Watch above or read below.

In this episode, we discuss:

  • Lagging vs. Leading Indicators: Understanding why your closing percentages and last month’s sales won’t save you from a future slump.
  • The Adrenaline Trap: Why celebrating a “best month” is often just a mask for the silent bracing of what comes next.
  • Building a Predictive Model: Dennis shares his experience building early warning systems that look 60, 90, and 120 days into the future.
  • Slow Down to Speed Up: Why five minutes of quiet can be the most effective leadership tool in your arsenal.

Dennis Collins: If you’re a business owner or a founder, you found a place to talk. If you’ve ever said to yourself, “I should have figured this shit out by now and I didn’t. And boy, I don’t understand. This is starting to hurt,” this Connect and Convert podcast is for you. Welcome to Connect and Convert. I’m Dennis. The lovely looking lady is Leah. And the smart looking gentleman, the astute, used to be called… We used to call him producer Paul. He’s now Paul, Paul Boomer. So welcome, guys.

We’ve spent decades, in some circles over 100 years combined. I know, don’t laugh, it’s mostly me. I know. Listening to what business owners don’t say out loud. They don’t say it to their teams. They don’t even say it to their spouse because it’s real pressure and it’s real embarrassing. And those are the real moments that decide how that business is gonna grow or not or quietly stalls. Connect and Convert is the place where these conversations actually happen.

So we have designed a format here called the Confessions of Small Business Owners, the Confessions of Small Business Founders. And we have some deep, dark, secret, private confessions that no one has ever heard that we are going to share with you, our audience, so that you know you’re not alone. Okay.

Paul Boomer: I was gonna say, actually, Dennis, everybody’s heard. They just don’t know others have heard it.

Dennis Collins: That’s excellent. Good reframe. I like that. So today’s topic, today’s confession, turn your volume down. We don’t want anybody to hear this. Okay? It’s quiet. Okay. “If my revenue stream is really broken, I have zero confidence that I would know it in time to actually do something about it. Come to think of it, even if I did know it was broken, I’m not sure what I would do about it. Okay? I just don’t have any early warning signs. Every sign I have, every metric I have is a lagging indicator. By the time I see it happening, it’s already happened. Obviously, I wouldn’t see it. I know deep down that hope is not a strategy. But I can tell you I still hope that next month and every month will always be as good as my best month. So I guess my fear is, how long can I just keep hoping? I guess as long as I want. But what good does it do?”

Leah and Paul, this is a true confession. This is real. This hurts. This really hurts, doesn’t it? They just don’t have confidence that they’re gonna be able to have a repeatable sales process that brings stable to growing revenues. That’s an awful feeling. I’ve had that feeling at times in my life. It’s not fun. It’s not fun. What do you think?

Leah Bumphrey: How did we do what we did? And how do I know I can keep doing it? And how will I know when it’s slowing down? That’s kind of it, right?

Dennis Collins: So you’re saying kind of deconstruct the process?

Leah Bumphrey: Yeah. I like to go back. I feel sorry for this person. This is just the saddest moment.

Dennis Collins: I do too.

Leah Bumphrey: I’m picturing this.

Dennis Collins: That person was me at one time.

Leah Bumphrey: Well, I’m picturing this. It’s Friday. Everybody else has gone for beers. It’s 7:30. Your spouse and kids are busy in activities and you’re looking and you’re just going, “Okay, okay, we did it this week. How are we gonna do it next week?” And the lagging indicators, those are the ones that happen. But what’s more important is the lead indicators. You gotta have the lead indicators and have those as tactics so that you have a clear indicator why the lag indicators are there. That’s lots of indicators.

Dennis Collins: Okay, so let me jump on that because that’s a critical point. Most business owners are probably very good at seeing lagging indicators, right? How much did we sell last month? How many units? What was our unit price? What’s our closing percentage? Those are all lagging indicators. Those tell us what happened. Leah, what is a leading indicator? I’m a small business owner. I have no idea what’s a leading indicator. The weather? The times the sun rose or set? I mean, what’s the leading indicator?

Paul Boomer: Can I actually… I’m gonna ask Leah to hold that for just a second.

Dennis Collins: Oh, of course.

Paul Boomer: So this isn’t a fear of failure. It’s a fear of not seeing something coming.

Leah Bumphrey: Right.

Paul Boomer: Okay, well, I just want to get…

Dennis Collins: That fear… Well, a fear of impending failure. Yeah. If I don’t see it coming, I can’t do anything to head it off. Two questions. First of all, how do I see it coming? And second question, when I see it coming, what the hell should I do about it? Two questions.

