Do Major Holiday Discounts Help or Hurt Your Business

 

What is it about Memorial Day, July 4^th, Labor Day and the Christmas season?  They bring out all the big discounts, which gets shoppers flooding to the malls to save money, especially on big ticket items like cars and mattresses, as examples.  And the sellers of those products bring out their best prices during these holiday seasons, trying to capture has much market share against their competitors as they can.  But the question I ask is: why?  Yes, you are driving more revenues, with the holidays often representing 30% of their total annual volume.  But, if you are sacrificing material bottom-line profits by slashing prices in the process, why play that game?  This post will dive deeper into whether you should or should deeply discount your products, during the holiday season or in general.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #361: Let Ad Campaigns ‘Breathe’—Over Optimization Can Suffocate Results

 

I have been a digital marketer for over 30 years, living by the mantra of making data-driven decisions that maximize your return on ad spend (ROAS).  Like any good marketer you will always be testing and tinkering with your ad campaigns to optimize your copy, creatives, lading pages and messaging in a way that will get you the best results, in the form of your highest ROAS or lowest cost of customer acquisition (CAC).  But something happened with one of my businesses in the last few months, where over-optimizing the campaign actually caused the wheels of the bus to fall off.  I had never seen that before, and I thought this case study was worth sharing with you, so you don’t repeat this same mistake.

The Situation

We had been growing our Restaurant Furniture Plus ecommerce business pretty consistently over the last few years.  The growth strategy was almost entirely Google Ads focused, where if we wanted to increase revenues, all we needed to do was spend more money with Google year-over-year.  And, that we did, increasing our annual advertising budget from $100,000 to $2,000,000 over the last few years.

Things were largely going fine.  As we scaled advertising spend, our revenues scaled along with it in a pretty consistent straight-line kind of way.  We weren’t overly optimized in our efforts, we simply managed the campaign with a few high level metrics to make sure we were heading in the right direction.  Those metrics included our ROAS and our Cost Per Lead (CPL), which were largely unchanged over the years, ignoring one-time anomalies in the market, like COVID in 2020.  We biased CPL over CAC since we could easily tie Google Ads into our Call Rail tracking data at the campaign level, and we couldn’t easily connect our CRM data to Google, at the time.

But, after we upgraded our CRM with one that better enabled a direct data tie to Google Ads,  we thought the campaign could perform more profitably if we engaged a more sophisticated marketing agency that had more experience in running campaigns based on CAC instead of CPL.  An agency that would be more “in the weeds” than we were as business executives, optimizing everything within the campaign, including the keywords, creatives, landing pages, product segmentation, audience targeting, etc.  We felt the biggest opportunity was managing the campaign at the CAC level, as opposed to the CPL level, since we figured knowing if a customer purchased from us was more important than if they contacted us.  Sounded pretty reasonably, right?  But, keep reading.

Our Ad Agency’s Plan

Our advertising agency was very bullish on connecting our CRM data directly with Google Ads, to let Google know which ads of theirs lead to actual buying customers.  The agency had a lot of success with their other clients with this strategy, and there were confident it would work for us.  We did a lot of work to set that up, and launched it, crossing our fingers it would lead to a material decrease in our CAC and a material increase in our ROAS.

But, what followed had us all scratching our head.  Instead of improving our campaign, this action actually hurt our campaign.  All of our marketing metrics started to move in the opposite direction—our CAC doubled and our ROAS cut in half.  None of us really had an explanation for what had gone wrong, until we started to do a little more digging.

What Happened?

The single change we made, which we thought would help us, actually hurt us.  We changed our primary data point that we wanted Google to optimize for from number of leads (e.g., phone calls and email form fills) to number of customers (e.g., closed transactions in our CRM).  And, more specifically, we didn’t care about online customers that purchased on our website, we only cared about offline customers that purchased with our team of expert project managers, because our average order size of offline orders was 3x that of our average order size of online orders, by adding that personal human connection and having the opportunity to upsell the order.  But, from a data perspective, that meant we went from sending Google 1,000 datapoints a months, from the phone calls and emails, to only sending Google 100 data points a month, from the offline transactions that were directly sourced from Google.

Remember, Google is an algorithm, and it needs data to digest to do its work.  And, the more data, the better.  By making this move, we were effectively “starving” Google, by cutting back the datapoints.  And, what does Google’s algorithm do when there isn’t enough data to work with?  It becomes paralyzed and doesn’t know what to do?  So it starts “spraying and praying” across its entire network, where it can hopefully generate more useful data and results to work with.  And, what happens to your advertising effectiveness during this time?  It basically gets flushed down the toilet.

