Robert: Welcome to the Ecommerce Marketing Podcast. Today’s guest is Tim Francis. He is the founder of ProfitFactory.com where he helps entrepreneurs turn their vision from business operator to business owner. Welcome to the Ecommerce Marketing Podcast, Tim, how are you doing?
Tim: Doing great. Nice to chat with you, Robert.
Robert: Okay, so today we are going to be talking about something you call “The Engine Room,” and you believe that by building an engine room for any business owner or marketer, this is actually going to give them more freedom and the control that they’ve always wanted.
Tim: That’s right. I own ProfitFactory.com and I actually also own a marketing company, which is a different business. And I’ve watched this work in my own business, and as I’ve been able to be more successful in my company, other entrepreneurs have asked me for help. So I’ve now been behind the scenes of dozens of companies and I’ve watched it work again and again.
So oftentimes, entrepreneurs, we get really good at the craft of doing a particular skill. So it’s kind of like plumbers and electricians get good at building a house. Marketers can get good at copywriting or SEO or Google AdWords, and those are all trades. And as we get better and better at those, in the beginning of the business anyways, we get more clients and that puts more and more demand on us. And if we’re selling a product online, same thing. Where more and more products are coming in and the demands on us just become bigger and bigger. And so we actually become—we go from being the company’s biggest asset in the very beginning to actually being our biggest liability, because we become a bottleneck and the business can only grow so far before it hits this plateau.
Most business owners then resort to hiring a few team members, which is great—that’s a whole new skill, though. To hire and to manage people, to get the right people into the team doing the right roles, that’s all a separate skill than SEO or PPC. It’s called management and project management. And that’s great for a while as well, except we run into the exact same problem all over again when there’s so many team members that the business owner’s the bottleneck again, because they can only manage so many projects and people at once.
And all along, the entrepreneur does have an engine room. So the engine room is simple what is the team, tools, and systems that produce the work? Be it to produce a service or to market and fulfill orders. Every one of us, we already have an engine room. It’s just, do you realize what your engine room is and how good is it? It’s kind of like we’re always all on a diet, it’s not like because we’re not on a diet that our body doesn’t recognize “Oh, that beer is not good for you.” of course, we’re always on a diet, it’s just is it good or bad? Just like we always have an engine room.
So our engine room goes from being just us to being us plus a few team members, and then after that, a lot of entrepreneurs get stuck there because it’s actually a fairly big jump emotionally, psychologically, logistically to go from being in the engine room to actually being out of the engine room. And that, to me, is the goal. We want to learn how to set up an engine room where the entrepreneur is not involved. Where you’re actually kind of like on the shore and you’ve built a ship, with an engine room in it, and that ship goes out to sea every two weeks and comes back and you get to stay on the shore.
When you get to stay on the shore, now you get to build other businesses if you want. Or you can work on the business instead of in the business. Or you can take some time off, go travel, vacation. And at the end of the day, that’s really all what profit factor’s all about. Is helping entrepreneurs to build real, sustainable businesses that help entrepreneurs to achieve their dreams and for all of it to be a smooth, almost symphony-like experience.
Robert: And as we’re talking about the engine room, Tim actually has provided the engine room blueprint, and you should be able to download that from his website, profitfactory.com/engineroom—profitfactory.com/engineroom. So you want to download that blueprint so that as we talk, you can also follow along. Thanks for providing that blueprint, Tim. So you’ve already explained what the engine room is. How can a business build their own engine room? Or how can an entrepreneur recognize the engine room, take themselves out? So how would they be able to build and test and optimize their engine room?
Tim: Robert, I’m sure you’ve heard of the 80/20 rule before?
Robert: Yes, I have.
Tim: Okay, and so, to everyone listening, the way to build an engine room is to think about 80/20. And if the 80/20 idea’s new to you, I’ll just very quickly say that 20% of efforts often yield 80% of the outcomes. So if we look at a city, we see 20% of the roads get more than 80% of the traffic. If we look in your closet, 20% of your clothes get worn 80% of the time. And in your business, you probably find that 20% of the tasks take up 80% of your time. So if we take all of the different tasks than an entrepreneur does in a day… So let’s call it the 100% percent of the tasks, and if we were to line then all up with each other and if we were to provide a dollar per hour value on each of those tasks, we would actually see an 80/20 curve. So an 80/20 curve looks kind of like a hockey stick, where it’s kind of like pretty flat, pretty flat, and then at the end it has a sharp curve at the top.
And we would see that most entrepreneurs have this long, straight line of ten dollar an hour, fifteen dollar an hour, twenty dollar an hour tasks, one after the other after the other. And when I say that, I mean literally like processing credits cards, producing reports, booking venues, handling your email inbox, scheduling a calendar—on and on and on—and if we start throwing in their personal tasks as well. There mowing the lawn, shoveling the snow, cleaning the house. All of those tasks that are under fifty dollars an hour, for most entrepreneurs, occupy a huge percentage of their time.
