What Makes Some Trade Businesses Grow and Others Fail

In This Episode

• Alex's Journey From Electrician to Franchise Growth Consultant

  John: Good day and welcome to the Trade Business School podcast. Today's a pretty cool day for me. I'm sitting here with an old friend of mine and my first business coach ever, Alex Johnson. So Alex, why don't you tell us a little bit about yourself?

  Alex: What an intro! Was I your favourite coach? My name's Alex, and a long time ago I was a tradesman. That's how I started, as an electrician, and obviously connected with you back in the early days. Currently I'm a franchise consultant of all things. I have an agency and I work with different franchise organisations. The main crux of what we do is help them grow their networks, so working with the marketing side and lead generation, sales and recruitment for franchises. We're basically an outsourced department for different brands, helping them grow. And we work with all different industries. Trades is one of them, services, food, retail, education, kids sport and fitness.

  John: That'd be like the past 15, 20 years?

  Alex: I've been doing this now for about 10 years. I did a very short time on the tools back in the day. I don't think I was long for being on the tools, but I loved being an electrician. I got into management quite quickly, then went through that whole management side of things. I worked in the franchise business and worked closely with you, that's how we met, as part of the franchise operations role, coming out and visiting different franchisees. After I left Platinum I became a franchisor. We had a bathroom renovation franchise that I got involved with. What I learned at the time, and this is how your business started too, was that a lot of people were looking at the success Platinum had and going, tell me what you did. How do you grow so quickly? How are you so successful? A lot of people were asking for help. So that's how I got into these different industries. You team up with someone and help them apply the lessons we learned. Then I got into the consulting side of things, because there are so many businesses out there that just need help. They're looking to pay for someone to come in and help them.

• The Three Things That Separate Businesses That Make It

  John: What do you think makes the difference between those businesses that make it, for want of a better word, or make good money, and those that don't? If you could pick three things, and I know there are many, what would be the top three?

  Alex: Are we talking trade or any business?

  John: Let's go with any business.

  Alex: The core product is interchangeable when it comes to business ownership. So instead of being a good practitioner, let's remove that. It would be the leadership side of things. Being a strong leader is really important. One of the biggest issues I see in business is a lack of capital, so making sure that you're adequately funded. A lot of ideas are started, and I think people totally underestimate how much money they need to kick it off the ground, or how important it is to stay lean. And I guess investing in yourself. One of the biggest things I learned, and the biggest growth phases I went through, were during phases where I was investing in myself.

  John: And what did you do to invest in yourself?

  Alex: A lot of things. There are multiple levels. Wellness, so health and fitness, being active. I wouldn't say I'm a wellness guru by any means, but I know that when I'm training and using my body and being physical, I feel more positive. I've got more energy. Problems seem smaller than what you can make them when you're in a bit of a funk from not being active. So investing physically in yourself. And investing in your knowledge. I was always a knowledge seeker.

• Why Reading Sets Successful Business Owners Apart

  John: I want to stop you there, because I want to make a point here for my clients that are listening to this that aren't reading. Now you've got Alex telling you that you need to read as well. It's not just me. I say that because I remember looking back at my twenties, that decade, I read nearly a book a month for a whole decade. That's about 120 books. That particular period of my life set me up to make the money that I made in my thirties. And sometimes people need to hear it from someone else. What do you think stops people from actually picking up a book and reading?

  Alex: I know people around me that just struggle with the commitment to do it, or the concentration. That's why for myself, audiobooks are much easier, or podcasts.

  John: It's not the same though, is it? When you're reading a book, that little voice in your head is actually reading. It's saying the words that are on the page. And that's important, because when you're listening to a podcast or an audiobook, you're cruising along and your little voice is doing whatever it's doing.

  Alex: It is easy to get distracted. Reading a book this year for the first time in a while was refreshing. And I think we're going to see more and more of this as things become automated and everything's AI this and AI that. There's going to be a rise of the old school things coming back, the things that humans need. By reading a book, it enabled me to stop and focus on it, because we've got so much information coming at us at all hours of the day. It's the discipline to actually sit there, take time out and say, I'm doing this for myself. This might sound a bit weird, but I'm a big advocate for saunas. And I found reading in the sauna was killing two birds with one stone. It was time out for myself.

  John: Can you imagine time travelling from now back to 1984, sitting there talking to a 10 year old kid with one of these phones in your hand, and saying, I can literally go anywhere in the world that I want with this. Tell me an address and I'll find a way to get there. Any little question that your brain dreams up, within five or ten seconds you've got the answer. I find it fascinating that we've got so much access to information so easily, and you kind of forget that it's actually an interesting and dangerous thing, because there's so much information you're bombarded with that you miss a lot of it. Sometimes it's not about the quantity. It's about just one or two really good things. I used to go to seminars and write down so many notes, and try to take a whole heap of stuff away. What really started to work for me was when I would go to a seminar and look for one or two things. That's all. I think you told me that.

