Do You Take Money off the Table?

Introduction:

This week, Shawn Busse, Paul Downs, and Jay Goltz discuss their philosophies about taking money off the table vs. reinvesting it in the business. Of course, you can’t take money off the table unless there’s money on the table. Paul tells us that he once calculated his average earnings for his first 22 years in business and they came to about $11 an hour. But he now expects to make more money in the next five years than he did in the previous 35. We also talk about content marketing, direct mail, and trade shows. Plus: Was the Paycheck Protection Program, despite the billions of dollars in fraud, a success?

— Loren Feldman

Guests:

Paul Downs is founder of Paul Downs Cabinetmakers.

Shawn Busse is co-founder and CEO of Kinesis.

Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Full Episode Transcript:

Loren Feldman:
Welcome Shawn, Paul, and Jay. Thanks for being here. We talk a lot here about how you guys handle your business finances. Today, I want to talk a little about how you handle your personal finances. You don’t have to tell us your net worth—although if you’d like to, you can—but I guess I would start here. Has it been your goal as you built your businesses to try to take money out of the business and invest it elsewhere? Or have you been putting everything that you have into the company? Shawn, maybe I’ll start with you. What has your philosophy been?

Shawn Busse:
Gosh, I’ve largely had the philosophy of—at least for the last 10 years or so—to try to build the business to work without me in it as kind of the guy. And so I’ve tried to build it so that I pay myself a market-based wage, so that if someday I needed to hire a CEO, the structure would work for that. So that’s kind of like the first layer of that.

And then I also tried to build the business in a way so that it puts off a healthy net income so that it’s attractive, when I decide to exit, to the next generation, whatever that is. Ideally, that becomes an employee acquisition, and so it puts off cash. Generally I’ve put the cash back into the business, and have just built up pretty strong cash reserves so that I could take advantage of opportunities or withstand downturns and largely have not put a lot into other investments until maybe the last couple years or so.

Loren Feldman:
What prompted that?

Shawn Busse:
The investments outside of the business?

Loren Feldman:
Yeah.

Shawn Busse:
I’ve done some stuff with real estate on the residential level, and it’s been pretty successful. And then I just have a personal passion to build and make things, so it gives me the opportunity to do that. It’s really more of that than anything. I mean, a really well-run small business, I think, is one of the best returns on your investment possible—if you’re running it well.

Loren Feldman:
That, of course, is true. But it also, for a lot of people, can amount to putting all your eggs in one basket, which is kind of the reason I’m bringing this up. Paul, how about you? You’ve spoken very openly about the ups and downs of your business. What has your thinking been along the way with regards to this?

Paul Downs:
I always wanted to make some money and, independent of the business, sort of build up assets besides the business, because the business itself probably didn’t have much value for most of its existence. And so in the last 10 years, I’ve—well, the first 20 years of the business were basically just surviving. And I think I calculated out once, prior to a talk I was giving, that in the first 22 years of the business, my earnings averaged about 11 bucks an hour. So at the end of that period, which ended more or less at the end of the recession, I had not built much personal wealth, other than having some home equity.

And then I got my act together. And now I have more personal wealth, paid off the house, and built up cash savings and retirement accounts. And I have a net worth on paper. If you include the business, it’s about $3 million. If you don’t include the business, it’s maybe one and a half million, which in the company I keep, is not very impressive. A lot of small businesses are just more profitable. But for a woodworker, it’s pretty damn good. So I don’t know how to score that. And I try to pay myself a reasonable income, and my wife and I live fairly cheaply. So we’re saving a reasonable amount of cash every year and we throw it in the stock market and it grows.

And I think that that should be a goal of business owners: To pay themselves and to have something for their efforts, even if the business itself isn’t going well. I’ve been through the period of putting everything back in the business, and it always felt bad to me to not be able to pay out whatever profit there was or to have to loan back money to cover losses. And I’m much, much happier now. My basic target for a year’s income is a quarter million dollars in salary and then whatever comes in on top of that. So for a $4 million-a-year business, I think that’s okay-ish—although I know other people at other kinds of operations who, with $4 million dollars of revenue, take home a lot more money than I do. You tell me whether it’s good or bad. I just gave you the facts.

Loren Feldman:
Jay, how about you? What’s your philosophy?

Jay Goltz:
Well, I laughed at a couple of words. You said, “What’s your philosophy?” Like, it’s not just philosophy. It’s a question of what you can do.

Loren Feldman:
Sure.

Jay Goltz:
I’ve grown 11 percent a year on the average. Some years were 30 percent in the old days, and then some years were negative 10. But growing the way I grew for the last 43 years—and I have an inventory business—so it just sucked up between the inventories and buying buildings and paying down mortgages, up until not long ago, I had zero outside of the business. It just sucked it up. And then I finally realized that—this is counterintuitive to the way most people think, but I believe this is smart business—the goal of paying off your mortgage might sound like a noble goal, but in business, that really doesn’t mathematically make any sense. Real estate doesn’t really work with no mortgage on it.

