#335 – The Art of Business Systemization: Lessons from Josh Fonger on Building Efficient Workflows and Boosting Productivity
In episode 335 of the AM/PM Podcast, Kevin and Josh discuss:
- 02:45 – Josh’s Backstory And How He Started Working With Sam Carpenter
- 05:00 – How Is Work The System Different Than The E Myth?
- 08:00 – How Do You Start The Process Of Setting Up Your Systems
- 10:30 – Creating Systems And SOPs: Is It A Laborious Project?
- 14:00 – “But I Can Do This Better, Faster, And Efficiently Myself!”
- 16:15 – Differences Between Amazon/Ecommerce Seller And Other Business Industries
- 19:40 – The Goal Is To Shift Into A Premium Pricing Model
- 21:30 – Common Stumbling Blocks That They Have To Work Through
- 27:00 – How To Handle Pushbacks From Employees
- 29:45 – How Long Does It Take To Systemize My Business And Step Back?
- 32:30 – Is Work The System For Established Businesses?
- 34:45 – How To Work With Businesses With A “Yo-yo Model”
- 36:45 – Talking About Growth Systems And Client Lifecycle
- 39:40 – Tips On How To Increase Your Personal Productivity
- 46:35 – How To Contact Josh Fonger
- 47:48 – This Week’s Golden Nugget Advice From Kevin King
Transcript
Kevin King:
Welcome to episode 335 of the AM/PM Podcast This week, my guest is Josh Fonger. Josh is a systems implementation expert. You know, a lot of us start off as single-operator entrepreneurs, and as our company grows, we need to hire people, we need to set up systems so that we can quit working in our business and work on our business. And Josh is one of the main consultants for a system called Work the System. It started out as a book published about 15 years ago, and now he is consulting lots of small businesses, everything from e-commerce to restaurants, to you name it. And today he’s gonna be sharing some strategies and tips on how to adjust your mindset and start developing systems for your business. Enjoy.
Kevin King:
Josh Fonger. Welcome to the am pm podcast. It’s so glad to have you here.
Josh:
Hey, Kevin. Great to be here.
Kevin King:
So a lot of people have probably never heard your name. You know, sometimes on the AM/PM Podcast, some of the names are familiar to the audience, and sometimes I’m introducing new people. You’re one of those new people that I bet the majority of these folks listening right now have no idea who you are. And you know, it’s something by the end of this, this talk, I think they’re gonna know who you are, and hopefully, some of ’em will actually probably reach out to you to get a little bit of help in their business. Because what you specialize in is helping small businesses and large businesses, both anywhere from a hundred thousand dollars, I think on up to, I think you’ve worked with hundreds of millions of companies doing hundreds of millions of dollars actually come in and either fix the systems they have or set up systems to actually systemize their businesses. Do I have that right?
Josh:
Yeah, that’s right. You’re making me feel bad that no one knows me, but that’s okay.
Kevin King:
No, no, no, no. So you’ve been doing this for a while. I understand the way I understand it is, it’s called Work the System. And it was developed by a guy named, I think Sam Carpenter, I think the book came out about 15, 16 years ago, something like that. And then you, you went through the course, and then you partnered up with him to actually do all the consulting and the helping people implement everything. Is that correct?
Josh:
Yeah, yeah. So I was a business consultant kind of traveling the country for several years, and I pumped into Sam Carpenter up in Bend, Oregon. He just released his, I think, second edition of the book Work the System. Now it’s in his fourth edition in a bunch of languages. And one thing that you definitely wanna do if you just tuning in is check out the book, Work the System. It really can transform your life, transform the way you see business and your life. But basically when, when Sam and I started working together he said he wrote this book about how to get freedom and to grow your business simultaneously. And he said, now that I have this book out there, people keep calling me, keep emailing me, and they want help with their business.
Josh:
And he said I don’t want another job. Like, I don’t wanna be a consultant. And so at the time, that’s what I was doing was business consulting. And so I said, well, maybe I should take on some projects. And we did a few projects together. I hit it off, I think that was around 2010-2011. And ever since then he and I have been working together. He’s still my mentor. He doesn’t have to work, doesn’t, but he enjoys the work. And I just do all the coaching, all the consulting, all the certifying of other people who want to learn how to work the system or develop their business in a way such that it scales and grows where they don’t have to be there all the time, where their business and they are separate. And we do that using Sam Carpenter’s methodology.
Kevin King:
It’s a thing in the Amazon selling space, where a lot of people start off small, they start off five, $10,000, maybe they’re a one-man operation, wearing a lot of hats, doing a lot of things. And then as they grow, they start to hire a few people, maybe a few VAs and they often reach a point where they either are getting close to burnout or they just can’t grow it anymore. And by setting up systems, it’s more of the keys to actually helping you actually grow your business, and get a better multiple for it if you sell. And people always say that the more valuable you are to your business, the less valuable your business is. And so, work the system. How is it that some people have heard of the e-myth that was kind of a similar thing? How is work the system different than something like the e-myth?
