It’s a sad but true statement that most new businesses fail.

I imagine you’re like me and can look around at both your personal and professional networks and can find all sorts of examples of people who “gave it a try” but didn’t continue on with their business.

I want to help you stay in the “business success” category and one of the ways to do so is to look out for the red flags that cause most business owners to fail.

My guest in this podcast, Walter Hill Jr., is a seasoned entrepreneur, business owner and is the author of the book “Think Red Flags, A Proactive and Profitable Approach For Your Small Business.”

It was a blast getting to talk with Walter about the common reasons most businesses fail after having been in the business world for decades and more importantly, the red flags to look out for and be prepared to deal with.

I took so many valuable lessons from this chat and I know you will too. If there are any big takeaways you have, leave a comment on the post at joshhall.co/142! I’d love to hear them.

Enjoy this one!

In this episode:

00:00 – Introduction
01:42 – Avoiding failure
04:56 – Greeting to Walter
11:29 – Learn from others
14:11 – Eliminating mistakes
15:40 – Encourage others
17:39 – Basic fundamentals
21:08 – Premise of red flag
22:42 – Common red flags
23:59 – Service of product
28:18 – Mistakes even at top
34:03 – Don’t overdevelop
36:09 – Value and profitability
39:22 – The What-If plan
45:14 – Relying on one account
50:17 – Long payment terms’
56:25 – Passing on situations
59:26 – Just say “No”
1:00:16 – Mentorship
1:05:25 – Final thoughts

Think Red Flags: A Proactive and Profitable Approach For Your Small Business


Connect with Walter:

Featured links mentioned:

Episode #142 Full Transcription

Josh 0:14
Hey, friends, welcome into the podcast. This is Episode 142. And I thoroughly enjoyed this talk that you’re about to hear. This chat is with somebody who is a seasoned entrepreneur and business owner, somebody who after talking with him, and spending about an hour with him, I really, really grew to see him as a mentor. And as a guide, not only in business, but in life as well. This talk, I really, really enjoyed, and I can’t wait to hear how it helps you out as well. This is Walter Hill, who is the author of the book, Think Red Flags, a proactive and profitable approach to your small business. And what was really interesting about this talk is that we dive into all of the red flags that business owners like yourself, and freelancers should look out for, to make sure you don’t fail.

Josh 1:12
Most businesses fail, and I don’t know what the recent percentage is. And I think maybe it’s a little bit skewed and different now, because so many people start side hustles and entrepreneurial journeys, as opposed to starting, you know, like a fortune 500 company. But the long and short of it is as I’m sure you can think of many people in your personal network and professional network, a lot of people start businesses and they don’t follow through or they end up quitting or they end up just, you know, it kind of fizzles out and they do something else.

Josh 1:44
In this episode, we really dive into a lot of the main things to look out for, so that you prevent that. And you become the case of a business that succeeds and pushes forward and success could mean many different things. One thing I’ve really thought about, as I’ve made my way through an entrepreneurial journey from freelancer, to business owner to, you know, now doing courses and a different type of business model. Now, I have learned that success looks very different depending on what season you’re in in life and what your aspirations and goals are. Success is not a financial figure, necessarily. I mean, you want to make enough to support you and your family or wherever you’re at. But there’s a lot of things that come into play with quote unquote, success in business. But I think more importantly, there’s a lot of things that people don’t talk about or are not prepared for. And Walter is somebody who is really akin to this. And he’s learned so much about it that he wrote a book about it.

Josh 2:45
So Walter is the founder of icon blue, which was a promotional products and branded merchandise company actually found that in the 90s. So you’re going to hear a lot about what he’s seen in his journey and how entrepreneurialship and business has changed. And interestingly enough, before we dive in here, there was one point fairly early on, as you probably just heard my daughter in the background crying, he talked about, there really was not any emphasis back then on work life balance, it was just a matter of, will you be successful in what you’re doing? Family, side, hustle, work, life balance, all those things took a backseat.

Josh 3:22
Now it’s very different, which actually really excites me as a family guy. And as somebody who loves the work life balance approached to working from home, I think it’s more important than ever, and it was a privilege and an honor for me to talk with Walter about what he’s seen in his journey and what he’s learned from and how you can learn from him to look out for these red flags so that you will be successful in your business endeavors as well. So without further ado, here’s Walter again, check out his book, think red flags.

Josh 3:50
And as a quick note, just like Walter became kind of a mentor for me in this episode, I want to mentor you. And no matter where you are in your journey, whether you’re looking to get started, whether you want to start your business and really take it to the next level, or if you want to take your existing business to six figures and beyond. I want to help you, I created a free guide for you, depending on where you are. It’s a 10 step action plan to help you have a perfect planned and proven path to follow. Go to Josh hall.co/get started. And you can sign up there and I will you basically can spend an hour it’s like having a free coaching session with me. I can spend an hour with you tell you what I would do and I would love to guide you in your web design journey to help you create a successful web design business as well. And without further ado, here is Walter. Let’s talk red flags.

Josh 4:45
Walter, welcome onto the show. It is such a pleasure to have you on.

Walter 4:50
Well, thank you, Josh. I appreciate the invitation and happy to be here.

Josh 4:56
Well, I’m really excited to talk with you and pick your brain about this topic. of why most businesses fail. And I know you have a new book out that I’m really excited to dive into here Think Red Flags, a proactive and profitable approach for your small business. And I know you have a lot of insight in your entrepreneurial journey to share with my audience. So needless to say, I’m so stoked to have you on. Before we dive in, do you want to let my audience know where you’re based out of? And if you could summarize what you do, what do you tell people when they ask you what you do?

Walter 5:30
Well, you know, I’m based out of Los Angeles, California. And I sold my business about three years ago. So I work now out of my home, here in Beverly Hills, California. And I guess right now, what I have decided to do, but the balance of my career, is I do quite a bit of public speaking on the subject that I wrote about think red flags. And, you know, what I hope to do now is just share a lot of what I have learned with others, and hopefully it will help them.

