Latest / Second Act Business Owner / “More is Not Always Better, Better is Better”
Transcript
- Ep19 === Welcome and Episode Focus --- [00:00:00] Lee Gray: Hi, everyone. Welcome to the Second Act Business Owner Podcast. I'm your host, Coach Lee Gray, and I am glad, glad, glad you are here today. Today, we are episode 19, and the topic about episode 19 is on one of the laws that govern law and business, and that's the law of diminishing returns. It summarizes this way: more is not always better. Better is [00:01:00] better. Ah. Sometimes things that are so simple are so cool, aren't they? Looking forward to diving into this with you. Those of you who are watching us for the first time, those of you who are just beginning your second act, those of you who are full force ahead in your second act, I think it'll be fun for all of us today and, something that makes sense and is gonna give you the tools and some more resources to be successful in your second act. Business Laws Recap --- Lee Gray: Well, , The last time we were together, I talked to you about some of the laws that govern business. So the, the last couple of episodes, we've talked about the law of entropy, which is basically the law that says if you don't do something to continue to improve it, or you leave things alone, they go bad. They go to the negative. The other we talked about was the law of the vacuum, and that basically says if there's space, it's gonna get filled with something. So if you've got free time, if you've got free space in your garden, weeds are gonna fill that space up . If [00:02:00] you have free time, that may get filled up with doom scrolling or something like that if we're not intentional. So go back and listen to those e- episodes to do a deep dive. Diminishing Returns Explained --- Lee Gray: But today, today we're going to talk about the law of diminishing returns, and it's so interesting to me how impactful understanding this law is. And for people who are in their second act, those of us doing our second act or our second second second act, know that we have to be doing the things that make the most sense for us to achieve our goals, and that's what the diminishing law of returns is all about. So we're gonna dive into it, When you're working on something and you conti- continue adding more time, more effort, more money, resources, while everything else stays the same, eventually each additional investment produces a smaller benefit, and I'll explain that a little bit more as we go along. At first, you know, more, effort may create a really strong en- environment. , It could be a really great... After a certain point though, however, that same amount of additional effort produces [00:03:00] less and less value if continued too far. The extra effort can actually become counterproductive. You've seen that before, and I'm gonna give you some examples so it'll even make more sense. But in our second act, we don't have time to expend effort that's got diminishing returns. Sales Calls Example --- Lee Gray: So here's an example of a, a simple business example. Let's say you make 20 sales calls and you get three appointments from it. That's one of the strategies you've decided to use for your business. You're working on that. Well, then you increase it to 40 calls, and they, maybe that produces five appointments. So I would say you're still in, sort of heading in the right direction then. Then you decide you're gonna increase the calls to 60, and maybe you only get six appointments from that effort. Well, you know, if one thing works better, do it more and more and more, right? Well, at 80 calls, we may be exhausted. We're tired, we may not even have the right kind of conversations. We certainly don't have the energy it takes to make these calls. [00:04:00] So you're working harder, but each additional group of calls is producing less, or producing a smaller return. That right there is the law of diminishing return. So the basic progression is this: increasing return, additional effort produces strong improvement. Diminishing returns, results continue to improve, but slowly, starting to diminish over time. And then finally, we get to a negative return. And believe it or not, as second actors, we can get so focused on what we're doing that we can dive in and just dig a hole to where we're actually creating extra effort that's giving us a negative return because we're exhausted. In that example of a sales call, nothing's worse than calling someone after you've had been hung up on 92 times or whatever. So I'm gonna give you some, some tips on how to streamline the efforts so that you can step back and have a look at it, make sure it is good effort and good results at the same time. Spotting Diminishing Returns --- Lee Gray: Th- The law of [00:05:00] diminishing return doesn't mean the work is ineffective or that we should stop something, you know, especially as soon as it becomes difficult, because sometimes that's right where we have to get before we get over the hump. It means there has to be an optimal amount of input and resources that