Essential Business Mindsets: Your Guide to Growth

Starting the conversation:

Tired of playing the small game? This program is for you — the world can be BOLD without drastic change (which happens enough). Michael Barbarita, President at NEXT STEP CFO, shares how to cultivate essential mindsets and strategies to help you right now.

Profits, clients, and support networks are just a few of the focuses we hold when engaging with our strategic growth. Regardless of the challenges you are facing right now, as every stage of a business’ life cycle has them, there are processes you can lean into that align with the opportunities and risk management you are working with over the next 12-18 months.

In this program you will hear the five critical steps to make any business work, advice to claim your knowledge from the financial information available to you, and THE skill that you can use right now that will change everything. Jess Dewell talks with Michael Barbarita, President at NEXT STEP CFO, about why it is BOLD to invest in making better business decisions.

Host: Jess Dewell

Guest: Michael Barbarita

What You Will Hear:

2:24 Strategy is something that people say. Everything has a strategy.

• Understanding the importance of distinguishing between mere plans and actual strategies.
• Identifying specific business challenges like sales leads, retention, and cost control.
• The “seven-step pathway to profit formula” enhances business profitability and operations

04:58 For each strategy, we have a step-by-step road map.

• Each business area requires a detailed step-by-step roadmap.
• Mastering seven strategic areas leads to overall business profitability and efficiency.
• Strategically addressing business areas can increase value and reduce workload.

06:35 Five critical steps that you need to take in order to make anything work.

• The five critical steps include clarity, a roadmap, skills upgrading, mastering psychology, and optimizing the environment.
• Understanding personal life goals should drive business strategies.
• Aligning business plans with personal success can solve the imbalance between personal and professional life.

12:13 There is such a thing as organizational saboteurs.

• External influences, including family and friends, can impact business decisions.
• Business owners should seek supportive environments to counter negative influences.
• Group or peer coaching can provide additional support for overcoming challenges.

22:43 It takes a different mindset.

• Achieving growth milestones requires ongoing shifts in business mindset.
• Different revenue stages demand unique strategies and adaptability.
• Overcoming growth plateaus often involves reevaluating strategies and mindsets.

48:22 It is BOLD to invest in yourself to make better business decisions.

Transcript

Michael Barbarita 00:00
So you need to optimize your environment by being with somebody where you’re surrounded by the right people to support you to counter these organizational terrorists.

Jess Dewell 00:09
When you’re in a business, they already have this expectation of you. It’s harder to change their expectation of you than it is probably to start the business the right way with step number one.

I’m so glad you’re here. Thanks for stopping by. At the Bold Business Podcast, we are normalizing important conversations. Yes. There are tips. Yes, there are ways to solve problems. More importantly are gonna be what do you need for yourself to be able to solve those problems and make the most of the education, the training, and the programs that you are already using. This is a supplement to that. It can sit on top of it, fuel your soul, fuel your mind, and most importantly, regardless of where you’re at on your journey, maybe you’re starting out, out. Maybe you’re ready to scale. Maybe you’re going through reinvention. The conversations we are having will help you at each of those stages. So hang around, see what’s going on, and I look forward to seeing you engaging with our videos.

Announcer 01:08
You are listening to the Bold Business podcast where you will hear firsthand experiences about what it really takes to ensure market relevance and your company’s future.

Jess Dewell 01:22
Michael Barbarita is a CFO at Next Step CFO. And let me tell you, he has been heavily involved in business ownership and now advising and providing financial support services to retail, manufacturing, and service companies of all sizes, sub 1,000,000 plus 50,000,000. He lives in the Northeast Part of The United States, and once upon a time decided he wanted to go into business with some partners. And so what did he do? At 27, he decided he was gonna invest in a ski company, says the person who never skied before. Go, Michael. Didn’t know the industry, didn’t know what to do, but jumped right in, thought it was a great opportunity. And one of the things that I will tell you that I took away is when the numbers work, you can make better business decisions. That’s my number one takeaway. And beyond the number one takeaway, there are three things that also come out of our conversation that are worth noting. So as you’re listening, you can hear them as well. The first is that there are five critical steps to make any business work, and he describes them. And we actually talk a lot. The basis of our entire conversation comes from those five critical steps. My biggest takeaway was when the numbers worked, they work, and you can make better business decisions. That is something that you will hear throughout the conversation as entrepreneur business ownership journey that he knows now and brings not only to his own businesses, but also to those he serves. I have to tell you, whether it’s frozen cookie dough, whether it was the ski company, whether it’s being the, the five different companies he served on the board of directors, whether it’s him and his coauthor of his book, Powerful Business Strategies. He’s bringing practical real advice, and he shared what he’s learned over his years of business with us today. I hope you enjoy the conversation that Michael and I have. Michael, what’s something that’s been on your heart lately when it comes to your work and your profession?

