Latest / Big Talk About Small Business / Ep. 52 - Mastering Business Dynamics: Cultivating an Entrepreneurial Mindset

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Ep. 52 - Mastering Business Dynamics: Cultivating an Entrepreneurial Mindset · Big Talk About Small Business

• 0:00
  Speaker 1: Hey everybody.
• 0:05
  Speaker 2: It's Mark Zweig, and we're back again with another episode of Big Talk About Small Business.
• 0:15
  Speaker 2: I'm here with my partner, eric Howerton, and we just had a very interesting meeting this morning about some of the topics that we want to put on the show.
• 0:31
  Speaker 3: Yes, there's just so many things that we want to talk about.
• 0:32
  Speaker 3: There really is, and I think that it was a good exercise, right, the podcast team brought us in, want to learn a little bit more, but I mean, like, I think that we came up with some really good things.
• 0:40
  Speaker 3: You know, and I think that what you and I both definitely agree on is number one we don't want to be another cliche type of business advice podcast.
• 0:54
  Speaker 3: This is not what this is about.
• 0:55
  Speaker 3: This is about look man, entrepreneurism is hard as hell.
• 1:00
  Speaker 3: Yeah, it is, and no one's safe.
• 1:03
  Speaker 2: I still don't feel safe to be honest with you, right like you didn't have to say if I feel worried about things every day and you can, I wake up at 4 am, that's right, man worried about stuff, and I'm less stressed now than I was 20 years ago agreed agreed.
• 1:19
  Speaker 3: So you want to make sure that there's a, there's a place where, like if you're an aspiring entrepreneur or you're in the middle of the weeds, you got a problem, you got problems, but you're going to have them as an entrepreneur, like you know that there's a podcast show or a video show that you got at least a couple of folks that are kind of exposing themselves a little bit here.
• 1:40
  Speaker 2: Yeah.
• 1:41
  Speaker 2: And talking about the problems.
• 1:42
  Speaker 2: We've actually done it, by the way, we didn't just read every single damn book out there on the subject, and now we're going to send you to Patrick Lencioni, or whatever the hell his name is, or some other bullshit artists out there, parasitic, selling success formulas to people.
• 1:59
  Speaker 2: Why is it parasitic?
• 2:01
  Speaker 2: Well, it is because most of these guys want a lot of money.
• 2:05
  Speaker 2: If you ever look into what it is, it's like okay, now I'll come out for six grand a day and I'll straighten you out.
• 2:11
  Speaker 2: Okay, we'll put you on this program, all right.
• 2:13
  Speaker 3: So it's really not advice, it's not wrong, it's more of a sales yeah.
• 2:19
  Speaker 2: I well, it's for a business.
• 2:20
  Speaker 2: I'm not saying some of those people don't help, but it's like if you don't make anything or do anything and instead you get other businesses to just pay, you you're feeding off them.
• 2:31
  Speaker 2: That's true For any you know.
• 2:33
  Speaker 2: Lack of a better term.
• 2:35
  Speaker 3: But anyway, yeah, I think the danger with that is that I mean like here's the deal is, like there's nothing but problems, there's a problem every day, compounds.
• 2:47
  Speaker 1: Yeah.
• 2:47
  Speaker 3: Problems become a big spaghetti bowl.
• 2:50
  Speaker 3: You don't even know where the problems are anymore.
• 2:52
  Speaker 3: It's just everything's a big problem and nobody really understands what the hell's going on in your mind and you really don't know how to fight through it.
• 2:59
  Speaker 2: You know, but I think, and a one size fits all program is not always what you need, and a one-size-fits-all program is not always what you need.
• 3:06
  Speaker 3: It can't man?
• 3:06
  Speaker 3: I tell you what on that?
• 3:07
  Speaker 3: I've read a lot of books and resources.
• 3:09
  Speaker 3: We're not saying that you shouldn't.
• 3:10
  Speaker 3: You should always be growing, learning.
• 3:12
  Speaker 3: It's part of being a business owner is that you're constantly graduating.
• 3:17
  Speaker 3: You've got to learn your experience plus what you're learning, which all you're doing when you're learning and you're reading stuff is trying to prevent at least a little bit of a problem.
• 3:27
  Speaker 3: Sure, you know.
• 3:28
  Speaker 3: And then also, how do you stay organized?
• 3:31
  Speaker 3: How do you get all the mountain of crap that needs to be done?
• 3:33
  Speaker 3: That's my continuous exercise is like how do I, how do I become more efficient to get more things done in a day and check it off the box?
• 3:41
  Speaker 2: And you and you know I constantly think about that because I've got do list after do list after do list, all right For everything.
• 3:49
  Speaker 2: I mean, like I got up at three something yesterday and I wrote a do list of everything I need to do at my house, you know, from the small to the major.
• 3:58
  Speaker 2: But but you know what, to me it always comes down to do the thing you don't want to do most first.
• 4:08
  Speaker 2: If I do that, then I'm always happier all day.
• 4:10
  Speaker 2: But if I procrastinate on that and do six other things that really weren't that critical or urgent, then I'm not going to be here.
• 4:20
  Speaker 3: You retain that stress and then it compensates, right.
• 4:23
  Speaker 2: It does, and so that is such an important part of reducing the stress and getting done.
• 4:29
  Speaker 2: What you have to get done is doing what you don't want to do first.
• 4:32
  Speaker 2: But anyway, sorry to take that.
• 4:35
  Speaker 3: Well, my thing is, I have in my experience, would look at another business or another business owner or read about them or see them.
• 4:46
  Speaker 3: You know, you see the highlight reels right and I think to myself I must have some sort of incompetency, because they obviously are doing better than I am.
• 4:58
  Speaker 2: Wait, but that's like the social media thing where people see everybody having fun on vacation on Instagram and they're like well, I must not be doing it right, because their marriage is perfect.
• 5:08
  Speaker 2: Look at all the fun things they do.
• 5:11
  Speaker 3: I think that that's a human thing, like we look at these other things and we think that there's something that I am lacking, yeah, and so I must be missing a software, I must be missing the process, I must be missing an education, I must be missing all these different things, but the reality is is that's not true at all.
• 5:29
  Speaker 3: And you know, and I think that what, what I guess I'm really trying to get to is like our audience that's out there listening, if there was a resource, like big talk about small business, to where you can understand that there's really no secret magic bullet trick, right, and if, and if you look in history, if you look at any entrepreneur and you really got them down to be genuine like we're trying to be genuine, yes, and you say how did you make it Right?
• 5:54
  Speaker 3: They most likely say it was a gosh dang bloodbath and I thought I was going to freaking fold at any moment.
