The E-commerce Leader

[00:00:00] MV: We all fall into just starting it and and then kind of realizing after a while we should have measured it.
[00:00:04] But if you start every project with that discipline up front, that is really helpful because what gets measured can be managed as they say
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[00:01:10] JM: Deciding when to kill an internal project side hustle or shiny object effort can be a really hard decision. And in this episode, we’re going to explore five powerful questions that we all can use when we’re having to make these hard choices. And so Michael, have you ever had a shiny object project or side hustle that you’ve.
[00:01:35] Thought about killing and is this topic possibly helpful to you?
[00:01:39] MV: Yeah, I think it is. I definitely had them and not had to not just thought about killing But I actually had to kill them and definitely had clients in the same position recently And actually often clients who haven’t had to kill a project they’re attached to but my advice has always been begging them to do so not because it was so terrible, but because there were other things they were doing that were clearly working much better.
[00:01:58] So many, many things to discuss here. It’s one of the master skills of business. So an excellent topic, I think.
[00:02:04] JM: Are you saying that you’re the grim reaper in your client’s lives in terms of their shiny objects?
[00:02:10] MV: Sometimes, sometimes I’m the opposite. Sometimes I like, dude, this is working really well. Why don’t you double down on this?
[00:02:15] So I, it’s just a question of allocation of. Of capital and, effort and focus, particularly focus. And we were guilty. And we, we need to talk about Alex Hormoza’s launch of his book recently. I watched Alex Hormoza video yesterday, which is just really good. A lot of common sense. And one of the things is like, if you want to grow this thing over here, you need to kill these five possible things over here.
[00:02:35] And there, there is a huge amount in that. So it’s very positive as well as sometimes forced upon us. So it could be either, but it’s still a key skill, I think.
[00:02:43] JM: Yeah. Sure, well, the reason this topic came to my mind was 2 fold. this week we were working with a client in 1 regard related to a project and it was interesting to think about and ponder with them.
[00:02:58] And then we are also doing some internal work in terms of evaluating 1 of our. Omni rocket projects. And so as it relates to the client story, they basically, we built their Shopify site for them for this, new project about a year ago. It was even maybe like 15 months ago. And, And, and they have other Shopify sites that we have built and manage for them, but this one just languished, it was just one of those ideas that we built a site around and, the site was fine.
[00:03:28] And, but they just had, they had this challenge where good idea, but it just didn’t go anywhere, and so, probably a year on. the internal decision and thinking and activities kind of started to kick in and, and, and interestingly enough, it started to catch fire a little bit. And I think now we’re maybe 3 months in to the, launch, I guess you could say that the real launch of the effort and it is absolutely on fire.
[00:04:02] And every week we review with the client, how it’s going on the various Shopify sites that, we, we help them on. And in this, this one is just sort of the bell of the ball right now. It’s like, what in the world is happening? This new idea that’s 15 months old, technically, is just firing on all cylinders and new momentum, new energy, new enthusiasm.
[00:04:24] Is swirling around this new, this new, this new site and a part of their business. And, and so that was really interesting to me to observe. And, and so it kind of prompted this thinking, like, how long do you wait for a project? And that led us to these five questions that we’re going to talk about today in this conversation.
[00:04:46] These are fantastic questions, that I think all of us can ask and answer as it relates to evaluating internal projects. You might call them a side hustle or a shiny object, depending on how big your business is, or kind of how you think about these things is, I think y’all probably get the point of what I’m trying to describe.
[00:05:04] It’s not the main thing. It’s a side thing to the main thing, and you’re hoping it can be meaningful and do something valuable for your business. But it’s clearly in second, third or fourth place mentally, emotionally, financially. so that’s what prompts these five questions. Yeah.
[00:05:21] MV: So I guess you just asked the key question.
[00:05:24] One of the key questions that I think we haven’t gotten the rest of the outline, which is how long do you give a project before you abandon it, turn it off, kill it, whatever words you want to give it. And what’s your feeling about
[00:05:34] JM: this? Just the basic timing of it all. Yeah. When do you review or evaluate?
