Having the right culture is vital to starting and growing a business. Learn the importance of building the right and winning business culture from Clay Clark the SBA Entrepreneur of the Year winner.Sign Up to Watch
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-Hola. My name is Clay Clark, I'm the CEO of thrive15.com. And today, I'm going to be teaching specifically about how to start a business and how to create a culture in a small business. How to create a culture where just two are gathered. Every business has to start somewhere. And if you're not careful, you're going to start a business on the wrong foot. You're going to end up building a culture that doesn't work. Instead of building an organization, you're going to build a disorganization.
Instead of building something that's functional, you're going to build something that's dysfunctional. So I'm going to teach you specifically about how to build a winning culture for your business as you start and grow it. Remember, at thrive15.com, we all believe that knowledge without application is meaningless. So as you're watching today's episode, just the time to ask yourself, what do you do to uniquely apply these principles in your own life and business?
Otherwise, today's episode may just prove out to be more meaningless than playing a video game deal or no deal. Today, we're talking about creating a culture. Specifically, we are talking about where two are gathered. Where two are gathered. Creating a culture with just two. Where two are gathered. This is tough because when your learning how to start a business, it's just you and another dude.
So I'm going to give an example here. This is you and this is Ashley. So you are Karen and this is Ashley. And the two of you now are in business together. You are the owner under this model and Ashley is the first employee. Now, what happens is in most businesses, is that instead of having function, they have dysfunction. Instead of having an or organization, they have disorganization.
Now, not in your business, but in most businesses, this is what happens. That's why if you read all these statistics they say that 90% percent of all small businesses fail. Why do they fail? Well, because the owner, Karen-- Karen, I'm talking to you. Karen, instead of having function, she's having dysfunction. Instead of having an organization, she has disorganization. So then Ashley runs around like a human with her head cut off.
You know how you have chickens with their heads cut off here? This is a human with her head cut off and she's just running around trying to find her head all around the office and just not getting anything done because she has no idea what to do. This is a problem. Because you have no function, you have dysfunction. You have no organization, you have disorganization. So what we're going to teach you specifically is how to take the dysfunction out of your organization, how to take the disorganization out of your organization and to come up with a system to create a winning culture.
Does that make sense? Because we have to create a culture. We've got to create a system. We have to create a place that works. Otherwise, we are creating a business that's just going to drift. And so I'm going to give you the checklist. I want to write these things down, because these are huge. When I say write these down, work we're supposed to use some innovative thrive technology and type this, but the point is, you need to take note of this. So principle number one of five.
You have to set weekly meetings. Now, I worked with a young man about a year ago who had an outstanding business model. He literally had a business that was creating so many customers that he had people waiting in line. He literally had that product that people couldn't stop talking about on the media. It was in the news, people were in line, people would call, phones ringing all the time, and they're not available.
They're always booked out, they can't take care of customers because they're already booked out. They can't even handle another customer because they're already booked out. Could you imagine what a great place that would be in right now? If you had a business that had that kind of excitement and that kind of demand for it? But here's the thing. Until he had the discipline to set weekly meetings, everyone's freaked out. So you have to, one, you have to set weekly meetings.
So now, he has a system. And I'm just making up dates and things just to give you a concept of what he did here. This is very accurate. But I'm just not going to throw this person under the bus here exactly, OK? So he sets up a weekly time. He says, here's the deal, guys. Wednesday, moving forward, we're always going to meet here at 8:30 in the morning. And then every Friday, we are going to meet here at 8:30 in the morning.
Now, when he says we, who's we? That he plus two. Or that's maybe you plus two. Now, what happens when you try to set an appointment? I'm just Making up an example here. Well, if you say to Sue and Dan and John, hey-- so you're Sue, that's Dan, that's John, and this is Kevin, and this is Doug and this is Lewis, you don't see enough Lewises today.
And you say, hey, Sue, you say, because your name is Sue-- you say, Dan, Dan, John, we're going to start meeting every Wednesday at 8:30 and every Friday at 8:30. And they say, why do we have to meet, we're already here? We're already right here. Why do we need to meet then? We can jut talk, right?
