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Russ Bencks Tells Us When It’s Time to Stop Running Your Business · Budget Your Business

• 0:00
  SPEAKER_02: And then I I want to re-emphasize the decision rights from there.
• 0:03
  SPEAKER_02: That that again becomes so important to be clear who's going to own what.
• 0:08
  SPEAKER_02: Again, kind of depending on the nature of the step back of the owner.
• 0:12
  SPEAKER_02: Defining, you know, clear and measurable KPIs.
• 0:15
  SPEAKER_02: Again, what stays with the owner, what doesn't.
• 0:18
  SPEAKER_00: Welcome to the Budget Your Business podcast, where small business owners go to learn how to financially plan for every aspect of their business.
• 0:25
  SPEAKER_00: Let's get started with your host, Scott Geller.
• 0:29
  Scott: Hello, and welcome back to Budget Your Business.
• 0:32
  Scott: Today I've got Russ Binks of Topline Search to talk through what I think is a little bit interesting conversation around owners bringing in somebody to lead their business.
• 0:44
  Scott: Russ, thanks for joining me today.
• 0:46
  SPEAKER_02: Great to be here, Scott.
• 0:48
  SPEAKER_02: Thanks for having me.
• 0:49
  Scott: Absolutely.
• 0:50
  Scott: So, Russ, for folks who are meeting you for the first time, could you share a little bit about who you are and what you do?
• 0:58
  SPEAKER_02: Of course.
• 0:58
  SPEAKER_02: Yeah.
• 0:59
  SPEAKER_02: So my background is really all executive search.
• 1:02
  SPEAKER_02: I've been at it for 30 plus years, all based here in Richmond, Virginia.
• 1:07
  SPEAKER_02: Started with a focus on the wealth management industry and really had a nice run there.
• 1:12
  SPEAKER_02: Was started with a small boutique firm and then opened my own firm back in 1999 and had a very nice run and ultimately became more of a generalist uh recruiting firm.
• 1:24
  SPEAKER_02: Um and and expanded outside of wealth management, did a variety of different searches, including CEO searches for for small businesses around Central Virginia, ultimately folded my firm into a a middle market uh consulting firm and and more recently just uh relaunched as kind of a one-man show in in the search business.
• 1:49
  SPEAKER_02: And uh that was the beginning of of this year, Jan 126.
• 1:53
  SPEAKER_02: So love love the space, love helping organizations grow and thrive and and you know working with good people to help them make their businesses even stronger.
• 2:03
  Scott: Thanks for that, Russ.
• 2:04
  Scott: Sounds like you've been in a in a few different, worked in and around a few different styles of businesses over the years.
• 2:11
  SPEAKER_02: Yeah, absolutely.
• 2:12
  SPEAKER_02: And I've I've even gone in-house, in essence, with a firm that had, at the time I joined them, they had about 250 employees, and it was initially kind of set up as as a contract gig, and uh they just kept growing and growing.
• 2:27
  SPEAKER_02: It was supposed to be a three-month engagement, and we renewed it over and over again, and uh ultimately grew their uh firm from 250 to 600 people over the course of about five years, and that had a global aspect, so got to do some international recruiting and travel.
• 2:45
  SPEAKER_02: So yeah, kind of kind of run the gamut.
• 2:49
  Scott: It's always nice doing that international travel on somebody else's dime, isn't it?
• 2:53
  Scott: Oh my gosh, yes.
• 2:54
  SPEAKER_02: Trying to go overseas and an economy these days is is is tough.
• 2:59
  SPEAKER_02: But uh yeah, when it's business class, it's it's a very nice way to go.
• 3:03
  Scott: It is.
• 3:03
  Scott: I I I was fortunate in my my somewhat early uh corporate days of hitting up England and and Italy for work and uh and and really enjoyed it, really enjoyed uh using somebody else's butt.
• 3:17
  Scott: But that's fine.
• 3:18
  Scott: That's that's for another conversation, I think.
• 3:20
  SPEAKER_02: Yeah, sounds good.
• 3:22
  Scott: So, Russ, I've worked and talked to business owners that they feel like they get to a point where they've hit a bit of a wall or or maybe a hurdle that they feel it's has been really difficult to get over.
• 3:39
  Scott: A lot of times my perspective is that they don't know if they know how to or if they can get the company to the next level.
