Mastering Market Dominance with Michael Barbarita, Founder of Next Step CFO

[00:00:00] Speaker A: Business owners keep doing what their competition is doing. They look and see what others are doing and they copy it. That's a problem. It's identifying the problem they have they don't want with the solution they want they can't find. So our conversion formula is four parts. That's the position of market dominance. When you can identify a problem that the customer has and doesn't want with a solution they want, they can't find, that's dominance. [00:00:24] Speaker B: Welcome to the Entrepreneurs Lockbook podcast. I'm your host Zach Bernard. You can find me on social at. It's Zack B. In each episode I bring on X experts from various industries for to learn about their strategies and insights driving extra business growth. Today we're joined by Michael Barbarita, founder of NextStep CFO, a firm that helps small business owners implement financial and business strategies that their competition simply is not using so they can take back their time and build more consistent, predictable profits. Michael's a 40 year veteran across retail, manufacturing and service businesses. He's also an award winning public speaker, a co author who's put his framework into practice. Not just on paper, but he's probably well more well known for taking Ski Town USA from 2.5 million to $8 million in annual revenue in just under five years. And he has since gone over to solve over 50 clients around the world through his company. Michael, it's great to have you on the show. Welcome aboard. [00:01:22] Speaker A: Thank you. Thank you for having me, Zach. I appreciate it. [00:01:24] Speaker B: Well, I'm really excited for this conversation. I mean we've had a lot of people around marketing, all sorts of like area. But on like the finance side of things, I don't think we've had a lot of people, especially on like the, the CFO side of things. I mean I've seen people around like taxes and everything, but the CFO component is like always interesting. But one of the things I always like to ask anyone that comes on the show, it is a business entrepreneurship podcast and you've been around the block. My goal, to put it very simply. So I'd love to hear if you had to like rebuild your company from scratch knowing like everything that you know today. What's kind of the do one thing that you feel you would do differently that a lot of people get wrong. [00:02:01] Speaker A: Right. Well, it's actually two things. Okay. I hate not answering, but it starts with a customer avatar because you really have to really focus in on who that customer is. And you know, when you're preparing a customer avatar, it isn't A group. It's one person that you should focus on. For example, my customer avatar isn't between the ages of 35 and 65. As a matter of fact, I've never seen one human being between the ages of 35 and 65. So they're, they're either, you know, 50 or 61 or whatever. Yeah. So my, for example, my customer avatar is Harry Hopper. He's 43 years old. He, he's married to Sarah. Sally. Sally Hopper. And they have two kids. And I get very specific, and it's six pages long, my customer avatar. Because I want to know exactly what my customer is thinking at all times, how they're feeling, what, what their challenges are, what their opportunities are. And so all of it's documented. And I think that when you start with that and you really know who your ideal customer is, it helps you moving forward. It's just make. It just gives you so much clarity. And then the next thing I would do is I take that avatar and I'd start developing a strategic partnership network because it's not going to cost me any money out of pocket for advertising or anything like that. And therefore I'm going to be able to start from scratch with no money, develop that strategic partnership network, which is a corporate. Quite an evolved process, but it, but it's an effective one and it's not traditional networking, I could tell you that. [00:03:45] Speaker B: Yeah. [00:03:47] Speaker A: And so that's what I would do. [00:03:49] Speaker B: I love it. So take taking a more like a strategic approach because I feel like a lot of people, they're going to target everyone and anyone and then like, hey, maybe something is going. You're going to throw some spaghetti on the wall, you'll see what sticks. And hopefully it's a good demographic that you want to target, but you want to like, go a little bit more narrow down to figure out exactly you should be working with. But before you even go to like, market, try to reach out to those people. A very more like thoughtful or methodical approach to doing it, to put it simply. [00:04:17] Speaker A: That's right. That's right. Because you know what, what tends to happen when you, you know, you're so excited to make your impact in the world. So you, you, you want to start right away. And you know, you do a lot of different things, as you said. And I just like to keep it focused down to that, that customer avatar being very important. And by the way, once that customer avatar goes into AI could do a lot of, could do a lot of things with that. [00:04:44] Speaker B: Oh yeah. But the second point that you touched on. I thought that was interesting because, I mean, it's something that we do to try to create like more partnerships with people, like strategic partnerships and everything. And it sounds like. And I mean, I've seen