Today’s guest is Tom Sylvester. I met him at a Brendon Bouchard meeting where we spent several hours talking about start ups and what it takes to get one off the ground. This is a little departure from the conversations we normally have. We usually spend time with our guests on what it takes to develop a blue collar business.
The reason we’re spending time on startups is because there are lessons there for all of us to learn. In today’s episode we’ll focus on some of these areas:
- What do you need to do before you start a business?
- Which of your ideas are viable and how you would know they are.
- Why small experiments lead to you to large decisions.
- Why start-ups need to work with mistakes even though they usually don’t.
- How to integrate the business into your life.
Narrator: Welcome to The Sustainable Business Radio Show podcast where you’ll learn not only how to create a sustainable business but you’ll also learn the secrets of creating extraordinary value within your business and your life. In The Sustainable Business, we focus on what it’s going to take for you to take your successful business and make it economically and personally successful.
Your host, Josh Patrick, is going to help us through finding great thought leaders as well as providing insights he’s learned through his 40 years of owning, running, planning and thinking about what it takes to make a successful business sustainable.
Josh: Hey, how are you today? This is Josh Patrick. You’re at The Sustainable Business.
Today’s guest is Tom Sylvester. Tom is one of those serial entrepreneurs that like to start lots of businesses. Hey, some of them have even been successful, he says. And of course, it sounds like some of them failed as well. I can put myself in that world just as well as Tom can. He currently owns a real estate investing business, a retail wine and liquor store and he also has an entrepreneur training and coaching business.
Today, we’re going to take a little break from talking about how we grow a blue‑collar business. We’re going to talk about startups and what it takes for you to be successful when you start your business. Now, I have to tell you, for the folks who have 25 to 200 employees, the information we’re going to talk about today will have just as much validity for you as it does for someone just starting their business out.
So, I’m going to bring Tom in and we’ll get started with the conversation.
Hey, Tom. How are you today?
Tom: I’m great, Josh. How are you doing?
Josh: I am doing just wonderfully. We met at Brendon Burchard’s program where you and, I think we spent three or four hours talking. It was a really interesting conversation. Today, we only have about 20 minutes so let’s start with you’ve mentioned to me that starting and growing your business, there’s a bunch of places that people get stuck and things they should be doing. What kind of things should somebody do?
Tom: You know, a lot of this has come from life lessons as we’ve started those businesses – some that were successful and some that failed. And then a lot was just talking to other entrepreneurs and seeing what works out there. And as we went through it, one of the things we realized was there’s a common set of steps that most businesses go through as they start. And just kind of quickly walking through those, we put them into five phases.
So phase 0, we talk about the Prequel and it’s actually not even talking about the business but it’s everything you should do before you start the business. And so many entrepreneurs get an idea and they get excited and they just jump into doing the business where they don’t actually take that step to ask “Why am I starting this business? How do I manage my time and money? What am I trying to achieve personally in my life by doing this business so that I can make sure the business supports and integrates into my life?” So that’s phase 0 that a lot of people skip and it doesn’t set a good foundation for starting that business and making sure that it supports your life.
Josh: That seems to be a pretty rational thing. So, if you’ve been in business for five or ten years and you never answered that question, do you think it makes sense to go back and ask it?
Tom: Absolutely. So, one of the things is when people come in and start working with us, based on where they’re at, we kind of judge them up and say, “You know what, here’s what stage you’re in and here’s where you should probably be focusing on.” And then one of the questions we always ask is, you know, “Have you considered these couple of things?” So, for example, why are you doing this business? You know, what is the end game for you with this business? And are you progressing towards that?” So, a lot of times what we find is that entrepreneurs just kind of start and find their own path which is probably why they’re entrepreneurs but along the way they miss out on some of those key steps that could really drive them to either that next level where they’re trying to get to or just make their business operate more efficiently and make them happier as they run that business.
Josh: So, if that’s phase 0, what would phase 1 be?