• 6:00
  Speaker 3: I was always, always worried, like we're talking about, always had too much to do, as always, overwhelmed, you know, and things didn't always look optimistic, but I believed in what I was doing and I drove through the shit to get to the other side, that's.
• 6:18
  Speaker 2: I mean, if somebody asked me, like, what's this true success formula in business?
• 6:22
  Speaker 2: Yeah, I was just thinking about this this morning and it's two things, and I know you'd agree with this.
• 6:27
  Speaker 2: Okay, hard work, yes, okay, damn it hard work.
• 6:31
  Speaker 2: And action, yes, less planning, less talking about it, less angst, more action.
• 6:39
  Speaker 2: You're right, act, act, act, act, act.
• 6:42
  Speaker 2: If you do those two things, I mean, and that's why the small business guy has got no resources, no, I know.
• 6:50
  Speaker 3: Nobody can do it for you.
• 6:52
  Speaker 2: Yeah, but you're not at a disadvantage because you can move fast.
• 6:56
  Speaker 2: Okay, yeah, and you can take action.
• 7:00
  Speaker 3: That's what I've been learning, and you can work hard.
• 7:01
  Speaker 3: I was talking to one of my team members yesterday.
• 7:04
  Speaker 3: I was like look, you know what my life feels like this?
• 7:08
  Speaker 3: I wake up and I push, I just push, and I push and I push.
• 7:13
  Speaker 3: I'm always pushing.
• 7:14
  Speaker 3: Everywhere I go, I'm pushing yeah and you're pushing people too.
• 7:17
  Speaker 3: Pushing people, yeah, pushing shit everywhere.
• 7:21
  Speaker 3: It's like we're bulldozers right, and you can't.
• 7:24
  Speaker 3: I mean like you're not going to push everything in one day or a week.
• 7:27
  Speaker 2: And you can't push everybody the same way.
• 7:29
  Speaker 2: So you got to be give a little gentle push.
• 7:31
  Speaker 2: So then you got to give a major push, but you're always pushing.
• 7:34
  Speaker 2: Yes, no one's going to push for you, it's true.
• 7:40
  Speaker 3: Yes, I mean, dude, that I'm like.
• 7:42
  Speaker 3: My stress really comes up a lot of times from my I don't know what you call it, my fantasy that I have in my brain, probably from being educated.
• 7:53
  Speaker 3: You know that, where everybody, if you're getting paid, then you're pushing what you're getting paid to do.
• 8:01
  Speaker 3: That hasn't happened, man.
• 8:03
  Speaker 3: There's really only the pushers out there are, most of the times, the entrepreneurs, yeah, and then you have some fantastic leaders and organizations that push and then you got a lot of resistors, though, and then everything else is resisted the resistors of the push the resistors of the push.
• 8:22
  Speaker 3: Yeah, what machine would they be?
• 8:24
  Speaker 3: The backhoe?
• 8:25
  Speaker 3: I don't know.
• 8:25
  Speaker 3: I don't know what they would be.
• 8:26
  Speaker 3: They'd just be rain.
• 8:28
  Speaker 3: You know, it washes everything out, right.
• 8:31
  Speaker 2: But yeah, they're definitely out there.
• 8:33
  Speaker 2: But you're right, there is a lot of pushing that you got to do constantly.
• 8:36
  Speaker 2: Oh, you're like constantly pushing and plate spinning.
• 8:39
  Speaker 2: I am gets upset with me, like today.
• 8:42
  Speaker 2: I was asking her like when are you going to get our tax stuff to the accountant?
• 8:45
  Speaker 2: It's due, okay, I mean you know she got mad at me immediately.
• 8:51
  Speaker 3: I'm always pushing.
• 8:54
  Speaker 2: You're one of the greatest pushers I've ever met.
• 8:56
  Speaker 2: Yesterday I was pushing the guys at Janus to freaking.
• 8:59
  Speaker 2: Make a decision on a problem that we have.
• 9:02
  Speaker 2: We keep talking about it.
• 9:04
  Speaker 2: Make a decision and act, Act.
• 9:06
  Speaker 2: But what if it's the wrong decision?
• 9:08
  Speaker 2: Make a new decision.
• 9:10
  Speaker 2: How's that?
• 9:11
  Speaker 3: A lot of times folks get stuck in that man.
• 9:13
  Speaker 3: They don't want to make a decision and then it just gets more complicated.
• 9:17
  Speaker 3: It gets heavier, a lot heavier.
• 9:20
  Speaker 3: You can't postpone things, man.
• 9:23
  Speaker 2: It's a disease, but yeah.
• 9:26
  Speaker 2: So we're out here to help these business owners get them through these problems that they're having, which there's a zillion of, as we both agree, it's not all fun, right, right, and, and we want to be a resource to them that gives very practical advice based on experience and education, both, um, and also try to make them laugh, if we can yeah, maybe so, and laugh at us.
• 9:51
  Speaker 3: It's okay, right, it's it's.
• 9:53
  Speaker 2: It's great to laugh at us, and you should have seen me doing candle pin bowling the other night.
• 9:59
  Speaker 2: You know what that is, no there's these little bowling over there at new york bowl, okay, um, which is now called um the leroy, and it was redone by ted belden, um, and it's a.
• 10:12
  Speaker 2: It's a bar and restaurant.
• 10:14
  Speaker 2: They have canopin bowling in there and these are small lanes.
• 10:17
  Speaker 2: They're big in new england with little pins and little balls, okay, and so, anyway, I was out there, man, and one of my balls, I, I bowled it, and I hit the edge of the lane and it bounced up over my head.
• 10:32
  Speaker 2: It went flying back behind me to this other group of people.
• 10:36
  Speaker 2: Okay, and man, I just, you know, they were laughing at me and I was laughing at my— you didn't mind, you laughed at it.
• 10:44
  Speaker 2: I didn't mind at all, I roll with it, man.
• 10:46
  Speaker 2: I went and tried to continue with the comedy act after that.
• 10:52
  Speaker 3: So tell me, how have you—like in your experience— I want to get into this a little bit that you're an entrepreneur and you've got your business, that you're an entrepreneur, you, you and you've got this, you've got your, you know your business that you're driving for.
• 11:08
  Speaker 3: And we know, as an entrepreneur, no one's really right, no one can predict the future, no one knows the truth yeah but then if you have people like I've I've had people come into my organization that think that they know better.
• 11:23
  Speaker 3: But they don't know everything and they they can really cast.
• 11:28
  Speaker 3: They're trying to doubt, cast and undermine what you're doing.