Michael Barbarita 03:38
Being a business owner is not easy as you probably know. It’s a lot of hard work. It’s a lot of hours, a lot of effort, a lot of heartache, a lot of joy and thrill. We’re in the business of helping business owners get the life that they want. Business owners aren’t hiring me for CFO services or strategic implementation. They’re hiring me to improve their life, whatever way that be. Now granted, the business is one of the ways that they is the conduit for them to improve their life, but they hire me to improve their life. And so what’s on my heart every day is improving business owners’ lives.

Jess Dewell 04:15
Really, the way to do that is what? Be in business, stay in business. So we’re talking about profit. Is that the core piece of where you’re at, or do you also work on other things?

Michael Barbarita 04:24
It is. Obviously, that’s the centerpiece. It’s always about about making more money. But it’s also about making sure that the business owner is being replaced because that really adds value to the business. And that the business owner is not working eighty hours a week, that they’re that they have their policies, procedures in place. It’s it’s streamlined. They have their people in place and their people plan. And so it’s about really every aspect of the business that we deal with. Even though we’re CFOs, there’s no question about it, but we’re strategic CFOs, and we deal with business strategy. And that’s why we wrote the book, Powerful Business Strategies because we wanted to make sure we really understood what business strategy is and how to implement it.

Jess Dewell 05:12
Everything has a strategy. So instead of having a strategic plan that is a strategy to execute toward this mission, right, everything falls in line. Every strategy has a strategy, and those strategies has strategies. So how do you help people understand and weed out what strategy do you really need?

Michael Barbarita 05:35
If they have a sales problem, there’s strategies for that. If they have a problem getting leads, there’s a strategy for that. If they have a problem retaining customers, there’s a strategy for that. If they have a if they have a problem with conversions and closing rates, there’s a strategy for that. They have a problem with average dollar per sale, there’s a strategy for that. For frequency of sale, there’s a strategy for that. For controlling their cost, there’s a strategy for that. So it, it depends upon and by the way, some of them need all seven. I call it the seven-step pathway to profit formula, what I just described there. Leads, conversions, closing rates, client retention, average dollar per sale, frequency of sale, and controlling your cost. If you’re focused on these seven steps and by the way, if you are focused on these seven steps, this will drive 80% of your revenue. So it’s these seven steps, if you’re focused on now and so business owners come to me, and they might be strong getting leads. Okay. So then we go to the next step, which is conversions, getting people into their sales process. Then we go to closing rates. So we just it, we go down the line, and it’s usually one or more of those seven areas they need help with.

Jess Dewell 06:41
So, sure, we have these strategies and we have places where we’re struggling now. And we also recognize if we’re not looking forward, we’re going to just keep struggling, and we might accidentally get stuck in the same problem we have today. So how do you take these strategies for each of these seven areas, and how do you align those to a bigger strategy? This is the way we make money. Here’s the way we need to change to stay competitive. Where where we at in the disruption curve of the life cycle of our road map?

Michael Barbarita 07:18
So if the strategy is to get more leads, we have a step-by-step roadmap to get more leads. So it, once you, if you can accomplish these seven areas and you can figure out how to master these seven areas, then with respect then everything, essentially, everything will flow profitably. And not only that, you’ll increase the value of the business. You’ll also be able to work less hours. All of that, it’ll, it’s all integrated as we see it into those seven areas. And each of those seven areas has multiple strategies potentially or just one strategy, but some of them have multiple strategies to and each of those strategies has a step-by-step road map.

Jess Dewell 08:05
And these are operational strategies. Yeah?

Michael Barbarita 08:07
Whether you work with me or someone else, there are actually five critical steps that you need to take in order to in order to make anything work, any type of consultant or any type of business coach, and that, and those there’s five steps, essentially. And if that business coach or consultant or CFO or whoever it is that you’re working with to try to get support on your p and l or and your business life, it has to include these all five of these steps. And the first step is clarity. Because before you can start to do tactical things, you must strategically understand why am I doing this, where am I going, and what does success look like for me, but not in your business, in your life. Because I’ve seen this mistake happen over and over again, and a lot of people listening might be in the exact same position right now where they’re so excited to make their impact in the world that they jump out there and they create a business, and now all of a sudden, you have to fit your life around this business thing that you created. So the way it should work is that you should create the life you want and let the asset, which is the business, serve you, allowing you to get to that life. That’s clarity.

Jess Dewell 09:31
Did you say, like, everybody? Because I thought you said there are people, and I’m gonna just go out there and say, the first business that anybody ever does, it’s like that. And if you don’t learn from it, you do it three or four times.

Michael Barbarita 09:46
That’s right. That’s exactly right.

Jess Dewell 09:48
I appreciate this being the first step, Michael. That is the truth. I’ve been here.