Loren Feldman:
Wait, are you talking about paying off your mortgage on your—

Jay Goltz:
All. Business, personal, anything. Well, my house I did pay off just because. That’s kind of where I drew the line. Though I wouldn’t argue with somebody if they said, “That’s stupid, you can borrow.” Well, up until lately, you could have borrowed at 3 percent and made 7-8 percent on it. But in business, I take out mortgages now, but they’re very conservative mortgages. They’re 50 percent of value versus 70 percent. And as a result, now I’ve got money in the stock market.

A lot of my net worth is in the business. I’ve got real estate. I have a stock market account. And I’ve got life insurance, and I think that’s an important part of the mix. So I’m feeling good about where I’m at today. But I would have had a very different answer if you asked me even five years ago. I had no cash.

And I realized it’s because I was taking all my cash and paying down the mortgages, and it’s not a good use of cash. If you can borrow money at 4 percent, and you can make 8-9 percent in the stock market, you’re effectively losing 5 percent. And that adds up to a gazillion dollars over 20-30 years.

Loren Feldman:
Looking back, would you do it differently, if you had it to do over again? You said the business sucked it up. Did you put that money into the business because it had to go there? Or do you think there was another option?

Jay Goltz:
No, I can tell you, there are lots of things I would do differently in hindsight. But in that one, it’s like, it is what it is. I mean, you can’t grow without putting money back. Usually, in my kind of business, you can’t grow without increasing your inventory. I’ve got receivables on my wholesale business. It goes with the territory.

Loren Feldman:
You also, in buying those buildings—I gather you bought them through the business?

Jay Goltz:
No, no, you always buy it personally and rent it back.

Loren Feldman:
Okay, so you did have money elsewhere. If the business had failed, you had real estate.

Jay Goltz:
For sure. Absolutely. But when it comes down to cash, there was no cash.

Loren Feldman:
But your eggs weren’t all in one basket.

Paul Downs:
No, you decided to invest in real estate. You just decided to inhabit it too.

Jay Goltz:
I mean, I needed it for my business, so it worked out. Most of the risk in real estate is having a good tenant. If you’re your own tenant, it’s kind of a no-brainer. So I can’t say that I ever sat there and thought, “Oh, here’s what I’m going to do: I’m going to start buying buildings and then when I’m in my 60’s, they’ll be worth a lot of money.” I just did it because I needed to do it.

And then I was actually quite surprised when I woke up one day and realized that, “Yeah, that worked out really well.” I tell people, “If you can buy the building you’re in, if you can buy the real estate that you’re going to have as your business for the next 20-30 years, it’s something one should think about.” And I can’t say enough about the SBA loans. I mean, 10 percent down. You talk about return on investment? Phenomenal. You get a 90 percent mortgage on a building and you’re paying yourself market rent, the return on investment is phenomenal.

Loren Feldman:
Jay, you put three kids through college. Did you ever have a college fund?

Jay Goltz:
No, and I can remember like yesterday, I was sitting there at dinner with one of my neighbors who went into the family business. My kids were probably 10 or 12, and he goes, “Well, I’m sure you’ve got your kids’ college education paid for.” And I said, “Nope, not a dime.” And I just said to myself, “Boy, he has no clue what it’s like in the real world when you start a business from zero. He just assumes that everybody’s got their kids’ college paid for.” And I made it. By the time the kids got to college, I had cash in the checking account to pay, but I didn’t even have it a year before. I mean, I made it, but…

Shawn Busse:
That’s such a thing that a lot of people don’t understand about small business owners. I mean, Paul’s story is kind of like my story, too. It was well after the recession before I had even a dime in retirement. And so I was in my late 40’s, which is not when you should start investing in your retirement. So I think that’s really difficult, because there’s so much deferred reward, as a small business owner. It’s not a linear thing like most employees experience, in terms of their career gradually growing over time. Ideally, it’s a geometric thing, where it starts to really climb in your later years. But those early years are really difficult, if you’re bootstrapping.

Paul Downs:
Yeah, I’m looking at, I’m going to be 60 In two weeks, and [in] the next five years, I should make more money than the preceding 35. That would be my guess.

Jay Goltz:
And that’s not uncommon. I mean, even Warren Buffett, no one knew who he was when he was 50 years old. He didn’t get to the major, big numbers until his 50’s, I believe. That’s not uncommon, especially if it takes 20 years to get momentum sometimes.

