Addition by subtraction might show short-term success but the long-term outlook becomes frightening. In this episode, Terry talks in depth about why dealers CANNOT shrink their way to success.
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Without further ado here is the founder and CEO of big-time advertising Terry McCauley
Buckle up reality starts right fucking now
All right, here we go podcast Monday big time thinking great topic today
I’m in a good mood ready to rock and roll. I’ve been hammering coffee for the last two hours got up early today
got a workout in so just
Feeling great and this morning wasn’t sure what I was gonna have as a topic for our podcast today
but as I was working out and on the drive home, I started thinking about
what I wanted to talk about and
Got it. Got a great topic because I think it’s an important one. It’s one that applies to my own business all the time
while my ad agency big time of advertising and marketing has only been around for
Four years this month celebrating our fourth year in business
with tremendous growth
We’re excited to to really envision our future but it
There’s ways to keep growing and I’ll get into this for our today’s topic
And and basically I’m going to talk about basically that you can’t shrink your way into greatness
You can’t shrink your company into greatness. So Terry what what in the hell are you talking about?
So we’re gonna spend some time talking about that. But what I’m talking about is
In my opinion too many companies out there
Even though even the new entrepreneurs and the ones have been around forever
They spend too much energy time and energy on trying to grow their bottom line growth
Versus their top line. So what’s the difference between top line and bottom line growth right top line growth is gross revenue sales
Are we growing are we are we getting more customers? Is that number growing?
Versus bottom line growth which would be net profit after expenses, right?
So you cut expenses you cut employees, too
So there’s ways to control net profit how much you make at the end of the day?
That you’re taking home putting in the bank now get it understand. I understand that what you make your profit is
long term, right
and it certainly is long term but
You can’t expense your way into prosperity
You can’t okay. You can’t you can’t shrink your way into greatness
You know, I want to spend I want you to spend some thought there. Think about that
Whatever it is you’re doing in your and your life
With your family your friends, but most importantly your dealership and or your business you cannot guys
I promise you shrink your way into greatness
I’ve said this all the time to dealers that I call on and when I’m consulting them
There’s only two types of dealers and you’ve got to decide where you’re at
There’s only two okay, and it can change every single day it can change every month
It can change every quarter and it can certainly change every year but you’re only one of two dealerships or businesses one
You’re a growing and thriving
business and dealer or
You’re a shrinking and declining and going out of business
Dealer or business now think about that. Okay, that’s that’s pretty wide. I get it. But if
Let’s say that again
There’s like two types of dealers one that is growing and thriving or one that is decreasing and declining that’s it
You only fall into one of two categories. Okay, the games that simple and it is a game
it’s a W versus a loss a win versus a loss and the wind can happen daily the
And and I again I come right back to it. You’re gonna hear me. Say it over and over
What’s the difference between a a ruttin or grave the depth? You got to get moving either way?
So if you’re a business that sales have declined for one month you’re declining
Look in the mirror and say no we’re in declining business at the moment
I’ve got to turn that around every time our agency has lost the dealership
I’m I don’t really share it publicly there buy a try stay calm and say hey no big deal
But I’m pissed because my revenue I know gross revenue is gonna drop, okay?
versus I gotta go replace it with two more accounts so that at the end of the month I can look in the mirror and
Say I am a growing and thriving
Agency, not one that’s declining and struggling
Because that’s the only two type of businesses, but you cannot shrink your way in the greatest
and I see and hear this a lot and I think you need to spend some time there and
Consider your own business and what you guys spend the majority of your energy doing?
if all you’re ever talking about and you devote more time and energy to
bottom line growth
In example trimming expenses scaling back operations reducing services to customers
What does that sound like to you just Rhys?
Say exactly what I just said again say to yourself
Today we’re going to talk about trimming expenses. We’re going to talk about scaling back our operations a little bit
So whether you can become more profitable, we’re going to talk about reducing services to customers and we’re gonna reduce some employees
Okay, does that sound like a thriving and growing?
Business, okay now don’t get me wrong. I’m not saying expenses shouldn’t be controlled
I’m not saying sometimes we make bad decisions
but I would prefer to work and thrive in a
Business or dealer that is not afraid to throw it out there in
The discussion of trying to grow business right? There’s nothing wrong with a dealer
That says you know what we’re gonna have a huge tin cell and we’re gonna spend a little more
We’re gonna try to grow our customer base
You may fail and fall on your face and not sell as many and the guy in the corner. Who’s the naysayer?