Leah Bumphrey: So you asked about the lead indicators. And I always find it really… To take it outside of the industry. Let’s look at it under a different microscope, something completely different. Paul and I are gonna run a half marathon, Dennis.

Dennis Collins: Are you?

Leah Bumphrey: Yeah.

Dennis Collins: Did Paul know this?

Leah Bumphrey: He didn’t know. He didn’t know, but we’re running a half marathon.

Dennis Collins: And he agreed?

Leah Bumphrey: Yeah, he’s all in and it is on, it’s July 4th, even though up in Canada we’re not celebrating, July 4th. So that is our lag indicator. On July 5th, we will know if we achieved our goal ’cause our lag indicator will be we ran the marathon.

Dennis Collins: Right. Right.

Leah Bumphrey: But does that mean I’m not a success from now until July the 5th when I do it? No, because that’s where the lead indicators come in. So I’ve got February, March, April, May, June. I’ve got five months to create the tactics, the lead indicators to take me to where my actual goal is. But without these, there’s no way I can feel successful. There’s no way I can know if I’m gonna do it or just fall on my face. There’s no way that I know if I’m gonna beat Paul’s time, the way we’ve bet. We’ve bet 500 bucks on this, so damn it, I’m gonna beat his time.

So that means for every month leading up to it, I have to have accomplished something. Then for every week within those months I need to do, those are my lead indicators so I can know week to week, am I on track? And that’s what this business owner wants to know. How do I know? So if his lag indicator is having gross sales of a million dollars in the next 52 weeks, then we can break that down in the same way. Know what you need to do, and every week you know, “Am I doing… What my lead indicators tell me? Am I doing it?”

Dennis Collins: That’s complicated, Leah. That’s… My mind is… I don’t agree with it.

Paul Boomer: I’m gonna slow this down a little bit, Dennis, because you’ve lived this clearly. You mentioned that is…

Dennis Collins: I have.

Paul Boomer: I want to know for you what are the behaviors, what things happen when you’re living inside of a lag organization? And what rationalizations do you give yourself? And then also, what are the costs of living only inside of a lag organization? So first off, what behaviors?

Dennis Collins: Okay, well, what behaviors in a lag organization or?

Paul Boomer: Yeah.

Dennis Collins: Well, reactive. I mean, you’re reacting to something that already happened, right? You say, “Oh, geez, my January sales suck. I’m below budget by a million dollars. Now what?” I’m reacting.

Paul Boomer: Okay. And if you’re a lag organization, then what are you celebrating in those times?

Dennis Collins: Generally you’re celebrating when you hit a metric. If you have a good month, okay, we celebrate, “Oh, we did it, we hit the goal.” Or you might have some KPIs, closing percentages, average order. There’s a whole list of KPIs that you can look at. Almost every business, they’re… As Leah said, those are easy to get. Those are all on apps and programs. You can hit all the lagging indicators you want.

Paul Boomer: Right. So let’s say, okay, you’re a lagging organization, and I mean that in the lagging metrics. When you celebrate those best months or best KPIs, what are you doing internally, though? How does it feel internally, yourself as a leader? What else are you doing?

Dennis Collins: When you look back and celebrate, “We had a good month, we had a good quarter, we had a good year,” and whatever KPI we used to measure that, we worry about next month next month when you’re lagging.

Paul Boomer: Well, that’s interesting because what I’ve experienced is that most organizations in this position, yeah, they’re celebrating today’s KPIs, “Yeah, we rocked it,” but they’re also silently bracing for what’s next. “We don’t know what’s gonna happen next month, so yeah, we have to celebrate this one.”

Dennis Collins: Well, remember, my confession is I don’t know how to do this.

Paul Boomer: Right.

Dennis Collins: We’re dealing with a confession with a guy who says, “I have no confidence that I could see it coming,” which means I have no leading indicators.

Paul Boomer: Right.

Leah Bumphrey: A lag indicating led company is always going to be focused on the adrenaline, on the adrenaline rush of getting it done.

Dennis Collins: Yes.

Leah Bumphrey: Okay, I’m going on holidays next week. That means I have an unbelievable to-do list to get finished, and I get it done Friday 5 o’clock by working like crazy. And I think, “Man, if I could capture this energy every week,” but I can’t because I’m focused on this lag indicator. With a company, with an organization, as you get towards the end of your fiscal year, fiscal starts September 1st, man, in August, you are just, oh, you’re so close, you’re just at that final bit of adrenaline, and you own it. And you can’t live like that.

Paul Boomer: So you’re borrowing…

Dennis Collins: I’m sorry.

Paul Boomer: So the confidence is borrowed from the past.

