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John Pollock

Episode 23: Why a Tax Operating System is More Efficient than Bookkeeping, with John Pollock

As the CEO of Financial Gravity, John Pollock has helped hundreds of entrepreneurs to find legal, moral and ethical ways to lower their tax, raise profit and create wealth. The result? His clients can finally start living their American Dream — a key reason they started their business in the first place.

As a podcast guest expert, John delivers more than just entertainment and good content. His audiences walk away transformed and equipped with real-world strategies they can immediately use to solve their most challenging business problems, including the ones they thought couldn’t be fixed.

What you’ll learn about in this episode:

  • Why your background doesn’t matter if you’re an entrepreneur
  • John’s business built around the problem that people think CPAs do tax planning even though that’s not true
  • The Tax Blueprint: Financial Gravity’s architectural plan for your finances that maximizes your tax savings
  • The Tax Operating System: the next step which takes your bookkeeping, payroll, tax returns, etc. as a monthly fee
  • Why you need to do sales in the context of a story if you want to differentiate
  • Why your story has to be believable (even if that means underselling what you actually do)
  • Why you should hire your kids as employees
  • How to reduce buyer reluctance
  • How and why you need to learn from other industries
  • Why you shouldn’t be afraid to launch and must be ready to pivot
  • What’s next for Financial Gravity

Ways to contact John:

Transcript:

Welcome to System Execution, the strategy and system behind today’s successful companies. Systems can make or break your company, but here, we’ll solve your physical, technological and psychological systems issues by connecting you with experts that have succeeded in overcoming those challenges in their own business, and providing you the guidelines and tools you need to implement those same strategies for immediate results. Now, here is your host, Vera Fischer.

Vera: Today’s episode is sponsored by 97 Degrees West, an Austin, Texas advertising agency built on the belief that when you combine creative talent and humanity, you can help companies make their products, services and brands relevant to the life of their customers. 97 Degrees West specializes in finance, healthcare, manufacturing and energy. For more information, go to www.97dwest.com

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    Welcome to System Execution, a podcast devoted to using processes and systems to drive to a better outcome for your business. I’m Vera Fischer, your host. All businesses, no matter the size, relies on systems. Some of these are physical systems such as a factory. Some are technological like project management software, while others are psychological systems such as checklist and organizational charts. Many of these systems will overlap in your business.

    Today’s guest, John Pollock, is the CEO of Financial Gravity. John has helped hundreds of entrepreneurs to find legal, moral and ethical ways to lower their tax, raise profit and create wealth. The result, his clients can finally start living their American dream, a key reason that most of us started their business in the first place. As podcast guest expert, John delivers more than just entertainment and good content, which we will be looking out for that. His audiences walk away transformed and equipped with real world strategies that they can immediately use to solve their most challenging business problems, including the ones they thought could not be fixed. Welcome to System Execution, John.

    John: Thanks for having me.

    Vera: John, I’m so happy that you’re here to share your experience with your company and what you had disclosed before we started. It’s something that’s proprietary, so I’m really excited to hear about that. But before we dive, could you tell our listeners a little bit more about your background and your experience?

    John: My background is I just built something. I really have no background to justify my existence, which is good because as an entrepreneur, you don’t really need a background. Whatever you studied in school, you can build anything, but entrepreneur is entrepreneur. I know that’s almost overused in this world, but for me, a personality standpoint, anybody that’s outside, a psychologist will look at me and say I can’t. I’m unemployable. I can’t do really anything else other than what I’m doing. The business basically started out as wealth management business. I was selling wealth management products, mutual funds, 401k’s that have mutual funds, annuity type products. As I became successful and started making a lot of money, I started paying taxes and when I reached out to the community that I automatically assumed helps with that thing, I found out the entire community doesn’t know anything about that thing, which stunned me.

    This is where most entrepreneurs kind of, they find a whole in the marketplace and they try to run a truck through it. That’s what happened. How could the entire CPA industry, the entire industry, not know anything about tax planning? What’s interesting is not only do they not know anything, they’re not trained on it. It’s not like they got trained on it, don’t do it a lot and then forgot. There literally is not a single question on the CPA exam about tax planning, which is crazy because when I go to a cocktail party and people ask me what I do, I tell them I help small business owners lower their personal income taxes. The first question out of their mouth is, “Are you a CPA?”

    It’s a very strange business problem. Everybody in the country thinks an entire industry does a thing the entire industry is not only not trained to do, but they don’t do. But no one in the industry has raised their hand and said, “Hey, we don’t do tax planning. We only do accounting. It’s in our name, so we’ll file your returns, but we don’t know how to take numbers out of boxes and put them in different boxes. We just know how to put the same number in the same box over and over and over again.” That was a strange problem. It took me about three years of vast research, going to financial conferences, accounting conferences because it was literally one of those things, this cannot be true. It cannot be true that accountants can’t do tax planning when everyone thinks accountants do tax planning.

