Clay Clark | The Three P’s: Process And Policy Lead To Profit With Jack Nadel

Audio Transcription

So many different times in my life, I’ve played with broken or hurt things, broken foot, broken leg, broken hand, broken arm, broken sternum, broken collarbone. I could keep going if I just thought more about bones. Why, man? Because I loved it. I loved playing the game. I was passionate about it. One of the reasons I even get encouraged at seeing all of you here, you know why I get encouraged by that is because you could be anywhere doing a lot of different things, but you chose to be here Some shows don’t need a celebrity narrator to introduce the show But this show does in a world filled with endless opportunities Why would two men who have built 13 multi-million dollar businesses? five hours per day to teach you the best practice business systems and moves that you can use. Because they believe in you. And they have a lot of time on their hands. This started from the bottom, now they’re here. It’s the Thrive Time Show starring the former U.S. Small Business Administration’s Entrepreneur of the Year, Clay Clark, and the entrepreneur trapped inside an optometrist’s body. Dr. Robert Zulman. Two men, eight kids, co-created by two different women. Thirteen multi-million dollar businesses. We started from the bottom, now we’re here. We started from the bottom, and we’ll show you how to get here. Started from the bottom, now we’re here. We started from the bottom, now we’re here. We started from the bottom, and now we’re at the top Teaching you the systems to get what we got Colton Dixon’s on the hoops, I break down the books Z’s bringing some wisdom and the good looks As a father of five, that’s why I’m alive So if you see my wife and kids, please tell them hi It’s the CNC, up on your radio And now, 3, 2, 1, here we go! Started from the bottom, now we’re here Started from the bottom, and we’ll show you how to get there Alright Jack, today we are talking about a subject that is near and dear to my heart. It’s tip number 30 from your book, The Evolution of an Entrepreneur. Yes. And it’s something you’ve called the three Ps. Process and policy lead to profit. First off, when did you come up with this concept of the three Ps? When did it hit you? When did you get the big idea for this? Well, I think it’s been with me for many, many years. When I sat down to write the book and put some of what I had done into language that could be understood, this came out. I’m going to take an excerpt from your book and read it and have you marinate on it with us because it’s so powerful. In your book, you say this. You say, in some ways, running a successful business is a bit like coaching a football team. The fundamentals of football are blocking and tackling. The fundamentals of a business are its governing policies and processes. To carry out the metaphor, touchdowns are profits. The best business idea in the world cannot survive bad execution. So when you sit down to develop your workflow, internal policies, and business structure, be merciless. Probe for weaknesses and assume that the worst will happen. Tell us what you mean by this here, my friend. Well, there are many things that are not done that should be done as part of the… and to break it down in its simplest terms without getting too complex and having to explain too many things that went before it. I had a wonderful bookkeeper who could never get a job done during the day and she was working overtime every night. So finally I sat down with her and I said, let’s take ten minutes. Tell me exactly what is it you do. Now I should know because I’m there in the same office, but I don’t know. I’m not a bookkeeper. I don’t see miles of ledger and stuff like that. And she said, well, the biggest thing I do is credit check. I said, okay. And what do you do to credit check? As I call three banks to find out what the customer is like and if they’re dependable and if they’re solid, I think great. And tell me, in all that time, let’s say all of last year, how many people have you rejected for bad credit? I think two or three. I said, oh, okay. Let’s go back again. First of all, you don’t need three banking references. One is sufficient. I find that most of the orders that we get are over, I forget what it was at that time, $500 or something. Let’s say anything under $1,000, don’t even bother to check. Because you haven’t rejected one customer. Yeah. Don’t bother to check anything under $1,000. And she was not working overtime anymore. She finished in her time. We didn’t lose anything by it, because we weren’t losing anything anyway. We had a very substantial credit policy that we had no problem, because most of the clients were first-class companies. Well, you know, I don’t want to say a certain percentage, but I would say the overwhelming majority of small business owners that I’ve met around the country don’t have any documented processes in place. It’s just sort of a tribal knowledge where, you know, John tells Jim, do this. Jim tells Mike, do this. And they get away with it. They actually have some success for a while. Every year, publish a manual. And it tells exactly what the policies are and exactly what should be followed. And of course, that went into the next year’s book. But the book of policies, because when you have a number of account