this. I mean, we're guilty of that too. Where we're going to do like a lot of outbound, we might do like paid ads and then we somewhat slack on like the partnership side of things and like trying to build relationships with people because it's a very low cost, like, option. Like you build that relationship for years to come. I mean, I imagine you've been in the space for a while. I imagine you probably have people that you started partnering with in the beginning of starting your company. You're probably still working with them today. And if you compare that to paid ads, I mean, you'd have to spend every single day to be able to get new customers. And I feel that's an interesting approach. No one has ever mentioned that. [00:05:29] Speaker A: Right, right. Because. Yes, because what we believe in is low cost and no cost strategies. That's what we believe in. Yeah. And so that's just, that's just one of many. But that's one of them. Yeah. And you got to really understand how you're. First of all, you got to identify other businesses that sell to the same customers as you do. That's, that's the, that's definitely the first step you have to identify. We call it, sometimes we call it identify your allies. Yeah, these are businesses that offer complementary products or services at different stages of the customer journey. That's the ideal situation. So you identify who they are and then you, you prepare. You don't just have a zoom meeting and say, yeah, I'll tell you, I'll tell you what, when. Yeah, certainly, definitely. Customers come my way. I'll refer to you. You know, that never happened. That never happened. [00:06:25] Speaker B: Yeah. [00:06:25] Speaker A: So, right. Or rarely. It just doesn't happen often enough and it doesn't have it consistently. So when you can actually prepare a presentation of how each person in the chain is going to benefit and how much value it's going to bring to their business, then that's where the strategic relationships really come into play. Yeah, they don't come into play. And just you and I getting on a zoom. We talk about each other's business and then we forget about each other, essentially. Yeah, that doesn't, that's not how it works. You need committed partners who are willing to, you know, participate in a very structured strategic program that's going to benefit the whole chain. And Usually you could find three or four, five, five businesses either before they use you or after they use you to form strategic alliances with. [00:07:22] Speaker B: Yeah. [00:07:22] Speaker A: But the critical component is that you do the work to prepare the proposal that's well thought out that you could partner with. And by the way, there should be referral fees both ways in your plan. [00:07:37] Speaker B: Yeah, and it's so true because I feel like I've run into that scenario before where like, if someone's gonna be like, hey, let's jump on networking call, see like how we can partner together. And then like you end up like, yeah, I mean, if I have anyone, like, I mean, I'll send them to you, I'll add you to like my vendor file. But it doesn't actually convert into becoming like a profitable long term partnership by any means. And I feel that that's where you need to have like that more structured. So I love that thought. That was a good insight here. But I'd love to like shift gears a little bit because I know we talked about like that advice that you mentioned, but your company, I'd love to hear like what you, what you do, how you help people, how you help move the needle. There's obviously a lot of people that they're going to hear cfo, first thing they think is okay, they're probably going to do maybe some bookkeeping and everything. But I know, I know you go a little bit beyond that to put it simply. [00:08:24] Speaker A: Yeah, yeah. Well, we don't, we do not provide bookkeeping. We're strategic CFOs, by the way, which is really important differentiator because if, if a CFO was going to get a job with a Fortune 500 company, they would need to understand business strategy or they don't get the job. However, fractional CFOs get away with understanding the business strategy. And that's what our key differentiator is. We not only understand the financial ramifications or the financial impact and opportunities in your business from a financial side, but we also understand strategy and the financial ramifications of implementing that strategy. So we combine the CFO services, fractional CFO services, with strategic implementation. And so what does that involve? Well, first of all, first of all, one of the important things in working with us is speed. Speed to implement is a critical factor in success. And so we focus very much so on speed. We are, we have developed a, a 10 minute assessment with, it's called, it's an AI assessment with, with the business owner. It's free, it's 10 minutes. The business owner will learn three strategies and how to implement them. But that's all in ten minutes or less. So we're big on, on speed and developing and developing implementation plans quickly. But in terms of working us with us, we tell you the story your financial statements are telling you. Every, every set of financial statements tells a story. Business owners who don't have financial backgrounds, they don't know what that story is, but they need to know. So we tell you the story of financial statements are telling you. We also give you the, the five