The Fix

Once we learned what the issue was, it was a simple fix:  we basically return to our old ways, telling Google to optimize on the leads data, instead of the transaction data.  That started feeding Google’s algorithm again, and good things happened.  Our ROAS and CAC returned to the historical levels, once the campaign wasn’t strangled and suffocating anymore.

The Lessons Learned

There were many lessons learned here.  First of all, we mentioned it above, Google needs data to work with, and there is a minimum amount of data that Google needs for its algorithms to successfully do their job.  We had basically choked it.  Secondly, there were a lot of very smart veteran marketers around the table that all collectively bought into the strategy that failed.  So, even experts can make mistakes.  In this case, the agency’s success with other clients was due to those other clients being materially larger than we were, sending Google a lot more data than we were able to send them.  And, lastly, there is a point in your marketing campaigns that you simply have “over-sharpened” your pencils, to the point the tips break off when you press on them.  Yes, campaign optimization is good and needed, but over-optimization could end up being the noose around your neck.  So, as you are tuning up your campaigns, don’t turn the dials up too high, or you may bust a few springs along the way.

For future posts, please follow me on Twitter at: @georgedeeb.

Trying to Scale Your Startup? The Odds Are Not in Your Favor!

My colleague and serial entrepreneur, Scot Wingo, of ChannelAdvisor, Spiffy and Triangle Tweener Fund fame, recently posted on LinkedIn, how hard it was to scale a business.  He referenced data from a book by Verne Harnish, the founder of Entrepreneur’s Organization, called Scaling Up: How a Few Companies Make It . . . and Why the Rest Don’t.  The core of the story was this graphic:

What the graphic basically says is, of the 28,000,000 businesses in the United States, only 0.061% actually get larger than $50MM in revenues.  And 96% of all businesses, never get larger than $1MM in revenues.  I was so taken back by the data here, that I thought it was worthy of a deeper discussion.

Read the rest of this post on Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb@georgedeeb.

[VIDEO] A 'Fresh Set of Eyes' Can Help Turnaround Struggling Businesses

I was recently interviewed by ASBN, an online "television network" serving the small business community, about how a "fresh set of eyes", can help turn around struggling business.  As you will learn, sometimes the founders are simply too close to the business, to clearly see the "forest through the trees".  I thought this video turned out great, and I wanted to share it with all of you, to see if a fresh set of eyes can help your business.  If so, you know who to call.  I hope you like it!!

The embedded video player didn't give me the option to change the size of this video.  But, if you want to see a bigger version, simply click the expand size button in the player above.

Thanks again to Jim Fitzpatrick, Shyann Malone and the ASBN team for having me on the show.  I look forward to our next interview together.

For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #360: How to Survive a Difficult VC Funding Environment

 

CB Insights, a leading research organization that tracks venture capital financings, recently released its report on the state of the venture capital market in 2023. The long story short is: it was a terrible year for raising capital. The global market was down 30% year-over-year, to its lowest levels in six years. The U.S. market fell to its lowest levels in 10 years, down 21% in the last quarter alone. Gone are the days of “unicorn” creation (companies worth more than $1 billion), mega-sized financings, and excessive valuations. And, investors simply can’t exit the investments they have already made, with an anemic IPO market. A pretty bleak picture if you are a startup raising capital today. So, what are you supposed to do to navigate these choppy waters? Buckle up and read on, for some useful tips based on my past experience surviving markets like these.

Step 1: Batten Down the Hatches—Cut Expenses

Don’t fool yourself into thinking your story is better than all the others, and that you will have no problem raising capital. Once VC’s put their heads in the sand, it is pretty much across the board, with a few exceptions if you happen to be in a hot market like artificial intelligence, fin tech, retail tech and sustainability. So, that means you need to get your expenses down to the absolute bare minimum. And, yes, that most likely means making the tough decisions of downsizing your staff, to survive the storm.

You need to hunker down to focusing on your core business (no side projects) and most profitable product lines, remembering that your marketing efficiency during a down market will also be negatively impacted. So take out your hatchet, and start chopping away at all non-core and discretionary expenses. And when you are done, if you do not have enough cash on hand to survive the next 18-24 months without requiring any additional financing, you have not cut enough. Keep cutting until you get to that point, even if it means you are cutting into your “flesh” at that point. Because if you don’t, you will never live long enough to survive and fight another day, which is the primary goal of this exercise.

