It’s not about how much money you make. It’s about how much you keep, what you do with that, and how it impacts your life, your freedom, your flexibility, your family, your community, and so forth. This is what profitability consulting is all about according to Thor Conklin, founder and CEO of Peak Performance Group. Sometimes it’s as simple as shifting around the mindset from the tactical side to executive coaching and trying to figure out what’s going on in your business, what’s getting in the way, and going through the whole thing. It always comes back to the person. Thor says you need money to fulfill whatever purpose you have for your business or your life. Learn how you can create profit as Thor delves into the subject of profitability consulting and how to increase profits.
I’m very excited to have Thor Conklin joining us. Thor, welcome.
Thank you very much for having me.
Thor, for those who aren’t familiar with your work, I know you run a well-known podcast, but you do a lot more than that. Take a moment and share a little bit of what you do.
It’s funny because people ask me all the time, “Do you do a podcast full-time? Is that your job?” I’m like, “No, that’s not my job. That’s my side gig.” We own a profitability consulting firm and an executive coaching organization.
I know you’ve also bought and sold multi-million dollar businesses and run a global risk management consulting firm. Before we get to that, let’s go back to the early days. I believe you were eighteen years old and you were selling life insurance door-to–door. To some that sounds like torture. Why did you do it?
It was torture. I graduated in high school. Apparently, you’re supposed to get great grades in high school in order to get into a great college. I missed that chapter somewhere along in my youth. I was working with someone and this opportunity came up to sell life insurance. I didn’t realize it was going to be torture, but I was selling life insurance. I always believed that whatever I put my mind to I can accomplish. I always had an entrepreneurial spirit. Growing up I was always around businesses and I thought, “What a great opportunity to get into the business. I can make a mark and let’s do it.”
I didn’t realize how difficult it was going to be. I had the business cards, my briefcase, and my three-piece suit and off I went. Not very successfully, but it certainly had a very big impact and that is sales. Whether it’s door-to-door insurance sales, knife sales, newspaper sales or whatever it is, you gain such an ability to work with people and you know what it means to have no thrown in your face every moment and you bounce back up and you keep going.
How did you do that? That freaks a lot of people out, the idea of rejection. I was speaking with a client the other day who is fearful of rejection, of hearing a no. How did you learn to overcome that? What was the transition or when did the light bulb go off for that this is all part of the process?
You got to keep doing it. The first time it hurts, the second time it hurts a little less, and so on. I have a technique that I use, which is three, two, one and go. I still use it. As a matter of fact, it’s in my calendar every single day at about 4 AM to remind me. When I’m getting ready to jump in the pool at 5 AM to do swimming lap, it’s cold. I don’t want to get in and I start the countdown. Three, two, one and it doesn’t matter, I go.Danger and fear is not something that we need to repress or need to get over. It's something that we need to learn how to dance with. Click To Tweet
The same thing with being rejected, all you got to do is get back up. There’s a saying, SWSWSWSW, Some Will, Some Won’t, So What and Someone’s Waiting. I’ve modified that a little bit and what I like to say is some will, some won’t, so why? So why? Instead of constantly moving onto the next one, try to analyze a bit, “Why aren’t they saying yes?” and learn from that. Every no gets you that much closer to a yes, you can learn from it.
I was thinking as you were talking here about my own background and not too dissimilar from what you were sharing. I sold Cutco knives at one point. I was at a stage where I wanted to make some extra money during the summer so that I could go overseas. I did a whole bunch of jobs. I lay sods. I worked in an electronics warehouse where I was moving boxes filled with dust and I was allergic to dust mites. That wasn’t fun. When you were saying about the why, one thing that I’ve realized maybe more recently is that the reason why I was able to do all the things that I’ve done is because I always had a purpose. I always had something like a reason for why I was doing it.
From probably age six and a half or seven until probably seventeen, sports was my life. That’s all I was doing. I was very competitive and I was quite good at it, but I was doing it because I wanted to win. When I think about school, I want to accomplish something, not in terms of my grades because I wasn’t very good at that, but if I wanted to change a program or get access to sign that I wasn’t supposed to, it’s always because I wanted something. There was a reason and that’s what you’re getting to in terms of the why.
