Mike Michalowicz's Blog, page 49

Maximizing Profits in the Healthcare Staffing Industry by Susanne Mariga

Profit and cash flow are critical in any business.  In the Healthcare Staffing Industry failure to maintain profit and cash flow can result in massive debt and out-of-control IRS payroll taxes issues.  To glean insights into the maximization of profitability in the Healthcare Staffing Industry I interviewed 5 Amazing Thought Leaders in the Healthcare Staffing Industry.  

The results are in.

1. Automate. Automate. Automate. – Mick Angelichio, President of Judge Healthcare

The Judge Group is the 12th largest staffing company in the country and it is the recipient of the Inavero’s 2018 Best of Staffing Client Diamond Award.  What the Judge Group does differently giving it a competitive edge is that they have mastered Automation. 

Angelichio realized that all staffing companies are vying for the same top candidates.  What makes one more successful than another is the ability to deliver top candidates quickly to their customers.  The Judge Group has heavily invested in their own team of in-house IT developers.

The IT team has developed an internal applicant tracking system that allows the Judge Group to go to market quicker.  When a job request is received the Judge Group can generate 60 top matches within a matter of seconds. Using the internally developed software, the Judge Group executes Internet Bots that continuously crawl the internet in search of new potential candidate resumes and new job postings. The internet bots serve as resume harvesters, building a qualified candidate pool.  Once the perfect applicant is selected by the bots, the software sends out a friendly note to the candidate. The Judge recruiter is then able to follow up on a warm lead and the candidate engagement is quickly solidified.

Not only is the applicant tracking systems used to fill job orders, but it is also used as an automated drip campaign allowing the Judge Group to send relevant articles continuously to potential job candidates and customers supplying them with relevant industry information pertaining to their market. By continuously remaining in contact with potential candidates and customers, the Judge Group remains visible to their clients and prospects.   By focusing on reducing human touches and automating the sales and recruitment process, Angelichio and the Judge Group are able to minimize the cost associated with hiring additional internal staff while meeting their market demand in record time!

So what does a blooming staffing company need to do in order to implement automation?  Angelichio recommends exploring large off the shelf automation systems currently available on the market.   Angelichio also encourages maintaining a mindset of gradual progression and being aware of the changes being implemented by the major companies.  Per Angelichio “it is important to remain ahead of the game”. Healthcare staffing agencies should find ways to leverage technology developments and custom tailor it for their needs.

2. Be nimble… Balance Fix and Variable Cost – Alan Buglar, Managing Director of Bow String Advisors

Bow String Advisors specialize in Mergers and Acquisitions, Raising Capital, and providing Financial and Strategic Advisory services to the Health Care Staffing Industry.  

Buglar recommends that Healthcare Staffing Companies focus on having a flexible cost structure to MAXIMIZE profitability.  The truth is economies change, revenues change, and sometimes things just happen.  Staffing Companies need to be able to adjust to these changes quickly in order to maintain their profits.  Buglar shares that he has seen Healthcare Staffing Agencies get trapped in fixed contracts, leases with multiple locations, and expensive executive staff. When staffing companies are locked into fixed contracts it is very difficult for them to be able to adapt quickly to adverse economic conditions.  

Buglar recommends that Healthcare Staffing Agencies focus on controlling fixed cost and balancing fixed and variable cost. Buglar encourages Healthcare Staffing agencies to focus not just on revenue, but also on the bottom line – PROFIT.    Buglar encourages staffing agencies to evaluate if it is best to sign up for the long-term lease for offices and copiers. For starting companies, flexible work environments such as WeWork may be adequate.

Buglar discourages Healthcare Staffing Agencies from following the “HERO” model, where they focus on hiring many Senior Managers with exorbitant remuneration packages.  Buglar encourages Healthcare Staffing agencies to be flexible and recognize trends and be willing to move quickly. Moving quickly may also include ripping the cord on people not doing a “great” job.  He recommends that Staffing entrepreneurs be honest with themselves and with the people they hire.

3. Implement the Use of Creative Compensation Structures – Tim Teague, President of BlueSky Synergy, LLC

BlueSky Synergy, LLC provides medical staffing software to Healthcare Staffing Agencies which allows them to manage staffing workflow from candidate sourcing through client billing.