Josh 6:07
Well, that’s awesome. Well, you come to the right place, for sure. Because my audience is hungry for advice. And I know, I think one thing I appreciate about my listeners is we’re always really curious about other paths towards business and entrepreneurial ship. As you know, I teach web designers but like I mentioned to you before we went live at the heart, we’re business owners, and we’re entrepreneurs. So I know you’ve got a lot of insight on that. I actually think a great place to start would just be to get a snapshot of your journey. If you could summarize your entrepreneurial path. What did that look like? When did you become an entrepreneur? And, and what led to you selling your business? Can you just give us kind of a snapshot of your experience and your journey?

Walter 6:46
Okay, sure, sure would be glad to? I started, I think my entrepreneurial experience started when I was nine years old, working for my father in a small town in Virginia 30,000 people, my father had three businesses, their auto body shop, and oil delivery business and SO service station, and I grew up in a very entrepreneurial environment. I don’t really think that my experience I’ve been asked before, you know, what’s unique about my experience, and I really don’t think it’s that different than what most people experience when they’re growing up. I mean, I worked at my father’s service station, someone else may have had a paper route. But you know, it, there’s always tasks and responsibilities that we have even startingly back as children.

Walter 7:44
So I went to college at University of Maryland, and then decided that after school, most of my friends were going to New York and Washington DC to work. But I knew I was starting out with no money. So I wanted to go to a place where the climate would be helpful, but it was large, lots of opportunity. So I took my entrepreneurial mentality because you know, growing up, all my father’s I was surrounded by entrepreneurs. I was at a town where my uncle’s own the grocery store, my father’s friends were lawyers, doctors, contractors, the pharmacy owner that docked me just lots of entrepreneurs. So that was my influence.

Walter 8:33
So I didn’t really think of anything other than ultimately, eventually becoming an entrepreneur. Okay. And I came to California in 1966, I founded my froze, 22 years old, founded my first business at 24, was a sales company and learned how to sell contracts to finance companies very lucrative business. And I was one of the times that I had one of my first red flags because I was married and had a family at the time. And then there was a personal red flag that I learned, and that is that when you’re doing well, and you get excited, and you’re making a lot of money, you still have to pay attention to a family, a family has to be nurtured. And I didn’t know that at the time, because I was too young to know that. And as a result by 25, I was divorced.

Walter 9:24
And so my life went on. After that. I was in public speaking for some time. And then I was introduced to the promotions, business advertising and promotions. And that’s where I spent the majority of my career and the company that I sold three years ago. It’s called an Icon Blue. And it was doing that business that I really learned to use that red flag process. In other words, how do I anticipate some of the issues that I’m going to face and how do I mitigate those issues before they become a real problem to my business. And that was the mindset that started me on this path of red flagging.

Josh 10:12
Gotcha. Well, I’m really excited to dive into that process and you hit on one really important red flag there, which was the family aspect. As I think you probably know, looking into what I’m up to Walter, I am a family man first, above all, so I am I work from home, you might hear my daughter there on my daughters are on the other side of the wall right now you might hear them at some point. I am very much into work life balance, and I love working from home. I’ve been doing it for a decade, I can’t imagine doing it any other way. I think what’s interesting is, I feel fortunate for entrepreneurs nowadays because this idea of work life balance is in the forefront. Whereas I’m guessing when you were in your 20s, I don’t know how many people talked about balancing home life and work. Is that fair to say? Was it just your business?

Walter 11:02
It was just grow your business and make profit. And that was it? Yeah.

Josh 11:06
When do you I’m just I don’t want to derail as right from the beginning. But when do you think that work from home? Or maybe even just family life balance? When do you think that came up to the, to the top of people, my people’s minds and entrepreneurial ship? Do you think that was something in the last 10, 15 years? Or did it happen earlier? What are your thoughts on that, since you’ve seen entrepreneurial ship in several decades now?

If we have to learn everything, from our own experience, we’re going to be very senior before we have wisdom. – Walter

Walter 11:29
I think over time, a lot of people who are successful that were in interviews like this, and speaking about their experience, started to realize that the success that they had achieved in their business career was not the equivalent of what they have achieved in their personal life. And more CEOs started to speak about the importance of balance, because many of them a great many of them, had already gone through one, maybe two families before they came to that before they came to that conclusion. So the idea is, one of the things that I talked about in the book, is learning from other people’s experience is one of the best ways to learn because if we have to learn everything, from our own experience, we’re going to be very senior before we have wisdom. So it’s learning from other people’s experience and listening to those CEOs and other people who talk about the importance of it. The idea is not just to have a financially successful life, but a full and happy life. And that is where the balance comes in.

Josh 12:47
What a great, yeah, what a great point. I’ve seen it so many times with successful business owners who are so focused on profit, and financials. And if you neglect the family, like you mentioned, you go through potentially a couple of families. And I would think that’s probably more costly in the long run. Because now suddenly, you’re you know, you’re providing for multiple families and the cost of divorce. I mean, there’s all these things that I guess on the way up maybe people don’t think about until they reflect and then they realize, well, and I don’t know how you feel about this, Walter, if you feel like, you know, any, any feelings of regret or anything, but I’m sure there’s a deeper sense of all that, where you probably wonder, gosh, if I just would have done this differently. Maybe I could have saved that right? Or I’m sure that’s feelings that maybe you felt, or a lot of people who get to that point where success on the outside looks like success. But you know, maybe you personally didn’t feel successful. How do you feel about that being that you went through a divorce, but at the same time you were successful in business? Do you feel like you your first couple decades as an entrepreneur was successful? Or did you feel kind of conflicted?

Walter 13:54
No, I feel it was very successful, because it led me to the ultimate place that I am now. I think it was, it was very successful. And the important thing that I always emphasize is learning from these lessons. It’s okay to make mistakes, because even though I write about how to recognize and eliminate them, the fact is, you’re not going to eliminate all mistakes, you will have mistakes, what we try to do is eliminate those mistakes from which we can’t recover. Okay, and that’s the whole premise and a idea of the book.