He’s gonna tell you see you look at all the money wasted you could have just sold that not doing it
But what they’re not quantitating is even if you didn’t sell today
How many people are gonna talk about it tomorrow because you reached out and at the end of the day?
Isn’t that what big time thinking is and wanting to be bigger? We’re going after more
We’re not gonna sit still and reduce and say hey look how profitable I am
So, you know and to many new entrepreneurs
Especially those that are just starting out. They they start out trying to drive profit and profit margins too early
Now the reason I focus on top-line revenue verse profit is that I believe you can always drive your profits
Eventually, okay, even I can grow like gross revenue say, alright, man
We’re thriving right now
God if I just cut this and I can I can sit around and not travel for a month or I can
Do some small things and I can make the profit go up
Okay, you can’t sit around and grow your business. You can’t shrink it into greatness
so that’s why I focus on top-line revenue I tend to
Always want to innovate and be ahead of the market
Because that’s where growth happens
I got a respect the importance of selling the year we live in right now. Let’s go sell right now
Okay, we’re not going to shrink expenses and then we’ll be healthy two years down the road as an organization
No, we’re gonna go sell right now
we’re gonna do whatever it takes to sell and we’re gonna go after it and when we sell more
We are a growing and thriving company
Here you don’t believe me. Look at Wall Street. Take a look at it, right?
How long did it take for Amazon to ever make a profit?
But why were people investing in it? Because they kept growing their top-line revenue because they know that’s a business that’s growing
Eventually, you can control them expenses and you become profitable. You can figure that out
But you can’t figure out is sitting around hoping you have customers because you’re not
Growing it and focusing on top-line growth. You’ve got to focus on top-line growth
I know my audio guy hates when I hit take my fist hit my hand cuz it makes it pop in the Mike
But that’s how animated I get sitting here
Know I got to run fast and grab as many customers as I can while I’m still ahead of the game
Okay, someone asked me when I first started this ad agency and all I still carry with me internally
And I asked myself its all-time some and some people still asking. How big do you want your ad agency to become?
But I don’t know the answer like there’s no such thing in my opinion. There’s no
Limit on how big it could be. Well, don’t you just want to sit where you’re profitable and you make a hundred grand here
No, I don’t
I’m not in this for a my my income. I’m in it cuz I love it
I’m in it cuz I’m competitive I made it because I’m good at it. I’m in it because
It’s my passion and you guys out there if you’re not passionate about what you’re doing
We’ve talked about that if you don’t whistle on your way to work you need to consider
Looking for another job, okay
You know, I did it
I did the same thing a lot of you might be doing when you first start out you’re chasing your income man if I could
Just make fifty grand man. If I could just make sixty grand same in business
When you’re chasing a profit
It never will show up. But if you chase
Excellence you chase going after it going after the big dream guys
I promise you I’m looking up and going is this all mine?
Like if I really earn this you guys gonna pay me this like and the numbers
Become pretty exciting
You can’t shrink your way into greatness. We’ve got to learn to focus on top-line growth. We want to increase productivity
Expand our operations create new profit centers
We want to create jobs now
doesn’t that sound like a dealer you want to work for or do you want to go sit in on the meeting that’s going to
Talk about how to trim expenses scale back operations
Reduce service to customers and reduce employees or you want to sit in on the meeting?
we’re gonna say we’re going to talk about how we can increase our productivity and get more out there how we can
Deliver more ads how we can get more phone calls how we can get more emails to our customers how we can take more ups
Right or we discuss how we’re going to expand our operations guys
We’re going to open up a bigger BDC Center so we can get we can support the stuff you’re doing
We’re gonna create some new profit centers. We’ve also got a new product
We’re gonna try all that the products not profitable are already profitable. Well
Again, you can’t shrink your way into greatness. You’ve got to want to go after top-line growth folks
That’s where the that’s where you’re gonna take off and have flight. Don’t get me wrong. I get it you do have to
Focus on and spend some time and not be foolish, right? That’s not trying to say you don’t wanna be foolish with expenses. All right
but if you’re just someone who sits around and as a bean counter go be a bean counter and get the hell out of the
Way of innovators and people who grow businesses. Okay, all the great ones they go get it
You can’t shrink your way into greatness guys, and we keep saying over and over over bottom line growth
It will not deliver the competitive advantage you need in the long term, right?