• 11:32
  Speaker 3: That's the professional manager response to the entrepreneur Usually in your organization and you start to see this as the entrepreneur.
• 11:43
  Speaker 3: What do you do?
• 11:45
  Speaker 2: Well, I think the first thing I'm going to do is try to talk to them and confront it directly.
• 11:50
  Speaker 2: I feel like you're working against me.
• 11:51
  Speaker 2: Why are you so doubtful of what we're trying to do here?
• 11:55
  Speaker 2: Let's get it out on the table right now, because I can't have that.
• 12:00
  Speaker 2: I'm certainly willing to listen to you, but I don't need um.
• 12:06
  Speaker 2: I don't need that.
• 12:08
  Speaker 1: And it's not helpful.
• 12:09
  Speaker 2: Yeah, and that'd be my first step, and you see what happens after that.
• 12:13
  Speaker 2: What do you think?
• 12:14
  Speaker 3: Yeah, no, I agree with that.
• 12:15
  Speaker 3: I think confronting it, you know, I think confronting it as fast as you feel that sense in you as an entrepreneur.
• 12:23
  Speaker 3: Yeah, you know what I'm saying.
• 12:24
  Speaker 3: I mean, it's not like something that's black and white.
• 12:26
  Speaker 3: It's not like they write a letter and say, hey, I doubt Mark Zweig and therefore I think that we should do this and send it to the entire team.
• 12:34
  Speaker 2: No, they will be much more subtle than that.
• 12:37
  Speaker 2: Oh, totally.
• 12:37
  Speaker 2: But the thing is, you know what their response is going to be.
• 12:40
  Speaker 2: What do you want to surround yourself?
• 12:50
  Speaker 2: Whether they say it or not, what do?
• 12:52
  Speaker 3: you want to surround yourself with yes, man Right.
• 12:53
  Speaker 3: You afraid of outside opinion?
• 12:54
  Speaker 2: Okay, then what?
• 12:54
  Speaker 3: do you say to that I don't know.
• 12:56
  Speaker 2: Are you asking me that question?
• 12:56
  Speaker 2: Yeah, I mean, I just want to surround yourself by yes with yes, man.
• 12:59
  Speaker 3: No, no, I mean, it's not.
• 13:01
  Speaker 3: It's not the disagreement that bothers me, it's the approach, it's the intention behind what you're doing.
• 13:08
  Speaker 3: I feel that you don't believe in what this entity is trying to accomplish.
• 13:14
  Speaker 3: I'm the one responsible for this.
• 13:17
  Speaker 2: I'm the one being held accountable, so I make the decisions on this, and if you don't like it, it then please get out of the way I got one of those situations right now where it's a company I'm involved in and I'm trying to tell top management who keeps, lets these people stay on indefinitely.
• 13:39
  Speaker 2: They tolerate it and they never act, you know why, I know why they don't act.
• 13:47
  Speaker 3: Well, my perspective is because, if you're, as an entrepreneur, and you have somebody that is behaving that way, right, they're basically bottlenecking progress, yes, and growth and action because they have perspectives, and growth and action because they have perspectives, but you're afraid to make a move on that a lot of times because you are seeing the value that they're bringing to the company instead of focusing on that 20% that they're bottlenecking.
• 14:18
  Speaker 3: You're looking at the 80%.
• 14:20
  Speaker 3: Oh well, they know how to do this.
• 14:21
  Speaker 3: I can't replace them.
• 14:22
  Speaker 3: It's going to do all this.
• 14:24
  Speaker 2: There's two things You're right Either the manager has to do their job if they're not there and they're already feeling overloaded so they don't want to take it on.
• 14:33
  Speaker 2: Okay, that's a problem.
• 14:35
  Speaker 2: Or B the company does such a crappy job at recruiting, which to me, needs to be a process Always recruiting, always on, always be recruiting and looking for people who are waiting to come into the company.
• 14:50
  Speaker 2: If you had confidence that you could hire somebody else, you wouldn't tolerate it Absolutely.
• 14:58
  Speaker 3: But even if you don't have somebody else, I have yet to see in my experience.
• 15:03
  Speaker 3: If I take that person, I'm like you know what?
• 15:06
  Speaker 3: This isn't working.
• 15:07
  Speaker 3: You need to move on your own way, yeah.
• 15:08
  Speaker 3: And then they leave, and then there's this big hole that everybody in the company's got to fill.
• 15:13
  Speaker 3: That anxiety for the company lasts for maybe 24 hours, but the next day everyone feels better.
• 15:21
  Speaker 3: Exactly, you got rid of the freaking poison it's a cancer.
• 15:26
  Speaker 2: That's what I was trying to tell the the management of this company is.
• 15:31
  Speaker 2: So we'll just let this guy remain on and then he can pollute the minds of five or ten other people yeah, okay, and just continue to work on them with negativity.
• 15:41
  Speaker 2: Yeah, because that's okay for us.
• 15:43
  Speaker 2: We're happy about that, right okay, work man and and they're afraid to confront it directly they don't want to do to you.
• 15:54
  Speaker 2: Yeah, well, they don't want to do the guy's job, or we don't have anybody to replace the guy, or he's got so much institutional knowledge that you know we'll be really screwed if they leave or whatever.
• 16:06
  Speaker 2: Or the other one too we didn't talk about the other employees will be upset because he's very popular with them.
• 16:13
  Speaker 1: Yeah, yeah, yeah.
• 16:14
  Speaker 3: Okay, yeah, and in that situation in my experience, the other employees that will be upset they'll I have had, so I had some that would like a very small portion actually exited because of that decision and that one person exited or that was let go, right, those are the people I mean.
• 16:36
  Speaker 3: It's honestly I hate it because they got poisoned and they don't even know it and so then they go off somewhere else.
• 16:43
  Speaker 3: But if they would have stuck around, you know, got back into the company vision and what everybody else is doing, they would have been really successful a lot faster and sooner and greater than when they exited out.
• 16:54
  Speaker 3: You know, but you can't help those people either.
• 16:58
  Speaker 3: You can only protect the flock.
• 17:01
  Speaker 3: That is positive, that's moving forward, that can see the vision, that can get in behind what the company's doing.
• 17:08
  Speaker 3: They see something for themselves, they see something for their peers, they see something that the company's going to provide to the market and that's exciting to them.
• 17:16
  Speaker 2: And they're happy with that.
• 17:17
  Speaker 2: Yes, yes yes, that but this is a big, big problem for people, totally is.
• 17:23
  Speaker 2: It just comes up over and over and over again in every single organization that I have any involvement with.
