Full Transcript for Your Hidden Advantage: Breaking the Broken Cookie Effect with Patty Block

say most women are hourly rates are too low to begin with, so you have to make sure you have a reasonable hourly rate and then you can add to that contingencies. If you're delegating to a team member, if you are. Elaine Acker (07:10.099) Yeah. Patty Block (07:23.238) You know, as women, we always go above and beyond. So you know you're going to go above and beyond for this client. So build that into your pricing so that you are fairly compensated because fair is the key word here. And right now, the way most women are pricing their services, it's not fair to the owner. Everyone else gets paid, your staff, your vendors, everybody else gets paid, but you may not be paying yourself. And that goes right back to the broken cookie effect. And so you can see it's very circular in how this plays together. So I think feeling like you're picking a number out of thin air is probably that misunderstanding of what I'm really talking about and that there is a calculation, there is a rationale. And the other thing I would say is it's not just about price, it's about building a pricing model. because with a pricing model, then you're standardizing and it feels less arbitrary and it's easier to talk about. So now when you have this rationale behind your pricing and you have a pricing model, which again is what I teach in value-driven pricing and I teach in the book as well, then I'm taking that model and when I'm talking to a client, I can speak to that and make it less personal. Then it doesn't feel like it's about me or my pricing. It's about this is the model that gets you the best result. Elaine Acker (09:03.602) You know, and Patty, one thing I want to talk about is when you talk about that value pricing, excuse me one second. I'll be editing that. Betty, when you talk about value pricing, that's kind of that first step in laying the foundation for if you ever wanted to sell. So there's two things I want to dig into. So number one, in our past conversations and in the book, you know, one thing I've learned from you is that women don't typically even think about building something that they're going to sell. So that's thing one. And then thing two, I'd like to talk about how your mindset changes for your business when you have that goal in mind, regardless of whether you ever end up selling. So first of all, talk about why women don't typically think about selling. Patty Block (10:09.048) So thing one, why women don't typically think about selling. If you think about, especially for our generation and even the younger generation, because my daughter is in her 30s and is a business owner. And in fact, I have three adult children and they're all business owners. And my daughter does not think about selling her business. So it's not strictly, Elaine Acker (10:27.251) Yay. Patty Block (10:36.012) the boomer generation, let's say, or generation X or Y or, know, it's not that clear cut, but as women and as girls, we're often, A, not taught to be a breadwinner, or even to think we have to be a breadwinner. And the other piece is we're not taught to think that we can build something that somebody else would value. Therefore, they would buy. And I have two brothers and my brothers were raised that way. My dad was an orthopedic surgeon. He had his own practice. So he was an entrepreneur. My brothers, we all grew up with that entrepreneurial spirit, but my brothers were intentionally taught. This is what you do. You build something of value. Other people see that value and you have choices and options based on that. I was not brought up that way. So because of that, think, regardless of generation, I think there is that gender difference. And I also think that as women, we are not as confident that what we have built is valuable to somebody else, that somebody else would even recognize it. So all of those things really work against us. And because of that, we stay quiet. If somebody asks me what my book really does, it really is a communication book. It's a book about how do you take these concepts and standardize and normalize them so that you can talk about them with confidence. And that is the outcome. from the book, from the program, because I see that as such a shortcoming for women and such a roadblock. Elaine Acker (12:36.884) And so that that kind of leads into thing two because he as you say the You know your hidden advantage your title of your book really is connecting those dots between the mindset the communication and the money So when I'm when I'm thinking about the mindset that shifts whenever So I may it's here it is. It's the difference between as they say, owning the job and owning an asset. So if I'm just owning my job as an entrepreneur, and I'm, you know, in our case, you know, we're publishing books and writing and doing the things that we love to do creative every single day. And yet, you know, until you stop to think about what would change Kind of like the 10x thinking too. What would change if I said, I definitely want to build something I can sell? Well, now you have to think differently, act differently, make better decisions. So in the book, what