Step 2: Revise Your Business Plan for a Downside Case

If your original business plan was to grow 50% per year, spend unlimited marketing dollars, add many new product lines, and expand into new markets, forget it. You will need to table that plan and dust it off in a couple years. For now, you are in survival mode. Focus, focus and more focus is what is needed right now. And whatever assumptions you made in your original plan, cut them all in half. Your cost of customer acquisition will double in a down economy, which means your revenues could cut in half of where they are today. So, focus more on getting additional revenues out of your existing customer base, where you can. And, if you do not have any revenues from a specific initiative you are working on today, those should get zero attention in this market. Only focus on your highest revenue producing product lines, and double down on those.

Step 3: Talk With VC’s to Learn Their Revised Goals and Keep Networking

Just because investors are not writing as many checks, does not mean you stop speaking with them, as they are still sitting on a lot of “dry powder” of un-invested capital. But when you approach them, instead of raising capital and asking for cash, you are asking them what they are looking for in the limited investments they are making today. And, getting their reaction to your revised business plan to see if you are heading in the right direction or not. If they give you any constructive feedback or suggest pivots, listen to them, and consider taking those actions, if it will help you raise capital a couple years from now. And once you and they are on the same page, and you have set some reasonable goals for yourself, keep in touch with them and hit those goals. VC’s are still prefer to invest in the best teams over the best ideas, and if you can prove that you accomplished the goals you set out for yourself, a year after the fact, you will earn a ton of credibility with them for when you re-approach them for a capital raise once the markets improve, and you have over a year of relationship-building with them under your belt.

Step 4: Seek Alternative Investors Outside of Venture Capital

If you have cut all you can cut out of your expense base, and there is still a capital need, you will need to seek alternative investors outside of the traditional venture capital industry. This could be friends and family, angel investors, crowdfunding, venture debt, credit cards, asset backed loans (e.g., securing inventory, equipment, real estate), revenue share loans, home equity loans, etc. Time to pull up your bootstraps and get creative in your potential funding paths. But focus on equity investments, if you can. If you go down the debt path in a down market, it could end up being the noose around your neck, tightening with each month that passes.

Step 5: Think Out of the Box

If the venture capital market is closed based on a flight to higher quality investments, maybe the private equity market is still open for larger businesses raising capital. Maybe consider rolling up a bunch of companies into one bigger business that is more of the size that private equity investors like. For example, the VC’s may not have liked your $1MM profit business, but if you merge with four of your same-sized competitors, the PE investors may like your $5MM profit rolled-up business. There are creative ways to enable those “mergers” in a cash-free way, based on pro rata revenues or profits, and then help those additional shareholders get an exit down the road, when raising PE capital. Roll-ups are a pretty complicated topic, so get some help if you decide to pursue this path. This article I wrote about roll-ups may help you.

Closing Thoughts

When the venture capital markets close, it is critical to take actions like the above to ensure that your business does not close, permanently! Make the tough decisions now, to live and fight another day. Your current shareholders and future version of your business, built for the years that follow, will thank you.

For future posts, please follow me on Twitter at: @georgedeeb.

Firing a Long-Term Employee is Hard — But Often Necessary. Here's Why.

 

I consulted a client that had to do something they had never done before—they had to cut a long-term employee that had been with the company for over 5 years.  Once an employee has been with a company for that length of time, they have basically become “family”, so that is the equivalent of cutting your “brother or sister.”  And, most employees that get to 5 years of service, must have been doing something right during their employment, otherwise they wouldn’t have lasted that long.  But, things can change.  And, in this case, the employee no longer was a high performer, they had quickly become a poor performer, and that was causing broader challenges for the business, as described below.  This post will teach you how to handle situations like these, and why cutting your “brother or sister” may be the only option you have.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.

[VIDEO] How to Define What is an Entrepreneur?

I was recently interviewed by ASBN, an online "television network" serving the small business community, about how to define what exactly is an entrepreneur.  As you will learn, it comes down to being a leader, a visionary, a risk taker, a pitbull and a superhero.  I thought this video turned out great, and I wanted to share it with all of you, to see if you have what it takes to be a successful entrepreneur.  I hope you like it!!

The embedded video player didn't give me the option to change the size of this video.  But, if you want to see a bigger version, simply click the expand size button in the player above.

Thanks again to Jim Fitzpatrick, Shyann Malone and the ASBN team for having me on the show.  I look forward to our next interview together.