• 17:30
  Speaker 3: They all deal with it and the thing is is, like you know, you've got to hit this as fast as you sense that.
• 17:37
  Speaker 3: I don't know what that sense like, I don't know how to describe the sense, but there is a sense that I have and that's happened.
• 17:43
  Speaker 3: It happened just lately with me in a situation where I'm like you know what dude I got.
• 17:48
  Speaker 3: I don't like a dozen of those situations right now.
• 17:51
  Speaker 3: Well, because you can be talking about something within the company and the person makes a comment like it happened to me a couple weeks ago.
• 17:58
  Speaker 3: Somebody made a comment in a meeting something about well, I'm not going to let that happen, that's my department, I make that decision, and I'm sitting over here and I heard it and it was said really quick to me in the middle of this conversation and I was like but as we exited the meeting I started getting this deep sense of like man, I don't like that comment at all Because that means that this other human being somewhere in their life before me has been told by somebody else probably some other angry person at a job that said don't ever let anybody else make a decision on who you bring in in your department.
• 18:43
  Speaker 3: Ever, don't, ever do that.
• 18:45
  Speaker 3: And so that person learned from that without any other knowledge or any anything else, and they have carried that in with themselves, which is basically has kept them from from achieving more things, and now they're bringing it into this organization.
• 19:01
  Speaker 2: It's funny you say that, because I was talking with a guy the other day about something totally unrelated.
• 19:06
  Speaker 2: He wants some help on a real estate project that he came to me with, but what he does is he does change management for big corporations, and he was saying that the biggest problem is these people bring all this baggage, misconceptions, they're basically taught by people wrong and then that becomes.
• 19:26
  Speaker 2: They just keep passing down these sort of dysfunctional ways of dealing with things and it just, you know, it just goes from one person to the next, to the next to the next.
• 19:36
  Speaker 2: It just goes from one person to the next, to the next, to the next to the next, and it gets heavier and heavier.
• 19:40
  Speaker 3: man yeah.
• 19:41
  Speaker 2: And it doesn't work and it's wrong, but it's the way it's done.
• 19:46
  Speaker 2: It's like business writing.
• 19:47
  Speaker 2: I always use that as an example, as per your request, and closed herewith yeah, we wrote like that in 1900.
• 19:59
  Speaker 2: Okay, yeah, nobody writes like that now, and yet you'll still see people writing business letters like that.
• 20:02
  Speaker 2: Why is that?
• 20:03
  Speaker 2: They learn from their boss, that boss learned from their boss, that boss learned from their boss, and it goes back to 1900.
• 20:11
  Speaker 3: So it's just like what you're saying, yeah, and I mean my thing is is like okay, the conversation is like listen.
• 20:16
  Speaker 3: I mean my thing is is like okay, the conversation is like listen.
• 20:19
  Speaker 3: You know, I agree, you should have a perspective on who you bring in, sure, but it's not yours to own.
• 20:25
  Speaker 3: You know what I'm saying this?
• 20:27
  Speaker 3: Isn't this isn't a thousand.
• 20:29
  Speaker 2: This is a mega corp.
• 20:31
  Speaker 3: This is not.
• 20:32
  Speaker 2: Right, I get it.
• 20:34
  Speaker 2: That's such a big topic in itself.
• 20:35
  Speaker 2: I say that all the time.
• 20:36
  Speaker 1: That is such a big topic in itself.
• 20:37
  Speaker 1: I say that all the time.
• 20:37
  Speaker 1: This is not.
• 20:38
  Speaker 2: Megacorp.
• 20:38
  Speaker 3: It is such a big discussion because you cannot treat a small business that's growing like a massive organization.
• 20:47
  Speaker 2: And right there, that is one of the problems with the quote professional managers or some of the books they read like Good Degree.
• 20:55
  Speaker 2: Yeah, okay, sure, this works in a, in a 50 year old company that does two billion dollars a year in revenue and it's a freaking, you know, but that's not where we are.
• 21:05
  Speaker 2: We're a 20 person company over here.
• 21:07
  Speaker 2: Yeah, okay, we're doing five million bucks a year and we're not.
• 21:11
  Speaker 2: We're not chrysler corporation, for god's sakes.
• 21:14
  Speaker 2: We don't want to be we all.
• 21:16
  Speaker 2: Yeah, we don't want to be we.
• 21:18
  Speaker 2: We cross.
• 21:19
  Speaker 2: The lines are real fuzzy.
• 21:21
  Speaker 2: Okay, you, you may be asked to move out of your area to do something else.
• 21:26
  Speaker 2: I may be coming into your area yes, that's the way it's gonna be yeah, it's not this rigid.
• 21:33
  Speaker 2: You know this is yours and only you have a right to say anything and don't accept any challenge to that as a threat to you.
• 21:41
  Speaker 3: Yeah, because your department is not that big.
• 21:45
  Speaker 2: Yeah, your department is like you and two other people.
• 21:48
  Speaker 2: That's right, okay.
• 21:50
  Speaker 3: And you don't think that I should have a perspective on what that looks like, because what's most important in this startup or this company that we're doing is growth, and it's the culture of the passion behind what we're doing, the energy that we're creating You've got to have substantial energy to take action right and drive forward, and that is much different than a battleship over here that's got thousands of people on it.
• 22:17
  Speaker 3: Yes, you know I always liken to like startups is like a speedboat among battleships.
• 22:23
  Speaker 3: Amen, there's some.
• 22:25
  Speaker 2: That's the advantage.
• 22:26
  Speaker 3: It's exactly.
• 22:27
  Speaker 3: That is the thing, dude, I can do it, don't list.
• 22:31
  Speaker 2: Right, you got zero resources.
• 22:33
  Speaker 2: Just enough gas in the fuel tank to do that donut.
• 22:37
  Speaker 1: Then maybe you'll run out.
• 22:39
  Speaker 2: But the big guys cannot move as fast, and you know what here's what I've been knowing they're not nimble.
• 22:47
  Speaker 2: Excuse me, I'm going to use a cliche I have to.
• 22:49
  Speaker 2: It was perfect.
• 22:49
  Speaker 3: We need nimble teams here's what I've realized here lately, mark is like there is this.
• 22:56
  Speaker 3: I guess the broader economy is ripe for small businesses.
• 23:04
  Speaker 1: Oh, it is.
• 23:05
  Speaker 3: Because corporations have gotten so big and you look around in about every industry, the big folks, their innovation strategy they're starting to realize this is they have to buy.
• 23:18
  Speaker 2: They have to buy those small companies to get that name.
• 23:21
  Speaker 2: Sure that yeah thing.