Teague encourages Healthcare Staffing Agencies to maximize the markup rates of client billing and candidate compensation through the use of taxable and nontaxable compensation.  According to Teague there is a “Sweet Spot” in compensation using taxable versus nontaxable compensation especially in the travel nurse industry. The Internal Revenue Service (IRS) allows a daily per diem rate for travel nurses and payment for travel expenses and this computes into an hourly component of the burden.  By balancing the taxable versus nontaxable compensation, a Healthcare Staffing agency can lower expected wages while pushing up the non-taxable reimbursement. In addition, by maximizing the allowable daily per diem rate and travel expenses, the Healthcare Staffing Agency is able to fairly compensate it’s travel nurses while reducing it’s own employer tax burden.  Teague warns that this balance between taxable and non-taxable compensation must be carefully weighed between normal expected wages and nontaxable items.

Teague offers an Integrated Margin Calculator built within the Bluesky Healthcare Staffing Software and VMS.  The Integrated Margin Calculator will assist Healthcare Staffing Agencies in calculating an accurate rate for the burden.  The Integrated Margin Calculator considers factors such as worker’s compensation, health insurance, non-taxable compensation, employer taxes, etc. 

4. Focus on Redeployment of Candidates – David Searns, CEO of Haley Marketing

Haley Marketing specializes in providing marketing services to the staffing and recruiting industry.

Searns shares that Healthcare Staffing agencies in general have a 16% clinician redeployment rate.  This means that there is only a 16% chance that a Healthcare Staffing Agency will reuse or redeploy a candidate that has been previously placed by it’s firm.  This means that 84% of the candidates that are placed never receive a second assignment from the same Healthcare Staffing Agency. The financial impact is that all the cost and all of the effort to recruit a hard-earned candidate is LOST on the redeployment 84% of the time.  Seans believes that if a Healthcare Staffing Agency can improve upon it’s candidate relationships and managing it’s candidates next assignment, a Healthcare Staffing Agency can drastically increase it’s profit while reducing the recruitment cost associated with obtaining it’s next placement.  

Searns believes that the high rate of loss in redeployment is due to the fact that in the Healthcare Staffing Industry assignment end dates are not well defined.  Recruiters are focused on filling today’s orders and there is a disincentive to find out when an assignment is going to end. After all, who wants to remind a client that they have an expensive temporary staff member on their team, especially since things are going so well.  Searns encourages recruiters to be proactive and monitor the status of their current placements. He also encourages maintaining continuous contact with their employees in the field to monitor how the project is going and when it may be coming to an end.

Searns encourages Healthcare Staffing Agencies to build loyalty not only in the relationship between their recruiters and the candidates but also with the Healthcare Staffing Agency and the candidate.  Searns believes this loyalty is built by creating an overall positive candidate “experience”. Throughout the candidate employer relationship, there should be multiple touchpoints between the candidate and the organization, building a reputation of high service that goes along with higher pay rates.  

Searns encourages Healthcare Staffing Agencies to employ the use of marketing automation which increases the frequency and creates continuous streams of communication. He recommends using e-mail and texting applications to maintain frequent communications with current field employees.  Some applications that Stearns recommends include SenseHQ.co and Herefish .  These applications can integrate with applicant tracking system and provides the contact manager and candidate with notifications to determine when an assignment is going to end.  

5. Make Culture Your “Secret Sauce” – Amy Chang, Strategist and Analyst for Staffing Industry Analysts (SIA)

SIA is the global advisor on staffing and workforce solutions providing insights into the services and suppliers operating in the workforce solutions ecosystem including staffing firms, managed service providers, recruitment process outsourcers, payroll/compliance firms and talent and talent acquisition technology specialist.

Chang advises Healthcare Staffing Firms to be intentional and deliberate about creating a great culture.  Chang advises Healthcare Staffing Firms to focus on hiring their employees based on cultural fit to create an environment of cultural cohesiveness.  A cohesive culture will have a competitive advantage when it comes to ensuring that team members are moving in the same direction and focused on the same goals.  By focusing on hiring for fit, Healthcare Staffing Firms are able to increase efficiency and create an environment where people enjoy their work. By maintaining an environment of employee satisfaction, Healthcare Staffing Firms will be able to attract talent and reduce excessive turnover.  By maintaining long-term employees, the Healthcare Staffing firm will be more productive.