executives and different companies, then of advertising agencies. It gets pretty complicated to determine which account is which. So we put it in and it’s easy to read manual and if there is a dispute, which there is every so often, we put them together and say, hey, work it out. But the processes are designed to give the company structure, right? I mean, why can’t somebody who’s watching this, who’s having success with just three guys, Mike, Jim, and John, they just know everything up here. Why can’t they just keep on going down that path? Why do they need processes? Well, they need process because it has to be a standard way that you do things and you do it all. The best business, I think the one I could point out, was when they started FedEx. It stunned me to realize that every FedEx package, even if I send it across the street, goes to Tennessee first. And the reason is that if you’re doing something that happens every day, you shouldn’t have to think about it. So this is to eliminate that different policies, let’s say, from different people who may be handling the same thing. And that process also obviously relates to the profit. If you have too many people doing too many things that do not bring profit, It’s a waste. I would say to somebody who asks me, because they all ask, how much revenue do you do, how much business do you do? I said, that is a nice question, but it doesn’t mean anything. I can do any amount of business you want. Are you making any money? That’s it. What is it that makes money? The real thing is the net profit that you’re able to take home at the end of the year and that you get to keep. So the profit, and profit comes from different places. As I said, sometimes profit comes from financing. If you give them a better than they ask for payment schedule, you’re able to negotiate a little extra discount from it. If you have an anticipated profit, an anticipated volume, you can do that. I have taken merchandise, like we used to sell a lot of merchandise for delivery at the end of the year, but we book it all year long. So I got in touch with my best suppliers and my best items, and I said I want to renegotiate these prices down, but I’m going to take something, you always have to give something when you get something. This is a motto of mine, always give. And I said, what I’m going to do is give you, I’ll give you an order by the end of July so that you’re not stuck with anything. There’ll be firm orders. And that’s what I did. And there were products that I was able to beat the price on. And then there was others where you’d talk to a supplier and say, you know, we are your biggest customer, one of your biggest customers. I don’t want anything special, but let’s say above a certain volume, there should be an additional discount. And I think you can afford it because, you know, as long as we pay on time and everything is legal as long as it s published for everybody. He says, Well, we don t even do this for this customer. I said, I don t care what you do for other people. That s not my problem. My problem is how we work together and get the most out of each other we can and I really do need this additional profit. You talk about this because you mentioned you said you’re amazed at how many how few businesses talk about profit and as you know one of the things that eats away at profit is not having processes in place you said having too many people doing things that shouldn’t be needed or the example you gave with the bookkeeper she’s wasting her time doing stuff, credit checks she doesn’t need to be doing. There’s a quote from one of my favorite authors, Clayton Christensen, he’s a Harvard business professor and basically what he says is, he says, in a startup company where there are no processes in place to get things done, then everything that is done must be done by individual resources. In this circumstance, it would be risky to draft someone with no experience to do the job. And basically what he’s saying is, you can’t even hire people if there’s no processes. It just becomes a cluster of craziness, right? No, no. You have to be consistent. When did your business get big enough where you started making processes and documenting things? How big did it get before you started doing it? I think it was from the very beginning. I got into the habit, for example, if I made a deal, I always confirmed the deal by returning email or mail or whatever happened to exist at that time. And I put just the solid details. Gee, thanks for the order, I really appreciate it. We’ll be able to deliver by such and such a date. Just to confirm the details, there’s so much apiece and they’re due at this and this time. And if this agrees with your understanding, just initial it by your name and we’ll know that we’re all on the same page. And that became a process. That was your personal way of doing it and it became a system. Every time. It came not as a price vehicle. It became a part of a thank you letter for the order, but in that was the confirmation of the price. Why don’t more business owners take the time out to make processes in your mind? Afraid, fear. Fear is one of the worst things in business. I think I’ve said never fear to negotiate But never negotiate out of fear You make a deal It’s a good deal and the best Example I can think of this is When I sold the