And you say, no, no, no, no, no, because we're going to build an what organization? We're going to build an organization, we're not going to have disorganization. We're going to have something function so are not going to have dis what? Function. So we're going to go ahead and meet every Wednesday at 8:30 and we're going to meet every Friday at 8:30.
-Now, two companies here. Sue says, let's meet Wednesday at 8:30. So Wednesday at 8:30 comes. 8:30, looking at the phone, looking on the clock. It's 8:40. Where is Dan? He's not there. Where's John? Not there.
So, Kevin, his meeting starts 8:30. Where's Doug? Right, he's on time. Where's Lewis? He's not on time. So, we have late, late, and late, these two different companies.
So what does Sue do? Sue says, you know what guys, I know it's hard for you to get here. Don't worry about it. We don't need to have these meetings. We can just talk about it.
Well, Sue, you just lost. You are forever going to lose. Boo!
Because you're not creating a functional organization. You're creating disorganization.
Now Kevin says, Lewis, did you not know what time the meeting was, Lewis? Lewis? Lewis? Did you not know? And Lewis says, I guess I knew. I just overslept. I didn't know. I wasn't really sure. I wasn't-- I didn't know if we're were going to do that. I thought we talked about it. I thought we already talked about it. I didn't know we needed to come in and talk about again because we already talked about it. Lewis
He said, Lewis, I love you and I love America. And I love unicorns, and bunnies, and I love everybody. But, here's the thing, you need to be on time for this meeting, Lewis, or you're going to have to be written up.
He says, written up? It's just me and two. How can you write me up? He says, well, I'm going to write you up, you know, so go ahead and sit down or I'll write you up. And then we're going ahead and start this meeting. Boom!
So, set weekly meetings. It's going to have to happen. Now is everyone going to be excited about it? No! Why? Because people love disorganization. What? Yeah, people love disorganization. Most people don't want to have a plan-y plan.
We're in Chicago today, and yesterday we had this plan. We started off the day we're saying, hey, we're going to get to the Magnificent Mile. We're going to get the Navy Pier. We're going to get to Wrigley Field. We're going to get to the Big Bean, this big metallic, seamless thing that somehow reflects light. I can't figure out what it is. But we're going to get to these things.
Well, we got everything on our list yesterday with the exception of two items. And then today, we're going to get those two items. Well, why, because we made a plan. Now if we didn't have a plan, we'd probably be drifting around, still at the Cubs' game. So, we have to make a plan. It absolutely has to happen.
Now, the second thing you have to do is you have to build checklists. You have to build checklists or as an owner you will be forever somebody guess what the word is, it rhymes with checklist, you will be forever pissed. That's what's going to happen. The camera guys are enjoying it. All right, so if you don't have a checklist, you're going to forever be pissed. Because common sense is not what? Common. It's not common. Common sense is not common.
So let's go over it here. Again, at this business, Sue, we're going back to Sue. Sue has this business. She has a bathroom. Let's go ahead and get in this bathroom here for a second. One, we have to clean off the urinal. Right. Two, we have to clean off the sink. Three, we have to wipe down the mirror. Four, we have to clean out the mats. Five, we have to clean out the stall. Six, take out the trash. And then, I want to see somebody's initials right here. And then, I want to see a time right here.
And do you know that at Southwest Airlines, where they fly millions and millions of flights, airplanes flying up into the air, you know that at NASA, where they would take a rocket and shoot it into space, you know that at Tesla Motors, where they're making cars, you what they have? A checklist. A sweet checklist. That's what they have.
Do you know what we do not have in most American businesses today? A checklist. And because you do not have a checklist, you're going to forever be pissed. That's how it works. So, you have to have somebody initial here. Yeah, I did this. Yep, I did that. Yep, I did this. Yep, I did that. Yep, I did this. Did that. And you have to have them put the time in. I did that at 10:01. I did that at 10:07. I did that at 10:09.