For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #359: How to Cut Dead Weight Out of Your Business

 

In business, you need to be running as efficiently as possible.  But, I have seen many businesses carrying a lot of “dead weight”, which is holding them back.  Some of that dead weight are smaller things, like being overstaffed or spending too much for services.  Or, poorly investing their sales and marketing dollars.  And, some of that dead weight is pretty material, like operating too many divisions or focusing on channels that don’t have a material payback.  This post will help you learn how to identify the various types of dead weight, so you can assess your business and see if there is any pruning to be done.

Strategic Dead Weight

Strategic dead weight is building a strategy plan that has you focusing in areas that the business really shouldn’t be focused on, investing resources in a way that is either not driving an ROI or it has become a distraction to more profitable areas of the business.  This could be things like supporting too many brands or divisions, or too many products, or too many sales channels, collectively taking focus away from the real core competency or most profitable product line of the business.

Operating Dead Weight

Operating dead weight is basically running the business inefficiently.  That could be having a staff that is too large in relation to the true business needs, or renting an office that is larger than you truly need, or paying more for services than is truly market rate, or worse, paying for services you really aren’t using at all.  Every penny matters in early-stage businesses, and ineffectively investing your precious cash resources means you are flushing dollars down the toilet that couldn’t have been better invested in other higher ROI activities.

Sales and Marketing Dead Weight

Sales and marketing dead weight, is investing your payroll dollars into salespeople that are not driving enough sales to hit their goals (or at least cover their costs) or investing your advertising dollars into campaigns that are not driving a profitable return on ad spend (ROAS). You need to be religiously studying your sales team’s performance and your advertising team/agency’s performance to ensure they are hitting their goals.  And, not only in the aggregate, but line-by-line for each specific campaign, to optimize and prune accordingly.  You always need to be cutting your “losers” and re-investing those dollars to “double down” on your “winners”.

A Strategic Case Study

As a strategic example, when we acquired my current business, it was operating two brands, Restaurant Furniture Plus, targeting commercial buyers, and Your Bar Stool Store, targeting residential consumers.  When running two of anything, that meant double the effort.  We needed to build and maintain two different websites and two-different marketing campaigns, as an example.  When we studied the financials by brand, we learned that Your Bar Stool Store was driving around 20% of the revenues, but only 5% of the gross profits, as its average order size was only $2,000 compared to $6,000 at Restaurant Furniture Plus.  And, there were material operating inefficiencies with serving the consumer market, which often resulted in a lot more phone calls to answer and a lot more claims and returns, which created a lot of extra work.  At the end of the day, Your Bar Stool Store was break even at best.

We decided to shut down Your Bar Stool Store, the original brand of the company, to help us cut our “dead weight”.  It helped us increase our strategic focus on more profitable commercial buyers, it helped materially improve operating efficiencies, and most importantly, it helped us re-invest those marketing dollars into the higher performing commercial business to materially accelerate our revenues and profits.  The “sacred cow” of the founders was sacrificed, to help propel the “better business” to newer heights.

Closing Thoughts

Small businesses cannot afford to be carrying any dead weight. They need to be nimble for maximum speed, and laser focused on what will drive the most profits.   Any things that get in the way of that goal, need to be sacrificed for the greater good, no matter how much you like that “sacred cow”.  It may result in some short term pain, but trust me, the long term gains in focus, efficiencies and profits will quickly mend those wounds.  So, what are you waiting for?  It is time to take out your magnifying glasses and start scouring for any dead weight in your business.  And then, take out your hatchets for larger inefficiencies, or scalpels for smaller inefficiencies, and start cutting away.  Your bottom line profits will thank you!!

For future posts, please follow me on Twitter: @georgedeeb.

Lesson #358: Revenues Lost is More Important to Measure Than Revenues Won

Revenues, and resulting profits therefrom, is often the primary metric that businesses use to measure their success.  I would argue there is an even better metric to measure, which is “lost revenues”.  What revenues did you lose during the course of the year, and what were the specific reasons you lost those customers?  Why do I say this; because you typically close 20% of your leads and lose 80% of your leads?  If you can figure out how to reduce that 80%, you can materially grow and accelerate the 20%.  And, increasing your conversion rate by 10 percentage points, is the equivalent of increasing your revenues by 50%!!  This post will help you figure out how to best define and measure your potential reasons for lost revenues, to help you get your arms around how to best lower that amount.