For Healthcare Staffing Firms embracing the challenge of building a great culture, Chang recommends that the companies start with defining core values and understanding what they stand for. Once these core values are defined, the company should make significant efforts to make sure that this culture is communicated to its teams and emphasis is placed on hiring for fit and building a strong and consistent culture.  Chang also encourages firms to adopt a culture of investing in its people. Chang believes that when a firm hires a new employee the firm should focus on a long-term approach that builds that employee into a future expert within their field.

In the healthcare staffing industry, the product is the people and the supply of clinicians is constrained.  In a world that is quickly becoming automated and digital, it is important for people to work in an organization that cares about them.  To attract ideal customers and team members, Chang urges that Healthcare Staffing Firms provide meaningful work where the team knows that the firm cares about them as people.  Chang believes that growth and profit are an outcome of a great culture where people are part of the team and are working towards a common goal.

6. BONUS … Honor the Value You Provide and Price Accordingly – Susanne Mariga, Certified Public Accountant (CPA), Certified Profit First Professional – Mastery Level, and Managing Member of Mariga CPA PLLC

There is a direct correlation between price and the esteem you place on the service that you provide and value you place on the people that provide these services. As a practicing CPA, I have seen many entrepreneurs so eager about getting a sale that they are willing to undercut their prices to a point that there is very little to show for it.  The impact of a decrease in price is a reduction in profit. I have had staffing industry entrepreneurs sit with me and swear that this is a “volume-based” business, only to find several years later that the loss has been financed by insurmountable debt and unpaid payroll taxes.

In a study conducted by the American Staffing Association (ASA) called Understanding Staffing Profits, it was noted that a 55% markup only yields a net profit rate of 4.11%.  The markup is quickly eaten up by the burden which consists of payroll taxes, workers compensation, and general and administrative overhead.  When Healthcare Staffing Firms reduce their markup, they reduce their profit.

An appropriate bill rate is simply a reflection of the value you place on the services that you provide and the respect you place on your team.  When margins are so tight due to a low markup, a Healthcare Staffing Firm is unable to invest in its company, hire and retain the best internal team, and attract qualified placements for its customers.  My recommendation… markup in a manner that is respectful of the value you place on your services and your employees.

In closing, to maximize profitability in a Healthcare Staffing Firm one should automate processes, remain nimble to flex with changing economic times, be creative in compensation structures, focus on the reuse of talent resources, invest in their people, and price their services fairly.

About Susanne Mariga

Susanne Mariga is a Certified Public Accountant, a Certified Profit First Professional – Mastery Level, a Certified Business Coach, and the Managing Member of Mariga CPA PLLC.  Susanne Mariga is a graduate of the Ohio State University and the daughter of an entrepreneur. Susanne has a personal mission to eradicate entrepreneurial poverty in the Healthcare Staffing Industry.

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7 Tips to Make Your Nonprofit Financially Healthy by Sandy Free

Keeping your nonprofit financially healthy should be your priority.  You cannot serve your mission and purpose if you have to close.

These have rapidly become some of the most challenging times most of us have ever seen. Even for nonprofit leaders who are accustomed to making much of little, the repercussions of the current downturn are difficult to fathom and challenging to address.

Nonprofit leaders are unanimous on this topic: open and frequent communication is very important when facing uncertainty. All stakeholders—employees, board members, funders, and even constituents—need to know where the organization stands and what its plans are. Employees also need to know where they stand personally. This helps keep people engaged and inspires them to be part of the solution.

As a bookkeeper who focuses on nonprofits, I wanted to add value to my clients, so I reached out to some of the top thought leaders in this field and here are some of their tips:

 

Best Road to Financial Health {Mary Cahalane – Hands on Fundraising, LLC – mary@mcahalane.com}

The best way to ensure your organization’s financial health is to invest in your fundraising program.  As Roger Craver notes, investing in stocks, bonds and other financial instruments may give you 1% or 2% annual return.  He continues: “It’s almost a dereliction of a board’s fiduciary responsibility to not invest some of those reserves judiciously in donor recruitment and development.  An investment that would yield an annual rate of return for most organizations of 20%, 30% or even more.”

