Transcript
0:04
I've dubbed that perma five. No, like I would go to someone, they'll say, Good talk someone who's 55 years old. When are you going to sell your business? Five years from now? I go back two years later, five years from now, you go back three years later, five years from now, they know there's something wrong that they can't get their business sold, or can't get enough money for the business or whatever it is. But they think that whatever it is, is going to magically appear reveal itself over the next five years are going to fix it. But they haven't had been asking the right questions. So I've dubbed that perma phi, most business owners in the country with impairment. Everything's five years away.
0:43
Hi, everybody. Welcome to the ROI online podcast where we believe you. The courageous entrepreneurs of our day, are the invisible heroes of our economy. You not only improve our world with your ideas, your grit and your passion, but you make our world better. I'm Steve Brown. And this is the place where we have great conversations with winners just like you while we laugh and learn together. Welcome back, everybody to the ROI online podcast and today, I'm really proud to introduce you to Josh Patrick. Now I met Josh on he reached out and talked to us but the more I talked to him, the more I felt you guys needed to meet him. Josh is an author. He has a book called sustainable a fable about creating a personally and economically sustainable business. He's got a podcast as well. He's the host of a podcast called cracking the cash flow code. Josh, welcome to the ROI online podcast.
1:50
Hey, Steve, I appreciate it.
1:51
Give us a little background about why in the world you would start a business to coach people that are somewhat off and think that they can start a business and change the world.
2:03
Well, most people don't start a business to change the world. First of all, most people start a business because they see a problem that's not being solved and they can solve it. And you know, Michael Gerber in, you know, the E myth calls had a technician having an entrepreneurial cramp. And the truth is, most businesses actually start that way. Most businesses stay that way. Because the person starting the business is really more interested in solving that. That little scratch they want to enrich, then they are building in the enterprise. That's true, if you could the numbers and here's something that I think is really always interesting. I'd like to bring up there's 28 million businesses in the United States. Only 6 million of those have any employees at all. And only 300,000 do more than $5 million in sales. That's crazy. So so when you get down and the numbers get really small, really fast. And the reason is, and I've talked to, you know, hundreds, maybe 1000 business owners over my 40 years of doing this stuff is that they just really are more interested in doing their craft than building the business.
3:16
Yeah, you know, those stats, Josh, I believe that the invisible heroes of our economy are these entrepreneurs that have 20 or less employees. And that's like 98, and a half percent of the American businesses have 20 or less employees. And you think about the person running that business. They're wearing every single hat generally in that business. And they're
3:41
in the challenges, they don't recognize what they do well, and what they do poorly. And they end up spending way too much time doing work. They could hire somebody for $20 an hour, and they ignore the work that creates $5,000 an hour for
3:56
totally, and that's why they need someone like us to help them think that through, but usually the only people that you really have to pull from are some of your employees or maybe your spouse or your, your uncle, you know, we don't have a lot of life support, so to speak for folks that are running businesses.
4:18
You know, that's pretty much true. And the other issue is that people who are good are expensive. So if you have a business that's making, you know, $200,000 or $100,000 a year, which is probably the majority of the private businesses in this country, you're not going to go out and spend $60,000 on a consultant to come in and help you run your business unless you are willing to make some significant changes. And you want to take that hundred thousand dollars or $200,000 up to $500,000 in profits.
4:51
So So what's a guy to do what's, what's this? This brave, courageous person that's got it figured out HR got to figure out pricing needs to negotiate it. We've got to buy and we got to get payroll done. What What do you do? How do you carve out a little time? How do you find somebody? That's, that's a significant challenge?
5:14
Yeah, the biggest challenge they have is that size business, the owner is almost always 100% involved tactically in the business, is zero percent strategically working on the business. And what I tell people to do so look if you work 50 or 60 hours a week, and please don't work when that because your productivity goes down terribly after you hit 50 hours. Well, let's say you're going to work 50 hours a week. Do you think it's possible to carve off a half an hour a day to work on strategic issues?
5:48
Yeah, I mean, just check your Instagram stats, right?
