1 00:00:00,090 --> 00:00:04,440 Hey, now use Savages. This is the Saturday side hustle, and I'm Dave Lorenzo. 2 00:00:04,440 --> 00:00:08,550 I'm solo today. Nicki G will be back with me tomorrow for the Sunday special. 3 00:00:09,360 --> 00:00:14,010 This session that you're about to hear is a 4 00:00:14,020 --> 00:00:18,300 seminar that I conducted for the Vistage Coaching Organization. 5 00:00:18,310 --> 00:00:21,900 Vistage is the largest coaching organization in the world. 6 00:00:22,350 --> 00:00:25,260 This is the first few minutes of that session. 7 00:00:25,950 --> 00:00:30,840 My goal with this segment of the session is to 8 00:00:30,900 --> 00:00:33,090 get the CEOs who are in the room. 9 00:00:33,300 --> 00:00:35,790 Everybody in the room is a business owner and a C E O. 10 00:00:36,390 --> 00:00:41,220 My goal is to get these folks to think about who they want to sell 11 00:00:41,220 --> 00:00:42,360 their business to, 12 00:00:42,990 --> 00:00:47,430 and who they need to influence to increase the value of their 13 00:00:47,430 --> 00:00:52,140 business, to get the maximum price for their business. 14 00:00:52,150 --> 00:00:53,310 When they're ready to sell, 15 00:00:53,820 --> 00:00:58,770 how can they get from where they are now to creating a 16 00:00:58,770 --> 00:01:03,720 business that is incredibly valuable that will give them the most 17 00:01:03,730 --> 00:01:08,700 options when they're ready to exit? So I've asked these people to 18 00:01:08,700 --> 00:01:13,350 think about a person who they can connect with that can improve the 19 00:01:13,350 --> 00:01:14,550 value of their business. 20 00:01:14,850 --> 00:01:19,710 And I put up on the screen a slide that has 21 00:01:19,740 --> 00:01:24,720 the different drivers of value. So if you listen to the show regularly, 22 00:01:25,020 --> 00:01:28,290 you'll know there are 10 key value drivers. 23 00:01:28,650 --> 00:01:32,730 Nicki g and I have discussed them with you over the last few weeks. 24 00:01:33,180 --> 00:01:36,450 I put that slide up and I say to the folks in this room, 25 00:01:36,780 --> 00:01:38,910 look at these 10 value drivers. 26 00:01:39,270 --> 00:01:43,920 These are the 10 areas that you must improve to be able to 27 00:01:44,010 --> 00:01:46,530 sell your business for the maximum profit. 28 00:01:47,520 --> 00:01:52,470 Who do you need to influence to improve these drivers to have the 29 00:01:52,470 --> 00:01:54,990 most options when you're ready to exit? 30 00:01:55,350 --> 00:01:57,600 And I've asked them to think of a person. 31 00:01:57,720 --> 00:02:02,640 Some of them have told me that that person is already in their business. 32 00:02:02,730 --> 00:02:04,350 It may be they're number two. 33 00:02:04,350 --> 00:02:07,230 It may be the second in command of the business that they're looking to 34 00:02:08,040 --> 00:02:12,690 influence to get them to do a management buyout of the business. 35 00:02:12,750 --> 00:02:16,350 Some of them have told me, listen, I need to improve these drivers, 36 00:02:16,350 --> 00:02:19,350 but I want to sell my business to a competitor, 37 00:02:19,830 --> 00:02:24,660 and I need to know how I can influence that competitor to buy my 38 00:02:24,660 --> 00:02:27,930 business. One person said they wanted to sell their business to a supplier. 39 00:02:28,230 --> 00:02:32,580 Another person told me they needed to influence a specific 40 00:02:32,580 --> 00:02:37,020 person in their industry to help them create a 41 00:02:37,020 --> 00:02:41,670 strategic alliance so that they could increase the value of their 42 00:02:41,670 --> 00:02:46,590 business for exit strategy that would provide them with maximum 43 00:02:46,590 --> 00:02:51,120 value. So all of these folks have a person in mind, 44 00:02:51,540 --> 00:02:56,400 and now I'm taking them through ways that they can influence 45 00:02:56,430 --> 00:03:00,370 the folks who could buy their business. I'm taking them through the core values. 46 00:03:00,580 --> 00:03:04,630 We're talking about the experience they need to create with that person so they 47 00:03:04,630 --> 00:03:07,480 can get the most value when they're ready to exit, 48 00:03:07,600 --> 00:03:11,110 have the most options when they're ready to exit. Now, 49 00:03:11,110 --> 00:03:14,140 the recording quality here is not fantastic. 50 00:03:14,150 --> 00:03:19,150 I'm taking this from a recording that the gentleman who leads the group 51 00:03:19,660 --> 00:03:21,340 is giving me, 52 00:03:21,400 --> 00:03:26,320 and this was recorded on his computer from people 53 00:03:26,320 --> 00:03:30,970 who are on Zoom. So he had, I think we had about 15 people in the room, 54 00:03:30,980 --> 00:03:33,610 and then he had another 30 people on Zoom watching. 55 00:03:33,940 --> 00:03:36,970 This is the recording from Zoom, 56 00:03:37,390 --> 00:03:41,020 and we weren't using any sophisticated equipment at all. 57 00:03:41,050 --> 00:03:44,800 We're basically shouting into a computer. 58 00:03:44,800 --> 00:03:49,210 So you'll be able to understand everything I say and all the 59 00:03:49,210 --> 00:03:50,800 questions that I'm asked, 60 00:03:51,040 --> 00:03:55,810 but the recording quality isn't as high a level as we would like. It isn't 61 00:03:55,870 --> 00:04:00,280 the same quality that this segment of the show is recorded at, 62 00:04:00,460 --> 00:04:04,750 but you'll be able to get a real feeling for what these people are thinking 63 00:04:04,750 --> 00:04:09,610 about and how the CEOs who we all work 64 00:04:09,610 --> 00:04:12,310 with think, if you're a ceo, 65 00:04:12,310 --> 00:04:15,760 put yourself in this boardroom with me and with these folks, 66 00:04:16,180 --> 00:04:21,100 and put yourself in a place where you have to influence someone in order to 67 00:04:21,110 --> 00:04:23,650 get maximum value for your business. 