760: 3 Reasons to Focus on Margin, Not Revenue w/ Todd Palmer

ABOUT THIS EPISODE

In this episode we talk to Todd Palmer, CEO at Extraordinary Advisors.

Click here to connect with this guest on LinkedIn.

Are you struggling to come up with original content weekend and week out? Start a podcast, interview your ideal clients, let them talk about what they care about most and never run out of content ideas again. Learn more at sweetfish MEDIACOM. You're listening to be tob growth, a daily podcast for B TOB leaders. We've interviewed names you've probably heard before, like Gary vanner truck and Simon Senek, but you've probably never heard from the majority of our guests. That's because the bulk of our interviews aren't with professional speakers and authors. Most of our guests are in the trenches leading sales and marketing teams. They're implementing strategy, they're experimenting with tactics, they're building the fastest growing BB companies in the world. My name is James Carberry. I'm the founder of sweet fish media, a podcast agency for BB brands, and I'm also one of the CO hosts of this show. When we're not interviewing sales and marketing leaders, you'll hear stories from behind the scenes of our own business. Will share the...

...ups and downs of our journey as we attempt to take over the world. Just getting well, maybe let's get into the show. Welcome back to the BE TOB grows show. This episode is sponsored by Directive Consulting, the B Tob Search Marketing Agency. Today we were joined by Todd Palmer. Todd is the CEO of extraordinary advisors. He's also the author of the job search process. Todd, welcome to the show, Chadathan. It's great to be here. Thank you so much for having me. We're a thrill to connect with you and you know, Todd, we're actually going to be talking today about this idea of why you should focus on margin and not revenue, and I think it's a fascinating topic. I think it's going to be tremendous content for our listeners. But before we get into that, I also did want to mention you are a sort of six times. You, you and your company six times on the ink five thousand list, and I think that's going to be actually part of today what we're talking about. If I was wondering if you could tell us a little bit more about that and everything that you and...

...your team at extraordinary advisors are up to these days. Well, thank yeah, well, first of all, that thank you for mentioning that. That's one of our nicest things we've ever been able to Copuich as a group. That company diversified industrial staffing is a six time in five thousand company in eight. The in five thousand measurable is fast growth companies tied to revenue and what we realized before we even made that list is we needed to pivot to have strong revenue is a great thing, nice to get the award, but more importantly, it's a you got to make money doing it because you can literally grow yourself out of business, but putting out so much revenue at lower margins, at the cash flow and the profitability the organization and it becoming incredibly diluted. What we chose to do for the recruiting company is we were very focused at one point and being an all things to all people company. First decision we made to get away from that. Is what hitch do we want to focus on? We found a niche where there's an increased demand and a diminished supply. What customers said, they told us, is they would pay us...

...higher margin if we could fill that gap in where, again, where there's an increased demand and the diminish supplan. That happened to be in the skilled trade sector, for manufacturing, for machinists and well, there's people like that, and it allowed us to then go and really grow the business in a profitable way because in the culture of the company became about the margin and we would turn down bad deals that were maybe looked really strong on the revenue side but they really drop any money to the bottom line. Because I'm seeing you have some company people today who are entrepreneurs and they're working for themselves the building companies, but they really should get paid for what they do and you can't pay yourself if the margins aren't there. Yeah, yeah, absolutely. I mean it makes a lot of sense and I and I love the fact that you know this is a very personal experience for you and businesses that you've that you've led, so you obviously know what you're talking about. This idea again focusing on margin and not necessarily revenue. Now, I know for for your process, I mean it kind of it may start with this conversation about where are you, where do you want to go, and how do you get...

...there? This is and this is all all tied to the idea of margin. So maybe you can tell us a little bit more about that. Well, yeah, and that's what we do at extraordinary advisors. When we take out a new client engagement, that's some of the first questions we ask them is where are you currently at? What's your planning process? What are your margins? What's your your financial overview? What is your human capital review? We go through all those pieces so that we can really help the entrepreneur or the leadership team make more money, because that's really why they're in business, because if they make more money they're able to be more profitably, they can share more with their teams, they can share more with their families. I certainly don't subscribe that you should work yourself to death. I almost did that and almost accustoming my business, so I gill subscribe to that. But if you are going to work an hour in the day, make it a very profitable hour. Focus on where can you get more margin. Is it? Is it adjusting a percentage to a point in your pricing? Is it taking a look at your cost struction? Is there anything you can do go back and get some discounts from vendors? What about your turn on cash when I...