do you describe that kind of leads people to that mindset shift? Patty Block (13:58.031) So as you can imagine, it's really hard to think differently and to have those kinds of paradigm shifts. So one of the ways that I start with that is by dispelling myths. And there are things that we do believe and have become pretty pervasive in the entrepreneurial world, like I need more clients. If I just get more clients, that'll solve the problem because then I'll have more revenue. And then I can, I don't have to rely on a few clients. I'll have more clients. So more is better. And I'm in Texas and bigger is better. Right? So because of that, we fall into these traps of thinking we need more and more clients. And actually that can cause more complex problems. because you as the business owner are limited in terms of your

time and energy, which means then you need other people to help you with the service delivery, which is perfectly fine, and you can build your team. That is an asset in your business, building your team. But you still have complications, and it does not mean that you're going to be more profitable if you have more clients. You might have more revenue. But there's a difference between bringing in more revenue and really being profitable. And profitable comes back to what is the money coming in? What is the money going out? So now if you're paying your team, you're paying vendors, you're buying technology, you're spending more because you need more resources to take care of more clients. So again, it's a little bit of a catch 22 in terms of what we believe and how we make decisions based on that. And again, I go through those in the book and there's an example of a client of mine who I think throughout the time we worked together really believed all she needed was more clients. And we changed her pricing, we restructured so that it was more standardized. You know, the best thing about a pricing model in particular, Patty Block (16:24.494) but anytime you standardize in your company, is that it takes away that feeling of it's personal. So if you're quote, selling your services and someone pushes back on pricing, we tend to take that personally. We tend to feel like I made a terrible mistake. I asked for too much or I moved too quickly through the process. If you even have a process or you know, I should have known that their budget wouldn't support this. know, all this, these mental gymnastics, right? And so because of that, we back down. We give what I call invisible discounts. no, no, no. You know, because of this situation, whatever it is, because of this, I'm going to offer you a 10 % discount or a 20 % discount or a 30 % discount. And you start offering discounts nobody asked for. Elaine Acker (17:20.788) Thank Patty Block (17:24.866) because you feel guilty and you take it personally. But when you have a structure, like a pricing model, then it's structural, not personal. And it makes all the difference. So to your point about if you're building something with the idea of building value and of having an asset that somebody else will value and eventually buy, then every step you take, you're gonna be building that value very intentionally. Elaine Acker (17:34.92) Yeah. Patty Block (17:54.643) and making decisions based on that. So all of that helps you build a healthier business while you're positioning for your exit. Elaine Acker (18:03.72) Yeah, I love all of that. And just so everybody knows, whenever you get the book, you're also going to get access to some bonuses that Patty offers. And one of those is a video training called the value equation. So that'll help you dig into that a little bit further. And also there's a full PDF on beating that broken cookie effect. So there's a couple of extra resources in there that are really going to help you take the next step. Patty, I know you also do some coaching. So I'm wondering if you can share a story about a time when you started working with someone. And just to put this in perspective, y'all, whenever you're working with Patty, it's a multi-month, probably multi-year kind of situation because you're really going through all of these steps that we're talking about. I you're talking about what does it take to build solid pricing and your value equation and to start to look ahead to the future. So that's why I'm asking is because I know Patty has perspective over a period of months and probably years of what it takes. So if you can tell us about somebody who started out and was perhaps kind of hesitant or wasn't really sure how to start building that value and then ultimately was able to work toward making that exit. What does that look Patty Block (19:39.983) It's different for everyone. I will mention that one of the most common scenarios is when a buyer comes to you. So most of my clients, we do the foundational work, we do the preparation, we position for exit because the buyer, excuse me, the owner knows that that's their goal. But as I mentioned, everything we're doing, is also making the business more stable and run better with less stress. So there's all these positive outcomes. Typically, I work with my clients between three and six years. So let's call this client