I call it a vision of where you’re trying to go. You got to be clear on why you’re doing it and where you’re going.
What do you say then to people who understand that? They’ve heard the Simon Sinek book and the YouTube TED Talk of Start with Why and all that kind of stuff. Yet, there are a lot of people who in a sales situation or in a business development situations still struggle because they have that fear of “failure.” When you say that they’re lacking purpose or lacking drive, what would you call upon or how might you counsel them to overcome that fear and ultimately take the action that can get them to a place where they’ll start to see more momentum and progress?
Fear is a natural occurring thing within us as humans. It serves a very good purpose. We’re afraid to cross the road during a green light, with traffic streaming by 60 miles an hour. That’s probably a good thing to have. A mechanism that says, “This is not very safe. Beware.” Danger and fear is not something that we need to repress. It’s not something we need to get over. It’s something that we need to learn how to dance with. We need to move with it.
If we were sitting in the same room and if I put my hands up and I pushed it towards you, a natural thing for you is to push back. Energy moves forward, but resistance is going to be on the other side. That’s what happens very often with fear. We try to wrestle it. We try to beat it and try to conquer it. Don’t do that. Dance with it, move with it, understand, acknowledge it, and then make intelligent decisions. Put yourself on a timer. Three, two, one, go and move forward. Despite that you’re fearful, move in spite of it. Keep moving.
A real point of distinction between those who struggle and those who are successful is that those are who are successful understand that dealing with a challenge, rejection, fear or anything that comes their way is all part of it. They get up faster. They don’t let that fear or whatever it is hold them back. It might knock them down, but they’re going to get up. They’re going to keep moving and because of that they’re taking more action in total than someone who is being paralyzed or significantly held back by that. In 2000, you got into a risk management consulting. Talk to us a little bit how you went from doing life insurance sales door-to-door to starting a global risk management consulting firm?
It’s all connected. I was trying to sell life insurance. I realized that there was an industry here, but most people had no idea what they were doing. They were winging it. I started to research the industry and found out there was a couple of colleges in the United States that had degrees in insurance and risk management. I contacted one in New York. I wasn’t initially accepted. I had to do a couple of courses on the side in order to get in. That’s a whole different story of how I got in because I was originally rejected due to my grades. I got in and went into the insurance business. I spent fifteen years working with private equity firms, helping them buy and sell companies, and helping them with the due diligence on the insurance risk management side.First off, it comes down to figuring out how to make sure that you're serving the client to the highest level. Click To Tweet
In 2000, I was down here in Atlanta and I was going to take another regional position with a competitor of ours. One of the private equity firms I was working with called me into New York and said, “Would you consider coming on our team and being one of our members of our staff or would you consider setting up your own company taking care of our portfolio companies worldwide?” At that point, they had ten companies with a combined total revenue of $12.7 billion. That’s what I did. I had twenty minutes to form my first company. I came out of the conference room. I had the name had the cost structure. My first company was formed in an unusual manner where 100% of my time was purchased and I’m off to the races.
When you found yourself in that position, you’re at 100% capacity from day one, which is something that very few people find themselves and unless they are considering themselves to be consultants, but they’re more like a contractor working for one main client. Maybe that’s the position that you were in or did you feel like you were running a business that had to also be thinking about business development and marketing? Was it that you had a consulting business but all your time is focused on serving the clients that came with the business as you started it?
The way I structured it was is that they had 90% of my time. I had another 10% that I could use to acquire new companies and new clients. I did that. I grew that and it got to the point where I brought on some other consultants. Then, eventually merged that into another company and then sold it. I gave myself a little bit of room, but the way I structured the deal coming out of the gate was 90% of my time was going to be dedicated to them. They could’ve bought or needed 100%. I wanted to leave a little bit of room so I could expand.
In that process, what did you find most important to position the business so that it could be sold? You mentioned that you brought on some other consultants. Very often consultants aren’t even thinking about creating real value with their business for the future potential of a sale, but in your experience, what was most important for you to position the company so that it could be sold?
