Latest / Crossroad Conversations with the Lewis Brothers / Ep.79 - "The Growth Trap: Why 5% of Multi-Million Dollar Companies Vanish Every Year"

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Ep.79 - "The Growth Trap: Why 5% of Multi-Million Dollar Companies Vanish Every Year" · Crossroad Conversations with the Lewis Brothers

0:00
SPEAKER_04: You scaled yourself out of this.
0:02
SPEAKER_04: Exactly.
0:03
SPEAKER_04: You kept hiring, you kept hiring, you kept hiring.
0:05
SPEAKER_04: This person's doing your social, this person's doing your cleaning, this person's doing your management, this person's going all over your systems, this person's going all, and you've completely eaten up any profit that you have.
0:15
SPEAKER_04: Lefty's like, well, is it's not worthwhile now to be seven plus figures and being less than 120, 130 grand.
0:26
SPEAKER_02: Hey everyone, welcome to Crossroads Conversations with the Lewis brothers, where we aim to share real stories about running a successful family business, working through adversity, and pouring back into the community that keeps our doors open.
0:38
SPEAKER_02: We're your hosts, Taylor Matt, and Shelby, and we'll bring you relevant local business advice and automotive insights that are sure to change the way you look at running a business, and may even throw in a plug for you to do business with us.
0:51
SPEAKER_02: Welcome, Crossroads Conversation, episode 79.
0:55
SPEAKER_02: We are the Lewis Brothers live in the studio.
0:59
SPEAKER_02: And a good topic today why success fatigue leads to sloppy systems and shrinking margins.
1:07
SPEAKER_02: But bottom line, how to protect your character and ethics when the stakes and checks get bigger.
1:13
SPEAKER_02: We're gonna have a lot of fun diving into this today.
1:15
SPEAKER_02: But a quick recap.
1:17
SPEAKER_02: We had Elvis with Arkansas on the car show.
1:22
SPEAKER_02: Elvis was in the building.
1:24
SPEAKER_02: Yes, loved talking about that.
1:26
SPEAKER_02: It's gonna be such a big event at um at the red-white game that they're gonna have at the university.
1:33
SPEAKER_02: Go back and check that out.
1:35
SPEAKER_02: It's really big.
1:36
SPEAKER_02: Had a whole lot of fun with Elvis on the set.
1:39
SPEAKER_03: Yeah, it was a great episode.
1:40
SPEAKER_02: Absolutely.
1:41
SPEAKER_04: So talking community outreach, hey, remember always to visit us at LewisSuperstore.com for all your automotive needs, whether it's be scheduled and oil change, looking for latest grace inventory, or wondering what is my car worth in my driveway, you can find that all there.
1:53
SPEAKER_04: And Crossroad Conversations Podcast.com for all things podcasts.
1:57
SPEAKER_04: And tune in with us so we can bring you relevant and new information.
2:01
SPEAKER_03: You know, today we're talking about a subject that many don't really even recognize or identify until things are going wrong.
2:10
SPEAKER_03: Okay.
2:10
SPEAKER_03: So what we want to do is try to get you ahead of that.
2:13
SPEAKER_03: It's called the profit leak.
2:15
SPEAKER_03: And it's tightening systems when money is easy.
2:19
SPEAKER_03: See, people look at tightening systems when they see that their PNL is going down, or they had a negative month, or year over year it was going down.
2:27
SPEAKER_03: But it but it's a growth trap.
2:30
SPEAKER_03: And there's why 5% of multimillion dollar companies vanish every year.
2:36
SPEAKER_03: That's crazy.
2:37
SPEAKER_03: So when you think about that, we're not talking about 5% of startups.
2:41
SPEAKER_03: We're talking about 5% of multimillion dollar businesses vanish every year.
2:46
SPEAKER_03: And we see this happening.
2:49
SPEAKER_03: Now, on our side, we get to see where they start spending the money on cars and on this and that.
2:55
SPEAKER_03: And we're thinking, man, we just sat in a meeting and and both the conversations, and you guys will relate to this, is one great job.
3:03
SPEAKER_03: We had a good month.
3:04
SPEAKER_03: We were up year over year, we're up our 90-day average.
3:07
SPEAKER_03: Now, by the way, we got to look at these expenses.
3:09
SPEAKER_04: It's funny that you say that because I saw a thing the other day about, you know, one of those social media things, and you click on it and you're invested.
3:16
SPEAKER_04: But guy was talking about he had a seven-figure year uh of gross revenue coming in for a gym he'd set up.
3:24
SPEAKER_04: And he was like, Well, how's it going?
3:25
SPEAKER_04: He's like, Well, I'm in seven figures.
3:27
SPEAKER_04: He's like, Well, that's what you're bringing in.
3:28
SPEAKER_04: Yeah.
3:29
SPEAKER_04: You know, how's the Ned now?
3:30
SPEAKER_04: You know, and he's like, Well, you know, we've grown to 27 employees.
3:34
SPEAKER_04: Uh I was like, Okay, that's pretty solid.
3:36
SPEAKER_04: And he's like, All right, so he's like, Oh, I'm bringing about$12,000 to$13,000 a month coming.
3:41
SPEAKER_01: Yeah.
3:42
SPEAKER_04: Uh, and so you're like 12 to 13, like super solid, right?
3:45
SPEAKER_04: But to be seven figures revenue, paying 27 employees what they're worth and dealing with all the headache, he's like, dude, you scaled yourself out of this.
3:55
SPEAKER_04: Exactly.
3:55
SPEAKER_04: You kept hiring, you kept hiring, you kept hiring.
3:57
SPEAKER_04: This person's doing your social, this person's doing your cleaning, this person's doing your management, this person's going all over your systems, this person's going all, and you've completely eaten up any profit that you have left.
4:08
SPEAKER_04: He's like, Well, is it's not worthwhile now to be seven plus figures and being less than 120, 130 grand.
4:16
SPEAKER_03: Now let's define something here, real quick, what everybody's listening.
4:18
SPEAKER_03: We're not talking about during startup.
4:20
SPEAKER_03: During startup, you know, you're hiring people, it's an expense, and it's gonna do it.
4:25
SPEAKER_03: It's just no different, even though we have been in business for over 70 years, when we scaled to our current location, we knew our forecast.
4:32
SPEAKER_03: That first year, that first six months, that first 18 months, it's gonna take a whole lot of expense.
4:38
SPEAKER_03: You know, we're talking about knowing you're rocking and rolling.
4:41
SPEAKER_03: Yeah, everything's going good.
4:42
SPEAKER_03: You guys think about this.
4:43
SPEAKER_03: You know, when business is booming, especially let's talk about a seven-figure business there, a$500 mistake or a wasted afternoon doesn't feel like a big deal because that top-line revenue just covers it up.
4:58
SPEAKER_03: But this is where operational bloat begins.
5:03
SPEAKER_03: You know, because all of a sudden, when you're like, Yeah, I'm done with the day and it's two o'clock and you're gone.
5:08
SPEAKER_03: When you when you get into like, hey, let's always buy food for everybody on Fridays.
5:13
SPEAKER_03: I don't take me wrong.
5:14
SPEAKER_03: I'm not saying don't take care of your employees.
5:16
SPEAKER_03: Yeah.
5:16
SPEAKER_04: But when it becomes a normal That's$26,000 if you bought it every Friday.
5:21
SPEAKER_04: Every Friday.
5:22
SPEAKER_04: You're gonna have to buy it on Saturday.
5:24
SPEAKER_03: Yeah.
5:24
SPEAKER_04: Right?
5:25
SPEAKER_04: So then you're$52,000.
5:27
SPEAKER_03: Yeah.
5:27
SPEAKER_03: So if that's$26,000, let's just say this guy's business, this guy's business had a 5% return.
5:34
SPEAKER_03: Yeah.
5:34
SPEAKER_03: Okay.
5:35
SPEAKER_03: So net, yeah, net.
5:36
SPEAKER_03: So take that$26,000, and we're gonna teach everybody something here.