Michael Barbarita 09:51
The first step. Right. [Yeah. Uh-huh.] The second step is that step-by-step road map I talked about. You know? You, you have to have an actual so each strategy or each, yeah, each strategy that you attempt to implement has to have a step-by-step road map. And, and if that because, otherwise, you don’t know where you go you don’t know how to go about implementing the strategy if you don’t have a step-by-step road map. You have to understand what it is and and what that road map is so that you can allocate the time, so that you can allocate resources and whatever is necessary to make that strategy work. So that’s two, and that’s step by step road map. The third step is you have to upgrade your skills. Now everybody needs a skills upgrade. When I was in the ski business, and I was that’s one of the businesses I owned early on was a ski retail business. One of the things that I implemented with a strategy called a risk reversal where the seller in the transaction takes most or all the risk. Now the problem the customer had in the ski industry is they really never knew if the ski they were being sold was the right ski for them until they took it up on the mountain and tried it out. So we implemented what we call the ski guarantee. Ski to ski three times. If you don’t like it, bring it back for a brand new pair and keep bringing it back until we get it right. And so when I presented this to my managers, they thought I was out of my mind. They thought that there were gonna be thousands of pairs skis coming back from the field, and they thought that we’re gonna lose a ton of money. And my philosophy on it was is that all the skier wants was a great ski experience. Sure. There’ll be some customers that might take advantage of it onto the nth degree and come back and come back and come back. But for the most part, the skier just wanted a great ski experience. We sold 8,000 pair of skis the first year we implemented, a 25% increase from the year before, and only eight came back. Next year, we sold 11,000 pair, 14 came back. This is part of a skills upgrade because when you really understand what a customer wants and what problems that they have, you can, you can better understand it gives you the skill to understand that a thing like a risk reversal will work if, if you understand what the problem is that the customer had. Because the customer is not out to, to put one over on you. Sure. They could do it. And some.

Jess Dewell 12:31
But we have other things to do. We’re designing our business around our life instead of the other way around.

Michael Barbarita 12:38
That’s right. And here’s the thing. So if a customer came back into the store and said these skis stink, guess what I did? I went to I gave a new salesperson, and they would give them a new pair of skis. No charge. Okay? So all I did was put it in my offer to make my offer capelli. I was I’m gonna do it anyway, so you might as well make your offer. That’s part of a skills upgrade. So that’s step three. Step four is master your psychology. So what it took for you to start your business and what it takes to grow your business requires a totally different mindset. So the business can’t grow unless you do. Now remember my employee’s mindset on that risk reversal? Thousands of pair of skis are gonna come back, and we’re gonna lose a ton of money. That didn’t happen because you need to have the right mindset to see things the right way. And then fifth is optimize your environment. We have all of us as business owners, we have saboteurs, or organizational terror terrorists as I call them. It’s normally family and friends, by the way, the ones who constantly questioning what you’re doing. So you need to optimize your environment by being with somebody or somebody, whether it’s a group or whether it’s a one-on-one situation, where you’re surrounded by the right people to support you to counter these organizational terrorists because they’re out there, and they’re gonna always question what you’re doing or saying that you can’t do it. Or sometimes it’s a spouse, sometimes it’s just family and friends. It’s out there.

Jess Dewell 14:15
Share your thoughts and questions in the comments below. I thrive on your feedback and engagement. You’re listening to the Bold Business Podcast on your house to Jess Dewell. This is your program for strategizing long-term success while diving deep into what the right work is for your business right now.

Announcer 14:30
You’re listening to the Bold Business Podcast hosted by Jess Dewell, a nationally recognized strategic growth consultant. She works with business owners and executives to integrate just two elements that guide business through the ups and downs of growth. Number one, know what work is necessary. Number two, do all the work possible. Schedule a complimentary consultation to find out more at reddirection.com.

Jess Dewell 15:00
There are a lot of family businesses out there, and so to just recognize that exists, I know people don’t if you didn’t grow up in a small town, which I did not, so I’m speaking from secondhand experience here, Michael, from one of my very close lifelong friends who has. And she goes, everybody thinks I’m still 13 years old sometimes. And that’s just what’s going on in the town. And so when you’re in a business, whether you’re it’s your spouse, whether it’s your children, whether it’s your parents, whether it’s your extended family, they already have this ex-expectation of you, and it’s harder to change their expectation of you than it is probably to start the business the right way with step number one. And so I wanna bring that up because I can tell you from having one of my businesses be very integral with my spouse that the saboteur wasn’t necessarily us against each other from our perspectives. We were acquired. And in that acquisition, we had two different we had two different departments over each of our areas of the business, and they had competing priorities, which meant we had competing priorities, which meant the business unit that we were at in was always under pressure. And I said family business as a segue in, but we were working together as a as a partnered pair, but we also had that external piece of other people and a bigger vision that didn’t align. And so they can be and I’m bringing that in because people are like, oh, it’s a family business. This is always the case. Yes. And. Or, oh, it’s always a business thing, and you don’t know nobody knows what they’re doing, and there’s a whole bunch of silos. Yes. And. Because just like family, people who have worked together for twenty years, while not familiar in that tie of relationship, business relationships exist and they last, and boy, can people get entrenched in those. And so I really appreciate that understanding and the optimization of the environment and the relationships that exist there.