Diane. she wasn't necessarily hesitant in working together, but her goal was different. We ended up working together for over six years. And the beginning, was because she had grown so fast. She believed she needed more and more clients. So that was her goal. And she was bringing in a lot of clients. The challenge was then it was very difficult to get control of everything. And so she wasn't hesitant in working towards selling. She was overwhelmed and not necessarily profitable. Bringing in money, doing good business, but not consistently profitable. Some months were better than others. And so as we worked together, she started getting a better handle, better control over the day-to-day operations. Once you can do that, then you can start looking to the future. Because before that, you really can't. you have to handle what's in front of you. Whether it's important or it's urgent or it's both, you don't really have choices. So getting control over your day-to-day operations is critical. And in some cases, I serve as an outsourced chief operating officer so that I can help specifically with that. As you do that, then we can start planning. As I put together my framework, Patty Block (22:00.815) for what I call an elegant exit. I developed a roadmap so that we can take it step by step in terms of what are the value drivers in your business? What levers do you need to pull? And the trick of this is that we don't always know. There's no formula for this because everything is contingent on the buyer. What they value. Elaine Acker (22:03.188) you Patty

Block (22:28.972) And that's always the case, right? When you're selling your services, it's contingent on who's buying your services. But it's on a bigger scale when you're getting ready to sell your company. So because of that, we need to be looking at different scenarios of, well, what if it's this type of buyer? What if it's this type of buyer? What if it's an employee? What if it's a family member? Because you have choices and there are so many options for selling your business. So with Diane, As we worked through getting control of her daily operations, making sure that her staff was stabilized, people didn't leave her employment because they really loved working with her, but some were more effective than others. So we needed to even out who her staff was. As we went through all those steps, then we could start working on the elegant exit roadmap. and what she wanted. And this is a really difficult piece for most women because we don't always know what we want. We know what we should want, right? You should want a big check, right? You should want a big check and to ride off into the sunset, right? That's what we're told we should want, but that may not be what you want. Maybe you want to stay involved in some way. Maybe you love the intellectual stimulation. Maybe you want to Elaine Acker (23:38.868) Good one. Yeah. Patty Block (23:56.729) Continue with your purpose because you have a purpose, right? Right now as a business owner. But what happens when you're no longer the business owner? So all of those emotional, logistical, financial aspects are what we dig through and clarify. And that's what I did with Diane. And she did have a buyer who came to her, offered a really incredible, in fact, she was so shocked. Elaine Acker (24:14.8) Okay. Elaine Acker (24:26.846) Thank Patty Block (24:26.912) at what they offered. And I think that's a really common thing. We are shocked because if it's a fair offer, the amount of money is a validation. It's not even that we necessarily need the money. It's a validation. And the deal went through very quickly because we had all the pieces already in place. And so she did not go to market. Most of my clients do not because when we position, Elaine Acker (24:38.42) Mm-hmm. Patty Block (24:56.972) They are in such good shape and so consistently profitable that they will have a buyer come to them and make an offer. And then we can negotiate from that. And I help with that negotiation because you don't have to just take what you're offered. Elaine Acker (25:13.628) Yeah, such a good, good scenario. And let's stay with the example of our friend Diane there for a minute, our imaginary friend Diane. What would have been, and I know this from our again, from our conversation before, but what is one of the biggest mistakes that happened way back in the beginning? There's something that most what would you call, most merger and acquisition people would recommend from the very beginning that you do not recommend. Do you know where I'm going with that? Okay, tell us about that. Yes. Patty Block (25:54.787) know exactly where you're going, and a business valuation. So if you go to a valuation expert, a CPA, even a transaction attorney who does a lot of mergers and acquisitions, the first thing they will recommend is that you get a business valuation. It is a tremendous waste of time, energy, and money. First of all, you can't delegate gathering all the information. And believe me, it's a ton of information to do this valuation because you have to balance out secrecy and stability. Most of the time, if you're interested in selling your company or exiting in any way, you must