5:51
Right. So if you can, if you can carve off a half an hour a day, you will probably double efficiency. In the effectiveness of your business over one year, you know, when I used to be my first one years, I own a vending and food service company. And the thing about the vending and food service company learned very quickly is that you have route drivers out there who are filling your vending machines. And they're doing 25 or 30 machines a day. Well, if I could find them a way to say 15 to 30 seconds on a process, and think about this for a second, that's a couple of minutes a week. Actually, more than that, it's 15 or 30. Let's say it's 30 seconds, I'm going to 30 machines that's 15 minutes a day. If I can do that every single week, I'm going to be saving this route driver hours in hours and hours of time by making them more efficient. So the thing that you need to do if you're a small business owner is not think about major changes you're gonna make but little teeny micro changes that are Second day that you're saving is something you do 10 1520 times a day. And part of that is, gee, if I'm doing something that I can pay somebody else $20 an hour to do. Or if you know how to use virtual assistants, which I think all small businesses should learn how to do, it's only eight to $10 an hour. You're really allowing yourself to find time to work on things that can create $5,000 an hour or more in time for you. But all those things, I mean, all those things are going to be strategic activities, and not tactical activities.
7:37
Totally. So. So do you have to like set up this regular schedule like from eight to nine? I'm going to do those that strategic how do you how do you
7:49
are you I'm a big fan of time was called that's called time blocking. And if you see my calendar, it looks like there's a lot of empty time two or three days from now. But if you look at my calendar today, you'll see that there is no empty time because I have scheduled all my activities for the day in time blocks. Now a lot of those activities are tactical things, but is still on my calendar as an appointment. And then I have the strategic things which are also on my appointment, I can't order as an appointment. So I have to consciously skip by this and go on there. I just found this very cool program, which I love is called sin sama, which kind of combines time blocking with a finger efficiency methodology called Scrum. With standard old getting things done, time management stuff, when you combine those three things together, you can find that you're way, way, way more efficient. There's a guy named Brian Moran that wrote this book, The 12 week here, and this fits in with using Brian's stuff getting more weren't done in 12 weeks, and most people get done the year. But the thing is, by time blocking, you're focusing where your time is going. And you're choosing how you're spending your time. activities, you're not choosing it for you. So what's the name of this tool that you're excited about? So insomma, as you say, Ma, as you know, Steve, we had this conversation last time we talked, I look for software that will save me a few seconds per activity per day. And I think that trying to find one piece of software to do everything for you. is a really stupid, yeah.
9:38
Well, the My problem is of study of software, but all the time I would have saved if I wouldn't have signed up for it. I'm, I spent evaluating it. There's so many choices out there. And again, I'm in a position where I'm not real confident, and I've made mistakes. I've signed up for a software I thought is going to change the world and it didn't
10:00
You just have a really major word there. And that word is mistakes. No, the truth is if you're going to run a business, you're going to make 90,000 mistakes. Now my joke is that I'm very, very successful people who are 50 years old and older running businesses. And the reason why is a made enough mistakes to figure out what works and what doesn't work. So typically, you'll find the people who have been struggling in their business become success overnight successes when they turn 50. It isn't that they became overnight successes, what happened was they made enough mistakes, they learned enough and they stayed with it long enough to become effective and efficient at what they were doing. Now, if you're 30 years old, and you're making mistakes, well, the question you have to ask yourself is, what did I learn and you have to make sure you don't beat yourself up or your employees when they make a mistake. When your employees make a mistake, and they do. The question you ask them is what did we learn? If they shrug their shoulders you have to then say, Okay, if you didn't know what you learn, what would that be? And when they shrug their shoulders again, you have to say to them, okay, now here's what I want you to do. I want you to pretend to tell me what you learned. And I've never had anybody can pretend to come up with something in the pretend they come up with something. That's actually what they really learned. And I say yes, that's the lesson. So how can we make this a permanent learning experience?
11:28
But that's funny that you're saying that the mistakes end up being like your MBA, what you had paid and go to school, but the X is more valuable. It's just a more of a flowing curriculum. That's a surprise curriculum instead of an expected curriculum. And to look at it that way, helps you maintain somewhat of your sanity.
11:53
One of my one of my favorite thinkers is again, our Buckminster Fuller who was around he died, you know before I don't know when he I think he died before the year 2000. But he written certainly great books one was critical path. And in there he says two things about mistakes. He says, One mistakes are learning opportunities. In two, you don't learn less. So those are my two mantras around mistakes.