...know, for example, one of the biggest areas we increased our marksin's margins at diversified industrial was our payment terms our clients at one point where in ninety days we got those payment terms down to fourteen days, and that save on cash and that attractiveness to a financial institution was huge in improving our margins as well as our turn on cash. So there's just a lot of different levers of entrepreneur compole. HMM. Yeah, and so I mean it's a great starting off point where you're kind of you're mapping out of your route to success with this focus on margin. Now, I know one of the things you had mentioned is growing yourself out of business when you are and talking about this idea of turning down deals that you know it looks like it's going to be great revenue, it's not going to be great, great margin. You know are there are the things that you look out for? Are Their ways in which you advise other business owners that to sort of to be aware of this or things that they should look for, like, you know, how do they prevent themselves from growing themselves out of business? For sure, and I think the the real measurable has to be what is your industry standard number?...

Every industry's got it. If you don't know it. Fight an association that can tell it to you. Talk to professionals, find out those data points. So if you're in the text base and the typical margin seventy five percent, well then you're in a good spot. You're in the staffing business like we are, sometimes that margin is razor thin, it's single digits. We're in the pennies business, not in the dollars business. So every penny saved can then equal a whole lot bigger impact than maybe it would be for other companies. A lot of younger entrepreneurs have to submens go through this growing process that companies will hire them to use them in a way that isn't in their best interests. And what I mean by that is I've had a many CPS over the course of by twenty five years in the staffing space say they love working with staffing companies. Why? Because they're an interest free line of credit. And I said, will tell me more about that, and they'll say, well, if I can get someone to give me Ninety Day or my clients ninety day payment terms that we're going to float payroll for, you know, a hundred employees for whole quarter, and then what they are all able...

...to do is there they a will to do different things with their cash and with the staffing. country. Doesn't realize is we're essentially being dupe because all the day, you look at it, some of their their cost of good soul and they don't take into account the float on cash and how that's really a cost of good soul if you're going to be doing those things for your clients and they'll say we're just going to leave and go to a different from what we're going to take the business away in. The owner of the staffing come and say, well, I'm losing a I'm losing a three million dollar client. Well, really, in that three million dollar client, what are you making to the bottom line, and you can do a real tight fisc will analysis to that. Took for three million dollars in billing. I'm making seventy FIVEZERO. That's the risk reward is way out of whack. Yeah, that makes a lot of sense, just and just being very critical and intentional about about taking a look at the at the larger picture. So, you know, I love that entrepreneurs have about really this weird, this random misunderstanding, because they see big companies do what they call lost leaders. Entrepreneurs don't have that ability and that that cash, those cash reserves, typically to do...

...a loss leader. So I always caution the class that we work with watch out for the big gorilla in the room trying to convince you to take a lossaiter, because all they're really doing is trying to put you out of business. Good. That's great advice, all right. Today's growth story revolves around search engine marketing and we'll be shining the spotlight on ages software, a company that makes software for manufacturing operations. A just was one of the first companies in their space to invest in search marketing, but this competition grew their performance plateaued. To counter this, they hired directive consulting, the B Tob Search Marketing Agency with unparalleled experience in in bent legend for bdb companies, directive was able to increase ages monthly online leads by four hundred and fifty seven percent, while at the same time lowering their costpro lead by a hundred and forty seven percent. I have a hunch that directive can get these kind of results tree to so head over to directive consultingcom and request a totally free custom proposal.

That's directive Consultingcom all right, let's get back to this interview. And so you know, if you're if you're on the lookout for growing yourself out of business, you've kind of tried your best to think critically. It's a it's a map yourself to success by thinking, okay, I have to focus on margin, not revenue. You know, do you have a couple of pieces of advice for our listeners? Then you know if they're thinking to themselves, okay, well, how do I focus on margin? You know all there's some some tips and tricks to the trade, things that things that you think people can benefit from if they're if they're thinking about some of these strategies. For sure, I think the entrepreneur needs to take a look at themselves and what are their strengths. A lot of entrepreneurs that I know are really good at sales, or a lot of the other entrepreneurs that run to are really good at operations, are working with the people on the deliverable of their service, so their product. What a lot of entrepreneurs are not good at is understanding the financial documents of having a company. They don't understand the Pano that...