match, that help create a greater value on our return on our investment. We may need to change the system, and I'm gonna talk to you about What to look at first. If you have discovered, now that you're intentional and understand the law of diminishing returns, is there some activity that you, in your business, in your second act, are doing that's not getting you the return you want? So here's some common examples. Working longer hours, but your productivity and your judgment's, like, not where it needs to be. Here's another example. Adding employees without improving management or communication. That's how diminishing returns happen in a business. You bring someone on, you produce less. That's why. It's a [00:06:00] diminishing return because the wrong effort's being applied. Here's another example. Spending more advertising after the best audience has already been reached. When that's happened, you can only go so far when you're tapping into your audience. We've all been here. How about holding a meeting longer than the value of the meeting? I mean, if we have an hour meeting, it doesn't mean we have to have an hour-long meeting. We just have to have an hour-long meeting that produces results for our effort. Really, you know, ROI needs to be applied to everything we do. The meetings that we have, the people that we hire, anything that we're doing has to have an ROI impact. Either you're getting a good return, a diminishing return, or a negative return. Those are the three things. It can't be anything different. This is a law. That's the thing about laws. They are... They govern us. We can't make them go away. They are what they are. So for second actors, the important question is this: Am I still improving the [00:07:00] result, or am I just adding more? So you gotta ask yourself that. Am I adding more because I've been taught since I was little, work hard, work hard, work hard? Make Calls Better Not More --- Lee Gray: And I agree, you have to work hard, but it has to be improving a result So number one, let's say you're doing more, but the results are not increasing. You're making 80 sales calls, but you aren't scheduling more appointments. The instinct is to make 100 calls, but more calls may not be the answer. Let's break it down. Let's break down the process. So when am I best at making calls? Now, for me, I've told you guys this before, I'm a morning person. I am not gonna make calls to new people in the afternoon when I'm tired. My best time is in the morning. Am I reaching the right people? If I'm just calling for the sake of calling, eh, I'm not gonna get a lot of, , ROI, am I? So diminishing returns are pretty much guaranteed there. Is my opening effective? Have I practiced what I'm saying when I first start my call? Am I [00:08:00] asking good questions? And then am I consistently following up? Choose one or two of those steps to improve. Block one hour of focus time each day to work on that, and then after an hour, look at it and say, "The goal isn't more calls, the goal is better calls." Think about that. And remember what I said when we first started today More is not always better. Better is better. So how do we take the steps we have and make them better? Avoid Fatigue and Busywork --- Lee Gray: Is the quality of work you're doing declining? Maybe you're working more hours, making more mistakes, becoming impatient or, you know, taking longer time to make decisions. I always tell business owners and people starting their second act, "Make fast decisions. You can always regroup." , , What I just described, becoming impatient and things taking longer, it's the diminishing returns that we get. It causes fatigue. It causes physical and mental fatigue. And then step back and identify, [00:09:00] you know, when your best work happens. That's when you can be your... That's when your best can be your best. Schedule important decisions and high-value work during that time. And , set up a stopping point. I mean, set your alarm for one hour. I personally think an hour is plenty of time to do any high-revenue generating, high-energy, high-engaging kind of activity. Take a break, step back and, and look at it. And then is there one activity you're doing... Like, I have an... This happens to me. So sometimes I'm working on something and I'm getting a lot accomplished. It's administrative though, let's say. You know, I've gotta get this or get that. But let's say I keep handling those administrative tasks 'cause I'm good at it and I'm getting, I'm getting results. I'm getting a return for that effort, but my return needs to come from the effort of getting new customers, for example, going back to the sales calls. So an hour that I spend doing administration, not selling, not leading, not planning, not preparing to get the next new [00:10:00] client, look at the diminishing returns from that effort because I'm choosing to do the wrong thing at the wrong time. And it seems, like, kind of innocent, doesn't it? Like, you know, I'm really working hard over here, but I'm not giving the effort to the thing that I'm gonna get