Josh:
Yeah, I get that question all the time. So people refer to Sam Carpenter’s book Work the System as the book that Michael Gerber never wrote or that he should have written next. And it’s very much a how-to book on how to actually not just theorize about having a company organized and documented and run on systems, but actually how to go about doing it. And it takes you through a story, Sam Carpenter’s story where he was working a hundred hours a week and living at the business. There was an answering service up in Oregon, and how he was able to separate the pieces of the separate components that made up his business. And he was able to document not only the strategy, the principles, but the procedures that were made of the business. And while he did that, he watched his work time go down eventually down to two hours a month, and his income goes up 20 times.
Josh:
And that’s what he details in the book Work the System, and how to actually do that in practical terms. And yeah, I couldn’t agree more. I mean, once you do it of course the value of a company goes up. The mistakes go down, the profitability goes up, the speed goes up, the quality goes up, and you can raise your prices. I mean, there are so many benefits to getting this work done, but it’s the work that is not as exciting as some other works, it’s most people like the kind of creative risk-taking new ventures. This is very much a focused effort on the parts of your business that are happening now and getting them better, getting them so good that they can almost run on autopilot. And it’s hard to get entrepreneurs to slow down enough to actually focus on their systems.
Josh:
And once they do, they realize that there’s gold in their business will say they have a mine for the gold that’s already there. They just never saw it, right? They think that the opportunity is something new. They think the opportunity is some new innovation, some new product, something new that hasn’t been tried before. And that could be true. There’s, there’s a lot of risk with that, a lot of potential. But if you just make what you’re doing now that you already have customers for, you already have a product or service for run better, that’s risk-free. And there’s likely way more potential and revenue and profit there that just hasn’t been realized yet. And that’s what we really push business owners to get focused on.
Kevin King:
So it’s a big mind shift. And that’s difficult for a lot of people that either like the control or think that they can, they’re the only ones that can do it, right? So how do you start this process? How do you begin the process? And you got an entrepreneur that’s doing well, he’s working 80 to 100 hours a week. He says, okay, I need to systemize this. I need to get outta work and get my business and work on my business. How do you, how do you start that process and make that shift? Because it almost seems like it’s a lot more work in the beginning because you’re still running your business with your hands and everything, and you’re at the same time having to go through and set up these systems. So it seems like it might be a lot more work, in the beginning, to actually work less later on. Can you walk us through how that process works?
Josh:
You’re totally right. That’s what usually prevents most people from getting started is they are already working hard, and so they would prefer just to stay stuck and do things the way they’ve always done them. And they plateau, right? They plateau, they burn out, and then their company goes out of business or they just barely make it, and they continue on and on and on. And that’s the story for most small business owners. So we really only work with those who are, they’re ready to grow by multiples 2x, 5x, 10x. They actually see a future of selling their business or opening up new locations or really expanding. It’s those with a bigger vision, and a bigger future, who are willing to change their mindset and change the way they operate.
Josh:
But if people have a small goal for the future, they have a small vision, they tend to just stay stuck sending out the support request emails, and packaging the boxes themselves like those people that they’ve already capped their future and it’s just a better of time until someone else goes into their space and runs a better business and puts them out of business. And so that is true. Now, in terms of the hours, very practically speaking, there are a couple of ways that I’ll strategize with an entrepreneur. If they have some extra cash, but they don’t have any extra time, then it’s about developing the systems to bring on some help to do more of the work so that they can free up more time and they can scale because they have extra cash set aside.
Josh:
If they don’t have the cash, then it’s about building more time. And there are two ways they can build more time. One is doing less of what they’re doing now, so either temporarily or permanently reducing their work week. And I have a systematic way of structuring in their day to find that time, or it is to work more hours, right? Which is also a possibility. And some people, they just say, Hey, you know what, I’m gonna grind it out. I don’t have any kids yet. I don’t have any family. I’m just gonna work an extra five hours a week or 10 hours a week, and I’m gonna put this infrastructure in place, which is gonna free up time, and I’m also gonna bring this team on. And they go that way. So there are a lot of ways to slice it. But in the end, it comes down to whether are they willing to see their business as a separate entity made up of systems, or is the business them, and the business is them, it’s gonna just stay at this maxed out level, whatever that level is. And so they do have this type of mind shift about it.
Kevin King:
A lot of times everything is in their head, so you’ve gotta get out, like you’re saying, if they’re doing the support tickets or maybe they’re doing the customer service, or even if they’re packing the boxes, they know, oh, this zip code is wrong, or this address is wrong, or here’s some strange question that comes in off the customer service. So just getting everything out of their head and into like an SOP or into something that someone else can manage and do is probably a laborious project, right?