    I basically was trying to prove that I was wrong, that this was a problem in the marketplace and I ended up proving that I was right so I was like, “Well, if everybody thinks accountants solve a problem that they don’t solve, there’s a business there.” And there are some pockets. You can maybe find a guy or gal that’s really good at it in a small market, but there’s no national firms that help small business owners lower their personal income taxes, then show them how to take those and help them drive their business to better heights, and so that’s what we’re building.

    Vera: This is awesome, and you’re absolutely right.

    John: Where do you start, right?

    Vera: Exactly, where do you start? Let’s start with how you’ve built the company. Clearly, you could not copy anyone. There wasn’t anybody to look up to in that regard, so where did you start?

    John: There’s a couple of things that came out of this. The first thing is, we couldn’t copy anyone and the second thing is, is we couldn’t get really help from the very people that we’re competing with. We’re talking on the accounting industry and none of them are going to help us. In fact, we went public recently so we are a publicly-created company. If you’re interested in checking that out, it’s FGCO. But when we went public, we had to hire an accounting firm we had a hard time hiring accounting firms because some of the stuff on our website was disparaging towards accounting. How is that for an interesting problem? You have to legally have a CPA audit your books in order to go public, but no CPA wanted to audit our books because none of them wanted us to go public, because we compete with them.

    We had to solve for that, so I had to change my messaging a bit. That was one of the problems we ran into real early. The way I kind of visualize it in my head, and we now use this in marketing, is that our real business is financial services. Eventually, we want to manage your money, help you with risk management, but what’s interesting is the tax code leads to all that stuff, because if we get the taxes right, all that other stuff falls in place. I came up with an analogy and then the process came out of that analogy. The analogy was, we just sell furniture, but the Merrill Lynch furniture and the Fidelity furniture looks the same as the John Pollock furniture.

    How do I get the John Pollock furniture to look different? Well, I can’t because the consumer thinks a chair is a chair is a chair, even though I knew that my chair was hand-carved, and this chair over here was made in a factory. The consumer doesn’t care. They want a place to put their butt, so they’re like, “Well, this chair …” It’s like me trying to convince people that my chair is different. I said, “Well, what if we design the house and built the house? Would when just let us furnish it?” They wouldn’t even care that the chair was made better. They would just say, “Well, you designed and built the house you get us, so you furnish it along our lines.”

    I’ve ran into a good illustration of this and it’s a very popular show, Fixer Upper, which I haven’t found a lot of people have not watched that show. You’re in Austin so you probably watch it because they’re locals.

    Vera: Exactly.

    John: The most amusing about Fixer Upper is that you’ve never see them … What they do for people they don’t know is they go in a house. They help people find out an old house and then they strip it and then they rebuild it from the inside and make it into this beautiful new home. They work with the customer to find the house that has the bare-bones. They work with the customer to design the interior of the house, but you never see the discussion as to what furniture to put in there. Here’s a model of theirs where nobody ask them, “Well, I don’t like that couch.” No, they spend so much time on the design and the build phase that the furniture was a natural conclusion, so we built a model around that.

    The idea is, how do we be an architect? What does an architect look like in the financial services world? I can’t call that financial plan because everyone does a financial plan. This is something that the listeners should consider as well, is as you design your process, you got to name it and then when you name it, trademark it. Because once you’ve named and trademark it, no one else can do that thing. The first step in our process is the tax blueprint, which is an analogy back to the architectural plan. We are going to design an architectural plan for your finances that are going to maximize tax savings. It’s your single biggest expense and no one is paying attention to it. Everybody is putting money into a 401k, growing it tax-free. They’re putting it in tax-free, growing it tax-free so that they can be hammered on taxes on the backend.

    Well, that’s not a good strategy. Why is everyone doing that? Because no one is talking about taxes. They just got sold a product. They got sold the chair without any consideration if the chair even belongs in the house. We designed the tax blueprint. The tax blueprint leads to the tax operating system and the tax operating system leads to the stuff that we were originally in business to do. Each one of those processes have processes. When you write us a check for the tax blueprint, we guarantee we will double the dollars you wrote. If you pay us 2,000, we’ll find 4. If you pay us 10, we’ll find 20. Our average is 12, which is kind of an irony because we can’t advertise that because no one would believe us, so we stuck with 2.