  Alex: The nuggets. I'm going to claim it. Yes, that was me.

• Feel the Fear and Do It Anyway: The Advice Worth Millions

  John: Something I wanted to tell you. I have used something that you told me right when we first started coaching, all the time, with my kids, myself and my clients. And it's feel the fear and do it anyway. I used to have that on a little post-it note on my laptop, because back at that stage, like a lot of people, I was very fearful of picking up the phone and calling people, whether it was a warm call or a cold call. That little piece of advice, and I think this is where coaching is so valuable, that one little thing that you taught me at the start, would've been worth millions of dollars to me over my business career. Thank you.

  Alex: You're welcome. I would see myself, pardon the pun, as a conduit during that time. I was being coached myself, and I was going through the same struggles in what I was doing in that role, having to do business development and sales. The aha moments I was having, the challenges I was going through, the coaching I was receiving, I was passing that on to you. And it comes back to what you were saying before about information. Who do you need to become, as the famous coaching statement goes, to use that information for your benefit? It's one thing to know that it's there. But who do you need to be to actually take that information and put it into use, so it's actually having an effect on your business or your life?

• The Biggest Challenges Alex Faced in His Own Business

  John: So when you got into business for yourself, and this could be the franchise that you started or what you do now, what were the three biggest issues that you faced?

  Alex: If we look at the consultancy that I'm running now, I was the bottleneck in the business. I positioned myself as a hired gun. I had experience in business development and sales, particularly in franchising, so I was selling myself to these brands: I can do your sales for you. But what I quickly learned is that's not scalable. Everything was running through me. So it was about still using my skill and experience to grow the business, but using systems, team members and software to scale in a way where I was more involved in the pointy end of the conversation rather than the start.

  The second thing was being able to look at the business from the point of view of finance, looking at the numbers. That was one of the things I struggled with, making sure I was charging the right amount and making enough money. You have to go through those lessons. I'd learned it from a trade point of view, but now I was in consulting. Sometimes you've just got to go through some of these challenges and then come up with solutions. Even to this day there's always a new thing. We need to get better at this, we need to get better at that. I don't think that ever stops. So I'd say being a bottleneck, and then actually understanding my pricing structure.

  John: I guess that's a hard thing when you change industry, isn't it? Back when you were in the electrical game, you knew exactly what the margins needed to be. You taught me to understand them as well. But if you change into a completely different industry, it's something you've got to relearn.

  Alex: I had the luxury of spending some time in the industry, but what I was doing was niche. I call myself a consultant, not a coach. Going into consulting, you're actually having to do work. You're getting paid to work on behalf of the client. One of the key things I wanted to do was not get stuck charging by the hour. I'm going to perform a task for you, and if it takes me two hours or ten hours, it's going to cost the same. So it was about finding that sweet spot with pricing.

• What to Look for in a Business Coach

  John: Let's go back to a trade business. For someone that's looking to get a business coach, what would you tell them to look for?

  Alex: A hundred percent, and this is where I have a bit of imposter syndrome about when we were working together, because I was quite young at the time. I would be looking for someone who's done it already. Meaning if I'm in an electrical business or a trade business, I'd want to learn from someone who has developed a successful trade business and gone through all the challenges that I'm going through now. Instead of someone who's giving you theory, it's actual real life lived practice.

  So I think it's about working with someone who's built a successful business, gone through the school of hard knocks, and can relate to those challenges. Money's tight. How am I going to pay my staff this week? Where do I get funds from? I can't find the right staff. I'm struggling with business development. It's having someone there that can leverage their skills and pass them on to you. But one of the key things is, you have to do it yourself.

  One of the stories I had when I was coaching for a little bit was having a contact passed on to me. I rang them to set up a discovery call, and when he answered the call, he said to me, so you're going to solve all my problems as a coach? And I said, no, you are going to solve your problems. I'm just going to help you. When you're looking for a coach, you want someone you can trust and get along with, someone whose story you can see and want to follow. But you also have to be willing to commit to the process. That's the biggest challenge. If someone's not willing to commit and take on some of the instruction, then you're basically blowing money up the wall.

• What Alex Would Do Differently If He Started Again

  John: If you were starting your current business again, is there anything that you would do differently? And if so, what would that be?

  Alex: I would put more money behind it, which is a common theme.

  John: Where would you get that money from? A lot of people say they're undercapitalised. So where would you get it?