Josh:
It’s a very labor intensive, and it’s not super complicated or, or difficult in terms of what entrepreneurs like to challenge. It’s not a big mountain to climb. It’s just lots and lots of small steps. And so I try to if I can bring on some sort of support person along with an owner or an operations manager or an administrative assistant or an online business manager, somebody with them to help them extract the data, which is gonna either happen through a Loom video or a Snagit video or screenshots or an audio recording or video recording, some way to kind of capture the work, how it’s happening and then help them document the work. And sometimes my team does that for entrepreneurs and documents the work and then saves it in a place where people can find it, where people can update it or people can use it for training and cross-training and onboarding and things like that.
Josh:
When if you just have a couple of procedures documented, it’s not gonna be very valuable. But once you have 10, 50, a hundred procedures documented, then it becomes very valuable because you have this portal, this place where all of the work that happens in your business has been already figured out. It’s been mechanized. And now it’s, it’s about finding people to do the work. Not let’s go talk to the owner because the owner is the only one that knows how to do it. And it does take some time, it takes some time to unravel that from the owner’s head, but it has to be done, right? So you are gonna start it now, or you’re gonna start it in six months, or you start it in three years, but eventually, it needs to happen.
Josh:
And so it’s better to just develop a strategy and a culture and a practice of doing it as opposed to waiting to the perfect time. There really is no perfect time. The majority of my clients come to me after some major disaster happens. Either quality control, a staff leaves, health issue, family issue, like a disaster happens and then they say, Hey Josh, I need to finally take my business seriously because like these disasters keep happening and I can’t afford another one like this. And then they finally wake up. And so I just typically wait on the sidelines until that disaster happens because it’s hard to cajole and push someone into doing it and tell some of those near-fatal shots to happen first.
Kevin King:
What about someone that’s robbing Peter to pay Paul? They’re, they’re on a shoestring budget. And like the example, you gave earlier where they’re the ones packing the boxes and they’re like if I’m packing these boxes, I can do 50 boxes an hour. If I hire some guy, he can do 10 an hour because and so I’m gonna be paying him X amount of money. And then half the day he’s gonna be sitting around maybe doing nothing. Instead of just, their mindset is, well, I can just do this better, faster, and more efficiently and actually keep that money to myself. How do you get someone to shift from that? And especially if there’s constraints, financial constraints on it, how do you walk ’em through that process?
Josh:
Yeah, well, that’s there are always constraints, time, and money. It’s always gonna be a constraint. And so I always examine everyone’s business model first to make sure their model is actually going to work, right? Like, they actually have an effective model. So if everyone in your space is, let’s just say using foreign labor, whether it’s in the Philippines or Mexico or whatever, but you’re using labor from San Francisco, they’ll have a college degree. Well, your model might be set up to fail, right? Like, you might just be organized in a way that’s just not gonna profitably work. And so I always analyze a company’s last two years, financial statements, and balance sheets to see like, where is the money going? How is the money coming in? And does this model even make sense? Cuz sometimes your model is set up in a way that of course is frustrating you because it’s just not gonna work.
Josh:
Your labor costs are too high, your shipping costs are too high, whatever it is, your pricing’s too low. And so it’s always part of the shift is that if we’re gonna build a system to scale your business, let’s say you actually have a good business to build. And so based on what you’re saying, it could be a number of things. The pricing could be too low, or the labor’s too high. Like you’re trying to find high-on-labor to-do boxes. I had a company that, that was a shipping company and we, we brought in you know, juniors and seniors in high school to do the shipping, right? And so instead of having maybe costly labor, they had a labor that came in a couple of hours, a couple of days a week to do boxes. Okay. That was simple enough, or you can do it maybe a third-party shipping company that’s in inexpensive. So there are a lot of ways to slice it, but in Amazon, you can’t overspend for labor or you’re gonna be in trouble cuz it’s very competitive.
Kevin King:
Do you see any differences? I know you work with clients in all kinds of fields and you’ve done some work with some, some Amazon clients and you said one of the guys that you trained took the system and actually took it to help aggregators in this space actually learn how to systemize the businesses that they were buying. Do you see any differences between the Amazon e-commerce seller? Say a restaurant or a shipping company as you said?
Josh:
You know, every industry has, I mean every vertical has its nuance to it. So I don’t know. I mean, right now I’ve got a guy who owns multiple tennis facilities. So it’s about making the best product to get the most youth tennis stars out of there. And they’re all about how to maximize what they can charge and maximize the utility of their space, right? And I’ve got another client who does own a restaurant and we’re working on lowering food costs by having really dialed in recipes exactly how much, how many grams, and how many ounces of all different food products and making sure that the way they sell is for top dollar in terms of how they sell and how to maximize the capacity of their space. So in the end, it’s money coming in and money going out.