5:40
SPEAKER_03: Let's take that$26,000 that you would have spent.
5:43
SPEAKER_03: Now let's do it at 5%.
5:45
SPEAKER_03: Okay.
5:46
SPEAKER_03: So divide that, divide uh here's the way you do that.
5:50
SPEAKER_03: You take the number and then you divide it by 0.05.
5:55
SPEAKER_03: Okay, so this is gonna tell us how much gross revenue we would have to generate to cover the$26,000.
6:02
SPEAKER_03: What'd you come up with?
6:04
SPEAKER_03: $520,000.
6:06
SPEAKER_03: So you'd have to generate over half a million dollars, not in sales dollars, in gross.
6:11
SPEAKER_04: Yes.
6:11
SPEAKER_04: That that's that's the tricky thing you don't look at because every vendor out there will pitch you like, hey, my system only costs$1,500 a month.
6:19
SPEAKER_04: Or pizza, you know, your employees will say, hey, buy me pizza, or buy lunch uh, you know, every other Friday or something.
6:26
SPEAKER_04: They say, but if you can sell another car, you can make that much money.
6:28
SPEAKER_04: Well, it doesn't work that way because that's the top line.
6:32
SPEAKER_03: That is top line.
6:32
SPEAKER_03: So so and I'll just I'll slow down a little real quick and hopefully our team will put it in the show notes.
6:37
SPEAKER_03: If you want to know how much you have to generate to cover that cost, take whatever percentage.
6:41
SPEAKER_03: Yours might be 10%, it might be 3%, it might be 25%.
6:45
SPEAKER_03: Net revenue.
6:46
SPEAKER_03: Of net revenue.
6:47
SPEAKER_03: Now, before you pay, you know, all your all your taxes or of net revenue, and you take that and you use that as the divider into however much you want to spend.
6:55
SPEAKER_03: You want to spend 50 grand, 10 grand,$1,000.
6:58
SPEAKER_03: How much do I have to generate?
6:59
SPEAKER_03: We do this with our employees that want to give away a set of formats, that want to competire.
7:06
SPEAKER_03: And I'm not saying we don't ever do that.
7:08
SPEAKER_03: There's situations we do, but that's the real way to look at it.
7:11
SPEAKER_03: Because if you don't, you're like, oh, it's 500 bucks.
7:13
SPEAKER_03: We're rolling, no big deal.
7:15
SPEAKER_03: This habit, and then all of a sudden you be you get operational bloat.
7:20
SPEAKER_03: I like that term.
7:22
SPEAKER_02: That happens fast, and it happens even internal employees.
7:24
SPEAKER_02: You start to go into that and talk, and I find it a lot that a missed miss PO, a miss vendor that we didn't hold out in the wheel for the deal comes across and a manager, you know, quickly if it's within two, three, four hundred, they're like, Oh, yeah, yep, charge it back, expense it to policy.
7:44
SPEAKER_02: I'm like, Whoa, do you even know what that deal is?
7:47
SPEAKER_02: And sometimes it'll catch them off guard that they're like, Well, no, I just know it was gonna have to be taken care of.
7:54
SPEAKER_02: So I just went ahead and said, Yeah, let's move forward.
7:56
SPEAKER_02: So when you take that times 10, times 20, times 30, times 50, whatever it would be, it starts to really add up.
8:02
SPEAKER_03: It really does.
8:03
SPEAKER_03: So the takeaway there is make sure, yes, you got to spend money to make money, yes, you got to take care of employees, but there's always a threshold there, too.
8:11
SPEAKER_03: Okay, you need you need to look at it.
8:12
SPEAKER_03: Hey, how much money are we actually keeping?
8:14
SPEAKER_03: Are you saying you're making seven figures, but you're really only taking, you know, just a few figures home?
8:19
SPEAKER_03: It's crazy.
8:20
SPEAKER_03: You know, you gotta re-look that.
8:22
SPEAKER_03: Okay, the next up, the discipline of the percent.
8:25
SPEAKER_03: Why you must manage by percentages, not just dollar amounts, to ensure profitability stays scaled in growth.
8:33
SPEAKER_03: You know, we just go over that.
8:35
SPEAKER_04: Yeah, yeah.
8:35
SPEAKER_04: But let me give it a different angle.
8:37
SPEAKER_04: Okay.
8:38
SPEAKER_04: So if you're looking at expenses, don't look at the dollars because the sales are gonna move based on the season of the year.
8:44
SPEAKER_04: Okay.
8:45
SPEAKER_04: Right?
8:45
SPEAKER_04: So it's it's gonna grow in the hot season versus when it's cold and you have to do something in construction.
8:50
SPEAKER_04: When it's cold out, you're not gonna have that gross revenue as high.
8:53
SPEAKER_04: But if you manage all the things based on percentages, whether it's net revenue or expenses or policy or healthcare, whatever it may be, if you'll manage that on a percentage, the month, the number won't matter.
9:06
SPEAKER_04: It's just a percentage.
9:07
SPEAKER_04: So you can see, am I in line?
9:08
SPEAKER_04: Is that increasing or decreasing?
9:10
SPEAKER_03: I think a great example.
9:11
SPEAKER_03: I'm gonna take our business because we just came off of you know a huge month and ultimate challenge.
9:16
SPEAKER_03: Percentage-wise, our advertising, we spent double what we normally spend in advertising, if not more.
9:22
SPEAKER_03: Yeah, probably two and a half times.
9:24
SPEAKER_03: But then in April, that scales back down.
9:26
SPEAKER_03: In February, it was down less too.
9:28
SPEAKER_03: We didn't just say, hey, leave that on repeat.
9:30
SPEAKER_03: No, you know, the team was ready to put in place different budgets in every different area.
9:36
SPEAKER_03: Yeah.
9:36
SPEAKER_04: Because it won't always equal.
9:38
SPEAKER_04: It won't.
9:39
SPEAKER_04: Right?
9:39
SPEAKER_04: You can't say, hey, if I spend$450,000 in advertising, it's gonna sell me 678 cars.
9:44
SPEAKER_04: There's so many other pieces to that puzzle.
9:46
SPEAKER_04: That's just worth it.
9:47
SPEAKER_03: There's seasons, you know, there's trends, the the manpower, their freshness.
9:53
SPEAKER_03: If you're in construction, you know, what's the supply look like?
9:56
SPEAKER_03: You know, what does the weather look like?
9:57
SPEAKER_03: Yeah, you need to take all those in consideration.
9:59
SPEAKER_03: It's not a set it forget it.
10:01
SPEAKER_04: And you're not just gonna bid 500 jobs if you don't have the manpower and the ability to do it, right?
10:05
SPEAKER_04: If you can only do 10 jobs at one.
10:08
SPEAKER_04: It's like there's no need to do that.
10:09
SPEAKER_03: Let me get y'all's thought on this, okay?
10:11
SPEAKER_03: Auditing, yes.
10:13
SPEAKER_03: Like the word yes.
10:15
SPEAKER_03: And when you think about that, when things are good, we say yes to everything.
10:19
SPEAKER_03: We're like, oh man, they've done good.
10:20
SPEAKER_03: Yes, yeah, go ahead and do that.
10:22
SPEAKER_03: Treat yourself.
10:23
SPEAKER_03: This segment discusses the power of a strategic no to keep your team from being spread either too thin or saying yes from an expense structure.
10:34
SPEAKER_03: So, what are y'all's thoughts on on controlling that word yes?
10:37
SPEAKER_04: On the expense side, I'll tell you, I'm very quickly to know.
10:40
SPEAKER_04: People will call me a cheapskate quickly.
10:43
SPEAKER_04: Like I from the management team to other salespeople to customers, you're like, golly, you're cheapskate.
10:48
SPEAKER_04: It's like I've I've seen it on the other side.
10:50
SPEAKER_04: I look at the expenses, I look at the bills.
10:52
SPEAKER_04: We can't afford to, you know, 678 cars sold, you're like, golly, must be rolling the money.