• 23:22
  Speaker 2: If a client, if their client comes and says, hey, man, I really like these black coasters.
• 23:27
  Speaker 3: You've been selling white coasters, but these black coasters are the new thing and the big company's going uh no, you don't need to worry about that, they're not that good.
• 23:34
  Speaker 3: Another six months goes by.
• 23:36
  Speaker 3: They're like I keep hearing this and they have their executive meetings everybody wants these freaking black coasters.
• 23:41
  Speaker 3: It's time like, wow, we're gonna create this ourselves.
• 23:44
  Speaker 3: And they'll be like, yeah, let's try it.
• 23:45
  Speaker 3: They'll do it for a year and they're like we can't create these black coasters.
• 23:48
  Speaker 3: But you got mark zwig over there that's cranking black coasters and say, hey, let's go talk to them, maybe they're interested in in selling their company it's so true.
• 23:57
  Speaker 3: And so, as an entrepreneur, you, if you know that your position is that speedboat and you're you, your goal is to is to potentially exit on the acquisition or you continue to grow it and then you become a battleship.
• 24:12
  Speaker 3: I mean, you've got different choices, sure?
• 24:14
  Speaker 3: I personally don't want to be a battleship.
• 24:16
  Speaker 3: I don't want to run a battleship, right, I don't want to run a battleship, right, I don't want to.
• 24:19
  Speaker 3: I mean, I want to sell to the battleship.
• 24:21
  Speaker 2: It's not fun yeah.
• 24:22
  Speaker 3: It's not fun to me Right.
• 24:24
  Speaker 2: I totally understand.
• 24:25
  Speaker 2: I have mutual respect.
• 24:26
  Speaker 2: I'm a bad, a stable organization manager.
• 24:30
  Speaker 2: I stay away from that situation.
• 24:34
  Speaker 3: I have significant.
• 24:35
  Speaker 3: There's been few entrepreneurs that have been really great CEOs, you know.
• 24:39
  Speaker 1: I mean there's like there are some, though there are some.
• 24:42
  Speaker 3: Yeah, but they're very rare and I've been able to figure out like I don't want to be that executive manager of a major organization, right, but I can find this little need over here I make black coasters.
• 24:54
  Speaker 1: Yeah.
• 25:03
  Speaker 3: And then once I sell that black coaster I I'm gonna go try to make more black coasters and something else.
• 25:05
  Speaker 3: You know, I get it and it works well, so it's a really great opportunity for entrepreneurs.
• 25:07
  Speaker 3: Yeah, and how do you, how do you, how do you find that?
• 25:09
  Speaker 3: That area to where, if I make a black coaster, that I know that a battleship is going to want to buy it.
• 25:14
  Speaker 3: That's kind of the big trick, like.
• 25:16
  Speaker 3: I think that's where Growth.
• 25:18
  Speaker 1: The growth Like where's the exit?
• 25:19
  Speaker 3: Like.
• 25:20
  Speaker 3: You don't need to go to business Harvard Business School to learn how to write an exit plan or have an exit strategy.
• 25:25
  Speaker 3: You just need to know kind of what you're looking to do.
• 25:28
  Speaker 3: You don't have to line it out.
• 25:31
  Speaker 2: It's funny.
• 25:31
  Speaker 2: I was looking at an approach, a company that was approached by another company to be acquired, okay, okay, so it's a smaller company being approached by a larger company who they acquired recently and the acquirer described their acquisition strategy as a certain multiple of EBIT and then with an earn out on top of that.
• 25:56
  Speaker 2: Okay, and my first thought was these guys don't know how to grow a company.
• 26:02
  Speaker 2: That's not, that's old school thinking.
• 26:05
  Speaker 2: These guys are not geared to go out and buy entrepreneurial companies.
• 26:10
  Speaker 2: They want to buy stale, old, stodgy companies and roll them in.
• 26:14
  Speaker 2: Because the entrepreneurial business owner would you have sold your last business if they said Eric, we'll pay you a multiple of 6.2 times EBIT.
• 26:27
  Speaker 2: Okay, hell, no, you wouldn't have, or the number would have been nowhere near what the real value was.
• 26:36
  Speaker 2: Okay, the value was it's a growth engine.
• 26:39
  Speaker 2: Okay, that's the value.
• 26:42
  Speaker 2: But you know, anyway, I I'm not trying to get sidetracked and then earn outs.
• 26:47
  Speaker 2: All they do is make it so you can't integrate the company.
• 26:50
  Speaker 2: So whatever other business you've got now, you've decided to keep that over there on the side.
• 26:55
  Speaker 2: So we're not going to have the synergy we could have if we were one entity going forward.
• 27:02
  Speaker 3: Which I think is a good thing for this podcast is like, if you are an entrepreneur and you're building a small business, there's all.
• 27:07
  Speaker 3: When you start getting into acquisitions and buyouts and stuff, I mean, dude, it gets so complex.
• 27:11
  Speaker 3: I love it though.
• 27:12
  Speaker 3: Yeah, I know you do.
• 27:14
  Speaker 1: But that's the value.
• 27:15
  Speaker 3: I love making deals but that's the value of people listening, right, I mean like, like, but we're advocating for the small business owner.
• 27:23
  Speaker 3: How do you set yourself up?
• 27:25
  Speaker 3: Because when you start getting into that, it gets really exciting.
• 27:29
  Speaker 3: Like, you, as an entrepreneur, have worked tirelessly, you have bled blood on the streets.
• 27:33
  Speaker 3: Nobody believed and all of a sudden you start your black culture, start getting some attention, and then these, these dreams start looking a little bit more real to you.
• 27:41
  Speaker 3: And, by the way, all your support and your staff and everybody's excited.
• 27:46
  Speaker 3: But that's in those moments, like, you can make some pretty rash decisions just so that the deal goes through.
• 27:53
  Speaker 3: Oh, yeah, you can put you into a two or five, five-year circumstance that— they're not going to be happy with.
• 28:00
  Speaker 3: Yeah, that shadows you as the entrepreneur who took all the accountability and risk to begin with.
• 28:05
  Speaker 3: And so I think that if people are listening to this show, we're advocating for you.
• 28:11
  Speaker 3: How do you get yourself ready for that?
• 28:13
  Speaker 3: And then to your point.
• 28:15
  Speaker 3: The best-case scenario would be I want a multiple of my revenue.
• 28:19
  Speaker 3: Yeah, because you can see my growth as hockey stick.
• 28:22
  Speaker 3: Is that all that freaking matters?