68 00:04:23,680 --> 00:04:28,060 So come with me now inside the boardroom with the c e o, 69 00:04:28,630 --> 00:04:33,580 and we'll be back after the show to discuss what 70 00:04:33,850 --> 00:04:38,260 we uncovered in this session. Here's the session. Enjoy it. 71 00:04:43,150 --> 00:04:48,040 I want you to think for a minute about how influence and 72 00:04:48,040 --> 00:04:51,220 persuasion can help you with all the different aspects of your business. 73 00:04:51,220 --> 00:04:55,270 Those of you who have seen Vistage speakers a lot know that this is the 74 00:04:55,870 --> 00:05:00,760 Vistage Wheel of business or Wheel of Life, or whatever they call it, right? 75 00:05:00,770 --> 00:05:02,980 They've never seen this. I never show this. You never show this, okay? 76 00:05:02,980 --> 00:05:06,490 I'm the only speaker in Vistage that does what they tell you to do. Anyhow, 77 00:05:06,880 --> 00:05:08,470 all of these different areas, 78 00:05:08,470 --> 00:05:11,260 Vistage makes us put this slide up for everybody except for Harvey. 79 00:05:13,960 --> 00:05:17,560 So what we're going to talk about today will help you with hiring top talent, 80 00:05:17,570 --> 00:05:21,460 negotiating agreements, planning leadership succession, 81 00:05:21,460 --> 00:05:23,860 getting things done with your team, attracting new customers, 82 00:05:23,860 --> 00:05:28,450 deepening share of wallet, and increasing lifetime value. Now, 83 00:05:28,570 --> 00:05:31,720 here's what I'm going to put up. I do a lot of work. 84 00:05:31,720 --> 00:05:36,250 My team and I do a lot of work in helping companies prepare for the eventual 85 00:05:36,580 --> 00:05:38,890 sale. They exit, right? 86 00:05:39,250 --> 00:05:41,800 We do this from 15 years in advance all the way back. 87 00:05:42,160 --> 00:05:46,450 This is our checklist of drivers of enterprise value, alright? 88 00:05:47,350 --> 00:05:50,800 You can also consider this if you're going to sell your business a due diligence 89 00:05:50,800 --> 00:05:51,633 checklist. 90 00:05:52,000 --> 00:05:55,930 What I want you to do while we're looking at this checklist is I want you to 91 00:05:55,940 --> 00:06:00,860 pick one of the items on here and have someone in mind that you 92 00:06:00,860 --> 00:06:03,890 can persuade or influence along this chart, 93 00:06:04,040 --> 00:06:07,400 and we're going to use that avatar through the rest of our presentation today. 94 00:06:07,850 --> 00:06:12,230 So I'm asking you to pick one person in mind along the lines of one of these key 95 00:06:12,230 --> 00:06:16,880 drivers so that you can have somebody in mind to use the system that I'm going 96 00:06:16,880 --> 00:06:17,630 to share with you. 97 00:06:17,630 --> 00:06:20,570 So I'm going to teach you a system to persuade and influence people, 98 00:06:20,570 --> 00:06:24,830 but pick one person that will help you with one of these things. So for example, 99 00:06:25,370 --> 00:06:28,790 increasing and improving your revenue streams, right? 100 00:06:29,390 --> 00:06:31,670 If you only have one type of revenue in your business, 101 00:06:32,090 --> 00:06:35,600 maybe you want to acquire another business that can help you provide an 102 00:06:35,600 --> 00:06:36,770 additional revenue stream, 103 00:06:36,780 --> 00:06:40,440 that's the person that you'll want to persuade or influence leadership 104 00:06:40,440 --> 00:06:42,020 development or management retention. 105 00:06:42,030 --> 00:06:46,850 Maybe there's somebody that you want to persuade to stay with you for the long 106 00:06:46,860 --> 00:06:51,290 term. Maybe it's your successor operations, 107 00:06:51,290 --> 00:06:52,500 standard operating procedures. 108 00:06:52,500 --> 00:06:56,000 Maybe you need to persuade a member of your team to create SOPs, 109 00:06:56,810 --> 00:06:59,090 human resources, standard operating procedures. 110 00:06:59,090 --> 00:07:03,740 Maybe you need to implement a new policy and you need to persuade everyone to 111 00:07:03,740 --> 00:07:07,310 adopt that policy, reducing legal exposure, 112 00:07:07,310 --> 00:07:11,630 increasing brand reputation, sales and marketing systems and support. 113 00:07:11,630 --> 00:07:15,530 Maybe you need to improve your sales in a specific area, 114 00:07:15,830 --> 00:07:19,430 want to attract a new type of client into your business, 115 00:07:19,610 --> 00:07:22,370 and you need to influence a group of people to do that. 116 00:07:24,110 --> 00:07:27,230 Improving market industry or supplier conditions, 117 00:07:27,230 --> 00:07:30,920 financial conditions and reporting and cybersecurity risk and information 118 00:07:30,920 --> 00:07:34,430 technologies. Maybe you have a cyber policy you need to implement, 119 00:07:34,640 --> 00:07:39,530 and you need every user to adapt that cyber policy and you need 120 00:07:39,530 --> 00:07:41,090 to influence them to do that. 121 00:07:41,480 --> 00:07:44,720 This is a checklist if you want to improve the value, 122 00:07:44,750 --> 00:07:46,400 the overall value of your business, 123 00:07:46,400 --> 00:07:50,180 all of these things are areas that are key drivers of value. 124 00:07:50,180 --> 00:07:52,460 All of these things have people involved in them. 125 00:07:52,820 --> 00:07:57,380 So pick one person in one of these areas to influence, 126 00:07:57,380 --> 00:07:58,430 to connect with, 127 00:07:59,000 --> 00:08:03,560 to help you improve the overall value of your company. Okay? 128 00:08:03,740 --> 00:08:07,190 Does that make sense? I don't want to see that. You want to see it for longer? 