10:58
SPEAKER_04: They're like their expenses are higher in that month than they ever will be, right?
11:02
SPEAKER_04: And so, yeah, I agree with that in the yes.
11:05
SPEAKER_04: And sometimes I need to say yes more.
11:07
SPEAKER_03: Um, but so on the no, let me unpack that for just a second.
11:11
SPEAKER_03: I agree with you on the no, but what's your delivery there?
11:15
SPEAKER_03: So, you know, employees don't just think that you're just absolutely smacking with a hammer.
11:20
SPEAKER_04: You got to deliver it with uh a reason and then an alternate, or we could try this, right?
11:25
SPEAKER_04: There you go.
11:26
SPEAKER_04: It's like, hey, I totally get that.
11:28
SPEAKER_04: Seems like a great idea.
11:28
SPEAKER_04: Thanks for bringing it to me.
11:30
SPEAKER_04: Hey, at the phase that we're in right now, we probably need to look at it this direction, where we've probably got that channel that already does that, or probably have a software that already does that.
11:38
SPEAKER_04: Or what if we reallocated our cost for those people?
11:42
SPEAKER_04: And I'll jokingly, I'm like, hey, what if we reallocated the cost of those people and then we could do that?
11:47
SPEAKER_04: We could buy pizza.
11:48
SPEAKER_04: It's like, what do you mean?
11:49
SPEAKER_04: He's like, well, we wouldn't be able to employ them, but we could get pizza.
11:52
SPEAKER_04: So like, what?
11:53
SPEAKER_03: And I'm like, oh yeah, I know it doesn't make sense.
11:55
SPEAKER_03: But you know, another one though, where it does make sense, and I've I've heard you do this before.
11:59
SPEAKER_03: When somebody brings you, okay, we've been talking about pizza and this and that, but they bring you a new system idea.
12:05
SPEAKER_03: You know, we left NADA this year, and hey, something else for$5.99 a month.
12:08
SPEAKER_03: And before you say just yes to it, you I've heard you tell them before, like, hey, bring me something else we could cut or we could replace.
12:15
SPEAKER_04: That's so important.
12:17
SPEAKER_04: Uh and so then chances are they're not going to bring anything, right?
12:21
SPEAKER_04: They might, they might bring you something, but they already like what they have, right?
12:25
SPEAKER_04: And they they have fear of FOMO or fear of loss if they unplug this.
12:29
SPEAKER_04: And so then it quickly tells them, okay, maybe I shouldn't.
12:32
SPEAKER_03: But if they're really bought into it, then they might look through it and go, man, you know that other thing we really don't use, we could probably get rid of.
12:38
SPEAKER_04: Yeah, if they had a higher ROI.
12:39
SPEAKER_03: The three of us were going through that.
12:41
SPEAKER_03: Remember when we were looking at all the systems?
12:43
SPEAKER_03: And we were looking at that.
12:44
SPEAKER_03: We were like, you know, we really liked this, but when we look at the user report there, it's not really being used.
12:49
SPEAKER_03: We could cut that.
12:50
SPEAKER_03: Yeah, and we had to invest it in another area, you know, track tracking our rapid recon.
12:55
SPEAKER_03: Yeah, we took money from what we cut over here and reinvested it there.
12:57
SPEAKER_03: Yep.
12:58
SPEAKER_02: No, that's really good.
12:59
SPEAKER_02: I think that applies to personnel and employees too.
13:02
SPEAKER_02: I find myself more and more that it's no, I want everybody to have time with their family, have vacations, have time off, whatever it needs to be.
13:12
SPEAKER_02: We need to structure it this way, and it's because of I need the customer not to suffer.
13:18
SPEAKER_02: So same thing Shelby was just saying.
13:20
SPEAKER_02: Always you can have the no in there, just have an alternative that you need to walk your team through.
13:25
SPEAKER_03: Yeah, and and I know I've gotten in this trap trap many a times, is I just keep adding on instead of like replacing.
13:34
SPEAKER_03: It's like, you know, you what you can use in the in the fancy documents is find and replace.
13:38
SPEAKER_03: Yeah.
13:39
SPEAKER_03: You know, sometimes you can do that, like replace it.
13:41
SPEAKER_03: And sometimes you just got to prune.
13:43
SPEAKER_03: You know, if we if we get into we're getting into springtime, people have pruned things, so then they'll grow back even bigger.
13:48
SPEAKER_03: Yep, yep.
13:49
SPEAKER_03: So just remember that.
13:50
SPEAKER_03: All right, the guardrail, maintaining the same rigorous expense tracking you had when you were scrappy and hungry.
13:58
SPEAKER_03: So, what's that mean?
13:59
SPEAKER_03: When you were starting up and you barely had any cash flow and you're checking your bank account five times a day to make sure we could do payroll and we could pay for that shipping.
14:07
SPEAKER_03: You're relooking at the packing slip, going, okay, that was 210 net 30.
14:11
SPEAKER_03: We're on day 20.
14:12
SPEAKER_03: We can wait a couple more days before we pay that one.
14:15
SPEAKER_03: That type of structure really helps somebody scale.
14:19
SPEAKER_03: But sometimes when you start making money, that kind of goes what?
14:23
SPEAKER_02: It has to evolve with that.
14:24
SPEAKER_02: You have to keep that same in mindset, but it has to evolve to the scale of whatever your business is.
14:30
SPEAKER_02: But I think it's so, so important to never forget that.
14:34
SPEAKER_02: And that's probably where a lot of people say, don't forget where you came from.
14:39
SPEAKER_02: Don't necessarily mean you have to go back to doing things exactly how you were doing it, but remember that structure.
14:45
SPEAKER_02: Remember how you used to audit how deals were done, how cash flowed through your business and how personnel was taken care of.
14:53
SPEAKER_02: So I I really like that that it just goes back and it it's reground you because everybody gets out of rhythm sometimes.
14:59
SPEAKER_02: I agree.
15:00
SPEAKER_04: I think it's the discipline as well.
15:01
SPEAKER_04: Think about any good athlete on their up and coming.
15:04
SPEAKER_04: You know, they they had everything to gain, not much to lose.
15:08
SPEAKER_04: And so they were super disciplined, super scrappy, super hungry to do whatever needed to be done.
15:14
SPEAKER_04: And so in business, you think about that like, okay, you're going to audit all this stuff and you're going to make sure the systems are correct.
15:21
SPEAKER_04: You're going to make sure the word tracks are correct.
15:22
SPEAKER_04: And are you answering all the leads in a proper time?
15:25
SPEAKER_04: And are you answering the phone call?
15:26
SPEAKER_04: What do you sound like?
15:27
SPEAKER_04: And what does your delivery look like?
15:29
SPEAKER_04: And is the car cleaner when it leaves here than when it came here?
15:32
SPEAKER_04: All those things.
15:34
SPEAKER_04: You know, so you have to remember those things.
15:36
SPEAKER_04: And so then if you have to scale, which most businesses do, you need to make sure the person you put in your replacement has that same discipline, hunger, and ability of these details matter, right?
15:47
SPEAKER_04: And so if you have that, then that allows it to continue to scale.
15:50
SPEAKER_02: I love that aspect of being hungry.
15:52
SPEAKER_02: I was at and completely take this to the realm of a different side, but still in a business.
15:58
SPEAKER_02: Um, recently was at a restaurant and they had a guy that was playing uh entertainer in two different nights.
16:05
SPEAKER_02: So first night, I was like, God, that guy was good.
16:07
SPEAKER_02: Like, played all the songs, knew it, had the whole crowd going in, and he was a newer guy.
16:13
SPEAKER_02: Second night, and they're like, Oh, you think he was good?
16:16
SPEAKER_02: Wait till the next night when a guy comes in.
16:19
SPEAKER_02: Like, okay, the guy's been there for over 18 years.
16:22
SPEAKER_02: They normally played for about three hours.
16:25
SPEAKER_02: This guy played 20 minutes, walked around for the other 45 minutes, and then played another 20 minutes.