Josh 14:35
Yeah, that’s great. That’s a great answer. And I, I think that’s why I’m so excited about what I’m doing now, which is teaching what I’ve learned in the decade of being a web designer and as business owner, because my whole goal with this podcast and everything I do is to save people the hardship that I went through. Yes, people are gonna make mistakes. Everyone’s journey is a little bit different. There’s a lot of different variables. But at the end of the day, if I can help save somebody’s journey and half from from what I experienced and did all the wrong way. I’m so excited to do that. And I think it seems like that’s your heart in this as well.

Walter 15:09
Absolutely. And that’s what I was happy to come on your show, Josh, because you know, what you’re doing is it’s just an incredible asset for anyone who aspires to be in business or anyone in business. It’s important to have these reminders that have people who are doing well and come back and mentor other people. And in essence, that’s what you’re doing with your show. It, I would encourage not only your listeners, but that for them, to encourage others, to listen to shows like yours. And because that’s where you learn best by someone else’s experience, so that you don’t have to have the same experience in order to get to an end result.

Josh 15:58
Yeah, and that’s the beauty about technology now to with videos, and podcasting, and I still think books are probably the most powerful medium. And I think personally, an actual book that you read is still the most powerful thing. I’m not against audio books, but it’s definitely different. When you actually read a book and you’re highlighting things and it’s, you know, visually going into your eyes and then you take it in and apply. It’s, you know, it’s it’s an extra powerful medium, but I think everything combined really makes entrepreneurialship super exciting. I actually want to toss this question to you. Is this just about the most, most exciting time for an entrepreneur to get started? Like what how do you feel about the landscape right now, with the opportunities in business and technology and opportunities for entrepreneurialship?

Walter 16:47
I think this is a very exciting time for entrepreneurs. We’re just coming out of the worst pandemic I’ve experienced in my lifetime. That’s the downside. But we both know that with downsides, it’s always incredible opportunities that are incredibly creative for the right person with the right mindset. And I think there now there are needs, there are a lot of businesses that did not make it through the pandemic. So there there is, in essence space to make entries. But it’s so important that I had someone that was reading my book, and a professional and they said, Well, it seems that what you’re talking about a lot of the fundamental basic fundamentals, and I said, then you get the idea. That’s the point. Because if you take enough low impact issues in a business that are not done well, and you collectively you combine them, it becomes a high impact issue. So having a business that is fundamentally sound is what leads to a profit result. And that’s what we practice in, in our business. And that’s what we hope to share through sync red flags.

Josh 18:16
So you said the fundamentals the principles, I’m willing to bet, success in business, in your mind is, if you think anything like me, it’s all about mindset. And I say this, because when I look back at my decade journey of being a web designer, freelancer, entrepreneur, business owner, the biggest steps I took in my business, and even this translates financially, like when I saw the biggest growth, it was all to do with mindset. There wasn’t like one small tactic that I implemented or a tool, those things help. But it was really the mindset of everything that that really helped me take things to the next level. What are your thoughts on mindset in business is I guess the question is, how important is your mindset when it comes to succeeding and not failing in business?

Walter 19:11
Yeah, well, no, I think it’s very important. When the whole premise that when we wrote this book, it was explaining that this process is not a three step process. five steps do you take to success? I think that books that are written with with that platform are very effective. It’s so happens, this one is not one of those because red flagging is a mindset is something that you learn to think about. It’s you walk into a convenience store. And you see a man standing at the counter with a long coat on it’s 90 degrees. Outside, he has his hand underneath the coat, he’s standing at the counter, he has a hoodie on. And he’s standing talking to the clerk. Your intuition immediately kicks in that this does not look right. I sense a potential danger, a red flag, you know.

Walter 20:20
The term red flagging is a very common term. That’s why we use it. That’s why I use it in my business, because I wanted people to relate to it, to understand it to grasp it very quickly. So with that, you begin to you can make a choice. Do I surge forward? Or will I be safer and retreat from this convenience store? For my own protection? How will I solve this, the whole idea of problem solving and problem preventing is, first of all, being able to recognize it, if you don’t recognize it, and you know that it’s a potential problem, it’s likely you’re not going to solve it, you’re not going to address it. But being able to have that intuition and instinct and the mindset. It’s questioning, is what we do. That’s the whole premise of red flagging, is developing a mindset and then sharing that with your staff. So they understand it too.

Josh 21:16
And I think the really important thing about this idea of being intentional about looking at your business almost from a from a more objective view, is like getting out of the operator chair, you know, getting out of wearing all the hats in your business where you’re just doing the work. Because this is really common with freelancers and web designers. And I think all entrepreneurs, we tend to just work work work doo, doo doo. But if we don’t take time to reflect, and think and work on our business, it’s likely these red flags are just gonna pass us by without us even recognizing them. For example, I got to a point where when I got married, I really wanted to take my business to six figures, at least just 100,000. But I was charging $1,000 to 1500, for websites that were taking me 20 3040 hours, which meant I would have had to have built over 100 sites on average a year. It’s just not practical. There was no way to do that at the amount of hours I was spending. So just shifted my mindset then, which was to just look at this and reevaluate my pricing told me, I need to change some stuff. This is a red flag right here. Like I’m not gonna go anywhere if I don’t change this. So I guess I’m sure we can dive further into the process here, Walter, but what are some of the most common red flags that that we should be looking out for?

Walter 22:42
Well, obviously, it’s there are many. But my experience, it’s taught me that you don’t have to do everything right to be successful in business. You know, there is room for some error. But the some of the things that you need to focus on is, first of all, what are the things that causes businesses to fail and getting an understanding of it, we know that 25% of businesses fail within the first two years and 45% fail within the first five years. The good news with that is I always say that 55% succeed within the first five years. And then the question is always well, how can I do to increase my odds, improve the odds that I will join that 55% group? And some of the key components of your business, it’s important to isolate them, identify them? What is it about my business? What are the components in my business that I must get right in order to succeed? You know.

