Why do you want to start a business? Sean Castrina thinks understanding the why is absolutely important. Sean is a bestselling author, a serial entrepreneur, and the host of The Ten Minute Entrepreneur podcast. He started his first company at age 23 and has not stopped since. Today, he shares his model for starting businesses with Melanie Parish. One out of every two startups fail. Don’t want to be a part of the statistics? Tune in to this episode to help you discover your why and start motivating yourself to reach for your goals.
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Starting Businesses: The Business Plan That Works With Sean Castrina
I'm here with Sean Castrina. He's a serial entrepreneur. Having started more than twenty companies over many years, he still seeks to launch a new venture annually. He's an investor, a teacher, and a highly sought-after speaker who communicates with humor and a bluntness that engages and captures his audience. He's the author of 8 Unbreakable Rules for Business Startup Success, The Greatest Entrepreneur in the World, and World's Greatest Business Plan.
Sean, I'm excited to have you here on my show.
It's good to be here.
Tell me a little bit about what you are working on right now in your world.
I'm an entrepreneur. I have a company that has eight divisions. That's the one that pays the bills and gives me the money to bankroll all my ideas or other things I'm working on. I'm working on a company with my son. That's exciting, a platform building company to help people launch their books because every company I've ever started always came out of a problem I faced. I found when I launched my book, I felt like I had to have six people doing different things. There was no company that could launch my book. I either had a PR company, podcast company and Instagram company doing this. We're trying to put that all under one umbrella with one strategy. That's the project I'm playing with now.
I don't know if you know that I've launched a book in April. I have lived that reality of the multiple people doing lots of things.
It's expensive. I don't think it gives the best return on money and/or time. I find there's a lot of disjointedness. My fourth book will be coming out in November. I've worked with my friends that are New York Times bestselling authors. The independent publisher which is the future anyway. A million books are self-published a year. There needs to be a one-stop source for that person.
Which one is your new book?
The one that I wrote in 2020. I only wrote this one because I was helping my son with this business and I was trying to get him to do a business plan. I speak at colleges and I ordered one book after another on Amazon. One book was worse than the next. I looked at this and I'm like, “This doesn't work.” I said, “Colin, here are the 25 questions that I always answer before I start a business.” I wrote the book, the World's Greatest Business Plan: That Works! That was writing a book to my son, 151 pages on this is all that mattered. This is all you need to get a business off the ground, but you better have answers to these questions. The idea was, if I talk you out of starting a business, I'm as happy as you starting a successful business because some businesses are not made for the marketplace. They only sound good and the head of the founder. When they expose it to the marketplace, it dies a very painful expensive death.
I've been a business coach for many years. I can't tell you how many friends have come and said, “Here's my business plan. Here's what I want to do.” I said, “Walk me through how that business can replace your $200,000 a year salary,” and they can't do it. I feel so happy that they didn't start that business because they had convinced themselves it was going to be fine.
I always tell them my big thing that I preach, never quit your day job unless you live in the basement of your parent's house. Barring that rare scenario, you’ve got to earn the right to quit your job and a business plan doesn't earn it. It's implementing a business that can generate 50% of your current income back to you. That's when you've earned the right to take that risk. You jumping off a cliff is fine. You jumping off a cliff and taking your wife with you, two kids in a college fund I don't think you have that right.
I'm in full agreement with you. Can you give us a preview of a couple more of the questions like the top question that might be in your book?
The big thing that I try to go on is, I want to know why you want to start a business in the first place. I know that sounds very simple but I want to know why. “Why” has got to motivate you, why do you want to be a business owner? “I want flexibility of schedule. I want unlimited income. I want to control my own career.” Your why is irrelevant to me, it has to motivate you when things get difficult because if you don't have a strong motivator on why you want to be a business owner, one out of every two startups fails. Your why has got to be compelling to you. The other thing is, “Why do you think this business idea will work?” These are questions that are on the so basic level but give me your elevator pitch why this business. Who's your competition and why are you going to be better than your competition? It’s a very simple type of thing. All the costs, people get the cost to start the business and they forget about how much it's going to cost to sustain the business.
Another massive mistake they make is that they have this revenue forecast. I love this imaginary chapter in every startup book but mine, you have no idea what you're going to bring in. That is a fantasy. Every startup book I've ever read, ABC Tool Company starts in Chapter 1, Chapter 15 ABC Tool Company is making all this revenue. It's amazing how they make enough revenue to pay all their bills and the founder makes money. I've never had that startup happen and I've started over twenty companies. What you think you're going to make is complete and utter speculation. The only thing that you can count on is the money you bring to the startup because how quickly and what you're going to make after the launch is a complete fantasy.
How do you help people grapple with that fantasy?
I have a way of speaking in such a way that I don't hide the ball. My wife said, “Sean has a unique way, you won't wonder what he's communicating.” It's like in the book. I'm like, “Tell me how you can guarantee that? Have you ever owned a similar business that you can compare it to?” In other words, if you're projecting something, what is your validation for that? Have you worked for a company that launched a new division? If you've done something that's parallel, that might give you a general idea and it may give you more confidence that the revenue is going to come in, but you can't base your business plan on it.