vital numbers that you need to know at a minimum. At a minimum to manage your business effectively and how to track them. We do forecasting, which we may have an opportunity to talk about a little later. And the advantages of a forecast. Yeah, we find out your number one goal and what's been stopping you, standing in your way or slowing you down from achieving it. I mean that's the most important thing. You know, the business owners, most business owners, number one goals, by the way, when you whittle it right down, is time freedom and leverage revenue. They want to have, they bought, they got into their business so that they can have time freedom, the ability to make memories with their families, the ability to work on other projects. But what ends up happening is the business ends up running them instead of them running the business. Yeah, and, but, but, but when we understand your number one goal, which is like I said, most of the time is time freedom and leverage revenue. What I mean by leverage revenue is the business runs by itself without your supervision, without the business owner's supervision. So that's usually the number one goal of most business owners. Not everyone. Some people just want to create a legacy. That's fine too. But 90% of the time the number one goal of business owners is time freedom and leverage revenue. And then so we, we usually now, now we're in on the focus, in on their number one goal so that we, we understand where they want to go. And then we begin the implementation of five core business strategies. How to free up your time. Our seven step pathway to profit formula, the conversion formula, which is driven by the avatar and establishes market dominance, strategic partnerships and joint ventures that we talked about briefly earlier and capturing what I call the 97 to 99% of prospects who are on the buyer's journey. Yeah, so there's a lot of things that business owners aren't doing that they should be doing that will help them get the time freedom and leverage revenue that they're looking for. That most of them are looking for. [00:12:53] Speaker B: Yeah. And I wanted to Touch onto, like, an idea that you have, which I thought was, like, pretty interesting because I feel like everyone maybe has a different perspective to that. But you're saying that a lot of business owners, everything that they've learned about growing in business is, like, totally wrong. And then, like, directly when I'm hearing that, I'm like, what is Michael talking about? Like, there has to be some secret sauce that he has that he's going to share with us. I was a little bit curious, and I'd love to hear what you have to say about that, that bold statement that you have there. [00:13:21] Speaker A: Right. Well, the reason why I say that is a couple. Couple things. So one, business owners keep doing what their competition is doing. They kind of look and see what others are doing, and they copy it. That's a problem. Okay. 95% of business and financial strategies used today are identical to your competitors, and they don't work. So that's. We. We come in with the 5%. So that's number one. They also don't understand that 20% of their activities drive 80% of their revenue. It's another way to leverage your time. 20% of your activities drive 80% of the business. Yeah. And business owners aren't focusing on that 20%. And then they don't understand that the key to getting your ideal prospect is in the messaging, not the platform. The, you know, like, people will say, well, what's better? Facebook ads or LinkedIn ads or Facebook ads or Instagram Twitter ads or. Yes, yeah. Or you name the social. The social platform has nothing to do with that. Has to do with the messaging that you have. That's where business owners see picking the platform is tactical marketing. Strategic marketing is dialing in into the messaging of your ideal prospect. So that's, that's where business owners get it wrong, is that doing what their competition is doing. They don't understand the 20% of activities that drive 80% of the revenue. And they don't understand that the key to getting your ideal prospect is in the messaging. [00:14:58] Speaker B: Yeah. [00:14:58] Speaker A: Not the platform. [00:14:59] Speaker B: I mean, it's so true. [00:15:00] Speaker A: Not the. Not the media. Yeah, not the media. It's the message. [00:15:03] Speaker B: I mean, it's so true because, I mean, you see, like, so often that if you have a good offer, regardless of where you place it, if there's people out there and you have an amazing offer, it's going to convert. You just literally have to have a good offer, have a good messaging. The platform obviously plays a role in that. But the big part of the puzzle is going to Be like how you frame your offer, your messaging. And that seemed. That's exactly what you're saying. That probably a lot of people just go totally wrong about this. They're just trying to think like, oh, are we going after LinkedIn, Facebook and everything like that. And then while you look at your offer, and then it's terrible. Not going to work. [00:15:36] Speaker A: Yeah, that's tactical. Yeah, that's tactical. Yeah. When you're trying to pick a platform and saying, okay, in other words, what you're saying is that any messaging will work. What's the right platform? Yeah, you know, and that's just not the case. [00:15:50] Speaker B: I want to go back to an idea that you talked about earlier. You brought