16:30
SPEAKER_02: And I started laughing.
16:31
SPEAKER_02: I said, He's working the crowd, but he's not near as hungry as that guy was the first night.
16:38
SPEAKER_02: That he was like, Oh, yeah, song.
16:40
SPEAKER_02: Okay, great, I got you.
16:42
SPEAKER_02: And then for the alternative, I looked at the tip jar that was up on the front, the guy on the first night, it was way more full because he was hustling.
16:50
SPEAKER_02: So whoever you have jumping your business, no matter what it is, make sure they have that dog in them that's got the fight and they're getting after it.
16:59
SPEAKER_04: And realize what they're getting paid for.
17:00
SPEAKER_04: Yes, not getting paid to walk around and talk to people, getting paid to play music.
17:04
SPEAKER_04: They brought the people with them that they wanted to talk to, right?
17:07
SPEAKER_04: And so you have to keep that in mind because oftentimes we try to mitigate and change, like, no, here's what I'm thinking.
17:13
SPEAKER_04: You know, it's a thing I told the managers this morning, like, hey, if you had to write every single paycheck for every single one of your employees, would you be satisfied in the check that you wrote them today?
17:24
SPEAKER_04: They were like, cool.
17:25
SPEAKER_04: I was like, and some of them would be big.
17:26
SPEAKER_04: Some of you got a hundred people on your, you know, team, would you would you feel good about each one of those that you wrote individually?
17:33
SPEAKER_04: And they're like, I was like, so just think about right the entertainment.
17:36
SPEAKER_04: Would you be happy with the entertainment that you provided tonight?
17:41
SPEAKER_03: No, that's good for sure.
17:43
SPEAKER_02: So going through there, we kind of touched on on this, but how many multimillion dollar companies go out of business each year?
17:49
SPEAKER_02: We're not talking about a startup, but you looked at it and it was over five percent of those businesses go out of business every year because of the small bloat we talked about, the operational blow, the the profit leak that starts to come through.
18:04
SPEAKER_02: So that's something you really and I say the more effective leaders do it whenever they're making more money.
18:11
SPEAKER_02: That's it.
18:12
SPEAKER_02: They do it whenever they're making more money, they prepare.
18:15
SPEAKER_03: And it's no different if if you talk to somebody, especially if if you have variable income and you and you talk to a financial planner or you talk to somebody that's been highly successful for a long time, they say work your budget based upon your worst month or your least amount of income month.
18:31
SPEAKER_03: And from a business perspective, if you'll work your expenses based upon where you can still be profitable on your slowest month of the entire year, then the rest will take care of itself.
18:43
SPEAKER_03: Yeah.
18:44
SPEAKER_04: I think that's so good.
18:45
SPEAKER_04: All right, segment two, we'll talk about character insurance.
18:48
SPEAKER_04: And this isn't necessarily something you can buy, right?
18:50
SPEAKER_04: But protecting your ethics at the peak.
18:52
SPEAKER_04: So when things are going really good.
18:54
SPEAKER_04: So, first one is it's easy to be a person of high character, just like I talked about in the athletes, when you really have nothing to lose.
19:01
SPEAKER_04: But when the real test is when cutting a corner could gain you an extra six figures.
19:07
SPEAKER_04: If I cut this corner, I'm like, what is that corner?
19:10
SPEAKER_04: What are you cutting?
19:11
SPEAKER_04: Is it a quality?
19:12
SPEAKER_04: Is it an inspection?
19:13
SPEAKER_04: Is it a person?
19:13
SPEAKER_04: Is it a necessary role?
19:15
SPEAKER_04: So understanding character insurance of like, what's your character?
19:19
SPEAKER_04: When no one's looking or when everyone's looking, what does it look like?
19:22
SPEAKER_04: The shortcut temptation.
19:24
SPEAKER_04: You know, people often look at shortcuts.
19:26
SPEAKER_04: So, what's your guys' feelings and thoughts on shortcuts if it means net positive?
19:30
SPEAKER_03: I'll tell you where we get tested all the time in our business, and it's in the finance department.
19:36
SPEAKER_03: You know, so when you talk about protecting your ethics even at a peak when it can cost the amount of deals that we will not get approved here, because we're a hundred percent transparent with how long they've been on their job, how much income they make, they'll go down the road and somebody bumps their income up when they submit that credit app over, and then they get them approved.
19:58
SPEAKER_04: So it would mean net positive to the store, to the finance manager, to the owner.
20:03
SPEAKER_03: In the short term, yes.
20:05
SPEAKER_04: And so the thing is, and what you have to realize is we are 100% responsible for that customer's information to them.
20:12
SPEAKER_04: We represent the customer to the bank.
20:14
SPEAKER_04: And most people know based on a customer's credit score and the structure of the deal of when they're gonna say, prove that to me.
20:21
SPEAKER_04: Right?
20:22
SPEAKER_04: When they say, okay,$5,400 a month is what they make,$3,200 a month's what they make, prove that to me.
20:28
SPEAKER_03: That's right.
20:28
SPEAKER_04: Right?
20:29
SPEAKER_04: But they know there's a fine line there.
20:31
SPEAKER_04: And so what if we bumped it up a little bit?
20:33
SPEAKER_04: That means we could get a little more money carried.
20:35
SPEAKER_04: You're not gonna sell the car for more, but you're not properly representing the customer to the bank.
20:40
SPEAKER_04: And that's one of the things we will not cut a corner on.
20:43
SPEAKER_03: That's right.
20:43
SPEAKER_03: That's right.
20:44
SPEAKER_03: Even, you know, because we want the long-term business.
20:46
SPEAKER_03: We have yet to ever have a bank cut us off.
20:49
SPEAKER_03: Yeah.
20:49
SPEAKER_03: In 80 plus years of doing business.
20:52
SPEAKER_03: And, you know, we hear about it all the time up and down the road because we make sure.
20:56
SPEAKER_03: So there's that part, and then there's the straw purchase part too.
20:59
SPEAKER_02: Straw purchase, and that's where a lot of employees even will come to us and say, any three of us, but they say, Why are you always so confident?
21:07
SPEAKER_02: And I can easily go back to them and I say, because I know how we do the process, and I can confidently go through it and know, know that y'all are going to be held accountable for what we're going through.
21:20
SPEAKER_02: So whether it's straw purchase of saying, hey, we're misrepresenting I'm buying the car for Shelby, and it's actually he's gonna be using it, but we're using my income or whatever would be credit to buy it, that's considered a straw purchase.
21:33
SPEAKER_02: And a lot of people do that, misrepresent a mom or a dad buying for a kid or grandma or anything else.
21:40
SPEAKER_02: That's just short term gain that is not worth it.
21:44
SPEAKER_02: It's not worth it because then you can't stand there and confidently say, I've taken care of you.
21:49
SPEAKER_02: This is the process we're doing, and this is what we do.
21:52
SPEAKER_03: I think too, it's just I always remind myself because you know, I know I'm delivering that news, I know it's the right thing to do, I know that.
22:00
SPEAKER_03: The decision we're gonna make, but but I know that we'll lose some short-term business from us from it.
22:06
SPEAKER_03: But I always remind myself it will always come back around to those that do it, it'll catch up to it's funny because it's like it's not delayed obedience, but that's what it feels like.
22:18
SPEAKER_04: Like, because here's the thing you get a new sales professional, sales professional that comes from another industry or from the same industry at a different store or a sales manager, and they have that customer, you can't get them approved because you did everything net zero, how it's supposed to be.
22:32
SPEAKER_04: Then they get a call from because the customer's a little upset, like you represented them well.
22:37
SPEAKER_04: They get uh approval from a different dealership.
22:40
SPEAKER_04: They're like, nothing changed.
22:41
SPEAKER_04: The banks are the same, the cars are the same.
22:43
SPEAKER_04: It's like, what do you mean?
22:44
SPEAKER_04: It's like, well, they got approved on this and this.