Tom: So phase 1, we call the Foundation. This is where we actually get into establishing that business. So, one of the things with an entrepreneur is they probably have a lot of ideas and they tend to jump into actually starting the business without doing the proper validation of that idea. So, one of the things we like to do is to think about every idea or whatever you thought you have as a hypothesis and then, basically, what an entrepreneur wants to do in the foundation is take all those ideas, run a bunch of experiments and figure out which ones actually make sense and could turn into a viable business versus which ones maybe are going to fall through the cracks and not be viable. A lot of times, as entrepreneurs get in there, they don’t ever validate the idea before they spend a whole bunch of time and money to actually get the business launched and then they struggle with not getting revenue or not getting some of the sales because they missed out on the market, or the problem they’re trying to solve, or maybe they had both of those but they brought the wrong solution.
Josh: So, when somebody starts a business and they put tons and tons of effort into the planning part, what happens when things don’t work out so well?
Tom: Yeah. A lot of times, these are those statistics that you hear about where 80% of businesses fail. So, they jump in, they don’t put that right time for planning and really validation in, early on, and then they run the basis for a little bit. Often times, they’re not actually taking any money during that time and then the business just closes its doors and that entrepreneur, who may be really was an entrepreneur, just missed some of the steps. Or if you’re looking at like Michael Gerber and the E-myth, maybe they really weren’t an entrepreneur. But what happens is they end up going out of business and that’s not what we want.
Josh: Well, there’s two things that just came to mind during that last piece you were talking about, one (1) is you’re starting of a new business a form of it is, which is “fail fast, fail cheap”, and the other is (2) learning how to handle mistakes which is when things don’t go well, how do you make a correction? And what you do when that happens? So, with both of those, how would you recommend business owners handle each?
Tom: I’m actually going to start with making mistakes. And one thing that I’ll say for entrepreneurs and really everyone in life is “You’re going to make mistakes.” So, people get in and they—well, “I don’t wasn’t issues to happen, or I don’t want to fail, or I don’t want to make mistakes.” Just get that out of your head right now and realize that mistakes are a part of the business and you actually don’t want to avoid mistakes.
What you want to do is make those mistakes and failures happen faster. So, one thing we focus on is “how do we make more mistakes to make sure that we’re moving forward?” And then a key thing is once you make those mistakes, how do you identify that it was a mistake as quick as possible because one of the problems that people have is, they make a mistake – well, let’s say for example, they only look at their books once a year. They don’t realize that mistake until the end of the year and then there’s nothing they can do about it.
So, one of the things that we set up for businesses, as they’re operating, is this cadence of meeting daily to do a quick sync on what they’re working on. Meeting weekly so they kind of review the previous week to figure out what mistakes and issues came up and then planning on the next week. Meeting monthly to kind of check in on how they’re doing on their quarterly goals. And then meeting quarterly to make some of those pivots based on what worked and what didn’t work in the previous quarter so that they can meet those goals for the next year. So, there’s different points in time where you can check in to say, “What mistakes did we make? And then, how do we make pivots based on that to continue learning and growing?”
Josh: The key question there was–and I’m going to say this in a different way than you did, is a pivot which is, “what did you learn from the mistake?” I’m assuming.
Tom: Mm-hmm. What I like to look for with pivots is the mistake came up and it could be one of two things, and how you know whether you’re actually going to be able to make a pivot is, “How does that mistake tie into whatever goal you set out to do?” So, in some cases, something may come up that’s not working in the business and you realize that in order to achieve the goal because that goal is still valid, you need to pivot and change how you’re operating, learn from that mistake and put something else in place. In other cases, something may not be working and because you learn more, you may realize that that initial goal or that initial destination you were going after, it’s no longer accurate, and now you’re actually going to make a pivot in what that goal is because you learned something along the way and now you’re taking your business on a little bit of a different track.
