Hello everybody! Welcome back to another episode of the Wealth Unplugged Podcast! This week on Feminine Wealth TV, I interviewed Kaye Scott and Lisa Sullivan Smith of The Clinic in Sydney about their very successful business partnership of the last 15 years and how to make a business ‘marriage’ work. One of the great things about their partnership is that not only are they thriving in business, but they have managed to remain friends throughout the whole process. So many people come undone and friendships end up ruined, so theirs is a great example of how to make a partnership work.
Here are three of my key takeaways:
Takeaway #1 – Get proper paperwork drawn up first
Going into business with friends can be very tricky. There’s always the temptation to cut corners with friends and things can go bad fast. Kaye and Lisa were not friends beforehand, but with everything set up properly they became friends.
Takeaway #2 – Get proper cash-flow forecasts and agree before you start out
Go in with your eyes wide open! It is much more exciting to go after something with your full energy if you know you’ve got your back covered! Set up things such as a ‘stop-loss’ – an automatic trigger point that if hit, means that you stop what you’re doing before losing any more money. Don’t keep on going until there’s nothing left! Make sure you’ve properly done your budgets and don’t blow everything early on things that are not going to bring in the dollars.
Takeaway #3 – The stereotypes about women in business still exist!
Kaye and Lisa are known as ‘bulldogs’ simply because they are clear, they negotiate and they set boundaries. Why are strong women in business perceived this way when men would be applauded? What are we all creating with unconscious biases? I sure hope that this changes for our future generations…
Speaker 1: Want to know what successful people are doing with their money to create wealth and use it consciously for the greater good? Welcome back to Wealth Unplugged, the weekly podcast that gives you diamond tips on creating conscious wealth, from change makers, world shakers, and wealth creators. Now here’s your host, Barbara Turley.
Barbara Turley: Hi there. I hope you’re all having a great day, and welcome back to Wealth Unplugged. We’re now on episode eight of the show, which I absolutely can’t believe. Time is just flying by. I’m happy to report that we’re getting some really good listenership now, so thanks to all of you who’ve subscribed, and of course a really warm welcome to all of our new listeners today. If you’re new on the show, very welcome.
My aim with this podcast is to make it nice and short, with just the quick key tips that I pick up from the guests I interview on my feminine wealth TV show. You can easily fit it in while you’re cooking dinner, out for a run or a walk, or God forbid, stuck in traffic. If you’re going to be stuck in traffic, you may as well have something good to listen to and actually learn something, so it can turn into a really useful tool for you there.
This week on the Feminine Wealth TV show I decided to shake things up a bit. I left my little studio where I interview my guests, and I decided to venture out and do this week’s interview on location at my guest’s office. I also shook it up another way, because I had two guests on the show. You can imagine I was having all sorts of nightmares around sound quality, equipment setup, and all that jazz. Moving set and having more than one guest on the show was a newbie for me. It really put me right outside my comfort zone. But as they say, you’re not growing until you step firmly outside your comfort zone, so off I went, and I pushed myself into it. I’m delighted to report that it went fairly well. We had a few sound issues, but all in all it was quite a pleasant experience. I think you’ll be seeing a lot more set changes in the future episodes, as I take Feminine Wealth on the road.
On the show I had two fabulous business women who’ve been in a very successful business partnership for over 15 years now. That’s something. Kay Scott and Lisa Sullivan Smith, they’re co-owners of a place called The Clinic here in Sydney. The Clinic is a totally decadent skin rejuvenation oasis, with a real clinical results focus. I love how Lisa herself actually puts it. She says, “If you want a facial, go to Betty’s Beauty Box. If you want results, you go to The Clinic.” I just love her straight talking attitude. I think it’s one of the reasons why they’ve actually been so successful in business over the years.
I have to say, the interview is really one of the best ones I’ve done yet, and I think it’s because Lisa and Kay have been in business so long, and been so successful for so long, that they really had a lot of value to add to the show, and the questions, we could’ve gone on forever talking. The main reason I wanted to get them on the show was because of the great partnership they have, but also because they have a great friendship. The partnership is something that was really interesting to me, but I also know that they’re very close friends. I watched this dynamic at play and thought, “Wow, that’s the holy grail really for women and business, so I really wanted to get them on the show to talk about that.
My first key takeout from the show was of course about making partnerships work, obviously. Interestingly, the first thing they both piped in with was, as I asked the question they both said immediately, “We weren’t friends before we went into business together.” They actually became friends afterwards, which of course is a bonus, but they weren’t friends beforehand, and they agreed that going into business with friends is very, very tricky. Too many assumptions are made when you’re friends. You start to cut corners because you think you know each other, and in the end a lot of things can blow up in your face, and really badly. It really can destroy a friendship.
