How Do I Find Ways to Take Risks with My Small Business? (Podcast) | Ep. #055

Elizabeth Larkin, Michael Kelly, and Eric Dollinger

In episode #55, hosts Elizabeth Larkin and Gene Marks answer this question:

“I’m a very risk-averse person, but I know that in business being too unwilling to take chances is a bad thing. How do I find ways to make more low stakes risks?”

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Transcript

Elizabeth: Gene…

Gene: Elizabeth.

Elizabeth: Do you use Uber for your business?

Gene: I love Uber. I’m a huge fan of Uber, I use it for business and I use it personally. Why do you bring that up?

Elizabeth: Because I just had a terrible experience with them.

Gene: Okay.

Elizabeth: First of all, they’re in the news because they’re very controversial, like they’ve made a lot of bad business decisions recently and they haven’t really treated some of their employees very well, but this is very personal to me. I used Uber… I live in a big condo building in Hartford and we have an entrance to the building in the front, and then you can go around back, there’s a parking lot where all the residents park. So, the Uber driver dropped me off and then when I walked into the building, I was coming back from the airport, drove around to the back, parked next to a car. He was driving a black Toyota. He parked next to another black Toyota and his hubcap was broken on the back of his car, so he took the hubcap off of the car next to his…

Gene: Whoa, and put it on his car?

Elizabeth: And switched them.

Gene: Okay.

Elizabeth: We got the whole thing on security, like my building’s security video. The whole thing is on video. So, we contacted Uber and they’ve done nothing.

Gene: How do you know they’ve done nothing?

Elizabeth: Because I’m the one contacting them.

Gene: Yeah, but how do you know they haven’t fired the guy?

Elizabeth: Well, because they repeatedly say, “I need to pass this link onto… ” First of all, you can’t make a complaint against Uber without signing up for an Uber account on their website.

Gene: Because you have to do it on their app probably, right?

Elizabeth: Yeah. So, you can’t just call them or email them and say, “Hey, this person committed a crime.” You have to sign up. So, I have to get the Hartford PD to sign up to make this complaint to Uber. It’s taken about a month and we still cannot get anyone from Uber to write us back on that.

Gene: Well putting aside Uber, first of all, you reported this to the police, I guess, right?

Elizabeth: Yeah, of course.

Gene: You have videos so let the police deal with it. Uber is… They have tens of thousands of drivers all around the world and they’re all… Most of them are contractors of the business.

Elizabeth: I just don’t think it’s right. What if it was something more serious and I have to log in and create an account or go to the police to get them to do anything?

Gene: That process sounds annoying, I agree.

Elizabeth: It’s very, very annoying. I’m all for these new companies that everything’s online, but I should at least be able to email you without having to… I’ve also heard another friend of mine was in an Uber and the driver was making her feel very uncomfortable, like he kept commenting on her looks and asking why she was traveling by herself, which any woman knows like…

Gene: Not great.

Elizabeth: You’re going to end up in a Law and Order episode if you stay in the car, so she got out and she had no way to contact Uber, because she didn’t have an account with them so she had to stand on the side of the road with her phone, create an account on their website to log in to then send an email, which they did email her back in about 20 minutes, but at that point she’s just standing on the side of the road.

Gene: They did email her back?

Elizabeth: They did email her back and they asked her to go over to this other Uber website called LERT, which is Law Enforcement something or other. She tried to create an account there, but you can only create an account if you’re actually law enforcement. It asks for where you work, like who your sergeant’s name is, all this stuff. So anyway, they need to make it easier to report these kind of things.

Gene: You know what it is? It’s not just Uber though. It really is a customer service issue that we all kind of face. I mean, look, in my business, we make mistakes all the time and we’re just a little piddly company. So, big companies, they make mistakes. The magnitude of that as well and you have to expect that that’s going to happen, nobody’s perfect. By the way, no offense on The Hartford, but the bigger the company that I work with the more screwed up they are internally. You know what I mean? I see that and just because there’s a lot of things that have to be managed, but they can all … Big companies can all be better customer service and Uber, I would consider to be way more than a startup.

Elizabeth: Well, I would say, if I were at a vendor and I’m an employee of a very large insurance company, if they sent me down to a vendor meeting and I was in the vendor’s office and I stole someone’s hubcap off of the car…

Gene: Yeah, that would be a problem.