Josh: So I’m going to challenge you on word you’ve been using, and the word is ”pivot”. Because in my mind, pivot means ”I’m going to 180 degrees” and in fact what I’ve learned about mistakes is when I make a mistake, it’s usually a small adjustment I want to try for my next experiment because doing a giant pivot just has me kind of flopping all over the place. So, when you say pivot, what exactly do you mean?
Tom: So, I use pivot probably in the sense of both of those things you just described. And an analogy I like to use with people as we go throughout this business is “look at maps versus GPS”. So maps were really good for a long time. And if you look at a map, what do you do? You put in your starting point, you put in your destination and then you basically track the route you’re going to go. But while your GPS is superior to maps, it’s superior because it’s constantly giving you feedback and letting you know when you’re off the path and then you get to make a decision. Do you follow what it says to get back on the path because that original route is still right? You just took a misstep. Or, as an entrepreneur, do you realize that you’ve learned more and now your target is actually going to be something different? So that’s where I would look at a pivot to say, “Now, I’m really going to shift the direction of my business to your point probably 180 degrees.” So when I describe it, it probably covers too much and it covers both of those.
Josh: Yeah, in my experience, the GPS is a really good analogy and when you’re on a GPS or if you’re flying an airplane, it’s minor corrections that they’re making all the way across the country or out to the moon or wherever we’re trying to go and we’re not turning around, coming back to Earth because there’s a correction that needs to be made. And in most businesses, as you’re moving forward, the pivot is not so much a true pivot but an adjustment and a new experiment that comes out of that adjustment. At least, that’s how I’ve always worked. I’m not a big fan of 180-degree turns just because it makes me flop around all the time and not get anything really accomplished.
Tom: Yeah, and I think that’s actually a really good distinction that you made, so a minor adjustment versus a larger pivot which is the 180—
Tom: So when we meet daily or when we meet weekly to kind of review the business to the point we’re making those adjustments and we tend to make the larger pivots on a larger scale whether it’s quarterly or whether it’s annually.
Josh: Yeah. Or even on a three-year basis.
Your next step is integrating business and life. And I know that you run your business with your wife and there’s lots of listeners who do that. So, what kind of tips do you have around that particular issue?
Tom: Oh, I have a lot of tips for this issue.
So early on, actually, my wife was not involved in the businesses and she was actually very opposed to it. And as a result of that, I made a lot of mistakes. I made a lot of decisions, you know. One which I wouldn’t recommend is going to a seminar and spending $15,000 for training from that seminar on a credit card without informing her – so don’t do that if you’re listening.
Josh: Or have a separate checking account altogether.
Tom: Yeah. So we struggled for a couple of years. We had a lot of conversations and what finally made it click for us and made us be able to work together was we kind of took a step back and said, “What do we want our life to look like?” So you can call it lifestyle design. You can call it visioning for your life. But once we got aligned on what we were trying to achieve out of our lives, then we can kind of work backwards and say, “Okay, well, what things can we do to get there?” And that’s when we realized that she was looking at life as a traditional person who was going to school and getting a job, whereas I was looking at it from an entrepreneur perspective and not waiting 45 years to “retire” or have that freedom. So once we got aligned around that, then we can start working and being intentional about all the actions we took to actually get to that goal and that lifestyle that we wanted. So, getting aligned with your spouse or whoever you’re working with is such a key piece.
Josh: What did you actually do to become aligned with her?
Tom: We had a lot of intense conversations. And by that, we basically listed out like “what was important to us?” So we obviously got together because we were aligned on some things, you know, values and perspectives. And when we started to create that vision, we really wrote down what was important to us and we kind of looked ahead and said “what do we want our life to look like when we’re 50, when we’re 70?” And then we worked backwards and said, “Okay, is the path we’re on now going to get us there? And if not, what are some alternatives?” So then we brainstormed and then said, “Based on what we’re trying to achieve, what our comfort level is, which things should we do?” and we really got aligned around what that path looks like.
