An exclusive discussion with Dan Kennedy and Rob Minton
For those who don’t know, Dan Kennedy is a multi-millionaire serial entrepreneur; author of 11 bestselling business books – including two new ones we’ll discuss here; a popular speaker who has often appeared on programs with a wide variety of legendary entrepreneurs including Donald Trump, Jim McCann (1-800-Flowers), Debbi Fields (Mrs. Fields Cookies) and even Gene Simmons (KISS) as well as leading business speakers Zig Ziglar, Brian Tracy and Tom Hopkins; and, through his newsletters and networks of consultants and coaches, directly influences over 1-million business owners a year – including countless real estate agents. I have been relying on Dan for strategic business and marketing advice since 2004, and have been a Member of his most elite Platinum private client group and high level coaching groups for 4 years. Recently, while at a Platinum meeting, I sat down with Dan to discuss the economy, business, money and even politics. Here is the result:
ROB: Let’s start right out with the so-called elephant in the room, the economy, and the dreaded ‘R’ word. Economists are arguing over technicalities. The news media has had us deep in a recession for months. People do seem troubled by gas and grocery prices. What’s your take on it all?
DAN: First, you always have to temper what people say with objective reality. For example, if you listened to all their weeping and wailing about gas prices, you’d presume everybody had their cars up on blocks, huddled in their homes as if in caves. But the recent Memorial Day weekend had only a 1% reduction in people driving 50 miles or farther from home according to AAA. There is no doubt that there are segments of the population severely affected….others slightly affected….some unaffected by this very specific inflation of gas and groceries. In big-ticket spending, the inevitable hitting of the wall with using appreciating home equity as an ATM has whacked big, dumb, slow to adapt companies like Home Depot and Lowes. Cities and businesses dependent on summer vacation dollars may be hurt this year. So I am not a “recession denier.” However, it’s also important to look at all this in full context. For example, as we’re doing this, we’re in the 4th straight week with declines in jobless claims – less people each week filing for unemployment. The stock market still reflects a fairly optimistic analysis of the overall economy. Real estate is not, as media reports, in an across the board collapse. In the Cleveland area, where I have one of my homes, foreclosure numbers are roughly 25% to 30% higher than normal, putting the area in the top 5 markets in the U.S. for foreclosure problems, but luxury home sales are healthy, and even more telling, commercial real estate transactions were up in 2007 vs. 2006 and are apace to grow again in 2008, and there’s more new investment in significant development in and around the city than anytime in the past 7 years. In short, saying “recession” is a big, fat, over-broad, over-simplified generalization. There are plenty of consumers, plenty of investors and plenty of business owners spending plenty of money – and that’s one of the things I want to talk about, related to one of my new books. Further, there’s no profit in buying into this concept of a giant black cloud of doom descending over the entire land – and every business owner must constantly be asking himself ‘where’s the PROFIT in that?’ – with regard to his own thinking, his own analysis and his own actions.
ROB: Before we get to the practical cures, if you will, let’s talk a little more about this thought process. How should businesspeople manage their own thinking about the economy?
DAN: This is a presidential election year, during which well over a half-billion dollars has been spent, and between candidates, parties, and independent groups called 527-c’s – for which I write some ad and direct-mail copy – another billion dollars will be spent, most of it aimed at convincing voters that we are in crisis here, there and everywhere. One side cries “crisis and change.” The other side threatens “crisis requires steady, experienced hand.” Either way, everybody’s selling crisis. There’s also a profound media bias, even what I call ‘media mental illness’, a very unbalanced emphasis, excessively reporting bad news, nearly ignoring good news. On CNN, which I call the Communist News Network, you get good economic news only in the little type crawl across the bottom of the screen. You actually have to go to Fox Financial News or CNBC or the Wall Street Journal to get a fully balanced presentation and, of course, most people don’t. So the gloom ‘n doom sales machine is cranked up on high. To quote one of the success authorities I studied very early, Earl Nightingale, “we become what we think about most.” So if you DON’T actually MANAGE your thinking about this….if you let yourself accept the mainstream media’s and politicians’ selling of crisis, if you think about it, regurgitate it in conversation with others, hang out with others regurgitating it to you….you’ll undoubtedly find yourself upside down in it, shit up to your ankles! It’s up to you to seek out better, more complete information. And, incidentally, to turn around and provide that information to your real estate clients. You’d better be what I call a “good news merchant” yourself, influencing your clients’ thinking about this – yours may very well be the only such voice they hear. And being that lone voice of reason and encouragement can be very magnetic. I’m sure that you, Rob, have been telling your real estate agent coaching clients this and in your weekly fax and other tools you provide them, doing this for them. There’s a thing called the Consumer Confidence Index, a measurement of consumers’ attitudes that at least somewhat predicts their near future spending. Every business owner needs to be actively working at positively influencing his consumers’ confidence.