First off, it comes down to figuring out how to make sure that you’re serving the client to the highest level. The private equity firms are very demanding clients and the talent space that understands the nuances of that business are small. We started to acquire people that had the expertise in this area. Then, when I merged with this other company, they brought out a whole bunch of their clients and pretty much we controlled probably 60% of the market in this particular space, in this particular niche. To be clear, I sold my percentage back to my business partner and he has to this day is continuing to run that company. It was not a complete sale of the company.
Did you not then go ahead and start your profitability consulting firm or did you do something else?
I started a company that was a wholesale insurance operation. Then, I started an insurance agency and another insurance agency. Then, I purchased a manufacturing company that was manufacturing pedicure equipments that went into nail salons.
That came from personal experience?
That was a disaster. I had just exited to sell the second insurance agency over to my partner. I had been in the insurance industry for quite some time and I said, “I want to try something different.” I started talking with brokers, started looking at about 300 different businesses that were for sale and came across one where I looked at the balance sheet with the P&L. It was an industry that I knew nothing about and it was going to be a huge challenge. I’m like, “I want that one.” I closed the business in August of 2008. Months later, the government said that we’re in the middle of a major recession.
I’m like, “That’s okay. I can figure this stuff out. We can weather the storm.” About two months later, I figured out that the P&L balance sheet, all the financials were completely bogus. It ended up in a major lawsuit with the ex-owner. I found out that the $2.5 million worth of inventory was actually empty boxes at the top of the racks in the warehouses. It was not a pleasant experience. I had that business for eight years. Then, upon exiting that business, I started the consulting business.
You’ve been a part of building multiple businesses and overseeing a lot of different operations. If you boiled all that down and tried to offer one key lesson for a consulting firm owner from your experiences that could help them to start or to run their business better, is there one or two things that you’ve learned are critical?Figure out where your niche is. Your most profitable customers are going to come from that particular lane or niche. Click To Tweet
You’ve got to figure out where your niche is and when you figure out what that niche is, you have to stay very close to that lane and go deep. Your best customers, your most profitable customers are going to come from that particular lane or niche. The people that you’re currently working with in that lane are going to be your best referral sources. If you’re out there constantly trying to pound on the door and try to figure out how to create new relationships without some warm lead in, it’s going to be extremely difficult. You want people, you want your current clients to pick up the phone and say, “Bob, Sally, you need to talk to these folks. Bring them in.”
What if people don’t have current clients? If they’re just getting started, they’ve identified an area where they can provide the most value. Maybe it’s related to what they were doing previously in a corporate role or some other function. They know that, but they don’t have any specific ends. Maybe they’re even in a new location where they don’t have connections or network. Based on your own experience, what would you say to them is the best way to go about generating leads and getting appointments?
Go out and talk to people. If you can’t figure out who to talk to, go on LinkedIn. Find someone that’s in the industry. Find somebody that might be a prospect and ask for fifteen minutes of their time to pick their brain and find out what their biggest business issues are. Do that over and over again. Find out where the pain points are. Come up with a solution and then go back to that group.
Something that I’ve certainly talked to a lot of clients about. It’s validation. Some of you may have heard me tell this story before. My cousin and business partner, Sam and I, many years ago, we started a business. We invested $23,000 into building this online portal for experts, professionals and consultants. The problem is that we didn’t actually ask the marketplace whether or not they wanted this. We built all these cool features, things that we believed the market wanted. When it came to the time of putting it out there, the feedback that we finally got after we had invested all this money was like, “We don’t want all this. The one piece that you have over here is cool.”
We were fortunate to recognize at that moment, “We need to adjust and make a transition here.” We were able to pull that off successfully. About eight and a half years later, we sold the company. It was a big learning experience for us. What you’re sharing, Thor is so spot on. The sooner that you can go and validate the need in the marketplace, the real problem, and then connect that to how you can best add value and solution, the better.