22:46
SPEAKER_04: So then they the salesperson's mad because they missed a deal, sales manager's mad because it made them look silly, and they come to us and like, what and you're like, no, our character says so it doesn't, it's delayed gratification.
22:57
SPEAKER_04: It's not helping you today.
22:58
SPEAKER_04: It is.
22:59
SPEAKER_03: And when we get somebody new here, it takes them a while to understand like, no, we're gonna do the right thing and it's gonna pay in the in the long term.
23:06
SPEAKER_04: And that's why we enjoy sitting in the in the business.
23:11
SPEAKER_04: Because you, when you get new people, you got they need they either gonna create your culture, destroy your culture, or you're gonna say, no, no, no, here's how we do it.
23:21
SPEAKER_04: Let me show you this.
23:22
SPEAKER_04: Like, no, no, no, no, no, no.
23:23
SPEAKER_04: I heard what you said there.
23:24
SPEAKER_04: No, we need both of their credit apps because it's gonna be both of them on the car.
23:28
SPEAKER_04: We're not grandma's not buying this for junior, and grandma you know can't even drive anymore, you know, or whatever it may be.
23:34
SPEAKER_04: It's like, oh, how'd you calculate that income?
23:36
SPEAKER_04: Let me help you calculate that.
23:38
SPEAKER_04: And but those those pivotal points right there allow you to help trajectory that person, are can they still get away with that?
23:44
SPEAKER_04: Sure.
23:45
SPEAKER_04: Or will they understand the proper way?
23:47
SPEAKER_03: I think it's really I I don't know about you guys, but when I hear a vendor talk, and when we say vendor in our world, we're talking about finance reps, you know, people that help us take pictures of the cars, the BG, the oil, the tire, like all the reps.
24:01
SPEAKER_03: I hear from rep after rep, because they're in all the other dealerships.
24:05
SPEAKER_03: They talk about if I'm buying a car or if I'm sending somebody to buy a car, it's from you guys.
24:10
SPEAKER_03: Nobody is just transparent and runs their business at the high level of ethics and morals that you guys do every time.
24:19
SPEAKER_04: So that's where you get to feel good about it.
24:20
SPEAKER_03: Agreed.
24:21
SPEAKER_04: And I'll talk about this as you were saying that I was thinking, I saw someone brought this up today.
24:24
SPEAKER_04: I was like, well, I hadn't heard that in a long time.
24:26
SPEAKER_04: PPE.
24:27
SPEAKER_00: Yeah.
24:28
SPEAKER_04: Right?
24:28
SPEAKER_04: So in COVID, the government gave out PPP loans of grants of money.
24:33
SPEAKER_04: Well, someone the other day was talking about something and they were so far out, and they had ended up getting arrested because they gave out millions and millions of millions.
24:42
SPEAKER_04: Businesses would get one, two, or three million, whatever, right?
24:44
SPEAKER_04: There was a percentage that you get based on the uh net revenue and based on your employees.
24:49
SPEAKER_04: It was supposed to help mitigate loss to keep people employed.
24:52
SPEAKER_03: Yeah.
24:53
SPEAKER_04: And then you had to pay back, right?
24:54
SPEAKER_04: And then they talked about forgiving those things and you know, forget that.
24:57
SPEAKER_04: So these people had gone to jail because they got it.
25:01
SPEAKER_04: They'd bought sports cars with it, they bought vacation homes, they bought jets with it.
25:06
SPEAKER_02: Uh-huh.
25:07
SPEAKER_04: That is not what it was designed for.
25:09
SPEAKER_04: So that was they're like, quick money, I got it, let's go.
25:12
SPEAKER_04: They're never gonna inspect this.
25:13
SPEAKER_04: Guess what they did?
25:14
SPEAKER_04: The corner was cut and it chopped the whole table in half.
25:17
SPEAKER_03: I'll tell you, we actually opened up because we we got some of that money.
25:20
SPEAKER_03: Yeah.
25:20
SPEAKER_03: Okay.
25:20
SPEAKER_03: Um, and we got it now.
25:24
SPEAKER_03: A little bit of context here, too, with us.
25:26
SPEAKER_03: We didn't furlough any employee.
25:28
SPEAKER_03: We didn't lay any of them off.
25:29
SPEAKER_03: So we took on all the expense.
25:31
SPEAKER_03: And we opened up a whole different bank account for it and put it in there.
25:36
SPEAKER_03: It just debited it out of there.
25:38
SPEAKER_03: The differences in payroll between actual earned and what we guaranteed because it based upon the previous years, and like so documented, because I'm like, we're because we know that would happen, right?
25:49
SPEAKER_03: Yes.
25:49
SPEAKER_03: Yeah.
25:50
SPEAKER_03: It's like, here you go.
25:51
SPEAKER_03: And it's all on its own account, real easy, clean.
25:53
SPEAKER_03: Yeah, nobody's trying to hide anything there.
25:56
SPEAKER_04: But too many people take that easy money, that easy corner.
26:00
SPEAKER_04: That's good.
26:01
SPEAKER_04: So uh another topic on that, staying grounded.
26:04
SPEAKER_04: How to keep your service first mindset.
26:06
SPEAKER_04: You know, thinking of 80 years, how do you stay grind uh grounded uh and how do you stay after it, even with a legacy when you're tempted by that transaction first?
26:15
SPEAKER_03: I know we talked about that a little bit, but there is a quote that sticks out in my mind, and I learned it a long time ago, and it says this, and I'm gonna say it slow because it gets a little wordy, okay?
26:28
SPEAKER_03: Customers are not dependent upon us, we are dependent upon them.
26:35
SPEAKER_03: So when you think about that, because sometimes when you have success and your head gets a little big, you're like, no, they gotta see us, they need me.
26:42
SPEAKER_03: No, they don't.
26:44
SPEAKER_03: They have options.
26:46
SPEAKER_03: And the second part to that is I remind employees and managers and myself when you see your paycheck, it's funded by the customer.
26:55
SPEAKER_03: Yeah, we're just transferring the funds.
26:57
SPEAKER_03: It might say Lewis, but one of the three of us may have signed it.
27:01
SPEAKER_03: We're just transferring the funds.
27:03
SPEAKER_03: Yes.
27:04
SPEAKER_03: And so I really think those two things will help really keep you centered and grounded, no matter how successful and how long you've been in business.
27:13
SPEAKER_04: That's solid.
27:13
SPEAKER_04: And that goes along with your checks and balances, right?
27:16
SPEAKER_04: Your checks and balances that keep those guardrails on, that holding here's the tricky thing of sometimes holding leadership accountable to the original mission statement, no matter how big the balance sheet is, right?
27:27
SPEAKER_04: Of just understand, no, here's how we do it.
27:29
SPEAKER_04: And a lot of it isn't not necessarily always the right and wrong.
27:32
SPEAKER_04: Like generally, that's pretty clear line, but it is the expense bloat that they're like, oh no, let me sign that.
27:40
SPEAKER_04: Oh, let me sign that.
27:41
SPEAKER_04: Like, there's reports and reports and reports that we get even after you think you sign it and push it over here and it gets hidden under here, then a port comes out and we're going through it, and the media's like, What's this?
27:49
SPEAKER_04: What was this here?
27:50
SPEAKER_04: It's like and it's like, hey, here's this, where so is such and such wrecked a car, and we didn't charge them for the$500 deductible.
27:58
SPEAKER_04: Like you just thought you could get away with it.
28:01
SPEAKER_04: And it's like, well, come on, boss.
28:02
SPEAKER_04: Like, you sold 678 cars last month.
28:05
SPEAKER_04: Like, yes, and we paid everyone.
28:07
SPEAKER_04: We paid for every car, we paid for every training, we paid for every technician, paid for every salesperson.
28:12
SPEAKER_04: And we're gonna make sure that they need to pay for what they're due.
28:15
SPEAKER_02: Be hell accountable for it.
28:17
SPEAKER_04: But uh, oftentimes that happens as well.
28:19
SPEAKER_03: No, that's good.
28:20
SPEAKER_04: The bigger the balance sheet gets, the the sloppier that kid is.