The things that must get right is start with service of product, evaluating the service, does the service do exactly what I am able to perform as I wrote it in my business plan? – Walter

Walter 23:53
I’ll have some leeway. I don’t have ever do you have to do everything perfect. But the things that must get right is start with service of product, evaluating the service, does the service do exactly what am I able to perform this service as I wrote it in my business plan? In other words, you validate those points that you know, and understand that you are delivering to people, your customers, what you promised you’re going to deliver. And you’d be surprised how sometimes and quite often that’s overlooked. I can tell you a story of a young couple of young entrepreneurs that started a business and they had this new project, a new invention. They call it a I think it was a radar rim, they referred to it in basketball and you it was just a rim and it was a on a pole. In other words, if you picture a basketball rack rim, it did not have a net and it did not have a bat board. So if you practice shooting through this rim it’s going to improve the shooting percentage of your team. Makes sense? Yes?

Josh 25:00
Get a lot of swishes, if you get really yeah, you

Walter 25:03
just practice without the without the net and without because of the you know is less visible, the visibility t isn’t enhanced by the back board and then you practice shooting through it? Well, it’s a great idea. So they set out to raise money for this idea. And spent months and months planning for the idea. But they never did the very basic thing, which is an obvious red flag. Does the product increase shooting percentage? Does it actually do it? The challenge with red flagging is it is so simple, that most intelligent people just can’t. Can’t think at that level. It’s very, very elementary, very, very simple. Does my product do but I promise that it will do. So they never validated. So the never idea never went anywhere. The idea was to maybe have some samples, donate the samples to local universities, the basketball teams, get some stats and responses from the coaches. You know the same thing we do the same thing you do with your business, you have your business online, there’s lots of comments, referrals, ratings from customers. In other words, it establishes credibility. And once you do that, then you have something that you can offer that’s commercial. And they failed to do that. Not to and I only mentioned people’s errors, because it serves as a teaching tool.

Josh 26:47
It’s a great lesson. Yeah.

Walter 26:49
It’s a great lesson. You know, it’s great to be enthusiastic. But you’re not going to build a business on enthusiasm alone. Yeah, you want to be enthusiastic. But you need some of the basics, the practical things does my product do? Can I deliver the service, the way I’m proposing?

Josh 27:08
And it’s tricky as an entrepreneur, I feel like because a true entrepreneur is just they’re gonna put something out to market. Yet at the same time, you’re so right, Walter, making sure what you’re putting out is gonna work for just a select small group of people first, before you scale, it is crucial, I kind of found that when I started building websites for people, it worked for one person, so I knew it’s going to work for two and it’ll work for five don’t work for 10 and 100. Same thing with what I do now, with my courses, I started making a difference with just a handful of students at first that were getting really good results. And then I knew, okay, I can do this thing, because this actually works. And I do think a lot of entrepreneurs tend to have a really good idea or what they think is a really good idea. And just do it, which as we all know, I think as business owners and entrepreneur, I think it’s probably better to at least do something than just sit on it and procrastinate and wait till it’s perfect and never logic. So they’re I guess there’s probably a line to bounce there. But what a valuable point get some early results first, right before you before you push it out, is that kind of the moral of the story for this red flag gets get some get some measurements and data, make sure it works.

Walter 28:15
Yes. Yeah. And I can tell you the stories from experience from these were young entrepreneurs to doing a project in the 80s for a multi billionaire, very wealthy man in a country who had an I mentioned his success level only to to emphasize the fact that he wasn’t an amateur. He wasn’t just starting out, and was a project and I won’t go into a lot of detail on it. But we all flew to South of France to watch it this product function, it was going to revolutionize the photography, the film processing business, we all took this car in the south of France set in a big auditorium. And they came out to introduce the product and demonstrate the product and the product did not work.

Josh 29:11
Oh,

Walter 29:13
It didn’t work. It hasn’t worked since and it never worked. So he spent and invested something like $30 million. So the point I’m making is the mistake and the enthusiasm of overlooking details is not just that, that amateur entrepreneurs or people who are just starting out, it’s also at the top level, I mean people who are very, very experienced, but his experience was in real estate. It was not in marketing and retailing and things like that. So I give him the benefit of the doubt for not knowing that that part of it. It did not validate that he really had a product that could do what we promised it was done.

Josh 29:54
And on that idea of making something whether it’s a product or a service, in my case, my Students are offering website design services, SEO services and digital marketing. Another I think, potentially, but before we even get to creating a service, we have to understand our clients and our ideal type of customers. What are some of the, I guess? What’s your thoughts on that, because we do need to identify who our customer is, before we make a service or product, right? I mean, I think that’s potentially something a lot of people overlook. They just create services that they think people are going to need. But we should probably get to know our customers and their needs first, right? Before we do anything.

Walter 30:36
Absolutely. And one of the one of the better ways to do that I, I talk about three ways that we learn, basically, reading and formal education. We learn from, as I said, reading and formal education, and we learn from experience, and we learn from mentors. And one of the ways to get that they experience is working for someone else. working in the industry, so that a lot of the nuanced issues that can cause problems and costs you profit on you learn to address them before, it’s on your dime. Before it’s a pain point for you personally, it’s not to say that you don’t want to care about your employer. But mistakes happen. And it’s better to learn all your mistakes in the process of evolving to where you want to go, as opposed to getting there and then having all the the errors.

Josh 31:44
Well, you touched on mentorship earlier and kind of what I’m up to now. And I really, first of all, I appreciate your thoughts on that. And your compliments to what I’m up to. Because I think that is a really important thing for folks just starting out, is to have somebody like myself, and I have a lot of colleagues who are teaching and giving back their experience. We kind of know what the main pain points are for clients. So web designers just starting out, they don’t need to do all the the boots on the ground legwork that I did for years leading up to that are some colleagues, do you you are going to get your own experience, like you said, but there’s a lot of value in mentorship, like you mentioned reading. And then yeah, good old experience of just trying things out seeing what’s working I do. I’m curious to get your thoughts on these entrepreneurs, who are they’re going to do something? What are your thoughts on like how far we should dive into a service or product? Again, we just talked about how it’s better to get something out instead of never getting anything out. But you probably don’t want to invest $30 million in something unless you’re sure work. So do you recommend just like dipping your toe into something on a smaller level before you potentially make a whole service? Do you have any thoughts about that as far as just how to kind of ease your way into a new service or product without you know, investing too much time or energy in case it doesn’t work out?