Do you? What I mean by that is if you look like everybody else and you’re going to sound like everybody else, you’re going to get lost in the sea. Stand out. Whatever it is for you, just do you. Not everyone’s going to like it, and that’s the whole point.
Let’s talk about that more specifically. What do you mean? Maybe offer some examples or experiences. How do you stand out?
One of the things I tell my prospects before their clients. I said, “We’ve got a couple of rules. One is I know every single one of you are ADD. If you can’t focus on why we’re actually having our meetings, if you can’t commit to that because you’re trying to do multitask then, we’re not going to be a good fit. I’ve got two excuses for not doing what you said you were going to do. You died last month or you’ve been incarcerated for fourteen days or more. I don’t take any bullshit.” Many of my clients had the ability to pay our fees and then not necessarily have to do the work. I’m not looking for clients like that.
When do you establish those?
Right up front.
Before they become a client, is this in the initial conversation with them?
Yes. What’s interesting is I do me and I figured, “Where’s our niche? It’s going to be males 40 to 55 that have tough skin.” It’s amazing the number of female CEOs that are like, “Thor, I need that, because everybody around me is like, “Yes ma’am, no ma’am. This is great.” I didn’t think it would resonate, but it does. Not everybody, but I had a preconceived notion that my style wasn’t going to resonate with everyone and it doesn’t. I’m shocked at the number of people and the varying backgrounds that it does. At some point we’re going to get real.. Expose what’s going on. If you tell me a lie, that’s another thing. If you tell me a lie, we’re going to come up with a solution that’s based on a lie and you’re going to end up in a direction that you did not intend to be. If you can’t tell me the truth, there’s no sense moving forward.
The concern that people would likely have to that approach is, “I don’t want to offend people. I don’t want to scare them. I don’t want to come across as being too harsh.” What I’ve observed and learned when it comes to marketing is that polarization is extremely effective by standing out. If we look around at the most successful characters, people in our society, they’re typically people who stand out a lot whether it’s their looks, their fashion, their language, or their actions. They do things that allow them to be visible and stand out from everyone else.
Some people are scared about that, but the reality is if you try and play it safe, if you’re doing the same thing as everyone else, you are not going to stand out and your message won’t resonate with anyone. If you take a side, if you say, “This is who I’m serving, this is how I’m going approach it.” Then you might push some people away but you’ll also attract others.
I was going through an annual planning process with a client and he had put in a 14% or 16% increase over the last year. In some businesses that would be fine, but for this one it was way below what he was capable of doing. I sat there in the boardroom and I’m like, “That is ridiculous.” I’m embarrassed to hear that number coming from your mouth.” He’s like, “What?” I said, “That is ridiculous.” I said, “You are capable of so much more. You’re playing small. I’m not going to be a part of it. Why are you doing that?”
He admitted. He goes, “I don’t know how to do it. Quite frankly, if I look at it, I don’t think I’m worth it.” I’m like, “Here’s this major CEO. This pillar doesn’t think that he’s worthy of it.” He goes, “I don’t know how to do it.” I said, “That’s fine. I don’t know how to do it yet either, but we can figure it out. Let’s figure out how to play big. Let’s figure out how to play up to our potential. Let’s figure how to play a little bit above our potential. Then let’s figure out how to make it work.” He’s killing it. As a matter of fact, we had a race. He’ll do 43% this year.Stand out. Whatever it is for you, just do you. Not everyone's going to like it, but that's the whole point. Click To Tweet
I think the importance of thinking big is something that so many of us can benefit from because too often we’re playing small. We’re not realizing the true potential that we have within ourselves. Thor, you are focusing on profitability consulting. You work with CEOs and leaders and so forth, but explain a little bit more of what you do. When someone hears profitability consulting, it may not be clear to them at first glance what that means.
The firm is divided up into two sections. On one side, we have profitability consulting, which is the nuts and the bolts and it’s not, by the way, although we have the expertise to do it. It’s not about going through the financial statements and trying to figure out how to comb through those and figure out how to reduce expenses. Although that’s something we can do, but that’s not where most of the focus is. How can we increase the profitability of the company at the end of the year? Sometimes it’s as simple as shifting around the mindset from taking in sales, minus the expenses, and figuring out what’s left over. Before you take out the expenses, take in the sales, take out your owner compensation, take out your taxes and take out your profits. Then whatever’s left over, run your business.