Because most everyone has gotten better at cutting cost the past few years. We’re all getting better
There’s so many more tools out there. Help us cut costs
But listen, if you want the competitive edge, you got to focus on the long term
Right. I’ve had podcasts on this before previously talking about more leads. People say, oh we don’t want more leads
We just want to be better closing the ones we’re closing
Well, yeah, you want to be better at closing a buyer percentage of them?
But we want more leads because that’s top-line growth. If I get more leads every month. Guess what happens? Hey, your closing ratio sucks
That’s fine. But do I I’m sorry. Do I sell more than you? Yeah. Well then listen, how’s my dust taste cuz you’re eating it
Okay, and that’s the passion you got to have
Right. Yeah get it cutting jobs is hard work and managing that stuff. But you know what?
Creating jobs that’s fuckin genius
Right. Those are the guys. We applaud the guy that creates the jobs not the ones that cut them
So which one are you? I want to create jobs, right?
I’ve sat in on my Vistage 20 group meetings
And other dealers like gob and how many employees you got now be careful. You don’t want too many employees
What the fuck are you talking about? Yeah, I get it. You don’t want to be employees. They’re expensive
They’re not expensive every time I had an employee my business just grew
Right. Hopefully I’m hiring the right person who’s gonna make my business better because I grow
Businesses through people right and sales. Those are people I’m selling so
I’m getting fired up because it’s so true
but it’s again when you’re spending your time on how it will eventually affect the competitive market advantage of the marketplace you
Got to ask yourself. Are you spending your time there?
And so then it gets taught but I thought to myself I better jot down a few points and I came up with three
And I want you to consider right these are points that can help stimulate your thinking in the big time thinking on
Growing your business and/or the earth not just cutting it or maintaining it talk about snooze alert
Right, let’s just maintain our business and I’ve given this thought I think that’s why I’ve always enjoyed being at a dealer that I’ve grown
And I’ve done it write your own dealers
Exponentially now. I’m growing an agency where you will lose me
It’s when we’re just all gonna maintain a set still and not keep growing. I’m bored about checking out
All right, you guys go maintain tell me how it is
I’m gonna go hang out with the creators and the innovators and you need more of those in your organization and your dealer quit
Limiting the ability of people to go be a top-line growth person. If you’re the bean counter, that’s where you fall
That’s fine. We need you. We need somebody to keep score while the ball players are out there playing ball, right?
You think a baseball player goes? Oh my god, I got out my drop my average just dropped to 276
No, I get up there and they hit and they compete and at the end of the season they look at what the bean counters
Told how they did and if their average was better than guess what they make more money our businesses are no different than sports
Ok, so I came up with a couple things that I want you to consider
And points, it really will stimulate your thinking on helping you grow your business not just cutting it
But the one is that many times businesses have to seek bottom line growth to grow company profits because they’ve spent insufficient time
Bringing about new innovation. So when bit what am I saying?
So basically when businesses spend too much time trying to incremental e grow their operations
they aren’t spending enough time to
Reinventing it and blowing it up right and creating new opportunities for endeavor
So what I’m trying to say is number one incremental ism kills innovation
Ok, when we say oh, let’s not grow too fast. What are you talking about? What do you mean?
I’d rather solve the problem of growing too fast
Then trying to grow it incrementally and then it never fucking happens
So that’s what I’m saying incremental ism will kill innovation, right?
Yes, we have to seek bottom line growth so we can afford the things we want I get it but when businesses spend too much
Trying to do it incrementally
They’re not spend enough time reinventing it sometimes you got to reinvent what you’re doing
You got to make your product better so that you can blow it up and create new opportunities for the entire dealership or business
So what does incremental ISM do it creates myopic thinking?
Ok, so when I talk about myopic thinking right?
We’re talking about nearsighted right we lack imagination foresight or what we call intellectual insight. Ok
Big time thinking which is what we’re after is thinking outside the box. It’s thinking about top-line growth
So that we don’t become myopic
That’s what I want to remember. That’s point. Number one incremental ISM will absolutely kill innovation innovative companies
They thrive and grow
Thinking about it with some thought ask yourself
What is your business or dealer spending more time, or are you trying to do things to incrementally? Are you trying to blow it up?