[00:05:39] Yeah. Yeah. I think the main, the main Yeah, it’s the first obvious question. I think the main thing is just set a timeline, like I’m not sure what the right length of the timeline is, but I know it’s wise to have a timeline. Maybe it’s three months, maybe it’s a year, but I know one thing it’s true in my own life and my business and I’ve seen it true in clients lives.
[00:06:01] If you don’t set a timetable by which you will thoroughly and honestly evaluate. The side hustle, then it’s going to just probably wither on the vine and, or or you’ll just continue to plow money and effort into it and and, feel increasing pain of it until you’re forced, to evaluate it.
[00:06:21] but I, I do think that that’s probably the main thing is just. Give yourself at the beginning a timeline and I don’t know if it’s a Chinese proverb or something like that is before you start a game, always know two or three things and one of them is, when you’re ending it, when, when the game is over, how it’s, how it ends.
[00:06:39] And I think that’s a wise thing to add at the very beginning of these projects. yeah,
[00:06:45] MV: I think this is good stuff. I think that. As well as the timeline, I’d say a project. So this is the budget, sorry, for a project. So this is one of the things that Seth goes and talks about him. I can’t remember where it is.
[00:06:56] It’s somewhere online. We’ll put links in the show notes over at the e commerce leader. com. Folks, if you’re listening for that. but he says that rather like you, it doesn’t really matter what time you give it, as long as you have a cutoff date and a cutoff budget as well. So you’re going to spend 10, 000, a hundred thousand, 10 million, whatever.
[00:07:11] And you’re going to give it 18 months, three years, whatever. And then after that, you’re going to say, okay, this has not worked. We’re stopping this. now that’s the
[00:07:18] JM: other way to,
[00:07:19] MV: yeah, I was going to say, I would also say it’s good to set some milestones, but I think it’s really important when you’re setting milestones, not to copy what the big boys do when, the, the venture capital backed startups like Uber or, the latest AI startup weren’t born every minute.
[00:07:35] they have, a different way of operating. If you’re running an e commerce business that’s selling widgets on a Shopify or Amazon platform, you’re not doing anything that radical. So you have to have more sensible milestones, but you probably would look at traffic. you’re getting any kind of traction for your, your marketing efforts.
[00:07:50] Is it paid advertising? But particularly if it’s SEO. There’s going to be a realistic timeframe for that. How long does SEO take? I don’t know, 12 months, 18 months. if it’s paid traffic, it’s going to be pretty quick. Are you getting leads? Are you getting revenue? Are you getting a profit? or at least, are you getting to break even in terms of cashflow?
[00:08:06] So those sort of key financial metrics latterly, and then in the first place, marketing metrics. I think you’ve got to attach those some dates to get a bit of a reality check. Which isn’t quite as brutal as turn it off or turn it on, but it is certainly, are we on track or is this looking like, we may have to turn it
[00:08:22] JM: off.
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[00:09:12] JM: yeah. I like the emphasis on the budget side too. I guess my mind usually goes is on the time side and the effort side, not the budget side, because so many of these purported, awesome strategies, the shiny objects that we’re like, Oh, we can start doing this. So many of them are, low barrier to entry financially.
[00:09:32] it’s really just on some ways about setting up a new process or doing a new platform, a new, new effort. and so I, my mind always goes to how long have I been doing it? And am I seeing fruit from it or whatever? But you’re right to point out a hard mathematical look at how much. Money you’ve spent.
[00:09:50] and at what point you’re saying this is as much as I’m going to spend without a good ROI is important. But this, I think those ideas lead us to the 1st question, which was probably the right place to jump in here on the 5. So, okay. And that question question. Yeah, so the 1st question is, what is the project’s cost, including opportunity cost?
[00:10:11] So that sort of, tease up the idea nicely. So are you ignoring the ugly truth of the math? the other project this week that I mentioned was an internal project. And 1 of the things that we did simply just. ask ourselves the question, how much have we spent on this in the last 3 years as part of the evaluation?
