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The day-to-day details of a business can be draining, and this episode’s guest enables founders to step back. [00:59]
Build a bigger promise first – that will pave the way for everything else you need. [06:11]
You only need one each of these key business components… [11:26]
What can your clients invest in that’s high-reward and low-risk? [15:23]
People come to you when you see a vision for them they can’t see yet. [17:03]
Are you asking people why they don’t buy? [19:33]
When you expand the vision for your clients, you create growth opportunities for them and for you. [26:16]
Doesn’t a growth plan sound so much better than a contract? [28:30]
Sometimes there’s a market waiting just beside your current niche. [31:29]
How far out of the day to day do you want to be? [34:26]
Five exits, five ways of taking a step back and running your business hands-off. [36:52]
Optimize your business and your life with James’s help
For most entrepreneurs starting out, there is a period where they are the business. James recommends extracting yourself from that position as quickly as you possibly can.
His guest today, Mandi Ellefson, makes a living helping business owners out of the day-to-day grind and into something much more leveraged and enjoyable. She describes the end goal in three words: hands-off CEO.
It’s at this point, she says, that your growth takes a quantum leap and you’re able to let go. This takes a mindset shift, actual systems and processes, and other things Mandi would like to discuss that are the missing piece to having a company run without you.
She’s certainly gotten James’s attention. That’s what he wants, to make this an actionable episode for business owners who are long overdue for a day or a week off because of their involvement in their business.
To provide context, Mandi works with consultancies and agencies, those that dream of a multimillion-dollar, hands-off CEO company, a company that, at one point, will give them freedom, that at one point, maybe they could sell.
The thing you need before the rest of it will work
A lot of the advice out there for scaling, says Mandi, doesn’t apply well for service companies without one very important piece.
Popular strategies are about making systems and hiring people. The trouble is that building systems take a lot of time. And once they’re made, you hope the people you hire will follow and take ownership of them, which is not often the way it works.
James has seen it with his clients. He never recommends they build SOPs, but instead have their team member do it, who will be using those SOPs in the first place. Every person he knows whose company has a wiki also says their team don’t use it.
A wiki sounds like a very static solution for the dynamic environment we live in, says Mandi. And once you have your system, there’s the matter of affording people to run it and its processes.
Then, too, people decide to productize it, and turn a high-ticket, high-level service that gets million-dollar results into the equivalent of a pie or a hamburger. And they go from being able to charge a healthy fee with a good margin down to a low fee, in competition with every service company that does anything close to what they do.
And with that drop in value, the business owner takes on a new job – that of trying to sell their product. Because nobody wants it.
What you need, says Mandy, is systems built around more expansive outcomes. It’s about being able to build a bigger promise, so you can charge a higher price point, so you have a much higher margin. So you have the cash flow, and the profit to be able to hire people to actually build those systems, and run your company so that you actually have the time to go out and scale it.
A bigger promise, or a better outcome for the client, says James, would pave the way for everything you need.
Yes, says Mandi. And when she says a bigger promise, it’s also looking at the bigger promise for who? What is the promise that you’re going to be providing? Who are you going to be making that promise to? And then what is the problem that you’re solving?
So instead of solving someone’s problem that they’re short-staffed and need a graphic designer, what if you addressed the question of how to add $5 million to their company, of which graphic design is just part of the solution?
Discover the power of ones
Mandi says it’s looking at, what client type could we work with that we can offer a much bigger promise for, and that gives us the ability, then, to charge a much higher price point? When you have that ability, it makes sales so much easier. And they have it broken down to what they call the power of ones frameworks.
One client, one painful problem, and one outcome or promise. When you get those three down, it’s like hyper niching. And that’s when you can really become an expert.
Within three to six months, Mandi’s clients are booked with high quality clients that they’re charging double, triple, quadruple for, because they’re so focused on who they’re making their promises to. That’s when they run into scale issues, and the question becomes, how will we get this company to run without me?
Mandi’s framework sits well with James. One of the things he teaches is having an offer that converts. The reason people can’t scale in the initial stage is they don’t have money to scale. And the reason they don’t have money is they don’t have a good offer. The offer is the promise.
He also loves the reframing of the client’s problem, from needing a part-time designer to design being part of an overall solution. It takes some real skill and ability and confidence, though, to tell a client they may be asking the wrong question, or to suggest a different way of looking at it. It takes Johari Window reasoning, knowing what you can see that the client can’t see.