Walter 33:02
But I think it would be important to just validate the essentials. First, you need to know if the product does what you think it’s supposed to do? Is it a real value to people and to potential customers? And if it is a value to them at what price points should you offer it so that it represents a value for them at a profit to you. It’s important not to over develop over analyze. I recall a fellow that had a machine for processing plastic bottles and the dude in the United States because as you know, they all they take all the plastic at one time and they put it on ships and they ship it to China. And that’s where it was processed and converted into other other forms of material. So he had this machine that was going to do it here in the United States.

Walter 34:03
But once I heard the pitch, he was trying to raise funds once I heard the pitch and how long he’d been working on it. And how detailed he was about the the functioning of it. He was an engineer. And as an engineer, he continued to work on this project I passed on the investment. And I wasn’t always so fortunate but on that particular one I was and I passed on it because I just sense that he was overly detailed and would never really take a product to market to test the interest and it turned out to be right. It was never introduced. It never finished his development stage. So the comment that you make is accurate. It’s very accurate. You have to show that you don’t over over develop.

Josh 34:57
Yeah, I kind of have a 90% rule and then It’s tough for me because I am a perfectionist. And as a website designer, I would, you know, tweak every little thing to the enth degree and it just wouldn’t matter at the end of the day and it would make me unprofitable. But what I’ve learned in my journey is once you get something to 90%, and it’s it’s damn good enough, maybe it’s not perfect, you know, we’re gonna have some issues, get it out, tweak it from there, as long as it’s going to make good on the result that people are going to get, we can fine tune the other stuff. I’ve personally found that to be one of the best ways to go about everything that I release. I just released a free masterclass for one of my courses. And is it absolutely perfect? No, but again, it was darn good enough. And I felt fine about releasing it. And it’s, it’s doing really well so far.

Josh 35:43
So I think that’s just a good example of you know, I could I could, you know, I could fine tune that thing and never release it. But it’s better to absolute what’s the old quote, it’s better to have a good plan executed well than a perfect plan, procrastinated or, I think was that Eisenhower or something like that. But yeah, that idea definitely holds holds true in business. And I, you just said something a little bit ago, Walter that I want to bring back up here real quick. It was that your service or product needs to provide the result and fulfillment for the customer, but also is profitable for you. And these are two really different things. Because something that works really well for a customer on the books may actually be really terrible for you. I know, I experienced that when my prices were too low. I was developing really nice websites that were converting for clients, but I was killing myself. So a red flag for me that I did not intentionally see and just kind of escaped me was the fact that I was doing websites and I was making basically less than I would have if I worked at McDonald’s. So I think it’s probably a good point to bring up here that it has to work for the client, and it’s got to work for you too, right? As a business owner, I’m sure you would agree that you got to have some emphasis on your profitability, your life. I mean, it’s not all about money, but we’re not in the business to make it a hobby, we need to make money to grow the business and to be able to give back and provide. Yeah, what are your thoughts on that about limiting those red flags for you personally.

Walter 37:16
Limiting the red flags, obviously, is my topic that I talk about. And I think that everything that I did in my career, starting at a very early age, I wanted to try to eliminate the things that the issues that would cost me money when I was collecting quarters on a parking lot at 9, 10 years old. And occasionally I’d get someone who didn’t want to pay the quarter to park this was a lot that my father controlled and on weekends as a kid, I’d collect the quarters and on the lot occasionally someone didn’t want to pay. And I’ve made me feel terrible, because I didn’t, wasn’t able to do the job that my dad had given me and they’d walk away from me and not pay. So I was able to red flag that. At the time, it wasn’t called a red flag. I didn’t have that and hadn’t developed that consciousness them. But I did think forward to say what happens the next time that happens. How do I keep this from happening again? So I asked my father, I said, Can we remove cars? Can we have cars towed? And people don’t pay when they park here? He said absolutely. So even as a kid, I knew I needed something that would give me some leverage so that people would have more of an incentive to give me the quarter, then they would not to. So as people started to leave and not pay. I’d say sir, your car won’t be here when you get back.

Josh 38:54
Wow, what an entrepreneurial mind you had at 9, 10 years old already.

If you offer enough incentive for someone to tell you yes, you have a better chance of having a positive outcome. – Walter

Walter 38:59
And then I observed that 100% of the cases they flipped me the quarter. So that was a tremendous lesson in that not to be mean spirited. But the fact that they were being mean spirited for not paying a 10 year old kid a quarter. Okay. So my response was to so that I could I could do my job. And what I learned was that if you offer enough incentive for someone to tell you yes, you have a better chance of having a positive outcome. That’s the whole premise of trying to limit mistakes to limit these issues. comes from advanced thought, the mindset that we talked about advanced thought to what if this happens, I think that NASA is probably the most brilliant organization at Red flagging that you will ever seen. You know, we saw an extraordinary example in this last trip to, to the space station where they had developed a device that if something is not functioning the way it should have, there’s an alarm. And it aborts the mission. And this is for the safety of the astronauts, and they can return safely, as opposed to just continuing to let them go up and this thing explodes, right? They thought, what if all of these perfect machinery all these perfect computers don’t function? Well? What if What should we do as a result? So they spent millions of dollars to develop an alternative? And on a very smaller scale? That’s what we do in small business?