company I owned the building we’re in as well as the landlord So they wanted the building as it’s fine and so we got an appraisal and you could buy the building. But instead of stock, which is the deal, I want cash for the building. So I paid cash for the building. Fine. Fair enough. So when I went to sign the document, they had the building thrown in with the… being paid for by the other company’s stock. I said, no, I said, we said cash, I’m not renegotiating. He said, well, it doesn’t work for us that way. I said, well, I’m sorry, then I guess we’re going to have to forget it. The guy looked at me in astonishment. He said, you mean you’d blow this whole deal just because of that? The whole cash, there were millions of dollars involved. The building was assessed at $90,000 which was pretty good because I bought it two years earlier at 80 something like that. So I wouldn’t take it. He said, what can we do? Just keep it going. I’ll be the landlord and you pay the rent same as the costs increase. And last year my company decided that they would need more room, that they absolutely had to have a bigger building. So they came in and said, move, I’ll sell they moved, this is the punchline. They wouldn’t give me the $90,000. I sold the building for $4.2 million. Boom! That’s a good one, huh? Just last year. Now, I want to talk about policies. And again, I’m talking about these things, and I just want you to know, you know this, these are things that I’m excited about. I love processes. I love policies because I know they lead to profits. But most people, I think, when they hear the word processes, they just go… They hear, you know, policies, and they go, what? What was that? Because most of it is nonsense. Because it’s not sexy. It’s not exciting, you know. Talking about policies, where do policies really matter, you know, versus just the nonsense policies? What are the policies, what are you talking about? Where do they really matter? Well, they come from actual experience, as I say. You have a conversation, our conversation today. Yeah. We’re formalizing it and doing a video, so we know exactly what we said. But I guarantee you, a week from now, we will not remember everything we said. And there may be some things that would be discordant. Gordon, so it’s nice to have something on record that happened at the time so that there is verification. You can’t recall a conversation. It just doesn’t work. You never win that argument. But if you have a letter that says, Clay, thanks a million for the order. Here’s the details on it. Just initial that to make sure we both understand the same thing That’s absolutely essential. You have to have something in writing No matter how much you trust people or how much they trust you that confirms what your deal is Because in the event of any disagreement you have that piece of paper Now, okay, let’s let’s make it real. Let’s get into another example because your real estate example is awesome. Let’s get into the one about the pen factory. We’re going back to New York City. The time period is 1970-ish. Right. I think guys were wearing leisure suits. Were guys wearing leisure suits in the 70s? I think they were wearing leisure suits. Just go ahead and start it yet though. Well, we were in the pen business. We were very big distributors. We were selling a lot of pens for advertising purposes to many, many, many different accounts. And there was a pen factory in New York that was in the process of going broke. So I really made a deal to buy that factory because I wanted to manufacture some of our own pens. I had some ideas for new pens that I didn’t want to pass on to anybody else. So we did. We bought the pens right there. Before we did anything that I was going to change, I wanted to know what existed. So I hired a company to do a study as to exactly where the money was being spent. And one third of the money was being spent in the department that manufactured the refills for the ballpoint pens. Well, frankly, the refills weren’t that good. And I said, okay, I’ve got to find the best refill made because every pen that I make has to have a great refill. Whether we make them or somebody else does is irrelevant. So I found the best pen writing pen on the market at that time was Paper Mate. And I went to Paper Mate and I found out, because I was a customer of Paper Mate’s too, that they didn’t manufacture their own refills, they were buying it from a company in Pasadena. Got the name of the company, went to see them, and said I want to buy these refills for these pens in order to get a million at a time or whatever it was. And he gave me a quote. Would you believe it? The difference was we were paying between 10 and… I think it was costing us between 10 and 11 cents a piece to build a refill and I paid 3 cents a piece for these. So walk me through the three P’s as it relates to that. What part of that was the process? The process was figuring out where they’re spending the money? The process was first of all what is. What exists and what has to be changed in accordance with where you are and where you’re going. Okay. That’s the first part of the P. That’s a process to find out exactly and not to depend on my guess because I don’t know beans about construction. I know less about equipment and as I said I got five thumbs on each hand. If I knew it I couldn’t