it up, like, really quickly, but you talked about the position of market dominance. And I'd love to hear what you meant by that because that's. That sounds interesting. You mentioned, like a market dominance. I'm assuming it's probably related to just being top of your market, like crushing everyone else, but love to hear it. [00:16:09] Speaker A: Well, it is, but there's an approach to it. There's a strategic approach to it. It's. Yeah. So what we. When I was doing research for my book, what I found is that the key to successful marketing is getting into the mind of the prospect. Okay, that's great. How do you. How do you do that? Okay. And what I found was, is that the way to get into the mind of a prospect is centered around two things. The problem they have they don't want. The solution they want, they can't find. So we developed a formula around that. We call it the conversion formula. [00:16:45] Speaker B: Okay. [00:16:45] Speaker A: And the first two components of the conversion formula, which is the problem in the solution, and we have names for that. That. That's our position of market dominance. So let me explain the conversion formula, and then I'll explain the position of market dominance and why that's so successful. Successful. And remember, the key to successful marketing is getting into the mind of the prospect. And the way you get into the mind of the prospect is identifying the problem they have they don't want with the solution they want they can't find. So our conversion formula is four parts. It's really simple. Part number one of the conversion formula is what we call captivate. That's the headline or the problem that the customer has that don't want. When they say headline, it could be in a message. It could be in an oral message. It's just the first thing you say. Or that a prospect sees when they come in contact with your brand. It's that problem they have they don't want. Normally the problem is with the industry. Okay, Normally. Okay. So for example, in the construction trade, people don't return calls or. Yeah, or they, they, they say they're going to start on April 1st. They started on April 10th. [00:17:58] Speaker B: Yeah. [00:18:00] Speaker A: Or they don't show up. They say they're coming back tomorrow, they don't show up. These are the, it's usually an industry thing that, the problem they have. Sometimes you have to go deeper into the mechanics of the product, but for the most part it's, it's the, it's an industry thing. So the Captivate is that headline. The problem they have they don't want. The second component of the formula is called fascinate. That's the solution that they want they can't find. And the reason why they can't find it is because no one ever brings up the problem. Yeah, okay, 90% of your competition might be able to solve the problem, but only you bring it to their attention, make them aware of the problem and then the, and then you have your unique solution to solving that problem. So that the, the captivate is actually the sub headline or the second thing you say. Yeah, when, when prospects come in contact with your brand, whether it's a headline on an ad or whether you say it in a 60 second elevator speech, it doesn't matter. But that's, this is the formula you use. So it captivates the problem, fascinates the solution. The third component of the conversion formula is called educate. This is where you educate the prospect on why your solution is superior to the competition. Okay. This is where you have a little bit more time because you've got their attention with the Captivate and the fascinate, the problem and the solution. And by the way, the captivate and Fascinate, that's the position of market dominance. When you can identify a problem that the customer has and doesn't want with a solution they want, they can't find. That's dominance. [00:19:45] Speaker B: Interesting. [00:19:46] Speaker A: The fourth component is a compelling offer. So the fourth component is called close. So it's captivate, fascinate, educate, close. And the close has to be a compelling offer. And there are five components to a compelling offer. People don't realize this, but there are, there's five components. And not only that, you can use one or more of these components. And if you think about it, a lot of us have been hit with these, with these components with different companies and different messaging. So scarcity and urgency is the first component of a compelling Offer scarcity is there's only three left or I only have five appointments left. Urgency is this offer ends on Friday. So scarcity and urgency is used quite often, and you've probably seen that a lot, but that is a component of a compelling offer. The second component, once again, these can be used altogether. The second component is a risk reversal where the seller in the transaction takes most or all the risk. Now, now, when I was in the ski business, the problem that the customer had, I'll always go, I'll always say that in every business I'm in, the problem the customer has. So when I was in the ski business, because the problem the customer had is they never really knew if the ski they were being sold was the right ski for them until they got it up in the mountain and tried it out. Yeah. Okay. So what we did is we implemented what we call the ski guarantees. Ski the ski three times. You don't like it, bring it back for a brand new pair. Okay. This was very creative