Kay and Lisa’s key piece of advice is to get proper partnership agreements drawn up by lawyers before going into anything. Business partnerships, they’re like marriages, and when they go bad the divorce process is very difficult, it’s very costly, and it’s emotionally very draining. I know when you’re starting out in business, the last thing you want is any unnecessary expenses, but the girls were adamant that this one was serious and absolutely necessary, to in fact basically save you a lot of heartache and wasted money later.
Kay, I think it came really because Kay had had the experience of going into business originally with a friend, this was before she met Lisa. She had originally started out the business, and within a year of them starting a partnership the whole thing had fallen apart, and Kay was left on her own. Then she met Lisa and that eventually evolved into a partnership, which was a lot better, but she did learn a lot from that initial experience of that one year. In her opinion, getting and paying for the right advice is worth its weight in gold, because you just don’t know what you don’t know.
You think you know all the bits and pieces that could trip you up, but then when you get into the nitty-gritty of it you actually don’t really have it all covered, and you really don’t know the bits that you don’t know. For example, what I thought was pretty interesting is, how do you propose dealing with family and friends in the business? Do they get discounts? If they do get discounts, how much? How often? It’s better to decide all this kind of thing from the start, and to document it so there’s absolutely no confusion later on.
These are all the ground rules I suppose, that, you need to put the work into setting up before you open the doors and start doing business. It’s vital, vital, vital, so please don’t skimp on this one. It’s absolutely vital.
My second key takeout from the discussion that we had, it was another very important point, and the girls stressed it. It was the need for proper cashflow forecasts. Of course this one is very close to my heart, because I know it’s one of the key reasons that businesses fall over in the early stages, is lack of proper planning around cashflow. So many of us in business, we’re super keen to get on to all the fun stuff. We think our idea’s amazing, the world’s going to love it, and we don’t foresee any problems or roadblocks. I suppose when we see something through our own eyes it’s very difficult to see any roadblocks that might come. Unfortunately, as we all know, as life is known to do to us, a few bitter lemons can get thrown here and there, and before you know it you’re up to your neck in a mess with littler or no margin for error, and the result is never pretty. This is how a lot of people end up losing not only their businesses, but also their homes, family relationships, and even friendships sometimes.
How do we go into something, a business partnership like this, with our eyes wide open, but without boring ourselves to tears and dampening our excitement for our business? The way to look at it is this: How much more exciting is it to truly go after something when you know you’ve all your numbers done correctly, and more importantly, you know what your stop loss is? It takes a lot of the stress away, so it means you can focus your energy on actually growing the business, and you know you’ve kind of got your back covered.
For anyone out there wondering what on Earth a stop loss is, let me explain for a second. A stop loss, it’s a term traders use in the investment world. What it means, it means it’s a loss level past which the trader is no longer comfortable to keep the trade on, or to pump more money into a losing trade. It’s an automatic trigger point to say that the trade is a failure, and must be closed out so that new decisions can be made. It’s basically a risk mitigation strategy that removes the emotion from the decision-making process.
That’s key: Removing the emotion from the decision-making process. Because without that, as humans we’re prone to convincing ourselves that things might turn round, that our opinion might come to fruition, and you spend your whole time on the hope strategy. Of course the more important question really to be asking is, what if it doesn’t turn around? Does that mean total annihilation if it doesn’t turn around? Often in business it does, so it’s really important to actually have some sort of process in place where the decision is kind of made without you getting emotionally involved.
What I find strange is, I spent years in the investment world, and we used stop-losses all the time, risk mitigation strategies, because you can’t really assume anything with investing. But in the business world we often don’t think about these kinds of risk mitigation strategies. We just keep going until there’s nothing left in the kitty. It’s like throwing money into a bottomless pit in the hope that you can get some sort of dying horse to get up and race again.
I thought what was really interesting is, and I was proud of the girls with this, was to see that Lisa and Kay actually had this stop loss idea in their business from the beginning. They agreed at the outset a certain cashflow number, and what the expected result they needed from that cashflow number was, before that they would stop out, change tack, or if it came to it, break up the partnership, break the business up, and what the agreements are in that, if you do come to that, how does that all transpire.
I think this really demonstrates the benefit of getting good advice. I’ve said this a few times on the podcast, but having key people on your dream team and using them effectively to get the outcomes that you want, but also to protect you from the possible circumstances that you may not for see. It’s really good to have people on your team that can kind of lay out what might happen. Even if it doesn’t happen, have a process in place for how you deal with it if something should go wrong, particularly around cashflow.
