ANTHONY TUMBIOLO

Building a Business

Why I Don’t Believe in “Hard Work”

Look anywhere in our culture and you’ll see people promoting “hard work.”

There are so many variations of this story, such as:

  • If you just “work hard” you can reach your goals
  • “Hard work pays off”

It’s so ingrained in our culture at this point.

To be honest, I really never stopped to question it until the last couple of years.

I too believed that “you must work hard to be successful.”

But let’s take a step back.

What does “hard work” even mean? 

Here’s what Google says:

So, “hard work” = “a great deal of effort”

And look at that, right below the definition, it says: “it takes hard work to be successful in business.”

It’s ingrained in our culture so much that even a Google search spits it out.

But why does work have to be “hard” and why does it take “hard work” to be successful?

Why can’t work feel effortless?

That’s not to say it’s done without action.

And that’s a very important distinction. 

“Feel effortless” does not mean “without action.”

But here’s how I like to look at it:

When we are in flow, work — even when focusing on a complex or difficult task — can feel effortless.

It may take action, but when we are in flow, that action comes with ease. 

So why aim to “work hard?”

Why not aim to “be in flow and take inspired action?”

Because when you are in flow, the action feels effortless and tasks can be done with ease. 

(note: with ease is different than a task being simple/easy)

It feels amazing to work when you are inflow.

Whenever I’m inflow, even if I’m working on a super challenging problem, it doesn’t feel “hard.”

It feels like a very fun challenge to solve.

And now imagine all your work was like this.

Would you really call this “hard work?”

Or would you just call it “work?”

Or better yet, “playing?”


Building a Business

When Should You Invest in Marketing for your Company’s Brand?

When I started Jakt out of my bedroom in NYC, there were plenty of things I didn’t know about running a business. 

I had previous entrepreneurial experience, but this was my first attempt at running a full-blown, service-based company with employees, etc. 

It was a big (and challenging) step for me. 

There were also things I didn’t know that I didn’t know. 

I mean… how could I? I was just figuring things out as I went along. 

I don’t believe in mistakes. But I do believe in lessons –and in learning from them. Jakt is now a $4M/year business but, looking back, I wish I knew certain things. 

One of those was when (and why) you should invest in marketing for your company’s brand. 

Is marketing worth your time in the beginning?

During Jakt’s early years, I was extremely focused on serving our customers. Which meant I would spend a large share of my time doing production work.

And any time I could find outside of that would go into selling or gradually working on the business. 

That’s what made sense to me, right?

These were the activities with the highest short-term ROI. I needed to find new clients or I wouldn’t make payroll next month. I needed to work on the business so that we could eventually scale and fire myself.

So I get it. I really do. 

I understand why many business owners just focus on that when they’re starting up. When you’re scrambling to survive, it can seem too far-fetched to think about anything else.

When Should You Invest in Marketing for your Company’s Brand?

Building your company’s brand

One area that I really didn’t focus much back then was content marketing and brand building. 

Now, don’t get me wrong. The Jakt brand definitely grew over time. As we signed more and more clients and helped solved bigger issues, we started to make a name for ourselves.

But I can’t help to think how much further along we’d be if we had started earlier.

If we just had invested in creating content that showed our expertise, grew the brand and laid the foundation for SEO which pays off massively over time. 

The truth is, in the early days…

It’s hard to justify spending time and money on content.

“Why would I spend money and time on something that doesn’t have an immediate ROI?” I thought.

You see…

I was worried about making sure we’d get through the next weeks and months. I truly believed that I couldn’t afford to think about the long term as much.

The power of compounding.

Here’s the thing:

Just like working “on the business” compounds over time, so does content and brand building.

You won’t see the impact today, or this week, or this month, or maybe not even this year.

And that can lead you to ignore it when you’re not in a secure financial position. But its effects on your brand over time are worth it in my opinion. 

When Should You Invest in Marketing for your Company's Brand?

How to get started with content creation:

I’ve taken this lesson to heart. And I’m now applying it to all my future business ventures. 

While it’s not directly related to any specific company of mine, my personal brand is an example of this. 