Michael Barbarita 16:59
And it doesn’t have to be a family business because it could just be a spouse. There are many spouses out there don’t understand business ownership. They understand w-2. They understand w-2, and they and so when a business owner is working eighty hours a week and making less than the spouse who’s working forty, the spouse comes to question that. And that’s the part of the saboteur or the organizational terrorist that’s impacting this person’s mind, the other spouse’s mindset.

Jess Dewell 17:29
Okay. So the external viewpoints that are influential.

Michael Barbarita 17:33
That’s right.

Jess Dewell 17:35
Give me some steps to overcome that because if you don’t under here’s the last thing you want you don’t wanna do. Right? So you’ve got stuff over here, and this is where we are. Then we go home to somebody who doesn’t understand us or doesn’t really understand the mindset and doesn’t understand what’s actually happening. How how do you bridge them? I bet you have some good ideas.

Michael Barbarita 17:51
What we’ve done always is we’ve always put people in a supportive environment, whether it’s a group environment, because some people need that. See? Some people or some people can deal with the one-on-one environment and be able to counter the organizational terrorists. Okay? Because they have somebody they could go to who understands. They have someone who they could go to who understands. Okay? And, and because of that, it’s a support mechanism. And then there’s those people who need the group. They need five or six people who understand that kind of environment where whether it’s a group coaching environment or whether it’s working with their own multiple consultants like a CPA and a, let’s say, a business coach and a CFO and those types. But when we recognize that somebody needs more than one, we put them in a, we put them in a group, a group program, because that allows them to really get it and to really have that support that they need.

Jess Dewell 18:52
What was that tipping point for you to go, I need somebody a little like me that can relate?

Michael Barbarita 18:57
When I own the ski business that I talked about earlier, I was 27. I could tell right away that employees didn’t have the same passion for the business that I had, a. I’ve never been married, so I wasn’t married at the time, obviously, but my family didn’t understand when I couldn’t go to family events, and they would put a lot of pressure on me. And then I started to talk to other business owners in, let’s say, networking groups or the chamber groups and that type of thing, and they were encountering the same issues. And that was my support mechanism at the time because I didn’t realize you don’t realize what’s happening.

Jess Dewell 19:35
Accidentally found your way in, which is great because you knew what you didn’t know what you needed, but because of the effort that was being done, the right thing showed up. I’m a big believer in that, by the way. Might be the right thing at the wrong time, but it could also be the right thing at the right time even if it feels like a disruption of everything.

Michael Barbarita 19:52
But if you don’t have that kind of support, that’s why these five steps are so critical. Because if you like, in the last one, if you don’t have that type of support, it’s gonna be hard for you to implement a strategy because your psychology is somewhere else. That’s why we think it’s clarity, step by step road map, skills upgrade, master your psychology, optimize your environment. Whether you work with me or someone else, they must incorporate these five steps.

Jess Dewell 20:21
Mastering your psychology a little more.

Michael Barbarita 20:24
In order to go from being a thousandaire, meaning a couple thousand in sales

Jess Dewell 20:28
I love that. Thousandaire. Yeah.

Michael Barbarita 20:31
The 250,000 in sales, it requires a different mindset. The mindset that brought you oh, let’s put it this way. The mindset that brings you to 50,000 in sales is a totally different mindset to bring you to $2.50. You’ve gotta do you gotta think about things differently and how you’re gonna handle that extra volume. And then from $2.50 to a million, again, it takes a different mindset. And some people get stuck at 400,000, 3 hundred thousand, 2 hundred 50 thousand, 5 hundred thousand. They get stuck there because they don’t know they don’t have the mindset necessary to go beyond that. See, there, there’s a mindset that goes along with building a business, and those mindsets have to change at different levels. If you take every business owner when they started, how they went about it, me, I was cold calling.

Jess Dewell 21:31
I still do that once in a while. I’m like, oh, this is the business I wanna know or and I cold outreach, I guess. How do I get into the same place that this business is that I want to know, that I’d like to work with?

Michael Barbarita 21:41
But then at certain levels of volume, when you start hiring people, you start building sales, you know, that strategy isn’t as productive anymore.

Jess Dewell 21:50
I’m gonna pause because I think I can expand on what you’re saying because so I’m like, oh, I pick and choose. I want to go be where that company is because I want to meet that company versus I’m gonna talk to as many companies as I can so that I can at least have revenue. So let’s I wanted to go back one step because what you said next, I was like, oh, let’s clarify that as we yeah.

Michael Barbarita 22:15
Yeah. You see, the latter that you said where you’d call everybody and anybody, that’s a particular mindset at the beginning. But as you develop, now you’re becoming more focused, more strategic in your approach, and now you only pick companies you wanna work with.

Jess Dewell 22:29
That’s right.

Michael Barbarita 22:30
That’s a different mindset.