at the time. And amazingly enough, we sold 8,000 pair of skis the first year we implemented a 25% increase from the previous year and only eight came back. So the point was, contrary to popular belief, all the customer really wanted was a great ski experience. That's all they wanted. Even if they skied five days a year. They wanted those to be the best days that they, that they could ever have. And, and they wanted to be in the right equipment. I mean, the worst thing in the world is if you have the wrong pair of skis. I mean, it's just, and of course, the wrong boots. [00:21:57] Speaker B: Oh yeah. [00:21:58] Speaker A: Or boots that hurt, that, you know, hurt your feet. So those are, those were all guarantees that we had with respect. And it all, it gave the customer reassurance that, you know, where were we were the ones to buy from. It's a compelling offer. So one is scarcity and urgency. Two is risk reversal. Three is adding more value to your product or service. So when I was in the frozen cookie dough business, the problem the customer had was that they didn't want to waste valuable oven space baking their cookies. They wanted to have cookies as an add on sale, but they didn't want to waste valuable oven space. A pizza parlor didn't want to waste valuable oven space where they could bake pizza, to bake cookies. So what we did, and despite the fact that our opening order averaged $50, what we did is anytime you gave us an opening order, we gave you a free convection oven. Okay, all right. That allowed them to be able to bake the cookies with just space on their counter. So. And that solved the problem, and that opened many doors, both domestically and internationally. So that's adding more value to the product. We added more value to the product by solving a problem that the customer had with oven space. The fourth component of a compelling offer is packaging and bundling products and services together. When I was in the skate business, we took the most popular selling ski graphics, the skins on the ski, and we matched that up with a parka pant sweater and a hat, packaged it together, and had clothing packages. See, everybody in the ski business had ski packages. Yeah, but we were the only ones who actually packaged clothing. And they sold like hotcakes. And competitors never, never, never duplicated that strategy ever. It was, it was amazing. Yeah, but that, but that's packaging and bundling. Packaging and bundling gives the perception of value. And, and it's hard for a customer to do comparison shopping when you have packages and bundles. So it's very compelling. [00:24:18] Speaker B: Yeah. [00:24:19] Speaker A: And then the fifth component of a compelling offer is being indifferent to the outcome. When you show tremendous bias toward the sale of your product, the customer picks up on that, and as a result, they think you're a used car salesperson and only out for yourself instead of out for them. Yeah, but being indifferent to the outcome, for example, I would say, whether you work with next step CFO or someone else, there are five things you must know in order to properly implement business strategy. [00:24:49] Speaker B: Yeah. [00:24:50] Speaker A: And then I'd go through those five or six things, But I'm the one presenting those five or six things. Okay. [00:24:55] Speaker B: Yeah, you got it. I love that. [00:24:57] Speaker A: Yeah. So. Yes. So in difference to the outcome. So it's scarcity and urgency, risk reversal, adding more value to your product or service at a low cost. By the way, I didn't do it at a low cost. Another example I gave you. But it worked well. Yeah, because I understood the long term value of a customer, Zach. That was the key. Every customer I got, I was confident in my product. And every customer I got was five grand of sales sometime in the future. So to me, it was worth a 200 investment in a, in a convection oven. Even though I was only getting a $50 order, I believed in my product. [00:25:37] Speaker B: Yeah. [00:25:38] Speaker A: Okay, so that's adding more value then packaging and bundling is the fourth and fifth is being indifferent. So those are the five components of a compelling offer. So when you have the conversion formula, captivate, fascinate, educate, and close, you know that the compelling offer is. That is in the close, which Makes it all very most effective. [00:26:02] Speaker B: Yeah, I love that. Like, I feel like I've learned a couple things just with this, like, simple explanation, like your framework. But it's also very interesting, like, how creative you were, like, getting to be able to create like a. An amazing offer, like giving like an oven. I don't think a lot of people would think about that. Like, you're basically thinking like, okay, what problem do they have that maybe. Or like, objection. That would stop them from taking their offer. And then you pre address it by maybe providing them with something, giving them a product, even like the guarantee that you mentioned, that's like 0.1% of people ended up, like, returning it. That's literally like no one on like 8,000 pairs of skis. That's a lot, right? So that was a good offer, Right? I thought that was interesting. I mean, I've never been a big skiing person myself, but I remember when I went one or two, two times, I wanted to make sure my ski fit perfectly in my boots, make sure it doesn't hurt my feet or anything like that. So I know that was like