• 3:48
  Scott: And they've come to me and ask, Scott, do you think I should have bring in somebody else to run this business?
• 3:54
  Scott: I think that for one, for for a business owner to see that self-reflection themselves is is is pretty advanced and and uh very self-aware.
• 4:08
  Scott: But it's also very, I think, a very difficult thing to do.
• 4:12
  Scott: Could you maybe just kind of talk about the early stages of uh of an owner thinking about bringing in somebody else to to basically run their baby that they've created and built over the years?
• 4:28
  SPEAKER_02: Yeah, it's it is a journey.
• 4:30
  SPEAKER_02: And and to your point though, Scott, I mean, the it's a good sign when an owner, you know, kind of has the self-awareness of, hey, I'm maybe I need to be doing something differently or bring in a different skill set, or you know, there might be some personal factors that are starting to kick in, um, you know, with family or burnout or just age or just wanting to do something different and step back.
• 4:56
  SPEAKER_02: But a lot of times on the professional front, it's you know, I I've grown it to, you know, pick a number of five million, ten million, whatever it is, and you know, things are going good to very good.
• 5:11
  SPEAKER_02: And but I, you know, I want to keep growing it, but uh maybe I'm not the right guy, or I I don't know how to go from you know five to fifteen or whatever the the numbers might be.
• 5:24
  SPEAKER_02: Or again, you know, it's something, hey, I've I really enjoy doing these two or three things, but you know, all this other stuff I'm kind of getting bogged down with, and you know, I just don't have the time or the capacity to you know focus on working on the business as opposed to in the business.
• 5:44
  SPEAKER_02: So that you know, there there can be kind of, hey, the owner might become stuck.
• 5:49
  SPEAKER_02: Sometimes, again, this is a high level of self-awareness, but the the business might have outgrown the owner's ability.
• 5:56
  SPEAKER_02: And uh so just you know, again, having that self-awareness to have to start to have the conversation because once you get into that, there are so many factors that that come into play on really what you should do next.
• 6:09
  Scott: What are some of the signs that you've seen that an owner should be thinking about, or or maybe as far part of that self-reflection, but what are some of the signs that maybe it's time to think about this?
• 6:21
  SPEAKER_02: Yeah, a couple.
• 6:23
  SPEAKER_02: Um, you know, one, I think there's you know the the burnout factor I mentioned, you know, earlier.
• 6:30
  SPEAKER_02: Two, you know, the if if the owner is you know kind of involved in every decision and you know, it just becomes kind of a bottleneck, right?
• 6:41
  SPEAKER_02: Where you know everything has to go through him or her, and it just the the the business slows down as a result because they don't have the bandwidth or the expertise to you know develop a different process or you know, and and install a new technology or hire a different person that that might help them get past that bottleneck.
• 7:06
  SPEAKER_02: So those are those are kind of two of the big ones.
• 7:09
  SPEAKER_02: And then again, I'll circle back to the to the personal side too.
• 7:13
  SPEAKER_02: I mean, I think, you know, running a small business is a is a very emotional journey, and there's lots of high highs and low lows.
• 7:22
  SPEAKER_02: And you know, sometimes folks just get to the point is like I I don't know if I can handle this roller coaster for another two two or three years.
• 7:30
  SPEAKER_02: And you know, I love my people, I love my clients, and you know, I want to make sure there's a really strong go-forward entity here that can uh you know make sure everybody's taken care of.
• 7:43
  Scott: And this to me is a little bit different than bringing in other C-level roles.
• 7:48
  Scott: Like it's one thing to bring in a full-time or even a partial or fractional CFO.
• 7:55
  Scott: Uh maybe, you know, usually a chief sales officer is probably the first, or the chief operations officer is one of the first C-level roles that most small businesses feel like they need to bring in.
• 8:05
  Scott: You know, then maybe a marketing or or an IT, depending on the on the industry, maybe a CFO.
• 8:12
  Scott: To me, I feel like bringing those C-level individuals in is a lot different than bringing a CEO.
• 8:19
  SPEAKER_02: I couldn't agree more.
• 8:20
  SPEAKER_02: Yeah, I think you're spot on.
• 8:22
  SPEAKER_02: I mean, I think the the way I think about it is, you know, those are you know really kind of functional hires, right?
• 8:29
  SPEAKER_02: If you're talking to CFO or, you know, chief revenue officer or chief technology, you know, hey, they're gonna own that function.