Shawn Busse:
I think that just the one last piece of insight I have is, some years ago, I went to a seminar on finance, and the guy leading it—a guy by the name of Greg Crabtree—said, “What could you make if you were an employee in the market today? What are you paying yourself? Subtract that. Just imagine at the end of the year, you write that check to the company, because that’s really what you’re doing. And you’ve got to know there’s a time when that number should inverse. And if you don’t see that happening, then you have a hobby. You actually don’t even have a business. That was a powerful moment for me, because I, like Paul, made like $30,000 forever. And you just can’t sustain that. And it just kind of took a wake up call.

Jay Goltz:
And I can tell you one of the problems is, the reason that happens—and I’ve been there myself—they’re afraid to charge more. I mean, if you asked me, “What was my number one mistake?” There’s no question. I was growing at 30 percent a year, and I had like a 3 percent bottom line. That makes no sense. I should have just raised prices 5 percent. The growth would have slowed down a little bit, and I would have had a decent bottom line. And like, you always rationalize in the beginning, “Oh, well, I’m just starting it.” No, you should charge what you’re worth. And people are afraid to do that. Including me.

Shawn Busse:
Mhmm, I’d say that’s pretty universal in the businesses I meet that are early-stage.

Paul Downs:
Well, early-stage, you may not be worth it.

Jay Goltz:
Right.

Shawn Busse:
There’s truth in that, too.

Paul Downs:
No, I think back to the first people who hired me, it was like, “Why did they do that? I didn’t know what I was doing, and I looked like an idiot.” [Laughter]

Shawn Busse:
Shh, don’t tell anybody that. That’s our secret.

Paul Downs:
It’s water under the bridge. They’re all dead now, all those clients.

Jay Goltz:
But you had nothing to do with it. I just want to be clear.

Paul Downs:
No, but I’ve gotta say, I’ve seen pictures of myself in my 20’s, and I’m like, “This is not a good look.” And how do you walk away from these meetings with a check? I guess I’m brilliant.

Shawn Busse:
I started my business when the internet was nascent. You couldn’t just get on YouTube and learn things, right? And that was even more true for Jay and Paul and my dad. I think about him, and I’m like, “How did he ever get a business off the ground?” And I just think that the access to information now is so much more widespread. Even this podcast, right? So the mistake that I’ve made—

Loren Feldman:
Especially this podcast.

Shawn Busse:
Especially this podcast.

Jay Goltz:
Wait, we’re on a podcast?

Paul Downs:
If you don’t mind, I would like to tell the story of sort of my doppelgänger, which is somebody who started off in small business and has been incredibly successful at an early age and built significant wealth. But the thing about him is, his family was all entrepreneurs. And they had a total culture of identifying all of the kids in the next generations, like which ones were going to be capable of being entrepreneurs.

And my friend was picked out. His parents helped him buy a liquor store at age 18, and a Dunkin’ Donuts franchise, and he ran those successfully. Then he started his own business that does business valuations for SBA loans. That’s been incredibly successful. And he had advice and support from day one.

So in my mind, advice and support—good advice and good support—are critical to making that change from just struggling to succeeding. And that’s what happened to me. The turning point for me was actually, Loren, writing to you and all of a sudden getting hooked into a world of people who could give me help. And I had just floundered around for decades before that on my own, without really figuring out how to get help. And so one of the critical things I would say is, if you want to turn a small business that may just be a lifestyle business into something that’s an actual asset, go ahead and get some help. That makes all the difference.

Shawn Busse:
As usual, Paul said something way more succinctly and accurately than I did. It’s just like, my younger self didn’t know to ask, and I didn’t know where to go. And I spent a decade just kind of making mistakes and floundering around, and I finally got some help. And it was amazing what a difference it made.

Jay Goltz:
And I’m telling you the difference in our ages—even six years between Paul and I—I’m telling you there was nowhere to go, because I didn’t find anywhere. And I tried. I went and hired a consultant, and I went to SCORE, and I’d go to seminars. And I’ve gotta tell you, I got very little out of it. And to this day, I’ve never really had a mentor. I don’t want to brag, but as I’ve said before, I think I’ve made every mistake you can make. But I’ve learned from them. But it wasn’t the efficient way of doing it. That’s for sure.

Paul Downs:
Well, part of the problem is that the society that you were reaching out to wasn’t prepared to help you. All those guys from SCORE probably spent 40 years at IBM or something.

Jay Goltz:
Yeah, that’s what the problem was. They were executives. They weren’t entrepreneurs.

Loren Feldman:
And that’s what the name was. The “R” and the “E” in SCORE are—

Paul Downs:
Senior retired executives.

Jay Goltz:
Right.

Paul Downs:
And when I started, it was a version of the same thing, except that the industry I was in—the so-called industry of tiny little woodworking shops—the median shop owner is actively hostile to anybody asking them for help, because the median woodworker is convinced that people are trying to steal something from them.

