Ep23 The Ratchet Effect: How to Move Upmarket Without Screwing Over Existing Clients

Joe Blackburn  0:00  
And a lot of people get caught then staying below their floor or at their floor out of fear, then I'm going to not make it here, or I'm gonna lose all this. So there's that fear of loss on both sides. It just seems like when you draw that line, the world then starts there and goes up.

Jason Croft  0:20  
Welcome to the lion's edge, where top performers sharpen their teeth. Hosted by Joe Blackburn, founder of The Lion who is relentlessly dedicated to helping business owners lead multi million dollar teams and me. Jason Croft, I transform unseen entrepreneurs into industry leaders by developing their market gravity each week, we reveal proven strategies and raw insights to help you maximize your business, multiply your wealth and make your family indestructible. Now, let's create your edge in your sphere, in your world right now, who's doing it right in terms of business building business growth with all the different new factors that are coming in and tried and true stuff, who's doing it right? And why is that that working? Right now, we've got,

Joe Blackburn  1:15  
I don't know, 25 different businesses that we work with it, just in the inner circle, maybe 30. I don't look at the numbers, but I one of the, you know, one of the, what I would call superstars, and someone who gets it and has done it probably faster and at a higher volume than about it might be faster than anyone I've ever seen, actually, you know, do the work around, especially pillars. So, you know, you have your hygiene business. You got to learn it, fulfill it, all that fun stuff, but the actually taking and, okay, building strategic networks, doing the work, staying up late at night, like just putting in the time and the effort. I mean, rich bales. He's a machine, though. So, like, it's hard to if you're gonna benchmark him, you better buckle up. He just, you know, he's got a motor. He's a little younger than me saying, you know, probably 1518, years. But his, what he does really well is he gets in the right rooms, you know, like on the internet, when they say, like, be in the right room. This isn't like a, you know, like a bullshit like, he gets in the right rooms with people that give him a better opportunity to grow exponentially just through that relationship, which we would call that an influencer relationship, where I have access and they have access to each other's businesses, and he does it at a high level with people that are probably a little up the chain on the business cycle, whether it's through acquisition M and a real Estate, financial services, he's in insurance, and he's doing larger and larger insurance, you know, deals, HOAs, bigger commercial, those types of things. He didn't start there, though. He was doing home and auto. When I met him, that was kind of, I mean, he dabbled in commercial, but, and, you know, we're talking, actually, today on our hot seat, we're going to talk about how to move up market, because he's okay. I've got the foundation built. I've got all these networks, strategic alliances. His activity is off the charts. Now. How do I start to move up market? Because from a capacity standpoint, mechanically, it's about the same we talked about this probably last week. I don't even know when we talked about it, but he's now got to make the leap again up market, because his network is now demanding that. So it's a new level of expertise. It's a different group. Yeah, describe.

Jason Croft  3:53  
What do you mean? Like, the market's demanding that.