• 8:37
  SPEAKER_02: When you're talking about the CEO, it's the whole system.
• 8:41
  SPEAKER_02: So it's strategy, it's capital allocation, it's being the culture leader, and it's really being that final point of accountability to the owner andor board.
• 8:52
  SPEAKER_02: So it's it's just you know, it's again the the full gamut.
• 8:56
  SPEAKER_02: And and so I think that's the the key differentiator.
• 9:00
  SPEAKER_02: And I think as a result of that, I think where when it is bringing in the CEO, where I've seen a lot of these situations go sideways, is ultimately around decision rights.
• 9:15
  SPEAKER_02: I'm probably gonna mention that a couple times throughout our discussion today, but I think that's it's just such an important, you know, again, to your point, when you're hiring a fractional CFO or or even bringing one in-house, you know, it's clear, okay, that person's gonna own, you know, finance and accounting, and you know, maybe one or two other things.
• 9:34
  SPEAKER_02: But when it's the CEO and the owner, you know, you you really have to get crystal clear on who ultimately decides on, you know, on some of those bigger, you know, budgetary or capital allocation or or strategy components to again help help move the business forward.
• 9:54
  Scott: I'm gonna push on that a little bit.
• 9:56
  Scott: How do you start this process of thinking about or actually bringing in uh a CEO?
• 10:02
  SPEAKER_02: Yeah, I mean, I think it's it's a couple of things.
• 10:06
  SPEAKER_02: You know, again, it's a bit of a journey, and it's usually not an overnight thing.
• 10:10
  SPEAKER_02: I mean, I'm I'm gonna start maybe when with more of the when does it make sense, and then maybe move into the how, if that's okay.
• 10:18
  Scott: Yeah, I I like that.
• 10:19
  Scott: Yeah, that's definitely talk about the when.
• 10:21
  SPEAKER_02: Okay.
• 10:21
  SPEAKER_02: You know, I I touched on it a little bit earlier, but you know, I I think one of them is you know, when the owner has kind of a clear why, like, hey, I've gotten to a point, I'm ready for succession or exit planning.
• 10:35
  SPEAKER_02: You know, I just want to step into more of that chairman role.
• 10:39
  SPEAKER_02: I may want to, you know, launch a new venture or just you know, travel more with with my spouse, you know, whatever it might be.
• 10:47
  SPEAKER_02: There's also, you know, kind of a budget factor too, which is you know, you've gotten to a level of profitability where you can actually afford to hire a really good CEO.
• 10:59
  SPEAKER_02: And that's just not salary.
• 11:01
  SPEAKER_02: I mean, you know, I think I've I've seen this miss before with some owners where they they kind of think, okay, I'm gonna hire this person and at you know, pick a number 250, and they don't take into full account kind of the bonus and you know potential equity and and benefits, and you know, really don't plan for for the whole you know comp package.
• 11:24
  Scott: And then there's the you know, kind of the more you know pure business factors around and Russ, I I'm sorry, I'm gonna interrupt you for a minute because I think you touched on some, especially from my point of view, that I want to ask you about.
• 11:35
  Scott: You you bring in a CEO, you're gonna have to pay them.
• 11:38
  Scott: And I I really like bringing up the the total comp uh, because you have more than just a salary.
• 11:46
  Scott: But as the owner, you've been paying yourself this whole time as well.
• 11:51
  Scott: How should an owner think about their own compensation if they're bringing a CEO in at$250,000 plus$100,000 in total compensation?
• 12:00
  Scott: Let's just say a$350,000 in total compensation, and let's say the owner is impinging themselves X amount, and now they're stepping away.
• 12:10
  Scott: How does that work?
• 12:12
  SPEAKER_02: Yeah.
• 12:13
  SPEAKER_02: Well, that falls into the it depends category because sometimes the you know, the step away, you know, in essence, and you know, they become, for example, the fractional chief revenue officer.
• 12:25
  SPEAKER_02: So, you know, I think then it's all right, what is the fair and reasonable comp plan for that?
• 12:31
  SPEAKER_02: And is it 10 hours a week or 30 or even 40?
• 12:35
  SPEAKER_02: And so it it depends a little bit on on the role.
• 12:38
  SPEAKER_02: Are they going to continue to do something from a functional perspective, or are they really going to fully step aside and in essence be the chairman?