That simple shift in how you take care of your accounting will revolutionize your profitability. That’s more of a tactical side and then on the executive coaching, that’s more of the mindset. We start off with, “What’s going on in your business? What’s getting in the way? We’ll go through this whole thing.” I know where it’s going to end up. I said, “At the root of the entire thing, what’s getting in the way of the business why? Why are we not at a higher level?” It always comes back to one answer, “Me.” It always comes back to the person. Now that we know who’s getting in the way, what do we need to do about it? By the way, if you don’t have the right team, you don’t have the right people on your team, somebody hired her, somebody approved them, someone’s keeping them, and someone’s continuing to pay them. Who is that?
I got one guy that he wants to move his controller who can no longer scale with the business. They’re close to $90,000 and his idea is, “I’ll make them a bookkeeper now.” I’m like, “That’s a great idea. Let’s take an overpriced controller that can’t do his job and let’s make them a bookkeeper.” He’s like, “I feel bad.” I was like, “Do you want to feel bad or you want to run this company and do you want to be a leader?” On the executive coaching side, it’s about getting in, finding out where that CEO, where that founder or entrepreneur wants to go and figure out what’s getting in the way, and devise a plan in order to get him there.
I was on a podcast and the person interviewing me asked, “What do you do when your business hits a plateau or what should people do when their business hits a plateau?” My response was that, “A business doesn’t hit a plateau. It’s you as a leader or the owner of that hits a plateau.” When you reach that point and you’re not seeing the results that you want, it’s not the business fault.
It’s your responsibility to figure out and decide whether you are still committed to greater upside, greater growth, greater improvement. If you are, then you’ll never be at a plateau. You’ll always find ways to improve and get to that next level. It doesn’t mean that you’re always growing the same rate every single year, that you never have challenges, or some negative effects. Certainly if you are a committed to improvement and growth, you’re going to get there as long as you’re open to it.
The other big thing that we see a lot of is a lot of companies, even as much as they’ve grown, don’t have a strong COO or second in command. The owner is still in the middle of things. Whether they’re doing $2 million or they’re doing $50 million, they are still stuck in the middle and everything relies upon them.
I like the focus that you have on profitability, Thor, because these days with the environment that we have, we’re all being bombarded and surrounded by social messages and social media platforms. A lot of people talk about, “This is what our revenue is and we’re making all this money.” It comes across to me as often being very egotistical and if it works for them, that’s great. What I’ve observed is that many people in talking about their revenues don’t actually look at what their profits are.
You might see a company or someone talking about, “We make X millions of dollars,” but when dig into what they’re doing and say, “What’s your margin on that? What’s your profit?” It’s very little. It’s interesting because the focus that you have on profitability to me strikes a chord in a very positive way because it’s focusing on what the end of these is the most important thing. It’s not about how much money you make, it’s about how much do you keep, what you do with that and how does it impact your life, your freedom, your flexibility, your family, your community and so forth.
If the purpose of your business and your life is to save the world or feed the kids, you need money to do that. Create the profits so you would have that at the end of the year to do whatever you want with it. Another thing that comes up quite a bit and it doesn’t come up too much in consulting organizations because the cash doesn’t get lost, is it’s very easy to lose cash in manufacturing operations. Just because you have a net profit at the end of the month or the year on your P&L doesn’t mean that you’ve converted that to cash. Sometimes a lot of those profits can be tied up in inventory.Profits are not cash, cash is cash. Click To Tweet
I remember one year we had a huge profit. I went to my accountants and I have no cash. “Where’s my cash?” “It’s in your warehouse.” I said, “That’s not my problem.” He goes, “That’s what you did with your cash. You took your cash profits and you bought more stuff.” I said, “I need to buy more stuff so I can sell it, that’s right.” He goes, “You’ve got another great news. You have all this income, so now you owe taxes on the income.” I’m like, “Will the government take some of my inventory because that’s where all my cash is.” You’ve got to be very careful. Profits are not cash, cash is cash. Understand how to look at and understand backwards and forwards, operating cashflow, OCF. If you don’t know what it is, ask your accountant. Get that form.