12:25
So, so tell us a little bit about your system that what are like the top four things that you sit down and address with someone when you begin an engagement with an entrepreneur business owner that's wanting to get their act together? Well,
12:41
it's actually led by the entrepreneurs not led by me. Now I know pretty much that any issue that business owners can come up with, falls into four broad, actually five broad categories. And the four broad categories is what is my business about which is values and mission The second is having enough revenue coming into the door, which broadly, I put under the theme of recurring revenue. The third is becoming operationally irrelevant your business, which is where you have to learn how to delegate, that's actually probably the most important thing you can do. The fourth is to systematize your business in we've been talking about that pretty much right up in that, but that's all strategic stuff. Then finally, is, Are you feeling the four buckets of profit, which is lifestyle, having the emergency fund having a fully funded growth program in a fully funded retirement program? Now, the way we figure out where we're going to go, is we have this process we call the alignment conversation. And the alignment conversation is very simple. Where are you today? Where do you want to be tomorrow? Or some point in the future? What's the gap between those two? What would the value be for you if you were able to find fill that gap. And that's a really important question to answer, because you know if the value is high enough to work on it or not. And then finally is, you know, gee, do you want some help with this? So, from that I basically get an idea of what's important to you. Because the truth is, you're the expert about what you want in your life. My job is to help you understand what you want, and then develop strategies that get that and those strategies and creating what I call sale ready business will generally fall under one of those five things and usually all those five things, but we have to go in the right order at it. Now, my buddy Mike mccalla wits, just wrote this great new book called fixes next. And it sort of combines the same with Maslow's hierarchy of needs, which he rejiggered around that to helping you figure out what's the next thing you want to focus on? And Mike is in this book talks about thing called the Theory of Constraints. And I call the Theory of Constraints whack a mole for business. Because what you do is you look for a bottleneck to occur, you fix the bottleneck, and you move on to the next one. So Mike's little thing with his little graphic with his hierarchy of needs, helps you figure out what that bottleneck is you need to go after next. Now in your business, you use a methodology called Scrum, which is project management, which is how can we increase the velocity of doing similar projects all the time, because you do the same sort of project for your clients over and over and over again. And by systematizing, what you're doing in going back and doing a retrospective of what worked and what didn't work, you're going to increase the speed of what you're doing so dramatically, that it gives people who do Scrum well, an unfair advantage. You know, for example, I love this one my favorite things. I get a contractor on the phone with me from the contract. In business, yeah. And one of my first questions would be I said, what would it be worth to you if I could increase your profit and your productivity by 30%? in six months? And they go, Well, you can't do that. I said, Well, no, that wasn't my question. My question was, what would it be worth you if you could do it? And then you do that and explain how Scrum works. And I said, Do you know something that will give you an unfair advantage because it's used by every software development company now. But it's used by no construction companies is the same methodology that they have that you need, which is project management. And if you get good at that, which is what systematizing your business, you are going to have an unfair advantage over your competitors. If you ever want to leave your business. So what you're doing, you've now given another construction company, a good reason to buy you because they don't know how to do that is worth a lot On the water.
17:01
Exactly. So you and I were talking about them. One of the epiphanies that I had was that and I got it from a book, it wasn't my idea but a business goes to life stages just like a person does. You've got this startup stage it's really messy then you kind of start to get some traction and and some buy in from employees and, and there's a certain stage in that business life cycle where you you would be a perfect fit. That'd be nice to start from the start with all your your ducks in a row. But you don't know everything at that time. What stage is the best time to like start to bring you into an organization
17:50
when you've been doing your business for 20 years, wow. And and you've had a lot of mistakes and you realize you're stuck. You're at a stage, you've been on stage for 578 years. And when someone says, When are you going to do this? You keep saying five years from now. I've dubbed that perma five. Like, I will go to someone, they'll say, Well, good talk, someone was 55 years old. When are you going to sell your business? Five years from now? I go back two years later, five years from now, you go back three years or five years now. They know there's something wrong that they can't get their business sold, or can't get enough money for the business or whatever it is. But they think that whatever it is, is going to magically appear reveal itself over the next five years are going to fix it, but they haven't been asking the right questions. So I've dubbed that perma five in most business owners in the country live in perma five. Everything's five years away. I just finished writing my second book in there. I was being kind of a brat and we were talking in the second book is about Business family transition, same characters as my first book. And I wrote that it's going to happen in four and a half years, because I hate hearing the term five years. I know it's a myth. So when you say sale, sales ready business, right? What does that mean? Exactly? We consider my definition is very simple. It's a business that somebody else wants to own.
19:27
Mm hmm. So what are those things that that we need to consider when we were starting to think about it that that's a mindset. That's a shift from I'm just trying to stay alive and make it through for five more years to what do I need to do to prep to sell this thing?
19:46
Yeah, the, that's a really kind of interesting question. In that, again, we go back to those five things are talked about. If you have those five things as somewhere on eight to 10 on a scale of 10. You have a pretty Isn't that people are going to want to buy in, you're going to be dying not to sell it, because you're having too much fun and making too much money. Now I've done this several times with people where we talk about someone walks in my office and say, I want to sell my business. I say when they say yesterday, I know right now I'm working with burnout. before we've even gone to anyplace else. I know I've got a burnout issue. And the reason I have a burnout issue is working 100% tactically in zero strategically, if I help you do the five things of sustainability with your business, you are going to be working 90% strategically in 10% tactically, and you're gonna start making a ton of money and having a ton of fun. And we start with values. And I tell people, I say look at a buyer doesn't give two cents about your values. But if you're not values LED, you're never going to create a great company. Somebody else wants to own it, by the way, when your values lead. It's a great company that you're so happy to own You never want to leave.
