9. How to Streamline Your Business in Three Steps

TRANSCRIPT:

Welcome to Episode 9 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, and I’m thrilled you’re here. If you’ve been following along, you know that we are in the home stretch of a seven-episode spree discussing the seven skills that take your income to seven figures and beyond. If you were with us for the last episode, Episode #8, you know that we talked about the skill of serving. Service is where you do things in your business that move your clients further towards their happy ending, and you scrub your business of all indulgences—things that make you feel better, but not your clients. When you do this, you steer away from earning emotional currency, and you lean into generating cash.

The skill of service is about creating a business that focuses on your clients getting toward their happy ending. It’s one of the skills that helps you deliver like no one else. Today we’re continuing our focus on delivery, with another skill. Today’s skill is about taking the path to the happy ending and making it shorter, more efficient, and therefore, far more appealing for your clients.

How do you do this? With the skill of severing. That is the sixth skill that creates a business that goes to seven figures and beyond. Severing involves cutting away every unnecessary thing from what you’re doing in your business, so your clients can get to their happy ending on the shortest, most efficient path possible. When you can deliver in the quickest, most efficient way possible, you will stand head and shoulders above everyone else in your industry, and in the minds of your clients.

Critical Path Planning: The Tool that Streamlines Your Business

Severing is a really fun topic, because it’s where you get to slash your to-do list and cut away all the really clunky things in your business. It’s where you get to streamline everything. At the severing stage, entrepreneurs always say, “Yay. I’d love to cut out a whole bunch of stuff from my business. I’m working my tail off, so let’s do it.”

I couldn’t agree more, so now, without further ado, I’ll tell you the three steps to streamlining your business so that you can deliver in the most efficient, most enjoyable manner possible. To do this, it’s helpful to know about an engineering concept called the critical path.

The critical path is the sequence of steps or stages that determines the minimum time needed to get to the end. Notice a couple things about this. The critical path describes a sequence– first you do this, and then you do that, and then and only then do you do the next thing. If you’re constructing a house, first you lay the foundation, and then you put up the walls, and then the roof goes on. In my program, Gateway to Seven, we figure out what you’re going to say before you go out and spread the word. Figuring out what you’re going to say is a much better thing to do before you go out and start talking. It’s much more effective. Getting the sequence right creates efficiency. If you want to build a house because winter’s coming, never would you first build the walls and then put the roof on, and then think about the foundation. The very first thing you’d do is lay the foundation. So, in critical path planning, order is important.

The other thing about the critical path is that it defines the minimum amount of time needed to accomplish the goal. That means that you only include the necessary components. If something is not part of the direct path from point A to point B, it’s not part of getting there efficiently. If it’s not necessary, it’s a diversion. So the critical path is about determining the right tasks, and putting them in the right order. When you are severing the unnecessary away from your business, what you are severing is everything that isn’t on the critical path.

Step 1: Identify what is on the critical path

I hope you’re gleaning from this that the first thing you do, in streamlining your business, is identify what’s on the critical path. You can’t know what to sever away from your business until you know which things to keep, right?

So what do you keep? What goes on the critical path? The answer is, only the things that truly solve the problem. Only the things that truly get your clients to their happy ending. To know what to keep, you have to know exactly where your clients are now, where they want to go, and what must happen at each step on the path from where they start, on the way to their happy ending.

Let’s consider a very simple example from the hedge fund world. Part of the critical path to take a hedge fund investor “from here to happy” is having them sign what’s called a subscription agreement. When they sign this agreement, they’re saying they understand that the fund involves risk, and they’re agreeing to the terms and conditions that apply to being in the fund.

Getting a signature on a subscription agreement is on the critical path for every hedge fund. Why? Because you can’t operate a hedge fund without a subscription agreement executed by each of your investors. The SEC and the CFTC would have your head. Plus, the subscription agreement is a moment for the investor to pause and assess everything that’s involved in investing in the fund. A crucial step for them to have a great experience in the fund is to consider, what exactly does this fund involve, and do I want that? And when they sign, they’re indicating that yes, they do. So signing the subscription agreement goes on the critical path for a hedge fund.

Notice the question implicit in this analysis. If we can’t get our investors “from here to happy” without doing something, it must go on the path.

So that’s the type of analysis that you can do in your business as the first step to streamlining it. What’s the next thing you do, in streamlining your business? Once you know everything that goes on the path, you pause and reassess.

Step 2: Get VERY critical. Is this REALLY necessary?

Because the truth is, a lot of the stuff that we think needs to be there doesn’t actually need to be there. So the next step is to get very critical. Often, what we initially put on the path we can simply take away, and everyone will be better off for it.

Here’s an example. Before I started my own hedge fund, I worked in and around countless other hedge funds. And they all had subscription agreements. As I just said, the subscription agreement definitely goes on the path. Every hedge fund needs a subscription agreement executed by every investor in the fund.