Josh:
So you do have to analyze those things and in the end, every business is made up of systems components and you wanna maximize each one of those components for efficiency and speed. Maybe the only thing with Amazon is that would be nuanced to the industry that, again, I’m not an Amazon expert, would be that it’s moving fast, right? So it’s dynamic. You don’t set the rules because you’re selling on someone else’s platform. Whereas if you’re selling on your own website, if you’re selling in your own real estate, then you can set more of the rules yourself. And I would also believe that on Amazon it might be difficult to price, and I could be wrong depending on the market at the premium price points that you can in other more localized business situations where there is, it’s the internet, right?
Josh:
There are a lot of options for people and if you are not competitive on price or differentiated in a very big way, it’s probably more difficult for those people on Amazon. So yeah, I mean I had a client a couple of years ago that sell automobile parts, and they were on Amazon and they also had their own e-commerce store and they just weren’t set up price strategically when I met them. And they just got buried because I could not compete on price. And when people were buying these car parts, price mattered and they can search with one click of a button and choose someone else. We’ve got another guy who sells cigar products and humidors and the only way they’re competing at price is their private labeling their own products and they’re building a premium brand and they’re trying to get people to buy consumable products from them that they have to buy on a regular basis so they can engender some loyalty to their brand. But installed business 101 stuff. But I think Amazon just, you don’t get to set as many rules as you want to set and the competition is probably fierce, right? Once people realize that a certain product is selling well on Amazon than anybody in the world because it’s a low-buried entry can decide to sell a similar product and cut you down.
Kevin King:
It was one of the goals. It sounds like you’ve mentioned this a few times in and worked the system to actually try to shift to more of a premium pricing model. Is that whenever possible, I mean, like you said, sometimes it may just not be possible, but is that one of the goals?
Josh:
It is. It can’t always be done. I’ve got a company right now that I’m working with that does construction striping and construction security equipment and they always, and they’re doing 10 million a year, but it’s low price bidder. So as low price bidder gets the job and so they have to be efficient and they can’t really be a price premium. But whenever you’re systemizing a company, you want the work and the effort and the investment you’re putting into the assets, you’re building those systems to align with the strategy. And what do systems do? Well, they tend to improve your quality. They tend to reduce mistakes and they tend to make the workers that work in your business just do things better, right? So whether that is speed and responsiveness or that’s producing a better product or service. And so naturally when I have clients who do that, I got an accounting company I’m working with right now, they’re producing a better service.
Josh:
So they shouldn’t be the low price, they should be the high price, right? And so that’s part of what we try to do is say, Hey, if you’re gonna be more responsive and have better customer service and higher quality to what you do, cuz you’re training, you’re onboarding your staffing, you should also charge a premium price because of it. Now, with some of the Amazon sellers that might not be possible. And so for them they might have to, I dunno, pick a different avenue, but I’m always, if it’s possible to be premium prices, I would prefer to be premium and to figure out a way to make that part of the unique selling point of what you offer. So that’s what I do.
Kevin King:
So when you’re working with a new client that’s, that’s wanting to systemize their business, what are some of the bigger things you get pushback from the client on? You’re like, you need to do this, and this, and like, why not? Why do I need to do that? Or Nah, that takes too much time or costs too much, or what are a few, like two or three of the big stumbling blocks I guess for them that you have to work through?
Josh:
Yeah, there’s usually a lot if there are multiple owners or partners, it’s getting buy-in. That tends to be a difficult thing is people, they get in habits and they don’t like to change. And so getting one person to change is hard getting two or three or different partners to change. That’s even more difficult. And so getting people to align by a new way to operate their business is, is always a challenge. And so we take people through an exercise called writing a strategic objective or essentially writing your business plan. Like what is your business going to do? What is its goal of it? How it’s gonna operate? What is the objective of your business? Cuz you want alignment. And so getting people to actually write that strategic document is difficult because they don’t always know where they’re going.
Josh:
And they don’t like to put it in writing. They prefer to be nimble and flexible and reactive. And I’m trying to say, if you want to stay the course and build a team and build infrastructure that’s going to actually pay you back, then you have to actually have a clear written down strategy. That’s usually where I get pushback. And the other pushback is on the staff. Cuz if you are used to having a chaotic operation, you probably have staff that knows a lot in their head, but they are great in environments of chaos that they’re just good at being responsive, they’re good at putting out fires. And so that’s your team. And now you’re developing a business that prevents emergencies from happening that prevents problems where people can just go in, do the work and leave and they don’t have to be stressed on the weekend about jumping in to solve a problem.
Josh:
And that’s a different kind of mindset and culture. And the staff that’s really good at handling emergencies doesn’t always like the shift. They kind of like things lost. And so you have to get them to buy into this and give them new challenges to tackle. And typically you can bring in less trained, less expensive, less educated staff to work the systems you document and they just like to come in and do consistent work and they’re usually really good at it. And so your staffing might be not exactly aligned with this new way of working either. So let ’em know that’s part of the, part of the growing pains towards growing an organized business versus a business that’s driven by the seat of your pants. And those are some of the problems. And the biggest problem ultimately is the documentation part.