What Are the Typical Reasons for Lost Revenues

There is a wide range of reasons for losing revenues.  Some are related to your company, including your product, pricing, sales and marketing efforts.  Some are related to your buyer’s company, including having management approval and budgets in place.  Some are related to individuals involved in a transaction, including your salesperson, the buyer at your customer’s company or some other middlemen that may be involved.  And, some are related to other outside factors, including competition and economic conditions.  The key is figuring out which of these is the exact reason you lost each sale, documenting those reasons in such in a way you can build reports to learn from, and putting action plans in place to address each of these hurdles, to remove those constraints from your future sales efforts.

Issues Related to Your Company

Remember the four P’s of marketing you learned in business school—product, price, promotion and place?  Each one of those are variables in whether or not someone will buy from you, or they will look for solutions elsewhere.  So, you need to do lots of research here?  Ask your customers what they do and don’t like about your product.  Lean into the positives in your marketing messaging and fix the negatives and try again.  Test the elasticity of demand by changing your pricing and seeing at what price the most revenues are created.  Test different marketing messages, to see what offers resonate the most in terms of driving conversions.  And, make sure your products can be discovered at any and all places a customer may be looking for them.

Issues Related to the Buyer’s Company

The largest issues at the buyer’s company are whether or not they have the management approval to proceed, with an established pre-approved budget in place.  No matter how much a junior level staff member wants to purchase something, if their bosses won’t let them or they do not have enough funds in place to purchase your product, they won’t and can’t.  So, as you are going through the sale process, make sure you ask these very important questions—who are the key decision makers involved here, and have budgets been approved?  Then, you can work the decision makers to get them sold on the idea, and know you won’t be wasting your time on projects that don’t have a cash budget in place to afford the purchase.

Issues Related to Individuals Involved

Like the band Depeche Mode said, “People Are People”.  You may not get the sale because of the specific people involved.  Maybe your salesperson is not very good, and needs training?  Maybe your client has personality conflicts with your salesperson, and doesn’t want to work with them?  Maybe you are working with a middleman, like a design agency, and the designer is just using you for ideas and doesn’t really have a contract in place with the client yet.  It could be a myriad of reasons like this.  So, make sure you have a firm handle on the “people issues” of the persons involved in the transaction, and maybe try selling into other people at the same target company that are more open to a transaction with your business.

Issues Related to External Factors

Sometimes you are not getting the sale because of external factors that are out of your control?  Maybe your big competitor just dropped their prices, and you didn’t react quickly enough.  Or, maybe the economy is soft, and buyers are just nervous about making a big discretionary purchase right now.  Maybe your product is seasonal or cyclical, and people just aren’t going to buy snow shovels in July, or voting booths in non-election years.  Or, maybe government regulations are getting in the way (e.g., they won’t purchase your product because it is made in China with high tariffs incurred)?  So do whatever you need to do, to track these external drivers, and have a message that best resonates with your customers despite whatever hurdles are presented in the market.

What Needs to Be Measured Here?

You pretty much need to be measuring every single thing that was discussed above in this post.  Are you tracking the success of your marketing campaigns, A/B testing with different offers and creatives?  Are you measuring the success of your various salespeople, and cross fertilizing best practices and weeding out underperformers?  Are your tracking your competitors’ moves?  Are you asking the right questions of your customers that didn’t purchase from you, as to the specific reasons they didn’t purchase from you?  You will be amazed how much intelligence can be gleaned from your customers by simply asking them the question.  And like with anything else in business, you can’t manage what you are not measuring, so make sure you have reports that measure all of the above “lost revenue” drivers, so you can see “no” turning to “yes” more frequently through higher conversion rates over time.

Closing Thoughts

Hopefully, you now have a better understanding on why it is so important to focus on the reasons behind the 80% of sales you lost, instead of celebrating the 20% of sales you won.  If you focus on the 80% of lost revenues, you may be able to increase your win rate from 20% to 40% and double your sales in the process.  Good luck!!

For future posts, please follow me on Twitter at: @georgedeeb.

[VIDEO] What Milestones Should Your Startup Track?

I was recently interviewed by ASBN, an online "television network" serving the small business community, about what key milestones a startup should track as it is getting its business off the ground.  As you will learn, you can manage what you are not measuring, and these milestones will help you set the proof-points that will impress prospective investors.  I thought this video turned out great, and I wanted to share it with all of you, to make sure you are defining the key milestones and metrics for your busines.  I hope you like it!!