And then there’s a few tasks, kind of like the curve of the hockey stick at the end—there’s a few tasks at the end that they actually are making a hundred dollars an hour, five hundred dollars an hour, maybe five thousand dollars an hour, they just don’t spend that much time doing them. And if they could do fewer of the fifteen dollar and hour tasks, they would be more free to do the higher end tasks, which make a massive difference for the business.
So one of the challenges entrepreneurs have is being stuck in that bottom of the 80/20 curve, and it just becomes a matter of finding those tasks, and then from there putting the team, tools, and strategy around it so that they can get out of it.
So, for example, if I had a podcast and I wanted to take a look at that, you choosing the topics, Robert, is a top 20% task. You appearing on the podcast is a top 20% task, however, pretty much everything else around it is actually a bottom eighty percent task. So scheduling the guests, making sure that they have the links, getting their bio. Then after the editing the audio, uploading the audio, putting the cover art, if you do that, etcetera, etcetera—all of that is bottom 80% tasks. And it’s up to you to identify that, figure out what your specific narrow role is and then from there, write a few checklists, procedures, find an assistant to put all that in place. And it maybe sounds like a lot of work, and in a lot of ways it is a lot of work in the beginning, but the payoff is extraordinary on the other side.
And I think one of the biggest objections I hear is, “Hey, Tim, that’s great, but what if I don’t have five hundred dollar an hour tasks in my business?” Well, if somebody does not have five hundred dollar or even one hundred dollar an hour tasks in their business, maybe it is too soon. And maybe they do need to go and continue to spend more time in the fifty to twenty dollar and hour task zone. That’s absolutely possible. That being said, I think a lot of entrepreneurs have one hundred to five thousand dollar an hour tasks, and they don’t even realize it. So I think that where we find a lot of those tasks is when we look at skills like—if we take a task and we break it down again, and we say the top 10% is often times high value work. The middle 80% is often times lower value work. And then the last 10%, again, is high value work.
So it’s like, if a person’s really good at pay-per-click, then the first ten percent would be strategizing the campaigns, coming up with ad copy, setting campaign settings, and then after that, the middle 80% is just kind of tweaking, maintaining, watching, running split tests—all that’s lower value work. And then the last 20% would be analyzing the results and choosing a winner.
So that is a very quick example of where—it’s one of many places I know to go to find more one hundred to five thousand dollar an hour tasks in a business, and hopefully that helps some of our listeners here today find something in their business too.
Robert: So the whole goal is, when you’re looking at your own tasks and where you’re spending your time, you just want to spend time on the main tasks that bring in the money for your business. And then everything else, you want to somewhat outsource that or give that to other people, and that’s where the engine room comes in. Correct?
Tim: We all already have an engine room. So even if somebody listening to this is a solopreneur, even if they’re alone, they have—even if they run their company part time because they have a day job, they still have an engine room. So we all—it’s not about are we going to build an engine room or not, it’s you have an engine room, do you realize it? Do you realize where it’s strong and weak? Do you realize where the opportunities are? And what are you going to do to reshape your engine room so that you get a different result in the future?
Robert: Okay. And where does the entrepreneur and the business owner—where to they get their freedom and the control that they’ve always wanted from the engine room? How do they get out? How do they transition to be outside of the business once they identified those tasks using the 80/20 rule?
Tim: A business is nothing more than a collection of smaller procedures and tasks. Like you could take the biggest company in the world. You could take Apple or you could take any big company like Coca Cola or Microsoft or anyone, and it’s all just people working. It’s people doing tasks. And when you realize that you can go on Elance and—if we were to go on Elance and we would say “What percentage of the people on Elance are willing to work for fifty dollars an hour or less?” it would be like 99% of everyone on Elance is willing to work for fifty dollars an hour or less. In fact, probably thirty dollars an hour or less would capture 80% of everyone.
So when you realize that, you realize that in a lot of ways, you can be replaced. And it’s just a matter of you developing a new skill called being a business owner who knows how to build an engine room. So it’s a new skill, just like, once upon a time, a person maybe didn’t know how to do SEO or PPC or ad copy, so you went and learned. So guess what, if you do what you’ve always done, you will get what you’ve always got. If you are sitting inside PPC accounts all day every day, and you are doing 100% of the work for 100% of the campaigns, then you’re going to get maybe incremental growth over time where you’re improving by 10%, 10%, 10% every time something.