Josh 40:46
The the what if mindset, I know that can derail an entrepreneur or business owner in some ways, because you could go really far down a rabbit hole with extreme you could? I agree, Walter, I think everyone has to have a little bit of that, because you do need to, and I think a lot about what I love about what you’re talking about with red flags is anticipation. What if this happens, what and this could be hypothetical, or it could be based off of experience, I know, one of the we talked earlier about how a problem can create a solution and a service. For me, that was a website maintenance and hosting plan, like a security plan, because I would build websites, and a lot of websites started getting hacked. So just you You said something a little bit ago that was really powerful it was I’m gonna learn from this to make sure I limit it, or I don’t let it happen again.

Josh 41:39
So for me, I learned about website security, and how to make websites more secure. And then I offered a security plan for all my websites, so I would maintain them, protect them. And that ended up being my most profitable service far into my business, all stemming off of a problem. And clients calling me freaking out because their website had been hacked. So I was a little bit later in my journey when I discovered that red flag, which was like, Okay, I can’t just build a website and hope nothing bad happens, because it’s going to get hacked eventually, if someone’s not protecting it. So just a primary prime example of that, like the what if, and this could be okay, whatever website gets hacked, what am I going to do? Or here’s a big one. If my client says, I don’t want your website maintenance plan, I let them know, okay, well, here’s what’s going to happen. Here’s what if, what if they neglect the plan? Let them know, here’s what’s gonna happen. If you don’t, you know, here’s the process if you don’t accept this, so I just I love that idea. I wanted to put a practical example in there with this idea of this, what if mentality, because oh, my gosh, this could play out on a micro level with some small things, or it could be catastrophic for businesses, I’m sure if they’re not thinking a couple steps ahead and anticipating problems?

Walter 42:56
Well, you’ve just given one of the best examples of red flagging. People ask, you know, what is it? That’s an excellent example of what it is and what it does. It’s wasn’t an object that you had to do anything with. It was your mindset. It was your thought process that said, you know, Wolf, what if at but these things can prevent problems that can be catastrophic. And that’s the whole idea. I remember when my 16 year old daughter when she was 16. At the time, she said to me, and I was doing one of my dad coaching things, which you will certainly realize as you go along with your kids,

Josh 43:37
Yeah, yeah, there are three in one right now. So yeah, I do too much coaching yet. But

Walter 43:41
Yeah, it’s a little early now. But she said, I was explaining something one day. She says, well, Dad, you know, I know you don’t want me and my sister to make mistakes. She said, but we’re going to have to make our own mistakes as we grow up. And I said, You’re absolutely right. But sweetheart, as your father, my job is not to keep you from making mistakes, but from keep you from making mistakes from which you cannot recover. Gotcha. That’s my job. And the same thing applies to our business life, we have to just identify and avoid those mistakes, that could be catastrophic. If I’m a small business, and I have a shipment of goods coming in from China, and, you know, two or three containers, and it’s two or $300,000, and I’m a small business and open the container and the goods are not what I expected. You know, it’s close to time to close the doors. I mean, you know, unless you can you have the reserves to take a two or $300,000 hit, and you’re a small business, which most small businesses don’t, yeah, then it’s has a major impact. So what we’re trying to do is not overdo, but really identify the things that can have A major negative impact on your business and control those, that’s awesome all our load, the smaller low impact things will, you know, they come and go, you learn from them and you move forward from them. You don’t have to put as much focus on that.

Josh 45:14
Well, first of all, I love this, Walter, I’m totally taking this as some parental advice, that’s such a great line to use and idea to have, which is, yeah, you’re gonna make mistakes, little ones, but we want to help you avoid the catastrophic ones, like you said, so that I’m gonna hang on to that for the rest of my life, for sure. Again, totally true in business, something that comes to my mind is when any business owner or service provider, primarily like a web designer, has a client, that is a really high percentage of their income. Because I can tell right now, that’s a red flag, because what happens if they leave, suddenly, you lose a big chunk of your business, one of my best friends growing up, his family owned a landscaping company. And they had a multi million dollar landscaping account for this chain here in Columbus, Ohio. And I think it was 2010 or 11, when a lot of changes were happening economically and stuff, and they lost that account, it was like 60 some percent of their income, overnight, gone. Millions of dollars. So I is that probably a very worthwhile scenario to when you have all your eggs in one basket? I mean, that’s a red flag right there, I imagine.

Walter 46:25
Absolutely. Absolutely. When you have such a scenario, and I did, you know, I have a long career, many years. So during my career, I did experience having one client that was responsible for 60% of my revenue. First of all, when that happens, you put in as many safeguards to make sure that you’re giving that client, the best possible service possible, so you don’t give them a reason to cancel your contract. And in many cases, there’s nothing you can do about it. Because internally, things change in corporate and they just, and you lose the account.

Walter 47:09
But in doing so, if you if you if you lose an account like that, it’s or when the account is still active, I always had the mindset that it could happen, what if I lost this account? So I kept substantial reserves, you know, if we made X amount of dollars, I always took a part of that, because we had a lot of surplus with these big account with the big accounts. And while things were fantastic, I did not spend at that level. And I didn’t pay myself at that level.

Josh 47:45
Gotcha.

Walter 47:45
I reserved the capital. So we were a small business that had, you know, triple A credit. And quite often no debt, substantial reserves. And eventually, after about 16 or 17 years, we did lose the account. The effort, of course, is to balance that is to try and get other business. Sometimes it works. Sometimes it’s difficult to get that when an account gets to be 60% of your revenue. Yeah, but we did manage it.

Josh 48:22
That’s great. Well, solid advice, very sound advice for that. I know, that’s really common for service providers, you get one really good client and at the same time, you don’t want them to be too much of your business, because that’s asking for trouble. And inevitably, there’s a change.

Walter 48:35
Absolutely

Josh 48:36
I do. I would love to shift this topic, Walter to red flags when it comes to personality types. And customers good. This is really, really important because particularly for a web designer, I don’t know how much experience you’ve had with working with with web people. But website design in particular is not a quick one and done service, you really start a relationship that’s likely going to last years and should last maybe a decade or longer. Because if I were to build your website, Walter, I’m going to maintain it. And we’re going to be talking a lot over the years. And this is what I found with all my clients is I had clients for years. And it had to be something I learned later on, I became much more careful about what type of clients I took on. And this is where the red flag thing came in.