But the subscription agreements these other hedge funds were using were SO CLUNKY. It wasn’t just, “Here’s the agreement, however many pages there are to it, and sign and date at the bottom.”

Rather, it was, “Sign here. And sign here. Oh, we need you to sign here, too. And there. And also there. And also at the end of this document. And in the middle of this document.”

For an investor coming into the fund, the process was as onerous as a real estate closing. If you’ve ever borrowed money from a bank to buy a house, you know what that process looks like. You sit and sign your life away. There are so many documents, you can’t even believe how many.

But here’s the thing. When you’re borrowing money to buy a house, this onerous process doesn’t feel that objectionable. Because, after all, the bank is fronting you tens or hundreds of thousands or even millions of dollars so that you can buy this house. They’re entrusting you with their money. Of course it would make sense that you’d have to sign a few things to borrow their money, and that much of it.

But it’s exactly the opposite at a hedge fund closing. The investor who has to sign and sign and sign isn’t borrowing money from the hedge fund manager. They’re signing and signing and signing and sending money to the hedge fund manager. Millions, or tens of millions, or even hundreds of millions of dollars.

So why are they signing their lives away? It didn’t make sense to me at all, when I saw what was happening. And it was messing with the onboarding process of all these hedge funds that were using this onerous process.

Because what would happen, if they missed even a single signature in the onboarding process? Often the investor didn’t get into the fund at all. If investing in the fund was going to be overly difficult, they would stop before the onerous process was 100% completed. When a single signature was missing, the investor would say, “Forget it.” Or more often, the investor who’d gotten tired would simply ghost the hedge fund manager. They wouldn’t complete the paperwork, and they would stop responding to inquiries about it.

So when I started my own fund, I had a single-signature subscription process. All of the separate documents that another hedge fund would have them sign—multiple times, with signature after signature—were, in my fund, incorporated into a single document with only one signature.

Makes perfect sense, right? But guess what? When I did this, people told me it wasn’t allowed. This kind of thing is one of the reasons I went to law school. Before I had a law degree, when people told me something wasn’t allowed, I’d say, “I’m pretty sure it is.” And they’d say, “Are you a lawyer?” And finally, I just got the darn degree so I could say, “Yes, I am. I am a lawyer and I can tell you with utter certainty there is no law that says that an investor who’s sending me money has to sign his or her name fifteen times for the privilege of doing so.”

Fifteen separate signatures to get into a hedge fund may not seem like a big deal, but it was a big deal, because folks who can invest that kind of money in a hedge fund tend not to sit around making themselves available to deal with paperwork. So streamlining the onboarding process for my fund was a very big deal.

So here’s a story about that. One time, I had an investor who wanted to get into my fund. He told me that if I could get the documents to him by Friday, he would turn the paperwork around and wire the money. But if I couldn’t do it by Friday, his investment would have to wait, because he was going to be away on vacation for two months. And he wasn’t going to do ANY paperwork while he was on vacation.

I was on vacation in Montana at the time of this conversation. I had cell phone coverage, but little else where I was. So I called back to my office and I told my assistant, “Listen. We have one chance to get this paperwork to him. Here’s the address. Fed Ex these documents to him. This is the ONLY thing I want you to do today. Check the Fed Ex air bill. Double check. Check again. Make sure everything is right because he wants to invest now. If he doesn’t get in now, and the fund makes money while he’s away, he will have lost out on those two months of profits, because we made a mistake, and I don’t want that to happen to him.”

She said she would follow my instructions to the letter. And we got off the phone.

And the next day, the investor called me. He said, “Hey Kelly. I got a big box from you.”

Now, at this point, I’m wondering what’s going on, because this box should not have been big. It should just have been an envelope containing just a few documents, with another fed ex envelope inside so he could turn the paperwork around and send it right back to my office. I was silent as I was thinking about this, and I could hear him opening the big box in the background of our conversation. And then he said, “Hmmm. You sent me a used Hewlett Packard printer?”

And I said, “Oh yes. That’s our new policy. When you invest with us, we send you a used Hewlett Packard printer. It’s a token of our appreciation. It’s like when you open a new checking account, and the bank gives you a toaster.”

And he said, “Really?”

And I said, “No. Actually, if you plug that printer in to a wall outlet and turn it on, it will spit out the documents to invest in the fund. And then you can sign them and scan them back to us. All using that printer.”

And he said, “Really?” And I said, “No.” I said, “Really, I have no idea what’s going on. I’ll have to call you back.”