Let’s make this actionable
Now how could they make this actionable, asks Mandi, for current clients?
Say it’s buying season. Clients are looking at their budgets for next year, asking, What do we want to invest in? They naturally want something very high-reward and low-risk. This would be a good time to get clients and prospects back on the phone and tell them you have an idea for them.
When you’re looking at services that you can provide and the clients that you want to work with, there are factors that you need to have in place, that if they are in place, you’ll be able to really hit it out of the park.
The best place to look for those are in your past clients – your case studies, your client results.
For example, for Mandi, if they are working with clients that have at least half a million to a million dollars of results for a client in a year, they can generate case studies at least worth multi-million dollars, which will make it so easy to position their offers to double their fees.
It’s looking at the factors you need in place to deliver your very best results, and then eliminating every other prospect that doesn’t have those. And then it just boosts your confidence when you’re showing up to sell.
“Vision-based selling is looking at what you can see for the client that they can’t see yet.”
That sales process is the opportunity to discover what’s really possible for clients. Mandi calls it visioning. Vision-based selling is looking at, what can you see for them that they can’t see yet? She knows James does this too. That’s why his clients come to him.
One of James’s go-to tools is finding out why prospects don’t buy. It just takes an email. And once you know, it’s easy to recalibrate and get the sales.
There was a time, too, back in his Mercedes-Benz days, when they were losing sales to a popular BMW model. James brought in a unit, and he and his sales people took apart its features, determined what was good and what was bad, and injected what they knew into their sales efforts.
This is something James has incorporated into his subscription business, where it’s important to know why someone is leaving. If you can program it back into your sales promise, to put back into your service delivery, and stop someone leaving in the future, that’s powerful.
“The greatest gold mine is probably your existing database.”
It ties in, he says, with what Mandi is saying, that the greatest gold mine is probably your existing database. He’s even created a campaign around winning back old clients, because things change over time. Your systems will change, your promise and ability to serve will change, and your clients will change, too.
James has seen research data that found people oscillate between different categories of profiling, not only over years, but over months, or weeks, or days, and even time of the day. You could be a completely different person in the morning versus the evening, or one week to the next.
The value of an expanded vision
Mandi tells of a client who had a prospect wanting SEO. They put together a proposal and heard nothing. They got the prospect back on the phone and determined that what she really wanted was 10 extra clients a month. The client proposed an idea for achieving that, increased the price point, and created a longer term engagement as well with the prospect.
A growth program versus a contract
Mandi encourage clients to do at least a 12-month engagement for their customers for a whole growth program, not to tie them into a contract, to take them properly through the steps of the program.
James likes that distinction. He advises agency owners something similar, to do up not a proposal, but an action plan or a strategy guide.
And he again likes the focus on what the customer really wants. If you’ve listened to or watched this episode, he suggests going back and having a look at what you’re offering your market to see if you’re promising the right thing, or if it’s even bold enough or big enough. Maybe you’re capable of so much more.
The five kinds of exits
Going back to the promise of getting out of the business workings, says Mandi, they have five kinds of exits, and it’s about understanding, how far out of the day to day do you want to actually be?
The five exits span about a three-year period of time, depending on where the company is at. You can get through it a lot faster – they’ve had companies go through it as quickly as six months, usually forced by some external event, like a family emergency.
Exit one – getting out of client management
Mandi calls this their client management escape plan, and they want their clients to complete this in year one, at the very least.
It involves determining, what will it take for you to get out of the day to day of managing clients? This includes email and client communication. It’s really putting in place a client success role within the company so that you’re not the one doing it.
If there’s a strategy role in the company, you want to be there as the brains, not the hands. The brains, because that’s the highest level, the thousands-of-dollars-an-hour type of activity, if you want to talk like James about effective hourly rate.
It’s also an exit from project management, and sometimes you’ll have one person handling that and the client management. This is really where you’re developing an operations manager to run your company.
The benchmark there, says Mandi, is you should be able to leave your company for one to two weeks. Meaning you can completely turn off your computer, and maybe just answer a text here and there. Really, checking in maybe twice over a two-week period of time.
“Is this 30 minutes worth $1,000?”
If you can do that, and if you’re focusing your time on the high value offer, on selling it, you should be able to get to $100,000 of sales a month of cash coming in, Mandi says. A lot higher, maybe, if you’re already beyond that. She actually has a sticky note on her computer that says, Is this 30 minutes worth $1,000?