handle it anyway. So, the first thing is to find out what it is. That’s what it is. Profit is kind of, if you have the advantage of volume sales, there’s always a way of negotiating a better deal. And plus, one of the big breakthroughs in the ball pen business was that the, at first, it said no ballpoint pen signatures allowed, particularly on checks, because at the time that the ballpoint pen first came out, you could easily transfer the signature to another piece of paper just by rolling your thumb over the signature on the check and put it on another check. So bankers did not approve of checks that were written with ballpoint pens. And Papermates, one of Papermates major breakthroughs was banker accepted ballpoint pens. And I have the same bankers accepted that they do. So you, I mean, as you go through your career and you think of all the different business deals and all the things you’ve worked in, whether it’s real estate or buying a pen factory, you can sum it into the basically these three P’s here. You’ve got to make sure you have solid processes. You’ve got to follow that process, document your process. Absolutely. And then you’ve got to have your policies documented and you have to follow your policies. And then from that, focus on the, through with both of those combined, focus on the profit and that’s going to lead to that profit. You’ve got to follow those policies like a laser. I mean, like, I had a policy with account executives. They could not take a deal on the side, which is sometimes a temptation, some would say, you know. And I followed it through. Well, my second best account executive, I found out he took the deal. The minute I found out I fired him. How could you fire him? He’s one of the best guys in the business. That’s the policy. That’s the policy and that’s what I did. Even though I was wounded, I took the gunshot and still I think if you could I’d like to kind of Summarize this and unpack this for the thrivers as we’re kind of wrapping this particular Training up here. I think that if you focus on the three Ps and not focus on just how you feel You know, I’m just not not focus on your emotions. You’ll actually feel better in the end You know if you if you focus on these three Ps, you’ll actually feel better at the end, but if you focus on how you feel and you don’t do those three P’s, you’re going to feel pretty bad at the end. So I mean really… 100%. Yeah. Because the end is going to be, is going to be something, there should be another P in there. Predictable. Oh, predictable. I could predict the profit if I have all my costs in tow. I don’t know exactly where I am on that. So, that’s a very big P. Well, Jack, I appreciate you taking the time to invest in us and teaching us the three P’s that you’ve learned through six decades of entrepreneurship. Now four P’s. I’m adding peas as we go. The fifth pea is pasty white. So thank you for letting your super pale friend here interview you. But thank you, my friend. Thank you. Appreciate it. JT, do you know what time it is? Um, 410. It’s TiVo time in Tulsa, Roseland, baby. Tim TiVo is coming to Tulsa, Oklahoma, in the 2-Day Interactive Thrive Time Show Business Growth Workshop. Yes, folks, put it in your calendar this December, the month of Christmas, December 5th and 6th, Tim Tebow is coming to Tulsa, Oklahoma, in the Thrive Time Show 2-Day Interactive Business Growth Workshop. We’ve been doing business conferences here since 2005. I’ve been hosting business conferences since 2005. What year were you born? 1995 dude, I’ve been hosting business conferences since you were 10 years old and a lot of people You know if I followed Tim Tebow’s football career on the field And off the field and off the field the guy’s been just as successful as he has been on the field now The big question is JT. How does he do it? Hmm. Well, they’re gonna have to come and find out, because I don’t know. I’m just saying, Tim Tebow is going to teach us how he organizes his day, how he organizes his life, how he’s proactive with his faith, his family, his finances. He’s going to walk us through his mindset that he brings into the gym, into business. It is going to be a blasty blast in Tulsa, Russia. Folks, I’m telling you, if you want to learn branding, you want to learn marketing, you want to learn search engine optimization, you want to learn social media marketing, that’s what we teach at the Thrive Time Show two-day interactive workshop. If you want to learn accounting, you want to learn sales systems, you want to learn how to build a linear workflow, you want to learn how to franchise your business, that is what we teach at the two-day interactive Thrive Time Show business workshop. You know, over the years we’ve had the opportunity to feature Michael Levine, the PR consultant of choice for Nike, for Prince, for Michael Jackson. We’ve had the top PR consultant in the history of the planet has spoken at the Thrive Time Show workshops. We’ve had Jill Donovan, the founder of rusticcuff.com, a company that creates apparel worn by celebrities all throughout the world. Jill Donovan, the founder of rusticcuff.com, has spoken at the two-day interactive Thrive Time Show business workshops. We have the guy, we’ve had the man who’s responsible for turning around Harley Davidson, a man by the name of Ken Schmidt. He has spoken at