21:02
Yeah. So there's this book I read called vivid vision. You know, and by Cameron Herald. I really, really liked that book. So I said, and did that exercise for my agency. And I took maybe three or four months to really decide the questions I want to answer. And in that book, simplistically, you draw a picture of what your company looks like three years from now. Yes. So you pick the questions you want to answer, then you answer those, but you answer them in the future. I'm telling you that it made my employees. Let's assume you have employees that are engaged and want to do their best.
21:43
The truth of the way that's all that's all employees. If your employees are not doing their best not engaged, it's your fault. It's not their fault.
21:50
Totally. But it let's assume that they exist without supervision. They're rolling to some point on the horizon. And even if they think they're going where You want to go? That's not the case. And unless you, you say, this is where we're going, and this is why and this is who they can't wrote to the same place that you,
22:11
you know, I've been helping people write job descriptions and job ads for years. And my own company about three years ago, our longtime assistant left, so I hired new assistants. I'm going to try something just as an experiment. I wrote one paragraph about the job and five paragraphs about our values. This was well before the Coronavirus, this was back when burlington vermont had a 3% unemployment rate. Nobody could hire anybody. I had 120 applications come in. And it was because we were writing about our values and what was important, so people could decide whether you were the right company to work for, based on what you're about, and not stupid job description. You know, I tell people for years, I said, look at, simplify what you're doing. Stop making it complicated. This is especially hard for MBAs, because they're smart people. And smart people like complicated solutions, because it makes us feel smarter. The smartest people I know, want dumb solutions solution so everybody can implement. So instead of writing this long job description that has this laundry list of what you want people to do, I want you to think about the job in a different way. I want you to think about the three to five things that person has to do to be successful in that job, and call those success factors. And when you're putting together your job description, in your job posting, it's the success factors you talk about, not the stuff you need to be able to do, right. If you do that you can get better people. And if you have a methodology for hiring, which we also have a framework for that you're going to be able to hire About 80% 85% correctly, instead of your usual 35 or 40% correctly.
24:07
Yeah, I love that I'm, I must confess, I don't read resumes. I, you know, I want to get to know them. I even I think the perfect job interview would be like, hey, Josh, I appreciate you applying for the position. Usually, I'm going to sit here and ask you a bunch of questions, and you're going to try to tell me the answers I want to hear. But why don't we just flip this? You just asked me questions for an hour. And then we'll figure out what's the next step after that. I think that would be the most because you're going to get all sorts of ideas from them onto the way they think, what they're interested in. And if the first question that they start with is Well, tell me about your benefits. Well, we're not we're good. already going, we're going down two different paths right there. Right. And I, I think it would be a great way to kind of enlighten. One of the things that I think most people looking for position don't realize is it's incumbent upon them to figure out what they're best at and where they fit. I can't read. I can't read you. And right now it's my job to go. Alright, Josh, I'm just from a few conversations. I'm we're going to put you up front here and you're going to answer the phones. I think that's where you would be the best. You and I know that the chances are that that's not where you're best. But how do I figure that out? Right, and without some experience with you?
25:47
Yeah, I mean, it's an interesting idea, and I think I'd like to try it out. I'm pretty much that we're hiring for a role and the role is not your technical skills. skills, technical skills can be taught. Now if I need to buy, you know, get a c++ programmer, they need to know how to program or c++. That's just you know that. That's the entry to the conversation. If you can't do that, I'm not going to talk to you. But if he can do that, I'm going to ignore all those technical things you can do. And I'm going to be talking to you, I'm gonna be asking you open ended questions about values. For example, my core value number one core value is personal responsibility. I want to hear your story about your last job or something didn't go well. So I'm going to ask you to tell me, I like people telling me stories. Yeah. So I say tell me a story about law. And in there, I'm going to be picking out whether they're going to uphold the values that I think are important or not. I will not hire anybody for any of my companies, unless you score an eight out of 10 or above, on the five values which we think are dear And it's just, you know, one of those things that, that that's where I start, and then I go in and start talking about, are they willing to do the activities in the business that will make them successful in the role that I'm hiring for? So for example, if I'm hiring a salesperson, are they willing to get out of the office and go talk to people?
