17. How to Know if You Are Underearning: Part 2

TRANSCRIPT:

Welcome to Episode 17 of How to Make More Money, a podcast that helps you get seriously good at the game of making serious money. I’m your host Kelly Hollingsworth. I’m thrilled you’re here, because today we’re continuing our discussion of how to know if you’re underearning.

If you were with us last time, you know that we embarked on a deep dive into underearning and how to figure out if you are doing it. In that episode, we defined underearning as receiving less than the market is willing to pay you. And I gave you one test for determining if you have this going on. The first test is that someone else is marking up your services. For example, if someone is billing you out at a rate of $700 an hour and paying you a hundred dollars an hour, you are underearning in a rate of $600 per hour. If this is happening on a full-time basis, you’re making $200K, but your employer is making $1.4 million.

The “markup” test is especially helpful for employees and independent contractors who get paid by a firm that brings in the clients, and then the firm farms the work out to you while keeping the bulk of the money. Given the massive discrepancy between the money the firms are making versus the money the people who are doing the work are making, one might wonder, why is this going on with such alarming frequency?

Most people tolerate this ridiculously expensive situation because they believe that it’s difficult to get clients. This is perhaps the lowest profit thought there is. When you believe that it’s difficult to get clients, what you end up doing is doing all the work for a fraction of the money.

What the markup test reveals is the high cost of thinking that you can’t get your own clients, and here I’d like to point out two things. One is that this is a thought error. A thought error is a thought that’s not true and not useful. If you’re employed at a firm, and the firm is bringing in clients and paying you a fraction of the money to do all of the work, you have a single client. It is the firm that you work for. They hired you to do legal services or architectural services or accounting services or graphic design or coaching or whatever type of service you do. You are able to sell that type of service to the one firm that hired you. That firm is your sole client. And guess what? If you can sell your services to one client, you can sell them to another client.

So the first thing I want to say is that if you are underearning in a “markup” situation because you think that you can’t get clients, please know that this isn’t true. You can get clients. And the way we know that is you already have a client: your employer.

The second thing I want to say is that although it isn’t true that you can’t get your own clients, it can feel very true. Why? Because so many people who are out there trying to do it aren’t getting it done. When we see this happening to them, we very reasonably conclude that it’s difficult. It’s difficult for them. So it’s going to be difficult for us.

But here’s the thing. The difficulty that they’re having is caused by a common but entirely curable business affliction that we’re going to discuss today. Once you know what this is and how to solve it, getting clients no longer feels like a crapshoot. It feels very predictable and easy. And that’s when you start making all of the money instead of a fraction of the money.

The moment you know that getting clients is easy is the moment when you begin to become a high earner, because think about this. If getting clients is easy for you, you can be in any business you want, and no matter what business you’re in, the sky is the limit on your earnings.

Clients are where the money comes from. This means that the ability to attract clients with ease is a money faucet. When you have this ability, you can turn on this faucet anytime you want to make money, and you turn it off when you don’t want to make money (which is just about exactly never). So the ability to attract clients is a faucet that brings money to you just as reliably as you turn on the faucet in your kitchen sink and water comes to you.

This is why I always say that the ability to get clients is the gateway drug to a seven-figure income. Once you can do that, everything else is pretty easy. And the great news is that, contrary to popular misimpression, getting clients is pretty easy, too.

When someone is not attracting clients, there are one of two things going on. The first thing is you’re selling something no one wants. This is what I call a “sand-in-the-Sahara” problem. My grandmother used to knit those dolls that you hang on the wall and you shove plastic shopping bags in the doll’s skirt. I guess they’re called bag dolls? Sometimes she would try to sell these bag dolls, but no one wanted them. So they didn’t buy. She had a sand-in-the-Sahara problem. But mostly if we’re not selling it’s for a different reason, that is easy to diagnose and very curable.

To see what this reason is, please consider a movie I saw recently. It’s called The High Note and it perfectly illustrates this problem that I’m talking about. In this movie The High Note, Dakota Johnson plays a budding music producer who works full-time as a personal assistant. Why is she working full-time as a personal assistant? Because, in spite of all evidence to the contrary, she is thinking of herself as
“not a real music producer.”

So let’s consider the facts of her case, and you can be the judge. Is this character a real music producer or not? When the movie opens, we see that her obsession is music production. She studies it. She works at it every chance she gets. She has all this complicated equipment and software, and she clearly knows how to use it. We see her voluntarily taking it upon herself to produce a piece of music for a multi- Grammy award-winning singer. She does this on spec. She hasn’t been paid to do it, and she hasn’t been asked to do it, but she just does it. And then when she shares the piece of music with the singer, the singer is so delighted, it winds up on the singer’s next album. So clearly she has a talent at this. She’s saying she’s not really a music producer, but she has produced a piece of music that gets used on an album of a famous singer, because no other music producer produced that particular piece of music as well as she did.