a. Probably a big, like, it was a, like a social proof in a way where you were seeing, like, hey, if you don't like it, bring it back. And it just shows that you're very confident in what you're selling, that they're probably going to end up liking it either way. [00:27:04] Speaker A: So I was, and we said, keep bringing it back until we get it right. [00:27:07] Speaker B: There you go. See, that's even better. Even a better offer. Risk reversal, I should say here, but we talked a little bit about numbers and that's where I want to go because I feel like a lot of, like, small business owners, they're maybe either too afraid to look at, look their numbers, they don't know what to do with them, or maybe they don't even track them properly, which, that's another issue in its own. That probably should be addressed before. But I'd love to understand what a business and cash flow forecast like actually is. Like what? Why do you believe that every business, no matter the size, the needs, like, why do they all need one? [00:27:45] Speaker A: As I said, everybody's financial statements tell a story. And what the business and cash flow forecast does is it identifies the most effective business model you can have. Because what we put together a story that is the most effective business model. And if it isn't, we have what if scenarios that will be able to help the business owner understand, really truly understand what their financial picture will look like in the Future if they implement this, this, this, this, and this. So that's number one. It identifies the most pop. Most effective business model you can have. You gain a competitive advantage because you learn more things than your competition does. Who doesn't do one? Okay. Your competition isn't doing a forecast so that the fact that you. You are is a great advantage. It answers the forecast, answers the most popular question. I get the can I afford it? Question. Can I afford a new truck? Can I afford a new manager? Can I afford a new location? All of those questions are answered with the business and cash flow forecast. Then it identifies how much cash you need in advance of needing it. Basically, it tells you when it's cloudy, not when it's raining. So when you know. In other words, I'll know well in advance if you're going to run into a cash flow problem. I'll know well in advance if the strategies that we implement are going to require more cash to support. Also understands and addresses risks and opportunities. By looking at the forecast, you can address any opportunities that might. It might help create or the risk associated with it. So that's another thing that it does. It makes it easier to make the right decisions on a timely basis. And then I already mentioned, it helps you gain a competitive advantage because of all these advantages that it has. So it's a tremendous tool. I do it with all of my clients. There are a few who don't want to do it, but it's not really a good idea. I'm not as effective with them. [00:30:00] Speaker B: Yeah. [00:30:01] Speaker A: Because I don't have it. Think about it. You know, I'm asking the business owner to implement new strategies, and I'm not showing them what it looks like financially unless they have the forecast. Yeah. [00:30:12] Speaker B: You can't quantify the impact that they're going to have. Or maybe not. [00:30:15] Speaker A: Right? [00:30:16] Speaker B: Yeah. [00:30:17] Speaker A: Right. [00:30:17] Speaker B: Interesting, right? [00:30:18] Speaker A: That's exactly right. [00:30:20] Speaker B: Well, Michael, I want to thank you for coming on the show. I learned, like, quite a few things, like, believe it or not, I have a lot of, like, podcast appearances, like, every, like, one or two weeks. But a lot of the things is like, hey, maybe we should apply it this way to, like, your company and everything like that. So you gave me a lot of parting thoughts that I'll definitely look back at her episode. So thank you so much for coming on the show. And I know you mentioned you had your book, you have your website, you're on LinkedIn if anyone wants to get in touch with you. What's the best way to do so a year. [00:30:47] Speaker A: It's next step. CFO.net okay, you could download a free copy of my book called Powerful Business Strategy so you get an idea of what your competition isn't doing. Also, in a couple of weeks I will have up on the website a 10 minute actually 10 minutes or less AI assessment where you could find hidden revenue in your business. Okay. And utilizing the strategies from my book. But it only takes it takes less than 10 minutes to go through with that assessment and then the result is that you get three strategies and a step by step of of how to implement those strategies free of charge. [00:31:26] Speaker B: Oh, thought 10 minutes. That's all too much as opposed to reading a book, so. [00:31:31] Speaker A: That's right. We believe in speed. Speed. [00:31:33] Speaker B: I love it. Perfect. Well, we're going to put that in the description if anyone wants to reach out in the show notes and then to listeners. If you've enjoyed this episode, don't forget to subscribe. Like the podcast review, all that fun stuff. You can also find more insights at wecom, where we're dedicated to helping entrepreneurs build their thought leadership in business by getting them on podcasts and launching their own podcasts. Until then, keep pushing and we'll see you in the next one.