...even understand at the PNL they have as a craft crafted correctly for their industry. They can't read a balance sheet. They don't know how to forecast a cash flow analysis. Those three documents, the pl the balance sheet and the cash flow are critical to any business, no matter what you're in. If you want to avoid growing out of business, you've got to know what your cash flow is going to look like. Can you project that? You may have great margins, but if your payment terms are extended, you've got to manage for that. I know one staffing company that we've worked with out in California has a really unique model and they get paid ninety days out, but they have guarantee pay, which is a good thing, but they have to manage their cash flow so tightly during those ninety days that they have real highs and real lows. But then they've not created a financial model that fits what they do, so they could forecast what it's going to look like on the horizon for payables, receivables and pay internal payroll as well as external payroll. So there's again you want to know what you're supposed to be doing and that's really in comment upon the entrepreneur to get financial literacy. Where can they get...

...that? They certainly can come to a coach, they can go to a CPA for some of those things. They can talk to industry peers if they are a part of a networking group like an EO or Ypo. At the end of the day, though, a lot of entrepreneurs don't realize what they don't know, and what they don't know typically ties around the finances. Yeah, all right. Well, you know, Todd, obviously this is I mean this is just your area of expertise and you've seen incredible success with extraordinary advisors, with the businesses that you've you've obviously led to the you know, the ink five thousand list, which is incredible and incredible accomplishments. And this is one question we've actually been talking to our guests about the ones that have a vision, ones that are building towards something, you know, the ones that are CEOS or thought leaders, and we've been getting some great answers. I'd love to ask you then, todd, sort of at the end of the day, what kind of legacy are you hoping to leave behind? One of that is, of course, you know, personally, professionally or even a combination of the yeah, I think that Joh, I think that's an...

...awesome question. I wish more entrepreneurs pondered them. I started pondering that probably gosh ten years ago. I'd met a young author the same as Simon Senek. He wrote a book the power of why, and I actually brought in it to Detroit a couple of times for some events and he really helped me craft with my my legacy is going to be my legacies two words. It's improve lives, and anything I do in any endeavor I take on, want to improve the lives of the people I spent that time with. I used to have a definition of success and that we know and had a lot of zeros behind the one at the front. It's cars and houses and all that kind of fun stuff. Well, working with Sonic then pivoted me into redefining what my definition of success was and for me it's just been so powerful and I still look completely with complete authorship appreciation to Tony Robinson. It's simple. My definition of success is doing what I want, when I want, as often as I want to do it and with whomever I want to do it with, and sometimes that costs a decent amount of money and sometimes that's free.

But then I get to spend time with people that are important to me doing it really coolly unique things. And if I do enough of that and I connect with enough people, whether it's some my coaching business or just socially with my friends, and I can improve those lives. And you know, when my time comes to leave this earth, they throw a big party to celebrate the things I've been able to help folks understand or d then it's been a life while lived. Yeah, that's fantastic. I mean it's a fantastic goal. It'll be a fantastic legacy. It feels like you're certainly well on your way to to helping a lot of people and I know that you've helped a lot of people in our audience. I mean, this has just been great content and we really appreciate your expertise. Now, Todd, obviously that you know this idea is is larger, bigger, more complicated, more complex than we could ever get into and in the time that we have together. So if any of our listeners are interested in there, in following up with you about today's topic, they want to connect to you, they want to find out more about extraordinary advisors. You know what's the best way for them to go about doing that. But, Jonathan, I think the best way for them to do it, I'd like to put this out to your listeners today, is if someone's gotten value for our conversation together and they think I...

...can potentially, even just a half hour to forty five minute conversation, add value to their lives and improve their lives to talk about their margins, talking about their people, talking about what maybe what kind of Legas that they want to live. I don't know. I'm happy to give an hour of my time to anybody who mentions that they heard me on your podcast today. They can book that through my website, extraordinary Advisorscom then, kind of tech, my booker, her name is Kelly, and Kelly will get you introduced and added onto my calendar so that we can have a conversation that could potentially improve your lives. As really is a thank you to your group today, Jonathan, for having me on the program well with definitely thank you for that. That's that's tremendous for you to offer that to our listeners. Again, we've been talking with Todd Palmer. Todd, thank you so much. It really was a pleasure having you on the show. We really looking forward to staying connected with you. Thanks, Jonathan. There are lots of ways to build a community and we've chosen to build the BEDB growth community through this podcast. But because of the way podcasts work, it's really hard to engage with our...

...listeners, and without engagement it's tough to build a great community. So here's what we've decided to do. We're organizing small dinners across the country with our listeners and guests. No sales pitches, no agenda, just great conversations with likeminded people. Will Talk Business, we'll talk family, will talk goals and dreams, will build friendships. So if you'd like to be a part of a BEDB growth dinner in a sitting near you, go to be to be growth dinnerscom. That's be toob growth dinnerscom. Thank you so much for listening. Until next time.

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