the Thrive Time Show two-day interactive business workshops. Folks, I’m telling you, these events are going to teach you what you need to know to start and grow a successful business. And the way we price the events, the way we do these events, is you can pay $250 for a ticket or whatever price that you can afford. Yes! We’ve designed these events to be affordable for you and we want to see you live and in person at the two day interactive December 5th and 6th Thrive Time Show Business Workshop. Everything that you need to succeed will be taught at the two day interactive Thrive Time Show Business Workshop December 5th and 6th in Tulsa, Oklahoma. And the way we do these events is we teach for 30 minutes and then we open it up for a question and answer session so that wonderful people like you can have your questions answered. Yes, we teach for 30 minutes and then we open it up for a 15-minute question and answer session. It’s interactive. It’s two days. It’s in Tulsa, Oklahoma. We’ve been doing these events since 2005, and I’m telling you folks, it’s going to blow your mind. Yes, ladies and gentlemen, the Thrive Time Show two-day interactive business workshop is America’s highest rated and most reviewed business workshop. See the thousands of video testimonials from real people just like you who’ve been able to build multi-million dollar companies. Watch those testimonials today at thrivetimeshow.com. Simply by clicking on the testimonials button right there at thrivetimeshow.com you’re gonna see thousands of people just like you who’ve been able to go from just surviving to thriving. Each and every day we’re gonna add more and more speakers to this all-star lineup. But I encourage everybody out there today, get those tickets today. Go to thrivetimeshow.com. Again, that’s thrivetimeshow.com. And some people might be saying, well, how do I do it? I don’t know what I do. How does it work? You just go to thrivetimeshow.com. Let’s go there now. We’re feeling the flow. We’re going to thrivetimeshow.com. Thrive is cool. Again, you just go to thrivetimeshow.com. You click on the Business Conferences button, and you click on the Request Tickets button right there. The way I do our conferences is we tell people it’s $250 to get a ticket or whatever price that you can afford. And the reason why I do that is I grew up without money. JT, you’re in the process of building a super successful company. Did you start out with a million dollars in the bank account? No, I did not. Nope, did not get any loans, nothing like that. Did not get an inheritance from parents or anything like that. I had to work for it and I’m super grateful I came to a business conference. That’s actually how I met you, met Peter Taunton, I met all these people. So if you’re out there today and you want to come to our workshop, again, you just got to go to thrivetimeshow.com. You might say, well, who’s speaking? We already covered that. You might say, where is it going to be? It’s going to be in Tulsa, Russia, Oklahoma. It says Tulsa, Russia. I’m really trying to rebrand Tulsa as Tulsa, Russia, sort of like the Jerusalem of America. But if you type in Thrive Time Show in Jinx, you can get a sneak peek or a look at our office facility. This is what it looks like. This is where you’re headed. It’s going to be a blasty blast. You can look inside, see the facility. We’re going to have hundreds of entrepreneurs here. It is going to be packed. Now, for this particular event, folks, the seating is always limited because my facility isn’t a limitless convention center. You’re coming to my actual home office. And so it’s going to be packed. Who? You. You’re going to come. Who? I’m talking to you. You can get your tickets right now at ThriveTimeShow.com. And again, you can name your price. We tell people it’s $250 or whatever price you can afford. And we do have some select VIP tickets, which gives you an access to meet some of the speakers and those sorts of things. And those tickets are $500. It’s a two-day interactive business workshop, over 20 hours of business training. We’re going to give you a copy of my newest book, The Millionaire’s Guide to Becoming Sustainably Rich. You’re going to leave with a workbook. You’re going to leave with everything you need to know to start and grow a super successful company. It’s practical. It’s actionable. And it’s TiVo time right here in Tulsa, Russia. Get those tickets today at Thrivetimeshow.com. Again, that’s Thrivetimeshow.com. Hello, I’m Michael Levine. And I’m talking to you right now from the center of Hollywood, California, California where I have represented over the last 35 years 58 Academy Award winners, 34 Grammy Award winners, 43 New York Times bestsellers. I’ve represented a lot of major stars and I’ve worked with a lot of major companies and I think I’ve learned a few things about what makes them work and what makes them not work. Now, why would a man living in Hollywood, California in the beautiful sunny weather of LA come to Tulsa? Because last year I did it and it was damn exciting. Clay Clark has put together an exceptional presentation, really life-changing, and I’m looking forward to seeing you then. I’m Michael Levine, I’ll see you in Tulsa. We’re going to teach you how to fix your conversion rate. We’re going to teach you how to do a social media marketing campaign