But I’m talking about how do we double the business? How do we double the business in the next couple years? How do we go from working sixty to eighty hours a week to working, like, forty? How do we cut that in half? And that comes from building the skill of knowing how to build an engine room. When you are an engine room builder—which, again, if it sounds foreign, that’s because it is foreign. It’s a new skill to learn how to hire the proper people, how to manage them, how to give them the right tools.
Like, for example, if you’re going to delegate something to a team member, there’s three things you always need to give them. You need to give them vision, resources, and definition of done. So if I have a graphic designer who I want to build a logo for me, I want to give them the vision. I need to say things like “Okay, I want this logo to be more masculine than feminine. More traditional than modern. I want it to be on their color palette. Here’s three examples that I like,” etcetera, etcetera. So we have to give them the vision. Then, from there, we have to give them the resources. We have to tell them, “Okay, I’m willing to pay up to a thousand dollars for this logo. Here’s my login information for iStock Photo so that you can go and get stock images if you need them. Here is a budget for how much you can spend for other software or whatever that might be needed along the way to vectorize the images.” So they’re given the resources, and then from there, the definition of done would be “I want to logo that I feel meets my design brief. I need it to be in PNG/GIF formats. I need a transparent background, a white background, a black background. I need It all uploaded to this one particular Dropbox folder. And the three milestones that I need this done are first version needs to be to me within two weeks, then the next version the week after that, final version the week after that, so we’re all wrapped up within one month from now.”
So now I’ve given them a definition of done, what does success look like? If you can give a team member or a contractor those three things, now they can go and do their work without having to interrupt you eighty-five times and say “Oh, what about this?” “Oh, we didn’t cover that.” “What about this?” “What do you think about this?” “Can I get your feedback?” If you do a poor job of delegating, then you’re just gonna have a fulltime job of managing the people who are doing the fulltime work that you hired them to do in the first place, and that’s a real pain in the butt.
Another very quick example is when you learn how to properly write systems, you learn about something that I call decision making guidelines. And so it’s guidelines that you give your contractors and/or team members to that they can do and do their work without having to interrupt you again every sing moment of every single day.
So a lot of people listening to this podcast, I’m sure, have listened to the 4hr Work Week or they’ve read the 4hr Work Week. And Tim Ferriss gives a really good example, something that I’ve used in my own company in my own way, and he wanted to outsource all of his customer service, so he did, but was still getting tons of emails. Instead of getting it from customers, though, he was getting it from his out customer service team. “Do we ship overnight?” “Can this be taken with this drug?” “Can this be eaten at this time?” etcetera. And he was just getting hammered with thousands of questions. And finally enough was enough, he had the innovation—which is not a new innovation, a lot of business owners have done this before Tim Ferriss but it’s just what he need in that moment—he told his customer service people “Okay here’s the”—he didn’t call it a decision making guideline but that’s what it was. “Any problem you can solve for under fifty dollars”—and then I think he went up to a hundred dollars after that—“just do it. Don’t call me, don’t ask me, don’t email me. Just do it.”
So as a business owner—not a business operator, but as a business owner—if we can give our team and our contractors decision making guidelines like that, guess what, we can wipe out huge amounts of work that previously we had to do by simply having a few really smart decision making guidelines in place. And now, again, we can stay on the shore while our team is on the ship and going out to the ocean. They have vision, resources, definition of done. They have decision making guidelines, and they have some of the other tools that are really important for an engine room to be successful.
Robert: Okay, and what are some resources and tools that the entrepreneur can use to manage this whole new system and skill?
Tim: Yeah, so Scrum, which you’ve probably heard of before, there was a great book written by Jeff Sutherland called Scrum that was a few years ago. He took a project management strategies—it’s an agile product management strategy and he modified it for—or he developed it, let’s say, over the last twenty years in the software world. Very few people are using it outside of the software world, and I decided to use it in my small business, in my marketing company. And I gotta tell you, Robert, it’s been mind-blowing. Things that used to take two weeks were getting done in three and a half days. The acceleration is amazing. So Scrum has been phenomenal. And that being said, there’s some definite nuances of Scrum. I was so excited by Scrum that I actually dropped everything I was doing, I paid to fly to Chi—I live in Canada, so I flew to Chicago and I became a worldwide certified Scrum Product owner, is what it’s called.
So I’m actually certified in Scrum. And getting that top level education on how Scrum works in big companies is very interesting to then bring into my own small business and to see how it was the same or different. And actually, there are a ton of differences. A ton of tiny little nuances that are different for small business owners. And especially for small business owners that have virtual companies and/or have a lot of contractors and part time people. Scrum has originally been developed in the environment of everybody’s fulltime, everybody’s working on one project, everybody’s focused on one thing, whereas as small business owners, we have one-time contractors coming and going. Sometimes we’re not all in the same room, sometimes you’re not even in the same country. So that is a very, very different situation.
