The Recession-Proof Business : Chapter 10
The Chief Rainmaking Officer
In a previous chapter, I shared the story about how I grew one of my product lines from $500 a month to $30,000 a month in 90 days. Now, I’m going to share the story of how I took that $30,000-a-month product line and shrunk it to $15,000 in three days. As you’ll recall, I grew that product line by systematically trying new promises in my ads and tracking the results. Because I was using direct response marketing that’s accountable, I could drop the least profitable ads and keep experimenting with the most profitable ads.
As you might imagine, I was thrilled with the very fast revenue growth. This continued for about half a year until in a span of three days, my sales from that product line dropped by 50 percent. Here’s what happened. At the time, my marketing for that product line consisted of running ads in only one advertising source. One hundred percent of my income from that product line was tied to a single source of leads and new customers. That publication made a simple policy change that required me to run my ads half as often as I used to. Within three days, my ads were showing half as often, resulting in a 50 percent drop in revenue almost overnight.
That one policy change cost me $180,000 in revenues over the next 12 months. While I was disappointed, I realized that I had made an enormous mistake. My entire marketing effort was tied to a single source of advertising, a single way to get prospects, a single customer source. I had all my marketing eggs in one basket.
I have a saying that in entrepreneurship there are no failures – only successes and lessons. Through that experience I learned a huge lesson – I needed to acquire new customers from multiple sources. The other thing I got was an $180,000 “tuition” bill courtesy of the school of hard knocks.
The rest of this chapter shows you how to insulate your income from volatility. It shows you both the mechanics of how to do this and the role you personally must take in making this happen.
The three keys to income stability are 1) recognizing your role as a Rainmaker; 2) continually finding new sources of customers (e.g., new places to advertise profitably, new market segments to target, new distribution channels to target); and 3) once you tap into a new source of customers, get your team to serve those customers while you stay focused on finding additional sources of new business.
Here’s where most people go wrong. They start their business and stumble upon one, maybe two, customer sources that produce some results for them. Once they find something that works, they stick with it. There is nothing inherently wrong with this approach except that it’s extremely complacent. Just because you have one customer source that works does not mean you should not look to establish additional ones.
One of the reasons some companies fail in a recession is an over-reliance on too few customer sources and revenue streams. In a booming economy, a rising tide lifts all boats. A strong economy can mask the fragility of a business that is over-reliant on too few customer sources. But when the economy turns or the company hits a bump in the road, all the weaknesses in the business suddenly become exposed.
The Chief Rainmaking Officer
As the CEO of your company, it’s your role to be the Chief Rainmaking Officer. Rainmakers are the people most responsible for generating revenues for a business – they’re the chief marketers for the business. If your business is profitable and growing like crazy, it’s because you did a great job of being the Rainmaker. If your business isn’t growing at all, that means you’re not doing a good job as a Rainmaker or you aren’t spending enough time on “rainmaking.”
This point cannot be stated strongly enough. Your role must shift from “operating the business” to “growing the business.” You absolutely must reduce the time you personally spend in operations and shift it to revenue generation – and in particular in establishing new revenues sources that are then managed by your team. You must become a Rainmaker.
The Rainmaker’s #1 Job – Finding New Sources of Customers
As your business’s Rainmaker, your #1 job today, tomorrow, and forever is to find new sources of customers to tap into.
Think of each new customer source as the equivalent of an oil well – something that has enormous profit potential. Your job as a Rainmaker is to spend your time drilling for new oil wells (customer sources) because it’s the single most profitable, highly paid use of your time. Once you strike oil, bring in your team to pump out all the oil. This frees you to go drilling for new oil wells.
If you’re very good at finding new oil wells (e.g., you really know how to market), you can pay others to pump out all the oil for you (e.g., fulfill on promises made to your customers).
If you don’t do this, you’ll spend all your time trying to pump out all the oil from just a single well. This is fine temporarily, but at some point that oil well will run dry and you’ll be on the feast or famine roller-coaster ride that in a recession can be lethal.
I dedicate one day a week, Wednesday, to “drill for oil” or to look for and tap into new sources of customers. I keep my calendar clear on Wednesdays just to look for new customer sources that I can tap into. I don’t take any phone calls; I don’t do any client work; I just drill for oil on Wednesdays.
Whether you dedicate a whole day a week to new customer sources or an afternoon a week or an hour a day, some portion of your schedule must be focused on this critical activity.
How to Evolve into Your Rainmaker Role
If you’re like many business owners I know, here’s how your story goes. You launched your business by offering a promise to your prospects that was not especially unique, compelling, or credible. You simply promised the same thing as your competitors. In most cases, your prospects couldn’t see how you were different from your competitors, so they did not reward you with their business.
Because of the lack of business, you can’t afford to build a team and get others to do the operational work for you. Because you have to take care of customers personally, most of your week is spent on operations and you only take on the role of “Rainmaker” when you have no customers to serve.
You cycle back and forth between feast and famine. When you get a lot of customers, you get so busy taking care of them that you stop generating new business. For a while you feast off of the new customers then eventually you don’t have enough business to sustain you. So you end up back in the famine mode desperately looking for new customers.
Here’s specifically how you break this cycle:
It all starts with marketing, specifically with crafting and communicating a unique, compelling, credible promise. You keep working on your promise until it’s truly unique, definitely compelling, and incredibly credible (with a lot of proof and testimonials to back up your promises). Once you have the promises in place, you want to charge above-average prices. Charging above-average prices only works if what you have to offer is unique, more compelling, or more credible than what your competitors have to offer. If you’re not unique, more compelling, or more credible, you’ll have a very hard time charging above-average prices. Again, crafting a unique, compelling, credible promise is the key to charging higher prices and breaking out of this cycle.
Once you have a winning promise in place, use that promise with your existing sources of new customers. Charge prices that are slightly higher than your competitors and use that extra money to hire the staff needed to manage your operations. The kind of help you need varies depending on the business you’re in. What you do need to do is get someone else to handle the most time consuming, lowest revenue producing activities that you currently do personally. This can be an employee, a contractor, or a vendor. I tend to lump them all together as “team members.”
Take the time you’ve just freed (initially it might only be one to three hours a week) and apply it toward rainmaking activities.
Use the time to create ads and test different places to advertise. Start small and increase your marketing investments on the profitable sources and shrink or eliminate your investments on the unprofitable sources.
When you get a source to work for you, congratulations! You just found another oil well. Now take the money you make from that lead source (the oil well) and pay to expand your team to handle the fulfillment of the promises you made to those customers. In other words, get your team to pump all the oil out of the well for you.
Use your time to continue to look for, test, and tap new customer sources. Repeat the process over and over. Once you’ve exhausted all the possible sources for new customers, work on establishing new revenue streams. These can be new products or new services or finding new markets to go after.
That’s the Rainmaker’s role in a nutshell. It’s where you need to focus your time in order to prosper in a recession. So pay attention to where your time goes today, and work to shift an increasing amount of it toward rainmaking activities. It’s a key step to recession-proofing your business.