Joe Blackburn  3:55  
What do you mean? Well, let's just talk about insurance for one second. How do you know if you have the right coverage? Someone I could tell you you have the right coverage. How do I know it claim time, what he's done is he's figured out the gaps and the pain points within the marketplace for people that you know they're not. If you're running a 50 100 million dollar business, a hospital or a huge manufacturing facility, your assumption is my insurance is what it should be like. That's I, I should hope so. I've said that, you know, pillars like hygiene is on whatever your business is, well, I should hope so, because that's your business. You should get this. But what he was finding was there's a huge gap in what people thought they had versus what they actually had. So it's helped him propel into bigger opportunities, because he's uncovering and he does a great job, not only in pillars, but he's got a pretty strong social media where it's like, Well, do you know? Do you have the right thing? Do you even know what the right thing is? So it's creating people asking, I don't know. Do I like? How do you can you. Help Me. So his demand is going up because he's created the platform of access to bigger opportunities. Now he's got to figure out, Okay, do I hire more people? Do I put a floor in place that I don't go below ever again? I mean, he he's in in that situation, and everybody probably goes through this as they ascend. What do I do with the things I already did? Because this is waiting for me here. So now I'm back into ratcheting, and I have a commitment. So what what's my next move? Essentially becomes, am I willing to turn something away, hand it off at the risk of loss, to go to the next level? And that's it sounds good in theory, like I'm just gonna draw a line in the sand and not talk to anybody when you have children and bills and employees. That's a tougher decision. I my experience, personally, and what I've witnessed coached, whatever my greatness has been over this last almost three decades. About the time you make that decision is when it all shows up. I don't know why I'm not a astrophysicist yet, but it it it always link when you're in this. So he's in that tweener stage. When you're in that situation, you tend to still attract a lot of the things that may not have to be done by you. Doesn't mean you don't do them, or your team doesn't, or you don't build, you know, equity value in the business, or whatever, because that has a revenue place, and if you've got fulfillment, you can do that. But as you're tempting this, it's kind of like there may not be enough in my, you know, pipeline that it will do it, but what? And, you know, they call it burn the boats or whatever. What I've seen is, once the boats are burned by necessity, this is all it is. I believe he's this close to making that big leap without neglecting commitment and fulfillment, and, you know, relationships that guide him there, that's, you know, normally, and I'm talking a lot, so if you need to stop me do normally in the ascension, especially around pillars, as I'm working with more affluent, more status, bigger opportunities, I'm more concerned about filling that up where it does get really hard, and he's kind of coming into this is I've done all that now. How do I go up without giving up? And I'm not sure you can, so you have to, it's it's a conundrum, as we say. So you have to figure out, how can I still give these people great service and commitment and all those things while I ascend? And it's a tough decision. The most important part about it is make it when you decide this is where I'm at and this is where I'm going and everything else will be taken care of, that's risk. It's business risk. And a lot of people get caught then staying below their floor or at their floor out of fear, then I'm going to not make it here, or I'm gonna lose all this. So there's that fear of loss on both sides. I'm just again, I'm not an astrophysicist. I like that word. I'm gonna say it a lot. It just seems like, when you draw that line, the world then starts there and goes up, it's like, I call it ratcheting every time I ratchet up, it just gets bigger and mechanically, fulfillment is about the same. All people are pretty much the same. They have different experiences, different levels of expertise and all those things, but at the human level, we're all about the same. And they find out that person is just another person that worked hard luck following their way because they were consistent. You know, all those little trite deals, they just didn't give up, didn't quit, were tough enough to get there. They're not that different. So I, I'm really proud of him. I mean, I'm it just, it's like, It takes guts to do that, and he's and he's not a jerk about it. He wants, he's like, I got, hey, I'm not doing this. Just dump everybody. So I have to build something that, you know, keeps my commitments as I get bigger.

Jason Croft  9:31  
And that can come in a couple of ways. It can come as keeping that in house and internal hiring, right? Someone now, someone manages those folks as you move up, or if you're just not built that way or don't want to, there could be that trusted, Hey, someone else that gets tricky to maintain that relationship. I think there is. A piece that maybe, maybe folks are too quick to burn the ships and just go, I'm going here now, you know, I think you can, you know, take care of those folks still maybe move over time. But to your point, there's also a piece of that if you, if you do the opposite too much, you try to keep both, you know, a foot in each one, and that that's when those next level things don't show up quite yet, because you aren't committed fully, and you're not fully looking for them. You don't, you're not all in with that. It is. That's the That's the tough, the tough part. But I do think that it does become that clear decision. Here's where I'm going. This is what my business looks like. Now, let me take care of this other stuff along the way, rather than a constant, okay, I'm kind of both right now, and I'm sort of this, and I'm sort of that, even energetically, even in your own head, when you draw that line, that's, well, huge.