Jess Dewell 22:32
It’s a total different mindset. Then that’s as soon as you said that, I was like, oh, wait. But we gotta clarify where we started. Because like you, you’re right. I’m like, I did that. And now I have a variation of that, but you’re right. There are two and people call it scale, and it’s really interesting because I, I’m a, I’m a big focused person on scale, and I know everything tends to translate to revenue. And that’s something where I’m not focused on, Michael. I know we need profit. I know we’ve got the levers to make profit but sometimes scaling doesn’t look like more money as the first step. It’s the revolt.

Michael Barbarita 23:03
That also requires a mindset shift .[Yes.] Because you have to be able to deal with the investment that you’re making. You have to be able you have to be able to deal with that. You have to be able to sleep at night with that.

Jess Dewell 23:16
I wanna know a story of yours where you totally put yourself out there in the riskiest thing you’ve ever done as a business owner or that you’ve suggested to a business owner in all of your years of experience that was this leap of mindset. And I’m picking risk on purpose because it’s something that could be relatable, and I know we all have a risk tolerance, and so some of us might get, oh, super anxious about what you say. But some of us might be like, oh, I didn’t even know that was risky. And look at how I can celebrate this. And either way, there’s a path forward. Right?

Michael Barbarita 23:50
I’m 27 years old, and I have to put I’m ready to buy this business with some partners. And we had to borrow money at 25% interest plus borrow money from credit cards in order to do it. But because I was a financial guy, I could figure out the numbers, and the numbers worked. They worked. So the interest rate was 25. I would pay everything’s about terms. Everything’s about terms. I don’t know what your business is, but I’ll pay $10,000,000 for your business if I could pay a dollar a month for ten million months. The point is that terms can make a big difference, and that’s what I learned from that even though I didn’t know it when I was doing it. Okay? Because although I had Mastercard and Visa, alright, money going in, although I had a personal loan at 25% interest, that didn’t matter because the numbers work because of the terms I got. And, and I never skied before. So this was a giant leap. You know? I didn’t know anything about the business at all, obviously. And then I was gonna go into debt up to my eyeballs. I was gonna make a very small salary as a result, but I was willing to make that commitment because the numbers worked. And I thought if I was able to increase business, the company had certain assets that I thought they were taking advantage of. And so I did it, and it worked out really great.

Jess Dewell 25:21
A lot of business owners when they go and they jump in and they have clarity about what they wanna do, but not how they’re actually gonna be able to do it around the life that they already have. Your step number work. So I’m gonna come I’m gonna pull that in, and I’m gonna think about this and where we’re talking about that mindset piece, which is your step four. And I, you keep saying the numbers worked. And here’s something that I am not a I am not a numbers person. I read the data. I can ask for questions and understand what should be on the data, but I can’t make the data with which to work with. And I know and some people are like, because I can’t do that, I’m not a numbers person, and I disagree with that. I have a decent amount of financial knowledge even though I can’t make the spreadsheet. When you, if you would ask me, could you make a spreadsheet about this? I’d be like, no. But I could tell you if it was right. Okay? So there’s something. But then there are people out there who are they don’t even know about the numbers. They don’t understand any of that. They’ve got their basic p and l or they’re working with the most basic information in their business, which gets in the way of the mindset of how much we can grow, but it’s also a confidence thing. And I think people are more aware of numbers, and they have a pulse that they don’t give themselves credit for unless they’re a CFO. Can I be real? And so what is, do you have some advice or some tips to really focus on some of that? If the numbers work, why not try? Or if the numbers work, how do you evaluate it? And how can we claim the because if we’ve successfully been in business for three to five years, we gotta know something about numbers whether we sit believe we can or not. And then when you get to those next revenue plateaus and go through them, you know something about numbers even if you’re not grasping onto it. So what advice can you give us?

Michael Barbarita 27:11
If I’m doing a presentation and I ask how many people look at their p and l once a month, less than half the room raises their hand. If I yeah. And if I I when I ask how many people look at their balance sheet once a month, about 10% of the people raise their hand. And if I ask them how many people look at their cash flow statement once a month, I might get one person to raise their hand. And so now cash flow is the lifeblood of a business. So what I’ve done is I ask business owners who don’t really wanna get into deeply into the numbers. First of all, you should have some type of financial person that’s available. That’s available because because a lot of people say I have my CPA, but try to reach them, you know, from February 15 to May 1. Try to reach them from July 15 to October 4.

Jess Dewell 28:07
Outside of your quarterly meetings with them.

Michael Barbarita 28:09
Yeah. That’s right. It’s it’s hard. Right?

Jess Dewell 28:11
It’s hard. And no offense to them. That just happens to be how their business is. And so if we can do that, who else could we have in our corner?

Michael Barbarita 28:19
No one’s going in that profession because the hours are heck. The hours are terrible. And so no one’s going into the profession, and people are retiring. And so, woo, it’s getting shaky over there. But, anyway.