You mentioned that that doesn’t affect consultants as much which is very true. What do you see from your experience of both running and interacting with professional service businesses and consulting businesses, what is the biggest mistake that you see people are making?
They say yes to whatever comes along. They haven’t figured out how much your time and what their value is. They’re running around and they’re willing to take things that don’t fit into their wheelhouse. They have no boundaries and no priorities. I get opportunities for speaking and opportunities to travel all over the place. I don’t do it. I’ve been there and I’ve done that. I’ve made a decision that I don’t want to spend my life running around and being in the middle of Kansas for four days working with a team on execution. I could do it, but that’s not what my business is all about. I built it at a different way. It’s not understanding what they will do, what they won’t do, and saying no. Every yes is a no to something else and leaders suffer in this area. Figure out and put a line in the sand. Draw a line. “This is what we do, this is what we don’t do, it’s a fit or it’s not a fit.”
You’ve hinted at a part of your daily routine. You became a successful consultant, you’re productive and you get a lot done. You mentioned that you start your day at 4 AM, at 5 AM you’re swimming. I’m interested to know to hear from you, what does your daily routine look like and what habits are to your success in playing at the highest levels of performance.
First of all, this is not done every single day. I hope it is done every single day, but I’m human. I don’t get up every day at 4:59, although my alarm goes off at 4:59 every day On most days, this is having a schedule that works. At 4:59 I’d get up and I’ll spend about two or three minutes in bed, not getting up right away because I find that most of my creative stuff comes to me first thing in the morning. I want to take the opportunity to jot those things down and make a simple pledge. “I Thor Conklin promise to do my best, to do my duty, to keep my commitments, so help me God.” Then, I need a little extra help because I made my own pledge, but I could use a little bit more of energy behind it so I make a prayer. “Dear Lord, thank you Lord for giving me this day. Give me the strength, the courage and the focus to do my best in doing my duty to keep my commitments so help me God. Amen.”
I get up, make some coffee, and have some water. I spend 60 seconds to look at my calendar and make sure that there’s nothing showing up real early in the morning. This whole thing by the way takes about 50 minutes but you can cut it down however you want. I then go upstairs and sit outside. I look at my goals for the year and goals for the week. I’ll do some journaling. I focused on my top four items for the year. I’ll go for a ten-minute visualization process where I see them, feel them and touch them. I take a couple of deep breaths again. Then, I’ll come back down and I’ll start my day in prep before I start it. This is a pre-prep process.
I do not check emails, I process emails. Meaning that every single email gets acted on, it’s less than two minutes. If it’s going to take more than two minutes, it goes into a folder then to be processed later in the day. I’m looking at things while I’m waiting for people to get back to me. I’ve got a file that’s called WTF winning on things from. I make my micro-commitment through the day what I will do, what I will not do. I make that every single day. Micro commitment is a big piece of what I do. I set my calendar and set alarms for all the important meetings. Five minutes before this call, my phone went off. I wasn’t focused on what was going on. The other thing is I have a critical driver’s scoreboard, similar to a KPI, but instead of a lagging indicator, a KPI, I look at critical drivers of those actions that are going to produce the KPIs.
Thor, thank you so much for sharing that with us. I also appreciate you coming on here and spending some time. Before we end, I want to take a moment and make sure that people know how to learn more about your work. Where is the best place for them to go to?
The best place is ThorConklin.com. All social media is Thor Conklin. You can find me on Twitter, Facebook, and LinkedIn @ThorConklin. If anybody is struggling with something in their business and needs a little bit of help, just send me a 50-word email or less with the biggest issue that you’re facing in your business. I will respond back with a four-step process that will absolutely eliminate that issue, or at the very least, reduce it greatly to the point where it’s no longer a big deal. It takes a little bit of time because I respond to these emails personally.