• 28:24
  Speaker 3: And, by the way, the market is demanding it for you from you as the bigger company and you don't have the ability to make that happen.
• 28:32
  Speaker 2: So you need to impact your whole company as opposed to what we just do on our own over here, exactly.
• 28:39
  Speaker 3: And if you're leveraging sticks in the market valuation, which is a phantom type valuation, right, it's not an EBITDA, no, so you want a market valuation and you want a revenue-based valuation multiple.
• 28:53
  Speaker 3: Amen, I keep saying this, and then you want to sell 100% of that right out the first deal.
• 29:00
  Speaker 3: Cash is moved, everything's done, it is now your company and, by the way, this is what I would do.
• 29:06
  Speaker 3: My tenure with the new organization will be maybe three months, maybe six months to help with the integration Right and I'm out.
• 29:19
  Speaker 2: I hear you.
• 29:19
  Speaker 2: I mean a lot of buyers don't want that.
• 29:21
  Speaker 2: But a lot of sellers are very unhappy when they find out they no longer have control over the thing and they start seeing all the decisions that the acquirer makes and they don't like them and they get super unhappy and it just deflates them.
• 29:37
  Speaker 3: The only thing that I could see myself being encouraged to stick around.
• 29:40
  Speaker 3: I mean, here's the problem.
• 29:47
  Speaker 3: It's not about sticking around, as, like, I'm unhappy with the fact that I don't want to go into the company more.
• 29:53
  Speaker 3: It's more about the fact that, in my heart, I have to feel like I'm providing value.
• 29:58
  Speaker 3: I have to be superbly valuable without having to think about it.
• 30:02
  Speaker 2: Yeah, or you'll extract yourself out of the situation.
• 30:05
  Speaker 2: Yeah, you don't want to be a dead weight.
• 30:07
  Speaker 3: No, I wouldn't start a business and not be valuable, right?
• 30:11
  Speaker 2: No, I get that totally.
• 30:12
  Speaker 3: You see what I'm saying.
• 30:13
  Speaker 3: Yes, I do, and so the way to maybe do that would be okay.
• 30:21
  Speaker 3: Hey, we bought your company.
• 30:22
  Speaker 3: It is a new division.
• 30:22
  Speaker 3: You're going to keep doing what you're doing because you're doing a good job at it.
• 30:26
  Speaker 2: We want you to continue to be the entrepreneur that you are.
• 30:28
  Speaker 3: It does work sometimes like that I have seen it work and do we have incentive as I continue being this entrepreneur?
• 30:33
  Speaker 3: Yeah, that I'm going to benefit from that financially.
• 30:37
  Speaker 3: Yeah, if that worked, that could be a good circumstance.
• 30:41
  Speaker 2: It can work out like that.
• 30:43
  Speaker 2: I've seen it where suddenly they've got more resources.
• 30:46
  Speaker 2: The acquired company is going to be the platform that the buyer uses to grow, and so they're going to roll other companies under that acquired company, and there's situations that it can work out really well, and there's a lot of situations it doesn't work out.
• 31:02
  Speaker 2: But back on your question, though, like what can you do to prepare yourself for those kind of deals?
• 31:07
  Speaker 2: If you're a business owner, I think the first thing is you've got to be focused on growth.
• 31:14
  Speaker 2: If all you're focused on is your short-term profitability and how much money you can extract, yes, then you're not going to get the big valuation because you won't have the big growth.
• 31:26
  Speaker 2: So you've got to be like putting all your resources into growth okay, and have faith that it's.
• 31:33
  Speaker 2: If you can grow fast enough, you'll also be profitable, because your costs won't grow as fast as your revenue stream.
• 31:40
  Speaker 2: That's right.
• 31:40
  Speaker 2: That's been my experience.
• 31:42
  Speaker 2: Yes, I never really worried about a profit in companies that I started.
• 31:47
  Speaker 3: I feel so much better about myself since you said that now.
• 31:50
  Speaker 2: I never even set a profit goal in my companies.
• 31:52
  Speaker 2: Love it yeah.
• 31:53
  Speaker 2: Now I won't say I don't do that in companies I work for.
• 31:56
  Speaker 2: Yeah, but that's a different.
• 31:58
  Speaker 2: That's a different thing.
• 32:04
  Speaker 3: Yeah, exactly, I'm talking about an established company versus one that's trying to kick off and generate new market interest.
• 32:08
  Speaker 3: Right, and I think that my gauge on continuing like my gauge on recognizing that there is growth opportunity is simply by listening to the clients in the market Of course you go to your existing clients and what else do they need?
• 32:24
  Speaker 3: It's always the easiest place to sell, and if they're bitching about something, that's we got to figure that out.
• 32:32
  Speaker 2: Yep, there's your problem you're going to solve.
• 32:34
  Speaker 2: Just keep stacking that baby and grow.
• 32:37
  Speaker 2: It's so true, it's so, so true.
• 32:39
  Speaker 2: But yeah, I mean, I think the growth rate is critical, you know, having a really great team of people.
• 32:47
  Speaker 2: Absolutely, because they do know you're going to be demotivated post-transaction.
• 32:51
  Speaker 2: They don't want everybody to leave.
• 32:53
  Speaker 2: Somebody's got to be back there that knows how this thing is going to do.
• 32:57
  Speaker 2: It's critical.
• 32:59
  Speaker 3: Are you texting in the middle of our?
• 33:02
  Speaker 2: podcast.
• 33:03
  Speaker 2: I'm just responding to a question, I'm sorry.
• 33:05
  Speaker 2: I mean, there's things that are urgent.
• 33:10
  Speaker 2: Are we good multitaskers?
• 33:12
  Speaker 3: We have to be.
• 33:13
  Speaker 3: I mean, can you can?
• 33:14
  Speaker 3: All right, I want you to continue to talk as you're responding on your text.
• 33:16
  Speaker 3: Go for it.
• 33:17
  Speaker 3: Well, what am I supposed to say?
• 33:17
  Speaker 3: What do you?
• 33:18
  Speaker 3: To continue to talk as?
• 33:18
  Speaker 2: you're responding on your text.
• 33:19
  Speaker 2: Go for it.
• 33:19
  Speaker 2: Well, what am I supposed to say?
• 33:21
  Speaker 2: What do you?
• 33:21
  Speaker 3: want me to talk about.
• 33:22
  Speaker 2: You totally forgot about them.
• 33:23
  Speaker 2: No, but no back on what creates a good business to buy.
• 33:30
  Speaker 2: I mean, I think, having the good team, having really good numbers, having the history of growth and the good numbers is showing continuous growth of new sales.
• 33:48
  Speaker 3: Yeah, but that's critical.
