The Business of Business - Two Daughters & Their Dad

#6: Reinvesting In Your Business - Right from the Start

April 02, 2020 Two Daughters & Their Dad Season 1 Episode 6
The Business of Business - Two Daughters & Their Dad
#6: Reinvesting In Your Business - Right from the Start
Show Notes Transcript

Welcome to the Business of Business - Two Daughters & Their Dad Podcast!

In this episode Jennifer Dempsey asks for help on a decision to bring in a new product line.  The discussion centers around living like you are at the end of the tube of toothpaste - another nugget from Jack!

The Dempsey's talk in detail about the importance of reinvesting during each and every growth in your business and Jack explains more on the Sigmoid Curve - https://www.dumblittleman.com/lesson-of-sigmoid-curve/

Tune in for tips on when and how to reinvest in your start-up versus taking that money out for lifestyle right away.

But who are the Dempseys?

Jennifer Faith Dempsey has been in the beauty industry for over 10 years. The last 3 1/2 years she has owned J.Faith Hair Studio. She brings her experience on how she balances entrepreneurship and motherhood.

Staci Joy Dempsey is an insurance agent, a mom and a busy non profit volunteer. She truly understands what it means to be an entrepreneur.  Staci serves as the podcast's host.

Jack Dempsey is the dad who heads up this busy family.  He is a founding partner in Dempsey, Weiss & Associates, an Elmer, NJ based insurance and investment firm begun more than 30 years ago.

The Business of Business podcast is sponsored by:

Dempsey, Weiss & Associates, Elmer, NJ,     856-358-3900

J. Faith Hair Studio, Logan Township, NJ     856-975-5965

Email us at: TwoDaughtersAndTheirDad@gmail.com

Please download our Best of Nuggets eBook here.

Like and follow us on Facebook

Jennifer Faith Dempsey has been in the beauty industry for over 10 years. For the last 5m years, she has owned J. Faith Hair Studio. She brings her experience on how she balances entrepreneurship and motherhood. Check out Jen’s blog.

Staci Joy Dempsey is an insurance agent, a mom, and a busy non-profit volunteer. She truly understands what it means to be an entrepreneur. Staci serves as the podcast's host.

Jack Dempsey is the dad who heads up this busy family. He is a founding partner in Dempsey, Weiss & Associates, an Elmer, NJ-based insurance and investment firm that began more than 30 years ago.

Staci Dempsey:   0:00
Hey there.  And welcome to the business of business podcast. Here were two daughters and their dad seeking to inspire and educate you to follow your dreams of being in business by teaching you the business of being in business. The good, the bad, the humor are all parts of our unique perspective as an entrepreneurial family. Thanks for joining us. So grab a coffee. Turn up the volume. Here we go.  

Staci Dempsey:   0:26
Well, welcome back everybody to The business of business. I'm Staci J. Dempsey.  The J is very important. It brings the joy. And I have with me the dad and the other daughter I have with me.  Say hi, Jack.

Jack Dempsey:   0:47
Hello, everybody.

Staci Dempsey:   0:48
Hey, Jennifer. Hi. How's everybody doing today? Feeling good? Good, good, good. I have also. So I just want to start by asking the both of you how has everything is.  Has there been anything new that maybe has come across your desk, your business? Any new experiences based on maybe any of the conversations we've had in the last couple episodes kind of it would give us a little nuggets about what's been going on.

Jennifer Dempsey:   1:25
Well, first, I want to say this past week was our week before Christmas craziness in the salon and we did our best numbers financially. 

Staci Dempsey:   1:39
What does any best members financially this year or ....

Jennifer Dempsey:   1:42
in a week. In one week, period,   We've had our best week ever if three years of being in the salon. So the salon is thriving.  the salon is  growing.  So that makes you  excited to get back to work!

Jack Dempsey:   0:00
It makes me excited too!  

Jennifer Dempsey:   2:00
I want to talk about something that I have been struggling with in my business, and it's funny because I would have normally just call my dad on the phone. But I waited until we got to our podcast to bring it up.