    Then there’s a whole process on that. You write us the check, we go to work. We’ll bring the blueprint to you. If there’s some strategies, “Well, I’m not going to do that.” We’ll take that strategy out, just like an architectural. If you want your kitchen a little bit bigger, we’ll make adjustments to it. We’re going to give you several dozen opportunities to say, “Well, I don’t want to do that. That’s not worth my time. I’d rather pay the taxes and I have to deal with that.” “Well that, gosh, I don’t have to do much.” And I say, “$3,000 a year for a single form. Let’s do that plan.”

    Once we’ve basically created the blueprint, the final blueprint, then we can move on to the next phase which we trademark called the tax operating system. The tax operating system allows us to bookkeep your payroll, and your tax returns as a monthly fee. All in an effort to make sure that we accomplish the goals in the first part of the plan. If we tell you we’re going to save you $50,000 and we just hand the blueprint to you, you’re going to go, “Well, how do I get this built?” Well, you can go to an accountant. We give you the exact parts of the code, but found that accountants are like, “Well, I’m not comfortable with this and we’ve never done this before.” It doesn’t matter if the code says they could do it, they’ve never done it.

    We end up getting the accountant fired through our exclusive process. They end up doing the tax operating system and then they’re like, “Well, you designed it. You built it. You said we needed these three types of product in our portfolio because it’s the most tax-efficient. Go ahead and put them in.” That’s our process and that all sprung from first, how do I want the whole thing to fit together and how do I explain it from a marketing standpoint? Then once that was built, we named it and then we built it, and then we iterate it because you’ll find that when you introduce a new process into the marketplace, something is not going to work, so I encourage people, especially the perfectionists that are listening, is launch. Be 50% good, be 80% good because anything …

    There is no 100%, that’s first of all. It doesn’t exist because as soon as you launch something that you think is 100% ready, somebody will blow it up. There’ll be something that you’ll think is the most important part or process that ends up being removed completely. There’s something that you think that shouldn’t have been in there, that should have been in there. That’s why you start to build the process and get it out in the marketplace.

    Vera: Backing up just for a second, John. You had mentioned that when you were building this entire blueprint, you said that it was really important from a marketing perspective to be able to explain it. Can you dive a little bit deeper into that you’re thinking there and why that was so important?

    John: Yeah, because I think in analogies. I’m really good on interviews because I always have a story or I always have an example or I will spring into an analogy when I’m trying to sell something. I’m just really good at analogies. There’s a lot of speakers throughout history that use analogies to drive their point home. The one that comes to mind immediately is Jesus. We’ve all heard of Him. He spoke in parable. Those are analogies. Those parables taught deeper truths. I think that’s the way sales should happen. Sales should happen in the context of a story, and if people understand that there’s a beginning, a middle and an end of the story, then they’re more inclined to join into that story. Make sure when you’re building your processes that there’s a story around it.

    Now, there are some processes that are not going to have stories, but I mean, I’ll give an example that’s simple, Subway. Really, how could you add a subway to the way you build a sandwich? Well, it’s easy. They actually added a story to it by naming the people that work there sandwich artists. It’s no longer making a sandwich. My sandwich is my personal work of art, that only I will like because it fits my taste buds. They ended up telling a story about a process that was unique to them without creating a story. They just names the person that’s building sandwich a sandwich artist, which kind of changed the paradigm. I can’t go to any other Subway shop and get a sandwich artist. They trademarked it. Smart, so they were able to tell a story without telling a story with the name.

    When I say I will build you a tax blueprint, you already have idea. You’ve never heard of it, but you kind of have an idea, “Well, shoot. Then he’s building something. He’s designing something around taxes. I want lower time,” assuming he’s not designing something that make taxes higher. What is the tax blueprint? I can just post online “tax blueprint” and people are going to smuggle in a story that you didn’t even intent, but if you name it well, people will smuggle in a story, their own story into your story or your naming convention that will help you no matter what. No one is going to come up to the conclusion that a company selling a product called the “tax blueprint” is doing it in a way to make sure you pay more taxes. That’s just not a story that people are likely to tell in their head. There’s always one or two that will, but you can’t sell something without a reason to buy it and people buy logically. Actually, they justify logically. They buy emotionally.

    As someone as in financial services that have served engineers … Engineers are, without question, our wealthiest clients because they’re cheap and they save a lot. Doctors are not our wealthiest clients because they get out of college with a lot of debt and they maintain that huge level of debt their whole lives. Engineers are the wealthiest, so they’re very hyper analytical. But if you think that they don’t buy emotionally, they are fooling themselves because I’ve seen it over and over again. I’ve seen engineers get divorced and marry the same woman. The story that woman … Whatever that woman does to feed that engineer, he’s basically buying the same story, “I like this type of woman. Even though I divorced that type of woman, I ended up marrying the same type of woman.”