Josh:
People will really like the idea of, hey, we should write down how we do this. Or others can do it just in case someone gets sick or leave. But doing it does take some time, it does take some focus. And what I try to show people is that if you take that focus, you’re going to find the money you didn’t know is there. And one of the clear examples that I share is a small parts factory that I was working with in Michigan. And so they would produce these small parts and they had been in business for I wanna say like 40 years, a long time, long time. And he said everyone kind of knows what they’re doing here. We’ve been doing this for a long time they don’t really think this is gonna be valuable. And said, just, just humor me and write down a procedure for something that you do every day.
Josh:
Just write it down. And so he wrote down the procedure for how they change shift from first shift to second shift. They had 20 employees on the first shift on the machines, 20 on the second shift. And so they wrote a procedure for how to change the shift. And I said, so what’d you find out when you wrote this procedure? And he said nothing really. We’ve been doing this every day for a long time. And I said, let’s look through each step and could we do this better? Could we do this faster? Could we do a handoff a little bit quicker? Recalibrating the machines between the handoffs. How about the communication between the first shift and the second shift? And we come to find out that the first shift and the second shift had a 15-minute overlap every single day. And this was you know, they’re paying for this.
Josh:
And I said, well, based on this, how long do you think it’d be? And he tested it out and it was a five-minute overlap of time. And so instead of having basically 40 employees overlapping 15 minutes of payroll time, you’re paying as an owner, it moved to five minutes. And so I said, what’s that worth your company? And he said he did the math. And he’s like, well that’s, that’s a hundred thousand dollars of saved money that I was spending on people not really being productive. And now that’s saved. And so he is like, I wish I would’ve systemized that one process a few decades earlier cause they would’ve saved me a lot of money. And just, he’d never really taken the time to look at something like that. He didn’t even know that it saved him time when he wrote it down in the beginning, it was pushing him to his strategy and then why don’t you take that benefit and translate it for five or 10 years because this system is going to hopefully not become obsolete next six months, but actually be effective. And once he did that, he realized how much money was wasted. And then he of course was more excited to write more systems, right? And find out what other things were being done inefficiently.
Kevin King:
So when you go to employees and you say, Hey, well I want you to document what you’ve been doing. Do you get pushback from the employee? Like, why would I do that? I’m just setting myself up to be fired or to be let go so that someone else can just step in and do my job. So what kind of pushback and problems exist around that?
Josh:
You’re, you’re right, some of them can see right through it and they think, okay, this is not gonna work out well for me. Especially if they already have a bad attitude and haven’t been doing quality work. There’s a couple of different strategies. Again, it depends on the industry, the company, and the owner. But if the owner is saying, and it’s true, we are growing, look at the last six months or year and I have big ambitions for the expansion and I wanna take you with me cuz you’re a good person. And people are excited to document because they’re like, okay, good, I can actually expand my career potential here. I’m gonna move up the ranks and this is a necessary part of growing a stable quality business. Those people buy in because they see that it’s necessary to do it.
Josh:
The other strategy is that you just make it part of what everyone does, as in, hey, we work with outside vendors, they document we work company-wide from top to bottom, we’re all gonna do it. It’s a major initiative for this year, so everyone’s doing it. So you don’t pick on one person or one department, you just, hey everyone do it, right? That tends to help because then they don’t feel like they’re being targeted to be remote. So the expansion and then the, everyone has to do it. And then also what helps people buy in as incentives and in terms of negative and positive ones, as in, if you get this done, you’ll get a bonus. If you don’t get this done, you can’t work here. You know, like negative and positive. And so if there is a clear timeline for getting your initial package of procedures done, let’s just say each employee has maybe 20 they work on or within.
Josh:
So if they realize there’s an incentive and a goal and a timeline, that usually gets them focused to do it. But yeah, there always is that concern is a bigger concern when the company’s going down and the employees know that, then they get more nervous if they’re documenting what they do. But you still wanna do it. Like when people know they’re being laid off soon, my goal is to at least get some record of what they do is. So that just might be screen recordings audio recordings, video recordings, or it’s having somebody shadow them for the week, just someone shadows every single thing they do and writes it down again, it’s very obvious that the person’s gonna be let go, but if you can get some of it, it helps. So best case scenario, your companies growing and then people are excited to be a part of it.
Kevin King:
Typically, how long does it take from the time someone says, okay, I’m ready to systemize my business into actually having it up and running where they can step back? I know it probably depends on the industry and the complexity, but that’s just like a rule of thumb or a general how long does this process take?