And this is not a fair characterization, but it’s an accurate characterization. This is a group of people who are self-selected to be sort of loners and want to be in their shop. When you ran into someone, it was pretty likely that you would not get any help from the community. It was only when I found a way to connect to a different community of different kinds of business owners that I started getting real advice and help that was useful to me.

Jay Goltz:
Now while we’re still on finance, I do want to highlight something I just found out in the last couple of years. There are four or five ways of getting money. The most expensive one is those ads you see for, “No problem! We don’t need your FICO score. We do other stuff.” And they give you money for six months. If you did the math, you’ll find out the interest rate you’re paying is about 80 percent.

Then there are the finance companies. They’re all over the place. Then you go to the bank right now, so maybe the bank loan is 5 percent. Then you can do a second mortgage on your house, which will probably be cheaper. That might be 4 percent. And then there’s borrowing against your stock portfolio, which is unbelievably cheap. Maybe it’s 2 percent, two and a half percent.

Loren Feldman:
Of course, you have to have a stock portfolio.

Jay Goltz:
Yeah, I know. I’m just saying, if you can get to that point, that is good to know. And I never knew that. So I will never have a bank line again. Because I will borrow against my stock portfolio for half the price.

Paul Downs:
Before we start talking about stocks, let’s acknowledge that the period between 2008 and 2021 was pretty much the biggest bull market ever. So if you had money in at the beginning of that, you got a huge reward. And I’m not sure there’s a guarantee that that’s going to continue in the future.

Loren Feldman:
When you look back, do you think you would do things differently, if you had it to do over again, just in terms of how you managed the money that you did make?

Jay Goltz:
I don’t think I would. You know, it worked. I didn’t have a bank account. But I didn’t need it.

Paul Downs:
Yeah, I wouldn’t have done anything differently because I’m a cheapskate. After 2010, I was making more than I was spending. And that’s just about as sophisticated as I am financially.

Jay Goltz:
That’s a bad philosophy, I think. Spending more than you make.

Paul Downs:
Well, there are guys like Jay, and I know a lot of people who are borrowing against their stock portfolios, or whatever they’re doing to get an extra percent. And God bless you, but I just don’t have… For whatever reason, I’m not interested in optimizing every part of my life.

Jay Goltz:
No, no, I respect that. You know the old phrase, “You’ve gotta sleep at night.” That’s a literal phrase. One has to sleep at night. And if somebody wants to pay off their house mortgage because it makes them sleep better, hey, I can’t argue with that. But financially, it’s really not the greatest thing to do when interest is low. Now, interest isn’t so low anymore, so maybe that’s going to change shortly. But when you can borrow money for 3 percent, and you can make more, you’re making money by not doing anything.

Loren Feldman:
So what do you have all your money in Jay? Are you buying individual stocks?

Jay Goltz:
No. No.

Shawn Busse:
That’s a fool’s errand.

Jay Goltz:
I’m mostly in crypto. [Laughter]

Shawn Busse:
I’m in gold.

Jay Goltz:
No, I have it at Merrill Lynch, and they’re managing it. I’ve got enough things on my brain. I can’t deal with that either.

Paul Downs:
Yeah, I just put stuff in Vanguard. You know, Admiral index fund. And that’s it. And that’s done great. And Vanguard is just down the road from us. They’re one of our clients, so I feel like that’s the home team. That’s who I’m going with.

Shawn Busse:
They’re great.

Jay Goltz:
Did you put some speakers and microphones in their conference tables so you can see what’s really going on behind closed doors?

Paul Downs:
Yes, Jay, I bugged the Vanguard tables, but don’t tell anybody!

Loren Feldman:
Wow, we’re breaking news here today. All right, I want to follow up on a marketing conversation that the three of you had a few weeks back, but first, let’s take a quick break to hear from our sponsor.

[Message from our sponsor, Work Better Now]

Loren Feldman:
And we’re back. So about a month ago, we had what I thought was a great conversation about marketing. To summarize quickly, your points were largely along the lines of, “You’ve gotta have your house in order first. It doesn’t make sense to bring in more business if you’re not handling the business you already have well.” And also: Happy customers are probably the best form of marketing. I think Jay said, “It’s better to make sure your existing customers are happy before you”—

Jay Goltz:
I call that flow-through marketing. You bring them in the front door while they’re going out the back door. That’s not a good thing.

Loren Feldman:
If you do it wrong.

Jay Goltz:
Right. When you do it wrong, it’s called flow-through marketing—bringing in new customers to make up the ones you just lost.

Loren Feldman:
But here’s my question. I think you guys largely do have your houses in order, so what’s the next step? What are you guys thinking about, in terms of your own marketing? We really didn’t get to that in the last conversation.