• 12:47
  SPEAKER_02: And if it's if it's the latter, you know, then you know I in a lot of cases, you know, really the comp should should go down to zero.
• 12:56
  SPEAKER_02: And you know, their benefit is is being the owner, and if there's some distributions on the annual basis, you know, that's great.
• 13:03
  SPEAKER_02: Or, you know, more importantly, kind of focused helping the the new CEO and the rest of the team, you know, focus on creating enterprise value.
• 13:12
  SPEAKER_02: So if there's ultimately an exit, they're they're gonna be in a very good spot.
• 13:16
  SPEAKER_02: So those are the kind of the two main factors is you know, what is their their role on a good go forward basis, and then budgeting around that from just a realistic, like, hey, if a buyer to come in and and say, um, yeah, we're looking at the note, then this, yeah, this comp for this fractional chief revenue officer lines up with you know what you would see in the market.
• 13:42
  Scott: Right.
• 13:43
  Scott: It doesn't really make sense, unless you could financially handle it, but it doesn't really make sense to pay two people to be the CEO in the business.
• 13:50
  Scott: So on the personal side, I feel like the the owner kind of needs to take that into account.
• 13:54
  SPEAKER_02: Absolutely.
• 13:55
  SPEAKER_02: Yeah, and again, I think I always, and and maybe not rightfully so, but I I try to take the view of you know, hey, you know, we're we're setting this organization up to be potentially acquired, let's say.
• 14:11
  SPEAKER_02: And and so again, you want to have clean books and and you want all the you know comp issues, and and usually talent is is you know your most expensive line item on the expense side.
• 14:24
  SPEAKER_02: And so you you want to make sure everything is is tight and clean and clear there.
• 14:28
  Scott: Right.
• 14:29
  Scott: Okay, thanks.
• 14:30
  Scott: So let's let's jump back into where you were with when kind of describing when it makes sense, if you don't mind.
• 14:36
  SPEAKER_02: Yeah, yeah.
• 14:37
  SPEAKER_02: Thanks.
• 14:37
  SPEAKER_02: So, well, moving on to how, I mean, I I think you know, the the process there really begins with defining the role.
• 14:48
  SPEAKER_02: And again, that depends a little bit on the step back.
• 14:51
  SPEAKER_02: Is that a partial step back or a full step back by the owner or something in between?
• 14:56
  SPEAKER_02: And so, and it's in essence, say what is the charter of the CEO role?
• 15:01
  SPEAKER_02: And then I I want to re-emphasize the decision rights from there.
• 15:04
  SPEAKER_02: That that again becomes so important to be clear who's gonna own what, again, kind of depending on the nature of the step back of the owner, defining, you know, clear and measurable KPIs, again, what stays with the owner, what doesn't.
• 15:19
  SPEAKER_02: And then from there, I mean, I th I think it's important, you know, with the help from someone like you, is to get the org and the financials, you know, really crisp and clean, because any CEO candidate, or if you partnered with a recruiter, they're gonna want to see the books and you know, understand the org design and the org chart and and really have a good understanding of uh the strategic plan and you know have an ability to evaluate all that so they can do their due diligence on you as the owner and the opportunity as a business.
• 15:50
  SPEAKER_02: I think a third step in there that I do personally as a recruiter, uh, particularly for CEO roles, is create a role-specific scorecard.
• 16:02
  SPEAKER_02: So that includes really kind of three components.
• 16:05
  SPEAKER_02: It's it's one, hey, what's the mission of the role?
• 16:08
  SPEAKER_02: Um, and that's just kind of summary two or three sentences.
• 16:11
  SPEAKER_02: And then the second category is really the business outcomes.
• 16:15
  SPEAKER_02: Okay, what do we want this person to focus on and achieve in say the the first 12 to 18 months?
• 16:22
  SPEAKER_02: And that's usually five or seven items, and and it's intentional, you don't want to go too much farther than that, because you know, you can get into this Superman complex where, yeah, we want this new person to do these, you know, these 19 things, and then without that lack of focus, nothing gets done.
• 16:40
  SPEAKER_02: So it's like, hey, let's focus on these five or six things, and you know, really types and with all that.
• 16:48
  SPEAKER_02: The third component of the scorecard is the most relevant and and and most important competencies this person needs to have to be successful, you know, in the and you know, that might be strategy component, people leadership, or it might be some specific technical skill, depending on the on the business.