I’ve built a 24/7 personal brand machine that requires a small fraction of my time. Articles like this one are adding value to both my own and my companies’ brand.

With Polpo Group, I’m investing in cash-flow generating businesses. Moving forward, one of the priorities is to build up the company brand from the jump. We’ll work on that way earlier than I did with Jakt.

Your brand is an asset.

While growing your brand, you’re creating an asset that can run without you.

So, if you ever want to sell or step away, you’ve added value to it. And it will keep on paying over time. 

Eventually, your content and your brand will really be out there. Which will then lead to additional inbound interest, other opportunities, higher closing rates, etc. 

The more you put out (that is quality) over long periods of time, the more you’ll get out of this whole thing. 

Now, you don’t have to go all out tomorrow and start cranking up blog posts as your life depends on it.

You’re playing the long game here. So don’t stop selling and working on the business just yet. 

But define a strategy. Start slow. Be consistent. And let it compound over time. 

When Should You Invest in Marketing for your Company's Brand?

Found this valuable?

This article comes from a series I call “Wish I Knew,” which I write for ServiceBasedBusinesses.com members. 

As the name implies, these are valuable lessons that I’ve learned throughout my journey as an agency owner and CEO.

They are the type of things that I would’ve loved to know back in the day. And they would’ve helped me grow my business quicker and with fewer “oh, fuck me” moments.

I have plenty of others nuggets that I’ll be sharing on my community for business owners that run service-based companies. 

If you run an agency and want more insights like this every week, you can join us here.  

 


Building a Business

How To Attract Customers Organically and Authentically

[Youtube] Watch me talk about this.

[Podcast] Listen to me talk about this:

Sales and new business are very hot topics.

If you scroll down through any social media platform, you’ll be flooded with so-called marketing gurus.

Apparently, they’ve all “discovered” the latest, most innovative strategy that, in 5 simple steps, will bring you more clients than you can possibly manage.

Look, if you’re reading this article to find a groundbreaking technique, I have a feeling that you’ll be disappointed.

I don’t have it.

I don’t have the coolest FB Ads hacks.

Or the newest LinkedIn cold-messaging tips.

I just don’t.

What I do have is a $4M/year business and a bunch of years of experience in my shoulders.

By all means, I don’t know everything. But I do want to share with you the approach I’ve used to grow my company from 0 to 4 Million.

If you are a business owner or a CEO, I really think this can help you attract more clients and scale your business in a very organic and authentic way.

Here’s how…

The Most Unsexy Marketing Strategy Ever:

What I do is this:

I meet people.

And then I help them.

And if I can’t help them myself, I try to connect them with someone that might be able to.

There really are hundreds of people I’ve introduced that have done business together –which is awesome.

And I do this every single day. And every single week. And every single month. And every single year.

Just think about it:

In the last 5 years that I’ve been really focused on this, I’ve probably talked to around 3,000 people.

(50 people/month x 12 months x 5 years. And I’m sure it’s more because there are days where I’m talking to 5-8 people).

And then it compounds.

Seriously, how is it going to look when I’ve done this consistently for ten more years? Or 20 more years? The more people you meet and help, the better it gets.

It’s a long game.

And this weird thing happens when you help a lot of people:

It comes back to you.

Maybe not now. Maybe not in a year. Honestly, maybe not ever.

But, a lot of times, it does. And it can happen in ways you don’t expect or long after you’ve even forgotten about it.

Why some people don’t like this method:

I was recently having a conversation about this on Twitter with Mike, a good friend of mine.

And something he said really spurred my thinking:

“Shiny object syndrome is a real thing.

People don’t think this works because, if it did work, they would have to do ungodly amounts of work.

I’m not going to become a hustle-porn account, but some people don’t want to do it.

Not can’t, won’t.

And I 100% agreed with him.

This is a ton of work without an immediate ROI. That’s why some business owners don’t like our answer to how to get more clients. Others love it.

“Intellectually, he added, it’s much easier to say that Mike and Anthony are wrong. Then, it shifts the burden away from oneself.”

He’s right. This is not the automated way to get clients while you sleep.

It’s a very slow strategy that takes years. But it pays off later on.