Josh: So you just brought up a really important point – a really important word. And that word is values. And in my experience, a business that doesn’t have stated values is wandering around and everybody’s making up what they should be doing. How did you use the values conversation with your wife to come with direction for your businesses? And then, how did you get it instituted in your business?
Tom: We kind of stumbled upon values without even realizing it. But what we kind of found in hindsight was, looking back when things worked well, it was because our values were aligned and the actions we were taking in our business and in our life supported those values. And when it wasn’t, it was because one of us or the other one maybe had a different set of values that wasn’t brought to the surface. So what we actually did was we identified what we thought our values were. And then as we operated within business and life, we kind of did some check backs and said, “Based on the things that we’ve actually been doing, have they aligned to those values? Or were those values that maybe we wanted to aspire to but our actual values, based on the actions we took, were maybe a little bit different? And then through having those conversations, we were able to kind of tweak and say, “Well, maybe we’re not there yet but this is one of the paths that we want to shift to.”
Josh: That reminds me of Patrick Lencione’s aspirational values—
Tom: Yup. Yup.
Josh: Which I think is a really important concept in the world and what that basically means is that “we all have values that we would like to have but we’re not there yet.”
Josh: And I think it’s really important to know the difference between aspirational value and what I call a core value. So how do you take your values that you and your wife have and then implement them in the business or institute the in the business?
Tom: So one of the first things, and I think it’s so important whether we’re talking about values or plans or anything else, is to write it down because a lot of times, as entrepreneurs, especially when we have employees, those things are in our head but if we don’t communicate them to our employees and if we don’t weave them into the business, we’re going to miss out on pieces, so writing them down and then communicating them – probably orally communicating them with our employees as well as our clients and customers. So, for example, in our hiring process, we make sure that we ask questions and have some specific things where we make sure that the people we’re hiring are going to align to those values and fit into the roles that we’re trying to hire them for.
Josh: Do you use your values basically every day as conversation pieces in the business with the people that you work with – the stakeholders you’ve got?
Tom: I wouldn’t say every day we have that conversation but I would say the actions we take every day align with those core values. So, for example, we just had, in one of our real estate properties, we had an issue come up. Unfortunately, it didn’t get resolved as soon as it should and we ended up refunding the tenant the entire month even though the issue was only a couple of days and then we actually helped them move into their next property because they weren’t happy, so that cost the business a little bit of money but one of our values is “do the right thing.” So by doing the right thing, we were able to keep that tenant happy, get them into the next property and then feel good about our business because we are living by our values.
Josh: And it also helps your customers feel good and your employees feel good.
Tom: Absolutely, yup.
Josh: At least, that’s my experience.
Tom: I agree 100%.
Josh: So let’s talk about focus for a second. Why is focus so important?
Tom: So I come from a Lean background. So people that aren’t familiar with Lean, essentially Lean says “there’s two things you can have. You can have value and you can have waste.” And Lean is focused on identifying and removing the waste on an ongoing basis so that you can have more value. So, as entrepreneurs, there’s always a lot of things that we could be doing and the best entrepreneurs and the best leaders are the ones that can say “no” even to the good ideas so they can focus on the great ideas. One of the things with being able to actually focus and benefit from that is not multitasking or not spreading your focus but picking that one thing that’s going to drive the most success and putting all of your effort there.
Josh: It was two things that you just mentioned which I think are important for us to pay a little attention on. One is the use of the word “no” and the other is the concept of multitasking. I’m just going to say, just for the record, that we can’t multitask. And if you want to prove that to yourself, when you’re watching ESPN or any of the network news shows, try to pay attention to what’s being said on screen and read the scroll at the same time. I will almost guarantee that you can’t do it. So, let’s talk about the word “no” for a second. This might be where we’re going to end today but why is “no” such an important word in the world of business?
Tom: That’s a great question. I think one of the biggest troubles people have is not being able to say that because they’re afraid. They’re afraid of missing out on business. They’re afraid of upsetting somebody.