    We’ve seen this with these debts, so understand that there’s stories everywhere and your system needs to tell one. Not all of it, some of the systems are internal and boring, but they make things work better. How the hamburger if flipped at the amount of time in a McDonald’s franchise isn’t really part of the story, but the fact that the Big Mac is delivered the same way at every store all around the world, that is part of the story.

    Vera: John, how many iterations of the story did you have to go through before you settled on the blueprint or the story that resonates so well with your client?

    John: Actually, this particular one sprung very quickly. Once I named the tax blueprint, the … Actually, I named the tax operating system first and then we needed the tax blueprint and we were worried that the tax operating system, it doesn’t fit with the overall designed built, lived kind of idea of construction. But we wanted people to understand that the operating system, this is how you’re going to operate. Really, the tax operating system, if you really distill it to its most boring part is a bookkeeping service. We do bookkeeping. We do payroll. We take that information. We file tax returns. How do we prevent people from commoditizing our fee by saying, “Well, you’re doing all the same things my bookkeeper did for half the price.”

    Well, it’s easy. Well no, we’re not doing bookkeeping. We’re the tax operating system. Remember that blueprint that we did? In order to get the savings in that blueprint, which by the way makes our bookkeeping free, so we save you $20,000. We’re charging you 250 bucks a month, our cost are net zero. In fact, you’re net ahead. Your bookkeeper won’t do that. It allowed us to connect the story and by calling it the tax operating system, people realize it’s an ongoing system and whereas a blueprint, it’s obviously a one thing. You’d get the blueprint. You iterate on it and then once the blueprint is set in stone, we build from there.

    The story actually was first, the iteration of the story and the pieces that made up that story changed as we introduced it in the marketplace. For instance, we introduced the 3X promise. You pay us 10,000, we’ll find 30. We did a broad-based advertising campaign on it in the Dallas Metroplex. We did not get a single call. We even had a celebrity reading it, very well-known celebrity and he even read it on his own radio show. None of it worked. We switched to a 2X promise, where we’ve guaranteed to double their money and then the phone started to ring. The story really didn’t change. In fact, the story got worse. Instead of giving you 300% of your money, we’re giving you 200%.

    Vera: Well, that’s where the believability of the story comes into play.

    John: Exactly. It’s like, “Well, you know, yeah it’s a celebrity guy, but he’s just being paid and there’s no way they’re getting 300.” Well, we’re still getting 12X. We did not change the plans around the story, but we had to change the story because we wanted to move it more into the realm of reality than the realm of fiction. That’s important too. No matter how good your product is, sometimes you’re not going to be able to tell people. I cannot say, if you’d give us $10,000, on average, we’re saving people $120,000 because no one will believe it, so we’ll just focus on doubling your money.

    What we haven’t split-tested yet, which would be very interesting is, what if we just guarantee to get your money back? You pay us 2, we’ll find 2. Would we actually get a higher response than if you paid us 2 and we will find four? We haven’t tested that yet because the 2 times has been working for us pretty well.

    Vera: Then how long have you had that offer out in the market?

    John: About three years.

    Vera: The story has finally … How long has the company been in existence?

    John: The company as it exists today, Financial Gravity, that company has existed for about five years. First of all, Financial Gravity started out as a name of a brand. That’s kind of a cool name, and it was actually … Here’s another example. The name of the company is from a story. I wanted to figure out a way to explain to people in the financial services realm that there are certain laws within financial services that if you follow them, they work 100% of the time, and you’re not allowed to use the word guarantee in financial services. You’ll never hear a mutual fund guy saying the word “guarantee.” It’s illegal. An insurance person can say it, but a mutual fund person can’t.

    Even when it sells risk instruments where there could be an up or a down cannot use the word guarantee. Well, what laws in the universe of financial services are guaranteed to happen 100% of the time? The way I explained it to myself in my head was this is kind of like gravity. If I’d jump off a building and I scream at the top of the lungs, I don’t believe in gravity, I’m still going to experience gravity, aren’t I?

    Vera: Exactly, yes.

    John: Well, my belief system doesn’t really matter. Is there something in financial services that’s the same? I could choose not to believe, but I’m going to experience regardless. I started writing down and I came up with these laws of financial gravity and I named it the laws of financial gravity. When I showed it to people, they’re like, “Yeah, I believe in all of that.” I showed the other advisers, “Yeah, I believe in all of that.” Like, “Well shoot, we should build a money managing platform around these laws because everybody gets it.” The story informed the name, which then informed … The story, I kind of reverse engineered it. How do I solve the problem that I look the same as everybody else and how do I solve the problem that there are inalienable truth within financial services? How do I solve that?