• 33:49
  Speaker 2: But, then also you've got to just have basic, good numbers on all the metrics on how that thing is performing.
• 33:54
  Speaker 2: Gotcha, okay, good accounting.
• 33:56
  Speaker 2: Yeah, nobody wants a big surprise Like oh shit, we forgot we owe $2 million to somebody.
• 34:02
  Speaker 3: It's not on our balance sheet though, by the way you know, good numbers is having accurate, accurately recorded information from the company since day one.
• 34:13
  Speaker 2: Yes, yes, that is like any company that I was going to have, any size that I was trying to get ready to sell.
• 34:19
  Speaker 2: I would have a history of audited financials.
• 34:21
  Speaker 2: Okay, yeah, okay, so I'm going to have at least three years of that.
• 34:27
  Speaker 2: There's a cost to that, but it gives the buyer a lot more faith.
• 34:32
  Speaker 3: You've done a lot of mergers and acquisitions and stuff.
• 34:36
  Speaker 3: Yeah, I have For decades haven't you yeah, yeah.
• 34:39
  Speaker 3: I have For decades.
• 34:40
  Speaker 3: Yeah, yeah, I have.
• 34:40
  Speaker 3: I've done a lot of that.
• 34:41
  Speaker 3: Tell us a little bit about that.
• 34:42
  Speaker 3: As far as, what was your experience when we say you've done a lot of work, what have you been involved in?
• 34:48
  Speaker 2: Oh, several hundred transactions.
• 34:50
  Speaker 2: I mean myself.
• 34:51
  Speaker 2: I think I bought four or six companies, okay.
• 34:55
  Speaker 2: But as far as clients go, I've been involved in hundreds of them, everything from negotiation of the deal to valuing the business, to preparing a business to sell and recasting their numbers to a buyer to make it look better than it is, to planning to planning the integration.
• 35:14
  Speaker 2: Okay, yeah, no, I love ad backs.
• 35:18
  Speaker 2: Okay, they want to start talking multiples of EBIT?
• 35:20
  Speaker 2: Okay, I'm going to show you how I can take 700,000 and turn that into a 3 million EBIT.
• 35:24
  Speaker 2: Then you can give me a multiple on 3 million instead of 700,000 because of all the ad backs I'm going to put back in there.
• 35:31
  Speaker 2: What is it?
• 35:31
  Speaker 2: What do you mean by that?
• 35:32
  Speaker 2: Ad backs are things like insurance savings, getting rid of the CFO, getting rid of all the consultants, getting rid of the attorney, getting you know.
• 35:42
  Speaker 3: And then all of a sudden, so now you no longer have all those expenses, right?
• 35:45
  Speaker 2: So it's going to be thrown back into EBIT.
• 35:47
  Speaker 2: Okay, that's the way you do it.
• 35:50
  Speaker 3: It's like okay, so you think that our EBIT does this, but what if I just we?
• 35:54
  Speaker 2: don't need all this.
• 35:55
  Speaker 2: It's a recast of the EBIT.
• 35:57
  Speaker 2: Okay, it's a recast of the EBIT.
• 35:59
  Speaker 2: Okay, you take the entire employee bonus program and add that back into profitability.
• 36:03
  Speaker 2: There's a lot of things you could do, but yeah, I've been involved in every aspect of it.
• 36:09
  Speaker 2: Okay, from A to Z.
• 36:11
  Speaker 2: Okay, so, from finding companies to buy you or finding companies that will sell to you, all the way through to making it work once somebody else owns it.
• 36:26
  Speaker 3: The integration.
• 36:26
  Speaker 3: Yeah, the integration, I've done all that which is a whole beast of it itself, right?
• 36:33
  Speaker 3: I?
• 36:33
  Speaker 2: mean the biggest issue that you run into, I think, is well inexperienced buyers.
• 36:39
  Speaker 2: The people you want to deal with are experienced buyers.
• 36:41
  Speaker 2: You want to deal with the experienced buyers.
• 36:43
  Speaker 2: You want to deal with the experienced buyer.
• 36:45
  Speaker 2: It's going to always be easier to deal with and more realistic.
• 36:49
  Speaker 3: Because they know what they're going to need to do to integrate.
• 36:54
  Speaker 2: Yes, exactly, and they'll also be better able to structure the proper deal.
• 37:01
  Speaker 2: That's going to make it realistic.
• 37:05
  Speaker 3: I think it's okay that if a buyer and a seller recognize if you went into that situation, you already know that it's not going to be completely peachy.
• 37:18
  Speaker 1: No.
• 37:18
  Speaker 3: You know what I'm saying?
• 37:18
  Speaker 3: Right, I mean integration.
• 37:19
  Speaker 3: It's not going to be completely peachy.
• 37:19
  Speaker 3: No, you know what I'm saying?
• 37:20
  Speaker 3: Right, I mean integration.
• 37:21
  Speaker 3: It's like getting married.
• 37:24
  Speaker 2: Yeah, it's not going to be perfect.
• 37:25
  Speaker 3: It's not going to be perfect.
• 37:26
  Speaker 2: Can you work it out?
• 37:27
  Speaker 2: Yeah, somebody's going to leave toothpaste in the sink or whatever.
• 37:30
  Speaker 2: That's right.
• 37:31
  Speaker 2: And how do you work through that together?
• 37:33
  Speaker 2: Right, that's a good point.
• 37:35
  Speaker 3: Well, the deal structure to it is kind of I mean, it is that like premarital counseling of where, okay, here's the big high-level things that we're agreeing to do on this integration, and this is what's fair, and you, as the seller, have a duty to your team to ensure that they don't get put into a whirlwind Right.
• 37:54
  Speaker 3: To ensure that, like, they don't get put into a whirlwind, because I mean, you can take something that you built, built a really great team, and help folks out, and then you know, within three months you could really find yourself like that whole thing got decimated.
• 38:11
  Speaker 3: You know, and I mean you're trying to get a deal.
• 38:15
  Speaker 2: Yeah, I mean I think sometimes the owner is so anxious to get out and so enamored with the money that they don't think about that.
• 38:24
  Speaker 2: I mean I made that mistake probably the first time around selling to private equity.
• 38:28
  Speaker 2: That the second time around we did an internal sale for that.
• 38:33
  Speaker 2: I mean that's a big part of the reason.
• 38:34
  Speaker 2: Yeah, you know it's because it was just better for everybody that at least you know that the culture is understood, at least you know the buyer can come in and ruin things, as you said, like, let's throw out that, that uh bonus program that pays everybody based on how the overall company does, and let's pit everybody against each other and see how that works.