Jennifer Dempsey:   2:16
So we've been talking lately about bringing in a new product line in this line. This is something we do from time to time.  In the salon we have to keep up with trends, so we brought in some products. We have the stylists try  them out.  Everyone's really liking them.  They are higher price point product line.  I brought it to my staff's attention that if we wanted to bring it in, it was going to cost between $2,000 to $4000 to invest in this line.   I am still nervous to write the check.  I think in my world that $4000 makes me nervous even after three years of money coming and money going.     

Jennifer Dempsey:   3:10
I love the product line. I want to bring the products on.  Do I necessarily want write a check that big. No.   So what do you think? What should I do?    So let me back up. After I've talked to the staff, I definitely felt like I didn't get my message across in the right way. And that's my point.  I am definitely still growing as a leader in that aspect, 

Jack Dempsey:   3:43
So what do you mean?   What was their response?  What makes you feel like they didn't get your message coming across.

Jennifer Dempsey:   3:51
I had most of the staff with me - and there was a couple girls that were not there - and I had asked them to relay the message because I had to do a client's hair.   And as I overheard them talking all I heard them say was Jen's about to spend a whole bunch of money, so we have to sell this product. And in that moment, I knew I probably didn't have the right kind of conversation.

Jack Dempsey:   4:23
So can you remember what you said exactly to them?

Jennifer Dempsey:   4:29
Well, we've been talking about this product line for a while. I said, You know, I think we're ready to do this in 2020 for a new product line.   But I need to make my money back us as soon as possible.  So I definitely made it about me, my salon and my money instead of ....  I just feel like it could have went a different way especially when I heard the stylists in the back. It's like Jen wants to make her  money back and that was definitely not the right message.

Jack Dempsey:   5:02
Yeah, well, I think  you probably hit on the head from that from that perspective. You know, whenever you take on something new, it's been my experience is that communication to your team, to whoever's going to be involved -is very important.  

Jack Dempsey:   5:21
So it does sound like your communication was more from a position of fear of losing than how this might create opportunities not just for the salon but for them as individuals and how this investment could benefit everybody.   So that probably would have been a better approach. You know that would have resonated and given everybody, including yourself, probably better deal for you know how the team was going to respond to  picking up a product line with the higher price point.

Jennifer Dempsey:   6:05
Yeah, and I know that we've talked before and I feel like after the fact.  You go home and you're digesting your day, and I almost heard your voice in my head saying, You definitely just talked to them in a very fearful way, instead of having confidence about what this salon is about to do in their next move.  

Staci Dempsey:   6:32
Don't you hate when that happens, Dad's voice just pops up in your head like that.  Stop, stop.  

Jack Dempsey:   6:39
I know I love it

Jack Dempsey:   0:00
  

Jennifer Dempsey:   6:43
I love it too because I think OK we're learning. We're growling. I'm still on making the right decision, but we're still learning. So if I have to ask, how would I position that better next time?

Jack Dempsey:   7:02
again from the position of opportunity.  I mean, there's nothing wrong with  being humble about something or just explaining that you've made a decision or you're contemplating making decision too make a significant investments in a new product line for the for the salon.   I'm a bit nervous about it.  But here's where I see the opportunity for everybody and then just move right into the opportunity.  

Jack Dempsey:   7:32
So I don't think there's anything wrong with sharing that you're a bit nervous about it. But when it's that's the predominant emotion coming  - fear - we could really lose money here, that  is obviously going put put everybody on defensive. So just share your concern and then be really prepared to share the opportunity stuff for that.  You know how they can really benefit and how your clients can benefit too.

Staci Dempsey:   8:12
Yes, it really comes back to ,I know you mentioned it in a glass episode about, just that fear of reinvesting and what that looks like.   But then also why we fearful.   Jen you alluded to just finally started making and having a little bit of leeway, financially and there's now a little bit of a cushion.    It's not the drought every single,  every single month.  Out here is certainly new opportunity for the salon. Those who were involved in your salon with this new product line know what that looks like, but it was simply fear.    So you  didn't write the check yet, though.  Did we get over the fear?    I know we didn't communicate very well over the line and this situation but did we take Dad's advice?  

Jennifer Dempsey:   9:12
Yeah

Staci Dempsey:   9:14
Did check it cut yet as they say?