keep it a secret because otherwise your staff will start to leave, your clients may start to leave. Everyone will run for the hills. And it's critical that you maintain the value of your company with your staff, again, considered an asset, and your clients, and that consistent predictable revenue, which is an asset. So that needing to keep a secret, even from your employees, certainly, and even from a key employee, is extremely difficult. So you want stability and secrecy to be balanced. Now, you have to take your time and energy and focus on whatever it is, all the data that you need to collect for the valuation. Now, in addition to that, valuations can run between 10 and 20 thousand dollars. And that valuation will be incorrect within a few months. So what is the point of doing all of that and spending all that money? when it's gonna be incorrect in a few months, you've now, excuse me, you've now. Patty Block (28:04.48) shifted your focus away from generating business, from running your company, from managing your staff, and a lot of times you'll see a drop in value. But the most important piece is if I'm working with a client, my intent is to help them build value. So why would we want to do a valuation before we've intentionally built value? Let's do the valuation later in the Elaine Acker (28:17.156) Yeah. Patty Block (28:34.286) process when we know we have built that value and we know that that time and money is well spent. Elaine Acker (28:44.028) Yes. Excellent. Thank you. I just wanted to put that out there because when you don't know the process of getting a business ready to sell, it's really easy to fall into some traps that will cost you time and money and like you say, just be completely ineffective. Patty Block (29:04.738) Well, it is, and let me add that if you've never been through an exit, regardless of whether or not you decide to sell your company, but if you've never been through that kind of transition in your life, you don't know. And you're to be talking with people with whom you have no experience. Excuse me. So they are going to be speaking a foreign language. And because of that, again, as women, we tend to stay quiet. We don't want to ask stupid questions or what we think are stupid questions. And we don't want to look like we don't know

what we're talking about. So we often stay quiet. And I see women who get hustled and taken advantage of every day because we don't know. And you're not supposed to know. How would you know, right? So it's just an important aspect. And one of the reasons that having a business advisor with this specific experience is so valuable because I do know I have almost 20 years of experience in working with women business owners, in working with professional service companies, and in particular, on helping women position for their exit. and to achieve that elegant exit in a way that is satisfying, fulfilling, you still understand your purpose, and you have a financial gain in addition. Elaine Acker (30:47.144) You know, and it's that 20 years of perspective and experience. That's why I love it when people who have your kind of insight decide to write a book because you're able to share all of that knowledge with so many people and help them get around that learning curve a whole lot faster than they would have. So what inspired you to finally write that book? Patty Block (31:14.07) It's interesting. I was not very interested in writing a book for many years. But I had done some groups. I have a group called the Revenue Roundtable. I had done my online programs. And I felt like a piece was missing. And one of the challenges that I had early on with my business was that I have two types of audiences. One are the women who are focused on building their companies. And the other are women who are focused on exiting. And the language is a little bit different. The goals are different. And often the stage of life is different. So now I've worked with women in their 40s and 50s who have wanted to exit. So it's not women who want to retire, because I will tell you women don't retire. we always go on to our next thing. It's what I call our third act. Because in general, as women, have our first act, we, especially in professional services, we go through school, we get our degrees, we get our certifications and licenses, and we, our first act is working for someone else. Get a great job, we make good money, we learn the ropes, we feel like we've paid our dues. Our second act, we go out and we start our own thing, which is actually exactly what I did. And I was a political consultant and a lobbyist. And I built that company over eight years. It was very successful. But all of a sudden, I had three little kids at home and a surprise divorce and realized that I needed to make a change. And the funny thing, and I'll tell you the reason that I'm so passionate, about helping women build their company as an asset and exit in a way that works best for them is because I didn't do that. It never crossed my mind that I could sell my political consulting. Patty Block (33:26.102) I wasn't raised that way. didn't. I. It was an asset I could have sold, but it never occurred to me. So I closed my business. I left