James had one, saying, Would Richard Branson be doing this?
Exit two – stepping out of marketing, sales and implementation.
This is typically year two, but can happen sooner, says Mandi. At this point, you can accelerate growth quite quickly because the people, the team is already placed, and the cash flow is in place. And this is where you can really scale marketing and sales. You’ve been building out the capacity, so you can step out.
Exit three – stepping out of client strategy
This is where you’re hiring and training a strategist, and it can be challenging. It’s where it’s so important, where you go back to the high value offer Mandi and James talked about, with the power ones, to be really clear on the one client, one painful problem, one outcome.
Once you’re clear on that, and you know the promises, your operations manager can work backwards and can reverse engineer building out all the necessary systems. That’s really what allows the strategy, because you’ll be building out frameworks as you go. And it will allow you to step back from the day to day of it.
Hiring and training the strategist can sometimes be done within. It just depends on how dialed in your systems are for how you deliver results, and how you really create the magic. Some CEOs never want to exit that, and that’s okay.
Exit four – the high-ticket salesperson
You naturally want to exit out of low-ticket sales early. But high-ticket sales are $50,000 to $100,000 plus – this is often a $10,000 an hour type of job, definitely worthwhile for the CEO to continue doing for a while, until they really have it nailed down.
One of the biggest challenges Mandi sees for service-based businesses is when they don’t have enough sales, and decide to hire a salesperson. Yes, the salesperson will do a better job, but can they pay them enough?
Salespeople can be one of the fastest ways to grow a business, says James. And they can be one of the most frustrating and difficult hires to place if you don’t know what you’re doing.
You want to have your system so dialed that it’s easy, and you have massive visibility on if they’re succeeding or not. You also want to be able to hire multiple salespeople.
But certainly in the online world, there are many ways of selling. So if you are the founder, and you don’t want to do the sales, it doesn’t have to be you.
The other part of exit four, says Mandi, is marketing and sales strategy. At this point, the marketing strategy for your company is one that you want to hold on to a little bit longer, and where you’re better off hiring high-level strategists like yourself.
Trying to get an agency for that is challenging, because most agencies are not skilled enough in strategy, they’re more like a glorified set of hands.
You could hire someone like Ron Reich for your launch strategy, says James, or your offer creation or whatever.
Mandi would definitely hire him. He’s a smart guy.
So year one is about selling and building capacity. Exit two to exit four, is scaling marketing, scaling sales, and getting some automation in place and scaling that.
Once you have those exits in place, you should be able to leave for multiple weeks at a time. Not all CEOs want to. But if you’re out of action, in the hospital, say, or a family member is, it’s good to have that leeway.
It’s critical, says James. In a several-month lead-up to moving house, and then the actual move and doing a period of quarantine, his business ticked along like normal. He credits a great team and a really good business structure.
Exit five – installing an operator
This is where you get a CEO who will actually run the company. It’s optional, says Mandi, and will be based on the size of the company where you’re at. It’s really also where you as a CEO could then lean into the legacy, build your legacy brand, and where you might build other brands outside of it.
Mandi has clients who run into supply chain issues and decide, why not start a company here or acquire a company there, and solve that problem for myself?
They call it hands-off CEO ecosystems, where you’re creating new ventures and acquisitions to fuel the mothership.
A mothership brand, especially if it’s service-based, can be hard to scale. But it can also put cash into those other ventures, and allow you to do all sorts of other things.
Mandi had a client who used what she learned to exit company operations in six months, then sell it a year later. She then acquired about a dozen other companies and applied the same thing, resulting in 12 companies running without her.
The first company is the hardest, says Mandi. After that, it can become an empire-building game where you have freedom, high-value assets, time and money wealth, and multi-generational impact. And you really can do whatever you want.
What excites her about it is the potential to give back in the world. That’s the legacy exit.
Wrapping things up
The most important takeaway, James thinks, is to create a better promise. If you can create a better promise or outcome for your market, then you’ll have the funds you need to scale, and you can do that over multiple levels. You can gradually get off client management, then out of project management. And then you can beef up sales and marketing and strategy, and then have someone come in and operate the whole thing.
People like Mandi and Ron Reich can help you. If you want to get hold of Mandi, her site is handsoffceo.com.
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