The embedded video player didn't give me the option to change the size of this video.  But, if you want to see a bigger version, simply click the expand size button in the player above.

Thanks again to Jim Fitzpatrick, Shyann Malone and the ASBN team for having me on the show.  I look forward to our next interview together.

For future posts, please follow me on Twitter at: @georgedeeb.

The 5 Steps to Survive a Difficult Funding Environment

CB Insights, a leading research organization that tracks venture capital financings, recently released its report on the state of the venture capital market in 2023 and, most recently, the fourth quarter of 2023.  Long story short, it was a terrible year for raising capital. The global market was down 30% year-over-year to its lowest levels in six years. The U.S. market fell to its lowest levels in 10 years, down 21% in the last quarter alone. Gone are the days of "unicorn" creation (companies worth more than $1 billion), mega-sized financings, and excessive valuations.  And, investors simply can’t exit the investments they have already made, with an anemic IPO market.  A pretty bleak picture if you are a startup raising capital today.  So, what are you supposed to do to navigate these choppy waters?  Buckle up and read on, for some useful tips based on my past experience surviving markets like these.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.

Dead Weight Expenses Are Costing Your Business

 

In business, managing with a steady eye on efficiency is pivotal, of course, yet I have seen a great many operations carrying unrecognized burdens — from being overstaffed to spending too much for services, from poorly investing sales and marketing dollars and operating too many divisions to focusing on channels that don't have a material payback.  This post will help you assess your own enterprise — particularly with respect to growth prospects — in order to determine if there's pruning to be done.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.

Lessons in Leadership: A Jim Harbaugh Case Study

 

I am a graduate of the University of Michigan and lived through the roller coaster ride of the Jim Harbaugh era in Ann Arbor, which has recently come to an end with him returning to the NFL after winning the national championship at Michigan.  But, the last nine years has provided many nuggets for entrepreneurs to learn from, in terms of how to approach leadership.  This article summarizes the best of those leadership lessons to potentially apply in your businesses.

A Quick History

Michigan football is the winningest program in college football history, with a rich tradition of excellence and a rabid fan base that expect nothing less than winning championships every year.  But, when head coach Lloyd Carr retired after the 2007 season, nobody expected it would be followed by the lackluster coaching tenures of Rich Rodriguez and Brady Hoke between 2008 and 2014.  This had Michigan fans even hungrier to restore its championship ways.  And, who better to call on to "right the ship" than Jim Harbaugh, a true "Michigan Man", a beloved Bo Schembechler disciple and former Michigan star quarterback, that had realized head coaching success everywhere he had been (e.g., San Diego, Stanford, San Francisco 49'ers).  Jim Harbaugh agreed to take the reins of Michigan football starting in the 2015 season to "save" his beloved alma mater and return Michigan to greatness.

The first five years of Harbaugh's tenure as Michigan head coach were "ho hum" based on Michigan's goals.  He won 8-10 games in each of those years.  But that meant there were 3-5 losses in those years, and the losses were usually on the biggest stage, losing to ranked teams, in bowl games or to Michigan's arch rival Ohio State.  The fans were most panicked after the 2000 season (COVID year), when the team went 2-4 and people we calling for Harbaugh's firing.  But, the athletic director stood behind Harbaugh, they restructured his contract in light of poor performance, Harbaugh retooled the program, and then magic happened.  In the following three seasons, Michigan's record was 40-3, they beat archrival Ohio State in each of those years, they won three straight Big Ten championships and capped it off in 2023 with a 15-0 season and winning the national championship on the biggest stage.  Michigan had finally returned to being an elite program, and the fan base was beyond ecstatic.  After the season, Harbaugh decided to pursue his dream of winning a Super Bowl, and returned to the NFL as head coach of the Los Angeles Chargers.

Now, here are the resulting leadership lessons that come from this story:

Your Strategy Really Matters

When Harbaugh got started, he was talked into trying more of a spread-style offense, with speed in space, which was what the better teams were employing at the time.  But, with all the big bodies of the Big Ten, they simply weren't winning the battle in the trenches on the offensive and defensive lines.  It wasn't until Harbaugh reverted back to his "tried and true", "smash mouth" style of playing football, that he truly started to excel.  That wasn't a popular strategy, with slow style of play resulting in "three yards and a cloud of dust", but it was a strategy Harbaugh knew well and succeeded with in the past.  So, he pushed in all his chips, doubled down on that strategy, and the wins started to follow.  So, like with anything, do what you know and think is best, regardless of whatever "noise" would suggest otherwise.

