Mike Michalowicz is the author of the popular new book The Pumpkin Plan and the business cult classic, The Toilet Paper Entrepreneur. He is a serial entrepreneur with three multimillion dollar companies to his credit and a globally recognized entrepreneurial advocate. Mike is also a former small business columnist for the Wall Street Journal and host of the business makeover segment on MSNBC’s “Your Business.”
MM: Thanks for talking with us, Mike. Where did the analogy of comparing pumpkin farming to running a business come from? MIKE: Years ago, I hired a business coach. He told me I was doing 95% of things right, but it’s the other 5% that’s throwing me off. I went through the list of things I needed to change and it was overwhelming. Then, I read an article about a pumpkin farmer who grew nearly one ton pumpkins. He said that he was just like any other pumpkin farmer, but he does it 5% differently. And that’s what triggered the Pumpkin Plan. I researched colossal pumpkin farming and discovered the few things they do differently results in explosive growth of the pumpkin. I then applied it to my own business. And with just that little 5% change, my business started growing.
MM: The first step you talk about in The Pumpkin Plan is refining your seed selection. How does that apply to local business owners? MIKE: The ordinary pumpkin farmer plays the quantity game. He thinks the more seeds you get the better. The colossal pumpkin farmer is highly selective with their seed. Ordinary entrepreneurs often try to find the hottest trends such as social media they think will finally make their business work. Colossal entrepreneurs—ones that dominate their niche or are the category leaders—exploit their uniqueness and do something they’re passionate about. They make sure there is a repeatable customer demand from clients that they like. And they use systemization which means can you deliver your product or service, recruit prospects, and have them refer you to others all while you’re sleeping.
MM: The next step you discuss is focusing on sprout observation. What does that mean to business owners? MIKE: Ordinary farmers look for weak sprouts and take steps to help them grow. Colossal farmers ignore weak sprouts and pull them out. They know the strongest sprouts show the strongest potential. The colossal entrepreneur, just like the farmer, focuses on only the strong clients and focuses all their attention on them.
MM: The third step is water, water, water. How does this translate to the business world? MIKE: Ordinary farmers water one spot really hard once a day which can saturate and damage some plants. Colossal farmers use a technique called “frequency.” They water the colossal sprout in smaller amounts up to ten times a day. Ordinary entrepreneurs do mass watering. This saturation effect may actually offend the customer. Colossal entrepreneurs do the frequency model, which automatically builds trust. The more frequently (customers) see them, the more they begin to trust them … and that leads to explosive growth.
MM: The fourth step is building root systems. How does a business owner do that? MIKE: Going back to the farmer analogy again, ordinary farmers just focus on the surface level, the quality and health of the leaves. The colossal farmer thinks the most critical part is the root system underground. Ordinary entrepreneurs try to grow their business by working at the surface level and asking for client referrals. Conversely, colossal entrepreneurs focus on the root system. They ask the customer for the names of other vendors they work with so the entrepreneur can improve the service they give to that customer. Odds are, those vendors have access to other customers just like the one you have in common.
MM: The final step is weeding constantly. What does that mean? MIKE: Ordinary farmers do very little weed control. They throw down pesticides, but you won’t find them picking out the small stuff. Colossal farmers pick out a weed the second it pops through. Everything they do is to protect the colossal pumpkin. Distractions are often labeled as “opportunities.” They have three key questions they use when evaluating a new opportunity. 1) Does this better serve my uniqueness? 2) Does this opportunity better serve my top clients? 3) Does this opportunity further enhance or maintain my profitability? If they can say “yes” to all three questions, then it’s a colossal opportunity and they’ll do it. Otherwise, they’ll say “no.”
MM: Letting customers go or saying “no” to opportunities are radical ideas to most entrepreneurs, especially when their business is already struggling. What would you say to convince them this works? MIKE: One of the secrets I’ve found is that ordinary entrepreneurs say “yes” to opportunities 10 times more than they say “no.” Whereas colossal entrepreneurs will say “no” 10 times more than they say “yes.” If you want to take your business from Point A to Point B, there’s only one path to get there. Taking that direct path should be serving one type of customer and getting extremely efficient and effective at it. The less we do, the better we can do it.
MM: How does a business owner know when they’re ready to implement The Pumpkin Plan? MIKE: Usually when you’ve hit a plateau. Every business hits that certain sticking point whether it’s $100,000 in sales, $1 million or $10 million. But you can implement the Pumpkin Plan from day one. I Pumpkin Planned my second company from day one. Two-and-a-half years later, I sold it for a fortune.
MM: What kind of businesses would benefit from using the Pumpkin Plan? MIKE: I hate to say it works for every single business, but it really does. In the book I discuss about 13 or 14 different industries from rock bands to more traditional ones like lawyers and accountants because I wanted to prove how it can work in anything. If you’re plateaued, deploy it. If you’re just starting out but have some business experience, deploy it.
MM: What are 3 things a local business can do today to start incorporating the Pumpkin Plan? MIKE: The first thing you can do is analyze your seed. How is your business unique and who are your best customers? The second thing is to get in a support group like Entrepreneurs Anonymous. If you have a group around you that’s trying to do the same thing, there’s support in numbers. The third thing is to fire that bad client. The emotional relief you’ll get and the time you’ll save is immeasurable.
MM: What are 3 key points you want entrepreneurs to take away? MIKE: First, any business can be unique. Take for example the shoe industry. Look at FiveFinger Shoes, Uggs and even Crocs. The second thing is if you’re not satisfied with where you are today in your business, recognize this is a result of actions and decisions over the last five years. If you continue taking the same actions and making the same decisions, five years from now, I can predict where your future’s going to be—in the exact same spot. That’s why you’ve got to make those changes. The third thing is to start now. Time is ticking.