Joe Blackburn  11:11  
I've been watching our podcast. I say, well, a lot, so try to check me on that. I'm like, well, here's something I always bring up in that conversation, if mechanically, it's the same to fulfill, and I, let's say I spend, or in premium, or whatever, I'm $100,000 and this person is $10,000 and it's the same thing, in My mind, ethically, you're robbing this person for this person. Why am I getting the same here as here? Now you can do other things and increase but at base level, like, that's something you need to think through, is like, yeah, I don't want to push these people away. But from an ethics standpoint, is it ethical here? And is it ethical here? Because if it's now the same rate, and I'm doing everything here, and then these people are cast out into the abyss, it's an ethical dilemma like which. So how do I do this, so that what I committed here is fulfilled, and I can provide more here. There's where you get caught, meaning, which one like, if I go here, there's you. There's a cost to both. So you're, in my mind, you're just better off to find someone that can sustain, grow and have great relationships here. That's, I mean, I came out, I came out of financial services. You'll see that hell in that world, they'll send somebody with half a million dollars to the call center. Now you get a one 800 operator, so he doesn't want to do that. I mean, that's a, you know, massive corporate level. But the flip side of that is, well, are you calling them? I mean, so like, what? There's no black and white. Easy answer here. I believe you have to try to ascend as fast as humanly possible because of a capacity issue and your talent gap. If I can fulfill at the highest level, I'm obligated to do that. I just have to backfill here. And that creates another set of problems, which would be and Rich has some pretty good guys on his team. Now, how do I get them to the next so now it's like, go up, bring up, go up, bring up. Welcome to Business. That's how it works, and I what I'm so you asked someone who's doing at a high level and going that route, that's him. There are some people that never leave this land because they're scared, because they I believe they tell themselves it's because they're concerned about this person, but what they're actually concerned about, and this goes back to selflessness, is feeling bad about doing it. So who are they concerned about? This person or someone else? It's usually this person who doesn't want to feel bad. So it creates moral, ethical and business situation. It's, that's, that's the hard part. But you, at some point you got, if you don't let go, you'll get overrun here, because now your your biggest constraint is, I'm doing more for less because I'm multiplying this number.

Jason Croft  14:33  
And then even those folks, you're not serving to your best ability because you're struggling.

Joe Blackburn  14:38  
And this is probably more centric to businesses where personal relationships and the service side, insurance, financial services, really, you name them, it's probably more centric to that now on the product side, yes, mass marketing. Sell your products. We talked about that, I don't know, maybe before we recorded, like, if I sell parts, yeah, that's big ass volume game, and I want to sell all of them and raise. Price, and get SEO and do all those things, but on the you know, I'm building a business to where I want to get it to 10 million, 30 million, $50 million if I can't ratchet, I'm stuck. And I'm telling you, if you look around, most people just get stuck here on fear of being embarrassed or feeling bad, which has nothing to do with the client. You know, when we we came out of, it's in this popped in my head as I'm talking, because I like to hear myself when we came out of the financial crisis in the Oh 809, 10 area, a lot of the litigation came from the smaller accounts, families, because when the world was falling apart, who got the call person with 60 grand? Probably not, and that, I mean Right, wrong or indifferent. The reality was there was a neglect on that, but they didn't want to let him go either. I can't, I can't, I can't delegate this one. I can't put a junior person in place. Can't send them to the call center. I think that came out afterwards, but, you know, I can't, I can't do that. These people need me and that again. So the three factors are, they need me. I don't want to be embarrassed and I don't want to lose something, and I don't want to feel that's a four, like, that's all I statements. I don't know if that's helpful, but I do know there's a lot of people

Jason Croft  16:31  
stuck in that. I think there's a piece of planning ahead as well as you. Maybe it's not day one of your business. But as you move, like even client number 234, as much as you can structure your business and expectations that it is, we're going to get you this result, not I am going to do this thing for you, and that's a very different animal, because now person 345, that you hire can get you that same result as you move up going to that next level of those folks.

