I was whining to Clay Cary about the interest rate the bank was going to charge me to fund a real estate investment. I felt the percentage was way too high.

Clay asked, “Is the deal you’re about to make a good deal? How much money will you make from it?”

I answered his question conservatively. He said, “Now let’s calculate the total amount of interest that you will pay on the loan that makes this deal possible.”

We calculated the dollar amounts.

I was going to make hundreds of times more money on the real estate than I was going to pay in interest on the loan.

Clay said, “As a rule of thumb, if the interest rate you are paying determines whether or not the deal you are making is good or bad, you are definitely making a bad deal. Don’t judge according to percentages. Judge according to dollars.”

Here’s a thought.

Why do banks never get angry about the huge profits that YOU make on deals using THEIR money?

I have never heard a bank say, “We supplied the money, but you are keeping most of the profits. That’s not fair. You should give us more money than we originally agreed upon.”

Banks never say that because banks always remember that YOU found the deal and decided to let THEM make some money on it with you.

Here’s another example of how percentages can be misleading.

Woody Justice had been in business for 6 years when I met him in 1987. His business was circling the drain. Woody’s biggest year had a top line of $350,000. His goal was to someday sell $1,000,000 worth of jewelry in a single year. That would put Woody in the top 10% of jewelers nationwide.

I began working with Woody and we grew more than 100% a year for two years in a row. We blew past the $1,000,000 mark in the second year. About a dozen years later, Woody was grumpy. He said, “We used to grow by big percentages. But last year we only grew by ten percent. You need to get your shit together.”

“Woody, how many dollars did our top line grow last year?”

“We grew by a million dollars,” he said.

“Woody, when we first began working together, a million-dollar jump from $350,000 to $1,350,000 would have been a 286% increase. We would have nearly quadrupled your best year ever and you would have wet your pants. Evaluate yourself by dollar growth, not percentage growth. Percentages will lead you to believe that you are doing better, or worse, than you really are.”

Woody made a face but didn’t say anything, so I continued. “And by the way, we’re running out of people in this Dairy Queen town. If you want to grow by big percentages again, we’re going to need to open another store somewhere else.”

I could say those things to him because we were close friends.

Woody died unexpectedly 14 years ago but I still have his number on my cell phone. I tell myself that if I press that number, Woody will hear his phone ring.

As long as I don’t delete that number from my phone, Woody Justice will never be...

Pain is a signal that something is wrong.

Pain whispers, shouts, and screams, “Pay attention. Be careful. Something is wrong.”

Jean Marzollo wrote a children’s poem in 1948 that romanticized Christopher Columbus. It inspired a generation of children during the Captain Kangaroo years. Her proud poem begins,

“In fourteen hundred ninety-two

Columbus sailed the ocean blue”

Bill Bryson wrote an insightful summary of that famous voyage on page 205 of his book, “At Home.”

“Columbus’s real achievement was managing to cross the ocean successfully in both directions. Though an accomplished enough mariner, he was not terribly good at a great deal else, especially geography, the skill that would seem most vital in an explorer. It would be hard to name any figure in history who has achieved more lasting fame with less competence. He spent large parts of eight years bouncing around Caribbean islands and coastal South America convinced that he was in the heart of the Orient and that Japan and China were at the edge of every sunset. He never worked out that Cuba is an island and never once set foot on, or even suspected the existence of, the landmass to the north that everyone thinks he discovered: the United States.”

We learn the meaning of pain as children, but we train ourselves to ignore it as adults.

Why do we do that?

I’m talking to you about the pain of your Google spend.

Is there a chance that you should pay attention – and be careful – because something is wrong?

Twenty years ago, Google inspired and electrified American business owners with their promise of “holding ad budgets accountable” by making advertising results, “identifiable, measurable, and scalable.”

Business owners romanticized Google by shouting,

“Hooray! Advertising will now become just another mathematical equation! Hooray! Hooray! To double my customer count, all I will have to do is double my ad budget!”