• 17:08
  SPEAKER_02: You know, it can be a wide variety of different things, but it's a good measuring tool as as you're thinking about going through the interview process.
• 17:17
  SPEAKER_02: So you kind of don't get sucked into the personality hire, you know, hey, I love the energy and this, that, and the other.
• 17:24
  SPEAKER_02: But when you can take it back and compare, you know, any given candidate to the competency list and and really measure them on those that you've already determined are most important, that just becomes a good, again, scorecard, a measuring stick for you know for any prospective candidate to be to be compared to.
• 17:45
  Scott: Yeah, I like I like the scorecard approach because I I feel like that's gonna make you really prepare for this hire more than just, hey, I'm gonna put together uh a job description and start talking to people.
• 17:59
  SPEAKER_02: Yeah, yeah, and I think that's where it uh my experience and the conversations I've had is kind of a lack of prep by owners, you know, and it can be across, you know, the Christmas of the scorecard, the decision rights, the financials, the strategy.
• 18:15
  SPEAKER_02: You know, I I think a good way to think about it is almost you don't have to go to the to the end line here, but again, kind of thinking about it and looking, setting this up as hey, I'm I'm prepping the company for a sale.
• 18:29
  SPEAKER_02: In this case, I'm prepping the the company for a big transition.
• 18:34
  SPEAKER_02: So I want to make sure you know everything is is very clear.
• 18:38
  SPEAKER_02: You know, I can I can articulate the value prop of of this you know company and and this role.
• 18:46
  SPEAKER_02: Um and and it just it creates it creates more alignment and and and therefore creates more of trust in you know early conversations, and and that's what you want to do to you know to ultimately be able to attract the uh best candidates.
• 19:03
  Scott: And through this process, I I feel like at least I've been kind of laying out some you know the conversation and and a little bit of the conversation, but mainly around if there's an owner.
• 19:15
  Scott: What does that does this change any if there's multiple partners in the business?
• 19:21
  SPEAKER_02: Not really.
• 19:22
  SPEAKER_02: I mean, it's it's different decision makers, and again, depending on the nature of the pro are they 50-50 partners, or is it you know, two-thirds, one-third, or are there three partners with some different mix?
• 19:35
  SPEAKER_02: I mean, I think that's but ultimately what it comes down to is you know, is is the alignment and uh and just the clarity of the role.
• 19:44
  SPEAKER_02: I mean, I think, you know, there's and what I mean by that, I mean, there's some CEOs who come in and and not that there's anything wrong with this, but they're a little bit more of kind of administrative CEOs, and they're just they're almost closer to a COO, and they're just you know keeping the trains running, and and the ownership is you know still pretty heavily involved and they're driving revenue and and uh they're driving strategy.
• 20:12
  SPEAKER_02: In other cases, um, and it you often you see that with you know with multiple partners.
• 20:17
  SPEAKER_02: If it's the sole owner, it it's more common that that's more of a handoff, where it's hey, you know, for this, that, or the other reason, I'm gonna be moving on.
• 20:27
  SPEAKER_02: Uh again, I go back now to the decision rights and and just the alignment and clarity around all those things is is super important to make sure everybody knows what they're they're stepping into.
• 20:39
  Scott: Right.
• 20:40
  Scott: This is this has all been great about talking about the preparation of it.
• 20:44
  Scott: How about after the fact, where we found the person, we've we've hired this individual.
• 20:51
  Scott: How should the owner handle that transition?
• 20:54
  SPEAKER_02: Yeah, I think a couple of things.
• 20:56
  SPEAKER_02: You know, the the onboarding process and those first few months are are are just absolutely critical.
• 21:03
  SPEAKER_02: And and again, I think if you as an owner, if you do the prep work and you're really clear and you know, kind of have clear role guidelines for yourself on a go-forward basis, clear decision rights, a clear position description for you know the ownership the new CEO is going to take, then it becomes a lot easier.
• 21:23
  SPEAKER_02: I mean, ultimately, then again, if you have a scorecard too, you can then share the scorecard with with the new CEO and say, hey, this is what I've identified as the most you know important five or six things we're we're looking to accomplish in the next year and year and a half, and let's get after it.
• 21:42
  SPEAKER_02: I think another thing that that's absolutely critical is just putting all your support behind you know the new CEO.