And then what happens? Then she meets another musician, and starts producing music for him that makes him sound like the star that he wants to be. He’s talented, but with her producing skills, he finally starts to shine. From her production ability, she’s able to polish him up so that he begins to get traction in his career–traction that has previously eluded him.

Are you getting the lay of the land? She’s obsessed with producing music, and she is producing music for more than one person, and doing it quite well. By all accounts, the music that she is producing is amazing. But what does she do with this budding business? She kills it. She buries it in disbelief.

You know that scene in every movie where everything starts to fall apart for the main character? It’s towards the end. In this movie, the falling apart occurs because, here’s how she chooses to identify herself. She’s been telling people she’s a music producer, but in the moment when it really counts, she tells the key person in her life and business, “I’m not really a music producer. I’m actually just a personal assistant who produces music sometimes. I’ve been faking it.” When she says this, her budding business crumbles. Everyone who’s been thinking she was a music producer, and a talented one at that, starts questioning her instead. In about three sentences, she crushes the magical momentum she’s been building for her business, and she takes herself down about 57 notches in terms of her career prospects. Now she’s not even a personal assistant anymore, after that scene where she buries her business. She gets fired even from that job, because no one trusts her.

As I was watching this scene play out where she buries her business, I was thinking to myself, every struggling entrepreneur has to watch this movie. Not because it’s a fantastic movie. It’s fine, but it’s not like something I would recommend as a movie that should be watched purely for entertainment value. The reason every struggling entrepreneur should watch this movie is because this is a perfect illustration of the second test for under-earning. What is this test? You are under-earning if you are warning people to not do business with you. Why is this under-earning? We already said you’re under earning any time you’re receiving less than the market is willing to pay you. One way to under-earn we discussed last time–someone else is keeping the bulk of the money. Another way to under-earn is doing things that cause the market to want to pay you less.

How do you know if you’re doing this? The first sign is silence. Strategic silence is one thing. If you’re being silent because you’re working on something, you’re working on a launch, and you’re going to bring it out to the public, and you just don’t have anything to say about it yet, that’s a form of strategic silence. But if you are saying absolutely nothing about your business in perpetuity, not strategically, but just because you’re hiding, the absolute silence is a warning to the marketplace to not do business with you. Obviously. They don’t even know about you.

The second sign that you’re warning people to not do business with you is that you are saying things about your business, but the world is silent. They’re not buying from you.

If they’re not, it’s because in subtle and not so subtle ways, you’re warning them not to buy, with what you’re saying.

Why would this happen? People buy when they hear a clear path to a happy ending. When they hear something else, a warning, they don’t buy. It’s just that simple.

So consider this podcast. It’s an example. In the first ten episodes, I laid out a clear path to a compelling, happy ending. “These are the seven skills. If you acquire these skills, you will make serious money.” At the end of laying out that path, then I made an offer, and within weeks I attracted clients representing hundreds of thousands of dollars in revenue. This isn’t by accident. It works every time. Lay out a clear path to a happy ending and you will get clients.

The simplicity of this concept is well-illustrated in the movie. In The High Note, when Dakota Johnson’s character is talking about herself as a music producer, people were drawn to her. When she spoke about herself as “not really a music producer,” people were repelled. The path was no longer clear, and the happy ending no longer felt compelling.

So, given the stakes and the amount of money you can make by attracting clients in this fashion, it doesn’t seem like anyone would ever repel their clients intentionally, subconsciously, unintentionally, inadvertently. It doesn’t seem like something anyone would ever do. But the truth is, it happens all the time, and it doesn’t just happen in the movies. We do this in real life. This is why it feels so difficult to get clients. The people who aren’t getting clients are doing this. They are warning people to stay away from them on a mass scale. And here’s the thing: This problem hides in plain sight. Because when we do it in real life, it’s not so obvious as it was in the movie.

So now I’m going to share with you a few signs that you are warning customers to stay away from you. You’re probably not even aware that you’re doing this, but these are just a few of the kinds of signs that we look for in Gateway to Seven. And when we find them, we remove them from your brain. They start in your brain. They show up in your message. We remove them from your message, and then you start making money. So now I’ll tell you what the signs are.

Mimicking Your Mentor

The first sign that I want to discuss today is mimicking your mentor. Once I spoke with a tax attorney who was struggling to get clients, even though she was getting a lot of traffic to her website. So I went to her website, and I immediately saw why she was struggling to get clients. She was warning clients to stay away from her because her website was littered with articles written by someone else–the man she considered to be her mentor. There was nothing on the website about this woman’s own expertise, which was considerable. There was nothing on her website where she expressed her own opinions, although she had many, and they were actually different from the opinions of her mentor.