Josh:
Yeah, well you kinda stole the words outta my mouth. Yeah, it depends on a lot of factors. But for those listening, the more simple your business is, and that’s what I try to do is simplify companies. The simpler the business is, the easier it’s gonna be and the faster it’s gonna be. But you don’t have to feel like the benefit happens once I’m done. The benefit happens once you start. Once you start, every system you put in place is going to be a packet of productivity that’s going to help your bottom line. And so you can see each time you get a new system documented as an accomplishment and as a success to a project. You just have lots of little projects to work on. And I really try to push people towards a culture of continuous improvement as opposed to let’s just get this done.
Josh:
So the more you can make it a strategic shift, a cultural shift, and you can celebrate the wins of each system being documented. The less I guess painful it is because you don’t feel like, well, it’s just gonna suck at work and for the next six months until we get this done. And I’ll say that some departments, they do it really fast. Like I’ve had departments get every single thing and documented their whole department in three weeks, two weeks. For other companies, it takes six months, if they go slow, it might take a year. So it kind of depends on how, how much urgency they push with a particular initiative like this. Companies that push too hard, too fast, and I’ve seen this happen, end up falling apart because there’s not enough time for them to really think about each system in terms of making it better and training their team on the new ways of doing it, and then to let it actually play out and update it based on the feedback that the real world provides.
Josh:
And so I prefer like a middle-of-the-road pace where you’re, you are making constant improvement, you’re getting a feedback loop on how the new systems work, you have a chance to update that and it’s not distracting from your core business. So this is kind of one of those things that it’s happening in the background. It’s not like the front burner. It’s a, it’s a back burner always happening in the background part of your business and that’s ultimately what you want to set up for your team. Otherwise, they will rush, get it done, they’ll forget about it, they won’t use it. And then three, three years later you’ll say, Hey, all these things are obsolete and no one’s even using them. And that’s what you don’t want because then you have to do it again.
Kevin King:
So how does it work? So Work the System, is it more for established businesses that are already up and running so you can go in and actually document what people are doing, or what if I’m new and I don’t have a system? I’m new, I don’t know every single little thing yet that someone needs to do. I’m developing that I’m figuring it out as I go. Will this will work? Does the system work for a new entrepreneur as well as someone who has got an established business? Or is it more for something that’s already established?
Josh:
I’ve worked with all kinds, I’ve worked with a lot of clients that are pre-revenue, they just have an idea. But that’s rare. As long as you have money going in and expenses going out and you’ve been doing what you do for, I dunno, several months at least, and you’ve tested out the business concept, the business idea, and you’re like, yeah, this is going to work. People are buying what I’m selling and I have ambitions to grow it. Yeah. And then that company is at a point where we can work with them and, and start to document their systems as they grow their business. Oftentimes we’ll work with companies that have been around a while, but they’ve hit a plateau, right? They’ve, they’ve gone as far as the owner can take it, they’ve gone as far as the team can take it and they say, you know what just keeping it in our head is not working any longer and so now can you help us grow our business even further?
Josh:
But I’ve had companies that if they already know, hey, this model is going to work. Actually, I just got a new client who has a pool company, right? And he’s launching his pool company pool cleaning company next month. And so we already got engaged because he knows he wants to run this pool company in a very systematic way where he’s personally not washing and maintaining any pools vacuuming them, but he’s steady at the system so that you can have teams of people do that work. And it’s not a risky business model. It’s been around forever. It’s not something that’s so unusual that we don’t know if it’s gonna work. We do know it’s gonna work. There are pools there, there are a lot of pools there and somebody needs to clean them, so it should work. But we do need to actually develop the systems along the way. And so that’s what we’re gonna do.
Kevin King:
Some of the businesses you work with are probably yo-yoing back around. Can you tell people what that is and what are some of the tactics to actually help those types of businesses?
Josh:
Yeah, so a yo-yo business would be one that is tied to a string, right? It’s never going to go anywhere. It’s just gonna kinda go up and down, up and down. And if you look at their financial statements over the years, you realize that they’ve hit a ceiling, a plateau. So the owner will realize that the numbers are low and so they’ll busy themselves making new sales. Maybe they’ll focus more on advertising, marketing, getting out there, and generating new business referrals, and they’ll grow the business. But then it’ll grow, so they’ll have to serve the business. So they’ll be out there actually delivering those products and services based on new sales. But while they’re doing that, no one’s doing, doing outside sales and advertising and marketing efforts. So as soon as they serve those new sales, it starts going down again, and then it gets to another trough and then they have to go out and generate new business.
Josh:
And there’s on this endless cycle of trying to get new business, trying to service the new business, trying to get new business service, new business. And they don’t see a way out from that because they are the business and we call that a yo-yo business. And so when I see financial statements where they really aren’t going anywhere, they’re just stuck. I’ll let them know they have to actually, they can’t be the driver of every effort in their business. They have to build up a team. They have to enable that team with a strategy and systems, and then they have to actually have a place they’re driving towards instead of just trying to make it as in how much do we have to make to survive? Let’s do that much work. That’s different than the question of how much like where do we want to go and what systems we need to build to get there. And that could be multiples of where you are now. And so really as a shift of thinking that’s gonna allow you to get out of that yo-yo business model.