Elizabeth: …and they contacted my boss, my boss would not tell them to go set up an account online to report this.

Gene: Good point. Good point.

Elizabeth: My boss… The Hartford would fire me.

Gene: Good point. Good point. Good point. Good point. Good point.

Elizabeth: That would never happen. So anyway…

Gene: So, are you gonna stop riding Uber?

Elizabeth: I did. I switched to Lyft.

Gene: Just because of that? Wow.

Elizabeth: Yeah.

Gene: Okay.

Elizabeth: Because I just…

Gene: I use Lyft and Uber interchangeably just depending on the availability of the cars.

Elizabeth: I like Lyft. I just felt like if it was something more serious that had happened and I had to get in touch with Uber, they don’t make it easy. So, as a woman who is traveling alone a lot, I just don’t feel comfortable with using them anymore.

Gene: I understand. The reason why I’m a fan of Uber is because for every one bad incident that you hear — and I am not in any way minimizing this incident — there’s thousands and thousands of great entrepreneurial business owners who are supplementing their incomes or making an income out of driving for Uber and the company’s provided them with the opportunity to do that.

Elizabeth: They could switch to Lyft.

Gene: Yeah, they could switch to Lyft, and Lyft does the same thing. I agree with you.

Elizabeth: I actually took Lyft a couple times this weekend and the first time my driver was a pilot, he was in the area trying to get his hours up, so he was flying and during his downtime he was driving Lyft.

Gene: Was he driving very fast? No?

Elizabeth: He didn’t stop at any stop signs or anything.

Gene: Right. That’s what I thought.

Elizabeth: He just went for it. So, if you’re an Uber fan, try Lyft, give Lyft a chance and the pricing is around the same. I don’t think there’s much of a difference.

Gene: Yeah, well, Lyft’s biggest difference is you can actually add a tip on at the end…

Elizabeth: Yeah, which is nice.

Gene: …whereas Uber, it’s all been included. Either here or there, again, it’s very, very difficult for a company of that size to control all of their people, but I do agree they should have a better process of reporting issues.

Elizabeth: I don’t expect them to be able to control their drivers, but if there is an issue with one of them, it shouldn’t be…

Gene: It’s kind of a better process.

Elizabeth: …that hard to get in touch…

Gene: I agree with you.

Elizabeth: …to get that resolved.

Gene: I agree with you.

Elizabeth: Okay. We’re going to be right back with our question this week, which is about taking risks with your small business.

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QUESTION: How do I Find Ways to Make More Low Stakes Risks?

Elizabeth: And we’re back with our question. Gene, I think you’re going to like this one because this is about taking risks with your business and I know you’re very risk-averse.

Gene: I don’t do any of that. Why would I possibly like this question? But go ahead.

Elizabeth: I think you’re going to like Isaac, so he is a microbrewer in Missouri.

Gene: Cool.

Elizabeth: His name is Isaac D.

Gene: Okay.

Elizabeth: So, Isaac writes,

“I’m a very risk-averse person, but I know that in business being too unwilling to take chances is a bad thing. How do I find ways to make more low stakes risks?”

Gene: Sure, sure.

Elizabeth: So, how do you do that?

Gene: Well, first of all, every business owner that I know, every client that I had is successful, that I’ve grown, that I’ve done well, they all take risks. It’s just nobody bets the farm. I just wrote about this just… There was the King Arthur movie that came out just a couple weeks ago?

Elizabeth: Okay.

Gene: It was a huge flop. I mean, they think that… I think it’s Warner Brothers who made it. They’re going to lose like $150 million.

Elizabeth: I didn’t even hear about that.

Gene: And by the way, it must be a great film. Whenever it was marketed bad, these guys… They make movies. Movies, they have bombs, they have successes, whatever. So, these are companies. Warner Brothers a company that’s been business for eight million years. They know the game. They’re not going to bet the farm on this one King…

Elizabeth: One movie.

Gene: …Arthur movie. They took a bath. It’s going to stink. They’re going to have to… Okay, whatever, but trust me, they will still make their billions of dollars this year because big companies always diversify themselves. They always know how much they… It’s kind of like when you go to a casino. I don’t know if you go to a casino or not, but you go and you say, “Okay, I’m gonna bring $100 with me and that’s how what I’m gonna gamble.”

Elizabeth: Yeah, I don’t bring my whole paycheck.