Leah Bumphrey: Yeah.

Dennis Collins: Well, yeah, I mean, we did it.

Leah Bumphrey: And fear of the future. The adrenaline comes from fear of the future.

Dennis Collins: That was my confession, wasn’t it? I am fearful for the future. I didn’t say anything about celebrating the past. I mean, yeah, we do that. We acknowledge the past, we give bonuses, we give this, that, the other, but that’s lagging.

Leah Bumphrey: And I disagree with you a little bit, Paul, because it’s not just from the past. You can only borrow from the past if the past has been successful. Then that adrenaline carries you on. If I’ve had a crappy end to the month or the quarter, I’m depleted. This confession, the guy’s depleted.

Dennis Collins: Okay, so yeah, but let me share this. I reframed years ago what failure means. Okay? To most people, failure means you screwed up. You did not do what you said you were going to do. I think it’s only failure if you didn’t learn anything from it. So I deconstruct both. When I was running radio stations, I deconstructed both success and failure. And why did I do that? I wanted to know why we lost and I wanted to know why we won. Does that make sense?

Paul Boomer: I don’t know where it is right now on my crazy desk, but I have a post-it somewhere that says failure is not failure. Failure is only information.

Dennis Collins: It’s information. It’s a lesson.

Leah Bumphrey: Oh, I like that.

Dennis Collins: It’s a lesson. Yeah. So to answer your question more directly, Paul, what did I do to make myself more of a leading indicators instead of lagging indicators? Right?

Paul Boomer: No. What I was actually trying to do… But yeah, we should get onto that as well. But what I was trying to do is pull out, okay, what does it feel like? Because I think this is such a big conversation actually that there are so many different things that happen when you are a lag-induced organization and not realizing that, believe me, you’re not the only one but it’s not always the smart.

Dennis Collins: Oh, I know. That’s why we put this conversation out there because a lot of people have this.

Paul Boomer: Right. So I want to make sure to normalize it in such a way that, hey, you’re not the only one.

Dennis Collins: No. You’re really not.

Paul Boomer: And if you’re feeling these things, well, you’re not the only one.

Dennis Collins: Yeah.

Paul Boomer: But yeah. So what do you do as you transform, as you turn, as you reframe from lagging to leading?

Dennis Collins: I’ll tell you what. I can share my experience personally and then others that I’ve worked with but personally, I had to create indicators that I had faith in that I could look at 60, 90, 120 days out and start to see what it was shaping up to look like. So this is, I know this is archaic, guys. This was before the days we had all these computer apps. We didn’t even have computers at one point. I mean, I remember when computers got introduced into business. I know I’m old. It’s okay.

Paul Boomer: You’re wise.

Leah Bumphrey: Dennis, we all remember.

Paul Boomer: Yes. We do.

Dennis Collins: Some of you don’t but I do. So I’ll tell you what I did. My business manager, very smart and capable person, and our IT director, once we finally got computers, we sat down and said, how can we create a predictive model that can make predictions about what we are going to do 30, 60, 90, 120 days out? And they looked at me like I was crazy. “That’s impossible.” I said, “I don’t think it’s impossible. I think it’s possible. Let’s just figure out how to do it.”

Guess what? We did it. One of my biggest regrets in life is that we did not create that as a product that we could sell to other people. Because at that point, the radio business that I was in, there was no such product. Now they’re everywhere. But back then, we’d be having a different conversation if I’d have found a way to take that to market. Because we actually found a predictive model based on history. We had to get back into the history, and we had to build this manually. There was no way to do it.

So does that answer your question? We built a model. It didn’t exist. And it was expensive. It was hard to do and expensive. And I wonder how many of our small business owners say, “Screw it, that’s too expensive and too hard.” I don’t know.

Leah Bumphrey: How did you get the data?

Dennis Collins: Well, we had the data. I’m talking about history, sales history. We didn’t have complete data ’cause we started collecting data at some point that we didn’t have historically. Okay? So we had some new data that we created, and so we started tracking that from the time that we started tracking it, and that helped us too.

Leah Bumphrey: Okay, so that was pure sales. Pure sales numbers is what you were tracking.

Dennis Collins: We had a little bit more than that, but not much. And we could see, for instance, if I look 60 days ahead what percent of sellout, because a radio station has a finite number of spots. We’re only going to sell so many spots. So I could look out 60, 90, 120 days and say, what’s our level of sellout? Okay. What is our average unit price? How much are we charging on average per spot? And if we sell out at 60, 70, 80, 90, 100%, what’s the prediction? What’s the model predicting about the revenue? So it became a model that involved price, unit price and percent of sellout. At 100% sellout at this unit price, this is my revenue. I can predict it.