Try to blow it up and watch what happens
Just give it a real shot. And don’t try it for one week one month all we lost money bottom line sucked
No dig in and go get it. All right here. I’m trying to lose weight
I mention that imagine if your weight loss program was like you trying to cut costs well
You know what? I didn’t lose much weight this month, so it didn’t work, right?
No, you gotta go after you got to blow it up. You gotta go get the member ship to the gym
You got to buy more expensive food
So you they eat healthier you guys spend more time, which time is money?
But guess what the bottom line results they take care of themselves when you blow it up. You can’t go incremental
It’s all in all the time and that’s how you’re gonna have the one of two businesses
We want the one we want is one that’s growing and thriving as opposed to the one that’s cutting
Declining and eventually going out of business
It’s the second point I was thinking about as we talked about this topic
but you you know that I think is a great one and you can tell it’s got me fired up but
Sometimes companies level off and stop growing for one simple reason reason they fail to mix learning with forgetting
Okay, so this is an interesting. I thought this was really
Profound if I don’t say this to myself, sometimes we got to forget while learning is important
We all want to do this all let’s learn something that we need to do to get better
But I would say sometimes forgetting may even be more so sometimes we just got to forget a failure right? Sometimes we
We forget how important forgetting is
So what’s something we need to forget? I hate the term. That’s how it’s always been done around here how things get done
Always always a killer for an organization. I hate my hair an organization go. Well. That’s the way we’ve always done it
Sometimes we need to forget the way we’ve always done it if our business is shrinking and declining
Maybe we need to think of a new way
We’ve got to innovate just like I told you we don’t want incremental growth
So sometimes to get out of that myopic thinking we’ve got to forget how things have always done been done, right?
So sometimes we need to forget what the rules are supposed to be. Sometimes rules are great. You guys that are leaders of organizations?
If you’re a CEO CEO, if you’re a general an organization at a dealership sales manager
Yes, you’ve got to have rules cuz they set that they set the the guideline, right?
And they may make good
Logic in your mind, but sometimes when you sit down with your people, they’re not good sense
And so you’ve got to decide what is good sense for your business or dealer and what isn’t right
So if it’s not good sense, sometimes you got to forget the rule and overcome it, right?
One of my favorite lessons from the from Billy Budd
The short story Billy Budd is the only just law is one that’s capable of being over ruled, right?
So yeah, it’s a rule but sometimes it just doesn’t make sense in this instance. And so I’m gonna blaze right through it
I’m gonna win
Consider sometimes we got to forget how things have always been done. We’ve got to forget
What the rules are supposed to be?
That are supposed to dictate what makes good sense
When actually it doesn’t right if it doesn’t make in practicality good sense
Then we’ve got to sit down and reap forget what we’ve always said and say hey we’ve changed now
I will tell you I’ve worked with other business people they hate when I change. Hey, I thought that was the rule
Yeah, it is but I I’ve thought about it. I’ve lived it and it’s it sucks. It’s time to forget it. Let’s rewrite it
Okay, so that’s the that’s growing top-line growth. How does that grow top-line growth because
It’s limiting our ability to create and be innovative
So what’s another thing we could forget?
Well, I tell you one is for sure and this is one challenge for our own organization
But we’ve got to forget old world methods for recruiting hiring
motivating and keeping good people
this would be a whole nother great podcast, but I know people are struggling to hire how to motivate people and
Keep good people now for me
This is just being a good people person
but for some reason, you know
The the flavor of the day is everyone’s go all mollette hills. I get so tired of hearing people complain about Millennials, dude
You know what Millennials are fucking awesome. They’re fun, right? They’re like we used to be with technology in their hands
And they want money faster right now. Sometimes you gotta slow down what’s wrong with somebody wants more money nothing
So how do you motivate somebody wants more money set a clear goal?
On how they go get it, but the old world methods guys. They don’t work. I’m sorry
They don’t even I’ve had to change. I can’t stand not showing up on time
So I’ve I’ve had the Evolve and what does that mean anymore if someone gets you the 8-hour workday and they get their job done
Is it okay so?