Gene: Right, you don’t bring your whole paycheck. You bring … This is what I’m going to gamble and I’m going to stop. If I make it to 150, I’ll walk away and buy everybody breakfast the next morning. You know what I mean?

Elizabeth: Yeah.

Gene: Or if I lose the 100, I lose the 100. So, Isaac, by all means, you have to take risk, because risks will give you rewards. It will help you grow your business. And just have a specific return on investments for your risk. You’re never going to eliminate it entirely, but Isaac’s in the business. He’s a microbrewery, so does he want to buy new piece of equipment for his place? Okay, well, if you’re going to make that investment, what’s the payback? How many more beers is that going to produce? How much more revenues is that going to generate? How sure is he of that? He’d never be 100% sure, but spreadsheet it out and say, “Well, if I spend $50,000 on this piece of equipment, I think over the next three to four years based on certain strong assumptions, I can make that money back and then some.”

Elizabeth: I love Excel spreadsheets.

Gene: Me too. I’m a big spreadsheet… It’s an accounting thing. It’s an Excel… That’s what I would recommend doing is that you don’t stop taking risks, but you take calculated risks and you do the math and you make sure you’re not betting the farm.

Elizabeth: So, can you give us an example of when you’ve taken a low-level risk for the Marks Group?

Gene: Oh yeah.

Gene: Oh, I’ve got plenty of examples. One is when I bring on a new product. For people that listens to this podcast, we sell CRM software and sales and marketing software, but every few years I bring on a new CRM application. In fact, I’m thinking of bringing on a new one now, that’s kind of unique. It’s good. That’s a risk. I don’t know, like I’ve got… Listen, I’m not like a big company with a whole bunch of… like The Hartford, which can do data analysis and really know, whatever. I’m a small business. So, I have a pretty good hunch based on what clients you’re telling me and there’s interest in this product. I think, “I can… That’s cool. I can sell it.” There’s a going to be a risk.

The risk is, is that for the next year after I bring it on, I’m going to lose money on this product. I’m going to have to devote time and effort to somebody in my company who’s going to have to learn it. I don’t have to send somebody out to get certified and get training. Then we’re going to like three or four jobs they’ll bring in and we’re going to mess them up and we’re going to lose money on those jobs and give it away. Then we’ll just get better and we’ll get better and we’ll get better. So, I’m going to take a hunch. I’ve done that multiple times with new products.

Elizabeth: Have any of them not worked before?

Gene: Yeah, yeah. I’ve had some products that just did not generate the amount of business that I thought that they were going to generate. I actually have one of those right now. It’s like a marketing application. I’m just not… It’s not bringing in the money that I was expecting it to. I’ve really sunk a lot of time and effort into getting this thing off the ground and it’s been like two years now and I’m not there yet.

Elizabeth: Okay, well, let’s talk about that, because this is the… I think it’s called the Fallacy of Sunk Cost.

Gene: Okay.

Elizabeth: So, in social psychology, they always talk about this that people will say, “I’ve been in this bad relationship for three years. So, I’ve already put… I’ve sunk so much cost into this, so I have to keep it going.”

Gene: I have to keep it going, right.

Elizabeth: People do that with projects, with relationships, with jobs well after you know you should… “This is just not working for me. I should get out of it.”

Gene: I don’t get emotionally involved in these things. For example, when I… I do the same thing by the way with… I’ve made investments in employees that I bring on to do special work. I brought on a person just a few years ago to do database work. I thought there would be a lot of opportunities to do stuff with databases. And again, it wasn’t what I thought it was. This person was with me for about a year and a half and then I just let him go. I know it sounds kind of harsh, but first of all, the person was like… did not have enough work to do. It kind of stinks coming to work and you’re twiddling your thumb. So, there’s other opportunities for that person to go and feel better about themselves.

Elizabeth: I’m surprised database work didn’t work. I feel like every small business…

Gene: Because I stunk at selling it. That’s what it was. I did not sell it very good. I didn’t do a good job at it. I ran out of time.

Elizabeth: How much longer are you going to let this marketing thing go before you…

Gene: Not too much longer. I don’t have a theory or a process or a formula to give like, “Well, it’s 18 months or it’s 20… Whatever.” I usually say to myself, “You know what? If things aren’t happening by September, I’ve got to pull the plug.” I’m like wasting my time, wasting my money, and we’re just going to have to move on to something else. So, that literally is what’s going on in my mind about this one mark, which I don’t want to name because it’s a good product. Again, I don’t even think… It’s not the product’s fault. It’s my fault. By the way when you fail as a business owner, it’s your fault. You know what I mean? It’s not the product’s fault.