129 00:08:07,490 --> 00:08:12,320 Keep it up there. There you go. Okay. While you're looking at this, 130 00:08:12,380 --> 00:08:17,090 I want to highlight revenue streams and diversity and quality. Harvey, 131 00:08:17,100 --> 00:08:19,490 do you mind if I use that flip chart? Can I use that book chart real quick? No. 132 00:08:19,580 --> 00:08:22,130 Okay. Take it over you. No, no. We'll bring it over. 133 00:08:23,300 --> 00:08:25,100 Here's no camera on me or anything, right? So 134 00:08:26,840 --> 00:08:30,920 there's four types of revenue in any business, right? First type, 135 00:08:31,790 --> 00:08:36,080 I call it ad hoc, right? 136 00:08:36,080 --> 00:08:40,820 Ad hoc revenue is you go out, you find a client, you do the work for the client, 137 00:08:41,540 --> 00:08:44,000 client goes away. You go out and find another client. 138 00:08:44,330 --> 00:08:45,590 We're all familiar with this, right? 139 00:08:45,830 --> 00:08:48,380 This is what we all chase all the time for and over again. 140 00:08:49,670 --> 00:08:52,070 The second type of revenue in your business 141 00:08:54,860 --> 00:08:59,010 is revenue, right? Revenue. Revenue. 142 00:08:59,160 --> 00:09:02,610 That's repeat revenue. I love doing that. Nobody laughs with me. 143 00:09:02,880 --> 00:09:04,500 Repeat revenue is, 144 00:09:08,360 --> 00:09:09,750 yeah, took me a minute. 145 00:09:10,380 --> 00:09:14,670 So repeat revenue is same client, different work, 146 00:09:14,670 --> 00:09:19,470 different product line. It requires an investment of trust, 147 00:09:19,470 --> 00:09:23,400 but not the same investment of trust as acquiring the initial client in the 148 00:09:23,400 --> 00:09:26,280 first place. Think about that ad hoc revenue. 149 00:09:26,700 --> 00:09:31,110 Got to invest a lot of trust or somebody who has to invest a lot of trust before 150 00:09:31,110 --> 00:09:34,050 they do business with you. Repeat revenue. They trust you. 151 00:09:34,050 --> 00:09:35,460 They've seen you do this one thing. 152 00:09:37,170 --> 00:09:39,990 Now they got to trust you to do the second right. 153 00:09:40,530 --> 00:09:42,180 The third type of revenue 154 00:09:47,040 --> 00:09:51,030 Is recurring revenue. Same client, same work, 155 00:09:51,840 --> 00:09:56,280 same thing over and over and over again. Manufacture widgets. It's widget, 156 00:09:56,280 --> 00:10:01,050 widget, widget, widget, widget. Not a lot of trust required. Thank you, Harvey. 157 00:10:01,440 --> 00:10:04,890 Not a lot of trust required because they've seen you do it. 158 00:10:04,950 --> 00:10:06,990 They know you can do it. You're competent at it. 159 00:10:07,200 --> 00:10:11,670 They believe in you and they believe that you can. And the final is, 160 00:10:12,180 --> 00:10:14,160 oops, passive, 161 00:10:18,360 --> 00:10:22,920 Right? You go passive. You go to a place and speak. 162 00:10:23,400 --> 00:10:27,810 You tell people what you do, you demonstrate your knowledge. 163 00:10:29,040 --> 00:10:32,310 People call you. They drop a bag of cash on your desk for your widgets. 164 00:10:32,580 --> 00:10:36,000 I trust you. You seem like the best widget manufacturer there is. 165 00:10:36,000 --> 00:10:38,250 I would consider that passive revenue. 166 00:10:38,520 --> 00:10:40,350 You have a strategic alliance partnership. 167 00:10:40,350 --> 00:10:42,120 Now I'm going to drive you nuts and I'm going to go back over there. 168 00:10:42,130 --> 00:10:46,830 Is that okay? Explain. Say the difference between repeat and recurring. Again, 169 00:10:47,190 --> 00:10:51,630 repeat, same client, different type of work, different revenue. 170 00:10:51,630 --> 00:10:55,140 So repeat is widgets and crankshafts. I've seen you do widgets. 171 00:10:55,530 --> 00:10:58,650 Now I need crankshafts. You go, I do crankshafts. And they're like, oh, 172 00:10:58,650 --> 00:11:02,070 we've been with our crankshaft guy for 30 years now we've got to trust you to do 173 00:11:02,070 --> 00:11:03,960 crankshafts. We'll give you a one. You do a great job. 174 00:11:03,960 --> 00:11:07,470 Now you're doing widgets and crankshafts recurring is widget, widget, widget, 175 00:11:07,470 --> 00:11:10,950 widget, widget. I've seen you do widgets. I trust you. You can do widgets. 176 00:11:12,900 --> 00:11:17,400 Could be for different, I would say recurring revenue. For our purposes, 177 00:11:17,400 --> 00:11:21,960 recurring revenue is same. I'm talking about investment of trust, same client, 178 00:11:22,050 --> 00:11:23,970 same product or service, 179 00:11:24,150 --> 00:11:27,870 because the investment of trust is not necessary because they already trust you. 180 00:11:27,870 --> 00:11:32,520 They don't have to make an additional investment of trust and then passive 181 00:11:32,520 --> 00:11:34,860 revenue. Think about a strategic alliance partnership. 182 00:11:35,400 --> 00:11:37,680 You and I are strategic alliance partners, 183 00:11:38,460 --> 00:11:42,990 and I say to you, okay, I made the widgets. 184 00:11:42,990 --> 00:11:46,050 Now you make the widget add-ons. I'm going to send them over to you. 185 00:11:46,440 --> 00:11:48,600 Customer may not even know I'm sending them over to you. 186 00:11:48,600 --> 00:11:51,030 That's passive revenue for you because every widget I make, 187 00:11:51,030 --> 00:11:52,440 I need you to do the widget add-on. 188 00:11:54,220 --> 00:11:58,750 What we focus on most in our world is this ad hoc, 189 00:12:00,490 --> 00:12:05,350 and we don't spend a lot of time focused. We don't spend a lot of 190 00:12:05,360 --> 00:12:06,910 time focusing on these. 191 00:12:08,050 --> 00:12:12,910 But what I'm going to talk about today and what adds the most value 192 00:12:12,910 --> 00:12:17,680 to your business from a revenue stream standpoint are these three 193 00:12:17,680 --> 00:12:20,110 things, repeat, recurring and passive. 