What do you base it on?
I base it on what you have in your pocket. That's your runway. In reality, it's truthfully the only runway you can count on. Let's say that you sign a five-year lease, which I would tell you never to do. Why? You don't have guaranteed money that's coming in. By following my model, I would have you do a three-month temporary lease to make sure this works. Even if the lease is twice as much money, at least if it doesn't work, you're not on the hook for five years personally responsible. It forces you to think differently to be more nimble and to negotiate better. Maybe you did a temporary store, it was temporary and you went into it. I liked starting businesses at the micro level to get proof of concept, to get some level of traction, and then you push all the chips in a little bit.
I always love the idea of the prototype. How do you make the smallest thing you can try it to see if you get uptake?
A guy said something good on my podcast. I thought it was neat. He goes, “Show me how you're going to get one customer, then show me how you're going to get ten. Give me your plan for 100 and then give me your plan for 1,000.” His whole point was don't give me your plan to get 10,000 customers. I want to see how you're going to get the first one.
The first one is hard. I'm launching courses and full automation on the backend. It's hard to get the first client. There’s so much work.
In our imagination, we're going to get a fat 10,000. That big number because it’s so big. His whole point that I liked was knowing what I now know what's my plan to get my first customer? What's my plan to get us to ten then to 100? For most businesses, I thought that was great advice.
Who should buy your book, Sean?
Anybody who is starting a business or anybody who has a business that is stuck. Businesses need to be reimagined. Sometimes they need to be rebooted. If what you're doing doesn't work, you see your profit going down, you see your revenue going down every year, and you see more competition. You sense that you are a fish in a shark-infested water. When you sense that either of those scenarios and you're going to start a business and/or your business is stuck because a stuck business can redo a business plan. Start over. You have some great things going for you and that you have staff. You might have location. You have some customers. You have a lot going for you. There are some massive gaps in a business plan compared to maybe even if you did one ten years ago, or you didn't. Doing a new business plan helps businesses very much.
Let’s shift gears a little bit. I want to talk to you about yourself as a leader. What things are you experimenting on as a leader right now in your own life and work?
Everything dies and falls on leadership, John Maxwell. My number one responsibility is to recruit leaders and train leaders. My company cannot grow without leaders. That is the hardest thing to find. You can find salespeople. You can find technicians and they're valuable. I have found the only way I can scale divisions, start new businesses and max them out is my ability. I always took this as my superpower, my ability to see potential in other people before they see it in themselves, recruit them, retain them and put them in key roles. That's what I've done for many years. That's why I have six business partners in very varying industries.
As a leader, you make critical decisions. I get that, but your ability to recruit, build people, and make them as good as you, that's when you're great. When you can replace yourself, when at 2:00 AM you're not only one worrying about a problem. I love that when we face difficult problems, I genuinely have other people that have started thinking about that problem sometimes before it even got to my desk. Recruiting leaders is that skill you've got to have.
How is it different in 2020 than it was in 2019?
The key now is if you didn't have good leaders, you're feeling it because your culture is probably suffering. We're trying to piece together some type of corporate culture. The more people you have on your staff that has a flock of people that listen to them, the better. You're probably paying the cost for it, but I do think there's a talent pool out there. There are people that are working from home that are open to doing two jobs or two responsibilities. The 40-hour work a week will be demolished at some point in many industries. I even find it with me with the startup that we're working on. I don't care how many hours you do anything. I don't care if you work from a hot air balloon. I don't care if you live in Zimbabwe.
Here's the job. We define what we want out of you. Ninety-nine jobs out of 100 need to be clearly defined with measurable and let people do it. Don't pay them for the results. The truth is if I hire somebody who lives in New York or I hire somebody who lives in West Virginia, I'm going to pay more for the person in New York because living conditions are higher. If I don't know that then the job and the responsibility are still the same. When you start looking globally for talent, it changes everything. Your pay scale and how you define responsibilities. Your ability to create a virtual team that is global right now is the difference-maker.
How do you take care of yourself as a leader? What do you do for your own self-care to rejuvenate?
I exercise. I'm a fanatic about exercising because your morning is critical. Every book you've ever read on highly successful people. Your first hour in the morning is I'm selfish. I don't look at my phone. I don't look at my emails. There's nothing I can fix at 6:00 AM that I can't fix it at 7:00 AM. That's a reality. That's one of the things that I've learned. Number two is after 6:00 PM, rarely is there a customer issue I can fix so why am I going to get aggravated at 9:00 PM before I go to bed? There is a point where you’ve got to turn it off, you’ve got to shut it down.
I try to manage my stress level. I used to think that was like one of my things I bragged about my capacity to solve problems and all that. As I get older, I guard my mental health in that. I manage my stress loads. I involve other people in taking stress from me. You’ve got to have time for yourself and exercise. Exercise is a great stress reliever. I exercise and I guard my first hour of the morning. I know what time of day to start shutting it down. Another secret I've learned as I get older, it's I don't much manage the to-do list. I don't have a lot of things I have to do. I have key responsibilities, but it's not like I'm doing twelve things in the course of a day.