  Alex: I'd look at what sort of assets I had to leverage. In the industry I'm in now with franchising, someone buys a franchise, they're spending half a million dollars, and I'd say the majority are getting funding to do that. Which can be risky. But accessing capital, whether it's through cutting back, saving up and preparing for it, or looking at assets you can leverage. And I would probably invest a lot more in marketing than what I did. And I would invest in spending a lot more time on the strategy.

  That's what I would do now, but that's because I went through the struggles of doing it with no capital, with no strategy, just going out there and backing myself. So the learning lesson took longer. It's a catch 22. I had to go through these challenges to go, oh, I wouldn't have done that, I shouldn't have done this. But I learned out of that and came up with a solution. I think you always kick yourself, because you could be further along. Hindsight's 20/20.

• Can You Actually Enjoy the Journey as a Business Owner?

  John: I remember years and years ago when I was building my business, someone gave me some advice. If he had to do it again, he would enjoy the journey more. And I remember hearing that and thinking, that's good advice. But I didn't take it on. I don't know if you can take it on when you're ambitious, working hard and striving to get something. Part of that struggle is needed to get you to where you're going, because you don't grow unless you put something under pressure. So it's hard. Enjoying the journey, well, it's something old guys say to young guys, isn't it?

  Alex: Sometimes you don't have the luxury to enjoy it, because there's that underlying anxiety. I looked at business leaders I was working under and saw the stress and pressure, the late nights, the commitments you'd make and need to fulfil, whether it was putting on an extra service vehicle and then not having enough work for it, or a downturn in work. That's part and parcel of being a business owner. A lot of people think you make lots of money and life's easy, and you can go have a sauna and read a book whenever you feel like it. But they don't see working till midnight, or on the weekends, or missing kids' sport. There's a glamorous misconception.

  John: So I didn't enjoy it, but I did. My passion drove me to do things. And sometimes a big chunk of enjoyment was when I was driving back from the office at one o'clock in the morning, exhausted but exhilarated, because I'd done something for my future.

  Alex: Totally. And I guess you don't actually stop to appreciate it, or recognise the gratitude you should be having. We spoke earlier about me taking my son to the NBA this year as a bucket list thing, watching Steph Curry and LeBron play. These are things he gets to experience at 11 years old. I'm 45. It took me 40 odd years to go and do that. And then you're straight back into work. You've got to stop and go, hang on, that's pretty cool that we got to do that.

• Gratitude, Pride and Why Life Happens for Us

  John: There's a very interesting distinction around being grateful. There have certainly been times in my life where I've let pride get in the way of being grateful. Your ego takes over and you walk around thinking, maybe even saying, how good you are. And it's a dangerous place to be, because pride cometh before the fall. But if you can turn that around and just be grateful, even for the bad things, because the bad things drive us to better things. One of my little post-it notes was, life happens for us, not to us. And if you can be grateful even at times when things aren't great, it's a much better way to live your life.

  Alex: I totally agree. And you've got to go through some of these things to come out the other side and learn that lesson. And don't be too hard on yourself, especially when things are challenging. Don't beat yourself up or compare yourself to other business leaders or other people in your space, especially what you see online.

  John: Comparing your worst against others' best.

  Alex: Yeah. Just run your own race. And I think that's where coaching, particularly as a business owner, is really important, because it's super lonely. You're doing it all by yourself. And as we said before, your employees think you drive a Ferrari and live the high life. One thing I learned as well is never to vent to employees, and never to show it in front of them, even if you're struggling. They're looking to you for guidance, leadership and security. Having a coach means you can just be bluntly honest and say, I'm struggling, I need help here, I'm not feeling great. Having a coach as a business owner is definitely something that helped me get to where I was, and I know it helps a lot of other people as well.

• Favourite Books and Learning to Sell With Content

  John: Have you got a favourite book, or a book that you recommend to people?

  Alex: Personally, I've always leaned towards the sales side of things, the science of selling. I read Jab, Jab, Jab, Right Hook by Gary Vaynerchuk, and for me it just spoke to what I was interested in, which was selling concepts and ideas to people. It was around the idea that what we're doing today is part of content, developing content in your business. We're not just meeting someone and expecting them to transact with us. We need to provide them with some useful content on why whatever we're selling is relevant and what value it's going to add. So it's a gentle jabbing of content, and then later coming with that right hook.

  One of the things we've learned is, if you haven't got that skillset, find someone that does and bring them in to help you do it. That's where I've definitely leaned in the last few years, getting experienced people in to help me with the content side of things.

• Staying Fresh Outside of Business

  John: What hobbies do you have outside of work or business that keep you fresh?