And I’m not trying to get off on topic, but we sometimes have to just forget old world methods, right?
and then another one is forgetting everything that made us successful at one time and
Realizing that might not be the ticket in today’s world. I hate we gotta go left
You know Do You Know Who I am where I used to work. That’s what we used to do
Well, that’s great. What is what the hell? Does that have to do with today’s world, right?
What does it have this today’s world
If you’re one of those people that just says oh where I used to work where we were successful. Well, why aren’t you there anymore?
Right. One thing I don’t want to do is is sit around tell anybody what I used to do. Fuck that
I want to tell about what I’m gonna do that
I haven’t done yet that I’m dreaming to do and I don’t care if they go back in the back and smoke a cigarette or
Walk around in the front the dealership come in Terri’s an idiot. You heard what he’s gonna try to do
I don’t care he’s least they’re talking about what I’m gonna try to do as opposed to the outside going man
Does Terry really think that he’s still the man?
That was like five years ago and then all sudden becomes 10 years ago 15 years ago
no one cares when a good friend of mine once drove me by a
Cemetery and said, you know what’s in there and I’ve never forgotten this image a bunch of people who thought they were never replaceable
Right. Think about that a lot of people think they’re replaceable. So we can’t grow our company
On the top line without an eraser sometimes sometimes we have to forget bad decisions
We have to forget where we came from
We need to forget all the things that we think is the way it’s supposed to be because the world is evolving and changing
Right ask the Amish if electricity is gonna matter
Right. So today’s what’s today is a modern Amish as those that are still hanging on AOL accounts and telling kids that they have no
Playing Fortnite. Well get over if they’re playing for at night. So figure out how to make it part of today’s world and become successful
So as crazy as it may seem and sound we must forget much of what we know
To grow our company to its fullest potential and that’s what we’re after. We’re gonna grow our dealership to our fullest potential
sometimes we got to forget a
Lot of what we know and we got evolved and that means from the top line as well as the bottom
Okay, again, we’re after that top-line growth because we know darn well, I hope it’s coming across you can’t trick your way into greatness
so the third point I came up with as I was doing this and
Putting this podcast together was the last one. I wanted a I wanted to challenge you and ask you a question and
This is an important one and it kind of I kind of hit on on the second one
But are you a talent based enterprise? Right? How’s the talent at your dealership?
Do you put a premium on attracting developing and keeping?
Superbly talented people right? We’re not just after good people. And then how do you keep them in your organization?
Sometimes that means you got to pay the price
Right not cutting your way. All I want a cheap guy. I want a cheap guy
Well, guess what with cheap guy you get you get cheap results, right? All you guys have to bind a Bluetooth speaker
I’ve or the French. I’m tired of buying the cheap shit
I know I want something to holds up and last longer
We all do it in our in our adult life as we get older, right?
Well, how come we’re not doing with our businesses and dealers?
Why are we trying to be cheap instead of keeping and attracting the most superbly talented people of all time?
Right this year the New York Yankees
Bring stand on and pay crazy money. Why are they paying crazy money? Because he’s superbly talented
Right, so why aren’t we in our businesses seeking?
superbly talented people
There’s a reason they make the money they do in other other dealerships and other businesses because they deliver right? There’s a free agent
All right, we all want our favorite sports team to make a free agent move and get the best person
Why aren’t we doing it our dealers? Why aren’t we going out? Well, if I hear someone in town has a better salesperson
I’m gonna find out where they eat now
I’m gonna bump into them a restaurant how happy are you cuz there’s a chance my competitor might not be doing what?
Takes to get them. So we got to quit hiring cheap guys
Yes, it might bring bottom line growth, but I’m telling you right now. It’s a recipe for Destruction. It’s a recipe for failure
it’s a recipe for a
dealership business to go out of business
Cheap people. You know what I will tell you about cheap people
They rarely have the energy the drive the desire the innovation or the spirit to grow your dealership or company
From the top, which is what we’re after cheap people, you know what they’re nice folks
They just want to get by they want a job. I don’t want people in my organization want a job
I want to see an employee get a brand-new car cuz they better their life. I want to hear a guy in the back
Oh man, this is awesome. I’ll set them in a buy a house because I’m making more money
I want to hear that if I hear a guy just
Or gal just show up want to smoke a couple cigarettes not picking on smokers, but that’s another podcast
But just wants to get by
Because they’re cheap
They’re nice people
They’re not who I want to go to battle with. They’re not who I want to go to war with them
You’re going to business or dealership. I want people that want nice things, right?