This kind of thing never works, my friends. Why not? Because offering your mentor up as the expert is a warning to your audience. The warning says, “I don’t really know what I’m doing. You’d be better off if you hired him instead.”

So how do you know if you’re doing this? One is, you’re quoting your own mentor, not in passing, but as the authority for everything that you have to say and everything that you do. If you do this, people are just going to think, “Well, I should just go hire that person.”

Another sign that you’re mimicking your mentor is, if you’re not directly quoting your mentor, your message isn’t discernibly different. Your content and your copy looks very much like your mentor’s or a watered-down version of what your mentor would write. If you have this going on, you are warning people not to hire you. You’re actually sending them straight into the arms of the person you admire.

So that’s one of the reasons why, inside of Gateway to Seven, what we do is we help you figure out what you think, what you want to say, and how you can say that in a fresh new way. So you emerge as a thought leader in your own right, and you’re not mimicking someone else. You’re not parroting what another thought leader has already said. So that’s the first way you know that you are warning people to stay away from you, that I want to discuss today.

Offering intangible results that can’t be measured

The second way that you know you’re warning people not to do business with you, is that you’re offering intangible results that can’t be measured. I see this a lot in the hedge fund world. When a hedge fund manager talks about diversification. Diversification is an intangible thing that is fuzzy to measure. It can be measured, but it’s a fuzzy concept. Contrast this with profits. Profits are very tangible. They’re the very tangible thing of cold, hard cash. And that is very easy to measure.

When I work with hedge fund managers who are struggling to attract investors, a key feature in their marketing message is the benefit of diversification. This tends not to play well with an audience because nobody wakes up in the middle of the night thinking, You know. What I really need is some diversification. What do people think when they wake up in the middle of the night? They think, I need some money. So quite predictably, hedge fund managers who offer diversification as a key feature in their marketing message, tend to struggle. Who doesn’t struggle? Hedge fund managers that offer money as part of their marketing.

When I launched my hedge fund, everyone told me, “Don’t do it. Nobody’s buying new hedge funds right now. It’s a really tough environment. Just forget it.” But I knew that my fund was going to make money. So I put my own money into the fund, and I made money. And then, I went and told the naysayers )who said no one was buying new hedge funds) that I was making money. And what did they do? They invested in my new hedge fund that they said nobody would invest in.

So notice something about this. If I had gone out and told all of the naysayers that I had a new fund and it offered diversification, what do you think would have happened? Nothing. Everyone would have said, “Come and see us in a year. We’re not buying new hedge funds right now.” I went out into the world and instead offered money, something everyone wants. And that’s when people bought. I’m telling you this story because intangible benefits don’t sell. One reason they don’t sell is because nobody wants them. They want tangible benefits that are going to make a real difference in the real world, in their real life.

The other thing that happens when you’re talking about intangible benefits is that you come across as low confidence. Consider an example that I see a lot in the coaching world. Struggling coaches commonly say things like, “I empower women.” Or, “I help you with your self-esteem.” Contrast that with the message of this show. We go way past empowerment and self-esteem. I help you make money.

Do you feel the difference? The message that I can help you make money feels confident and tangible. If I told you I could help empower you, or help you get some self-esteem, how does that feel? It feels vague. It feels not compelling. Unconfident. Loosey goosey.

So here’s what you need to know. If you are talking about intangible or internal benefits–something your client might feel on the inside that wouldn’t necessarily show up on the outside, in their external reality, in their real life–you will come across as less confident, and that will repel people. If you are talking about tangible benefits that show up in the real world, not just in the internal experience of feeling more confident or more empowered, but also on the outside of achieving a measurable result that makes a real difference in your real life, you will come across as more confident. And that will draw people towards you. So confidence about achieving an explicit result is key. This is the bait that humans bite on in the marketplace.

The absence of a confident message about an explicit measurable result makes for bad bait. It’s a warning for people to stay away, and the moment they smell it, off they go, skittering away from you and straight into the arms of your competitors. So that’s the second thing. Offering intangible internal results that can’t be measured serves as a warning that people should stay away.

Waxing rhapsodic about your credentials and experience

A third way we warn people to stay away is, oddly enough, when we spend too much time talking about our own credentials and expertise. This may sound paradoxical, but stay with me for a second. I’ll tell you a story.