I watched a friend of mine raise his monthly Google budget from $20,000/mo. to $70,000/mo because he was convinced that he would get three-and-a-half times as many leads. When it didn’t work, I asked him to look closely at how many clicks he had purchased and compare that number to the total population of his trade area.

Have you done that math?

I watched another friend of mine elevate her Google budget until she was spending $90,000 a month. Her business was no longer profitable. I asked her to look at how many clicks she had purchased and compare that number to the total population of her trade area.

Have you done that math?

Have you ever raised your Google budget and had Google say to you, “We’re sorry, but it is not possible to spend that much money on your LSA. There simply aren’t enough people each day who are searching for what you sell.”

Do the math.

The past two decades have been the Captain Kangaroo years for millions of business owners.

Bill Bryson wrote that Columbus was, “convinced that he was in the heart of the Orient and that Japan and China were at the edge of every sunset.”

How many years have you been believing that your big payday from Google was at the edge of every sunset? Have you been saying,

“All we need to do is tweak our plan a little. As soon as we figure out the Google algorithm, we’re going to be rich.”

A business owner from a major American city recently spent a day with me. He had been spending $100,000 on Google ads each month for the past few years because he was convinced that he could not afford mass media in his city.

His budget could easily have made his name a household word by using television or radio. I know the town well. I have had clients there for many years.

His budget would reach more than 2 million...

You want to succeed.

But will you recognize success when it happens?

What will be its indicators? How will you measure it?

Most importantly, how long are you willing to pursue it?

You probably overestimate what you can accomplish in a year, and underestimate what you can accomplish in ten years.

How many years have you been pursuing your dream?

Experience is the name you are allowed give to your mistakes, but only if you have learned from them.

1. Some people have ten years of experience.
2. Most people have one year of experience ten times.

Ninety-nine percent of business owners* will continue to defend their marketing beliefs and management practices even when those beliefs and practices continue to underperform year after year.

These business owners underperform because traditional wisdom often feels like common sense.

The problem with traditional wisdom is that it is usually more tradition than wisdom.

Here’s how that happens:

1. Your goal is lead generation.
2. You create an ad that mixes urgency – a limited-time offer – with a strong value proposition. The features-and-benefits of your limited-time-offer dramatically outweigh the price.
3. Your plan is to upsell the customer after they allow you into their home.

This is called “transactional advertising” because you are advertising a transaction.

Here’s the problem: Transactional ads don’t differentiate you. In fact, they blur you into your category, making you indistinguishable from your competitors.

This is Today’s Traditional Wisdom:

STEP 1: Give Google most of your profits and keep your fingers crossed. Keep a sharp eye on your cost-per-lead, your conversion rate, and your gross profit per sale.

STEP 2: Keep doing this, week after week, month after month.

STEP 3: Once a year, calculate how much your cost-per-sale has increased.

STEP 4: Contact the people in your peer group to see if their experience has been the same as yours.

STEP 5: Yes. Their experience has been the same as yours.

STEP 6: Tell yourself, “Everyone else in our category is experiencing exactly what we have been experiencing. This means that everything is under control.”

STEP 7: Continue to do this. In 9 more years, you will have had one year’s experience 10 times.

Roy H. Williams

PS – A smart person makes a mistake, learns from it, and never makes that mistake again. But a wise person finds a smart person and learns how to avoid that mistake altogether.

A wise person discovers relational marketing.

*ADDENDUM

We gathered data from 64 reputable sources. It can reasonably be estimated that there are about 117,000 companies in the US that provide HVAC services, 132,000 provide plumbing services, and 252,000 provide electrical services. (117,000 + 132,000 + 252,000 = 501,000)

Let’s assume for the sake of this example that those numbers are elevated. A lot of home service companies offer two or more services.

Let’s further assume that a lot of them are going to be commercial, not residential. So we will reduce the aggregate estimate of 501,000 companies down to just 100,000 companies competing for the opportunity to serve homeowners across America.

Here is the fascinating part: we know for a fact that only 638 of those companies have a top line of $20,000,000 or more each year, and...