Josh 49:24
Because I learned later on, I could tell within about two minutes of talking with somebody or even a first couple sentences of a email. I could tell what type of client this person was going to be. And then eventually I got to the point where I didn’t need to take on everybody. Of course, in the beginning, I took on everybody who needed anything. So my question to you is when it comes to trusting your gut and listening to these, these are looking out for these red flags for the type of customers you take on. What’s your advice on that? Do you do you trust you? I guess maybe a follow up question. What’s your advice on trusting your gut about something? Because I’ve found trusting your gut to be one of the most important tools in business? Yeah, maybe what are your thoughts on that? What are some red flags to look out and trusting your gut when it comes to taking on clients?

Walter 50:17
Well, first of all, I have had clients that and I think this applies to any business. We’ve had clients where we have net 30 day terms. And then they are very large clients. And this is something this is a major red flag that when we get major clients, large companies, many of them, Josh, pay 60 days, 90 days, in some cases, they ask you for 120 days. I have the largest companies in the country, very large, I won’t name them. But they asked me for six months terms. And we’re a small business.

Josh 51:02
Wow.

Walter 51:03
I you know, it was so absurd.

Josh 51:07
That’s a cashflow nightmare, right.

Walter 51:09
That’s a cashflow nightmare. And that’s one of the one of the flags in in doing business is the the revenue cycle is you have to do make certain that as you do the work that the the cash flow will support the continuation of the work. So again, that’s that’s a very basic conclusion about that observation about it. And I don’t think that, that a lot of people consider things like the terms, if you have a supplier, that you’re paying 30 day terms, and maybe you can squeeze it to 40 a day, but your customer paying you is 60 to 90, you’ve created a major issue and a big red flag. Now you have to start borrowing money, there’s a cost to that money, you borrowing to pay your suppliers early. And the solutions to those kinds of things is developing relationships with suppliers that will work with you that if they want the business, you explain this is the client, this is what it is. And they put so huge company, usually they want the business to say but we have to partner this together, you know, we’re not going to be able to pay you in 30 days, they paying us in 60 days. And you you make some arrangement.

Walter 52:38
The the solution starts with recognizing that it’s a problem. There was a friend that I know about the young woman that had a business. She was in the promotions business and decided that she was going to sell to the major department chains had a very innovative product. And what she failed to research and find out about that, which was a huge red flag was that most of the major chains will provide you with space, they allow you to sell your product on their shelf. If the product doesn’t sell, they expect you to take it back and credit back. So now you have this potential back end that could come back at you. And if you are not a large company, yeah. And you don’t have the proper agents servicing those shelves, a product on the shelf to keep it positioned. Then at the end of a six month period, they come back to you and say okay, half the products sold half has to come back. If you haven’t made our cash flow allowance, if you haven’t happened, you know, anticipated at least close to those numbers. It can be catastrophic. And it was an example of someone that tried to do that, that I know it was catastrophic.

Josh 54:05
It was the what if.

Walter 54:06
It was a what if question that they didn’t ask because of the enthusiasm of selling to a Home Depot for example. You know.

Josh 54:16
Yeah, so the the terms huge, of course that that is so true and web design, I think this is why it’s important for web designers in particular to have their terms very clearly are a couple different options for terms. For example, my first projects I got paid when they were completed. And that is a great recipe for disaster because no cash flow, no money upfront. They pay when the website is done. So I learned to do 50 upfront 50 at the end of course, you know my industry My business is very different than a multimillion dollar you know type of business that you’re looking you’re used to looking at Walter but the premise of that cashflow terms that’s huge.

Josh 54:55
As far as red flags for personality types. I’d love to circle back around on this again because I You’ve worked with a lot of different people, a lot of different industries, I know, have you learned anything about what to look for in personality types that might be a red flag. This could be for partnerships, it could be as a client, I find this really important because I think more than ever now, as we’re in this new age of entrepreneurialship, you want to like who you work with, and you want to be on the same page, I think who you work with is very important now, maybe more so than it was you know, previously, because something may be really profitable. But if they’re up to no good, do you think they’re gonna burn you or screw you over? Eventually, we got to look out for those red flags. Any thoughts on that when it comes to, you know, starting a new partnership, or a client any red flags to look out for from a personality perspective?

I wouldn’t call them opportunities, because it was never a possibility. – Walter

Walter 55:46
I think that’s an intuition is what you’re talking about. And just reading into it. Obviously, we all make decisions about people within the first, you know, few minutes that we talked to them. Either you get a feeling of comfort and interest to go further, when you first talk to them or not, I’ve had situations where initially someone was, someone was rude, they felt that they had a right to be rude because things weren’t going particularly well in their lives. I usually passed on those of those situations. And those would be opportunity, I wouldn’t call them opportunities, because it was never a possibility. Because of, because of that attitude. I am not an expert on reading people’s, and I try not to do too much of that. And they should, because I could be wrong. It could be something when I first meet them that is happening in their lives, their personalized, that’s causing an issue for them. So I stayed focus on what my objectives are. And if I see that I can meet those objectives, and deliver my service to these people in a way that benefits them and me, and if I feel after initial contact, that that can be done. And I go forward, if I think someone is going to be because of if they ask too many questions, that I can tell they’re going to be overly detailed and stressful about doing business with them, you can sense that easily in a conversation with someone based on what their response to you is how they respond to you. Are they are they courteous? Are they? If they’re just detailed, that’s one thing, but if they’re requesting a lot of detail that drives cost for me, and they’re not willing to pay for it. I know not to go forward with the customer.

Josh 57:59
What sound advice, Walter, he may not feel like you’re an expert in that. But I view that little dancer right there as a very expert, like answer because I just thought of so many situations, in my experience that were flashing through my mind when you were talking about that I remember I was a few years into my career and I had come from I used to be a drummer and a rock band. So I would build websites for rock bands and recording studios and stuff. That’s how I got my start. And I got a call from this artist who is kind of like a failed 80s rock guy. He was really bitter against the music industry. And I could tell he was just a stressed out kind of dude. And he told me he had bad experience after bad experience after bad experience with web designers and graphic designers. So before I was really intentional about red flags, I probably would have accepted this job.