To invest wisely in fundraising, you have to assess your program to be sure you’re putting your money well.  If you’re not already focusing on retaining donors, start with retention. There’s no point in investing if you’re letting your donors (and money) walk right back out the door!

Storytelling {Julia Claire Campbell, MPA – Nonprofit Storytelling and Social Media Strategy – julie@jcsocialmarketing.com}

To ensure the financial health of your nonprofit, you have to figure out a way to collect, craft, and share the best and most compelling stories about the work of your organization. Storytelling remains the most effective way to raise money and to increase visibility for your cause. Sharing impact stories on a regular basis will deepen relationships with existing donors, and increase donor retention because they will feel appreciated and know where their gifts went. 

Wheat State Insurance Group {Cheri Trefethen – ctrefethen@wheatstateinsurancegroup.com}

Having the right insurance coverage in force is a start to prevent unwanted losses that can bankrupt.  Also using the right carrier. Carriers that are familiar with the risk and can grow as the nonprofit grows.  The carrier (agent) needs to have passion, know the needs of the nonprofit, know their vision to be able to write the proper amounts and write the kind of insurance needed i.e. liability, D&O, etc.  The carrier (agent) needs to be contacted at the beginning to assure the nonprofit knows the cost and the risk is covered. The nonprofits bookkeeper or accountant can work closely with the agent to advise and work as a team for the best outcome.

Revenue and Expense {Maddie Grant – Culture Consultant and Digital Strategist, Human Workplaces – maddie@humanworkplaces.net}

Help everyone in your nonprofit actually understand the ins and outs of both the revenue side and the expense side. You’d be amazed at how much employees will do when they understand the business model–and the real success drivers–at a deeper level. When you build that capacity inside your culture, it will pay off.” 

 

Infrastructure {Gail Perry – FiredUp Fundraising, President – gp@gailperry.com}

Make sure you invest in infrastructure. Because if you direct your money to programming and never build your organization’s infrastructure, then you’ll never grow. You’ll stay right on the same hamster wheel, spinning away.  Infrastructure means that you build up your base of donors, and stay in touch with them regularly. You value your donors and you spend time, energy and resources nurturing them as true partners in your mission.  That is the way to build long-term, sustainable funding for your work.

 

Strategic Plan {Sandy Free – Devoted Bookkeeping LLC, President – Profit and Growth Strategist – sfree@cox.net}

A proper strategic plan that can and will be utilized is essential to solving most financial shortcomings. Such a plan will keep everyone within and associated with the organization going in the same direction. Perhaps, more importantly, it will keep missteps to a minimum.  Time and time again, I see small and even medium-size nonprofits trying to operate without a strategic plan. The mere act of pulling all the key players together to create a proper strategic plan can be a game changer for such organizations.

Fundraising {Jay Frost – jay@frostonfundraising.com}

 

Make sure your fundraising is like a well-designed exercise plan. First, commit to fundraising as a part of what you do every day. Second, be balanced. Focus on the whole body of your donor universe, not just one part. In fundraising terms, that means you need to work on building up your many donors of modest gifts and that less numerous but critically important group of donors who make major gifts. Third, keep hydrated and fueled. In other words, continually welcome new friends into your universe of support. Fourth, listen to your body of donors. If something doesn’t feel right, make an adjustment in accordance with the needs and interests of your supporters. In the end, fundraising is really all about them. In short, fundraising that is well planned, balanced, sustained, and aware is key to the overall health of your organization.”

 

About Sandy Free

Sandy Free is the owner of Devoted Bookkeeping LLC and Teach Out of Poverty Inc.  Certified Profit First Professional, Certified Growth Strategist and Certified QuickBooks Online Pro Advisor.  For over 35 years, Sandy has been in the bookkeeping industry and over 15 years in the Nonprofit world. (https://devotedbookkeeping.com)

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Tips from the Oil and Gas Service Industry Leaders by Christian Brim

If you’ve been in the Oil and Gas Service business for any amount of time, you know the wild ride of commodity prices and how it can make or break your business.  We’ve asked several industry leaders their experience in how to successfully navigate the ups and downs to remain profitable and cash flow positive.