Your Management Team Really Matters.  

Harbaugh cycled through a bunch of assistant coaches during his tenure.  It wasn't until he tapped into the defensive schemes used in the NFL, by his brother John Harbaugh at the Baltimore Ravens, that good things started to happen for Michigan. Harbaugh hired two defensive coordinators out of the Ravens, Mike McDonald and Jesse Minter, and those guys helped to turn Michigan's defense into the #1 defense in all of college football, in multiple years.   And, that doesn't even talk about adding in world class strengh and conditioning, and nutritional coaches, as Harbaugh knew those areas were just as important to success as learning the playbook.  So, surround yourself by the best people possible.

Your Employees (Players) Really Matter--Win The Recruiting Battle

When Harbaugh got started, he did everything he could to stand out with recruits and push the envelope within the rules of the NCAA.  He would set up satellite football camps in other states that were recruiting hotbeds, with the logic if they won't come to visit Michigan, we will bring Michigan to them (which irritated the competiting football programs in those states).  He would take his team on big international team building trips (to give the players more than a football experience at Michigan).  He would have dinners and sleepovers at recruits' houses, to show those families how important that recruit was to him.  He launched a documentary about the Michigan football team on Amazon Prime, to get the program more media exposure nationwide, with an "inside look" at how business is done in Ann Arbor.  He may have gathered a lot of strange looks along the way, but there was clearly a method to his madness. Figure out what you need to do to attract the best talent, and stand out from your competitors.

Your Employees (Players) Really Matter--Recruit the Right People

Equally important was recruiting the right type of player.  Harbaugh was critcized for not recruiting enough five-star players.  But to him, it was more about the character of the person he was recruiting, knowing he would "coach up" a three or four-star player, into a "five-star" NFL prospect.  He wanted the guys that were underappreciated, had a chip on their shoulder, had a lot of hurdles they overcame.  He wanted that drive and mindset, as you can't teach that.  So, when the going gets tough, he would have a tough-minded team that would get going, driven to succeed no matter what challenges they were presented with.  And it worked, as evidenced by this year's Rose Bowl, when Michigan's 2 five-star players beat Alabama's 18 five-star players.  So, make sure your hires fit your desired culture, as you can't afford to have any "bad apples" in the bushel.

Your Team Culture Really Matters

I have watched over 40 years of Michigan football, and I have never seen a "team first" culture like this year's team.  They all had the singular goal of winning a national championship (after getting so close the previous two years), they knew they all needed to do their part on the field and in the weightroom, they all truly loved and inspired each other, and they were all "selfless".  Quarterback J.J. McCarthy sacrificied individual passing stats, if the coaches thought Michigan's vaunted running game would win the game.  Back-up running back Donovan Edwards, who could have easily started at any other school, was happy to play second string behind Blake Corum, if the coaches thought that would help them win the game.  Culture is one of the hardest things to build, and Harbaugh masterfully built his. You need to do the same.

Patience Is a Virtue

It would have been very easy for Athletic Director, Warde Manuel, to cut ties with Harbaugh after their dismal season in 2020.  But, Manuel believed in Harbaugh, and was willing to give him another chance.  It may have taken 9 seasons instead of 5 seasons to win a national championship, but Harbaugh ultimately delivered on the goal of restoring Michigan to greatness.  So, when making your hiring and firing decisions, be sure not to throw out "the baby with the bathwater".

Sometimes You Need to Eat "Humble Pie"

You have to know that Harbaugh was frustrated with his performance in 2020.  He was hired to restore the Michigan brand as one of the elites.  He wanted that more than anybody.  But, Harbaugh was willing to make the hard sacrifices.  He voluntarily cut his lofty salary in half, and made it more of a pay-for-performance structure, where the better the team did, the higher he got paid.  And, he pushed more of the team's salary budget, into the hands of his assistant coaches to increase their rewards for their hard work.  And, during COVID, even took personal monies to save certain staffers from getting fired.  That was not normal actions in the egomaniacal world of college football coaching.  But, these actions all instilled trust with the adminstration and loyalty by his team.  What can you do for your teams, to replicate this level of trust and loyalty to you?