But kind of going back to the values and everything else, to truly be effective to the point we can’t multitask and we’ve got to—like people a lot of times say, “Well, I don’t have time for that.” When people say they don’t have time, that’s a lie that we tell ourselves. What people are really saying is that “I’m not properly prioritizing things.” So, saying no or—sometimes, it’s not even no, it’s a “Not now” but that allows you to properly prioritize and put your focus on the most valuable things to drive to whatever goals you’re going for.
Josh: Yeah. I actually wrote a blog post on the concept of “not now” a few months ago.
Tom: Very nice.
Josh: It is. It’s an important thing to remember is that, you know, it might be not a “no” but it might not be a “yes” and it’s certainly okay to put it into the later folder.
Tom: Yeah. And one of the things too with that is that there’s an opportunity cost for everything you do or everything you don’t do. So if you don’t make a decision, there’s an opportunity cost there. And if you make a decision, there’s an opportunity cost. So, one of the things with saying “no” is that you get to own that decision because if you don’t say anything or if you say yes, that decision’s going to own you.
Josh: That’s a great point. Tom, I have one more question for you, and then we’re going to have end today’s conversation, which is let’s talk about systems just for a second. Why are systems so important for a business from the day you start it?
Tom: So, systems are critical to be able to leverage that time that we talked about. So everyone has the same amount of time and systems allow you to be able to outsource, or focus, or automate the lower value or the things that pull you away so that you can focus on high-value activities.
You know, where a lot of entrepreneurs get stuck are they’re doing everything in their business and they don’t ever pull themselves away from working in the business to – as Michael Gerber would say, to work on the business. And that doesn’t allow them to see those improvements, to cut out the waste and to really grow the business and guide it from a strategic level the way they should be as the entrepreneur.
Josh: Well, I’m going to say that your Lean background is just a really important factor for how you work with your startup businesses because that thought process – although I wouldn’t use the full Lean installation, but the lean thought process is so valuable and I’m going to encourage our listeners to read something about Lean.
So, Tom, we’re going to end it when you give us a suggestion for what book would you recommend somebody reads or listens to about Lean that would be valuable for a startup.
Tom: So the one I’ll say is actually a little more software-focused but I think it’ll work for most people. It’s called From Concept to Cash. It is basically about taking the idea from having an idea and how that flows through to ultimately get you paid and get back out to the customer to provide value.
Hey, Tom, I’m going to bet some of listeners might be interested in having a conversation with you. So if they are, how would they find you?
Tom: The two best ways are – we actually have a free Facebook for entrepreneurs and this is a place for people to hang out, talk business, help each other so you can check that out by going to SSCommunity.co. And the second place would actually be our membership site where we focus on helping people grow those businesses, so we go through those phases and give people the training and guidance along the way, that’s Startup Academy. People can check that out by going to serialstartups.co/join.
So, again, I thank you so much for your time today, Tom.
If you folks are listening and want some information about how to grow a business from scratch, Tom is your guy, so give him a call or contact him through his websites.
For those of you who are interested in some strategies you might want to use in your business to make it better, we have a special report for you, it’s called our Periodic Table of Business Strategies. It’s 56 different strategies that you can use in your business. It’s on one page. You can take a look at it. You can put it on your wall. You can put it on your desk. It’s a great reminder that there are lots of strategies out there you can use to make your business sustainable. To get this free report, just text PERIODIC to 44222. That’s PERIODIC to 44222.
You’re at the Sustainable Business. This is Josh Patrick and I hope to see you back here really soon.
Narrator: You’ve been listening to The Sustainable Business podcast where we ask the question, “What would it take for your business to still be around 100 years from now?” If you like what you’ve heard and want more information, please contact Josh Patrick at 802‑846‑1264 ext 2, or visit us on our website at www.askjoshpatrick.com, or you can send Josh an e-mail at firstname.lastname@example.org.
Thanks for listening. We hope to see you at The Sustainable Business in the near future.