Elizabeth: So uplifting.

Gene: It’s not the economy. It’s not the whatever. Trust me, there are plenty of other people successful with this marketing product that I’m not successful with because I’m doing a lousy job selling it and I could be doing a better job selling it if I devoted more time to it and thought about it more and here I am think anybody doing a bunch of other things. I’m not doing a good job.

Elizabeth: Are you the only sales person in your company?

Gene: There’s three of us that do sales.

Elizabeth: Oh okay.

Gene: There’s three of us.

Elizabeth: Are the others like as good as you are?

Gene: No.

Elizabeth: Are they better?

Gene: They’re getting better. They’re definitely getting better, but they all have different ways. I have one person that really is more like qualifying leads. He’s more like lead generation and initial calls. Then there’s myself and who I’ve mentioned before, Cory in my company who is… He’s getting better and better at doing sales. That’s a whole other topic about sales. I’ve been selling for so long now that I’m pretty good at sourcing out a qualified client. I mean, I still get surprised now because whatever, but I could speak to somebody. It’s kind of like if you’re a little league coach.

Again, I don’t know how this comes off, but I could have a little catch with a 10-year-old kid and within a minute, maybe two minutes at most, I know whether or not he or she is a player. I just know. You can see the way they throw, the way they catch, the way they move. You’re like, “Alright. This kid’s a player.” You know what I mean? In the same period of time I’m going to be like, “this kid couldn’t hit this side of a barn with a beach ball.”

Elizabeth: But they can get better. I mean, they are…

Gene: They can.

Elizabeth: …proving that.

Gene: I hear you. I hear you, but again we’re just making assessments here. I can have a 10-minute conversation with a prospective client and know whether or not this guy’s full of it or not.

Elizabeth: Okay, alright. So, back to Isaac’s question, the other thing I’m thinking, because, we like to make a lot of generalizations about people’s businesses when they ride in. What if the risk he wants to take is in an investment and equipment? What if it’s an investment in like marketing? Maybe he’s not spending any money on marketing and he’s thinking, “How do I measure it? How do I know it’s working?”

Gene: It’s a whole other question, right? It’s a whole other area. Everybody talks about marketing their business. First of all, marketing is a gamble. So, you have to really enjoy doing it.

Elizabeth: And you’re risk-averse, so…

Gene: I am, but I love marketing.

Elizabeth: Really?

Gene: I’m not a big… I live in Philly, so I grew up near Atlantic City. I used to go down there a lot with my friends. I was never a big gambler. Isn’t that weird? I don’t know if you are, but I…

Elizabeth: No, not at all.

Gene: I could go to a blackjack table and win a few hundred bucks and it’s cool, but it just doesn’t… It doesn’t jazz me up. Some people are really… They love it. Marketing jazzes me up, man. If I spend some money, the money promoting this podcast for example, and then we get more downloads because whatever, I don’t know what it is that jazzes me up and that’s the way with my own business when I invest money in marketing. It excites me. So, first of all, you have to be into it when you’re marketing. Again, you don’t bet the farm. I have a certain marketing budget and that’s just it that I’m willing to play with. I’m not going to bet the farm or anything. Then you want to have return on investment.

You want to have specific metrics. You ask anybody … I keep giving examples of the Hartford, but you have a VP in marketing here, Kathy, who I hope to have on the show one day. There is a person who runs this business by metrics and she will invest and she wants to see the return on investments. She wants to see that turning into leads or opportunities. That’s what we should all be doing. By the way, you’ll never… There’s no holy grail of marketing. So, if you want to take risks, you ask, “Do you wanna take risk with your marketing money?” You generally have to do a few marketing things…

Elizabeth: So, either way…

Gene: …to see what works.

Elizabeth: …if it’s marketing, if it’s equipment, if it’s hiring a new person, whatever it is, you need to get your spreadsheet out and figure out what is it.

Gene: You make your assumptions. You don’t bet the farm on it. You have fun with it, right? Because that’s… You got to do it. You got to take some risks if you want to grow your business, but you can minimize, minimize the downside by thinking it through and having specific return on investment.