  Alex: Aside from keeping my books dry in the sauna, fitness for me. Going to the gym is number one. CrossFit style training, throwing a barbell around, doing a muscle up or climbing a rope. And I do it with a really good bunch of guys that I train with, so we motivate each other.

  We've also got a family business outside of my business. We own a cafe and patisserie. Getting in there is actually fun for me, working with my children and my wife. It's cool going from being a tradie to a consultant to then standing in front of a register and having a lovely old lady tell you about her day, and why she loves coming in and getting a certain cake. I think you gravitate towards where your personality sits. Being social, and being able to just serve, I enjoy that.

  John: I've always liked going to the gym. I don't know how many days I walked into the gym with my lip dragging on the ground, life was just terrible, and you work out and you walk out and go, oh, it's not so bad. Everything's okay. I never, ever walked out of the gym feeling bad, no matter what had happened.

  Alex: It was in one of those books I read, maybe Jim Rohn: it's about not letting the weeds take the garden. If you're not being physical and activated, you get into a state where the weeds are just growing in. You need a release.

• Advice to Your Younger Self

  John: What advice would you give your younger self when you were starting out?

  Alex: That's a deep one. I'm not one for looking back and regretting things. Everyone's on their own journey, and you had to go through what you went through to be the person that you are. But I probably just needed to switch on a little bit more when I was younger. I was a bit more of a class clown. Leading into working and then starting out in business, I was all about having fun and being social. I'm a social person. I like working with people. But where I was lacking was probably the structure and the backend, having systems to help me. We talk about the DISC profiles. The S and C was not me. I'm D and I, and back then definitely very much I. I'm happy with how the path went, but if I had the time again, I'd probably knuckle down a little bit earlier.

  Alex: What would you say to your younger self? I'm going to throw it back at you.

  John: I never took my business seriously until my daughter was born. Things change a lot when you have a kid. So maybe I could tell myself to take it seriously a bit earlier. I would've taken more risks. I took some risks, but I could've taken more and put myself out there a bit more. One of the things that you told me at the start was, I wanted to virtually remain anonymous my entire life. And you said, you can't build a business if no one knows who you are. You encouraged me to get into a BNI group. Where I was, there wasn't a BNI group, so we started one. And that unwrapped a whole heap of stuff. Good referrals from people, a good network, some good friends. One of the things I recommend to almost all of my clients is to get involved in a BNI group and build a network.

  Alex: And touching on the BNI side of things, for a business owner who was more S and C, more compliant, wanting to sit behind the computer and make sure every I was dotted and T was crossed, BNI was actually going to put them out there, to be a bit more social, learn how to talk in front of a group, and learn how to confidently talk about their business. It was a double-edged sword in a good way. Yes, it was networking and helping the business grow, but it was also working on their personality.

• Franchising as a Growth Strategy for Trade Businesses

  Alex: One of the key things for me is, being a tradesman at heart, coming from the tradie background is where I started, and you never know where it can take you as an individual. For those that are starting a trade business or looking to start one, getting that skillset of working physically doesn't necessarily mean that's where your story is going to end. I never envisaged that I would be doing what I'm doing today, and I'm sure you'd be the same.

  And also, franchising is a way to actually grow your business. It was a successful strategy for the business we were part of. That might be an option for people out there. If they're thinking, I've got a really good business, I'm successful, I've developed myself, I know I can lead people and I want to replicate it, it's a growth strategy. As they say, it's growing with other people's money.

  John: If someone is that way inclined, or thinking that at the moment, what should they do?

  Alex: They would speak to someone like myself. What people usually do first, believe it or not, is go to a franchise lawyer, because you need to create your structures. What we do is involve the legal team, but originally we need to sit down and strategise, and develop a plan. Is this the right option for you and your business? What structure? What sort of revenue model? What are the unit economics for your franchisees? Are they going to make money? Are you going to make money by doing this? Is there legs behind the opportunity? Are you the right leader for it?

  One of the biggest things I'm seeing now is a shift towards service-based businesses. With where technology's going, there's a lot of fearmongering that AI is going to replace everything and everyone. But to a certain extent, it can't replace trades. There's a big demand for trades and skill-based jobs. For people looking to grow a business in that space, there's a lot of demand at the moment. But there aren't a lot of options. If you want to buy a franchise, you can get a pizza shop or a cafe very easily, but for trades there are far fewer options out there. So there's a bit of a gap.

  John: Well mate, thank you for coming on, and thank you for those kind words. I can say ditto. It's great to catch up. We spent a lot of time together when we were younger and I really enjoyed it. It's great to have you here in the studio.