    Well, if I call it gravity, which kind of has that drama toss to it which is a word that come from gravity, I thought maybe that would work. Then we test marketed the Financial Gravity and everyone really dug the name. We called it the Laws of Financial Gravity and then at one point as we started to scale and we knew we were going to go public, when we started to raise, we knew we had to rename the company away from John Pollock Financial because it had to not be about me. It had to be the bigger brand and then that’s where Financial Gravity was brought in.

    A lot of these stories started and we actually built the infrastructure to support the story, which is probably unique.

    Vera: It’s extremely unique and I really am still floored by the fact that I always assumed that CPAs did some type of tax and that the fact that they don’t is still rather shocking to me.

    John: It is and this is one of the reasons I do so many podcasts is, I feel like I’m an evangelist, that I have to … How do I tell people that the CPA is clueless when everyone likes their CPA? That’s another strange problem. Everyone loves their CPA, and it’s funny when people come in and this is one of the ways the blueprint was able to drive the wedge. People would come in and say, “I’m going to keep my CPA.” “Oh, that’s fine.” Remember, the blueprints and architectural plan, the tax operating system is like a home building plan. We’ll give you the architecture. You’ll see all the architecture. You can take that architecture to any home builder. If you got a CPA who’s a home builder that you love, then let them build it.

    But what happened was, is when we switched away from “Your CPA doesn’t know what the heck they’re talking about, come with us” to “Hey, if you want to keep your CPA, you can keep them.” What happened was is when we delivered the blueprint, the CPA gets fired. It’s somewhere around 90 plus percent of the time, because if we deliver a blueprint with $50,000 a year of tax savings, and we actually had this case whereas 50,000 in tax savings, the CPA was a brother-in-law. He’d been with the brother-in-law for ten years. He did the quick math. “Okay, ten years, 50,000. That’s a half-a-million dollars. I like my brother-in-law, but a half-a-million dollars, that’s a lake house. I could have bought a lake house.”

    If he’s not going to buy me a lake house, then I’m not going to keep paying him so I don’t get a lake house. That’s what’s been happening as we just focus on what the blueprint is isolated from the rest of the stuff we do. Let’s just focus on that. When we’ve delivered that, we can talk about the other things, and that our close rate is through the roof. If you do a blueprint, you’re going to fire your CPA. Now, there are a handful of CPAs that are like, “You know what? If they deliver something that has the tax laws in it and I don’t have to break any laws, I’ll do whatever you tell me to do.” That’s for the 5 to 10% we don’t unsee, so to speak.

    The funny thing is, the tax operating system, we actually built because you kept losing business to CPAs. We were never able to furnish the house because the CPA killed the deal. They would do the blueprint. They would take it to their CPA and that’s a part of process changes. The CPA would say, “I’m not doing any of this. I’m not comfortable with any of it.” “But we’re not breaking any laws.” “I know. I’m just not comfortable with it.” “You know we’re not breaking any laws and you’re not comfortable with this.” “Yeah. No, no.” The client is going to do the paperwork on them. Well, you’re the CPA, do the paperwork right. Well, that’s none of my business. Well, we know that.

    That’s where, if I told you to hire your kids which you should do. You’re a business owner. You work out of your house, you should hire your kids. You can pay your kids $6,000 … Let’s just use 5. You can pay your kid $5,000. That $5,000 can go into a Roth IRA. The 5,000 is completely not taxable. Here’s something interesting in the tax code. If I hire your kid, I got to pay FICA, but if you hire your own kid, FICA is not included. You don’t have to pay FICA. If you pay the kid 5,000 and file a tax return with a 6,000 standard deduction, the kid got $5,000 in tax-free dollars. Then you put the 5,000 in a Roth which grows tax-free and you could take money out of a Roth for three things, retirement, first time home buying and college.

    The way better college plan is a tax-free forever college plan and on top of that, when your kid goes to college, the FAFSA form counts the 529 dollars against the family need. Because you were responsible and put money into a 529, you get punished by the Federal Aid system. But if you have $50,000 in a Roth IRA, it doesn’t count. It’s not included in your need for Federal Aid, so you may be able to get, let’s say 100,000 in college. Let’s say you have 50,000 in Federal Aid and you save 50,000. Now, your kid went to school tax-free because you planned a little bit more correctly.

    You know how many accountants know what I just told you? I’ve just mixed three different parts of the tax law together in a way that it doesn’t break a single law, is 100% ethical and is being done all over the country by tons of people every single, and you didn’t know about it and most of the people listening didn’t know about it, and it’s a shame. That’s the problem we’re trying to solve. We can’t tell stories effectively on the front end. I never get to tell that story. I never get the opportunity. One of the things that we’re doing right now, which a lot of your listeners will dig on is that, we’re taking these tax strategies, so the Roth RIA has a set of rules. The 529 has a set of rules. The pay your kids has a set of rules.

