The Visibility Trap: Why the Data You’re Missing Is More Dangerous Than the Data You Have

Scott Todd (00:00)
Let me ask you a question. Why do your customers buy from you? I don't want you to guess. I want you to really think about it. Why do they choose you over everyone else? Now, let me ask you another one. Why do your employees actually work for you? What do they actually think about working here? And if you hesitated on either of those, or if you're just guessing, then you're in the visibility trap. And here's the thing.

Most business owners think knowing your numbers is about financials, but it's not. That's just the obvious part. The visibility trap is about flying blind in parts of your business, your money, your customers, your team, your operations, and not even knowing it. Today, I'm going to go deep on the final trap, and I'm going to show you why the data that you're missing might be more dangerous than the data that you have.

But first, let me tell you about a business owner who had perfect financials and he still didn't see the problem coming. Welcome to Fix My Business. I'm your host, Scott Todd. I have built multiple seven-figure businesses after leaving corporate America. And this show is dedicated to helping you build a business that you love. Now, in episode 54, this is episode 58, so four back.

I introduced the four traps, the control trap, the visibility trap, the memory trap, and the variability trap. And we've gone deep on the first three. And today we're tackling the final trap, the visibility trap.

And I've saved this one for last because it's the sneakiest. You can escape the control trap. You can fix variability. You can automate away the memory trap. But if you don't have visibility, you won't know that the other traps exist. So here's the story I was gonna tell you. I knew a business owner, let's just call him David. And David had his financials dialed in. He had his monthly profit and loss statement. He has cashflow projections. He knew his numbers cold.

But one quarter revenue started to drop and it ended up dropping for about 30%. Out of nowhere. Well, what did David do? Well, he panicked. He started cutting costs. He started adjusting pricing. He started running promotions. Nothing worked. Finally, he did something that he had never done before. He called some of his most loyal customers whose business had dropped off and started asking them why they bought from him. Why they changed, what changed.

And what he heard shocked them. See, they didn't buy from him because of his product. They could get that anywhere. They bought from him because of one employee, a sales rep named Maria. Maria made them feel taken care of. Maria remembered their orders, remembered their names, remembered their preferences. And six months earlier, Maria had left and David barely even noticed. She was just one employee. He hired a replacement and he moved on. He backfilled her.

but his customers noticed. And one by one, they left too. David had perfect visibility into his financials, but he had zero visibility into why his customers actually chose him. And that's the visibility trap. And it's not just about money. The visibility trap shows up in three areas in your business. And most owners, well, they're blind to at least two of them. So let's look at the three blind spots.

Blind spot number one, financial data. And this one's obvious, right? Do you know your margins? Do you know your cash flow? Do you know your runway? Do know which products or services are actually profitable? Which ones are bleeding money? And a lot of business owners think that they know their numbers. They've watched Shark Tank, they've seen it. I know my numbers. But when I ask them specifics, like what's your customer acquisition cost or your lifetime value, they hesitate, they guess.

That's the trap. You have the numbers, but then it may not be the right numbers or you have the right numbers, but you're not looking at them. Blind spot number two is customer data. And this is where David failed. Why do your customers actually choose you? Why do they stay? Why do they leave? Why are they even talking to you in the first place to be their provider? And if you don't know,

if you're guessing you're flying blind. You might be investing in the wrong things. You might be ignoring the one thing that actually matters to them. I've seen businesses spend thousands on marketing when the real problem had nothing to do with marketing. It was a fulfillment issue. I've seen businesses redesign their products when the real issue was customer service. They didn't know because they never asked.

Blind spot number three, comes back to your employees and your employee data. And this is one that really nobody ever thinks about. Why do your employees actually work with you? What do they actually think about the work that's being done here? Are they showing up just for the money or are they showing up because they support your mission? What would make them leave? Most business owners find out that an employee is unhappy when they hand in their resignation. That's too late. That's zero visibility.

And here's the question that reveals if you're in the trap or not. Do you have the data you need to make this decision? Not do I have data? Not do I have the reports? Do I have the data I need? Because every decision in your business should be backed by data. Pricing decisions, hiring decisions, marketing decisions, product decisions.

You have to understand also that you don't have, you're not always going to have 100 % of the data that you need. That's where you can get into paralysis, if you will. Okay? Because you need enough to make the decision that's based on data. You're never going to have all the data that you need. But here's what happens. Most business owners make decisions based on their gut, their instinct, based on what they think, and sometimes they're wrong.

But when they're wrong, they don't even know it because they never had the data to tell them about it. And I talk about this in my book, Fix This Next for Real Estate Investors. I call it the survival trap. It's when you're choosing the wrong problem, the wrong next action, because you don't have visibility into actually what's broken. You think you have a sales problem, so you focus on marketing.