And then, as an owner, you have to what? Oh, I'm giving you so many good nuggets here per capita today. It's just-- it's unbelievable it's going to blow your mind. You have to inspect what you somebody, somebody, somebody-- inspect is, I love to rhyme and you know I do, you have to inspect what you expect. Inspect what you what? Expect.
-You have to inspect. That means you have to trust, but verify. That means you have to come back in to verify that it was actually done. Because if you do not. One, if you do not have checklists, you as an owner will forever be pissed. Two, you have to have a checklist, but you have to inspect it. Right? Because you have to inspect what you expect. So you have to literally walk into this room. If you are Sue, you're the owner, you want to have a business that's not disorganized. You want to have an organization that's not disorganized. You need to walk into the bathroom and you check to see if it's done.
And will it be done? No. Why? Because that's what happens. So it'll probably be 80% done. And is 80% good enough? No. So you have to hold people accountable. You have to hold people accountable for what you want them to do. If you do not do this, you will lose. Does that make sense?
Which brings us on to point number three. You have to have accountability systems. As an example, if you go into the bathroom and the bathroom is not cleaned fully. You need to explain to your employees it's a yes or no deal. When I inspect the bathroom, if it's fully cleaned, and I can circle yes that you did it. Because it looks absolutely sharp after I inspect it. Then I'm going to pay you, and I'm making up a number here, but then I'm going to pay you $10 per hour.
However, if it's not done. I'm going to pay you the minimum per hour. So it's up to you whether you want to get a yes or a no kind of paycheck. It's the accountability systems. Some of you are saying, I don't like to manage that way because I want to manage the way that I would like to be managed. I don't want to have to have a pay system where I pay somebody less if they don't do a good job. Everybody does their best. No they don't. No they don't.
Did you know the Gallup poll, Gallup research, G-A-L-L-U-P, has shown over, and over, and over, that 70% of American employees are not engaged in their jobs. They're not even into it. They're not even working really. Do you know there's all sorts of data. Go ahead and Google this mess. Over 50% of all employees admit to stealing from their job. 50%. There's got to be accountability, or you will lose your shirt, all right? You'll lose your shirt.
Moving on to point number four. You have to have a merit based pay system. Meaning, that if you have 10 employees there's always going to be A players, B players, and C players. You're going to have 5% to 10% of your company here at the bottom. OK? Then you're going to have seven people here in the middle. And you're going to have, as a general rule, you're going to have like one person up here at the top. So seven to eight right here, one at the top, 5% to 10% at the bottom.
So what does this mean? You have 10 employees. You have one, you have eight, you have one. This is how it works. A player, B player, C player. Well let's just say that Carl is awesome, Doug is OK, and Tim is absolutely a nightmare. Tim is an abomination. Is it fair to pay Carl same pay as you pay Doug and Tim? No, no, no, it is not. It's not good. So what you need to do, you need to find a way to pay Carl more money than Tim.
So, as an example, when I started the DJ Connection business. We provide entertainment for weddings. Well, I love weddings. And I love entertaining for weddings. But one of the biggest challenges that I dealt with was that when you do 4,000 weddings a year, you have to manage something like 80 DJ's. Well, when you have 80 DJ's, are there a couple of them that are terrible? They're not terrible at DJing, but they just are choosing to not be good people. Does that happen? Of the 80 people, do we have any of those DJ's that chose not to do a good job? Yeah, that's the idea.
So what I did specifically, and my action step was, is that I actually took their pay. And I said, well you know what guys, and I'm just giving you a ballpark figure here. But I said, per show, I'm going to pay $150 minimum to DJ a show. But if you get a bad review, I'm pulling your pay down here to $100. And if you do a great job, I'm going to pull up your pay to $300. Does that make sense? So I took money away from Tim to give it to Carl. That's what I did. And I made the math work, I sat down and I spent the time. And you need to do that.
But the concept here is you have to have some sort of merit pay. You have to pay people based upon how well they do. Not based on how many hours that they show up. You've got to find a way to take money from the bad performer, and give it to the top performer. There's got to be some kind of way through your compensation that you're showing people that that is what you value.
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