How do you think you get nice stuff you go deliver you go all the top line. Not the bottom line
So we we got to start guys. We’ve got to start seeking people who think like owners don’t we not just employees?
We want people who can think and create and we’ll add real value to our organization
Right, and I’ve got one right now. I’ve got to even though I’m a small agency
I’ve got guys that had real value to my organization. I’m walking into my agency and they’re telling me about shit that’s changing
I don’t even know should be embarrassing and say oh man. You’re losing your touch
No, I’m surrounding myself with people who make me better, right?
And that’s why my agency is going it at the moment growing at the top line
Your dealership would be no different if you surround yourself with the best people and quit trying to expense yourself to success
You can’t shrink your way to greatness folks. Sorry can’t do it
Right. So my question is today the podcast have you fallen prey to any of these short-term
Short-sighted strategies give it some thought
And hopefully I’ve given you some thoughts of to where you could get better and become a better
Business and dealership and start focusing on that top-line growth
I will tell you that most companies from time to time can’t figure out why they’ve leveled off we’ve all done that man
We were so good. And this actually just happened on my last dealership visit
I was in there and it was kind of funny to ask him. They’re like man
Oh, it’s glaring what they’ve changed. So here’s the deal. They’re a buy here pay your dealer and
They’ve leveled off they they used to all three four years ago. We used to sell a lot more cars
We’re just not selling oil used to
And when I was out there, I noticed they started hanging prices on all their cars
Well guys everybody knows a by here pay your car
Those people are not buying because of price right like they charge more because of the interest and people are saying they’re an older car
They put more in service
so when you’re asking eleven and twelve thousand dollars for a car that you could Google on the internet and seconds and
See that it’s being sold for seven and eight again. It’s they’re not taking advantage of people
They’re selling it that way because it’s a higher-risk loan and they have to make money, right?
And I said, hey why do you hang those I don’t know why we get they told me they got tired of people asking
They put the price on there because they got tired of people asking what the price of the car was
And we just thought this was easier I said how long ago do you guys start that that process about two three years ago?
I said that’s funny
so now you got so tired of people asking you you found a way for no one to ask you about the price of a
and they almost what they kind of are arguing and I’m just like
Sometimes you got to forget like I said that how how or why you got there and rethink it. All right
It was it made perfect logical sense when you did it
I’m sure it did we all do things in our business and dealers that we make we can’t remember why you did it
But you know, it made good sense at the time and that’s fine. Don’t belittle it
But then sometimes you got to revisit and say why are we doing this? So
We don’t want to fall
Prey to these short-sighted strategies guys, and if your dealership or business has leveled off think about these things
Are you trying to cut expenses to grow I?
Want you to talk about these things
Because I want you to become vibrant meaningful and start focusing on top-line growth
I promise you if you’re if 80 to 90% of your energies and top-line growth the bottom line will take care of itself
Okay, it just will
Remember, you can’t shrink your way into greatness. And if your goal in business is not to be truly great
Why bother doing business at all? That’s my question
Think about that if your goal in business is not to be truly great
Big-time why bother doing business at all?
Again, that’s our podcast today. I hope it made some sense to you. I won we’re hammer home
You can’t shrink your way into greatness guys. You can’t high-five shrinking, right? We want a high five growth top-line growth
Alright, if you apply some of these strategies and some of the things we talked about and give it some time and your management team
All the way down to every order of every part of your organization every department
Start thinking about how you can go for it. Ask you ask your people. How can we become bigger? How can we become better?
And let’s start focusing on that top-line growth because I’m telling you energy is a force multiplier right positive
Energy is a force multiplier and let’s go get it. We can do it. Make it a great week
I want to remind you to keep downloading these podcasts. That means a lot to me. I love sharing my inner thoughts
What I’ve done in my own life, and I’ve got a long way to go
I learn as I do these guys these thoughts provoking things. I made a challenges me to think and
revisit what I’m doing and I
Know I’m becoming a better business person because of it
Share it bring a friend a big time thinking I’m not going to give up on this. I hope you like it again
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Share the word. Give us the ratings that we need them. We can’t do without you
Guys go out there grow your business. Remember you can’t shrink your way into greatness
I want you to have big time thinking and remember you want to be big time every time