28:23
SPEAKER_03: Just check yourself.
28:25
SPEAKER_03: I mean, I'm not saying anything.
28:27
SPEAKER_03: Yeah, you have to, but just check like who are you trying to be?
28:30
SPEAKER_03: Yeah.
28:31
SPEAKER_03: And I'm not saying if you've if you've earned a great living and you and you've sacrificed this day, you can't take your family on vacation, you can't do this or that.
28:38
SPEAKER_03: No, that's a different But you're just a human being, just like everybody else is.
28:42
SPEAKER_04: And then the rules need to be the rules with your business and realizing that.
28:46
SPEAKER_04: So if you're going on vacation and you and your partner said, hey, once a year, the business is gonna pay for vacation, or they did or didn't, whatever it may be.
28:53
SPEAKER_04: Yeah, you know, you just know what those rules are.
28:55
SPEAKER_04: It's like, hey, you can take vacation, but you have to pay for it.
28:58
SPEAKER_03: Yeah.
28:59
SPEAKER_03: Just be I and I think that like it's funny you talk about business partners because we're partners in here.
29:04
SPEAKER_03: And it's transparency.
29:06
SPEAKER_03: Yeah.
29:06
SPEAKER_03: One, it builds trust and it keeps everybody in line tune.
29:09
SPEAKER_03: You know, there's times where I'll come to you guys, or you guys will come to me, and we're all talking about let's let's just lay it on the table.
29:16
SPEAKER_03: Yeah.
29:16
SPEAKER_03: And sometimes it's over 500 bucks.
29:18
SPEAKER_03: Yeah.
29:19
SPEAKER_03: I mean, I gotta remember we had like, okay, we're gonna spend 500.
29:22
SPEAKER_03: Here's 500, 500, 500, it's 1500, but we all got to be on the same page about this.
29:26
SPEAKER_04: If you can't do it with 500, you'll never do it with half a million.
29:29
SPEAKER_02: You won't.
29:30
SPEAKER_02: It's way harder with the smaller amounts than it is the bigger amount.
29:32
SPEAKER_02: I mean, because the bigger amounts naturally, you do your research, y'all are in it together, and it's going, it's the little amounts that start eating away.
29:40
SPEAKER_02: But then that's a slippery slope.
29:43
SPEAKER_03: Not only does the bloating happen, then it's like, well, dang, Taylor, I didn't know you spent that on that over there.
29:50
SPEAKER_03: Uh-huh.
29:51
SPEAKER_03: You're you're getting reimbursed for your gas.
29:53
SPEAKER_03: I'm not.
29:53
SPEAKER_03: What?
29:54
SPEAKER_03: Yeah, you know.
29:55
SPEAKER_03: And so then that just builds up, and then all of a sudden that implodes the business.
29:59
SPEAKER_03: Yeah.
30:00
SPEAKER_03: So we're getting a little off.
30:01
SPEAKER_02: But communication is communication.
30:05
SPEAKER_02: That's we talk about that so much.
30:07
SPEAKER_02: It it goes around everything, but have the clear communication and have clear uh guidelines that you obviously all run into.
30:14
SPEAKER_04: And everyone's gonna have a different, it's funny, like you know, we've had different uh accountants and different attorneys help us with stuff, and they're like, Oh, you don't do it like this.
30:22
SPEAKER_04: Like, no, this is how we do it.
30:24
SPEAKER_04: And she's like, No, you could be doing it like this.
30:26
SPEAKER_04: It's like, okay, well, this is how we do it.
30:28
SPEAKER_04: We just need to keep it in check.
30:29
SPEAKER_04: And there could be something else that we could do, yeah, but we just need to all be in check.
30:34
SPEAKER_02: That's right.
30:34
SPEAKER_02: Right.
30:34
SPEAKER_02: That's right.
30:35
SPEAKER_02: At least to hear good.
30:36
SPEAKER_02: That's really good.
30:37
SPEAKER_02: Yeah.
30:37
SPEAKER_02: So going into the victory lap middle trap, we kind of talked about that.
30:41
SPEAKER_02: That you get so successful, you get into the end game versus the infinite game, reminding yourself that record breaking month is just a chapter, it's not the finale.
30:52
SPEAKER_02: And I myself laughed about that after we'd finished our record breaking month.
30:58
SPEAKER_02: I said, I was laughing one morning, and Sarah actually said, What's wrong?
31:03
SPEAKER_02: And I said, We're this is the only profession you can go into.
31:07
SPEAKER_02: You were just full steam ahead all the way up, and then it's a wham, and you're starting back over again.
31:13
SPEAKER_04: I mean, it's like you gotta think about some of those pro athletes, like the Chiefs that were did it again, did it again, then almost did it, and then did it again.
31:21
SPEAKER_04: And then it's like finally there was a year when they didn't do it.
31:24
SPEAKER_04: It's like, okay, they're human as well.
31:26
SPEAKER_04: But you gotta just start, it's like every month we start over, almost every day we start over like you're starting the beginning of a league over and everybody's oh and oh.
31:34
SPEAKER_04: And it's like, well, wait, we we did really good.
31:37
SPEAKER_04: The momentum was wrong.
31:38
SPEAKER_04: It's like, well, it doesn't feel like it right now.
31:41
SPEAKER_03: You know, you always need, or I do, I always need something, you know, to look at because if you always look, there's somebody that's done it better, there's somebody that's faster, and there's somebody this and that.
31:51
SPEAKER_03: Like you're looking for those people.
31:53
SPEAKER_04: Yeah, instead of seeing who you're beating.
31:54
SPEAKER_03: That's right.
31:55
SPEAKER_03: You know, um, so one of the people I or profession I look at are Olympians.
32:00
SPEAKER_03: Yes.
32:00
SPEAKER_03: Because you want to talk about a world where they trained for four years.
32:06
SPEAKER_03: Four years.
32:07
SPEAKER_03: And you think we're intense about stuff.
32:09
SPEAKER_03: I mean, it they they live, breathe with the other Olympians, not with family, not with travel, nothing else.
32:15
SPEAKER_03: And some of them it's for a 10-second event.
32:19
SPEAKER_04: There was a downhill skier this year that broke her leg before the main event or tore her ACL or something, something with her leg that was important.
32:27
SPEAKER_04: She was tapered.
32:29
SPEAKER_04: And she said, glue it back together.
32:31
SPEAKER_04: Yeah.
32:32
SPEAKER_04: Because I've trained for four years.
32:34
SPEAKER_04: Four years, that's it.
32:35
SPEAKER_04: To qualify, yes, to then be in it.
32:37
SPEAKER_04: And so then she went ahead and tried to tough it out.
32:39
SPEAKER_04: And it I think it just ripped the rest of the way out and like, but she at least put the effort in, but she did.
32:44
SPEAKER_04: I so what you're saying is Taylor, it could be worse.
32:46
SPEAKER_02: She's good way to say four years.
32:48
SPEAKER_02: It could be four years, but you know, in the craziness of our business, that's that little bit of like drive, you're like, oh, that's what we got.
32:56
SPEAKER_02: Yeah, yeah.
32:56
SPEAKER_02: There's two sides of it.
32:58
SPEAKER_02: And if you look at it, where which our optimistic side of it is always, whoo, that month is okay, great.
33:03
SPEAKER_02: We got a reset or oh, that month was really good.
33:05
SPEAKER_02: Let's use it and move forward.
33:06
SPEAKER_02: Either way is positive.
33:08
SPEAKER_02: Yes.
33:08
SPEAKER_02: And I'm moving it forward, but always having that resetting optimistic attitude that you can move forward there.
33:16
SPEAKER_03: I think that's good.
33:16
SPEAKER_03: I think you know, you just really that that's the rush you get, but when you get that rush, it comes at having to re-jumpstart yourself.
33:24
SPEAKER_03: Yes.
33:24
SPEAKER_03: You know, and sports teams are a great analogy to look at that.