• 21:51
  SPEAKER_02: Oftentimes, and I'm sure you've seen this too, Scott, where you know a new CEO comes in, you know, gets in there, ultimately makes a decision.
• 22:00
  SPEAKER_02: Or remove, and then some key employee doesn't like that, goes back to the owner and says, you know, I have a problem with this.
• 22:07
  SPEAKER_02: Can what can we do?
• 22:09
  SPEAKER_02: Can you fix it?
• 22:09
  SPEAKER_02: And that's a that's a critical test for the owner.
• 22:13
  SPEAKER_02: You know, obviously what you want to see there is, you know, thanks for the feedback, but you know, John or Jane is is running the show now, and you know, he or she has my fuller support, and you know, please, you know, please discuss that with them.
• 22:30
  SPEAKER_02: Um, and you know, the owner will get tested typically several times on on that to see, you know, hey, are are they they really letting the new CEO drive the bus or is it still going to be you know kind of the owner's show?
• 22:46
  SPEAKER_02: So I I I think that's where where I see it go sideways, obviously, is the reverse where they they you know they get emotional and hey, I don't want to see this key person leave, or you know, we're going in another direction, and they don't support or stand behind the new CEO, obviously that gets it off to a to a bumpy start, and that's it's tough to come back from that.
• 23:08
  Scott: I I've seen it with with several roles where you bring somebody in, if you don't let them do their job, it it just falls apart.
• 23:16
  Scott: And I can imagine this this just has to kind of multiply that effect of look, if you're bringing this person in, let them do their job.
• 23:26
  SPEAKER_02: Right.
• 23:27
  SPEAKER_02: Right.
• 23:28
  SPEAKER_02: Yes, and and I mean, I think it it uh there's there's so much positivity to and trust building.
• 23:38
  SPEAKER_02: You know, the the most important relationship there is is the owner and the CEO.
• 23:42
  SPEAKER_02: And you know, yes, hey, this is the my team, and a lot of them have been been with you for you know five, ten, fifteen years, and those relationships are super important as well.
• 23:52
  SPEAKER_02: But it's just absolutely critical to build that trust with with a new CEO right out of the gate.
• 23:58
  Scott: Yeah.
• 23:59
  Scott: Hiring this person is hiring a CEO is to me so much different than bringing in really any other role, and we've we've touched about that, even at the C level.
• 24:10
  Scott: Does that I I feel like that probably makes it even more critical to leverage someone that knows what they're doing, such as a recruiter rather than do it yourself.
• 24:20
  Scott: Because can you kind of speak to the recruiter part in this type of hire?
• 24:25
  SPEAKER_02: Yeah, um you know, and I clearly might be a bit biased in that.
• 24:30
  SPEAKER_02: And that's okay.
• 24:31
  Scott: I'm trying to set you up a little bit, Russ, but yeah, go ahead.
• 24:34
  SPEAKER_02: Believe in the value of what I do.
• 24:36
  SPEAKER_02: But that said, I mean, there are pros and cons, right?
• 24:39
  SPEAKER_02: I mean, the the the pros of the the do-it-yourself, you know, then the owner controls the entire process.
• 24:46
  SPEAKER_02: You know, it is certainly less expensive, you know, than than you know, working with a recruiter who's charging a fee.
• 24:53
  SPEAKER_02: And it it works well, particularly if the owner, you know, has a really strong network and and again kind of goes through the prep process that we previously described.
• 25:04
  SPEAKER_02: Um, you know, the downside of the do-it-yourself is you know, look, they've been focused on their business and don't necessarily have the network of of other really good CEOs that might be able to step in and take the company to the next level.
• 25:22
  SPEAKER_02: There can also be, you know, it's it's kind of the friends and family, and you know, you you try to transition a personal relationship into a professional relationship, and I've seen plenty of those go sideways.
• 25:33
  SPEAKER_02: So I think the you know, a couple things, the big benefit of working with a recruiter is you know, just being an objective, neutral party is is critical, again, and in particular in a small business environment, when there's you know there's just so many natural emotions involved with you know the the buildup of the business and and the transition as well.
• 25:55
  SPEAKER_02: So, you know, recruiters, of course, the good ones have have a really you know tight process that I I kind of touched on earlier uh around the scorecard creation, and then there's you know the go-to-market and you know the the access to to passive candidates and just you know the network that they've built up typically over years and years.