27:24
Oh, they're gonna tell you yes, yes, that's I love it. I love but I don't
27:27
ask him that question. I ask other questions that get allow me to see if they're willing to do that. So in other words, I might ask them, gee, are you an introvert or an extrovert? And what what about that makes you interested in other people? You know, I'll ask questions that are basically going to give me reveals or tells about whether they're going to do that if I and of course I say, Are you willing to go on and do cold calling? Are you willing to go out into five presentations a week or two presentations a week, I'm of course going to say yes. I might say, what's a reasonable way for you to spend your time? And they're going to tell me what they need to do. And I'm going to say, Well, how do I know you're going to do that? And they will tell me from past experience to prove to me that they've done it. Or they go boo, boo, boo, boo boo. I know they're giving you a bunch of Lima crap, right? So it's really about learning how to, you know, interviewing is not asking a closed ended question ever. all your questions need to be open ended. And let people tell you stories and asset is tell them that and use those use that language. Tell me a story. Because when you're telling me a story, they can suspend judgment, and they'll tell you what they're really thinking. Yeah.
28:58
Want to pause here just for a moment. And talk to you about a program that we have just released called the ROI quickstart Academy for authors every day, I talk to business owners just like you who struggle with quickly getting their fundamentals in place. We want to create a great foundation, and we want to grow our business. But the things that are in our way, our lack of knowledge about the specifics, we should put in place, what kind of technology what kind of messaging and what kind of campaigns and that problem exists for authors as well. And we just gel so good with authors because, well, I'm an author, and I understand everything that you struggle with. You have a great idea you have a great book, but what do you want to do? You want to get your book in front of more people, you want to make it easy for them to find you learn how they can schedule a time to talk with you hire you for a conference, or maybe sign up for the services that your book promotes. So what is the Quickstart Academy for authors Imagine working with a small group of like minded authors and the experts from the ROI quickstart team. It's a great way to get your messaging clear to be confident with the technology in your marketing automation, and how to run a strategic campaign to get you more of what you want from the investment of your book. To learn more about the Quickstart Academy for authors, you can visit ROI online.com or click in the link in the show notes below. And now back to this episode. So, revenue so we we've spent some time on values and missions and and so which one of these other four parts are your favorite? Which one do you really like to spend time on? You think that's a biggest lever you address first?
30:59
How to delegate becoming operationally irrelevant for your business. If you can't make time to work on this stuff, you're never going to work on it. So everyone has tried to delegate. Almost everybody has been a total failure at it the first time. In fact, I would say 100% of people that value the first time in almost everybody quits after the first time because it didn't work. Right. So that's why you specific to stay at 510 employees is that the owner feels that they have to have everything under their thumb. And they only can handle so much before they have to say I can't do any more. Right? If you can learn to delegate, you can grow a big business and there are two levels of delegation. First of all is can I delegate directly to somebody doing the job. And that's more or less building helpers as delegate is when you first do that, by the way. And then the second role is as you get 25 people you start managing managers in that point, You say, Can I delegate in a way that gets us the result we want to get, which means you're being a coach in supervisor, to the direct report, and you're coaching them and how to become delegators to their direct reports who actually are doing the work. And if you can't do that you can't grow a business. It's as simple. It is the most important thing you can do to create value in the business. Because a buyer doesn't want you they want your cash flow than what your people they want your systems they want your customers, not you. They'll tell you, they want you they don't want you and the more that you get yourself out of the way, the more your people are able to shine as long as they have systems to work in which give them guardrails to say here is appropriate performance. You know, bakwin Norris was was a greatest retail store of all times. Unfortunately not that way anymore. They just keep their employees guardrails and said do what's right. And, I mean, I used to go to Nordstrom and buy, you know, 2020 $500 worth of clothes at a crack back when I wore suits. Right. It was, you know, back 35 years ago, 30 years ago. And I was always amazed at how great they were at solving all sorts of problems that wouldn't normally come up. I remember once that they, you know, involve a bunch of clothes and they said, well go in the barn, have a drink, and then he came in said, Gee, I'm really sorry, I can't buy you alcohol. What can I buy you dinner? instead? Because are these by half an hour? Get all my crap ready? They bought, right? It was a great thing. Now even notice today, it's not going to happen. Because I don't know what they did. As far as their service goes. My guess is they put a bunch of arbitrary rules in place that used to not be there. And the truth is Your people need system. So I know what excellence is. Your customers need system so they know what to expect from your business.
34:09
That's one of the big things there is how to communicate proper expectations for both sides.
34:15
Yes.