    But if we put those set of rules together, we have something new and unique and it’s better than some of the parts. What we’re going to do is name that. Now, we’ll have the Financial Gravity College plan or something along those lines or something. The way I’m explaining is we’re going to have a mix and match different strategies within the tax code and then we’re going to come up with a recipe and then we’re going to name that recipe and then we’ll own it. Anybody can do our business. The tax code is published. We are all working under the same one. Just like Subway has the same food options as every Sub sandwiches, every outlet, but they systematized it differently.

    When an entrepreneur complains about, “Well, my business is hard to systematize.” It’s not true. You can systematize and name anything, and then you build a brand. Most of the stuff that people are wearing right now on their person is a brand. I mean, jeans are jeans are jeans. You can buy a good pair of Levi’s for 30 bucks. You could buy probably a decent pair of jeans for 20 bucks at Old Navy, but most of important, they’re wearing jeans that 100 to 200 bucks. Why? Not because their jeans are better, because of the brand, so build a brand. But you do need to have the systems to create quality. Even the $200 jeans have systems in place to make sure that their $200 jeans are the same. If I buy the same size, I’d get the same size. Systems are incredibly important, but marketing those systems is just as important.

    Vera: Yeah, as evidenced by the stories that you tell. You’re taking what can be perceived as an incredibly complex subject and making it in bite-size chunks so people understand what you’re talking about via the analogies that you use.

    John: Yeah, and if I sold the whole process, I said, “Okay. You came and there’s … It’s going to cost $2,000 for a blueprint. It’s going to cost you several hundred dollars a month for the tax operating system and then we’re going to manage all your money and we’re going to manage all your insurance. We’re going to manage all your health insurance.” People will look at that and go, “No, you’re not.”

    Vera: That’s too much, yeah. It’s too much.

    John: It’s too much and it’s like, “This just looks like a lot of work. I’ll just …” Because really, what most people are selling against is not another system, it’s apathy. I mean, that’s your biggest competitor, is complacency, apathy. “This is the way I’ve always done it.” What you’re trying to do is sell against that first. If you can figure out how to get people off their butt in order to do something different, then you’ve accomplished something. Then, you have to figure out, “Okay, how do I compete?” Now, I have to get people to do something different, which is pay for a tax plan and that’s for the two times guarantee. They’re like, “Well, I’m pay for it, but I’ll double my money so it’s worth it.”

    That’s something that you need to build in your plans too, is what do you have that will reduce buyer’s resistance? Is there any guarantee I can come up with? You’ll happy or your money back, something along those lines that will reduce, especially if you’re small and you’re new. You have to figure out a way to reduce buyer reluctance. With us, our buyer reluctance problem was, and most of them weren’t going to be able to solve it the way I solved it, but our buyer reluctance was, despite all the things I told you, and I can give all the evidence. We even have in our office the big book of what CPA studied for their exam and we say, “How many pages in this book do you think, 1,700 pages, are on tax planning?” “I don’t know, a chapter.” No, one page.

    The two strategies they recommend is shifting and timing, and they don’t tell you how to do it either. They just say, you can shift from one end to another and you can time by paying the tax next year versus this year. They don’t tell you any strategies around it. That’s it and that one page doesn’t even end up on the test. Tax planning is not even in the picture. We tell that story and we would still run into problems. The only way to overcome the problem was, is we had to figure out a way … Well, because the CPA designation is very solid in this country, somebody did good job of creating that brand, and the brand is so good that people don’t want to fire the CPA despite the fact that the thing that they want the CPA to do, the CPA is not doing.

    It’s kind of nuts if you think about it. It’s actually genius. It’s almost the status we all want. People will still keep us just even though we don’t do what they think we do. How do you even build that? Well, the CPA industry has done that. We had to figure out a way to overcome that. One of the ways we overcame that is we bought a company. We bought a tax code software that has 600 CPAs, EAs on their platform using the same exact software we are using. We also solved our competitive problem because once other people found out that our secret sauce was the software, then all of a sudden, for 99 bucks a month, someone could do exactly what we do.

    By buying the company, we’ve also raised rates. We’ve changed the model. We’ve enhanced the model. We’ve actually made it better for the CPAs and EAs in the platform and we’re now getting those same CPAs and EAs that competed with us to partner with us. All of this came from solving problems. Here’s our problem. We have the tax blueprint. We have the guarantees. Still, people don’t believe us because the CPA hasn’t checked it. Well, let’s buy a company that is respected by CPAs and let’s get them to partner with us, so we did that.

    Vera: John, it’s really interesting because you’ve built your business based on existing systems and processes, i.e. the tax code, right? As you said, it’s available to everyone, but you’ve actually become successful in the way that you have packaged and told the story of it.

    John: Yeah. Isn’t it what a restaurant does?

