A rope down? What's going on West? Is there something culturally that fashion and convenience is Mellie's? That's the the mecca of fashion convenience. Thanks. So because one of our other stores in West Texas to were coming west right now there you are, West Texas. What's actually on live and watching from West Texas right now Tell us, is convenience and fashion desired out where you are or something hot going on there, The question for coming. So I'm picturing now carrying on this really chic bows and really cute right advantage looking right, I'm thinking fashion. So if you get that's what kind of where you're targeting, wouldn't you then do all your branding? Your website? Everything would kind of go along with ex. You figured out your client your sweet spot, right? Yes. OK, we have more than more than right. It's like Yes. Yeah, baby, you're the only one we're doing this design for. And your Amazon doesn't get this. No one else gets it. And this is what you know exclusively made for right Yeah, you got five times. Yeah, that's a good idea. There's a technique and talk about the next module called scarcity, and basically have scarcely works. The less available something is, the more automatic desires it is. I'll talk about. Think all the shrimp bowl effect later, but this is a teaser for now on have shrimp people consume shrimp, but that spray any other ideas or thoughts for Kirsten? Those two ideas were great on online to you guys for Kirsten. Yet we have Jesse Elsa's West Texas. She has to speak Friday night lights, language for baby. All right, What does that mean for sure that it is, But like, What do they mean? I mean, football team stuff like I don't know. I suspect my suspicion is when you go to a Friday night football game, it's a high school football game. The whole community comes out and this is the big community event. So we think it's the equivalent to the potluck dinner we have in our church every Sunday where the whole community comes in and talks. This is, I suspect, where women are making their fashion statements. Yeah, training about football. It's about community Okay, maybe something there. Yeah, I was just going further on that and saying that, thinking that if one mom, if you go to the right events and one mom sees someone carrying it and they want it, then then that's when it takes off. So if you put it into the right community, right? So funny Line spoke up something that was just a little interesting, and we all kind of know it, But Tory Doe says West Texas is going there in oil, gas boom, lots of new money and young families moving there for Dad's oil work. So interesting. Good. No. All right. You know what's fascinating is the second you start bringing specificity, you start narrowing the niche. You said West Texas, you say fashion. All of a sudden, all these things pop up that you never knew before and the power is. Once you start focusing, you can learn all these little caveats that your competitors have no idea about. I know you got hundreds of competitors popping up on copying you. None of them understand the Friday Night football games in the community getting there. No one understand the oilfield money coming in, but you did. And now you can speak to that. Yeah, I take that further, which is, once you understand why what you're doing is so popular in one community or one area. And if you know those factors, you can then look for other similar areas of the country and find a little baby in those areas and do the same thing over and over. Yeah. Does it feel scary, though, Because, like, you've been doing something one way the whole time and now I'm saying changes. No, I think that that would be really, really helpful. I mean, we've taken it, their advice, you know, a little bit in the past when we have been looking for new patterns and came up with one that was a hot pink zebra print. It's one of our new ones. On the past couple of months, they ordered a couple. So were, you know, we only came out with it like the beginning of August, so hasn't been very long. Um, so we're checking out how you know, but that one was just for them because they asked for that one, specifically zebras or animal prints or hot pinks. Or, you know, things. So we we try to give him two of those things that they suggested. So we're going to see how that goes. There's something to find more stores that you know want that. I think it plays into what we were saying about how your business evolves. When you first started and you were the only one doing this, your area of innovation was really around the convenience. This is a great, convenient thing. But as soon as other people started copying you, you had to find another way to distinguish yourself. So that is shifting a little bit and you may have found it, which is This isn't just convenient because we know other people. Maybe is there just a convenient as ours? But we have the ones that you're gonna love to use because they're fashion statement. It reminds me when my kids were little and the diaper bags you could only find like Disney character diaper bags and like what? Mother wants to carry that. And when some companies woke up and said, Wait a minute. Moms want fashionable diaper bag that looked good with what they're wearing. Those companies took off and it's the same thing, it does convenience wise, the diaper bag does the same thing, but it's now the fashion fashioning of it that sets it apart, Right, Right, OK. And so do you think like even looking at Carsey like manufacturers and like the way the fabrics that they're using to make their car seats and finding patterns to match them would be no really Boutique E and the idea of these moms that want ones that match their outfits and they're gonna get compliments, then they're gonna wanna go by two more. And that's where I am seeing your business flourishing. New moms want to feel good about themselves in any compliment they're gonna get. It's just gonna feed your business. I personally think your best marketing investment would be fly down to West Texas and go to the baby shop and do Don't tell me you're there. And don't even announce yourself. Shop the store first, take pictures of everything until the who are you. I find out what price they're buying because they have certain they're buying certain things because it's working with our customers and buying because it's working. You want to get in line with that. There's no question about it. People are excited about this product your business, Ninja says. Upscale Product in Upscale Lululemon Moms wanted Send the samples of the upscale magazines in your area and then give some gentry and seven by seven or examples for San Francisco. But I'm sure you could find those upscale magazines in West Texas or whatever market you wanted to infiltrate. Okay, you know, we've been not doing press stuff because I don't have time way. You know, Donald teachers about the area of innovation, and the idea here is now. You have the seedling of it. You have the convenience and fashion Ari of innovation works When you bring it to a level, it's never been experienced before. When you can radically change market, how do you make this such a fashion statement that it's cooler to show up with your cover than it is a nice outfit? If you could get to be that cool, it can radically change your done

Class Materials

bonus material with purchase

Client Assessment Chart.pdf
Mike Michalowicz Presentation Slides.pdf
Mike Michalowicz WSJ Articles .pdf
Process Flow.pdf
Survival Trap.pdf
Sweet Spot.pdf

Ratings and Reviews

Jason Spencer
 

I was a part of the live audience, so I had a little extra business growth behind the scenes. If you ever have a chance to attend a live broadcast, I highly encourage it. This program follows the concepts of Mike's book "The Pumpkin Plan" very closely, but it's the expanded elements that make it worth every penny. I pulled quite a few business ideas and nuggets that I still use nearly a year later. Even owning the course, I took over 17 pages of detailed notes. Gaining a solid understanding of Immutable Laws, Pruning, UPOD, and so much more helps you from day one. But it's much more than that, because you can create a system that allows you to almost grow on auto-pilot and build profit along the way (the Profit First segment was one of my favorites because I'd already been doing some of it). It you own a business, you can't go wrong with this course in your arsenal of tips and tools.

a Creativelive Student
 

Great course, learned a tons. Thanks a lot Mike & Donna. Got some great insights for my business and will implement them right away. Worth 10 times the amount of the course.

a Creativelive Student
 

I watched this class live, read Mike's The Pumpkin Plan and am now about to buy the class. I think I am pretty tough critic and I think this is a GREAT class. I highly recommend it.

Student Work

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