34:18
You think that it would be clear, but it's not. And I've really fallen short on that a couple of times and, and it was really a struggle. But once we kind of got to the point where here, actually let's make sure we're talking about the same thing, then that's when started being fulfilling and fun. That's why you need clarifying statements around your values.
34:42
For example, my one of my values is rights and respect. You said in my clarifying statements, I will respect you as a person and who you are, and I expect the same from you. Now you have an idea what I mean by rights and respect If I didn't have that clarifying statement, you would make up your own meanings when I'm talking about. And there's about a 99% chance that your meaning would be different than mine meaning. You know, one of my favorite things I stole this game from Tony Robbins used to call it the picnicking. But you know, you have people in groups of eight or 10 around the table. And you pick a word no matter what the word is, but I you always pick a word that everybody in that particular industry, that room has a total belief, they know what it means. So for example, I used to go mice do things for the vending industry, I was a vending, right, the first 10 words that come into your mind about the word vending what it means. And then they would have those groups of eight or 10 people compare the list to see how many all eight or 10 would have would be the same. The most I ever had the same was two usually was zero or one.
35:54
Really?
35:55
Yes. So we think we know what a word means. We don't have a clue about what other people think the word means. So you need to be asking them what their definition is, or telling them what your definition is. And then after you tell somebody, you have to ask them to make sure they understood what you said, by having them feed it back to you. Because a lot of times I can say something. And what you're hearing isn't even close to what's coming out my mouth.
36:29
So true. So your book sustainable.
36:34
Yes, it is.
36:36
Why did you What? What was the inciting incident that kicked you off to write that book?
36:44
Ah, this is gonna say no, I've been wanting to write a book for years. And I had a guy come to me who was you know, he goes right here, yo, you dictate we published in our I was trading him working with him for where he does. And he never took any of my advice and everything fell apart. And I never got anything done. So I said, Okay, I'm gonna finish this book. I hired a friend of mine who's a great writing coach. In fact, she's doing the content. I think, this my book I just finished. I said, and we need to, I want to write this book. We helped me finish it. We ended up going back and having to rewrite the whole book. Now, I wrote this as a business parable. And the reason I wrote as a business parable is one, I really liked the hero's journey. The hero's journey is a great way to write a book in a really easy way to do the hero's journey in a way that is approachable for business owners is to make it into a story. Now a lot of people write books now your your book is great in that you have a really good story arc that goes through the book is not these little vignettes that mostly don't work. Most people use these little vignettes within a how to book don't work, but when you're writing In the parable, which is a story that goes from here to here, you have to have an arc that goes with that. Yes. And when she taught me about which was really valuable now I'm in doing stuff with Don Miller, which is how I found you is that you have to have a hero who has a problem. It comes across a guide, who could help them go through the issues they're having in a business parable is perfect for that. Because you tell the story, and maybe not everything in the story is going to be applicable to you. But there's enough in there where you recognize Gee, this is me. And because it's not telling you what you're, you're terrible. You get to say, I might want to try that. Yes. So you know, I'm a big fan of Patrick lencioni. Big fan of Steve Farber, and both those folks who may cut their teeth on writing business parables. And then I my friend, Chris Brown. into absolutely hates business parables. And as a result, won't write me a blurb. I love Chris, but it's just one of those funny things. What's the name of your new book? What is it about? It's probably going to be called the sale ready business. Okay. We haven't come up with the subtitle yet. But essentially, it's about the new book is going to be we're picking it up six years later from where the first book ends. And our hero, john aardvark, wants to leave the business. He doesn't really want to leave the busy. No, he should leave the business. And he's got two children. One who is totally a pain in the neck, what I call a brilliant jerk. And a daughter who has an MBA and is in sort of being an MBA for the last six years is going to be the heir apparent. We talked about all the issues that happened along the way. What they need to do to get ready to do that. What are the plans you're going to have to put in place? So john and his wife and feel comfortable selling the business to their child, finding a home for Adam, who's his son, and having enough money for retirement in, in john, you know, figure out what's next in his life, which is a big challenge when it comes to having a business that's ready for sale. So the thing that we work on is we need to have this business be sale ready? If so, in case we don't do what we need to do, for whatever reason doing the internal transaction, we'll have a third party which is an outsider wanting to come in and pay john a boatload of cash for his business. We talk about all the things we need to do. And say we talked about the concept of enough versus most, which is most business owners do not want the mostly gift for the business. They want to enough to fill their financial needs, but there are lots of non financial For me to happen along the way, that also have to be addressed. So as with the new book is about,
41:06
you know, one of the things that I was shocked to realize and I'm I don't know why I didn't realize it, but so many businesses or family run businesses and you do have that transition challenge, you would think that the parents or the people that started it would want to set the next generation up for success. But that's not obvious. And that's not you've got so many other family dynamics in play. That seems like a lot of obstacles to get over
41:37
it. The truth is, I would say maybe five to 15% of businesses ever get sold. The rest are just closed out. And in basically most businesses are not sellable. Because it's all based on the owner is based on what the owner does. Most businesses are sold for And there's nothing inherently wrong with not building a sale ready business, you have to use other strategies. And we call that the Financial Freedom Project, which is if you're not building a business that's going to be sale ready, then you need to have a strategy become financially free from your business, or you can never stop working. And frankly, a lot of people in these small small businesses, they really don't want to stop working. But at some point, when you're 75, or 80 years old, you aren't going to stop working. So do you have the resources to be comfortable for the rest of your life after that, you don't need to have a business of syllables to do that. You just need to run a different strategy, which we call pre funding a retirement. And that's what the Financial Freedom Project rolls in.