And it all starts with…

The Importance of Giving

My friend Chris Schembra once told me about Adam Grant’s book Give And Take.

In it, Adam talks about how the most successful people are givers and not takers.

I never thought about this as a “strategy.”

Going into it, I just wanted to help as many people as I could. I trusted that business would eventually flow my way.

And I really subscribe to the idea that stuff comes around to people that give more than they take.

Over the 7+ years I’ve been playing this game, I’ve personally seen how people have built very big businesses following this philosophy.

And this is not a hidden secret.

It’s just about giving as much value as you can and expect nothing in return.

Yes, even if you have to do free stuff for others.

I worked for free when I was starting up to prove my value. And I now help a bunch of people without asking for an economic return. And that’s okay.

I kid you not, if you have patience and bring an enormous amount of value, business will find you sooner or later. I’ve received referrals from people I haven’t talked to in 2 or 3 years.

There’s a Law of Attraction component to it as well. What you put out will be what you receive. It just works.

But something you have to keep on doing is this…

Share your story.

As you help people, you have to also be constantly storytelling.

There’s power in telling people your story and what you’re doing, right?

I’ve told my story over the years when it comes to Jakt so many times to so many people… that they just know me now.

I’m top of mind with those that I’m interacted with (and helped). So then, if there’s ever anything that might be a good fit for us, they tell me.

Sure, there will be people that say things like:

“Referrals aren’t scalable.”

But referrals alone can build a really solid book of business. At Jakt, the combination of referrals and channel partners makes up for the vast majority of our revenue.

And this doesn’t have to be your only client acquisition strategy.

I’m not shitting on any paid marketing channels. There are definitely good things when it comes to them.

I just wanted to share the importance of meeting people, helping them, and telling your story.

Yes, you’ll need a truckload of patience.

And a ton of effort.

And a bunch of work.

But, in my opinion, it’s worth it.

3 Quick Takeaways On This Approach:

  1. The more people you help and the more value you bring, the more people you’ll make an impact on. Doing that consistently over time will bring business back to you. Give more than you take.
  2. This is a slow process. It’s not easy, and it takes a lot of work. That’s why some people don’t like it. You won’t see results in the first week, but it compounds in the long run.
  3. You have to share who you are and what you’re up to. Keep on telling your story so that you’re top of mind when they have business to send your way.

Liked this article? Hit me up on Twitter @anthonytumbiolo and let me know!


Building a Business

Why Raising Salaries Each Year for Agency Employees is Hard

As an agency owner, you know that the people in your team are a huge factor in your long-term success.

In the early days, maybe it was just you doing the work. You had a unique creative gift that you used to help other businesses.

But as the demand for your services increased, you started adding people around you.

At least, that was my experience with Jakt. And we’re now at 20+ people between employees and contractors. You’d expect to face many challenges as you grow the company. I sure did.

But one that I didn’t expect is this:

It’s hard to raise salaries when you run an agency. And not because we’re cheap 🙂

In this article, I will discuss the reason behind it and how we’re approaching this at Polpo in a way that it makes sense financially. So let’s dive in.

Why is raising salaries in an agency so hard:

Whether people say it or not, if you have employees, your prices are always pegged to some sort of hourly rate.

But we charge a retainer. So we’re not based on time.”

You are.

Even if you charge a “retainer,” how do you pay your people?

If they are employees, they get a salary, which is based on TIME. So, naturally, you calculate your profits by seeing what you pay them hourly vs how much time it took them to do the work and for you to get paid.

The difference is your profit margin, but it can all be boiled down to an hourly rate.

Example:

Customer A pays you $10K. You estimate it will take your employee 100 hours to do the work. Therefore the hourly rate is effectively $100 per hour.

If you pay someone 100k salary, if you break down their salary into an hourly rate, it’s about $50 per hour. So good, you are making the margin you were looking for.

If you don’t calculate it like this, you are completely guessing if you will make money or not.

So yes, it still boils down to an hourly rate when having full-time w2 employees.

Note: This same principle doesn’t always apply when you use contractors, but that’s a topic for another blog post.

Now…

Let’s say you run a digital marketing agency. And imagine your target gross margin is 50% (that’s ours).