Kevin King:
So a lot of businesses, it astounds behind me of ’em do this. They work really hard to get a new customer and get new customers into the door, and then they ignore them after they service them and they take care of them for whatever that issue may be. Then they, then they ignore them. And there’s, it’s so much easier to sell a past customer on something that it is to get and cheaper in most cases than to get a new customer. So does Work the System help these businesses identify those opportunities and those strategies as part of systemizing everything?
Josh:
Yeah, yeah, definitely. That’s one of the systems we work on is certainly we call it growth systems. And so we’ll take companies from the start to the end of a typical client life cycle and then we’ll look at where those areas where they’re actually generating new revenue based on that client and then develop additional systems where they could maximize that either through raising the price, additional services, referral work, repeat work, residual work, you name it. But the whole point is you already have systems in your business, but how do you maximize them, right? So if your client comes to your business once every six months, is there a way to make it so they come once every three months, right? If your client’s average transaction is $2,000, is there a way to make it $2,200? And so everything you’re currently doing, the idea is let’s look at that system and see what we can do to improve and expand it.
Josh:
And you’re right, a lot of people, don’t go back to previous clients. I had a dental office and that was the biggest way to grow their year, as they were always trying to get new dental clients. And I said, have you ever called or emailed or reached out to your previous clients who had diagnosed treatment plans, whether it’s cavities or root canals or bridges or braces or whatever, and just said, Hey, we haven’t seen you in, do you wanna get that treatment scheduled next week? Have you ever done that before? They said, no, we’ve always tried to get new clients. And so all they did is just called previous clients who had diagnosable treatment plans who never had ’em done and they had the biggest year yet by far. It was not much effort. It required no risk, it required no direct mail, it required no advertising, just call ’em up and schedule it and that was it. And so I think that people, they, they do forget about the amount of value is already built up in their current roster of clients. And I’m sure Amazon is the exact same way, especially if you have a consumable product, how do you get them to consume it again? And to figure out unique ways of doing that.
Kevin King:
Yeah. And sometimes it’s as simple as partnering with other companies or cross-selling or giving ’em something else along the same lines that they want. But it is a little bit more difficult in e-commerce cuz especially selling on Amazon, you don’t always have the customer data, but there are innovative and creative ways to act actually do that. So I know you’ve been doing this for a while and you come in and help a lot of other businesses, but I think I read somewhere maybe it was on your LinkedIn or something that you also take this beyond just helping businesses. In your personal life you actually try to systemize and increase your productivity. And do you have any tips for entrepreneurs out there on ways, on their personal side of things that they even if they don’t want, they’re not ready to implement systems and go through this process with a Workless system, what are some things they can do on a personal level to actually just make themselves more productive?
Josh:
Yeah, well great question. And it’s always the easiest spot to start is that hey, you’re the number one worker in your employee, so if you can be more productive, it’s gonna help your company. So how do you do that? And most people are already saying, Hey, I’m already working as hard as I can, so how do I be more productive? And I’ll take them through an exercise of writing down is quite tedious, but it works, is writing down every single thing that you do for two full days, like from the second you wake up to the second you go to bed, and then analyze each of those particular things, whether it’s going out for breakfast or get some gas or drive your kids to school or call or call your operations manager or you’re on your slack channel, whatever you’re doing every single thing, you do all of it.
Josh:
And then look at each of those itemized things and say, could I do this better? Could I do it faster? Could I delegate this? Could I automate this? You know, do I even need to do this anymore and make notes next to every single thing you do and how much time it’s taking you now and how much time it could take if you made a shift of delegating if you made a shift of optimizing something if you made a shift of a technology upgrade, and it’s that. It’s really shifting those things. So if you’re driving your kids to the soccer game and you realize, hey, you know what, I could actually carpool and do this twice a week instead of four times a week and that’d save me some time. Or you’re driving, I had one guy who was driving a long way to jiu-jitsu every morning and then driving back and I said, Hey, it’s taking you about two hours a day just to do your jiu-jitsu thing in terms of getting ready.
Josh:
And I said, is there a better way to get exercise faster that would solve that problem? And yeah, like there is, you could probably, and so we developed a system that required a half hour instead of two hours. Now it wasn’t the same, you didn’t get to do his jujitsu, but the point is, you have to really analyze every minute of your day to figure out how do we batch, reduce, separate, and divide up your time to be most productive. And so I shift owners’ schedules around all the time because they, they really they’re not nearly as efficient as they think they are. And oftentimes they’re doing the difficult, hard, complicated work in the afternoons when they’re burned out instead of in the early mornings when they actually have the energy and the fortitude and the focus to get some of those major projects initiatives done.