money on the table. I gave up that opportunity, not knowingly. I just, I didn't know. So I closed my business, went to get a job so that I could stabilize things for my family, knowing I would start my company again. Elaine Acker (33:27.718) And you could have, right? It was an asset you could have sold. Patty Block (33:56.131) but also knowing I probably wasn't going to go back into politics. And over the course of working in, I worked in an international school as director of operations and director of development. And during that eight year period, I started to really understand better what I had left behind and how I had shortchanged myself. in not trying to sell that company. So that set the stage, literally, for this company, which I started in 2006. And the book helped to serve that first audience, which is women who are building their companies, who often are falling victim to the broken cookie effect in a hundred different ways, but certainly around pricing. So that was the motivation for writing the book because once I did that, then I could focus more of my consulting and business advising for the women who were interested in building their company as an asset and exiting someday. And it usually takes about five years to position your company for your exit. having the book and the online programs and revenue roundtable, all of that is around the book and that provides a pathway for women in that phase. And for the women who need more one-on-one consulting, who are positioning for their exit, then I can focus my attention there. And that has worked extremely well. Elaine Acker (35:40.937) Patty, you such good advice. And we're going to make sure, again, everybody knows how to find the book because we've got to be grateful for you forging that pathway and making that so much easier to walk. Just thank you so much for sharing the expertise and the stories. And for anybody who does want that deeper dive, I want you to go get Patty's book. I want you to check out those free resources that we talked about. And I want you to visit Patty's website and get to know what all she has to offer because I think we can think bigger and dream bigger. And I think you just opened a lot of minds here today. Patty Block (36:25.304) Thank you, it's been such a pleasure. Elaine Acker (36:31.632) Okay, that was great. Thank you so much. Patty Block (36:34.757) Oh, My pleasure. That was great. Elaine Acker (36:38.28) Yeah, as soon as it renders and does all the things it does, I'll make sure you have access to what you need. Patty Block (36:46.274) Thank you and then I'll, as I mentioned, I'll edit into clips and credit you and credit the podcast name and then I use that year round to promote. Wonderful. Elaine Acker (36:55.784) Yeah, yeah, great. Yeah, I hope we got some good, I think we have good things that you can use that really showcase your expertise and point of view and that kind of thing. Patty Block (37:07.074) Fantastic. Yeah, yeah, it was great. mean, your questions and, you know, as I said, I was going to follow your lead. It was great. Elaine Acker (37:13.832) Yeah. Well, we had had such a good conversation and that just, like I said, I wished I had, well, I had it recorded, but I wished we were formally, you know, recording at that time because it was so valuable and this was equally, you know, helpful and insightful. yeah. Yeah, I know they will. I've got so many women in my network who, especially with the Erika Bryant connection I was mentioning. Patty Block (37:30.792) I'm really glad. I'm really glad and I hope your audience finds it helpful. Patty Block (37:43.543) Yeah. Elaine Acker (37:43.986) She has a whole series of masterminds I just, and she recommends books to people all the time. So I know that she will find this helpful and valuable and be recommending the book, I'm sure. Patty Block (37:56.346) That's fantastic. I really appreciate that. Wonderful. Elaine Acker (37:58.92) Yeah. All right. Any questions for me? I'll let you know when it's coming out. I have two or three, but I actually love this so much. I may shuffle it a little earlier in my sequence. So I'm going to decide what I'm working on next, probably sooner rather than later. wait. Did you have something coming up that you were launching? Or was that somebody else? were talking about timing. Patty Block (38:13.174) Okay, well that would be... That'd be great. Patty Block (38:21.742) I'm not, although I am, no, no, for timing for me it doesn't matter. And when, if you'll let me know ahead of time, I will also promote. And depending on when it comes out, I may have the clips ready as well. Yeah. Elaine Acker (38:27.358) Okay. Elaine Acker (38:31.997) Okay. Elaine Acker (38:37.724) OK. Yeah, and this will do some automatic clips. So I'll pull out the ones that are decent and put them in that folder too. So if you want to use some of those, you're welcome to. Patty Block (38:46.425) that'd be great. my video editor will thank you. Elaine Acker (38:51.508) All right, Patty. Well, have a fantastic weekend. Patty Block (38:55.138) That's fantastic. Thank you, you too, and thanks again for this opportunity. Okay, bye-bye. Elaine Acker (39:00.966) All right, talk to you soon.