You sign a contract with a client for $6,000/month. You know that $3,000 will go to pay for your employees.

You’ve hit your target margin. All good for now.

The problem comes when you start raising salaries… but you keep charging your client the same $6k.

So now, you’re paying $3,500 to your employees instead of the $3,000 from before.

You margin has declined. It’s not 50% anymore.

And here’s the thing:

You can’t always go to your client and start charging them $7,000/month.

I mean, you could sell them on the increased value or that you have more demand or something like this.

And maybe it works…

But what if they say no?

I mean… it’s not like you’re adding more services on top of what you were already offering.

You’re just essentially telling them: I’m going to do the same amount of work but charge you more.”

From experience, that’s a hard pill for customers to swallow. Again, sometimes it works, but sometimes it doesn’t. And when it doesn’t, that’s where the issue of raising salaries comes into play.

If you can’t manage to raise your prices, you —the business owner— will be the one losing money when salaries are increased.

And what if your employees ask you for more money?

If you want to keep the same profit margin, you can’t give it to them.

And if they decide to leave you and go somewhere else, you run into another issue:

You have to pay the cost to replace them. You now need to go and find another person. Hire them. Train them. Get them up to speed on how the systems work, etc.

And that’s very expensive in itself, both in terms of money AND time.

When your team stays together over time, they get better and better. But when there are people that leave, you lose consistency.

So, the question is…

How in the world can you pay your employees more without fucking your margins up?

How using bonuses and profit shares can work for your agency:

At Jakt, we keep salaries the same every year unless someone moves into a higher paying role.

The reason behind it is that we don’t want to increase our fixed costs.

If I agree to pay someone an extra $5k/year, I’m obligated to do so no matter how well the company does.

But, ideally, you’d like the vast majority of your costs to be variable instead. That way you can protect yourself and be profitable at all times.

That’s why I’ve found profit shares and bonuses to work the best in this situation.

They de-risk it and give you control.

If your company makes a profit, you know coming in that you’ll pay a percentage to your employees. You can plan around that.

Or if you are able to actually charge more to clients, the company will make more profit and you can then share that with employees. But you protect your downside if the clients aren’t willing to pay more.

It becomes a win-win with the employer and employee instead of a win for the employee and a potential loss for the employer.

This also aligns your interest with your employee’s, right?

If they do well, you do well. And if the company does well, your team does too.

It’s a win-win scenario.

Let’s talk numbers:

I established a profit share of 20% at Jakt.

That means that 20% of our net profits ($774k in 2018) is distributed between employees and management team.

I personally prefer this method instead of raising salaries by 5-10% just because time went on.

And that’s not to say you’re going to underpay people. You’re giving them a nice salary in the first place.

You’re just incentivizing and rewarding high performance.

Over time, we’ll increase the percentage to 25%, 30%, and so on. And we do this yearly, but you can even do it quarterly. It’s the same concept.

The goal is for your expenses to be variable.

If you have a bad month, you can’t lower your employees’ salaries. But what you can do is hold onto the profits and, if there are any, distribute them periodically.

This lets you be flexible and keep a solid handle on your finances. Which would be impossible if you had increased your costs on a permanent basis.

Those are the advantages of a financial model built on profit shares over raising salaries. If you want to us to help your agency implement and similar system and maintain the types of profit margins I mentioned, we spun out a new company to do just that: check this out.

When raising salaries each year won’t work: Use these takeaways 

  1. Raising salaries in agencies is hard because of the mismatch between your fixed costs and your capped rates. Giving a raise to your employees equals lower profit margins for you.
  2. Profit share pools allow you to work around the fixed-expense problem. Your interests are in alignment with those of your employees. And they get rewarded when the company makes more money.
  3. The more variable your expenses are, the more flexible your finances become. You can scale up and down without adding fixed costs and losing money.

Building a Business

Want to Grow and Scale Your Business? You Need These 2 Things

During Jakt’s early years, I remember how invested and focused I was on sales.

I really believe that, while they should always be a priority, they require even more of your time and effort until you have reached your first revenue milestone.