 

Johnnie Reaves, Asphalt & Fuel Supply, Inc.

Know your customers!  Find recurring revenue with a necessary product, in our case maintenance of highways.  When possible, have long-term contracts with your customers and know your market. Is there an additional product you can provide?

 

Robby Hagemann, Boardman, Inc.

Our oil and gas sector works on a 6-7 year cycle, so we project and plan towards the average of that cycle.  Having good employees and diversity across other industries has allowed us to weather the changes in commodity prices.  In a boom, businesses hire too many people and spend money like there’s no tomorrow. Don’t overextend yourself with credit, and be selective with who you take as customers.

 

Mike Cantrell, Cantrell Investments, LLC

Resist the temptation to get drunk on your own whiskey!  People start believing in their own deals too much. Always expect the unexpected, three-quarters of it will be bad.  When possible, use other people’s money, but resist borrowing money from banks for speculation, just for acquisition.

 

Mims Talton, Flogistix

Have sticky products.  60% of our income comes from rental.  We’ve designed a product that not only helps with regulatory compliance, it provides a measurable economic impact for our customers even in down commodity markets.  Make sure that you can show your quantifiable value to your customer. We use data analytics to predict the next 3-6 months sales window and manage production output based upon that, which includes managing our supply chain.  Develop relationships with your lenders during the good times.

 

Nick Armoudian, Patriot Wellhead

Cross-train your employees.  That makes you more flexible in a downturn.  Have 3-6 months of cash. Have a plan and stick to it!  Understand what business you’re in. We only stock what is used 80% of the time.  I’d rather give up some profit margin than be stuck with something we don’t need and tie up capital.

 

Bob Cantrell

Borrow excess cash when you don’t need it, you can always pay it back.  We’ve had success using financial derivatives to hedge against price changes.  We think of it as insurance. You’re going to pay a premium, but you’ve locked in your profit.

What has been your experience?  How do you plan for the downturns?

 

About Christian Brim

Christian graduated from the University of Oklahoma with a Bachelor of Accountancy. He enjoys spending time with his wife and three children, and the very occasional golf game. He handles Core Group’s Business Advisory services and business succession planning for their clients.

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A Clockwork 4 Week Vacation – Case Study of Cyndi Thomason of bookskeep

What does this picture remind you of? I think it looks a lot like that still from Gone With the Wind, the one taken just after Scarlett O’Hara says, “As God as my witness, I’ll never go hungry again!”

That’s not Scarlett in the picture. That’s Cyndi Thomason, founder and president of Bookskeep, standing in front of Pyrocumulus clouds at the Kileaua eruption in Hawaii. Though her life story isn’t quite as dramatic, this moment in her life is.

The picture was taken on Cyndi’s first-ever four-week vacation. Two years ago, she was working grueling hours in her successful bookkeeping business, trying to keep up with demand while still delivering the stellar service she provided to her ecommerce clients. She barely had enough time in the day to sleep, let alone tend to her beloved garden.

Now, she is free and her business is booming, and Cyndi is never going back to the grind.

In my new book, Clockwork, I track Cyndi’s progress as she designed her business to run itself. Part of the process is scheduling a four-week vacation. I know, I know—you may be thinking, “There Mike goes again with his wacky ideas.” Wacky? Maybe. Impossible? Nope.

See that picture above? That’s Cyndi on her four-week vacation. She did it, and her business not only survived without her—it grew.

Because Clockwork went to print before Cyndi took her planned vacation, I wasn’t able to share her story in the book. Now, you can read the epilogue first.

“On Tuesday I returned home from my four-week vacation,” Cyndi wrote in a recent post. “I started planning for this 18 months ago at Mike’s suggestion. I totally disconnected on July 1 and did not work in my business until Aug 1. I did not receive emails or internal chat or FB messages—no communication from the team.”