Jay Goltz:
As far as framing, the old ways of doing it don’t work anymore, some of them. I’m now looking at my mailing list, realizing I’ve got a huge mailing list, and I’m rethinking whether I should be doing some more mailings to my own customer base.

I listened to an online seminar, and this guy who’s into that stuff said, “If you’ve done a mailing and it didn’t work, if you just did it once, it’s probably not going to work,” that there’s a science to it. And you’ve got to do multiple mailings. And you’ve got to analyze your list. And it’s a science.

So I’m working on it. I hired a guy I’ve known for years who does this stuff, and I’m going to see what I get out of it. But I just feel like—I feel this way about all marketing—I’d rather try it and fail, and I’ll not do it anymore, than not do something that might work. So I try everything.

Loren Feldman:
Is this an email list?

Jay Goltz:
No, postal mail. And if anybody goes, “Oh, nobody does that anymore.” You know what? I don’t know about you, but I get stuff in my mail every single day. And I’ve gotta think those companies aren’t just throwing money away. So anybody who thinks that direct mail is dead, that’s just a ridiculous comment. Because direct mail is not dead.

Paul Downs:
Are you buying any of that stuff?

Jay Goltz:
No, no, because—

Paul Downs:
Maybe it should be dead.

Jay Goltz:
Because, well, I have bought lists, and it’s been—

Paul Downs:
I’m talking about what comes in across your transom every afternoon.

Jay Goltz:
It doesn’t matter what I do. Because all that matters is that 1 or 2 percent of the people who get it do something. Just because I don’t buy anything off it doesn’t mean it doesn’t work. And I don’t think these companies would be spending millions of dollars a year or hundreds of thousands, whatever they’re spending, if they never got a response from it. Somebody is making money from direct mail. Some aren’t. But some are, and to think that they’re not is crazy. There are people making money on direct mail, they always have. They still are.

Paul Downs:
I bet the demographic is pretty restricted at this point. In other words, AARP does great with direct mail, and Facebook, not so much.

Jay Goltz:
Even the e-commerce companies are doing regular advertising on television. You see it all the time. So there’s no rules.

Loren Feldman:
Jay, do you know how many mailing addresses you have?

Jay Goltz:
Tens of thousands.

Loren Feldman:
Wow. You just accumulated that through the years?

Jay Goltz:
Yeah, and I think I cut them off at five years.

Loren Feldman:
Why do you have mailing addresses of your customers?

Jay Goltz:
Well, that’s a good question. This isn’t for Jayson as much, but for the framing, people leave their artwork. You’re going to get their name and address. They’re leaving something, and they give it to you. I mean, it’s not like they come in, buy something, and walk out the door. In Jayson, because we do a lot of e-commerce, we’ve got a lot of addresses from there, too. So the question is, “Is it going to be worth it?” The conventional thinking is, “Oh, why would I want to mail to my own customers? I want to find new customers.” And the answer to that is: Because your old customers can be stimulated to buy more products from you if they just saw your name again.

Just as a consumer, I know that once in a while I get a postcard from Nordstrom or something. I think, “Oh yeah, maybe I will go there. They’re having a sale.” It’s a science. You’ve got to know your own business, or you’ve got to test it out. So we’ll see if it works. I don’t know that it will. I’ve had not great responses. I’ve tried it a couple times in the last few years. I bought lists, and the results were startlingly bad. And I bought really upscale lists.

Loren Feldman:
I don’t hear a lot of people brag about success with lists that they bought. After our last conversation, I got an email from a listener, Nawal Motawi, who has a tile business in Ann Arbor. She made a couple of points, one of them, she wrote, “It sounds like Paul Downs has a top-of-the-funnel marketing problem. How would he market if there was no Google? Print advertising is not dead. And I like trade shows for their ability to give the customer the opportunity to sample the product.” Any thoughts on that, Paul?

Paul Downs:
Well, without Google, we wouldn’t even be making big conference tables.

Loren Feldman:
You wouldn’t have gotten where you are today without Google. But you could still exist today, if you didn’t do anything with Google, right?

Paul Downs:
Yes, but the Google thing was sort of a lightning strike that completely changed my business. But prior to that, I had grown the business through local print advertising and through some shows that were accessible to me. But it’s not simple to grow the kind of business I was to any great size, because in furniture manufacturing, there are literally thousands and thousands of small manufacturers, and it’s really hard for any of them to reach any kind of large audience through 20th century methods. I’m familiar with a number of companies that sort of went through this, and they’re all doing very, very poorly unless they get online and market, hopefully through search terms, because the search terms connect buyers who are anywhere with manufacturers who could be anywhere. And there’s no other channel that efficiently makes that connection.