Jennifer Dempsey:   9:17
Yeah, we will have a new product line starting in the new year. But I think we talked about this before. Just me, h ow I am as a person, and I'm sure other people can relate, is I find comfort, whether in my personal life and in my business, with money in the bank. Right.   So that makes me feel comfortable.  Having a lot of money in the bank makes me even more comfortable.  So I think, especially when you know when you're starting a business it's a lot of thinking oh we have some money, we let go of some money.  So when you get to a place again three and 1/2 years in businesses where we got a little bit of cash flow, you want to hold one to it even more; that is hard to reinvest.  It's hard to say OK, I'm starting to feel a little comfortable with what we're doing here. Do I want to go ahead and drop a whole bunch more money into my business when I just got comfortable?

Jack Dempsey:   10:25
I think this is a great point of being a lot of entrepreneurs face. You know what you're describing, Jen. One of the things I think is important, and for you, is to get to the point where you can have money set aside. For example, if  I was talking with an individual about finances I'm going to be talking to them about the importance of having an emergency fund - you know, money that that if they lost their job or something really went sideways, that they would have money that they could access quickly to pay their bills.   And depending on the type of work that the folks are in, that emergency fund could be three months if they're in a very secure type of job or six months if there's a lot of volatility.  

Jack Dempsey:   11:23
 I think that really, in business, it really is the same way.  Once you get enough money where you have three or four months that you could pay the expenses of your business through a business downturn of some kind, that's probably a pretty good comfort amount of money to keep.   Then, like I would counsel individuals, once you get that, then you got look at OK now where can I invest.  Or how should I invest?    

Jack Dempsey:   12:01
The other question that you should ask yourself -  or entrepreneurs should ask as they go into things like this and where they're looking to make a decision - the first question is, what's the worst thing that can happen?  You know, the worst thing that can happen is you lose your entire investment. You know that you don't sell any of it that you don't make one penny.   So you mentioned 2 to 4 so lets just say that is was 4000 that you invested and you lost every penny.  Are you gonna be able to open the doors here salon following that?    Yes.    So that probably should give you the comfort to say, you know what? I'm not betting the farm on this particular product line; if it goes bad that it's going put me out of business.  And I think that's how every entrepreneur should approach that reinvestment is they should reinvest.  And we'll talk about that I think it's a more detail, but you never want to put yourself in the position that you could lose everything truly, everything with with one investment.

Staci Dempsey:   13:12
Right? And I know that last episode Jack you did touch on it  we're gonna talk about it now. The sigmoid curve was something that you had mentioned last time. So can you just go a little bit more detail about exactly what that is, What that means to our entrepreneurs and just really what that looks like?  

Jack Dempsey:   13:36
Sure. First of all there's, there's a video out there and you can just Google i under what is the sigmoid curve.   It's like a five minute video that explains it very well. But basically it's a mathematical equation that says that when you have a starting point, and you are say for example, starting in business, the first part of that curve is downward, meaning that before you start growing, you're going to go backwards. You have to go through that period of discomfort where you're going backwards. But then you start to grow  then the curse starts to move upward. And then the question is at what point on this curve do I reinvest in my business for continued growth?  

Jack Dempsey:   14:30
Because what the sigmoid curve says is if you don't re invest in your business, your business will plateau and then at some point turn on itself.  This means that you actually start going down again because you didn't make that necessary investment in your business.  

Jack Dempsey:   14:50
So that plateau point could be certainly different, depending on the business.  But the challenge with that reinvestment is you're going to reinvest as the curve is going up, not once it plateaus. Then that is  usually too late.  So as it's going up why do you think that that's hard to do?

Staci Dempsey:   15:17
I think it's hard to do because, you know, if you're on the upward, it means that you're starting to have some cushion. You're starting to have a little leeway. You're starting to see where all of the sacrifices and hard work you've been putting into your business and now you're starting to see the fruits of your labor.  And, as Jennifer mentioned just a couple minutes ago, I'm going hold on to some of that fruit.  I want to hold onto and it feels good. There's a comfort. There's finally, we're making leeway. So I think this probably very difficult to do when you start feeling like you're starting to see the light at the end of the tunnel.