    Vera: Yes. Yes, it is.

    John: In every restaurant is the repackaging of food in a different way. We all the same access in the same food, so I mean, maybe one restaurant specializes in a very strange food, sea urchins or something, but in general, I mean the entire restaurant industry and we need to figure out ways to smuggle ideas from industries that aren’t connected to us. I think there’s a lot of people who have a lot of problem with that. Well, I’m this therefore, we can’t do that. Everywhere I go and this is kind of the way my mind works. I’m looking at how things are done in other companies.

    I went to a movie this weekend and I noticed how they’re advertising now. They’re trying to upsell to the bigger screens and how they do that, they’re trying to get people to use their apps. How are they doing that? Why they’re game of buying the apps, every time I buy a ticket or popcorn on the app, I get coins towards free tickets and popcorn. How are they doing all that? Why are they doing all that? I’m studying what somebody else is doing to me. Then I’d say, “Well gosh, that’s kind of cool. We should be doing that to other people. How come Financial Gravity doesn’t have an app? How do we increase customer users?”

    They’re on a tax operating system, how can we deliver them the data that show that we’re actually doing a good job for them? Maybe we need to have a dashboard, which we’re working on. Those are the types of things that you have to constantly be working on at your business because if you’re not and someone else does, they’re going to put you out of business. That’s the game.

    Vera: That is the game. I absolutely agree with you.

    John: Tour.

    Vera: Any initial pitfalls or really big failure that you learned immediately from when you first began on this journey?

    John: I would say, the biggest failure is not launching sooner. There’s this tendency to get it right. The problem is just, your version or variety is not right. That is a tough thing to understand. One of the companies we’ve purchased in our growth phase is fighting back with us right now and they’re trying to tell me how their clients think. I’m saying, “No. I don’t think that …” Well, we can’t advertise during this period or time of the year because they’re busy. You’re saying that all of your clients never look at Facebook this entire … It’s kind of like a seasonal retail. You’re trying to tell me that every manager of every retail outlet during Christmas doesn’t every check Facebook and you can’t advertise a product that will make next year’s Christmas better.

    Why not advertise during Christmas when they’re hairy and they’re checking Facebook in the bathroom and then you’re showing up saying, “This could be the last hairy Christmas you ever had.” Why not be there? Well, it’s because they’re not on Facebook. That’s not true. They’re on Facebook. They’re on LinkedIn. They’re on Twitter. They’re watching TV still. They may be watching less and doing less of all that, but if you’re there at the busiest time saying that you have a solution for the next time they have that busiest time, they’re going to pay attention.

    I’m arguing right now with people that are trying to launch in a way so that the way the argument has come to head was, “Fine. You do your way. You do my way. We’ll split test it.” Because if you’re right, I don’t care. You proved it. If I’m right, I don’t care. I proved it. Let’s let the customer decide. There’s some great stories on this, base camps has had some really good stories on what they launched, what they thought would work. The whole base camp business is nothing like the business they launched, and yet now, they have this really great simple-to-use project management tool that’s super easy to use. It doesn’t have 90% of what project managers want, but it being used by more project managers than anybody, because it’s simple. It’s easy and it was not the business they started out of.

    Be comfortable with the fact that you’re going to build stuff. You’re going to launch it. The customer is going to hate it and you’re going to have to pivot, or the customer is going to like something you had no idea they were going to like. Let data … You have to be a data-driven business. Let the data decide how your business is run. Don’t make decisions for other people for them because you don’t know. If you can get … This is a hard lesson to learn because you feel like you know product better than everybody else and you feel like your customer better than everyone else and that’s probably true. But you really have no idea the motivations behind what people are doing to buy your services, and we’re even working on that now.

    Did you buy us because of the 2X promise? Did you buy us because you were having problems in your business and we kind of offer solution? Where you can’t get a bank loan, but certain if I put up 2 grand and you guys find four, that’s better than a bank loan. This money I’m spending that I no longer have to spend. Where are people’s mental mindsets? If we can find out there’s a thread that’s running through all of them, then all of a sudden, our marketing can shift. Be data-driven, do not be emotionally driven. That’s probably the biggest lesson I’ve had over the last few years is, it’s not about what I think. It’s about what actually is true, and there’s great books written on behavioral psychology. There’s just dozens of Dan Ariely. He’s done the most work in the space. He’s got three books now in it.

    How do you get a college kid to drink a beer that has vinegar in it and say that he likes it? He proves that you can. It’s very interesting, so you got to study the stuff. You got to understand the stuff, but then, you got to launch, launch now. So whatever you’re working on, put it out there.

    Vera: Exactly. I love the 80-20 or the 50-50 rule. I think it serves very well.