So yeah, we have a one-funnel problem, or whatever she called it. Fortunately, it’s a fantastically good funnel. But that said, I am trying to expand beyond that. As a matter of fact, I’m just about to write a check for 50 grand to a marketing agent to take over some of our content production and then content distribution, with the aim of building our brand in a very targeted audience. And I’m hiring people who are good at this, and it’s not cheap, but I have confidence that they’ll be able to do it.

The owner of the business I’m hiring is one of my Vistage group peers. So I know him well. He knows me well. We understand each other’s business. And if he can’t deliver, it’s going to be a bad look for him at every meeting.

Jay Goltz:
You know what, I’m glad to hear that. Because as you’re talking, I’m thinking, “Wow, it’ll be interesting to see if that works.” But I’m glad he is in your Vistage group, because you’re right. He’s got some pressure to perform, because I wonder whether those things work. I mean, I’m sure they work sometimes. But I just wonder: How much do they not work?

Paul Downs:
Well, Shawn can probably tell you. He’s a marketing guy. I presume they work for him now and then, right?

Loren Feldman:
Well, you’re talking specifically about content marketing, right?

Paul Downs:
Yeah, I have a very specific need.

Loren Feldman:
Which is?

Paul Downs:
Getting back to our earlier conversation about brand building, Shawn insists I already have a brand. And to the extent that Shawn’s definition of brand is reasonable, sure, I’ve got one, but I need people to know about it. And I need a specific target group of buyers to know about it. And I want to use the most up-to-date channels of getting content to those people. And that means understanding social media and geo-fencing and all kinds of content distribution technologies that my own team is never going to be able to bootstrap to any competence to. So I’m paying money for it. Now 50 grand is not nothing, but I’m hoping we’re gonna be at six-seven million bucks a year by the end of this. So it seems like a reasonable roll of the dice.

Loren Feldman:
Can you articulate what the content marketing strategy is?

Paul Downs:
Yes, we are starting with a survey of the prospective audience that’s been done by someone other than me to double-check whether my assumptions and what I believe motivates this audience is really true.

Loren Feldman:
What’s the audience?

Paul Downs:
Architects and designers who do corporate work. And ideally, what we would have them do is say to their client, “Oh, you need a Paul Downs table.” And at the moment, we don’t know what they’re saying. But we want to find out and then insert ourselves into that conversation. So the beginning is making sure that our beliefs about the audience are correct.

And then second would be tailoring the messaging that we’re putting together to those concerns of the buying audience and then putting together films, video, content, basically, to be delivered. And then engaging experts in using the various channels to get them to the people we want to get them to. So that’s what I’m hoping to do.

Jay Goltz:
So the question is: You want to grow your business substantially—are you going to be going to the Neocon show, which is where all the big hitters in the industry go, that’s in Chicago? That I did the research for you and figured out it would cost you about $10,000? Are you coming, Paul?

Paul Downs:
Hey, $10,000 is just laughably wrong, because I’ve got to bring something to the show.

Jay Goltz:
No you don’t. You bring pictures of your beautiful tables.

Paul Downs:
No, you don’t. You’ve gotta bring a table. The other thing is the Neocon show is primarily about manufacturers and dealers, as far as I can tell. And I’ve been to it a bunch of times, and I would rather put the effort into this first. Like you said, Jay, you’ve tried everything, but there was something you tried first. And I would rather do this first because the Neocon is a one and done. And then you have to have a follow-up in a way that we’re not particularly good at.

Now, the other thing I just did was engage outside reps that I think are gonna be a good fit for us, and we haven’t had that before. So they’re working in a targeted geographic market. So we’ll have a broad-based marketing effort, a targeted rep-group effort, Google, and maybe when all that works out, I’ll splash some money on Neocon.

Loren Feldman:
Shawn, this is your turf. Any thoughts either on the content marketing or the trade show?

Shawn Busse:
I like how Paul’s articulated what he’s doing. He’s broken it down into a couple of component pieces. So the first idea is he’s going after what we call “centers of influence.” So either architecture firms or individual architects, their ability to influence buyers, and to potentially influence multiple buyers, is a really important business-to-business concept. And it’s like you want to make your money go as far as possible. That’s very different than going after individual buyers, which has been Paul’s Google’s strategy for many years. That works, too. They’re just two different ways of tackling things.

So I like the center-of-influence approach with the architecture firms. I like the talking to that audience to learn from them, and I like that it’s not Paul asking them questions. Because it’s really hard for business owners to get outside of their biases. And then, I think thinking about it through the lens of: What’s the message? What’s the value proposition? Who is our audience? How are we going to get it in front of them? What are the channels?” And he’s probably targeting LinkedIn, would be my guess, and probably Instagram. The architecture community is really strong there, especially the interior design architecture community.

So I think there’s just a lot of really good fundamentals, in terms of the strategy. What he just outlined was a great approach. Not necessarily right for every business, but the framework and the strategy are really good.

