Gaebler.com recently sat down with Grant Cardone to discuss a range of topics including small business challenges, car dealerships, multigenerational businesses and much more.
In Turnaround King, you help struggling entrepreneurs get their companies back on track. What inspired you to work with small business owners?
I've been consulting businesses for 25 years and when the economy contracted two and a half years ago, it was really small businesses that got hammered. Not just small businesses, but small, medium, and even some semi-large businesses that didn't have cash just started getting hammered.
So in addition to the clients that we work with, I put some attention on companies that were literally struggling with no cash and no credit line. It creates a new set of challenges for me as a problem-solver. These businesses can't borrow money and don't have any money to spend. That kills advertising and any kind of promotional activities, so what do they do?
On Turnaround King, we demonstrate low-cost, literally zero-cost solutions that make the cash register ring. Businesses need to quit opening up the Monday paper and saying, "Oh man, I hope the unemployment numbers go down." Look, it's going to be bad news for a long time. America needs to face that. But it's not bad news, it's just the news. It's really about getting skills and figuring out how to drive revenue without spending a lot of money.
What are some of the common challenges you see SMBs facing these days?
The first problem we see consistently when we go into a company is that they haven't assessed the right problem. In fact I can't think of one situation where management had identified the correct problem. So it's kind of like plumbing – if you don't have the right leak, you're going to keep getting water damage.
Most of these companies are so mired down by the problems of no money and juggling one creditor's money with another creditor to stay current that they can't figure out what the real problem is. But if you don't identify the right problem, then coming up with the right solution is impossible.
What we hear a lot of businesses saying is that it's the economy, it's the banks, it's the consumer, it's no money, it's competition. None of those brings solutions to a company. Because there's always going to be competition and the economy is not to be trusted. You should never trust an economy, because they're not dependable. And there's always going to be competition, there's always going to be lower prices, people are always going to be on budgets. So it's about how are you going to build value for your products or service in the marketplace so that people want to give you money.
What are a few key steps SMBs can take to address those challenges?
The first thing is to identify the right problem. America's been convinced that debt is their problem. Debt is really not the problem that got American businesses into the trouble they're in. It's that they weren't generating sales fast enough, in quantities great enough and at prices high enough. So the first thing is let's identify the real problem.
Number two is to reduce all expenses, which America has already done. Businesses have reduced their expenses, so that step has been done.
Next, we need to start spending money and energy on things that will drive revenue. We need to literally get 99% of the company focused on either directly driving revenue or assisting in the creation of revenue. And that would mean the CEO, the VP, the assistant, the mechanic – whoever works in that company needs to assist in revenue or be at risk.
And then the last thing we would do after we start really focusing on revenue is to reorganize our debt. A budget for a family is no different than running a small, medium or large-sized company. I experienced the same contraction in my businesses that everybody else did. Nobody was left untouched in this deal. So I had good debt and bad debt. I got rid of all the bad debt, I keep the good debt, but I keep all of my attention on revenue.
You talk a lot about "Information Assisted Selling". What is that all about?
In the early 1990s, I observed that businesses – whether it was a retail clothing department store, a contractor who rehabs houses, a car dealer – most companies have been trained to avoid information, that the way to control a sales cycle or a customer, was to not give information. Most sales programs and processes are built around a bit of deception and control. That's not what people want today.
Now this was pre-Internet. I literally revolutionized the automobile industry by showing them another way to handle customers. And this has now been picked up by all the manufacturers to make the buying process shorter and assist in information.
That's what people want, they want information first, and they don't want to waste time. They don't want to make friends with the sales guy. They want to go in, get the information, and get out. So it's called Information Assisted Selling, where we're using information to assist the in the sale or service of the customer.
You have a background in the auto industry and in one episode, you work to turn around Straub Motors, a third-generation car dealership in Keyport, NJ. Can you tell us about that experience?
Straub Motors had been around for 64 years and had their franchise pulled from them by General Motors. They were out of new car inventory for 10 months, so they literally didn't have anything to sell. They were reinstated, but now they've lost all momentum and they've got a little bit of a black eye in the marketplace. They don't have any inventory to sell, they don't have any money and can't even buy the inventory. They can't borrow from the bank because they don't have a float plan anymore.
So we went in there and I told them, "I guarantee you four days from now, Saturday will be the biggest Saturday you've had in a year." And we did that – without any advertising. We did social media, we got the inventory corrected, we just made some little, simple changes. The family has been in business 64 years and I showed them things that they were like, "I never thought about that." It would work in any business.
Do you have any nuggets of advice you could throw out there for other struggling car dealerships?
Yeah, quit competing. Dominate your sector, dominate your market, own it. Money isn't your problem. Obscurity is. Competition might be good in athletics, but it is terrible in business. If you're a horse, do it – compete. If you're an athlete or a football team, then good – compete. But the truth is that even in athletics, you don't want to compete, you want to dominate. You want to own the sector, you want to walk on the floor and have everybody just surrender. And that's what car dealers need to be doing. The plumber, the contractor, the real estate agent needs to dominate, own his sector right now.
How do family-based businesses complicate the change process? Are multi-generational businesses still feasible these days?
I don't think it's the family issue. It's not that they're family-owned, it's that they haven't made the shift or transition. You've been in business 64 years, but that can't be your brand. Nobody is going to do business with me because I've been doing this for 25 years. It's about what can you do for me right now, today.
So the fact that RIM Blackberry phones were great for a decade, doesn't mean anybody is going to buy them today. That can't be their mantra. "Straub Motors, 64 years, come do business with us today." No, the buyer is going to be like, okay, when I come in there, what's the experience? You don't know the prices of vehicles, you can't tell me what you're going to sell it for, you can't show me what the lease is going to be.
Their grandfather has nothing to do with it. He has nothing to do with what's going on with social media and didn't know anything about texting or Facebook or Twitter or how to get social media reputation controlled.
So it has nothing to do with family. That's not the issue. The issue is that they have to shift with the 21st century and shift aggressively.
If you could offer one piece of advice to entrepreneurs thinking about launching their first startup, what would it be?
Learn how to sell your product and your service. The Ph.D. everyone needs right now is how to sell their product. It's what business owners don't want to do.
I own three businesses. When I start a business, I don't go out and get printers and telephones and furniture. I go get sales. The guy who opens a restaurant, the first thing he does is go get business cards. But you don't need business cards, you need people in your restaurant.
Same thing with the chiropractor, he owes $100k to the chiropractor school in Atlanta and he starts a business by leasing equipment for five years, but doesn't know the first thing about getting clients. That's what people need to know today. They need to do what India and China are happy to do. Sell. Promote. Market. And they've have to do it today without spending money.
So that would be my first recommendation – get a Ph.D. in selling and get used to liking it. Be proud to sell your product. Don't call yourself something other than a salesperson. Don't do it. Because even a doctor needs to sell.
And the other piece of advice I would offer is to decide that you're going to make your business go and don't blame it on the economy because economies are not to be trusted.