Jess Dewell 28:34
And this is but you’re right. And some people then go, here’s my bookkeeper who does all my reconciliation. And that’s also good to a point because be that person sometimes may have the ability to ask questions or shape some things. But in general, when we’re talking about growth, when we’re talking about next moves, when we’re talking about evaluating an acquisition or maybe research and development or anything like that, we’ve gotta have somebody. And even if we have a controller, might be good to bring in a third person who’s a little distance from all the data to be able to ask really good questions.

Michael Barbarita 29:12
There’s no question. You have to understand what your financial statements are telling you. Okay? And so you need you do need to get somebody to help you. However, I do have a shortcut that, yeah, that, you know, is at at least it’s at least better than what they’re doing now, and I call it the vital size. If you know these five numbers, okay, then and how they work, then you’re pretty much able to make better business decisions. You’re not able to make the best because you don’t know what your financial statements are telling you, but you’re able to make better business decisions. Number one is sales. You’ve gotta know what your sales is. Gross profit. Alright? You need to know at least once a month, at least, my god, what your gross profit is and your gross profit percent. So it’s sales, gross profit in absolute dollars, gross profit percent, net profit, and your current cash balance. If you know those five numbers, you can make better business decisions. Just those five numbers. Focus on learning those five numbers. That’s all it is. Five numbers. And I say you can make better business decisions. That’s sales, gross profit percent, net profit, and cash, your current cash balance.

Jess Dewell 30:33
I’m your host, Jess Dewell. We’re getting down to business on the Bold Business Podcast. This is where we’re tackling the challenges that matter most to you with actionable and achievable advice to get real results that lead to your success.

Announcer 30:50
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Jess Dewell 31:06
Here I am going. I can read all of the numbers that you would give me, Michael. We could have a discussion about a company I don’t know based off of financial stuff you get, and those would be the five things that I’d be looking at as a starting point. So I’m like, heck. Who knew? So everybody that’s listening, you might even be using this too, and you already are making pretty good business decisions, which means there should be more confidence. And, oh, I said should. So hang on. How could I rephrase that? You have the ability to walk into a conversation about what becomes possible with more confidence because of that, and now you have that foundation to go. I know something. Now let’s learn more. Because then you get to go to what skills do I need? How do I change my mindset? What are the environment things that I need to change? So how that’s where I was going with that, Michael, is how do we claim that confidence a little?

Michael Barbarita 31:56
Those five steps. I mean, that if because if you understand where you’re going, okay, and you understand and you have a step by step road map to follow and you improve your skills along the way because the step by step road map helps you to improve your skills because it’s challenging. It challenges you. It’s not it’s not cupcake. It challenges you. These those steps challenge you. And then mastering your psychology is understanding what those steps what they’re driving you to do, okay, which is different from what you’ve been doing. And then it’s the organizational terrorist that you have to counter.

Jess Dewell 32:35
All of these things are great, and we can follow those. And yet, I’m still, like, experiencing my body. I’m like, oh. But if we think we’re doing it and we’re not really, we’re gonna stay stuck. And then we’re gonna be like, I don’t believe Michael because what he said didn’t work. And that just means we haven’t fully embraced what you’re saying.

Michael Barbarita 32:53
It takes time to shift the mindset.

Jess Dewell 32:56
Okay. Let’s talk about that. What’s your experience for that? Let’s say give us an example. Like, somebody reaches $500,000, and they’re trying to get to a million dollars. Okay? And they know that they have to change, but and they’ve been trying to change, but they’re not. Do you have an example in that realm where we could pick that apart and say what was being disguised as actually checked off in your steps, but really weren’t?

Michael Barbarita 33:23
When we’re working on somebody to to master their psychology, we’re just trying to get there and by the way, mindset growth is a step-by-step road map.

Jess Dewell 33:35
Oh, totally.

Michael Barbarita 33:36
In itself. In itself. Because you don’t see something right now, doesn’t mean you won’t see it later on. And that’s really the important thing. You know? If I hold up a card and I just pick a card here, you could see the card. Yeah. Maybe you can’t. Is it okay?

Jess Dewell 33:54
Yeah. I see.

Michael Barbarita 33:54
But what, what I see is totally different because I’m looking at the back of the card. Right. Basically, mindset is you can’t see it today, but it’s there. And it takes time to really understand whether or not how to get to that mindset that’s gonna take you from 500,000 to a million, million to two, two to 10, what whatever whatever it is that you need because it is a different mindset. There’s no question about it.

Jess Dewell 34:27
Sometimes we hit those milestones, and we don’t even know we’ve arrived. Sometimes we’ve done the learning. We look back. We decide to do it different, leave than we did before, and we get a better result. And we’re like, cool. That worked. But we forget the time we tried and it didn’t work. But we forget the time that we recognized we needed something new and we didn’t know. And it’s by working with an outside set of eyes like you and me that can help call that out for people so they know that they’re actually arriving where they wanna go, and they’re they aren’t traveling, I guess, if you what? If you change the degree of your flight plan by one, you end up in a whole different country or place in the universe if you’re in a spacecraft. I think that’s an important thing to recognize. Oh, I’m actually still on the right path. I’m in the vicinity of where I wanna be. And it’s hard to see sometimes even in peer groups because they don’t necessarily know our business as well. We can relate. We can talk, but we also need somebody that could go, hey. Did you know you did that cool thing?