[00:10:31] And we didn’t even know, it’s like, you have these ongoing expenses that start to just layer themselves into your, your monthly budget and your P and L and you don’t ever look back necessarily if it’s not like a big, big issue. So we had this opportunity this week and so we looked back at 1 of the projects we’ve been working on for 3 years and as it happens, we’ve lost 60, 000.
[00:10:53] 60, 000. Doing this, this, idea, let’s call it. And, so 60, 000 that if we wouldn’t have done anything would have been straight into our pocket. But that’s not even including opportunity cost on both the 60 grand. We could have spent some other place if we wanted to spend it. Oh, and also all the time that we.
[00:11:15] plowed into the, the idea and so opportunity cost is a big deal, but just the base math is also very, very important to look at. Yeah. What are your thoughts on that one?
[00:11:27] MV: Yeah, I think it’s extremely easy to do that. And it’s a pain to set up a cost tracking separately for each project, but I think it’s a pain that’s worthwhile because a 60, 000 is not chump change for most of us.
[00:11:39] And, if it takes you a bit of work and a few hundred dollars worth of work with a bookkeeper and accountant to set things up the right way, I think it’s really worth it. I mean, one thing I’ve just. With working with my accountant in QuickBooks online, it turns out you can use, I can’t remember what the word is because I don’t use it that often personally.
[00:11:56] I leave the accountants and bookkeepers to do their stuff, but, it’s something like a category or whatever. And you can basically set it up. So it’s quite easy to break down the cost. Class is the word they use. Yeah, classes. And, and there’ll be an equivalent on zero or whatever. And you can use that to quite quickly then get a report that’s unique to just that class and you can see the the revenue and the things broken down by that.
[00:12:17] Of course, that will only work if you allocate your expenses and your revenues and whatever else to that particular class consistently. So I think it’s important to set that up in advance. So you try and make sure you’re measuring in advance. And it’s easy to say that I’m, Thank you. We all fall into just starting it and and then kind of realizing after a while we should have measured it.
[00:12:35] But if you start every project with that discipline up front, that is really helpful because what gets measured can be managed as they say. Yeah,
[00:12:42] JM: yeah, the classes view of your P& L is really super valuable. We have our books done that way so that we have a consult what you might call a consolidated corporate P& L that we look at.
[00:12:55] That’s your income statement, that you see the top line. Revenues, and then you see the expenses and you see a profit, but we also have a view of that by our classes. And so for us, that would be like coaching done for you, services, events, books like that. So we can see for, for every one of our, efforts, what the, what the reality looks like.
[00:13:18] And so it was pretty simple for us to aggregate the information back three years. Cause we just looked for the three years for that. Topic. I’m referencing. and then, and then there we could see it. Oh, Well, we only lost 13, 000 this year. If you add up the last three years, that’s a big number.
[00:13:36] So that’s the idea. And you’re right. good bookkeeping is a cornerstone of being able to do that work efficiently and quickly. And, and so there you have it. So that’s the first question. I think it’s a really powerful question. I think just doing that level of analysis will prompt many people to, ask the hard question.
[00:13:53] Is it time to kill this? shiny object or this project, but there are, four other questions we can ask. So the second question on our list here is, is the project aligned with your strategy, your corporate strategy or your business strategy, however you want to articulate that or with your mission or purpose, I guess you would say of your business.
[00:14:13] And I think this is the biggest question of all, cause as we were evaluating that 60, 000 loss project this week, this was where our minds immediately went. And it wasn’t. Can we endure the 60, 000 of loss over three years? obviously anybody like a CFO would say, you shouldn’t want to endure that.
[00:14:34] But,that wasn’t really where our minds immediately went. I mean, I think as soon as we saw the number, we were like, no, we don’t want to be blowing 60, 000 over three years on a project, but the bigger question immediately unfolded, which was, does it really align? Is it, is it proving itself that it aligns?
[00:14:52] has it, has it demonstrated to us that it aligns with our, our big goals and the big question is, is this shiny object or this new special project, adding energy, health, and success to our main thing, or is it competing with our main thing? Because nobody starts a shiny object thinking this is going to completely distract me and be a total waste of time and energy and really dilute my.