42:46
So if someone was going to start a business today would would you recommend to approach it from the perspective All right, you're going to start this business, but let's start building it to where you can sell At some point in the future, and just by adopting that, that mindset, would it help you avoid a lot of mistakes along the way of building a business?
43:11
Maybe, maybe not. I mean, it's first of all, it's not a realistic expectation. That's not why people start businesses. I know there are very very I mean, there are people who do this or people start businesses with the sole intention of building it to sell it. I I've met them they exist is a small, small percentage of people start businesses. Most people start businesses and camera pretty good Carpenter I'm working with this guy's a jerk, I can go off and do my own carpentry thing, do a much better job for our clients, or customers. And I don't need to be the around the jerk anymore. So that's how most businesses get started. They're not started with the thought of doing that. If I wasn't going to talk to you, when you're first starting that new construction company, or new vending company or new marketing company. Here, I'm talking You're going to have, you're just going to go right over your head, your eyes are gonna glaze over. And you're gonna say not for me go away. Yeah, you really need to be at a level where you've gotten to five or 10 employees. And you realize, gee, if I could get to 30 employees or 40 employees, I'd have something be really different here. And now you're stuck. Now you need to have some help along the way. And, you know, one of the things that we're doing is we're building a three levels of help for people. One is the online course, which we're in the process of finishing up right now, for the sale ready business. The second thing is a mastermind we have a group of like minded people saying, we want to work on making our business sale ready. That's more expensive. And then there's the most expensive which is a one on one coaching, right? where you say, Okay, I want you to work with me, on my business, on an all you can eat basis about what we need to do to get the business to be so ready, and I want you to be holding me accountable to do that. Now, the online courses has no accountability or very little accountability. The mastermind has basically pure accountability. And then the one on one has real total accountability, where you've hired yourself a thinking partner, not a coach, not a mentor. So by doing that, I think we're beginning putting ourselves in a position that, hey, if I'm that 30 year old person with 10 people, and I can't afford $5,000 a month, I can probably afford $500 to do an online course, right? Maybe I can afford $900 a month to do a mastermind. And then if I get to a point where I'm making some real money, I'm saying, gee, I'm making a half million dollars and with some work I can make to a million dollars a year, then it's worth spending me 60,000 bucks a year. If I can go from if you have somebody coming to work for you, and you say, Gee, I can help you get to a million dollars in profit, and you're gonna pay me $60,000 a year to do that. The mean that seems like a pretty easy decision. Right? Yeah, where do I suck? Right? Well, that's the whole thing is, you know, it's it really comes down to is you have to be making a certain amount of money no matter what happens to hire a certain level of advice. And everybody can afford $500 everybody can afford $500 not everybody can afford $12,000 true, you probably need to be making 150 hundred thousand dollars a year before you're willing to invest $12,000 to see that 12,000 can become 25 or $30,000. And by the way, is not sales we want you to focus on its cash flow and profits. Sales is a waste of time, if you focus on sales and Mike McCall was talks about this a lot. Now. If you're focusing on your sales, you're really just wasting your time because building sales does not build cash. It just does. sales. Now if you build sales strategically, it can build cash. And I learned this the hard way with my father is that back when I was my first years of the vending business, the worst thing that happened to me that could have ever happened happened to me. And that was that was really, really successful. For my first couple years. We were blowing the doors off bringing new clients on, and building profit. And he kept saying to me, it's not about sales, you idiots about profits. If you don't have profit, sales don't matter. And then of course, I kept building sales but didn't realize that building sales cost cash, and I hit the wall. And I learned a really, really hard lesson that yes, cash flow is king. profits are nice, but it's all about cash flow. Sales don't mean a darn thing. It's all about cash flow. Sales are only there because without sales, you can have cash. So the first thing you need to focus on business is bringing business in the door. But once you get some predictability around that, your focus needs to go to how do those sales coming in the door, get converted to free cash flow? So that's the question he asked me most business owners never asked themselves.