So I got off the phone and called my assistant, and she told me that when she was on the way out to Fed Ex to send the documents, another partner in our firm stopped and asked her to also Fed Ex a used Hewlett Packard printer up to the mainland for service. Our office was in St. Thomas, US Virgin Islands, and we were always sending things from the office back to the states to be fixed. And somewhere between our office and the FedEx store on St. Thomas, the Fed Ex Air bills had gotten mixed up. And the documents to invest in the fund had gone to the maintenance department at Hewlett Packard, and the malfunctioning printer had gone to my investor.

So my investor didn’t have what he needed to sign to invest in my fund, hours before he went away for two months.

The good news is, shortly afterwards, I did receive an investment into my fund for millions of dollars from the maintenance guys at Hewlett Packard. They signed the documents and wired the money. it was fantastic.

And now you may be asking, “Really?” And the answer is no. Hewlett Packard did not invest in my fund. Nothing that fantastical ever occurred.

So why am I telling you this story? The reason is because stuff happens. In business, there are going to be screwups. And when stuff happens, you can correct for it far more easily if your business is as streamlined as possible.

So what happened with my investor? Because I insisted on a single-signature process for my fund, he was able to print his own documents, sign them, and turn them around to me. This is not something I would have ordinarily asked him to do. But he was willing to do it, because it didn’t take a lot of figuring out how to do it on his own. Investing in my fund was far more simple than participating in a protracted effort that looks like a real estate closing and makes you think, Wow. I’m sending you money. What’s with all the signatures?

The process was so simple that he could easily print and sign the documents without help, and send them to me along with a wire for the money that he was investing, all before he left town for two months. And the fund made money for him during those two months, so it was a good thing I had made my business as simple as possible so he didn’t miss out on that.

What I’d like you to take from this is that when things are ultra-simple, you make more money than when things are not.

The next thing I’d like you to take from this is that when you go to streamline your business and make it ultra-simple, people are going to tell you that you CAN’T. You could be one of those people who’s telling yourself that you can’t. Whoever it is who’s talking, whether it’s other people or it’s you. What you’re going to hear is that there are rules. And you can’t break them. Under penalty of law. Either actual law, meaning legislation or an act of Congress (that between you and me probably doesn’t exist). And if they’re not spouting non-existent laws to you, they’re going to tell you that there are “immutable rules of business” that you simply cannot break.

What are these “immutable rules of business?”

Here are a few examples. One I hear all the time is, “You can’t sell straight from a podcast. You have to offer a freebie, or in other words, a lead magnet. Because people need more nurturing. They won’t just BUY. So you have to offer a freebie so they get on your list. And then when they’re on your list, you hit them with a barrage of email messages for days or weeks or maybe months or years, and THEN and only then will they buy. No freebie? No lead magnet? That means no sales.”

Folks, this is a thought, but it isn’t the truth. I mean, tell me honestly. Do you need one more email from someone you don’t really even remember signing up for their list showing up in your inbox? No. Of course you don’t. I’m not saying I will never use an email list to send something valuable to you. I totally might do that if email is a good mechanism to send something that I want to send and that you want to receive. But I will also say that never in my life have I made a sale from an email list. I have, however, had three different podcasts—this is the third—and I’ve made sales directly from my podcasts to cold traffic. Over and over and over.

So now let’s bring this back to you. Take a look at everything that’s happening in your business that people have told you, “You have to do it this way.” And tell me—what are you doing that you really don’t want to do? That’s unnecessary? That’s making your business feel clunky and un-fun? What would happen if you JUST DIDN’T DO IT?

If you think there aren’t things like this in your business, please allow me to gently suggest otherwise. Every industry is comprised of humans, and wherever you find humans, you will find an adherence—often a rigid adherence—to rules that simply do not exist. The trail blazers in every industry are those who recognize, “Oh, those rules? Nothing happens when you break them, except that you make a boatload of money.”

If you want to become a trailblazer who makes a boatload of money, recognize two things. One, there are “rules” that really aren’t rules. Two, breaking them for fun and profit is one of the best things you can do. To do this, you have to ask yourself one key question: Does this thing I’m doing really move the needle, or is it window dressing? Almost everything I see and hear these days is window-dressing. It’s not needle-moving.

Just yesterday I was listening to a podcast in which the guest was on the show to explain to how to get out of debt and get rich. And the host of the show was asking questions about how to do it, and the guest gave that tired old admonishment, “You have to budget. You have to know what you’re spending, and pare it down. And control it if you ever want to get rich.”

And to this, all I could think was, nonsense. Everyone gives this tired old advice about budgeting, but it’s just not true. The truth is, if you want to get rich, you have to spend less than you make. That’s the essential skill. Rich is an accumulation of what you’ve made that you didn’t spend. If you’re spending less than you make, you’re going to get rich. If you’re spending more than you make, you’re not going to get rich.

It’s as simple as that. So where do budgets fit in? They don’t. It is entirely possible to spend less than you make without a budget. It’s also entirely possible to spend WAY MORE than you make WITH A BUDGET.