194 00:12:21,100 --> 00:12:25,660 And the reason that that's so important is because in some 195 00:12:25,660 --> 00:12:28,750 ways, in a lot of ways, these three are predictable, 196 00:12:29,470 --> 00:12:32,380 especially recurring revenue or passive revenue. 197 00:12:32,380 --> 00:12:35,500 If you have a strategic alliance with somebody or you're the bolt-on 198 00:12:35,500 --> 00:12:38,680 manufacturer for the thing that bolts on the widgets, 199 00:12:39,160 --> 00:12:43,120 that revenue is predictable. And when somebody's going to buy your business, 200 00:12:43,120 --> 00:12:44,260 when there's an exit, 201 00:12:44,800 --> 00:12:47,890 everybody wants to know how much they're going to make in the future. 202 00:12:48,760 --> 00:12:53,230 I call these three types of revenue, repeat, recurring and passive. 203 00:12:53,230 --> 00:12:58,150 I call that relationship revenue because those three types of revenue 204 00:12:58,960 --> 00:13:03,730 can be acquired into your business through 205 00:13:03,730 --> 00:13:04,840 relationships. 206 00:13:08,020 --> 00:13:10,960 Repeat is the relationship with the customer, with a client. 207 00:13:11,440 --> 00:13:14,320 Recurring is a relationship with the customer and the client, 208 00:13:15,100 --> 00:13:17,560 and also making sure that everybody in the industry knows. 209 00:13:17,570 --> 00:13:21,880 So you have to have a relationship with people who are influential in the 210 00:13:21,890 --> 00:13:24,940 industry. And then passive is strategic alliance relationships. 211 00:13:24,940 --> 00:13:26,410 So you can engineer these in your business. 212 00:13:26,410 --> 00:13:30,010 So as you look at these drivers of enterprise value, 213 00:13:30,730 --> 00:13:34,480 and when you heard me talk about these three as relationship revenue, 214 00:13:34,870 --> 00:13:39,400 think about the relationships in your business and who 215 00:13:39,760 --> 00:13:44,740 maybe the correct word is whom you need to influence and have that avatar in 216 00:13:44,740 --> 00:13:47,770 your mind as we walk through our time together today. Okay? 217 00:13:52,270 --> 00:13:54,040 So while you're thinking of your avatar, 218 00:13:55,030 --> 00:13:59,380 these are some ground rules for the presentation. First and foremost, 219 00:13:59,470 --> 00:14:03,580 I'm not telling you what to do and it's important that I say that, right? 220 00:14:04,000 --> 00:14:07,420 I'm just giving you what I've experienced that works. 221 00:14:07,930 --> 00:14:11,260 And my hope is that you take away one thing from our time together. 222 00:14:12,190 --> 00:14:16,540 So if you hear something that doesn't fit with your business, 223 00:14:16,540 --> 00:14:19,480 it doesn't fit with your personality or that you disagree with, 224 00:14:20,050 --> 00:14:23,830 I want you to treat it like a buffet. Take what you like and leave the rest. 225 00:14:24,340 --> 00:14:24,910 Okay? 226 00:14:24,910 --> 00:14:28,990 So just get one thing that you can use that can add more value to your business 227 00:14:28,990 --> 00:14:30,430 or make your life a little bit easier. 228 00:14:31,390 --> 00:14:35,140 This relationship operating system is going to give you options. 229 00:14:35,950 --> 00:14:36,783 Basically. 230 00:14:37,630 --> 00:14:41,680 One of the things I like to talk about with entrepreneurs, 231 00:14:41,680 --> 00:14:44,290 and Pete and I got into it, and it was Pete's doing, 232 00:14:44,290 --> 00:14:47,530 it wasn't mine. Within the first five minutes of our conversation is the first 233 00:14:47,530 --> 00:14:48,970 question I usually ask an entrepreneur is How 234 00:14:51,050 --> 00:14:53,600 be the end of your business? 235 00:14:54,170 --> 00:14:58,790 And my whole goal as a consultant these days in working with entrepreneurs 236 00:14:58,850 --> 00:15:01,610 and business owners, particularly mid-market business owners, 237 00:15:01,850 --> 00:15:06,200 is to make sure they have options when they're ready to exit. Right? Harvey, 238 00:15:06,210 --> 00:15:09,710 there's nothing worse than having to exit without options because if you have to 239 00:15:09,710 --> 00:15:12,080 exit without options, it drives the valuation way down. 240 00:15:12,740 --> 00:15:17,240 So this relationship operating system hopefully will give you options for when 241 00:15:17,240 --> 00:15:21,230 you have to exit or when you have to hire somebody from your management team all 242 00:15:21,230 --> 00:15:24,320 the way through that list of value drivers. 243 00:15:24,530 --> 00:15:29,000 This system is going to give you options all along the way. And then finally, 244 00:15:29,000 --> 00:15:31,340 the reason why you should consider what we're talking about today and 245 00:15:31,340 --> 00:15:36,230 implementing at least one thing is because my whole philosophy is that we 246 00:15:36,230 --> 00:15:40,010 put relationships first and putting relationships first. It just feels good. 247 00:15:40,250 --> 00:15:42,980 It feels like it's the right thing to do because it is the right thing to do. 248 00:15:43,370 --> 00:15:44,930 It's how we were all brought up. 249 00:15:49,160 --> 00:15:53,780 So what do people miss about relationships and particularly 250 00:15:53,780 --> 00:15:58,190 influence? We only influence people we care about. 251 00:15:59,240 --> 00:16:03,620 Think about this. We can only influence people we care about. 