the most return in, so my day results in diminishing returns. And then think about is, is this the best use of your time? Is it the best use of my time to do the administrative tasks or am I doing it because I've always done it? I mean, how many times have we done things because we've always done it? That's how habits happen, that's how traditions happen. It's r- ingrained to do things the way we've always done it. Reverse the Decline --- Lee Gray: So how do you, how do you deal with the law of diminishing returns in real life? You're a second actor, you're busy, you're starting something new, you're growing, you're growing in all these different ways. Choose one repetitive task to eliminate, automate, delegate, or simplify, and then intentionally reflect that time towards something that can give you a return, [00:11:00] a high-value activity. So to reverse diminishing return, it's simple. Stop adding more, break down the process, identify where things begin to decline, and then improve just one or two of the steps and then test and measure that new result. And I know it sounds kind of like a lot, but it's basically just... it's a law, it's a science. If you do what you're doing, look at it, take it apart and improve pieces of it, the overall picture and the overall outcome produces better return. So more is not always better, better is better. What does that look like? Client Telemarketing Case Study --- Lee Gray: Let me give you an example of a client that I've been working with who is determined to create new connections through outbound marketing, tele- telemarketing. So we've set a goal to get 10 coffee meetings a month, and it's a local area here, where we live, and so it's definitely doable. [00:12:00] So she started making phone calls, one after another after another, and just wasn't getting anywhere with it. At the end of the week, she said, "You know what? This strategy doesn't work. Calling people and inviting them to talk to me just isn't working." And I ask her, I said, "Well, what's your strategy?" "I'm, calling people and asking them to meet with me. It's just not working." So we sat down and we, instead of adding more calls, we said, "Let's make fewer calls. Let's break down the process, y- identify where the return begins to decline." And she said, "Well, when I call them, I really don't have a purpose." Okay, what's the purpose? The purpose is one of three things: invite them to a coffee meeting, invite them to a networking event that might interest them, or invite them to an event that she actually does for her business. So we got clear on those and also created scripts for it. We improved those two steps, and she... Basically, it went like this: "Hey, I am, uh, such and such. This is my business. I'm looking [00:13:00] to, , introduce myself to business owners, and I'd love to have a coffee with you. Does a coffee sound like something that would be of interest to you to... I could learn more about your business. You could learn more about mine. Who knows? Maybe we could form a partnership. If a coffee doesn't work, I also have a networking event that I attend once a month. I'd love to have you be my guest. There would be no charge for you to attend." And if the customer agrees to that, so I have then created the next step, and my return has evolved. No longer is it diminishing. I am getting a return on my time. So she did that. You can see it takes a little bit longer to make a call like that when you're intentional about it. So she would block off one hour to do this effort, and at the end, it was over, and she realized that the results were very, very positive. About three out of 10 people com- made some kind of commitment to take the next step. So that's how the law of diminishing returns works. Wrap Up and Call to Action --- Lee Gray: Now that you have some understanding of the [00:14:00] law of diminishing returns, have a look at where you're spending your day. Start there. Pick out that one task that makes the most sense for you to get specific on how you can make it better so we improve the return on your business. Remember, more is not always better. Better is better, and you are a second actor. You already know how to do better thank you for joining us today on the Second Act Business Owner podcast. What I feel like expressing is that knowing the laws that govern life and business has given me so much power and so much energy, and knowing that we can't do anything about the laws, but when we know what the laws are, we can adjust our behavior to have them on our side, and that's what I feel like expressing if you found this podcast valuable, I would really love it if you would help us let other people know by giving us a review on Apple or [00:15:00] Spotify. And if you're watching us on YouTube, give us a thumbs up and give us a comment. Tell us what you liked. Goes a long way for us to communicate what we're sharing with lots of other people. And you know what? We wanna be in good company with other second actors, so let's help them find this podcast. Let's help them get this information.