The classic case of this happening, of course, is in the beginning, when a business is just starting out. It’s really hard to forecast sales and costs and time to market and all these things. These numbers can be thrown out daily, they can be moving really really fast, and can be very volatile, so it’s really, really important to watch your numbers like a hawk, particularly in the beginning. You need to be crystal clear on everything coming in and going out. Profit margins, costs of acquisition of sales, fixed and variable costs, and of course you need to have a strict budget, and you need to stick to that budget at all costs. In the beginning it’s vital, because this is about survival in the beginning, until you get through those first few years.
Having a strict budget is one thing, but you also need to know that you’re spending the money that you are spending, you need to know that you’re actually spending it on the right things. Because I’ve seen people do this before. Business owners spending their early money on totally unnecessary things, like flash offices, state of the art technology, stunning venues for client events, and all the rest, when really these are not the things that necessarily bring in the early dollars in a business. If you’ve got a huge budget then this is all well and good. Of course these things are nice to have, and they do create a perception of the type of business that you are, but usually early stage businesses are not so flush with cash. This is the fastest route to failure that I know of, and this is the reason that businesses actually fail in the beginning. It’s one of the key reasons.
In a partnership situation, this is actually exacerbated even more. If you’ve got one partner who’s really budget-conscious and focused on bringing in the money, and another one who wants to splash the cash around and make it all look really fancy and good for the client, this can create a really difficult and very stressful time for both parties, and it makes the partnership really, really hard to sustain. Both of you, if you’re in the situation, both partners will believe that they’re right, and the angst it causes puts terrible pressure on the partnership, and int he end on the business. Unfortunately clients can feel that, and it can often push clients away.
The trick with this is simply, not go for it, but agree things before you start out, and just get it documented, so that all you have to if an issue comes up is simply go back to your agreement and deal with your issues in the way that you guys have both agreed in your partnership an issue like that would be deal with. It really gets rid of the emotion. That’s exactly right, it gets rid of the emotion and defuses the situation when it comes up.
At the end with my chat with Lisa and Kay a really interesting topic came up, and it was about the unconscious biases that we still have in society around women and business, and women and money I guess as well. Lisa and Kay had said that they’re known as “bulldogs” in their industry with suppliers, and interestingly, most of the suppliers are men, because it’s equipment suppliers and stuff like that. They’re known as bulldogs because they are direct, they negotiate terms, and they have boundaries, and they’re very clear.
It was interesting that this exact topic actually came up with them last week in my chat with Marina Passalaris when we were talking about creating savvy teen girls. Both Lisa and Kay, they hope that their daughters see them as role models, but as Kay jokingly said, unfortunately her daughter’s also watching the Kardashians. Like Marina and I were talking about and lamenting last week, we’re not really sure what kind of female role models the media is portraying, and are we still perpetuating this message that just because women might be clear, or stand up and have boundaries, and are quite businesslike, why does that make them bulldogs? It was just interesting that that question came up again in the interview today, and it’s something I’m quite passionate about in terms of changing that perception in society about women and money, and women in business.
I think the next decade is going to be a really interesting one for women, and the next generation of female leaders and female business women are teen girls that are coming up now. We all have a responsibility, both men and women, to grow them in the right way. Let’s all start thinking about our unconscious biases, or even if we don’t feel we have those unconscious biases, how are we supporting some of the biases in society that may not be that supportive to women, or to our girls coming up? It’s time just to be more conscious, and see clearly what we’re all creating by not being conscious.
That’s it for this week. I hope you got lots of good tips there, and if you are thinking about going into a partnership I think it’s really vital that you take these tips. As always, if you enjoyed the show I’d love to hear about it, either in the comments, or you can comment over on the Energize Wealth blog at EnergizeWealth.com.
I’d particularly love to hear from you if you have had any business partnership horror stories that you’d like to share. Because I think a few stories would really help others in this community. If you’ve had a horror experience then just think how valuable it would’ve been to you to get some tips and advice an da couple of stories before you dived into that situation. This is something that you can do to help someone out there right now. This is a community for you to share in and grow in, so keep the comments coming. If you’re game enough, you can also comment on my Twitter chat, which I’m doing every Monday at lunch time, and using the hashtag #WealthUnplugged so you can join in the conversation then to.
Tune in next week. I’m going to be back and I’m going to be talking about what I learned about creating an award-winning documentary, but doing it on the smell of an oily rag, which is a great Aussie expression for doing something on a shoestring. Be sure to tune in then, and I’ll see you then. Thanks.
Speaker 1: Thanks for tuning in. Come and join us on EnergizeWealth.com to continue the conversation, get your free video training, Seven Steps To Energized Wealth, and watch the video interviews that were the inspiration behind this episode.