33:27
SPEAKER_03: And it's not gonna always duplicate it, just like you said with the Chiefs.
33:31
SPEAKER_03: I mean, different obstacles are coming, are gonna come up.
33:34
SPEAKER_03: You got to be able to pivot, get back in the game, adjust, and keep it going.
33:39
SPEAKER_03: Because not only for us, but our whole team needs us.
33:41
SPEAKER_03: Yes, you know, so so we've got we gotta you're gonna do that.
33:44
SPEAKER_02: Yeah, and being able to dive into like reinventing the windfall there.
33:48
SPEAKER_02: So instead of lifestyle inflation, how to peak profits, how to build a motor on the business for an inevitable rainy day, slow chapter.
33:56
SPEAKER_02: We talked about that budgeting around your slowest month so that you're prepared.
34:02
SPEAKER_03: If our dad, uncle, grandfather had not been extremely good at that.
34:11
SPEAKER_03: Yes.
34:11
SPEAKER_03: Let me just put this out there.
34:13
SPEAKER_03: We would never have been able to build the facility that we're in right now.
34:18
SPEAKER_03: Yeah.
34:19
SPEAKER_04: Yeah, and let me put it in to a more base level.
34:22
SPEAKER_04: And it's funny because I've heard Matt say this a hundred times, and somehow we've all just figured out to do our best to live this way.
34:29
SPEAKER_04: But we all started in different layers of this business and worked our way through it.
34:34
SPEAKER_04: But there's been out COVID times, you know, uh of really reduced expenses because you didn't need to advertise and spend all the money, and the cars are bringing premiums.
34:46
SPEAKER_04: And then times where everyone's super competitive and you got to be 10 grand below net cost of a vehicle, meaning I'm paying the customer 10 grand to check my car.
34:54
SPEAKER_04: But early on, and Matt will say this, he said, good thing I never redid my budget from once I was a sales manager, a sales professional, or a finance manager.
35:05
SPEAKER_04: Good thing I never redid my budget.
35:07
SPEAKER_04: So I'm still living in this bubble, right?
35:11
SPEAKER_04: So we just figured out, okay, if I can survive on this, didn't go buy all these lavish things, didn't build all these ridiculous outside of the stealership, right?
35:21
SPEAKER_04: Because that's a revenue generator.
35:22
SPEAKER_04: But it's like, okay, if you can set up your nut, which is your normal expense per month, and not like when it gets high, don't go spend a whole lot more money.
35:32
SPEAKER_04: Don't do it.
35:33
SPEAKER_04: Like, treat yourself, go get a sneakers bar.
35:35
SPEAKER_04: But that's it.
35:36
SPEAKER_04: Uh that's what gets people.
35:39
SPEAKER_04: That's where those businesses go out around.
35:41
SPEAKER_04: They're like, oh, I should fly private.
35:43
SPEAKER_04: Like, I should do this, I should do that.
35:45
SPEAKER_04: And there's some businesses it makes sense to, but they've weighed all their options and they've gone through all the details.
35:51
SPEAKER_04: No, I think that's that's something I laugh about all the time.
35:54
SPEAKER_04: It's like good thing I'm still living on my budget from 2004.
35:58
SPEAKER_04: You know, yeah.
35:59
SPEAKER_04: And then when you want to treat yourself, you can.
36:01
SPEAKER_02: Yeah, it's that's the fun part of you learning and growing anything else.
36:06
SPEAKER_02: If you pull back the reins and hold in the business world, whenever that opportunity comes along, that there is a downturn and other businesses come up, you don't have to think twice and you wham, you hit it.
36:19
SPEAKER_02: You keep chugging along.
36:20
SPEAKER_02: Yeah, you're able to buy that.
36:22
SPEAKER_02: Because if not, if you're on the rev limit or the other, there's no way you're gonna be able to figure out the next business opportunity.
36:27
SPEAKER_02: And if you do, it's gonna crumple what you already have.
36:31
SPEAKER_03: But if you do not have the structure and if you cannot control your emotions, you will never get to what Taylor talked about.
36:40
SPEAKER_03: If if you've ever been around anybody that's that's crazy successful and you're around them during a transaction when they're buying something, like an investment or something, they're calm, cool, collected.
36:52
SPEAKER_03: In fact, many would say they don't even care whether they get this or they don't get this.
36:58
SPEAKER_03: Well, their whole business plan, their whole life, their whole retirement plan is not contingent upon whether they get that deal or not.
37:05
SPEAKER_03: Correct.
37:06
SPEAKER_03: You know, they would like to get it.
37:07
SPEAKER_04: I'm just saying, hey, the money tractor, if I can be at 70% of this or at 82% of this, and if it falls in it, great.
37:13
SPEAKER_04: If not, it wasn't for me.
37:14
SPEAKER_03: If not, they already have one of their other streams, but that didn't happen overnight.
37:17
SPEAKER_03: That took 15, 20 plus years of saving and living on a lower budget.
37:23
SPEAKER_03: Yeah.
37:23
SPEAKER_03: You know, so then you can have these opportunities and not stress out about it.
37:28
SPEAKER_03: And it's it is such a cool feeling where you can sit there and negotiate and look at business opportunities because you see it's a good opportunity, but not a have to opportunity for business.
37:42
SPEAKER_03: But again, most people's emotions get involved.
37:46
SPEAKER_02: Very, very hard to dial in.
37:48
SPEAKER_02: And but it's something you can do, it becomes very powerful that a lot of people do not have.
37:52
SPEAKER_03: I mean, I can just go on stories and stories.
37:55
SPEAKER_03: And we were fortunate, you know.
37:56
SPEAKER_03: I was when we were growing up, I had sold a Honda 90 four-wheeler I had.
38:02
SPEAKER_03: Okay.
38:03
SPEAKER_03: I listed it in the Star Shopper, you know, got some calls, all the stuff, paid off a loan to dad I had on it.
38:09
SPEAKER_03: And it was time to get a dirt bike.
38:11
SPEAKER_03: And I'd had an 80 before.
38:13
SPEAKER_03: I wanted a 125 so bad.
38:15
SPEAKER_03: You know, I wanted to be like Jeremy McGrath so bad.
38:18
SPEAKER_03: Okay.
38:18
SPEAKER_03: So we found a 125.
38:21
SPEAKER_03: Was it a new one?
38:22
SPEAKER_03: Nope.
38:22
SPEAKER_03: Oh no.
38:23
SPEAKER_03: Are you out of your mind?
38:24
SPEAKER_04: I just wanted to point that out.
38:25
SPEAKER_04: I knew the answer.
38:27
SPEAKER_03: So we found a used 125.
38:29
SPEAKER_03: We went and looked at it.
38:30
SPEAKER_03: Dad and I studied it.
38:31
SPEAKER_03: I wrote it around.
38:32
SPEAKER_03: We went back home.
38:33
SPEAKER_03: No, no, you didn't buy it right then?
38:35
SPEAKER_03: No, sir.
38:36
SPEAKER_03: That was the cardinal rule.
38:37
SPEAKER_03: Okay.
38:38
SPEAKER_03: Not right then.
38:38
SPEAKER_03: And I was like, Dad, we got to buy that.
38:40
SPEAKER_03: Somebody else is gonna buy it.
38:41
SPEAKER_03: He's like, Nope, nope.
38:43
SPEAKER_03: If it's meant to be, it'll still be there.
38:45
SPEAKER_03: So two days later we go back and it's sold.
38:48
SPEAKER_03: It's sold.
38:49
SPEAKER_03: And I was like, dang it.
38:51
SPEAKER_03: But what frustrated me then as a kid, because we were all kids and we want stuff right then, has paid off down the road where he made me stew three or four days over a$1,500 dirt bike, you know, that was used to now be able to make those business decisions.
39:07
SPEAKER_03: And I tell you that story just so hopefully people will know, sleep on it.
39:13
SPEAKER_03: Yeah.
39:14
SPEAKER_03: You know, and if it still feels like a good deal tomorrow and it is a good deal, yeah, then go for it.