I have to get major things done. I have major meetings where I need to be on. What I've learned to do is manage my energy level. I schedule my day like an athlete. This is when I'm at my best. Mentally, I need to be on that window. When I don't have to have it on, I can do these types of tasks because they're mundane, they're repetitive. I find myself managing my energy level, which gives me focus. I manage that more so than ever before.
I'm fascinated by the idea that you don't manage your to-do lists. You do a couple of things a day. That's lovely to hear.
I tell people it's like Rummikub. It's like Rummi with tiles. You try to get rid of all your tiles and whoever gets rid of their tiles, wins the game. My week starts with getting rid of tiles. I delegate it. I joke I would delegate a bowel movement if somebody would come up behind me and clean me. I'm not confident they would so I don't. The point is taken. I comfortably delegate. I have a loop to where I make sure it's all getting done and I delegate it to the right people. I give them measurable and time to do it. The point is that I want to get everything away from me that I can focus on the few things that only I can do that my staff knows only I can do. My staff wants me to stay in that zone. My staff will say to me, “What can we get off your desk? Is there anything we can take care of for you?” They know where I'm gifted.
What are you thinking about for the future?
There will be entrepreneurial surge. We're getting a look at how you're going to have to reimagine yourself. Online is going to be bigger than ever. If Amazon and Netflix didn't give you the future, you’ve got it now. You're going to have a business that is extremely nimble. Restaurants are going to reimagine how they do business because it could be something like this happen again. How would you do it? I do believe restaurants that can deliver home-style meals to houses is a gold mine. I order like Grubhub, but I never feel like I'm getting nutritious food. I never get that feeling and then you’ve got the delivery meals, but they always take like 45 minutes to cook. They always tell you like 20, but they're always like 45. I've done them all.
I'm doing good PR for this company, but I ordered like they had this family bundle like bonefish. They gave me a nutritious meal. It was a salad. You get a vegetable. You get a starch. You get a protein, and it was at a reasonable price. This should be your model. Why is eating inside your restaurant the model? It doesn't have to be, we all have to eat so change the model. At the end of the day, people would like to eat something nutritious and fast with quick cleanup. I'm not a restaurant guy, but I just reimagine things. I'm like, “There's got to be another model.”
I want it to cost exactly $55. That's what I'm meant for.
We have a dollar figure in our head that we're good with and I would have you cooked dinner for us four nights a week.
I'm with you. We’ve done them all. We've done everything.
I've had chefs that deliver me stuff. The problem is that I give them my credit card to go grocery shop. I look at it one week and he spent like $160. I don't know what they bought. I have to fire them. All I'm saying is that the pandemic, we still have to eat. If eating as a family has been more common because you were together. I always try to look at, what does new look like? Things are different but it's new. It will figure it out and there's going to be a business there.
Thanks for that. How can people find your book and you?
I love to give before I sell anything. You can go to my personal site, SeanCastrina.com. I always give away a book right now. We're giving away my first book, which was a bestseller, 8 Unbreakable Rules for Business Startup Success. It’s a good book. New York Times bestselling authors endorsed it as well as top universities and business schools. That's for free. That's a great way to understand the rules of a startup. You can go to Amazon, World's Greatest Business Plan. You're thinking about starting a business. I'm telling you this truly is the best business plan book because my eighteen-year-old son could understand it. That's important because I don't think we're all that much smarter than an eighteen-year-old had just got out of high school. How many of us are that much brighter? I wrote it so that an average person could understand it.
Thank you so much for being on my show. I've appreciated having you.
Thank you for having me as a guest.
I loved hearing him talk about creating a small three-month temporary business, which equates with agile model or nimble model, a way to prototype a business as you're starting it. I also loved how he talked about guarding his mental health and how he manages the energy in his day. It's a cool way to try managing your output as opposed to a to-do list. I love that he thinks of himself as an athlete in the way he thinks about that energy. I was also fascinated by his questions, “Why do you want to start a business?” Understanding the “why” is important. In my book, it’s part of the vision in The Experimental Leader as to what your vision is of how you want the world to be. Your mission is what do you want to deliver to the world. I wholeheartedly agree that your mission and your vision have to motivate you because times will be hard in business. As a business coach for a long time, I have watched so many times people starting businesses and those businesses struggling. It's so painful to watch people sink their life savings into a business that never had a shot in the first place. It was a pleasure to be on with Sean. Go experiment.
About Sean Castrina
Sean Castrina is a serial entrepreneur, having started more than 20 companies over the last 20 years, and still seeks to launch a new venture annually. He is an investor, teacher and highly-sought-after speaker who communicates with humor and a bluntness that engages and captures his audience. He is the author of 8 Unbreakable Rules for Business Startup Success, The Greatest Entrepreneur in the World, and World’s Greatest Business Plan.
A public speaker, consultant, workshop leader, author, and Master Certified Coach through the International Coach Federation, from whom she received the Prism Award, Melanie is an expert in problem-solving, constraints management, operations, strategic hiring, and brand development.