252 00:16:04,580 --> 00:16:05,360 Now, 253 00:16:05,360 --> 00:16:09,590 immediately your mind's probably went to a situation where you thought to 254 00:16:09,590 --> 00:16:10,400 yourself, well, 255 00:16:10,400 --> 00:16:15,320 somebody who stole from me or somebody who manipulated me in 256 00:16:15,330 --> 00:16:18,890 some way, exercised some influence over me, 257 00:16:18,950 --> 00:16:23,360 and I know that person didn't care about me because they took something from me, 258 00:16:23,360 --> 00:16:28,100 or they did something that was unethical. I want to point to number three here. 259 00:16:28,370 --> 00:16:30,740 When you think about that, in my world, 260 00:16:30,980 --> 00:16:35,960 influence is I'm helping you see something that's good for you and 261 00:16:35,960 --> 00:16:40,760 good for me. Manipulation is when it's only good for me. 262 00:16:42,230 --> 00:16:46,010 So I don't want you to think of influence as a dirty word. 263 00:16:46,340 --> 00:16:50,540 I want you to think of it as getting people to eat their peas and carrots, 264 00:16:50,570 --> 00:16:52,400 getting people to do what's good for them. 265 00:16:54,020 --> 00:16:56,780 A strong relationship makes everything easier. 266 00:16:58,010 --> 00:16:59,690 From the context of an exit strategy, 267 00:16:59,690 --> 00:17:03,530 a strong relationship with a person who's going to potentially buy your business 268 00:17:03,530 --> 00:17:07,700 someday, maybe it's a competitor, makes it easier when you're ready to exit. 269 00:17:07,910 --> 00:17:11,150 Strong relationship with the number two in your business makes management 270 00:17:11,150 --> 00:17:12,560 succession easier. 271 00:17:12,890 --> 00:17:16,400 A strong relationship with a prospective client makes doing business with them 272 00:17:16,430 --> 00:17:20,480 easier down the road. So we're going to talk about how to make your life easier. 273 00:17:21,110 --> 00:17:23,720 And then finally, and this is the key point. 274 00:17:25,010 --> 00:17:29,690 This is receiver based. We don't sell stuff to people. 275 00:17:29,810 --> 00:17:33,680 We don't sell our ideas to people. We don't sell widgets to people. 276 00:17:33,680 --> 00:17:37,760 People buy stuff from us. People buy into our ideas. 277 00:17:38,000 --> 00:17:39,770 They buy into you as a leader. 278 00:17:39,770 --> 00:17:42,800 Your people in your business buy into you as a leader. 279 00:17:43,400 --> 00:17:48,290 So influence is about helping them see that you're a person of 280 00:17:48,290 --> 00:17:51,720 goodwill, helping them see that you want to help them, 281 00:17:51,720 --> 00:17:54,750 helping them see that you want what's best for their future, 282 00:17:54,750 --> 00:17:57,690 helping them see that you have a vision that they don't have, 283 00:17:58,380 --> 00:17:59,640 and you're going to help them get there. 284 00:18:02,880 --> 00:18:05,160 So here's your relationship operating system. 285 00:18:05,160 --> 00:18:07,260 This is what I'm going to show you today, okay? 286 00:18:07,620 --> 00:18:10,980 Harvey and I had a conversation last night briefly about e o s, 287 00:18:11,250 --> 00:18:12,960 the entrepreneurs operating system, 288 00:18:12,960 --> 00:18:17,880 that dashboard with all the key performance indicators and drivers and stuff 289 00:18:17,880 --> 00:18:20,880 like that. This is your relationship operating system. 290 00:18:20,880 --> 00:18:24,990 This is the counterpart to that. So 291 00:18:26,760 --> 00:18:31,500 the best way for us to get what we want is by giving people or 292 00:18:31,500 --> 00:18:35,730 helping them get what they want. Here's a little pie chart I put up. 293 00:18:36,300 --> 00:18:39,870 Very unscientific for those of you for engineering types, 294 00:18:43,170 --> 00:18:44,400 if you want to help people, 295 00:18:45,240 --> 00:18:48,780 you have to understand that when we're going to influence them, 296 00:18:49,500 --> 00:18:54,420 there's a portion of what we try to accomplish by 297 00:18:54,420 --> 00:18:59,070 helping them get what they want by focusing on how they 298 00:18:59,070 --> 00:19:00,990 get it, by how we help them get it. 299 00:19:00,990 --> 00:19:03,600 And then there's the overall relationship experience. 300 00:19:05,160 --> 00:19:06,060 As a consultant, 301 00:19:06,060 --> 00:19:09,750 and I was a consultant with the Gallup organization for a number of years, 302 00:19:10,350 --> 00:19:12,870 we're really focused on our methodology all the time. 303 00:19:13,290 --> 00:19:15,510 We fall in love with our methodology. In fact, 304 00:19:16,090 --> 00:19:19,500 we claim that our methodology is a key differentiating factor. 305 00:19:20,100 --> 00:19:22,320 We'd love to talk to our clients about our methodology. 306 00:19:22,620 --> 00:19:25,830 We love to talk to clients about the results they're going to get and the 307 00:19:25,830 --> 00:19:28,770 results that they're going to get are important because we'd be out of business 308 00:19:28,770 --> 00:19:30,300 if we didn't deliver the results. 309 00:19:30,840 --> 00:19:35,100 But if you look at what really matters to clients and 310 00:19:35,100 --> 00:19:39,450 customers, what they're going to get, what they think they want, 311 00:19:39,600 --> 00:19:43,650 that's important. But as a differentiating factor for all of us, 312 00:19:44,550 --> 00:19:47,670 everybody, if they're in business and they stay in business, 313 00:19:47,670 --> 00:19:50,070 can deliver on the value proposition. 314 00:19:50,070 --> 00:19:53,040 Everybody can deliver what people want. 315 00:19:53,730 --> 00:19:56,250 If your competitors couldn't get the results, 316 00:19:56,340 --> 00:20:01,230 they wouldn't be in business anymore. Methodology, as much as we love it, 317 00:20:02,280 --> 00:20:03,930 we've got the best mouse trap, 318 00:20:04,770 --> 00:20:08,670 very small share of mind with the people you're trying to influence if they're 319 00:20:08,670 --> 00:20:09,660 your customers. 320 00:20:10,680 --> 00:20:14,610 But the relationship experience is pretty much everything. 