Joe Blackburn  17:14  
I like that. Hey, I'm gonna steal that, like results focus and it's there's some hair on that dog, like they're still their personal relationship. I and if they would never see this. But this became very real for me. I had two widows that when I was 100 years ago at Edward Jones, when their husbands passed, gave me their money, and like all good financial advisors, it was mostly put into an annuity, which didn't have a lot of recurring revenue and but it took care of them for life they were going to get an income. Never, you know, really, never have to worry about money again. And then when I left to Merrill, it was, I think, a $50,000 minimum. Then they changed it to 100 so they were like, kind of my first couple of clients ever, and it was gut wrenching, like, I can't I'm not compensating anymore. I really can't be your advisor type. And that was tough. I'm saying this because, you know, it's not like, oh, well, here's somebody else. There wasn't anyone else. So I get the psychology of, like, I don't want to do that. But I also didn't have time to go and drive 45 minutes to an hour to go sit I mean, so I did the, however, include them in my Widow's lunch every Valentine's Day, which is Saturday this but I would do it during the week. All of our widow clients would, we would host for lunch, but I couldn't fulfill on my commitment from where I was, and that was a tough one. However, they actually found someone, here's how it ended. They found someone local that could so, as painful as it was, the right thing was, they needed someone that could work with them, not try to stay tethered to me because I felt bad, which I did. Do you know what I'm saying? So, like, it's like finding the right fit, oh yeah. And sometimes you outgrow people, because you can't make your decision on where you're going based on, I have to stay at this like it's, I've never seen a business do that. Like I can't stay at if I stay at this level, I actually probably regress because of capacity. I know it's a it's, it's a paradox, no conundrum. I don't know one of those words

Jason Croft  19:39  
in your night classes you're taking to become an astrophysicist.

Joe Blackburn  19:43  
You got to fight the three people that watch this. I'm thinking about it now. I guess if I were to round it out, make the decision to go bigger and faster and. Then you're going to be tested on your ability to pull someone else up, which, by the way, if you get good at those two things, you're gonna have a pretty good business.

Jason Croft  20:09  
Yeah, that's the secret to business. I mean, because that's the other thing is you were counting off those things of why people don't do it. Another one is, oh my gosh, that skill of, I've got to train somebody, I've got to put these things like, yes, you do the idea. It's overwhelming, it's just all right, I'm going to sit down, go through everything that I do to communicate that. And, yeah, that's why it's hard, and that's why it's so important, and makes all the difference, because that is the only way to grow and progress. You do. You have to constantly judge those things for yourself and sometimes take it to that extreme. Because what's the alternative with you? Back at Edward Jones, is it you saying, Well, I just got to stay I mean, these, these couple of widows, like, I've just got to stay here. I've got to just not do anything else because, like, that doesn't make sense. So Okay, then let's look for alternatives. Let's look for ways to accomplish this.

Joe Blackburn  21:17  
It's a heartfelt decision. Maybe I'm blind. I would always think people would want you to be more and more successful. Give them the benefit of the doubt, and if they're taken care of, you've done a good job. I think we're the actual ethical dilemma is, like you said, we're now, I try to do it all, and nobody is getting the right fulfillment. So like, the fear of letting go, and, yeah, I mean, this could be a whole different topic, because we're talking how to grow the clients in the business. And you hit on, you know, the other issue that I think everybody is really having a time with is acquiring talent recruiting, because hiring is your best bet, right? Like, I'm gonna bet this, we go through that. I mean, if you hire someone looking for a job, you're rolling the dice. No question. That is no and then can I develop who I have and if you got good at all three? That was six, by the way, if I got good at all three. So if I could ascend in what I do, I can attract and recruit the right talent, and then train them, develop them, coach them, pour into them. Now I my limits start to dissipate. That's kind of I think that's the key to scaling. My favorite word scale, really. So I mean, if you get so as so in sequence as I go up, by necessity, I either have to bring up or bring in, and I have to be good at all three, because I'm the leader. You gotta be able to walk and chew gum the same time. And you've seen those people. They're on a mission. They're like, I'm here. So all right, is that enough for today?

Speaker 1  23:05  
Moral of the story is, it's hard. Do it figure it out. It's good advice.

Jason Croft  23:11  
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Speaker 2  23:45  
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