Paul Boomer: With all that information, Dennis.

Dennis Collins: Yeah, right.

Paul Boomer: I’m trying to phrase this in such a way that it makes sense. You have all this data. With all that data, what is the biggest risk?

Dennis Collins: Well, the biggest risk is not knowing what it means. You can throw all kinds of data on a spreadsheet but how do you interpret it? And we had to make rules to interpret. We had to make up rules to say, okay, when these two or three conditions exist, this is what’s likely to happen. Does that make sense?

Paul Boomer: So are you saying one of the biggest risks is actually not knowing what to watch? Because you can have 30,000 different pieces of data, but you only need to watch this 500.

Dennis Collins: Yeah, but we limited the data. There was more data we could have looked at but we limited it to the stuff that we felt would predict our future outcomes, that would predict a slump, predict some kind of problem so we had early enough warning to do something about it. Does that make sense?

Paul Boomer: Got it. So you knew what to watch, what to look for, and that’s one of the biggest things.

Dennis Collins: Well, we had to learn. Over time we learned what to look for, yeah.

Leah Bumphrey: When I was as a marketing person, as a salesperson, someone who made money selling, paid commission, I was always very goal-oriented. I knew my numbers, I knew where they were going. I had to know that. What I found is you can be too numbers-driven as you’re trying to figure things out. And so I would actually, on a weekly basis track tactics. What are the… It had to be between three and six things that I am doing this week to help me achieve this goal.

At the end of a week, usually on a Sunday, on a weekend, I look at those six things that I was going to do. This one I did, this one I did, this one I only did half time. But you figure out your percentage of conformance. What did you actually do? And if I’m hitting, I remember having a couple of weeks in a row hitting 35%, I’m never going to achieve what I want to do because I’m not hitting. And those tactics, it’s not a to-do list, but it changes every week. And pick your poison, gents. You could do it over a three-month or a six-month timeframe, but you can’t do it over a 52-week.

Dennis Collins: Okay. So I would say, Leah, that is more of a sales process to me in that you’re listing the activities that you need to perform to get to a certain goal. What I was looking for was a predictive model. Now, that would help. Yes, and we eventually did that, where we listed benchmarks. Okay, there’s 10 benchmarks that we now know that if we’re not hitting certain benchmarks by a certain point in the quarter or the year, we’re in trouble. We’re not hitting those benchmarks. But I consider that more of a process thing than what we’re talking about here, which is having early warning signs. It could give you that. It could give you that.

Leah Bumphrey: But this is how you involve your people, your team. Maybe at the management level, you need to have what you’re talking about, but I’m talking about data that is not just numbers-driven. I want to know what my 10 people working for me are doing.

Dennis Collins: Correct. And one of the big problems that I’ve noticed not only when I was running businesses but when I consult, is just that. They set a goal but they fail to set activity benchmarks. 

Leah Bumphrey: Yes.

Dennis Collins: They don’t have a process. That’s what a sales process is. It’s a map. It’s a roadmap to get to your goal.

Paul Boomer: So we’re talking where activity meets data.

Dennis Collins: Yeah. Right, right, right. Yeah, and they do need to meet. But yeah, that’s… So back to the confession. Do you think what we’ve been talking about here would actually help a small business owner get some confidence? What are we telling? What are you hearing? What are we trying to tell? To summarize what we’ve said in what ways that they could say, “Yeah, that could help me get some more confidence in my revenue generation.” What stood out?

Leah Bumphrey: You gotta know where you are to know where you’re going. You gotta have a map. And if you’re not… I mean, this is the power of information. This is the power, using it in a way to go, “Okay, based on past performance, if I’m doing this, I’m on the right track.” Otherwise, you are buying danger, danger, danger from six months in the future or three months in the future. And if you’re working your business like that, that’s just a tragedy waiting to happen.

Dennis Collins: Okay.

Paul Boomer: This confession isn’t about the numbers. It’s about timing. It’s about, can I see reality early enough to actually lead?

Dennis Collins: I like that. That’s a good summary. Can I see reality early enough to do something about it? To take a leadership position.

Paul Boomer: Yeah.

Dennis Collins: So have you guys found anything in your lives? Leah mentioned her setting up some activities. Paul, what about you? How would you coach a client who has this problem?

Paul Boomer: Well, first I want to know, going back to the word clarity…

Dennis Collins: Hey, there it is again.

Paul Boomer: There it is. There’s that word clarity.

Dennis Collins: Say the word clarity, get $100.