So a budget isn’t what gets it done. A budget doesn’t create “rich” any more than a tank of goldfish creates rich. The ONLY thing that makes you rich is spending less than you make. If you want something that will create spending less than you make 100% of the time, don’t look to a budget for help. What should you look to? What always works for me is the knowledge that its WAY more fun—AND I MEAN WAY MORE FUN–to make money than it is to spend money.

Let’s take a second and repeat that so it sinks in. The way to get rich, 100% of the time, is to recognize that it’s WAY MORE FUN TO MAKE MONEY THAN IT IS TO SPEND MONEY.

When you have this realization going on in your brain—that’s high profit thinking—you don’t need a budget. You just love making money, and spending money is secondary.

Does this feel believable to you? If not, try on this exercise. Imagine—I’m driving over to your house in a truck to install one of two things. You get to choose between: A) a fountain that generates money. We’re going to put it in your backyard, and every morning you can walk out and see the money pouring out of it. Or B) this is your second choice. I can give you a bucket of money, and then take a hammer and nails and pound some holes in it, so over time, all the money drains out.

Which is more fun? The fountain, or the bucket with the holes in it?

I’m guessing it’s the fountain. This is what I mean when I say that it’s way more fun to make money than it is to spend it. So the truth is, when you know the truth about making money vs. spending money, you don’t need a budget to get rich. EVER. No one does. If a budget is useful for you, terrific. Go forth and prosper. But I’ve gotten rich, and I’ve never been on a budget in my life. I may have had a budget at certain points in the early years, because someone told me I had to have one and for a while I believed it. But I just stuck it in a drawer and never looked at it. Instead, I just had fun making money–way more fun than spending money. And when I live this way, whenever I want something, there’s money to buy it. No budget required.

Imagine living that way. It’s what I suggest, because it’s actually effective. When you’d rather make money than spend it, you’re set for life. Whereas, budgets are often counterproductive to getting rich. Why? Because if you think that a budget is the only way to get it done, and you detest the idea of creating and living on a budget (oh, and by the way, there’s a  lot to detest about that)—if that’s the space you’re in, then you’re sunk. You think “rich” is not available to you.

The idea of getting rich without a budget is a new, fresh message that folks would like to hear. Because the truth is, budgets suck. They’re just like diets. Who needs another one of those? With food, you don’t need a diet. You need to have more fun doing things in your life other than eating. Same with money. You need to have more fun in your life than spending, and the funnest thing I can think of is making money. Remember, revenue generation is my hobby. It could be yours, too. And that makes getting rich effortless.

But imagine being the financial planner, and you’re thinking this is the truth. And you’re contemplating telling your clients that they don’t need a budget. If you’re the financial planner who comes out with this, guess what? Your entire industry is against you. And if you want to be that guy or gal, and do so effectively, what you need is the skill of severing yourself from the conventional wisdom of everybody else, so you can say something new and fresh that people actually want to hear.  

This is true in every industry. Whatever business you’re in, there’s something in your business that’s fresh and new, but completely unspoken. Something that people want to hear, and need to hear, but that everyone else is afraid to say. The trail blazer in your business will be the person who comes out with it, conventional wisdom be damned. This is the person who will be rewarded with the big sweet dollars.

Step 3: Sever yourself from the weight of conventional wisdom.

This brings me to step three of using the concept of severing to streamline your business. Sever yourself from the weight of conventional wisdom. This is the sixth skill that generates a business that goes to seven figures and beyond. If you want to be that person who makes the big sweet dollars … If you want unconventional success, you’re going to have to sever your business from the cash-sucking drain of conventional wisdom.

What is that?Conventional wisdom is the generally accepted belief, opinion, judgment, or prediction about a particular matter. And guess what? It’s not what you need in a business that goes to seven figures and beyond, because most people don’t make anywhere near that kind of money. The way they think the world works isn’t going to help you get there.

So when you’re pondering what should stay in your ultra-streamlined business, and what can go, ask yourself this: If I remove this item, whatever it is, from the critical path to my clients’ happy ending, can they still get results? If this answer is yes, it’s a good bet you can cut this thing, whatever it is.

If you want to know for sure, ask yourself another question. If I remove this, will it make it easier for my clients to get results? If the answer is yes to that, then you definitely know this doesn’t go on the critical path.

So now you know. And when you know, cut it. Cut it out of your business like the cancer that it is, and watch your business flourish.

If you need some help with this, please know that defying conventional wisdom and blazing trails by rewriting the rules and severing you from conventional wisdom is something we do in my signature coaching program Gateway to Seven. There are already clients in there who are doing exactly this. And doors open to YOU in just a few weeks. So stay tuned for that. And in the meantime, please join me next time, for the seventh skill that creates a business that goes to seven figures and beyond. I can’t wait to share it with you, and thank you so much for being here today.