[00:15:19] energy around the, how I make my money. Nobody would ever start a shiny object like that. They always think in some way it’s additive, accretive. It’ll, it’ll be helpful, beneficial to their overall business. That that’s the thesis we all go to when we start a special project. And so then that part of the evaluation therefore has to be, has that been proven true or is it just frankly, a completely different thing?
[00:15:45] That needs to be, ended, handed off, shut down, sold, whatever.
[00:15:50] MV: Yeah, I really agree with this thing. there’s something peculiar, we’re peculiar prone to it in the online space, just basically because if you go on YouTube, for example, I was on YouTube, watching a video about, business buying from one of the people that I follow, Carl Allen, I’ve actually got a course of his very good, but before I saw that there was some advert by some guy that I follow who I admire in terms of social media marketing.
[00:16:09] And before I know it. I’m, looking at some video that he’s seeing and and getting tempted and I was thinking what am I doing? it’s very easy to do that maybe i’m more prone to it than others, but i’m not the only person out there And again, alex hormozy not to hop on about him, but he’s so good on simple and yet powerful business strategy But he was saying Here’s a slide showing the difference between the small business and the big business.
[00:16:29] The small business had a load of arrows pointing in randomly different directions, and the big business had a load of arrows, all of which pointed in the same direction. And I think that’s, that alignment piece is really underrated. Cause I think that if you have, a side project. It succeeds, but it’s not big enough to really pivot your business.
[00:16:46] That can be the worst possible thing for your business because it goes in this direction and your main business is going the opposite direction. Now you’re being pulled in two directions. Your money is going in two directions. Your focus is going to direction. So I think alignment is, is absolutely
[00:16:59] JM: critical.
[00:17:00] I totally agree, and it sounds like we’re both totally nerding out over the Alex Hormo book launch stuff, so we need to do a episode on that where we can come through. We do that. Yeah. talk about that.
[00:17:11] MV: He’s not supposed, the book launch is, is what he, actually, weirdly enough, he, he would put together some seminar, I guess it’s part of the publisher and his book launch, but he, he said, I know reason to disbelieve in that he went out for.
[00:17:22] Beers or whatever with the guys who were on his seminar the night before and realized that they needed a completely different input from you. So he rewrote it. So I think it was his response to what he was perceiving small business owners and entrepreneurs were doing and the corrective actions that were needed.
[00:17:36] So this is to this point, I think that I see the same thing. I mean, it’s so easy to see in other people’s businesses and hard to see in your own, isn’t it? We get so seduced by those objects that we do need that corrective. And, yeah, I think we fool
[00:17:48] JM: ourselves, don’t we? We do we talk ourselves into it.
[00:17:51] And we are so good at that. Like, Oh, this makes sense. Yeah, really? Nine people you mentioned it to said it doesn’t make any sense, but you didn’t listen to them because they were being too polite. Anyway, okay, so that’s question two. Question three.
[00:18:04] MV: Just before we move on, a couple of ways, mechanisms to correct some of this stuff.
[00:18:08] one is we, we mentioned about… Profit and loss measuring by class. I think a simple thing is if you’ve got a new project, you’ve got not only commit to a certain timeframe and a, a certain budget, but you’ve got to set milestones where it’s no good [00:18:20] setting them up front if you don’t check what you’re hitting them.
[00:18:21] So I think you’ve got to commit and preferably just put in the diary, in advance after three months, six months, nine months, 12 months, whatever it is monthly, maybe if it’s a bigger project, you’re going to review those finances. And I think connected with that, you’ve really got to think about, could you pitch this to an external investor?
[00:18:38] And it sounds like it makes sense as an aligned business, or does it sound like you’re doing a bit of this and a bit of that? If you can’t pitch it to somebody, one test is go and pitch it. If they just look at you and go. Well, that’s not a business. Is it really? I mean, why are you doing this thing over here when you normally do this thing there?
[00:18:54] And if you get a few of those responses, that’s a bit of an external reality check. So I think having those sort of reality checkpoints built in is important.
[00:19:02] JM: That’s what I’m saying. Yeah, I totally agree. Yep. Love it.
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