Should you be architecting the business machine at the same time? Absolutely. You still need to be designing and creating your systems from the jump. But sales is the fuel that gets the machine fired up.

But once you have the engine going, you’re at a very critical point in your company’s growth.

What brought you here won’t take you to the next level. It’s time to find the right people, and foster a culture that supports your business growth and lets you scale.

The thing is, that requires a different skill set that you needed until now. And many business owners and entrepreneurs struggle to make that transition.

I sure did. Here’s what happened:

The Exodus

A few years ago, Jakt was going through one of our lowest points –and I did too.

Due to a variety of reasons, almost half the team left the company in about a month and a half.

It felt like Mike Tyson punched me in the face. And it messed with me on an emotional level. I started avoiding the issue at work while obsessing over it privately.

What was it? What could it be that was driving people out?

I really had to take a hard look at myself as a leader. It wasn’t easy or a 1-day thing. It was a process of self-awareness that doesn’t necessarily have a finish line.

I wrote in this article how I moved from being transactional towards my team to people-centered. And from emotional to accountable.

I also started studying companies that inspired me and that I could take learnings from. And what I found from these businesses that had stood the test of time was impactful.

ALL their Founders and CEOs shared the same two things as the main success drivers of building a company that lasts:

People and Culture.

People

I’ve never worked a 9-5 job. So it’s hard for me to grasp what makes an employee happy and fulfilled. If you’re a lifelong entrepreneur, you might be facing the same issue.

From the start, I wanted to make Jakt a company where I would work at myself.

When I take stock of the individuals that have grown with the organization, I notice we share a very similar set of values.

And not just professional, but also on a human level.

Things like the way they treat people and their level of respect. Even their relationship with money. These are all important.

As the business owner or CEO, your team is the foundation that will support your growth. You need talented people, but also human beings whose values are all aligned.

I’ll write about this in the future (stay tuned – opt-in on the form below), but here’s something we do at Jakt to make sure those values are protected:

Every new potential employee that goes through the interview process has to take a cultural interview. This is not about how skilled they are or to learn more about their previous experience.

Instead, we quickly explain our core values as a company and ask them to share a moment in time where they did NOT live up to them.

Then, we rule out those people with huge red flags as we don’t think they personally share those attributes. We might be missing on some great talent, but it’s worked pretty well for us.

Why do I/we care so much about our values? Because they are the bedrock that will determine your…

Culture

In hindsight, I had no idea what it meant to “foster a company culture.” Or even just what people meant by “culture.”

I knew I had to do it, but how? *crickets*

So I just went back to doing what I saw in the startup world: drinks after work and all that shit. Yeah, apparently that by itself doesn’t work –who would’ve known?

There’s much more to it, and it will be crucial for your business moving forward.

In fact, I recently asked my team why were they staying at the company. Between other things, people and culture were two elements shared by everyone.

And it works in a very similar fashion than a sports team. No matter how good your players are, your culture often is the main factor in whether you win or not.

I used to think that, if a person was contributing and doing their part, they didn’t need to be a culture fit. Now, however, I understand that the long-term play is to prioritize the culture above all else.

What’s more, you have to preserve the company’s culture to grow. And every single person you let in will shift it –so it will evolve over time.

The earliest hires you make will scale the most through the company’s culture. And that makes sense, right?

Because, when you go from 100 to 101 employees, your culture will change 1%. But when you go from 4 to 5, you’ll shift it 20%!

And remember, it starts at the top. As the business owner, you have to be the leading Sherpa that marks the pace as you climb up the mountain.

If you are slacking, your team will too. If you accept mediocrity, that will quickly become the new standard. And if you don’t hold people accountable, no one will.

So, I hope this post helps you on your journey and show you the importance of people and culture when growing a business.

People and Culture Takeaway:

  • Bring together a team of high-performers and then give them room to grow –while keeping them accountable.
  • Make sure your values as human being and professionals are aligned throughout your team. They are the foundation of your company’s culture and need to be protected.
  • Fostering a positive company culture is what allows your people to be in the best environment for them to excel. As the leader, it’s your job to 1) safeguard it when hiring new employees, and 2) set an example.