321 00:20:15,720 --> 00:20:18,330 So the way people feel, 322 00:20:18,870 --> 00:20:22,650 the way you make them feel when you're trying to influence them, 323 00:20:22,890 --> 00:20:26,280 it means everything. So you've got your avatar in mind, 324 00:20:26,280 --> 00:20:28,050 the person you want to influence and persuade. 325 00:20:28,060 --> 00:20:30,030 Maybe it's somebody you want to buy your business. 326 00:20:30,040 --> 00:20:33,570 Maybe it's a key management team member, right? 327 00:20:34,680 --> 00:20:37,560 Start thinking about it using this context. 328 00:20:38,010 --> 00:20:41,640 So that key management team member person, who's going to be your successor, 329 00:20:42,090 --> 00:20:44,670 what do they want? Well, they want to be the successor, okay? 330 00:20:44,880 --> 00:20:46,770 What's going to influence them to be the successor? 331 00:20:46,770 --> 00:20:49,720 Just making them the successor. Is that going to be enough? Well, 332 00:20:49,720 --> 00:20:52,750 over the next five years, if you want to exit in five years, 333 00:20:52,750 --> 00:20:57,280 no. The experience you provide them and helping them get ready 334 00:20:57,760 --> 00:21:02,050 is what's going to influence them as to whether they want to take over or not. 335 00:21:02,350 --> 00:21:04,180 The person who's going to buy your company. 336 00:21:04,900 --> 00:21:08,920 If you're targeting a strategic acquisition so that you have the most options, 337 00:21:08,920 --> 00:21:10,510 the person who's going to buy your company, 338 00:21:10,660 --> 00:21:12,370 the competitor that's going to buy your company, 339 00:21:12,670 --> 00:21:15,640 or the supplier that's going to buy your company so that they can vertically 340 00:21:15,650 --> 00:21:18,970 integrate the experience they have in working with you, 341 00:21:19,000 --> 00:21:22,690 you should consider yourself being evaluated the whole time. 342 00:21:22,690 --> 00:21:24,880 And what is the experience you're providing? 343 00:21:25,240 --> 00:21:27,700 The person want to influence? 344 00:21:29,050 --> 00:21:30,610 You want to introduce a new product. 345 00:21:31,150 --> 00:21:35,200 The experience that they've had in working with you over time is going to 346 00:21:35,200 --> 00:21:39,610 influence how receptive they are to adopting the new product. 347 00:21:39,700 --> 00:21:43,450 I get that. So in sales, it does. When it comes to your management team, 348 00:21:43,720 --> 00:21:44,980 it absolutely does. Sure. 349 00:21:45,220 --> 00:21:48,250 But for acquiring brand new clients who never bought food, 350 00:21:49,060 --> 00:21:51,220 you say it applies the same proportions here, 351 00:21:51,880 --> 00:21:56,830 I would say you can use it as a competitive advantage to if you decided to, 352 00:21:56,830 --> 00:21:59,440 you could use it as a competitive advantage. And here's how, 353 00:22:00,880 --> 00:22:03,040 and Vistage is a perfect example of this, 354 00:22:03,040 --> 00:22:05,590 but I can give you other examples from businesses. 355 00:22:05,590 --> 00:22:09,640 So Harvey goes out and he interviews prospective members, 356 00:22:09,940 --> 00:22:14,020 and he thinks a prospective member is going to be a really good fit for the 357 00:22:14,020 --> 00:22:14,853 group. 358 00:22:16,090 --> 00:22:19,900 What's the best way for him to put that perspective member over the top, 359 00:22:20,350 --> 00:22:23,620 to invite that person to participate in a meeting, 360 00:22:23,740 --> 00:22:27,280 to talk to all of you and see the value that you've gotten from Vistage. 361 00:22:27,280 --> 00:22:29,830 So for the brand new client, 362 00:22:30,100 --> 00:22:35,020 to immerse them in the experience is an accelerant to the sale 363 00:22:35,020 --> 00:22:38,590 because it deepens the relationship. Now, if your question is, 364 00:22:38,620 --> 00:22:41,710 is it a hundred percent necessary? I would say no. 365 00:22:41,710 --> 00:22:43,780 It's not a hundred percent necessary. 366 00:22:44,230 --> 00:22:47,500 But if you want to accelerate the process with a new client, 367 00:22:47,650 --> 00:22:50,890 I think you can use the experience by immersing them in it. 368 00:22:51,960 --> 00:22:56,920 There's an old school clothes that people used to use 369 00:22:56,980 --> 00:22:59,770 all the time. Some people still use it called the puppy dog. 370 00:22:59,770 --> 00:23:02,020 Are you guys familiar with this? Have you ever heard of this? 371 00:23:02,680 --> 00:23:04,660 So you probably know about this. 372 00:23:05,470 --> 00:23:09,190 You go to the pet store or the Humane Society and you want to adopt a dog, 373 00:23:10,390 --> 00:23:11,710 but you're not sure. 374 00:23:11,710 --> 00:23:14,770 You don't know if you can handle the dog running around your house. 375 00:23:14,770 --> 00:23:17,530 What do they do? They give you the dog and they go take it home for the weekend. 376 00:23:18,610 --> 00:23:21,940 So you take the dog home for the weekend, right? Dog craps all over your house, 377 00:23:21,940 --> 00:23:25,000 but you fall in love with it. And what happens? You don't give the dog back. 378 00:23:25,000 --> 00:23:28,750 You keep the dog. Even the fostering foster program, right? 379 00:23:28,990 --> 00:23:30,490 It's called the puppy dog clothes. 380 00:23:30,550 --> 00:23:34,000 And smart car dealerships will do this too. 381 00:23:34,840 --> 00:23:38,800 You take a test drive and you say, I love this car. 382 00:23:39,040 --> 00:23:40,000 I really want this car, 383 00:23:40,000 --> 00:23:44,110 but I'm just not sure that my spouse is going to be into it. 384 00:23:44,990 --> 00:23:48,500 So you want to use the experience to accelerate the sale. What do you do? 385 00:23:48,980 --> 00:23:50,300 Here's the keys. Bring it back on Monday. 