So I’m actually in the middle of writing a book called Scrum for Business, so people can go to www.scrumforbusiness.com and get onto the pre-order list. Depending on when they hear this, it might be available by the time you get there, just as of right now, it’s just in production right now. Scrum for Business actually gets into all the nitty gritty of all the nuances for small business for Scrum. So that’s one really amazing tool. Another really amazing tool, if you go to profitfactory.com/shortcut, I’ve actually written out—it’s about eight Google Drive documents and it’s an example of different systems and procedures, and it also has an example of some decision making guidelines and an example of what’s called an identity statement. And when you opt it, you actually get a link to a Google Drive folder that you can literally hit the button and it downloads my—I think it’s eight documents—directly into your Google Drive so now you can hit the ground running as far as building some of your own procedures in your own company.
So those are two really good resources plus the engine room blueprint, www.profitfactory.com/engineroomblueprint gives an entrepreneur—it’s a great tool to kind of see the big picture of how everything works together. Is that helpful?
Robert: Yeah, that’s very helpful. And thank you for providing all those resources. Do you have any final thoughts that you’d like to share with the listeners as far as managing their engine room?
Tim: I think, more than anything, I just want to say that…as entrepreneurs, I really feel like we go—and I don’t mean to sound like entrepreneurs are better than anybody else because humans are humans. I just want to say that starting and running a business can be very difficult, especially in the beginning, and especially—actually, at any of the growth stages where you’re kind of crossing from one level to the next in the business, it can feel like crossing the Grand Canyon to go from being alone to having three or four team members. And then it can feel like the Grand Canyon again when you’ve got three or four team members and then you’re trying to actually get yourself out of the engine room altogether.
And nobody teaches us how to do this in school, so it is truly—it can be very difficult. And I think the amount of value that entrepreneurs build for the world is significant. When you think of all the people that we hire, all the people that we help through our products and services, we really do hit above our weight class, if you know what I mean. So it’s really sad for me when I see entrepreneurs now a prisoner of their business because they’re stuck in their engine room, and sometimes they don’t even realize that they have an engine room, and sometimes they don’t even realize just how stuck they really are in their engine room.
So to see someone who has a dream of one day maybe being able to be financial comfortable, they have a dream of maybe being able to travel this beautiful world that we live in. There is so much beauty a richness for us two experience on this planet. We could live a hundred lifetimes and still just be scratching the surface of beautiful things to see, people to meet, experiences to have. And to know that that’s out there in the big wide world, and to know that the entrepreneur is delivering such tremendous value to the world, and yet they are stuck in their business working eighty hours a week, run by coffee, heavy bags under their eyes, and burning out a little bit more every single month that goes by, it’s just more and more of a grind—that’s very sad to me.
And it’s also very personal for me, because five years ago, I was that guy, and I actually developed an illness. I think very much because of how much of the work that I was doing. And I got so sick with a case of erythema nodosum, I actually couldn’t walk for three full months. So it’s personal for me, and having been to the extreme, maybe there’s a lot of listeners on this call that are starting to feel burnt out or really frustrated or like their dream is just too far away. And I’m here to say, yes, I think in a lot of ways I’ve been to that darkest place, and I really don’t want—I want to help entrepreneurs to be able to avoid that, and I also want to help entrepreneurs to be able to enjoy some of the beauty of life. It’s like, there’s some very dark dark, and I want to help you avoid that so you can get to the very light light.
And I don’t want to—something that really irritates me is the BS, Kool Aid drinking people out there are talking about “Get rich tomorrow” or this one ultra-domination method is going to change your life and you’ll be driving this Ferrari, blah-blah-blah, BS, BS, BS. It’s not real. And I’m here to help entrepreneurs to build real, durable companies that help them convert their dreams to reality, and I really like it when things feel like a symphony, when things are really smooth, when people are happy. And not just the entrepreneur, but also the people that work for us. That the people that work for us also feel like they’re fulfilling their dreams too.
My assistant, she works for fifteen dollars an hour, and she’s actually fulfilling a lot of her dreams because she gets to be a stay at home mom. And that is her dream and she actually tells me. “Tim, I help you build your dream because you help me build mine.” So I think that that’s really what it’s all about it is absolutely possible if you’re willing to do the work, to learn the skills, and to grow yourself so that you learn the mechanics of building an engine room. And it’s not through one single headline or one single domination method, it’s a handful of different skills you gotta learn that allow you to be on the show while the engine room goes and does the work for you.
Robert: Well said, Tim, and thanks for sharing that. And for our listeners, you can learn and find out more about the Engine Room from profitfactory.com and remember to download the blueprint. It’s the engine room blueprint and you can find that at profitfactory.com/engineroom. Thanks, Tim!
Tim: Thank you very much!