• 26:17
  SPEAKER_02: So ultimately uh working with a recruiter tends to lead to kind of a faster process as well.
• 26:23
  SPEAKER_02: They also have you know better access to to comp and benchmarking.
• 26:28
  SPEAKER_02: You know, the big downside I think to working with a recruiter is is the cost.
• 26:32
  SPEAKER_02: I mean, it's you know, search fees can run anywhere from you know 20% to 33% of first-year comp.
• 26:41
  SPEAKER_02: And then you know, also finding a recruiter actually understands the small business dynamics and isn't just you know kind of focused on big company executive search is is important as well.
• 26:53
  Scott: And I imagine a good recruiter is going to help you through that that prep process, the scorecard, some of those other steps you mentioned.
• 27:01
  SPEAKER_02: Yeah, I think so there's I I like to think of you know the the paperwork side of putting that together.
• 27:08
  SPEAKER_02: So the scorecard is is kind of really the internal document that the owner andor board is going to use to really evaluate uh the CEO candidate.
• 27:17
  SPEAKER_02: I also think the creation of the position description is important.
• 27:20
  SPEAKER_02: I see this from a lot of clients, you know, both big businesses and and small businesses, where it it's just, hey, here's a list of responsibilities and characteristics we'd like you to have, but it doesn't really articulate what the opportunity is, you know, what what's going to differentiate this company on a GoFor.
• 27:45
  SPEAKER_02: In essence, it's it's not a sales document where it really should be.
• 27:48
  SPEAKER_02: And I think a good recruiter can can help you tell that story, create some excitement about the role and the opportunity and the and the future benefit of of uh you know kind of taking taking the position.
• 28:02
  SPEAKER_02: So, you know, I think that's just having that perspective of, you know, this isn't just a a list of responsibilities.
• 28:10
  SPEAKER_02: It's it's really designed to be used as a sales document so you can attract the best and the brightest.
• 28:18
  Scott: Thanks for that.
• 28:19
  Scott: And that that that sounds, I mean, that that's what you want, right?
• 28:22
  Scott: You want something to help you through this process.
• 28:25
  Scott: Do you I know we're running up on time a bit here, but do you have time for one more question?
• 28:29
  SPEAKER_02: Yeah, yeah, absolutely.
• 28:30
  Scott: Okay.
• 28:30
  Scott: I'm not gonna ask you for comp structures simply because every business, every industry, every size is a little bit different.
• 28:37
  Scott: What I am gonna ask, and maybe this is still uh too much of a it depends, but I want to ask it anyways.
• 28:45
  Scott: Do most incoming CEOs are present?
• 28:48
  Scott: Are they gonna expect equity in the company?
• 28:51
  SPEAKER_02: Yeah, I think the short answer is is yes.
• 28:54
  SPEAKER_02: Again, that where where that percentage is depends on on a whole host of factors that that you mentioned.
• 29:00
  SPEAKER_02: You know, it could be interesting, it could be stage of growth, you know, at a three million different three million revenue run rate is much different from a$20 million run rate.
• 29:10
  SPEAKER_02: So there's a lot of different factors in there, but yet typically, yes, I I candidly I have not seen a situation in a small business where equity was not involved in a long time.
• 29:24
  Scott: That's what I suspected.
• 29:25
  Scott: So I appreciate you answering that.
• 29:28
  Scott: So Rose, I'd like to wrap up all of our shows with one to three immediate takeaways that our listeners could literally put into action as soon as they turn off the podcast.
• 29:39
  Scott: What can you share with us today?
• 29:41
  Scott: And as if it's already mentioned, that's fine.
• 29:43
  Scott: Just give us a reminder.
• 29:45
  SPEAKER_02: Yeah, I think I'll do a little bit of a recap there, which is you know, I think it's important just to kind of look in the mirror and do your best as an owner of and of the self-awareness.
• 29:58
  SPEAKER_02: Hey, what's working well?
• 29:59
  SPEAKER_02: How am I feeling?
• 30:00
  SPEAKER_02: You know, what's going to be best for the for me, what's going to be best for the business, and just really taking stock in that and just observing those factors, I think, is super important.
• 30:11
  SPEAKER_02: The second is if you ultimately decide, hey, I I think I do want to bring in a CEO, just doing that prep work we discussed.
• 30:20
  SPEAKER_02: So it's it's creating those the clear divider, hey, the owner is going to have these responsibilities, the CEO is going to have those, what are the decision rights?