386 00:23:51,890 --> 00:23:53,750 So then you give the keys to your wife, 387 00:23:53,750 --> 00:23:57,140 and she realizes you pull up in this huge suburban, by the way, 388 00:23:57,260 --> 00:23:58,550 actually happened to me. 389 00:23:58,730 --> 00:24:02,120 You pull up in this huge suburban and your wife comes out, she's like, 390 00:24:02,720 --> 00:24:05,540 you bought this thing. I didn't even test drive it. Look how huge this is, 391 00:24:05,690 --> 00:24:08,030 is a tank. I can't believe it. No, no, no, no, 392 00:24:08,030 --> 00:24:11,150 no. We get to drive it for the weekend, but it's going back on Monday, right? 393 00:24:11,180 --> 00:24:15,890 Okay, you take it out, go take the kids to the beach, go shopping, whatever. 394 00:24:16,610 --> 00:24:20,330 Next thing takes the kids to the beach. Wow, all this stuff fits in the car, 395 00:24:20,330 --> 00:24:25,310 right? Goes food shopping. Wow, I don't have to bend over in the backseat. 396 00:24:25,310 --> 00:24:27,740 The deck is right here. I can put the stuff in, right? 397 00:24:27,890 --> 00:24:30,860 Takes the dogs to the park. The dogs come back from the park all wet. 398 00:24:30,860 --> 00:24:34,670 They shake off inside the car, doesn't get the seats wet, right? Opens the back, 399 00:24:34,670 --> 00:24:38,630 it's inside. She comes in, does it come in blue? 400 00:24:39,620 --> 00:24:42,380 That's it. Sold. Didn't want to drive the tank. Now, by the way, 401 00:24:42,380 --> 00:24:45,200 she maneuvers that thing like she's a truck driver. She's fantastic. 402 00:24:45,380 --> 00:24:46,520 She drives it better than I do, 403 00:24:46,520 --> 00:24:50,840 but that's how the experience can accelerate the sale. So 404 00:24:50,840 --> 00:24:54,200 anytime you can engineer an experience, 405 00:24:54,210 --> 00:24:58,520 a really good experience into the process, you can use it for sales purposes, 406 00:24:58,700 --> 00:25:03,290 for sure. Okay, so remember the word of caution, right? 407 00:25:03,290 --> 00:25:05,900 The differentiating factor is how all these things will work together. 408 00:25:05,900 --> 00:25:10,310 So here's how you influence the experience. You first have to demonstrate, 409 00:25:10,400 --> 00:25:11,480 and that's a key word, 410 00:25:11,990 --> 00:25:15,770 demonstrate to the person you're looking to influence, 411 00:25:16,160 --> 00:25:19,790 that you are a person of integrity. After that, 412 00:25:20,150 --> 00:25:22,280 you have to show them that you are competent. 413 00:25:23,120 --> 00:25:27,680 So if you're looking to persuade or convince a client to do business with you, 414 00:25:27,950 --> 00:25:32,840 you have to show that you're competent at performing the task you're 415 00:25:32,850 --> 00:25:33,800 supposed to perform. 416 00:25:34,190 --> 00:25:38,030 If you're looking to persuade a management team member that they could be your 417 00:25:38,030 --> 00:25:41,120 successor, you have to demonstrate that you're competent to train them. 418 00:25:43,730 --> 00:25:45,890 The next level in the hierarchy is empathy. 419 00:25:47,300 --> 00:25:51,710 And empathy is critical because you have to understand what their 420 00:25:51,710 --> 00:25:56,330 reasons are for wanting to do what you want them to do, 421 00:25:56,720 --> 00:26:01,010 for what their reasons would be if they understood what you want them to do. 422 00:26:01,430 --> 00:26:05,060 So empathy is the gateway to sharing your vision with them. 423 00:26:06,200 --> 00:26:07,790 So you're looking to influence somebody, 424 00:26:07,910 --> 00:26:11,450 and you have a vision for their future that they just don't see. 425 00:26:12,350 --> 00:26:14,390 And you guys are CEOs, 426 00:26:14,690 --> 00:26:18,230 so you probably have a pretty good vision of the future for a lot of things. 427 00:26:18,440 --> 00:26:20,090 If you want to accelerate the relationship, 428 00:26:20,690 --> 00:26:24,980 you can make them feel like they're part of a community. Community, 429 00:26:24,980 --> 00:26:27,770 could be their work group, be your leadership team. 430 00:26:28,130 --> 00:26:30,740 It could be an industry association, 431 00:26:31,400 --> 00:26:36,140 but their feeling of belonging because achieved the level of status, 432 00:26:36,150 --> 00:26:38,990 and they're now part of a community. It's critical. 433 00:26:39,500 --> 00:26:44,430 And what this all leads to in the end is professional intimacy. 434 00:26:46,620 --> 00:26:50,130 And what that means simply is the person you're looking to persuade. 435 00:26:50,610 --> 00:26:53,250 They don't make a move without checking with you, 436 00:26:54,150 --> 00:26:57,570 or they don't make a move without using your company's product or service, 437 00:26:58,050 --> 00:27:02,610 or they feel so close and so comfortable with you 438 00:27:03,270 --> 00:27:08,130 that they consult with you before they do things that are critical 439 00:27:08,130 --> 00:27:12,810 or important to them. And again, Vistage is a great analogy for this. 440 00:27:13,690 --> 00:27:16,980 Think about how you rely on Harvey, right? 441 00:27:16,980 --> 00:27:20,490 If you've got decisions in your business that you're going to make Harvey's done 442 00:27:20,490 --> 00:27:23,730 all of these things, these things, probably without even knowing it, 443 00:27:23,730 --> 00:27:28,500 he's built on this foundation to a point where hopefully you guys are 444 00:27:28,500 --> 00:27:31,590 willing to consult with him before you make critical moves in your business. 445 00:27:32,430 --> 00:27:36,300 Does that make sense? Okay. We're going to look at each of these levels now, 446 00:27:36,360 --> 00:27:41,310 and I'm going to show you ways that you can demonstrate these 447 00:27:41,310 --> 00:27:43,500 core values. Again, 448 00:27:44,970 --> 00:27:48,420 you wouldn't be in this room if you weren't people of integrity and competence. 