But beyond that, here’s how true entrepreneurs think about this: it is a set of circumstances, of changes in the marketplace, to have foreseen and prepared for, now to respond to, in which there is enormous opportunity – and REDUCED competition pursuing that opportunity diminished by fear, indecision, emotional paralysis, resentment toward the need to adapt, and in many cases, lack of agility. This is a good time to be grabbing market share, acquiring new clients, marketing aggressively. There is always a ‘set of circumstances’ and there are always winners and losers. A lot of business owners do well only in a generous economy. But a lot of other business owners get their traction, outpace their competition, and create their greatest wealth during economic times widely regarded by others as “poor.” To complain about there being circumstances or changing circumstances is to complain about there being weather.
As an investor, I don’t worry a lot over a company’s dip in stock price at a time like this, because that reflects the mass public’s foolish acceptance of recession as a universal reality, as a completely dark time. I look for companies where insiders are buying up more stock at bargain prices and the company is expanding, growing, launching new initiatives. In a recession, everything goes on sale. Stock in very good companies. Real estate in very good areas. “Eyeballs” for advertisers and marketers – less people sending out direct-mail means less clutter in my customers’ mailboxes means more space and better opportunity to gain their attention and interest for me. Less pages of advertising in the magazines or newspapers my customers read, lower rate negotiated and more attention for me. When others cower, you want to be bold, aggressive, opportunistic.
ROB: Okay, let’s talk about being opportunistic. What are the big opportunities you are emphasizing for business owners right now?
DAN: There are two big topics I’m spending a lot of time talking about with my clients, coaching members, and readers right now, reflected in my two brand new books: NO B.S. GUIDE TO RUTHLESS MANAGEMENT OF PEOPLE AND PROFITS and NO B.S. GUIDE TO MARKETING TO THE AFFLUENT – as they say, available now at a bookstore near you or amazon.com, BN.com and so on. One topic is using this sea-change from generous, indulgent economy to grumpy, demanding one as motivation and mandate to re-assess your business inside out, and get smarter and tougher and more diligent about managing for maximum profit. And it is my contention that most businesses – including those in your industry could suffer a 25% drop in gross sales (revenues) but simultaneously enjoy a 25% improvement in net profits, employing the from a-to-z ruthless management strategies in my book. Also, most businesses could suffer a 25% drop in response to advertising and marketing, a 25% “drying up” if you will of prospective new clients coming their way but simultaneously create a 25% increase in conversions, in converting new prospects to clients. In fact, one of the chapters in my Management book is titled ‘How to Profit From The Age Of Mass Incompetence And Coming Monster Recession’. As you can see, this is a very timely new book. Second, is the grand and glorious, newly developing opportunity to re-direct a business to attracting, serving and securing more affluent clients – the subject of my new MARKETING TO THE AFFLUENT book. So, the hot words are: re-assess, re-tool and re-direct.
ROB: Sounds like a lot of unpleasant work – who wants to do all that re-assessing and re-tooling and re-directing?
DAN: Hardly anybody!!! – which is why there’s such abundant, exciting opportunity for the few who do. You know, I started in business myself during a real recession – that makes where we are now look like a light summer breeze in comparison to Katrina. Thanks to Jimmy Carter, we had the reality of double-digit base interest rates, unemployment rates and inflation….all more than double the current numbers, high gas prices and gas rationing, a credit crunch…and a widespread emotional malaise as well. It wasn’t pretty. For most. But I prospered. And I got to work with quite a few agile entrepreneurs who did. I have absolute understanding that the best time to speed up and gain position is when others are riding the brakes. But you’re 1000% right: most people long for the ability to get their business arranged a certain way and then never have to tinker with it again. But success in business doesn’t work that way. I’d love for that to happen with my houses too. One of our homes is just 6 or 7 years old. Re-paint the deck; next replace the deck. Carla wants to put a new floor in the kitchen. Paint this. Change that. Why, oh why, oh why, can’t it all just be left alone? Well, even if you want to, you can’t. Style changes, tastes change, furnishings wear out, water tanks wear out, garage doors wear out.
Look, in business, the surest path to mediocrity, to disappointments in income and wealth short-term and long-term, to losing disinterested customers (client/patients) to others’ seductions is denial, is resentment or procrastination over the need for constant change. That’s why being a part of groups like yours, being coached, being in your Less Clients More Money Program, coming to brain-exchange events like your mastermind meeting for real estate agents is so critically important at all times but treble important in particularly challenging times. You have to see the need for change as exciting opportunity, not as burden. You have to be mentally agile. With full disclosure, some of the companies I invest in now: Disney, Landrys Restaurants, amazon, 1-800-Flowers…all of which have been good to me and I expect them to be even better in the future….have creative, agile, innovative, opportunistic leadership and corporate culture. Nothing stays the same. If you are striving for same you’ll be slaughtered.
Especially now, but really at any time.
The transcript of this conversation with Dan Kennedy will be continued in my next blog post! Stay tuned!