48:23
Yeah.
48:24
And the reason is, if you read the business press, you would think that every company in Silicon Valley just focuses on sales growth in life is wonderful, because they're just focusing on sales. And that's what you should do. Well, the truth is, the VCs have a dirty little secrets in Silicon Valley, is that very, very, very, very few of their portfolio companies ever become Facebook or Google or Uber, whatever it is they have, where that strategy actually does work. But what mostly happens is these businesses never get the profitability. Then the VCs are able to force the owners to sell these companies to fangs to Salesforce, Facebook, Oracle, Google Apple, whoever it's going to buy it. Because these guys are out there buying talent, and they pay a couple of million dollars per engineer, they get the talent in the VCs get their 30% return. And the people who started the business, get to go to work and make a bunch of money, and probably start the whole process over again. And that's a game they play out there. But that doesn't work on Main Street,
49:33
now and then. So we're, we're coming up to the end of this excellent conversation. We're going to have to have a couple more. But tell us a little bit about your podcast right quick and then how folks can reach out to you and have a discussion.
49:54
Well, my podcast is called cracking the cashflow code and it used to be called the seal ready business, I mean sustainable business. And it was called sustainable business because I was talking about economic sustainability. And everyone kept saying Yo, is environmental sustainability. So I said, Okay, let's change the name. And we're probably gonna change name again to be the sale ready business, we're talking about what it takes to create a sell ready business. And more importantly, what you can do to have a lot more fun and make a lot more money in your business. So I bring people on who are either experts in their subject area, or people like you who own private businesses. We talked about the bottlenecks in your business, what you did to get past them, and what kind of advice you can bring to other business owners. So they don't repeat what you repeated. You don't need to make the same mistakes I made. You can make all new ones all yourself.
50:51
Yeah, I've I've got some doozies myself as well. So your people can what your website is
51:01
We have two websites one is www.sustainablebusiness.co. And if you go to that website and go forward slash sell ready, you get my free ebook on how to leave your business and style the steps you need to go to leave your business. And our other website is www dot sustainer. I mean www dot staged to planning calm. So Wealth Management site where I've been writing a blog for about 10 years. I think you have over 1000 blog entries there are some that is also our Knowledge Center isn't all our ebooks live so both are they're reaching me is really easy as Jay Patrick of stage two planning calm with a number two. And I do read all my emails, I'm email obsessed and usually get back within an hour or so unless I'm on a bike ride.
51:51
bike riding So one thing I was wanting to talk about when we didn't but let's do this so you have like top 20 business books that you recommend every year. Do you have like a little PDF? If someone was to email you, would you send them that list?
52:07
What I would do is I would dig up my blog post from last year where I wrote about it, because I haven't made a PDF out of it, but I probably should. Yeah. If you look in the back of my book sustainable, I think there's like 80 or 100 books I've got in there, which I recommend is recommended reading.
52:28
I love that. That's excellent. We, you need to put links to all of these on a page on your website as well where folks can go and click on
52:39
you're absolutely correct, and they will do that.
52:41
Hey, Josh, this has been an excellent conversation. This is stuff that I like to do. You know, we all run businesses and we all make mistakes. And we don't have a lot of folks to like powwow with but listen in on two guys over 50 that have been plodding through This the Scotland, it's kind of fun to realize you're not alone. You're not crazy.
53:06
And by the way, I'm way over 50. I mean, I'm closer to 7262 How's that?
53:15
But he's on a bike folks. He likes to ride his bike. And that's cool. So up in the beautiful state of Vermont. That's where I am. So if you're going to travel to Vermont, I'm at Joshua and have a suggested bike route that you should follow.
53:33
Several.
53:34
All right. Thanks, Josh, for me and on the ROI online podcast.
53:39
My pleasure. Thanks so much, Steve, for having me. All right,
53:41
that's a wrap. Thanks for listening to another fun episode of the ROI online podcast. For more, be sure to check out the show notes of this episode. And feel free to connect with me on LinkedIn where we can chat and I can help direct you to the resources you're searching for. To learn more about how You can grow your business better. Be sure to pick up your copy of my book, that golden toilet at surprise that golden toilet calm. I'm Steve Brown and we'll see you next week on another fun episode of the ROI online podcast.
Transcribed by https://otter.ai