Josh:
So I try to get block out time every week and make sure that’s in the morning and make sure that they batch their most difficult things early in the morning as well. And so there’s a lot of shifts you can do, but be really meticulous about it. Like, what did you eat? What did you drink? When did you go to bed? Every single thing. And you’d be amazed, you’d be amazed how many hours a day people waste where they think that they’re working and they’re not. Probably one of the biggest time-suckers right now is people being really stuck. Well, social media is obvious, but stuck on tools and platforms and project management tools and platforms where there’s lots of chatter and lots of communication happening, which feels like work, but they’re not actually moving any projects or initiatives to completion.
Josh:
And it’s because they haven’t actually had time to meet with their team in a real face-to-face like we’re having right now to solve things through to completion. Yeah, halfway done projects, projects that are done 80%, 90%, but are never really, really done. Kill business owners, especially ones that are small because you don’t get the utility and the benefit out of an initiative or a project until it’s a hundred percent done. So a lot of companies, don’t push things to the finish line and so they don’t get there. So that’s a rambling of a few things, but I try to make it situational to each of my clients because they all have very unique problems in that area.
Kevin King:
And one of the things I do on personal productivity is I look at the opportunity cost, and that could be either how much money could I be making in my business or time spent in my business versus doing this other thing, or how much free time could I have and what’s that free time worth? Or whether it’s spending time with my wife or, or doing something else. So some people might consider these luxuries like we have a personal chef and we have a personal trainer. They both come to our house and cook. He cooks and the trainer comes to our house to train us. We don’t, I don’t go to a gym and I pay like the trainer, I pay him $25 extra to come to our house three times a week and work out myself and my wife.
Kevin King:
And if I had to get in, stop what I’m doing, get in my car, drive to his gym, and come back, that’s an hour wasted right there. My time is worth more than $25 and whether I’m doing business or whether I’m spending time with my wife, it’s worth more an hour with my wife. It’s worth more than $25. So I’m willing to do that. And then like on the chef, we looked at it like both of us would love to cook, but we just don’t have time and we’re not good at it. And if we’re gonna cook dinner and lunch and dinner every night and eat fresh food it’s gonna take a few hours of our time. And versus having him come and, and do it we get that time back. Without him, we might be just ordering Uber Eats and actually spending $40 to $60 on a delivery or something. And that adds up over time. So I look at sometimes on personal productivity those types of opportunity costs and what could I be doing that’s more productive than those things.
Josh:
Yep, that’s definitely meal plans, meal delivery any way you can systemize, groceries, food, trash, like all the common things, the lawn, landscaping you should really outsource as many of those things as possible. Personal training, fitness, we do all those things too. It’s each one of those things that sucks up your energy in terms of trying to focus to get it done. And then if you’re gonna have to do it yourself like exercise, it’s way more effort to figure out how to exercise yourself and just have somebody force you to do it, and do it in a positive way. It’s way easier. So yeah, all great ideas, and if you’re an owner of a company, you’ve got to maximize yourself, and the way you eat and exercise is a key part of it for sure.
Kevin King:
Well, Josh, I really appreciate your time today and your coming on and sharing this. If people wanna learn more about working the system or, or about you or maybe get a little bit of help on this, how would they go about doing that?
Josh:
Yeah, they can just go to wtsenterprises.com. I guess there’s no video, but I’m showing the book right here. Work the System. You can get a summary of the book, Work the System there, and also some other resources and get a business systems assessment. So yeah, I go to wtsenterprises.com.
Kevin King:
Awesome. Thanks again Josh, really appreciate this. It’s been great.
Josh:
Thanks, Kevin.
Kevin King:
Setting up systems in my business was something that I struggle with for a long time, and once I started doing it, it definitely made a difference. And I know the guys at Helium 10 that founded Helium 10, some of you go back in time to remember when Manny and Guillermo actually founded Helium 10 back in 2015-2016. They actually were working in the business and I remember they went to a war room mastermind and something there just gave them a total shift. And rather than just being them, they started to actually hire people and set up systems and within two years they were able to exit the business for a huge, huge multiple and set themselves up for life. And that was because they had set up a system and a good system at that. So don’t be afraid to venture into this and do this, it can make a huge difference in your business. Before we leave, I’ve just got some words of wisdom. The traditional sign-off words of wisdom for you. You know, I’m not really interested in whether the glass is half full or whether it’s half empty. What I’m interested in is figuring out how to fill the dadgum glass. Yeah, I’m not interested in whether the glass is half full or half empty. I just wanna know how can I fill that dadgum glass. See you again next week.
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The post #335 – The Art of Business Systemization: Lessons from Josh Fonger on Building Efficient Workflows and Boosting Productivity appeared first on AM/PM Podcast.