• 30:30
  SPEAKER_02: And then the third, I think most important thing is just again being clear in communication and supporting the new CEO, you know, as as they get on board and and not undermining their decisions and you know, kind of kowtowing to you know longtime loyal employees.
• 30:49
  SPEAKER_02: I I think those are the there's many other factors, but to me those are the three biggest factors in in ensuring a good hire and a good transition.
• 31:00
  Scott: Got it, got it.
• 31:01
  Scott: Those are good.
• 31:02
  Scott: I like those.
• 31:03
  Scott: We also ask for a good podcast or book recommendation.
• 31:07
  SPEAKER_02: Yeah, I mean, one of my favorites, well, I'll I'll kind of maybe break it to two.
• 31:14
  SPEAKER_02: Um I think one that mo a lot of folks, particularly in the the small business world, are familiar with is traction.
• 31:21
  SPEAKER_02: You know, I I think if you haven't gotten to that already as a small business, you know, oftentimes if you're starting to think about this, it's you know, I'm positioning an organization for this next level of growth, and I'm going to bring in somebody with a different skill set that can you know take take the torch and and continue to carry that forward.
• 31:43
  SPEAKER_02: Establishing some more of a framework around the operating system within a small business, which is what traction does, and that's by Gino Wick Wickman, right?
• 31:52
  SPEAKER_02: And I'm sure you're familiar with that one.
• 31:54
  Scott: Yes.
• 31:55
  Scott: Yes, we we have had that on here several times, but that just proves of how valuable of a book that is if anybody has not read that one.
• 32:03
  Scott: So thank you.
• 32:04
  SPEAKER_02: The second one, which is a little less known, is by Patrick Lencioni, and he's best known for the five dysfunctions of a team.
• 32:13
  SPEAKER_02: But he's got another book called The Advantage that that I've personally used with with my businesses that I just think is such a game changer.
• 32:23
  SPEAKER_02: It's really centered around organizational health and you know how that creates long-term value for a business.
• 32:30
  SPEAKER_02: And it's it's all about alignment and communication.
• 32:34
  SPEAKER_02: I mean, some of the uh key topics we've discussed today.
• 32:38
  SPEAKER_02: So that's one I can't recommend enough.
• 32:40
  SPEAKER_02: It's it's very simple and it's kind of a four-step process, but as as with a lot of simple things, the complexity and actually uh getting to done there is is a challenge and you know it becomes an ongoing exercise as well.
• 32:55
  SPEAKER_02: It's just not, hey, we're gonna do this for three months and be done with it.
• 32:58
  SPEAKER_02: But again, it's the advantage by Patrick Lancioni is is a is a great way to take your organization to the next level.
• 33:07
  SPEAKER_02: And I think it's one in this particular case where uh an owner stepping into a chairman role or taking a step back can can really have an outsize impact on the business without getting involved in in the day-to-day and letting the CEO do do their thing.
• 33:24
  Scott: That is a new one.
• 33:25
  Scott: So thanks for adding that to our list.
• 33:26
  SPEAKER_02: Yeah, my pleasure.
• 33:28
  Scott: Well, this this has been great, Russ.
• 33:30
  Scott: Where can people find out more about you?
• 33:33
  SPEAKER_02: Well, yeah, the easiest is just my my website, which is toplinesearch.com, also on LinkedIn.
• 33:39
  SPEAKER_02: So either one of those are probably the two best spots.
• 33:44
  Scott: All right.
• 33:45
  Scott: Well, Russ, thank you for joining me today.
• 33:47
  SPEAKER_02: Well, thanks so much for having me, Scott.
• 33:49
  SPEAKER_02: Really enjoyed the chat.
• 33:51
  Scott: All right, folks, that's it for today.
• 33:53
  Scott: If you like the show, please check out another one where you can learn how to financially plan for every aspect of your business.
• 34:00
  SPEAKER_00: If you like the show or found something useful, text someone right now and say, I have a podcast recommendation to check out, budget your business.
• 34:08
  SPEAKER_00: You can also like the show or find more at your favorite podcast locations Apple Podcasts, Spotify, and Amazon.
• 34:17
  SPEAKER_00: Thank you for listening.
• 34:18
  SPEAKER_00: And we hope you'll join us for our next guest on Budget Your Business.