Josh 58:51
But at this point in my career, this was a red flag. This was like, Okay, this person’s never going to be satisfied. And he ended up calling me like three times in one day, just what you said, asking overly detailed questions taking up a lot of my time without any expecting anything in return. And it was all red flags. There were like 10 different red flags that went up in one day. And I almost took his job because I needed the money. But a colleague of mine who ran a recording studio knew him and I just asked him and maybe this is a valuable part of what to do with a red flag is to maybe ask somebody what they think of this situation. I asked him, Do you know this guy? What do you think about him? And he’s like, yeah, I personally don’t trust him. And he was like, Josh, you don’t have to work with him. And that statement has stuck with me ever since it just dawned on me like, I can have control of my business. I just have to control it. I have to say yes to things I think are going to be good and good opportunities and good people or no to the opportunities I want to pass by.

Josh 59:50
So in that case, thank goodness. I’ve took everything that we have applied in this era taking you talked about in this conversation with red flags, and I applied that and declined And he called me again, I just didn’t answer it, and then they need to talk to him anymore. So I just wanted to bring up that practical example when it comes to these red flags when it comes to getting a potential client working with them. And, yeah, cuz that’s, I think it’s really important to like who you work with. So

Walter 1:00:16
Absolutely, absolutely. And I think that I have cited a lot of really interesting, thought provoking examples in the book about how to red flag and different different situations, I comment on personal life. The book is not focused on personal life more on business, but there are some sections in it about, you know, managing the personal life for to, you know, life balance. So, you know, hopefully that people will find it that that helps someone you know, at this, at this point in my career, Josh, is it’s just more important to do things like this and, and I had some great mentors, in, in over my career, just absolutely great mentors, I could not tell anyone that I succeeded because I was so fantastic.

Walter 1:01:15
I succeeded by the grace of God. And I succeeded by the, the thoughtfulness of a lot of numerous mentors, people who, my senior vice president of Coca Cola, I was struggling for two years to get a license to do the Olympics in 1984. And I walked into his office one day, and he was on the phone, he hung the phone up and said, Walter, guess what I just did for you. And I said, What was that? He said, You have an Olympic license. I mean, just like that, well, you know, people that did, I had been struggling to get the license for two years. And they got it and said, you’re going to partner with Coca Cola. And, you know, great man, just always extended himself to me, and I’ve had that experience throughout throughout my life. And that’s, that’s been the greatest joy out of the people that I’ve encountered. Yeah. And even now, at this point in my career, being able to talk to people like yourself, Josh, who start these programs that contributed so much to people, I think one of the, one of the best programs I encourage people to watch on television is think is Shark Tank.

Josh 1:02:36
Yeah. Shark Tank, yeah, Shark Tank.

Walter 1:02:38
You have these professionals, investors, and these small businesses. And you listen, if anyone listens to the questions that they ask, it will help them to know how they can be better prepared for their business. So you know, my hat’s off to you for doing what you’re doing, because it’s it’s very helpful.

Josh 1:03:00
Thank you, Walter. I really appreciate that. Like I said, I feel like this is kind of a you know, half interview, half mentoring type of coaching call because I really have hung on everything you’ve said. It is funny, I think when it comes like Shark Tank, you really can learn a lot if you just look at the situation. And you can learn about cash flow and reports and profitability and marketplace. You can market share customers, all that stuff is covered. So yeah, a lot of great stuff. Well, Walter, I have one final question for you. I know we’re getting close on time. So I want to be respectful of your time here.

Josh 1:03:31
Before I get to this question, first of all, thank you for coming on and for sharing some really great, pertinent advice in regards to entrepreneurialship. And all by listeners, I know we’re going to take so much from this, we’ve really weaved in and out of different topics when it comes to red flags, but I loved it this I mean, really everything we’ve touched on is a really important red flag to look out for whether it’s your service, your customer, profitability, cashflow, customer acquisition, all these things we’ve talked about are so critical that to know what you’re looking for in the terms of red flags. So tell us again, what the book is called. And in where would you like people to pick up the book? Should they go to your website? Where would you like my audience to go?

Walter 1:04:12
Well, they can go to Amazon for the book. Think red flags, A Proactive and Profitable Approach for your Small Business. That’s where they would, that’s where they find the book. And my website is Walter Hill, Jr. calm. And that just had some additional, you know, information that they can follow about the topic of red flag. But the book itself is I hope you’ll find it a good read. And I would encourage anyone, not the to underestimate the value of fundamentals and the business because it’s designed to to help them someone, collectively get most of those basic things right. And I can assure you that that will enhance their opportunities for success.

Josh 1:05:05
That’s great. Well, my final question for you Walters, we just have a couple minutes left. If you could give a new entrepreneur one piece of advice. I mean, you’ve got a decades of experience. I know it doesn’t have to be the, the most important, but if there’s one piece of advice that maybe you’re really passionate about right now, what would you share with them?

Walter 1:05:25
Well, I think I would say that. Remember that success is intentional. It doesn’t just happen. Make the preparation, do the research. Remember, the three categories that are talked about in the book, where you get the information to red flag is the reading, and education and experience and mentorship and follow through on all of those areas to get the kind of insight that you need to be successful?

Josh 1:06:09
What a perfect way to end it. That was a that was a great little snapshot of some gold advice. Walter, thank you so much for your time for coming on. Again, I really, really enjoyed getting a chance to talk with you. I take mentorship so seriously. So to be able to get to talk with somebody who’s had such a level of success and experience in your entrepreneurial journey is a real honor for me. So thank you for coming on. And hopefully this won’t be the last time. I can’t wait to read the book. And hopefully we can do this again for your next book.

Walter 1:06:36
All right. Okay, Josh, pleasure to be with you.

 

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