That’s right, my friend. Total disconnect. Can you imagine what that would feel like? Can you imagine how restorative that would be for you and your family?

When Cyndi returned, she met with her core team, and was pleasantly surprised to discover how much they’d changed. “They took ownership, they had confidence, they don’t need me and my husband! In fact, their big concern was that they would backslide now that we are back. There was so much love and team camaraderie among them as a group, I tear up when I think about it.

“When we huddled with the full team the same day, all we heard was praise for the core team and how everything went. There were challenges: three personnel issues and they handled them! They brought in a new client and raised rates on two existing clients. Clients had tough questions and they resolved them.”

Cyndi followed the process I detailed in Clockwork to completely transform her business, and her life. Now, she’s making more changes. “I am convinced my leaving town and disconnecting was so effective, that I am scheduling half my days as unavailable to the biz, at Mike’s suggestion I’m scheduling a week off every month and disconnecting totally and I’m planning another month off.”

 

“When you read Clockwork,” Cyndi added, “make that commitment to take a 4-week vacation and do every exercise so you can make it happen for you and your business.”

You can free yourself from the grind and scale your business. It’s doable. Cyndi pulled it off. I pulled it off. You will pull it off.

Your “never-turning-back” moment is coming, and I can’t wait to hear all about it.

P.S. If you want to get you ready to start your own Operation Vacation, I set up a page with all the resources you need at Clockwork.life.

P.P.S. Enjoy your 4 weeks. Send pics.

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4 Week Vacation – Results From Cyndi Thomason

I’m so excited to see all the posts about Clockwork! I want to tell you how the story ends. This is not a spoiler- but a further nudge to let you know you can do everything Mike writes about.

On Tuesday I returned home from my 4-week vacation. The pic is me in front of the Pyrocumulus clouds at the Kileaua eruption in Hawaii.



I started planning for this 18 months ago at Mike’s suggestion. I totally disconnected on July 1 and did not work in my business til Aug 1. I did not receive emails or internal chat or FB messages-no communication from the team.

The core team met on Aug 2 and they had changed. They took ownership, they had confidence, they don’t need me and my husband!! In fact, their big concern was that they would backslide now that we are back. There was so much love and team camaraderie among them as a group, I tear up when I think about it. When we huddled with the full team the same day, all we heard was praise for the core team and how everything went. There were challenges – 3 personnel issues and they handled them! They brought in a new client and raised rates on two existing clients. Clients had tough questions and they resolved them.

I am convinced my leaving town and disconnecting was so effective, that I am scheduling 1/2 my days as unavailable to the biz, at Mike’s suggestion I’m scheduling a week off every month and disconnecting totally and I’m planning another month off.

When you read Clockwork, make that commitment to take a 4-week vacay and do every exercise so you can make it happen for you and your business.

Finally, Thank you, Mike!! You are a genius! [image error]

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Spend Your Time

Time and money. Both are scarce resources. Money depletes quickly. Time depletes, comparatively, more slowly.

Before you spend your money, spend your time. Determine if your time is resulting in a loss or a gain. Then, when you discover where time is well spent, spend money on it, so that you don’t need to spend more time on it but other people or resources can.

Money can be replenished. Time can’t.

Before you spend your time, be very selective. Waiting is a cost, too. Time is always ticking and not using it is wasteful, so pick wisely, move aggressively, find what works, and use money to expand it.

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The Real Way to Persuade Others

It’s about passion. It is having a love for what you do. It is about giving a shit.

I met a woman who is a dolphin trainer. She couldn’t stop gushing about how amazing her work is. Communicating with dolphins. Learning their personalities. Connecting. The stories she shared were nothing short of remarkable. And by the time we were done talking, I wanted to experience, even just for a moment, what she does. She has an absolute love for her work, and the energy conveyed to me.

Conversely, there is probably someone in the dolphin training industry, that really doesn’t care for their work. They do it because they have to. The cold water. The squeaky squeak dolphin talk. And the constant, awful smell of buckets full of rotting dead fish. They would struggle to “sell me” on the values of being a dolphin trainer.

Forget all the closing techniques and persuasion tricks. Nothing will ever match the persuasive power of loving what you do.