Loren Feldman:
So here’s my idea. Paul, you’ve already said that you’re hiring reps for the first time. And Jay is in Chicago, and he thinks you should go to a conference in Chicago to sell your wares, and you don’t need the actual tables there, he believes. Why don’t you hire Jay as your rep and send him to the conference and see what he can do?

Jay Goltz 39:29
If you’ve gone through his websites, you will see beautiful pictures of tables. I don’t believe people need to actually sit on a table or touch the table. I think you get a great video thing and have it rolling and make great context there. And I’d stand next to you, and I’d get you a bunch probably.

Paul Downs:
Yeah, I’m afraid I would be overwhelmed by the orders that Jay would bring in, so I can’t have that.

Jay Goltz:
All right, can we talk about my ad line I gave you that you seem to have blown off? Shawn, tell me what you think of this ad line: “Tables that make a statement. And then they go to work.”

Shawn Busse:
Oh, man.

Paul Downs:
That’s a perfectly good—I mean, that’s not a bad tagline.

Jay Goltz:
Shawn, what do you think? Shawn?

Shawn Busse:
I don’t know. I mean, I’m not I’m not the buyer of Paul’s product.

Jay Goltz:
Wimp. Yeah, okay. You figure you’re going to lose.

Shawn Busse:
It’s clever.

Jay Goltz:
If you saw his beautiful tables, it would resonate, because his tables make a statement. That’s why you spend a lot of money for a beautiful table.

Shawn Busse:
Is there anything else that you think the listeners are struggling with that you’ve either seen from the forums, in terms of if they feel like they have their house in order? Is there anything else that you’ve been hearing?

Loren Feldman:
You’re asking me?

Shawn Busse:
Yeah, you’re the one with the finger on the pulse.

Loren Feldman:
Jay was in the conversation we had last week where we talked about a webinar I did with somebody who specializes in content marketing. And I thought of it when Paul was talking, because this is the guy who saved his—

Paul Downs:
The pool guy.

Loren Feldman:
Yeah, right. His advice is not to outsource. He believes that there is tremendous learning to be done if you go down this path, and that you want to learn that stuff in-house. Yes, it takes some time. But it’s worth it in the long run.

Paul Downs:
Well, I just want to add that I’ve been doing my own content for the last 15 years. Well, actually ever since the web came along, so 24 years now. And I’m pretty aware of what my limitations are. So his advice, I think his story is partially a time-and-place story, which was that he was active at a time when it was easier for an independently produced piece of content to get traction. And it’s just harder now. Because there’s so many more people, and there are so many more channels.

Loren Feldman:
He acknowledged that. There’s just a lot more content.

Paul Downs:
Yeah, so everybody who’s had a success is going to try to sell you on that particular story. And I learned a long time ago that that doesn’t always translate into whatever time and place you’re at now.

Loren Feldman:
That said, Paul, you are a very good writer, and nobody else is going to write better about your business than you do. And before I gave up on doing it myself, if I were you, I would ask the question: Did I have the right process? Did I have the right strategy? The right philosophy? How often was I posting content? I just can’t imagine anybody telling your business’s story.

Shawn Busse:
Yeah, but Paul’s the exception. The truth is, most owners struggle to talk and write about their business in a cogent way. And so usually, they benefit from getting help. And then the other thing—I think this is super important, like, if I could just shout about this every time there’s a marketing thing being sold—the thing that was successful yesterday isn’t necessarily the thing that’s going to be successful tomorrow.

Loren Feldman:
It’s almost the reverse. It’s most likely not to be successful.

Shawn Busse:
Yeah, it’s gonna be worse. Yes. I think that’s the problem with the marketing industry: It’s built upon this, “Look at what I did! It worked. Buy it from me.” And then the problem is, is that tactic, usually it’s diminishing by the time it becomes sort of everywhere out there.

And content marketing is a really good example of that. You used to be able to just write stuff, put it out there, and then you’d be on the first page of Google. And now you’ve got to pay money, like, it’s just really hard. And so it’s not to say that content marketing can’t work. It’s just that it’s a lot more work than it used to be, and you’ve got to be way smarter about it than you used to be. It’s just a different game. And that’s the thing that drives me crazy is LinkedIn is filled with marketers selling marketing strategies, usually to in-house marketers. It’s just like this copying game of strategies that are diminishing in impact really quickly.

Paul Downs:
And then the product that you’re selling is going to have a huge impact on your approach, too. So that the pool guy, and me, too, we have the benefit that we sell a product that people want and nobody knows what it costs. There’s no common knowledge about what a pool would cost.

I put prices of conference tables up on the web for years, and it got me a lot of Google traction and a lot of business. And I eventually came around to taking it off for complex reasons, but if you’re selling something that needs to go through Amazon or something, then you can write all day about it. No one’s gonna care. You’ve really got to think about: What are you selling? How do people want to buy that kind of thing? And then what is the marketing that would support their normal mode of buying?