I used to do a super niche podcast for hedge fund managers. It wasn’t even for all hedge fund managers. I launched that show to talk about a very particular issue that only a handful of hedge fund managers have. Maybe 2,500 in the entire world were afflicted with this problem. And when I was preparing the podcast, everyone told me that I should spend the first episode talking about myself–that I’m a lawyer and accountant, a coach, that I manage my own fund, et cetera, et cetera, et cetera.

That approach may feel correct, largely because this is what everyone does, right? They open their podcasts with a pilot episode called “My Story.” But is this the way notable experts actually operate? When you meet a renowned surgeon or Nobel laureate, or a Grammy award winning music producer, or anyone who’s truly at the top of their game, who’s winning the game, do they open with all the impressive stuff about what they’ve done? Is that the first thing that comes out of their mouths? No. The reason these people do impressive stuff is because they’re immersed in the work. They’re thinking about the problems and how to solve them. They’re thinking about their art and how to make it better. They’re thinking about how to improve lives. The true experts don’t talk about themselves and list their credentials. They just go immediately into solving the problem. That’s why they’re experts.

So, in starting this podcast for hedge fund managers, I didn’t talk about myself. I talked about their problem and their solution. From episode one, I just launched immediately into it. And in a very short period of time, I had hedge fund managers who suffered this particular problem calling me from all over the globe. It was some of the best marketing I’ve ever done, in large part, because I didn’t talk about myself. Instead of telling them I was an expert and expecting them to believe me, I showed them that I was an expert by talking about their problem and the solution that I had developed for them.

The takeaway on this point is that if you find yourself providing a laundry list of your own credentials, “I’m a certified this, and a master of that, and a PhD in this other thing,” ask yourself why you’re doing it. If it’s because you want to be taken seriously, please remember that we get what we think. The only reason you have a desire to be taken seriously is because you’re thinking someone isn’t going to take me seriously. And when that’s what you’re thinking, that’s when you take it upon yourself to list all the things everyone should know so that you will be taken seriously.

This never works, because this is not what serious people do. Serious people just get right into solving the problem. This doesn’t mean that you can’t share tidbits about yourself. In that show, where it was relevant, I told the audience little pieces about me that they might need to know. But I didn’t tell it to them all upfront. And the reason I didn’t do that is because that is not the way we enjoy getting to know people.

Picture meeting someone at a cocktail party. If they spent the first 10 or 20 telling you everything about themselves, do you want to know more? No. You want to get away from that person as quickly as possible. That’s when you say,” I need a drink, and you head for the bar.” But if they start talking about an interesting take on a compelling problem, and the way they’re talking about it feels fresh and it sounds useful, then what happens? Then you want to know more about that person, and what they have to say. And, when that person drops little details about themselves, you think, “Wow, I didn’t know you were that, too. What haven’t you done in your life?” You’re enchanted with that person, rather than repelled by them.

So, those are three big symptoms that you are warning people away from you. There are so many, I can’t even count them all, but for today, let’s just talk about three big symptoms. One, you’re mimicking your mentor. Two, you’re offering intangible results that are internal and that can’t be measured, and that feel vague and loosey-goosey and not very valuable. And three, you’re listing your credentials and awards and certifications and degrees rather than just talking about what people really want to hear.

If you’re doing these things, you are warning people away from you. Those are very specific examples.

You’re out there in the world, selling and marketing, but people aren’t paying you

So here’s the test that you can apply in any situation. How do you know for certain, no matter what, that you are discounting what you do and reducing the market’s willingness to pay you? Here’s how you know. You know, if you are out there in the world, talking about what you do, and it’s not a sand-in-the-Sahara product… People actually want it, you’re talking about something people actually want and they’re not paying you. This may feel difficult to believe, but here’s a big truth and a little secret.

The big truth is this. If you’re struggling to attract clients and you’re selling something that people actually want, the only reason you’re struggling is because you are warning people to stay away from you.

And here’s the little secret. I am not a magician. The way I help my clients double, triple, or quadruple their earnings isn’t voodoo. When you’re not attracting clients, first, we look for a sand in the Sahara problem. If it’s not that–if you’re selling something people actually want–the only other reason is because you’re warning the world not to buy it from you. I don’t have a magic wand. What I do have is the ability to help you see where you are warning the world not to buy. And then we scrub the warnings out of your mind, and your message, and then you begin making money. It’s just that simple.

So if it’s time for you to start making serious money, please join me inside Gateway to Seven. Consults are very limited right now, but you can go to my calendar at kellyhollingsworth.com and find one for yourself. Keep trying, because it’s worth it to get inside and start making some serious money. And please join me for the next episode, because we’re continuing our deep dive into under earning and how to know if you are doing it. And thanks so much for being here today. Happy to have you here, and I look forward to connecting with you next time.