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The Daily Huddle at Profit First Professionals

Every day at 8:34am Eastern Time our small company of eight people conducts a daily huddle that is 15 minutes or less. All employees attend.

We meet both in person and virtually. This is the recording of one of our huddles. Yeah… we are a little bit weird (but we have FUN!).



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Do Your Employees Trust You?

I seem to get this call a lot. It’s a business owner in desperation, seeking immediate help with employees. The question is inevitably a variation of how do I get them to do X.

Here’s the dealio. You can’t inspire any employee to do anything for you, without one key element: Trust. Surely you could put a gun to someone’s head or threaten their welfare and people will respond. But it won’t bring out the best in people. And it ain’t sustainable.

The basis for a cohesive, focused, high performing employee is trust.

So how do you get them to trust you? You must trust them first.

Doesn’t make sense does it? I mean, you are the boss after all. Don’t they need to earn your trust? No, they don’t. Maybe in your fantasy world, but in the real world the only way you can gain trust is by giving it first.

Start trusting your employees immediately. For example: Let them make key decisions that you never let them make before. Let them handle the big opportunities that you historically would only navigate yourself. Let them see your vulnerabilities, instead of the fake facade of “everything is great.”

Building trust is about giving trust first. It does not happen over night. It takes time, sometimes lots of time. But the sooner you start, the sooner you will deserve the trust of your employees… because you gave it to them.

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The Most Effective Closing Technique

Of all the things I have done in my entrepreneurial career, selling has been the one constant. Ever since my first job out of college I had to sell to make a salary. And then, when I started my first business, I had to sell to survive. Even after I wrote a book, it was nothing without a huge selling effort. I’ve been a lifelong fan and student of great selling techniques.

My favorite technique used to be the 1-to-10 close. This is where you ask your customer, “On a scale of 1-to-10, where do you stand on deciding to proceed with us?” And when they answer you say, “What do I need to do to make it a 10.” It worked occasionally, despite the fact it is exactly what I should NOT be doing.

Here’s why—people resist suggestions. If you’re a smoker and I say “You need to stop smoking, it’s bad for you,” you’ll say, “Yeah, I know.” Then you’ll light up a smoke and blow it in my face. We automatically do the opposite of what people suggest. If you have kids, you know how true this is.

If you tell me you are a 5 on the scale, and I say I need to make you a 10, you’re naturally going to resist anything I do while trying to make you a 10. You might even drop your ranking to a 4 or 3, just to show me. And while you might not say it, you will feel the resistance and blow the proverbial smoke in my face. It didn’t work, but sales people, including me, kept doing it.

Then I stumbled across another 1-to-10 technique, which is the most effective closing method I have ever experienced. When asking people where they stand on a 1-to-10 scale with me, no matter what they say even if it’s a 3 or 4, I say something like “I didn’t expect you to pick a number so high. From our discussion and your body language I thought you were actually lower. Why do you pick a number that high?”

By suggesting a number lower than what they said, people naturally resist my remark and want to go higher. Now they argue about why the number they picked, say 5, is not that high, and they may even change their number to a 6 or 7. But no matter what, the conversation in their own head is arguing why they should go with you.

If you’re not convinced, think about how we all use this method in our lives. I mean, you can tell a kid to go mow the yard and they’ll never get off the couch, but if you tell them you’re going to go mow the yard because they’re not old enough to use the mower yet, they’ll fight you to prove you’re wrong. Play it right and you won’t be able to get them off of the mower and you’ll never mow the yard again.

Remember Tom Sawyer? He was punished and made to paint a fence all day. But, he got his friends to paint the fence for him using this same technique. His buddies were teasing and ridiculing him when they first came up and saw him painting the fence, but he didn’t care. He kept painting and said wisely and a bit snobbishly, “Not just anyone can paint a fence.” That shut them up. By the time he convinced them they weren’t capable of painting a fence, they began begging him to let them paint it. Only then did he let them while he relaxed in the shade. It’s called “reverse psychology,” by some, but whatever you call it, it works.

When you use the same technique with your customers, they will follow their natural resistance to suggestion and persuade themselves to work with you! Beautiful.

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