Shawn Busse:
Yeah, and I think to Jay’s point earlier, it’s like, you don’t want to swim in the same direction as everybody else. So he’s exploring direct mail. There could be a certain way he does that that is just incredible. Like, we don’t know. But the thing is, you’ve got to try things in order to learn.

Jay Goltz:
Or maybe it’s not gonna work, and I’m not gonna try it again.

Shawn Busse:
It might be a failure. Yeah, that’s okay too.

Jay Goltz:
Trust me, I did it a couple times the old fashioned way. I bought a list. I did a nice mailer. I sent it out, and the results were worse than I would have ever expected. So I know that didn’t work.

Paul Downs:
Jay, for what it’s worth, the direct mail that I see that actually catches my eye are people I’ve done business with in other contexts, who are saying, “Hey, we’re sending you this thing, and you punch in this code, and you’re gonna get 25 percent off the website.” So in other words, they’re acknowledging that I’m buying a particular way that’s not through the mail or phone calls but just nudging me, that reminder kind of thing.

So maybe that’s what you do: returning customer discount. Or, “You bought a frame from us. Did you know we do Jayson Home? Here’s 10 percent off anything you get through that website.” I think the ones that I see working now are doing this sort of cross-channel, where they’re using direct mail to drive people to the web.

Shawn Busse:
Yeah, I mean, I get direct mailers from Google.

Paul Downs:
You do?

Shawn Busse:
Oh, yeah.

Paul Downs:
What do they ask you to do?

Shawn Busse:
They want me to participate in Google Local. They want me to do Google advertising. You know, it’s a B2B play. They’re mailing it to Kinesis—not to me as an individual.

Loren Feldman:
All right, we’re almost out of time. I want to hit one more topic, which is this: This past week, we highlighted in the Morning Report a column that ran in the Washington Post about the PPP program, Paycheck Protection Program loans. There were, it’s becoming clear, billions and billions of dollars in fraud. This column said, “Nonetheless, the program was a success because it had to move quickly. And if they had waited to do the things you have to do to prevent that kind of fraud, more businesses would have failed.” I believe the three of you all got PPP loans. Would you agree with that? Was it a success?

Paul Downs:
I would agree 100 percent that the speed with which that thing went out was just unbelievable. I had plans to lay off half my people. I had it all lined up with an X next to all the names, and then the money showed up. And it’s like, “Okay, I don’t have to do it.” And then I never had to do it.

I think that it’s not appreciated how hard it is to restart a business after you’ve laid everybody off. Like in my shop, there’s no instruction book for how to be Paul Downs Cabinetmakers. It’s all built together in shared knowledge. You know the people. You know what they can do. You know what they can’t do. If you dissipate that one day, and then you try to put it back together six months later, forget it. I think that they did exactly the right thing.

Loren Feldman:
Shawn, Jay, you guys agree?

Jay Goltz:
No, I agree. It was critical.

Shawn Busse:
Yeah, I think, too, the thing that’s under-appreciated is the trickle-down effect of it. I had multiple clients that probably would have canceled their engagement with us if they hadn’t gotten PPP. It wasn’t even that maybe they didn’t have the money to keep funding us, but everybody was moving into retreat and batten-down-the-hatches mode, which means cut every unnecessary expense, and certainly third-party expenses. They’re usually the first to go—like us. And they didn’t do that, and I think a lot of them didn’t do it because they felt like, “Okay, this isn’t the dire end like it was in 2008.” And I really believe we would have had 2008 all over again, if they hadn’t done these measures.

Paul Downs:
Oh, absolutely.

Jay Goltz:
Maybe worse. Worse. And I think the other issue—I’m probably preaching to the choir here—but for people who aren’t in business, people should be reminded: Yeah, I got a nice amount of PPP money. I pay millions of dollars every year in taxes between sales tax, real estate taxes, payroll taxes, income taxes. I’ve been paying millions and millions of dollars for 43 years. I don’t feel any guilt about taking some money back from the government when things got bad. I mean, that’s who’s been funding these things. So, good for the government.

Loren Feldman:
Well, I will say this: There were a lot of business owners who were a little bit outraged about the amount of unemployment money that went to people who did lose their jobs, especially early in the pandemic.

Shawn Busse:
You know, like it was a shitty time. And I don’t know, I just have a lot of a lot of grace for both individuals who got laid off, as well as businesses who struggled. I mean, it was the right thing to do. 100 percent. And the people who committed fraud, they’re gonna get caught.

Loren Feldman:
All right. My thanks to Shawn Busse, Paul Downs, and Jay Goltz. As always, guys, thanks for sharing.