Jennifer Dempsey:   15:57
Especially coming off so many years of being uncomfortable. I think that's what it comes back to, being uncomfortable.  Feeling the pressure.  You kind of get to say OK, we're making it, we're making it. I want to hold on to this. This feels good. I don't necessarily want to jump back into being uncomfortable. I just lived there for how long? How many years?  So I definitely could relate to why that is hard.

Jack Dempsey:   16:28
Well, that's exactly right. You know what you both just said.  When you reinvest back in your business, when you're investing on the growth side of the curve, it starts over again. So, as I said earlier, you have a starting point and your first movement in the curves downward and discomfort.  And so now, suddenly you've taken your business do an uncomfortable phase. Now you're in growth and nd now you're sitting there like now I have to hit that uncomfortable place again because the first movement on that re-investment is going to be downward.   Usually.    

Jack Dempsey:   17:14
And so you've got to say, All right, I'm ready to be uncomfortable again in order to continue to grow.   So it's developing the perseverance and the really the internal fortitude to live because in order to get your business to a certain scale, you might have to do that - several times on the curve - because once you're started new curve on the upward the now again, you're gonna be at a point where you say OK, now, where do I where are reinvested on this curve.  So you have to be really determined to say, you know what? I'm OK with being uncomfortable because I know that's what I have to do to continue to grow.

Staci Dempsey:   18:12
So as far as you know  people feel uncomfortable about reinvesting in their business or they are  fearful about reinvesting in the business. What do you think is another another reason that people don't   reinvest?  Is it ,do you feel,  because there's a stigma attached to I know  you own your own business, so that must mean you're like a  billionaire right?   You know, I own my own business,  she owns her own business, and she just must have all this cash flow.   So besides, you know that kind of stereo-type,  which often times is not not true, what do you think is another reason why it's hard to reinvest. Where did people are  putting their dollars at then?

Jennifer Dempsey:   19:03
Oh it comes back to just lifestyle.  I mean especially when you're starting a business from ground zero and you start to grow through that you feel like, you know,  I'm OK so now I can finally buy a new car. You can finally start to gain more materialistic things. So to make that sacrifice again, I'm sure that that is probably harder the second time.

Jack Dempsey:   19:36
And that's exactly right. So one of the things that entrepreneurs, where they make their mistake, I think, they want they want to start to see the fruits of their labor. They want others to see the fruits of their labor.   So that could be going from driving, a dependable, decent car to something that's a little more flashy.  Something that symbolizes success or could be other toys, it could be a bigger house, things of that nature.    And so now all of the sudden that investment or the money that would go into reinvesting on the curve is going into a lifestyle.  

Jack Dempsey:   20:22
There's an old saying out there that that farmers use  - that house will not build a barn, but a barn will build a house.   So you'll never be able to grow your business if you're going to be investing in lifestyle because you won't have the resources to do it.  

Jack Dempsey:   20:43
So that's the other piece of it is to stay really lean.   That's not easy to do. Much easier said than done.  But to stay lean with your lifestyle so that you are in a position to reinvest.  

Jack Dempsey:   21:00
I'm now if you're single and you're only answered for yourself, well, maybe that's that's easier to do. Not easy, but easier.   But if you're married and have a spouse and you know the spouses sacrificed along the way to get that business off the ground, that could be a tougher conversation because again they want to start having more, doing more, taking better vacations, driving a nicer car.  That could be a real challenge to even keep your spouse engaged in a lean lifestyle so that you can invest in your business, It's just essential because you have to have the dollars to reinvest.  If you pull money out of your business, it's just not going to be there. There's gonna be a point where your business will plateau and you will be frustrated. So live at the end of the tube of toothpaste!

Staci Dempsey:   22:07
Nugget alert!  Live at the end of the tube of toothpaste.

Staci Dempsey:   22:18
Okay, so on that note, we will wrap this episode up. Thank you, Jack. Thank you, Jennifer, for your time and effort and insight. And so this will end our episode of Two Daughters and a Dad.  We  will see you guys next time. Thanks.

Staci Dempsey:   22:34
We want to thank you for listening today.  Please subscribe and never miss an episode. Leave us a positive review. And we want to say thank you to our sponsors Dempsey, Weiss & Associates and J. Faith Hair Studio.