Paul Boomer: Clarity, clarity, clarity. Is how clear is the owner, the leadership team, especially the leadership team, based on the owner, how clear are they on what they’re trying to achieve? And I’ll just take it. Let’s just keep it in the HVAC industry. Their primary goal is to sell, typically, sell new units. Okay, great. What leads to new units? Well, you back that up. Well, typically, getting a new customer to buy an $18,000 piece of equipment is pretty damn hard. That takes a lot of trust.

Okay, well, why don’t you start with something a little smaller? What about just repair? Okay, let’s get them in the door first. So let’s go back to how many people do you need to reach out to to invite them to call you to help with repair? And once you are in the door, how do you help keep them in your inner circle through club memberships or something so that it’s more natural, say, “Hey, yes, I already have a relationship with this organization?”

So it’s just looking at all these little steps and asking again the owner and the leadership team, “What is it that you’re trying to do? Let’s gain clarity. And what is the easiest path to that thing?” And if there is no clarity or the clarity is as clear as mud, you gotta put some more water in it and you gotta loosen it up and you gotta be able to see through it. And I see Leah here kind of…

Dennis Collins: Oh, she’s saying, “Maybe, maybe not,” she says.

Leah Bumphrey: No, I’m not I’m not disagreeing with you, but I’m thinking about most business owners and the woo-woo kind of scares them. The idea that like something that you can touch and tangible is there’s comfort there. And we’re talking HVAC, I think that comes from a lot of these people, they came from working on the tools. That’s what they learned. It’s pretty easy. This is what you’re doing. Because really what we advocate for people is a little bit different than the tangible. I mean, you need the tangible and you need the ability, but it’s a lot can be solved by five minutes of quiet.

Paul Boomer: Oh yeah, you speak my language.

Dennis Collins: A lot can be solved by five minutes of quiet. Should we just turn the mics off here for five minutes and let’s see what happens?

Leah Bumphrey: I challenge everybody listening, and put it in the comments, tell me how this works for you ’cause this is the beginning of a coaching process I do with people. And I want you to set your timer for five minutes, five minutes and ten seconds, and I want you to sit somewhere you’re not gonna be disturbed and just close your eyes. Don’t worry ’cause the timer’s gonna go off, you’re gonna know when it’s five minutes. When you do that, amazing things happen. And that’s just the beginning of what can happen.

Dennis Collins: Amazing. Wow.

Paul Boomer: Slow down to speed up.

Dennis Collins: Another phrase. Slow down to… Boy, we’re just coining phrases all over the place here, aren’t we? Well done guys.

Leah Bumphrey: We need t-shirts.

Dennis Collins: Hey, Paul, remind… T-shirts, yeah. Remind our wonderful audience about our free stuff, would you mind?

Paul Boomer: Most certainly. If you find any of this helpful and that you want to… Excuse me. Hold on. I’m dealing with this wonderful, wonderful…

Leah Bumphrey: Cigars and whiskey.

Dennis Collins: Cigars and whiskey, I’ll say that.

Paul Boomer: If you want something that you can tangibly hold in your hand and guide you through some of this stuff, go to the show notes of this episode and any episode of Connect and Convert and drop your email in and we will send you immediately a PDF that is the Founder’s Small Business Owner Sales Trust Playbook.

Dennis Collins: Sales Trust Playbook.

Paul Boomer: And what you’ll also find is that we’ll start adding little bits onto this playbook through time and we’ll automatically email you when new ones come out.

Dennis Collins: Yes.

Paul Boomer: So this is not just a one…

Dennis Collins: You’ll be the first to know. Yes.

Paul Boomer: Yes, so you will gain a growing library of playbooks.

Dennis Collins: A library of playbooks. Free.

Paul Boomer: Free, free. You’ll find them in the in the show notes of this episode and…

Leah Bumphrey: Wait a minute. What do you mean, free? I didn’t approve that. What the heck? Free?

Dennis Collins: Oh my gosh, Leah.

Paul Boomer: I’ll buy you a whiskey and some cigars.

Leah Bumphrey: It’s okay, but free in Canada too. I don’t want your American dollars to be a deterrent.

Dennis Collins: Oh God. No, there’s a tariff on this. No, no, there’s a tariff on this. We’re putting a tariff on this. Paul’s the Minister of Tariffs.

Leah Bumphrey: And we’re off.

Dennis Collins: And we’re off. Yeah.

Leah Bumphrey: Gents, this was a good one. This was very good.

Dennis Collins: Okay, well let me just summarize. You’ve been listening to Connect and Convert, honest conversations for small business owners and founders. Better decisions are yours. Tune in every episode of Connect and Convert. See you soon.

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