But the real problem is something else, maybe fulfillment. Customers aren't coming back, but you'd know if you had the data, but you don't. So you keep chasing the wrong thing, and it's a series of chasing the wrong thing, and that puts you into a circle. puts you into a survival trap. Now, here's why the visibility trap is the most dangerous of all of the four traps that I've talked about. It's because it hides the other three traps. It masks them.

Think about it. If you don't have visibility into your processes, then you can't see the control trap. You won't notice that everything is flowing through one individual person until that person leaves or burns out. If you don't have visibility into your outputs, you won't see the variability trap. You won't notice that the quality depends on who does the work until, well, somebody complains. If you don't have visibility into what's happening,

then you won't see the memory trap. You won't know that the follow-ups are falling through the cracks until revenue begins to disappear. The visibility trap is somewhat of a meta trap. It's the trap that lets all of the other traps hide. And here's the uncomfortable truth. You might prefer not to see. You see, visibility means accountability. When you see

The problem, you have to do something about it. I've talked to so many business owners who they don't want to survey their employees because they're afraid of what they'll hear. I talked to one business owner who he doesn't want to analyze why his customers are churning because he doesn't want to face the reasons or he feels like he's constrained and he won't be able to solve the problems that they identify. Ignorance feels easier.

If I don't have to see it, then I don't have to fix it. But that's not leadership. That's hiding. The whole point of escaping these traps is to build a business that runs without you, a business you actually love. And you can't do that if you're afraid to look at the truth. So how do you escape the visibility trap? Well, there are three parts to escaping the visibility trap. Number one.

Identify your blind spots. You have to go through the areas of your business. Start with financial, customers, employees, operations. And you have to ask yourself, what don't I know? For finance, do I know my real margins, my cash flow, my customer acquisition cost, my expenses as a percent of revenue? For your customers, do I know why they buy, why they stay, why they leave?

For employees, do I know what they think? Why do they want to leave? What would make them stay? Why do they show up tomorrow anyway? Make a list of all the questions you can't answer. Those are your blind spots. And heck, with AI, you can use AI to help you build these blind spots or identify these blind spots. Step number two is to build feedback loops.

Visibility doesn't happen by accident. You have to build systems that capture data. For customers, that might mean exit surveys when someone cancels or quarterly check-in calls with your best customers or simply asking new customers, why did you choose us? For employees, that might mean anonymous surveys or regular one-on-ones with specific questions like what's one thing

that would make your job better or on exit interviews when someone's leaving to actually listen to what they say. For finances, it might mean dashboards that show you the numbers that matter. Now look, not just revenues, not just passive income, but the metrics behind the revenue. The point is that data doesn't just walk into our door. We have to go collect it and we have to have

methods and systems that help us collect this. Part three, and this is the hardest one, is you have to look at what you don't want to see. See, once you have the data, you actually have to look at it. I've seen business owners build beautiful dashboards and never open it. It's like they don't want to open it. I've seen them collect survey responses from customers. They don't read them.

Visibility without attention is just noise. And you have to commit to actually looking at it, especially at the uncomfortable stuff. The data that makes you cringe is usually the data that matters the most.

Now here's how the visibility trap connects to the scale framework. And scale framework is something that I use when I'm talking about business automation. look, we've gone on like a number of episodes where we are building up to automating your processes. And I talked about this in episode 52. Again, this is episode 58. So just go back six of them. I talk about the scale framework and the L. L in scale is leverage the data. And that's exactly what we're talking about here.

When you escape the visibility trap, you're not just collecting data, you're using it to make decisions. You're building alerts for when things go wrong. You're creating feedback loops that show you the truth even when the number is uncomfortable. In episode 57, I talked about building alerts for failures. That's visibility. You're making the invisible visible.

And once you see it, you can fix it. So here's your action for this episode. Pick one blind spot, any area of your business, financial customers, employees, whatever you want, just pick one and build a feedback loop that gets visibility into it. Put the spotlight on it. It could be a survey, it could be a question, it could be a dashboard, it could be a conversation. Start small, but start.

That's the first step out of it, the visibility trap. Now here's the important piece. Four traps in every process, control, variability, memory and visibility, and they never go away. They exist in every process of your business. It doesn't matter how many times you refine it. They're still there in some way. Now, maybe not all four in the exact same process, but these, these

traps never leave your business. It's the imperfection that's built into every business. But once you see them, you can't unsee them. And that's half the battle. And in the next episode, I'm going to show you how to look at your processes holistically, how to find where they are hiding before you automate. So important before you automate.

Because if you automate the traps into the system without trying to first identify them and remove them, then you're amplifying the chaos. And if you have a business question, I want you to head over to scotttodd.net forward slash ask. I read every single submission and I will see you in our next episode.