Elizabeth: Okay. That’s great advice for Isaac. We will be right back with Gene’s Word of Brilliance.

WORD OF BRILLIANCE: Vegas

Elizabeth: Alright. We’re back with our Word of Brilliance. Gene just told me to bring it on, so I’m interested to what this Word of Brilliance is going to be.

Gene: So, my word of brilliance today, it’s Vegas as in Las Vegas.

Elizabeth: Okay.

Gene: The reason why that word of brilliance is this, here’s my story, Elizabeth. It just happened to me this week and I want to share with you. I was scheduled to go and speak to a CPA conference in Las Vegas called ENGAGE later on this month. I was excited to go out there and speak. I am a CPA. I belong to the American Institute of CPAs, the Pennsylvania Institute of… I have a very great respect for the profession. I got a call earlier this week. They canceled my presentation because somebody that’s on the board of the AICPA was offended by something that I wrote four years ago online…

Elizabeth: Oh my goodness.

Gene: …about CPAs. I think you know by now we’ve been on the show that I… Certainly critical of those of my profession that aren’t so great, and I have a lot of respect for those that are. The piece that I wrote was about why you shouldn’t hire your CPA as your business advisor. That was the piece that I wrote.

Elizabeth: Really? Okay.

Gene: The main gist of the piece was that with all due respect to the profession, and there were certain CPAs out there that are very, very good, and could be good business advisors, most of the CPAs that I meet aren’t. They’re tax professionals. They’re tax-focused people or maybe they’re just accountant people or they’re bookkeeping people. My experience and my 600 clients in my business and all the readers that I have and all the business… Believe me, the past 30 years, my experience is people in my profession, the majority of them, they’re not such great business advisors. They’re great at what they do and there are some out there that are good business advisors.

For the most part, they’re specialists in what they do. Anyway, so, I wrote, of course, I use my tone, which, of course, is offensive as usual. So, it upset some people there and they canceled me from speaking at their conference.

Elizabeth: Did you cry?

Gene: I did not cry, but I was annoyed. The reason why we talk about the word of the day is that… The word I said is Vegas, but maybe it should’ve been ENGAGE. Now that’s the name of the conference, but it is engage. The name of the conference is called ENGAGE. Here is a guy in the profession that has a different point of view about the profession’s strengths and weaknesses. Just because you don’t agree with my point of view, you cancel me from speaking to your members about a completely different topic, but we were speaking about how to better manage your practice and such. So, you’re going to deny those members from having me come and speak and sharing whatever stupid thoughts I have, because you don’t agree with something I wrote four years ago.

So, as a business owner, Elizabeth, there are people out there, and we know these even in these very political times, but there are people out there that will have differences of opinion with you how you run your business, how you manage your employees, how you market your product. Some people may call you unethical in some of the things that you do. Some people may call you they don’t like what you do, your competitors, whatever. Never shut the door on them. Always if these people are in your industry or these people… Learn from them. Open up, find out why they feel this way. Open up and listen.

You can disagree with their point of view, but if people have a point of view, they’ve got a point of view and there might be something to… In other words, don’t cancel them from speaking at your conference just because you have a different point of view from them.

Elizabeth: It’s personal.

Gene: Yeah, it’s just personal so we’re just going to cancel. So, that’s my Word of Brilliance for today. It’s Vegas. It’s ENGAGE, right?

Elizabeth: Yeah.

Gene: It’s embrace people that have different opinions from you because you can learn something from them.

Elizabeth: That’s really good advice if you’re going to your industry conference or if you’re out like at a networking event… Oh God. We’ve talked about networking, but you can’t just talk to people that run their business the way you run yours.

Gene: You are always going to run across people that don’t like you. Don’t like the way you run your business. Don’t like the coffee that you make. Don’t like the food that you… There are always going to be critics.

Elizabeth: Or just don’t like you.

Gene: We’ve talked about even taking online reviews on Yelp and YP and all these kinds of services or people like TripAdvisor. Okay, well, listen, you don’t get into a shouting match with these people. People have a bad experience. There’s a reason why people do this stuff and you may or may not agree with them, but you need to at least accept criticism and try and grow and learn from it and don’t cancel them from speaking at your event just because you don’t agree, okay?

Elizabeth: Oh my goodness. Alright. We will be back in a couple days. Thank you so much for joining us.

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