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Are you guys using employee / human leverage much?

by TheBigBee
4 replies
I came across this amazing video that discusses a form of employee leverage. It's cut off at the end, but it's the best video I've found to explain the concept:

I remember posting a while back about the level of production I was getting out of sales reps getting paid on base + incentive vs. pure commission. I took a position that base + incentive worked best at that time... My thinking has changed.

As this video points out, very very few employees are ever going to give their entire self to a company. We've all been there, if there's no incentive for you to be GREAT at your job, you're not going to strive for greatness. You're going to strive to not get fired - particularly if there are no advancement opportunities.

I operate in the short term working capital space. It's hyper competitive. A couple of years back I raised some seed capital and we couldn't find a "growth engine." But, we kept a "hobby business" on the side and have matured it into a form of leverage. I've gone from being one of the many fighting for deals and subsequent commission checks to being in a position to provide the leads guys need to get commission checks. I literally had a "Warrior" whom I am well acquainted with get very mean and nasty with me yesterday because I don't believe in free lunches... Then he turns around and offers me a 90% split on commissions for the first 5 deals! 90% my way! LEVERAGE.

I might be speaking gibberish to some, so let me add a bit of color here... Our specific skill is at finding other people's customers. Let's say you live in northern New York and your local liquor store takes short term working capital on Monday, chances are by Thursday I'll have him on the phone with another broker who can offer alternative solutions - including more money. Now, the guy who wired him the money has invested heavily into making sure we don't find it, to no avail.

The market conditions are so tough, co-brokering with us seems like the best option of many brokers who are intent to ensure they keep earning $100k+ per year. It's either that or cold call in competition with 63 other brokers for the same deal.

Some of you have been on the same grind that I've been on recently and have invested heavily in your businesses. Whatever they may be. You're more polished. Better organized. And more and more word of mouth business is trickling in...

However, I think you should at least consider building in some employee leverage so as to scale your business in a way that makes your sales reps / agents very happy, and one that makes you a boatload of money.

One of the guys I look up to around here; bob ross has an interesting take on leverage. He's leveraging his knowledge to earn money off of folks who are happy to implement it. Think about it, at some point he may have said;

"I'm not going to hire a nationwide cold calling army to sell 9x12 in every city in America, I am going to teach folks how to do it. They'll pay me to teach them, then they'll pay me to provide design and printing services (most of the time)."
He leveraged his UNIQUE knowledge to basically create a fervently loyal customer base. Genius.

bob ross, if I'm off the mark here please dress me down via PM.

Anyway, these are two concrete examples I know of from folks who have been active here over the years in what they're doing. I think the survival plan of anyone who has gotten to the point of having an established business should be to thrive now. The only way to thrive is to scale. The most effective way to scale is to use leverage.

Anyone have any thoughts or ideas about what they're doing to build employee / human leverage in their businesses?
#employee #guys #human #leverage
  • Profile picture of the author mojo1
    I think Bob would agree with you.

    I'm a Bob Ross fan girl and customer who came to realize early on that his model is so uniquely positioned while supporting all of those physical products and now monthly elite membership club at amazing price points that no one competitor in his field can even come close.

    It also helps that he goes above and beyond with client support and maintains an active online community that contributes to the "it's not a scam" factor for all potential buyers who enter his ecosystem which keeps both him accountable and his members actively buying and using products. This is human leveraging at its finest.

    I would compare Bob's biz model to Amazon in that he's created a highly sustainable ecosystem who's 2nd entry point (printed materials) might be a loss leader for him with the first being the 9x12 ebook which keeps Bob well insulated from any real competitors on the print/direct mail business aspect.
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  • Profile picture of the author locale
    Well I've employed dozens of sales people at this point and I'll say two things about it.

    1. Sales people are the laziest employees ever, they are like children, they must be treated like children in order to produce the result you want, children cannot be left unattended with the parent assuming they will be ok. The incentive matters very little, most people just want to scrape by, the idea of earning a $1000 commission is great, but unless they are pushed to hit those phones, and you are listening to them on those phones, correcting them, teaching them, etc, you will have to hire 100 people to find 1 truly self motivated sales closer

    2. All that aside, you either move fast and grow, or you die out. This idea of working from a home office and doing all the sales yourself might put food on the table but the reality is if you want to dominate, you need to grow. You should spend your initial time perfecting the pitch and the product so you can teach it to employee #2, then #3 etc.

    Stay lean and stay nimble in the early stage for sure, no sense taking on the burden of even a small office, extra sales person etc, but as soon as you are able to start closing deals you need to be looking into an office space where you can start leveraging other people.

    We call hundreds of businesses and we return calls and emails from dozens of businesses per day. I started out just me, then I began using outbound call centers to run lean, then I was able to use the revenue from that to bring in better sales people in house that I could get closing a much higher percentage than some guy working for $9 an hour across the country.

    Follow ups are huge as well and very few single operator guys do them. They are afraid to call back someone that said no or they just want to keep dialing new numbers to hopefully get a yes. The big guys will call every potential client multiple times per month, and it works.

    You have to have people hitting that list of "no's "and "maybe next's " saying "hey what do we need to do to earn your business? what will it take to let us help you increase your business?"
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    • Profile picture of the author themoney222
      Originally Posted by locale View Post

      Well I've employed dozens of sales people at this point and I'll say two things about it.

      1. Sales people are the laziest employees ever, they are like children, they must be treated like children in order to produce the result you want, children cannot be left unattended with the parent assuming they will be ok. The incentive matters very little, most people just want to scrape by, the idea of earning a $1000 commission is great, but unless they are pushed to hit those phones, and you are listening to them on those phones, correcting them, teaching them, etc, you will have to hire 100 people to find 1 truly self motivated sales closer

      2. All that aside, you either move fast and grow, or you die out. This idea of working from a home office and doing all the sales yourself might put food on the table but the reality is if you want to dominate, you need to grow. You should spend your initial time perfecting the pitch and the product so you can teach it to employee #2, then #3 etc.

      Stay lean and stay nimble in the early stage for sure, no sense taking on the burden of even a small office, extra sales person etc, but as soon as you are able to start closing deals you need to be looking into an office space where you can start leveraging other people.

      We call hundreds of businesses and we return calls and emails from dozens of businesses per day. I started out just me, then I began using outbound call centers to run lean, then I was able to use the revenue from that to bring in better sales people in house that I could get closing a much higher percentage than some guy working for $9 an hour across the country.

      Follow ups are huge as well and very few single operator guys do them. They are afraid to call back someone that said no or they just want to keep dialing new numbers to hopefully get a yes. The big guys will call every potential client multiple times per month, and it works.

      You have to have people hitting that list of "no's "and "maybe next's " saying "hey what do we need to do to earn your business? what will it take to let us help you increase your business?"
      I greatly appreciate this post.

      Currently I'm at the issue of being afraid of calling back a solid lead I generated (email provided and best callback time provided with the business owner). On avg I'm generating 2-3 leads per hour from 50-60 calls per hour, but I have to become fearless and call them back to work towards earning their business and closing that sale. I have to change my mindset and to accept an abundance of juicy commision cheques being mailed to me most days of the week, and to achieve that I have to follow up, build relationships and close those sales.
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  • Profile picture of the author Simonseed
    That's great. It's much appreciative and informative.
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