    John: Yeah. I mean, strategic coach teaches us, 80% is ready, launch it.

    Vera: Exactly.

    John: Because there is no hundred, so stop trying to attain this because you can go out of business trying to get to a hundred.

    Vera: But you can-

    John: You could build a business.

    Vera: You can never launch in trying to get to a hundred.

    John: In the process of building, you’ll come up with, “Oh, we need an ad.” That’s how it is.

    Vera: Exactly.

    John: That’s a problem with building a house. You build a house and you’re like, “Oh, there’s this new cool thing that came out a week after we finish.”

    Vera: Well, John, I really love all the insight that you provided us around all of the tax blueprint and the tax operating system and really, the process that you went through in creating the story and the analogies at which to build those product names and get that messaging out there. What’s your next challenge for Financial Gravity?

    John: What I’m doing now is I’m trying to figure out … The challenge I have is that if I walk in a cocktail party and I ask any business owner this question, “If I built a business that was around accounting that allowed you to see the numbers that you need to see to help you run your business better and lowered your personal income taxes, would you be interested in that business?” The answer was going to be unequivocally, “Yeah. You’re going to lower my taxes and give me numbers and help run a business.” Then if you also ask the same group of entrepreneurs if they can read their balance sheet and their profit and loss statement, most of them will say “No, honestly.” If they can read it, I’ll ask them if the information is valuable and then you’ll get a “no.”

    You’ve got an entire industry not helping people save taxes and not getting them numbers that help them run their business. Those are the two … That’s the foundational part of our business and then we’re trying to bring in products and services. I met last week in Cincinnati with a company that uses the tax code to lower the cost of Obama Care by 40%. That’s very impactful to the small business owners, so we want to add that into our mix. It’ll be included in the tax blueprint and it will output as another type of furniture with a much cheaper type of furniture. You see how I’m able to use the analogy over and over again and people get it now.

    Vera: Mm-hmm (affirmative).

    John: That’s the next big business challenge, is how do we actually build a complete outsource? I want you as a small business owner to join us on one thing and end up having ten products and services and we are the economic engine that runs your business. You are never going to look at the hood and look at the engine, but Financial Gravity is what’s running you. We’re doing everything that you hate so that you can do everything that you love. That’s good.

    Vera: That is good, I’ve literally-

    John: I just love all that.

    Vera: Yeah, you need to write that down, that you absolutely have to write that down.

    John: I am doing that right now.

    Vera: Well, John-

    John: That’s where our ideas come from, by the way.

    Vera: It is, absolutely. That is perfect.

    John: It’s spontaneous and if it’s good, write it down.

    Vera: If it’s good, write it down, absolutely. John, you’ve really shown us that processes are really needed to get the work done and more importantly, launched. I know our listeners love to hear that information, especially regarding the execution of its successful system, but before we go, let’s close out today’s discussion with any final advice you want to share. Anything we may have missed and then tell us the best way we can connect with you.

    John: My final advice is, go after your taxes. It doesn’t have to be us and there’s probably someone in your market that might be able to help you with this, but taxes are found money. Taxes that you’re paying, the rich have gotten richer by lowering their taxes and do not have … Donald Trump does not have pieces of the tax code that you don’t have access to. We all have the same exact tax code, and that’s what we’re trying to do, is we’re trying to bring the strategies of the rich to the rank and file. The first place I would start is we have a book that if you text to 33444, the word “taxbook,” one word, we’ll send you a link and then you can download a copy of the ten biggest myths that small business owners have as it relates to taxes and then how to deconstruct them and build it.

    You can do some of the stuff, do it yourself which I highly encourage you do if you don’t want to hire a firm like us or someone else. At least start down the path of being more tax-efficient because you don’t want that drag on your business. You can always go to financialgravity.com and check us out, see what our company is about and what we’re trying to do. Not on a personal upside as well, but I’ve given you enough. I can give you seven places to find us, but if you search up me or you search up the company, you’ll find us. If we don’t, then let me know and I’ll let my marketing know that he is in trouble.

    Vera: Duly noted. System Execution fans, no matter how many notes you took or how often you re-listen to this episode, the key is every successful business, you have the system to drive to a better outcome. John, thank you much for sharing your expertise and insight to our listeners today.

    John: Thank you very much. I hope they found value.

    Vera: Attention System Execution fans. Do you have a system that would be valuable for our listeners? We want to know about your system. Go to www.systemexecution.com, fill up the contact form with your information. Don’t be shy. Systems are cool.

    I hope you found this episode of System Execution enlightening. For free examples, case studies, eBooks and more, be sure to visit systemexecution.com/resources. Contribute to the conversation by reaching out to Vera directly on e-mail at vera@systemexecution.com. Until our next episode, thank you for the privilege of your time.

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