39:19
SPEAKER_03: Absolutely.
39:21
SPEAKER_02: And it's that I love that.
39:23
SPEAKER_02: I love that.
39:24
SPEAKER_02: So many people get so completely just mixed up in that.
39:28
SPEAKER_02: And if it's something that you've gone through and you've researched, you've obviously thought about it.
39:33
SPEAKER_02: It makes sense what you need to spend on it.
39:37
SPEAKER_02: And then when the opportunity, if all of it lines up, great, move forward.
39:41
SPEAKER_02: If not, you walk away.
39:42
SPEAKER_02: Yeah.
39:43
SPEAKER_02: Like there's no emotion in it.
39:44
SPEAKER_02: So great episode diving into all of the spots there of just making sure your your operational bloat doesn't happen, the you're protecting your integrity of your business and then the victory lap.
39:59
SPEAKER_03: I want to bring this in context because we've had a great conversation over all this, but I the reason I bring this up is just so everybody knows that nobody is exempt from this happening.
40:10
SPEAKER_03: No, nobody's exempt.
40:11
SPEAKER_03: I don't care how good you think business is going.
40:15
SPEAKER_03: And I want to dive just a little farther into how many multimillion dollar companies go out of business each year.
40:21
SPEAKER_03: Now think about this.
40:23
SPEAKER_03: And then I'm gonna ask you all a percentage.
40:25
SPEAKER_03: In the 10-year mark, what percentage of businesses fail?
40:31
SPEAKER_03: So within the first 10 years of operating, what percent of businesses fail?
40:40
SPEAKER_03: I'm gonna say with I'm gonna take it's over 50 percent.
40:44
SPEAKER_03: It's over 50.
40:45
SPEAKER_04: Wow.
40:45
SPEAKER_04: I I'm not looking, so I could try to give you a I was gonna say in the 20% mark.
40:50
SPEAKER_03: So within 10 years, 65 to 70 percent of businesses fail, really, within 10 years.
40:57
SPEAKER_03: And I can tell you they wouldn't have made it that far if they didn't have profit at some point in time.
41:02
SPEAKER_03: Yeah, nobody has that just big a nest egg to sit there and do operations.
41:06
SPEAKER_03: Even if they do, they're not just gonna let it burn.
41:08
SPEAKER_03: They're not gonna let it burn.
41:08
SPEAKER_03: Okay, here's the second part here.
41:10
SPEAKER_03: Now we're gonna compare companies with 10 million to 1 billion in revenue.
41:15
SPEAKER_03: Okay.
41:15
SPEAKER_03: You know, I got 1 billion in revenue.
41:18
SPEAKER_03: That's pretty high.
41:18
SPEAKER_03: Okay.
41:19
SPEAKER_03: Among those that spread of companies, every single year, two to five percent of those exit the market.
41:30
SPEAKER_03: Okay, of one billion in the US alone, there are between 20 and 30,000 commercial bankruptcy filings every year.
41:43
SPEAKER_03: Not personal, commercial, 20 to 30,000.
41:48
SPEAKER_03: Now, I read you all that not as a pump up, but as a reality check.
41:54
SPEAKER_03: To get the dog fight back in you, to get your expense structure back in, like when you're first starting up, so you can pass that 10-year mark, so you can have an Uber successful business for years and years to come.
42:06
SPEAKER_04: And not to just throw gas on the fire, but let's talk about it uh without fully breaking it down.
42:13
SPEAKER_04: Just saw on the news yesterday, Carmart, locally owned Rogers dealership, who had done such a great job, had over 148 rooftops announced that they'll be closing 46 rooftops.
42:27
SPEAKER_04: And the guy texted that to me, that's a local car dealer here.
42:30
SPEAKER_04: He's like, Did you see this?
42:31
SPEAKER_04: And I said, I did.
42:32
SPEAKER_04: Uh, and that's not closed because the manufacturer made them close because it's a used car business, right?
42:36
SPEAKER_04: And I said, Hey, what do you what's your thoughts?
42:38
SPEAKER_04: Why'd that happen?
42:39
SPEAKER_04: He said, I think they got away from the roots.
42:41
SPEAKER_04: Too many execs forgot what made them work.
42:43
SPEAKER_04: And I said, Well, I didn't notice that they had a lot more late model, more expensive vehicles.
42:48
SPEAKER_04: Yeah, because they're they're toting the note on it's where people generally can't get approved based on their credit situation, and so they go hold the note.
42:56
SPEAKER_04: So they of 150 stores, they probably had a whole lot of receivables way out there.
43:01
SPEAKER_04: And so then they that's a tricky line because they could control if I need to sell more cars, just loosen up my loaning a little bit.
43:08
SPEAKER_04: Like, hey, if 60% loan to value didn't work in, let's go up to 70% loan to value.
43:13
SPEAKER_03: Or they even got, and I think what you said, and this is what I read about it too, is if they're, I'm gonna make some numbers up here, but if their core financing amount was$10,000 to$15,000, they said, hey, let me start bringing in some$20,000 and$25,000.
43:26
SPEAKER_03: That's what it looked like.
43:27
SPEAKER_03: It was too much.
43:28
SPEAKER_03: And that's what they found that like they'd gotten away.
43:31
SPEAKER_03: They still did buy here, pay here, but they got out of the realm of where they had calculated and they had built the business.
43:37
SPEAKER_04: The model changed there.
43:38
SPEAKER_04: So just like you said, keep that in mind.
43:40
SPEAKER_04: Like, that's so good.
43:41
SPEAKER_04: And one last thing I'll leave you with I saw this in the notes somewhere in here that says keeping that day one energy.
43:47
SPEAKER_04: Like when you're the up and hungry and the go getter starting your business, sleeping on the floor, greeting everybody, making sure the coffee's topped off, make sure the bathrooms are clean, all those things, that day one energy, and treating.
44:00
SPEAKER_04: Every customer, like they're the ones that's gonna keep the lights on.
44:02
SPEAKER_04: That's right.
44:03
SPEAKER_04: Like they're deal number 600.
44:05
SPEAKER_04: Like they're the customer that you just have to have today to be able to pay all the other employees.
44:09
SPEAKER_04: If you can keep that day one energy and treat the customer as they should be, as like, thank you so much.
44:16
SPEAKER_04: You allow me to be able to provide for all these people because of your light bulb you bought today.
44:21
SPEAKER_04: No, the blinker fluid, you know, all the stuff, right?
44:25
SPEAKER_04: Thank you for that.
44:26
SPEAKER_04: If you can have that day one energy, and we talk about it, like you finish Ultimate Challenge, people say, Well, what are you gonna wear now?
44:31
SPEAKER_04: I'm gonna wear my work clothes.
44:32
SPEAKER_04: And then I was like, Whatever I can.
44:35
SPEAKER_04: But it's like, you're right, you know, that was fine.
44:36
SPEAKER_04: Okay, I'll cut some more of my pants off, get some more jorts, and get people jacked back up because that you know, that's what here people are here for, about the treatment that you can give them.
44:45
SPEAKER_04: So if you don't want to go belly up, and if you don't want to be one of those 20 or 30,000 people a year, treat that customer like they're the one paying your bills because they are, they're the ones writing the checks.
44:55
SPEAKER_01: Yep.
44:56
SPEAKER_04: And make sure you have that day one energy every day, even when you don't feel like that.
45:00
SPEAKER_03: Man, that's good stuff.
45:01
SPEAKER_03: Thanks for joining us today on the growth trap, why five percent of multi-million dollar companies vanish every single year.
45:09
SPEAKER_03: And check out this episode and many more at Crossroad Conversations Podcast.com.
45:14
SPEAKER_03: And yes, we have all our inventory live at Lewis Superstore.com.
45:18
SPEAKER_02: If you enjoyed this episode, be sure to give it a like, share it with your friends and family, and visit our website to send us questions about what you would like to know about the automotive industry or family business in general.
45:29
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45:30
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45:34
SPEAKER_02: Thank you again, and we'll see you in future shows.