449 00:27:48,900 --> 00:27:53,700 So I don't want you to think of this as just having these qualities 450 00:27:54,360 --> 00:27:58,740 you have to demonstrate to the person you're looking to 451 00:27:58,740 --> 00:28:02,520 influence. You have to demonstrate these qualities to them, 452 00:28:03,120 --> 00:28:07,800 or you're not going to be able to influence them. Good or good? Good. All right, 453 00:28:07,810 --> 00:28:12,300 here we go. That was my little Pacman graph. 454 00:28:12,990 --> 00:28:13,823 Alright, 455 00:28:18,480 --> 00:28:21,060 so here's how this breaks down, 456 00:28:21,390 --> 00:28:23,550 and here's how we're going to chunk these up. 457 00:28:25,800 --> 00:28:29,670 The first two levels, competence and integrity. 458 00:28:32,520 --> 00:28:36,330 They demonstrate authority, believability, and credibility. 459 00:28:37,500 --> 00:28:40,830 Okay? So if you want to influence someone, 460 00:28:41,460 --> 00:28:44,370 you have to show that you're an authority in the area. 461 00:28:45,390 --> 00:28:50,250 You have to demonstrate that they should believe you and that you're someone who 462 00:28:50,250 --> 00:28:53,340 could be trusted in this specific area. 463 00:28:54,300 --> 00:28:57,150 Once you've overcome that hurdle, 464 00:28:57,150 --> 00:28:59,550 once you've built on that foundation, 465 00:29:00,330 --> 00:29:02,220 then they invest their confidence in you. 466 00:29:02,370 --> 00:29:05,700 That's when they have personal confidence that, Hey, 467 00:29:05,700 --> 00:29:09,150 Peter has my best interests at heart. He understands me. 468 00:29:09,300 --> 00:29:11,460 He sees what my future should look like. 469 00:29:11,670 --> 00:29:13,830 So once you've built on this foundation, 470 00:29:13,830 --> 00:29:16,890 that's when they'll invest their competence in you. 471 00:29:17,640 --> 00:29:18,840 And at this point, 472 00:29:20,640 --> 00:29:24,060 you can feel pretty good that you can influence them and you can persuade them 473 00:29:24,070 --> 00:29:27,420 if they buy into the vision you have for their future. However, 474 00:29:27,450 --> 00:29:29,880 to take the relationship to the next level. 475 00:29:31,170 --> 00:29:34,680 If you can make 'em feel like they're part of something bigger than themselves 476 00:29:35,520 --> 00:29:36,600 in a community, 477 00:29:36,660 --> 00:29:41,500 or you can deepen that relationship to the point where they have so much 478 00:29:41,500 --> 00:29:42,333 trust, 479 00:29:43,000 --> 00:29:47,890 so much confidence in you that they call you before they make any move, 480 00:29:48,520 --> 00:29:51,040 that's when you really have relationship clarity. 481 00:29:51,820 --> 00:29:56,560 And there are clients that we have who exit their businesses 482 00:29:57,130 --> 00:30:01,540 and the person they sell their business to five years later still calling them 483 00:30:01,900 --> 00:30:04,630 and saying, Hey, I'm going to do this. Can I bounce an idea off of you? Hey, 484 00:30:04,630 --> 00:30:06,790 can we go to lunch? I want to bounce an idea off of you. 485 00:30:07,180 --> 00:30:08,200 Think about that for a minute. 486 00:30:08,590 --> 00:30:12,760 What a great potential relationship that could be where they feel so good, 487 00:30:13,360 --> 00:30:16,570 so comfortable that they'll continue to call you. By the way, 488 00:30:16,570 --> 00:30:19,750 you can get a consulting fee for that. All right. 489 00:30:21,790 --> 00:30:25,660 Thanks for joining me for Inside The Boardroom with the c e O. 490 00:30:25,960 --> 00:30:28,840 As you can see, or maybe as you can hear, 491 00:30:29,170 --> 00:30:34,050 these folks were incredibly engaged and they are 492 00:30:34,960 --> 00:30:39,850 thinking about these things for the very first time. 493 00:30:40,630 --> 00:30:44,950 You have a great opportunity because you are 494 00:30:45,340 --> 00:30:46,630 meeting me here, 495 00:30:46,630 --> 00:30:51,430 and because you spend time with Nicola and me each day, 496 00:30:51,850 --> 00:30:54,730 you're already thinking about your exit, 497 00:30:54,850 --> 00:30:58,900 and now you've heard what other people who are in your place, 498 00:30:58,900 --> 00:31:02,110 the CEOs, the entrepreneurs are thinking. 499 00:31:02,530 --> 00:31:07,420 So I want you to take a look at the slide 500 00:31:07,420 --> 00:31:09,220 that accompanied this show. 501 00:31:09,460 --> 00:31:14,260 You'll see in the show notes that the slide with the hierarchy, 502 00:31:14,260 --> 00:31:18,610 the core value hierarchy, is the cover for this episode. 503 00:31:18,820 --> 00:31:21,910 I want you to take that slide, the pyramid, 504 00:31:22,990 --> 00:31:27,640 and look at each of the core values and think about who you need to 505 00:31:27,640 --> 00:31:32,410 influence using those core values in order to get the maximum 506 00:31:32,410 --> 00:31:37,150 value for your business. If you're not a c e o and you are not looking to 507 00:31:37,150 --> 00:31:39,760 sell a business, you can use this hierarchy, 508 00:31:39,770 --> 00:31:43,390 this pyramid to influence anyone in your business or in your life. 509 00:31:43,450 --> 00:31:47,770 But think about how you're going to demonstrate these core values to the people 510 00:31:47,770 --> 00:31:50,410 you're looking to persuade, you're looking to influence, 511 00:31:50,500 --> 00:31:55,030 and you can use it to help connect with people who can eventually buy your 512 00:31:55,030 --> 00:31:58,690 business and offer you the most options when you're ready for an exit. 513 00:31:59,320 --> 00:32:01,990 I'm Dave Lorenzo. This is the Saturday side Hustle. 514 00:32:01,990 --> 00:32:05,980 We'll see you back here again tomorrow for the Sunday Special. 515 00:32:06,730 --> 00:32:07,240 Take care.