Michael Barbarita 35:29
What mastering psychology means to me is helping you get to levels that right now you can’t see. And it’s like the winning level is what I can see back here. You can’t see it because I’m only showing you the front, but that’s what you can see. Okay? You can’t see the winning formula.

Jess Dewell 35:48
And you don’t know if you’re the boss of the level yet to pass to get to the end of the game, do you?

Michael Barbarita 35:52
That’s right.

Jess Dewell 35:54
Remind me the name of your book.

Michael Barbarita 35:56
Powerful business strategies.

Jess Dewell 35:58
Looking back, what is the skill that you bring to the table for where you’re at today that you had to learn, and you can look back and go, everything would have been way different if I had known this at the beginning?

Michael Barbarita 36:11
That’s what we call the conversion formula, and, and that’s what’s in our book, and I’ll explain it. And by the way, we give away our book. We don’t we don’t sell it. It’s like our contribution to the business community because I, I, I, I co-wrote I coauthored the book, and I coauthored the book because I wanted to learn business strategy more in-depth. And so it took two or three years for me to study it and do the research for the book, and we’re still interviewing business. We still keep writing additional additions to the book because business is always changing. And so we’re always interviewing small business owners to learn more about their industry, and the problems that they have in their industry and, and so forth. But the thing that I’ve learned that I wish I knew back when was this concept called the conversion formula. And what it does is that’s a four-step formula that converts prospects into a conversion event, whether it be a meeting or whether it be actual, sale itself. And it’s a four-step process that like any other formula, it has to be followed in the exact order. Otherwise, it doesn’t work. And the way I, the way I discovered it was back in 1931.

Jess Dewell 37:35
Wait a second. You weren’t around in 1931. You, I love this the way you started this conversation. Hey, Okay. This is part of your research. I got you, Michael.

Michael Barbarita 37:46
I had to go back ninety years to figure this out.

Jess Dewell 37:49
But that’s actually cool. It exists already. Right? And ninety years ago.

Michael Barbarita 37:53
Ninety years ago, somebody said, you have to get into the mind of the prospect. Okay? That you have to get in the mind of the prospect. So the way I saw that is that to get into the mind of the prospect, it’s gonna be based on emotional issues and, specifically, two emotional issues. And that’s a problem they have that don’t want. The solution they want, they can’t find. And people buy based on emotion, back up that emotion logically. And I wanna show explain how the conversion formula follows that track. So the conversion formula starts with something I call Captivate.

That’s the first step. Captivate is a headline. It I it’s the first thing that should come out of your mouth when somebody asks you what you do. It’s the first thing that come out that, that should be presented, whether it’s an email headline or whether it’s a a marketing headline of some sort, social media, whatever it is. But the Captivate is the headline, and that headline is the problem that the prospect has that they do not want. And that’s what that headline is. Probably one of the more famous headlines is and positions of market dominance, as I call them, is dominance, where they they had to their the problem was that the hungry college kids had to get to their next class and or wanted when they were hungry, they wanted to eat now. And so they made a guarantee about thirty minutes, and if it, it doesn’t arrive in thirty minutes, it’s free.

So that was a position of market dominance based on a problem that a subset or a set of prospects had that they didn’t want. Now so the captivate is the first step. The next step is fascinate, which is the solution to the problem that they can’t find. When you have so the captivate and the fascinate, the problem and the solution is what I call the position of market dominance. Because if you get that those first two steps, you’re well on your way. And so the first step is captivate. The problem they have, they don’t want. Second is fascinate.

The solution they want, they can’t find. The third step is educate. Now that you’ve captivated and fascinated, you’ve got their attention. You now have a little bit more time to educate them on how you go about solving that problem. And then you have to hit them with the offer, which is the close. That has and it has to be a compelling offer, and I’ll go into that. But it has to be a compelling offer. So the way it works is to captivate and the fascinate are the emotional issues, the problem, and the solution.

The educate is the logical. If a spouse was if one spouse is trying to explain to another spouse why they purchased a particular product, they would use the educate. But it was the emotional problem solution that got them interested in the product of in the first place. So it’s captivate, fascinate, educate, close. Now your compelling offer. There are five components to a compelling offer. One of them I mentioned earlier. But those five components is urgency and scarcity.

So urgency is this offer ends on Friday. Scarcity is there’s only five left. Your and by the way, if your offer has all five of these components, it’s it’s better than just having one or two. The second component of a compelling offer is risk reversal. If you recall, that’s that I did in the ski business where a problem the customer had and notice I said the problem the customer had was they didn’t really know if the ski that was being sold was the right ski for them until they tried it out in the mountain. So risk reversal was the is the second part that where the seller in the transaction takes most or all the risk. Third is adding more value to your product or service. When I was in the frozen cookie dough business, the problem that the customer had is they didn’t wanna waste valuable oven space baking cookies.