that works. How do you raise capital? How do you get a small business loan? We teach you everything you need to know here during a two-day, 15-hour workshop. It’s all here for you. You work every day in your business, but for two days you can escape and work on your business and build these proven systems so now you can have a successful company that will produce both the time freedom and the financial freedom that you deserve. You’re going to leave energized, motivated, but you’re also going to leave empowered. The reason why I built these workshops is because, as an entrepreneur, I always wish that I had this. And because there wasn’t anything like this, I would go to these motivational seminars, no money down, real estate, Ponzi scheme, get motivated seminars, and they would never teach me anything. It was like you went there and you paid for the Edith Pick Chocolate Easter Bunny, And they would never teach me anything. It was like you went there and you paid for the big chocolate Easter bunny, but inside of it, it was a hollow nothingness. And I wanted the knowledge, and they’re like, oh, but we’ll teach you the knowledge after our next workshop. And the great thing is we have nothing to upsell. At every workshop, we teach you what you need to know. There’s no one in the back of the room trying to sell you some next big get-rich-quick, walk-on-hot-coals product. It’s literally we teach you the brass tacks, the specific stuff that you need to know to learn how to start and grow a business. I encourage you to not believe what I’m saying, and I want you to Google the Z66 auto auction. I want you to Google elephant in the room. Look at Robert Zellner and Associates. Look them up and say, are they successful because they’re geniuses, or are they successful because they have a proven system? When you do that research, you will discover that the same systems that we use in our own business can be used in your business. Come to Tulsa, book a ticket, and I guarantee you it’s going to be the best business workshop ever and we’re going to give you your money back if you don’t love it. We’ve built this facility for you and we’re excited to see you. And now you may be thinking, what does it actually cost to attend an in-person two-day interactive Thrive Time Show business workshop. Well, good news, the tickets are $250 or whatever price that you can afford. What? Yes, they’re $250 or whatever price you can afford. I grew up without money and I know what it’s like to live without money. So if you’re out there today and you want to attend our in-person two-day interactive business workshop, all you’ve got to do is go to thrivetimeshow.com to request those tickets. And if you can’t afford $250, we have scholarship pricing available to make it affordable for you. I learned at the Academy at King’s Point in New York Octa non verba Watch what a person does not what they say Good morning. Good morning. Good morning. Harvard Keosak University Radio Show today. I’m broadcasting from Phoenix, Arizona, not Scottsdale, Arizona, they’re close, but they’re completely different worlds. And we have a special guest today. Definition of intelligence is if you agree with me, you’re intelligent. And so this gentleman is very intelligent. I’ve done this show before also, but very seldom do you find somebody who lines up on all counts. And so Mr. Clay Clark is a friend of a good friend, Eric Trump. But we’re also talking about money, bricks, and how screwed up the world can get in a few and a half hour. So Clay Clark is a very intelligent man, and there’s so many ways we could take this thing. But I thought, since you and Eric are close, Trump, what were you saying about what Trump can’t, what Donald, who’s my age, and I can say or cannot say. Well, first of all, I have to honor you, sir. I want to show you what I did to one of your books here. There’s a guy named Jeremy Thorn, who was my boss at the time. I was 19 years old, working at Faith Highway. I had a job at Applebee’s, Target, and DirecTV. And he said, have you read this book, Rich Dad, Poor Dad? And I said, no. And my father, may he rest in peace, he didn’t know these financial principles. So I started reading all of your books and really devouring your books and I went from being an employee to self-employed to the business owner to the investor and I owe a lot of that to you and I just want to take a moment to tell you thank you so much for allowing me to achieve success and I’ll tell you all about Eric Trump. I just want to tell you thank you sir for changing my life. Well not only that Clay, you know thank you but you’ve become an influencer. You know more than anything else, you’ve evolved into an influencer where your word has more and more power. So that’s why I congratulate you on becoming. Because as you know, there’s a lot of fake influencers out there too, or bad influencers. Yeah. Anyway, I’m glad you and I agree so much, and thanks for reading my books. Yeah. That’s the greatest thrill for me today. Not a thrill, but recognition is when people, young men especially, come up and say, I read your book, changed my life, I’m doing this, I’m doing this, I’m doing this. I learned at the academy at King’s Point in New York, I learned at the academy at King’s Point in New York, acta non verba, watch what a person does, not what they say.