Don't Publicly Disclose Your Actions Unless You Have To

The one big criticism of Harbaugh was his perennial flirtation with the NFL.  In 2022, it was with the Minnesota Vikings.  In 2023, it was with the Denver Broncos.  In 2024, it was with the LA Chargers who ultimately hired Harbaugh. Even if Harbaugh's intent was to create negotiating leverage for his contract renewal with the University of Michigan, you don't do it publically in the media, for all the current players, coaches and recruits to see.  It doesn't create a sense of stability, and would naturally have everyone looking for the door, especially with rival coaches fueling that messaging in their recruiting pitches.  Which is part of the reason Michigan's recruiting class ranks suffered.  So, keep your cards close to your chest any time your actions could have a negative impact on the team.

Timing Is Everything

If Harbaugh had left Michigan after his disastrous 2020 season, his reputation would have been permanently stained.  It would have been his first real failure, and his reputation with the university he loves, would have gone from beloved Michigan Man to a pariah.  But, by righting the ship, and leaving after winning the national championship, all is good with the world.  Harbaugh accomplished his goals, the fans are euphoric and he will be fondly remembered as the man that "saved" Michigan football.  And, even if he wants to go scratch that itch of coaching in the NFL and leaves Michigan, sobeit, we wish you the best.  In three short years, Harbaugh legacy evolved from "loser" to "legend".  And let's be real, there is only one way to go when you are at the top, and it was unlikely for Michigan to have another undefeated season in 2024 with top ten programs like Texas, Washington, Oregon, USC and Ohio State on the schedule, in the wake of four Pac-12 teams joining the Big Ten next season.  Timing is a critical compotent to your success and reputation, so use it wisely in your own efforts.

If It Isn't Broken, Don't Fix It

On the heels of Michigan's first national championship since 1997, losing your head football is not what an athletic director wants to deal with.  But, Manuel's actions were swift, and rightfully so.  He promoted Offensive Coordinator, Sherrone Moore, to head coach. Why?  Firstly, because Harbaugh said he was the next guy to carry the torch, and Manuel trusted Harbaugh's opinion.  But, more importantly, the players loved him, and he would maintain Michigan's very unique culture going forward, hopefully giving the team increased odds for additional championships in the future with a "winning recipe" in hand.  And, everyone remembers Moore's success filling in for a Harbaugh during his three-game suspension last season (for the sign stealing scandal), winning all three games against Michigan's three toughest opponents that year (Penn State, Maryland and Ohio State).  So, he was a known entity.  Could Michigan have hired a big name coach out of another program? Sure, it could have.  But, it would have risked toppling the entire apple cart in the process.

Closing Thoughts

Thank you Coach Harbaugh for everything you accomplished during your tenure at Michigan, you exceeded everyone's goals with three straight wins over OSU, three straight Big Ten titles, three straight trips to the College Football Playoff, and a national championship this year.  It may have taken you a couple extra years, but you ultimately did it.  The Michigan fan base wishes you nothing but success in Los Angeles.  And, for all you small business owners out there, see if you can apply any of these leadership lessons in your businesses. Go Blue!

For future posts, please follow me on Twitter at: @georgedeeb.

[VIDEO] How Passion Drives Entrepreneurial Success

I was recently interviewed by ASBN, an online "television network" serving the small business community, about how passion is a key driver of entrepreneurial success.  As you will learn, without passion and a true love of what you are building, it will be very hard to get your business to succeed, especially through the bad times.  I thought this video turned out great, and I wanted to share it with all of you, to make sure you are doing all the right things to instill a passion for the business in all of your employees.  I hope you like it!!

The embedded video player didn't give me the option to change the size of this video.  But, if you want to see a bigger version, simply click the expand size button in the player above.

Thanks again to Jim Fitzpatrick and the ASBN team for having me on the show.  I look forward to our next interview together.

For future posts, please follow me on Twitter at: @georgedeeb.

Increasing Conversion Rates Can Materially Boost Revenues

It's common to close approximately 20% of leads and lose 80%. What's frequently overlooked in the search for growth, however, is that increasing that conversion rate by just 10 percentage points can be the equivalent of increasing revenues by no less than 50%. That's why, in my experience, a rigorous analysis of lost opportunities is among the most pivotal steps to consider when a change in strategy is needed.

Some missed sales are directly related to the selling company, including the product and its pricing and marketing. Some are related to buyers' companies, including having management approval and budgets in place. Some are related to individuals involved in a transaction, including salespeople, the buyer at a customer's company or some other middlemen. Finally, some are related to entirely external factors, including competition and economic conditions. The key is figuring out which of these is/are the reason you lost each opportunity, and then putting detailed actions into place to address each.

Read the rest of this post on Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.