They wanted to put in that space pizza if they were a pizza parlor or subs if they were heating up stuff and that type of thing. They didn’t want to waste valuable oven space baking pizza. So what we did, we understood the long-term value of a customer, which is very important metric to understand, by the way. Yeah. And so we understood that the long-term value of a customer in our business was $5,000. Once somebody ordered something, they would probably end up spending $5,000 over the course of their cookie-purchasing career.

Jess Dewell 42:46
So I love this.

Michael Barbarita 42:49
Yeah. So what we did is we gave him a free convection oven with every opening order. Now the opening order was only 50 to a hundred dollars, but the convection of it was 202 hundred $50. So we’d lose money on the first couple of orders, but we knew the long-term value of a customer. And so we knew that over time, we would make that money up very easily.

Jess Dewell 43:12
That number worked. I’m gonna quote you. I’m gonna quote you. My nervous.

Michael Barbarita 43:20
And it solved the problem that they had that didn’t want, which was putting cookies in the main oven.

Jess Dewell 43:25
So I’m gonna pop this. It seems like we’ve been in business for a while. We figured out how to keep the lights on. Most of the people that are listening to this program are in that boat. Right? They have their first growth ceiling, maybe their second. They’re or maybe they’ve been around for a while, and they’re thinking about what do I wanna do next? How does this evolve? Maybe I’m tired of working eighty hours a week. Whatever whatever it is, they’re all listening for their own reason, and they’ve hit some sort of a plateau here. And something that I find fascinating is that just in this conversation is that I’m gonna just go out of my way and say, I believe every single person that is listening and watching this is, oh, yeah.

Oh, yeah. So every time that you have said, oh, yeah. I hope you took a note. I hope you bookmark the time stamp. Whatever you need to do to go back because these are things you already know and that you can leverage more. That’s what we’re doing on the Bold Business Podcast. And I really just wanna say that right now because Michael has dropped us tons of valuable information. And you’re gonna go, oh, yeah.

Oh, yeah. Oh, yeah. I’m a little more confident than I was at the beginning of this conversation about how I run my business. So who knew? And not and I’m saying that slightly cheeky. So for all of those listening, I know you might think this too, but really claim it for a second because we do not give ourselves enough credit sometimes as business owners. We do not give ourselves enough credit as achievers, and I really wanna say whatever we’re saying oh, yeah to, that is the foundation with which our success has happened, which means we already have the momentum to go get that next success.

Michael Barbarita 45:04
Fantastic. That was fantastic. My god. Just right there. There’s there’s Done.

Jess Dewell 45:08
Mic drop. No. But we have one more. I have one more question for you, and that is I wanna know what makes it bold. I wanna know what makes it bold to really invest in all of the things that we’ve talked about to make better business decisions?

Michael Barbarita 45:22
You have to know yourself, first of all, and you have to know whether or not, let’s say, you’re coachable or that you’re flexible. Here it is. One of the biggest one of the biggest attributes that a business owner could have, in my opinion, is being the ability to adapt and to be flexible to change, whether it’s the ability to adapt to an economic environment or the ability to adapt to a new idea. And to hear it at I like the conversion formula, for example, just to throw one out. That I that idea. Do you have the ability to adapt? Because in all likelihood, you’re not doing it now. So do you have the ability to adapt and to be flexible to change? And if you have that ability to adapt, that’s the boldness that I feel that one needs. That’s the boldness It’s the ability to adapt and to be flexible to change.

Because if you all have that ability to adapt and be flexible to change, number one, you’re gonna succeed in any economic environment. And number two, you’re gonna be able to take new ideas and run with them. A lot of us are stuck in our ways. We’re not flexible. We’d sign a contract with God to be able to do the same sales volume every single year. That’s not being flexible. That’s not being adaptable.

Jess Dewell 46:57
Every single time I have a conversation, I take away something that I wanna share with 25 people. I know when you’re listening to this podcast, you’re also listening for that and will have something that you want to share. In the comments, I would like for you to engage with us. What is that thing that you wanna tell 25 people from this program? Here’s why it’s important. It’s important because, yeah, there are gonna be how-to’s. Yes. There are gonna be steps. Yes.

You’re gonna be like, oh, I wish I wrote that down. I wish I wasn’t doing this and I could actually take action on that right now. But guess what? You’re not. So engage right now because that one thing you wanna share with others will be the thing that you can figure out how to incorporate in your business, in your workflow, in your style tomorrow.

Announcer 47:46
Jess hosts the Bold Business Podcast to provide insights resilient, profitable business by deeply understanding your growth strategy, ensuring market relevance and your company’s future. It is bold to deeply understand your growth strategy with your host, Jess Dewell. Get more information about how to drive solutions and reset your growth mindset at reddirection.com. Thank you for joining us, and special thanks to our postproduction team at the Scott Treatment.