• 38:56
  Speaker 3: so when you were helping other companies and you would go out and I mean you would help go find a buyer for the company right.
• 39:03
  Speaker 3: What were like you were looking?
• 39:05
  Speaker 3: You already said it, looking for experienced buyers, Right.
• 39:08
  Speaker 3: But I mean, are you looking at the culture of the selling company and the culture of the buying company before you approach a buying company?
• 39:17
  Speaker 3: I mean, how would that work Sometimes, Okay, Sometimes.
• 39:19
  Speaker 2: Okay, sometimes, sometimes you've got to.
• 39:22
  Speaker 2: Let's say, you know, it just depends on the situation.
• 39:24
  Speaker 2: If you've got a really successful company, then you want somebody as a buyer who's going to respect that.
• 39:31
  Speaker 2: Yeah, if you've got a company that's in trouble financially, you just need a buyer period.
• 39:38
  Speaker 2: Yeah, yeah, culture goes out the door.
• 39:40
  Speaker 2: Survival rules first, yeah, yeah, so there's a lot of distinction there.
• 39:46
  Speaker 2: Based on the scenario, how would you sell a company that's that's not doing well oh well, I've done that many times yeah, I've always been intrigued.
• 39:56
  Speaker 2: How does that happen?
• 39:57
  Speaker 2: Because they've got talent in and let's say it's a.
• 40:00
  Speaker 2: It's an industry that has a hard time hiring people.
• 40:03
  Speaker 2: They've got clients or customers, so they've got volume and they've got talent, but their management's not good, as evidenced by their financial performance.
• 40:14
  Speaker 2: So you can simply educate, you can quickly assess what they really need to be successful and you can share that with potential buyers.
• 40:26
  Speaker 3: Yeah, and so you're kind of you then, as you're going out and finding a buyer on behalf of this seller that's in a bad situation, like you're looking for a buyer that probably has that need or understands that need to begin with, like hey, listen, they're not doing that well financially.
• 40:43
  Speaker 3: But I've been able to kind of identify the areas the owner knows.
• 40:47
  Speaker 3: This is well.
• 40:48
  Speaker 3: The owner's a little tired.
• 40:50
  Speaker 2: Yeah, his brother-in-law's there and makes half a million bucks a year and spends another $500 on their expense report and he won't deal with it.
• 40:57
  Speaker 2: But you can, but you can exactly.
• 41:01
  Speaker 2: I mean, there's a million things like that.
• 41:02
  Speaker 3: So the buyer's like okay, this is worth, okay, we can make an offer, because we believe that the additional accounts that they have, plus the seven out of the 15 people we really could use their talent and we can diversify them and make ends meet better.
• 41:19
  Speaker 3: And we'll get rid of the other eight of them that are because of nepotism or whatever else, yeah, exactly.
• 41:26
  Speaker 3: And so they can clean it up.
• 41:27
  Speaker 3: But the seller is pretty happy because they had an accident.
• 41:31
  Speaker 3: They get off the hook.
• 41:38
  Speaker 2: Yeah, they're sitting there like ready to lose their house because they personally guaranteed their line of credit and it's maxed out and they can't meet their payroll or whatever I mean.
• 41:42
  Speaker 2: So those are the kinds of situations where culture I don't even think about culture.
• 41:47
  Speaker 2: Right In that circumstance, yeah, but I mean yeah, I mean sure, if you've got a successful company and you got people who want to remain on board, you know, I think it's important to understand what the history of the buyer is and how their deals have worked out.
• 42:01
  Speaker 2: Yeah, with other companies, yeah, and have they worked out well or have they not worked out well, and you know?
• 42:08
  Speaker 2: So that's the kind of thing that you're going to really want to research.
• 42:11
  Speaker 3: Even in some circumstances you might want a thrashing top buyer, because that's the only buyer that's going to make sense of this business that's not doing well at all.
• 42:22
  Speaker 2: Yeah, absolutely so.
• 42:24
  Speaker 2: Anyway, it's fun.
• 42:25
  Speaker 2: I like doing it.
• 42:26
  Speaker 2: I think small business owners you know that to me has always been the distinction between small business and entrepreneurship is the value creation as opposed to what you extract along the way.
• 42:39
  Speaker 3: Okay, yeah, because you get in that selling circumstance, can you?
• 42:43
  Speaker 3: Are you selling something of value, or have you?
• 42:46
  Speaker 3: Are you selling nothing that has value anymore because you've sucked it all?
• 42:49
  Speaker 2: dry.
• 42:50
  Speaker 2: I've seen both scenarios.
• 42:52
  Speaker 2: Yeah, the small business owner has sucked it dry every year and then they want to get paid a lot of money for it at the end not going to happen.
• 42:59
  Speaker 2: Okay, you know, a lot of companies can be profitable by simply not spending money on stuff.
• 43:08
  Speaker 2: I could take almost any company and make 20% or 30% a year if it's been around a long time.
• 43:13
  Speaker 2: Profit for a year Okay, you can make 20% or 30%.
• 43:18
  Speaker 2: How do you do that?
• 43:19
  Speaker 2: You spend no money on development.
• 43:21
  Speaker 2: Cut all your marketing expenses, fire everybody who's doing anything um overhead wise that you don't need, and sure you'll be real profitable.
• 43:31
  Speaker 2: But where will you be next year?
• 43:32
  Speaker 2: And yeah, don't make any capital expenditures.
• 43:38
  Speaker 2: I I mean.
• 43:38
  Speaker 2: So you know.
• 43:40
  Speaker 3: And that whole year you just lost a year of not gaining value, right.
• 43:44
  Speaker 3: And then the second year you're going to be spending to gain value, but you're not going to see that value.
• 43:51
  Speaker 2: You've got a need to put money into the company which is another thing.
• 43:55
  Speaker 2: You know, whenever you look at buying a company, one thing's the price, but the other thing is how much do I have to invest in this company to get it to where it's going to function, you know, but anyway.
• 44:08
  Speaker 2: So there is a big distinction between entrepreneurship and small business, which relates to value creation.
• 44:15
  Speaker 2: As you said, many small business owners extract everything.
• 44:18
  Speaker 2: Then they expect to get paid for it.
• 44:20
  Speaker 2: They're very disappointed with their exit.
• 44:23
  Speaker 3: They, they okay heard they've read stories about that kind of shit and then you got somebody that maybe had to have that happen.
• 44:30
  Speaker 3: But I can promise you if you have a company that you've bled dry and you're not investing in growing in yeah then you, you were able to make a really great income on it all that entire time, and then you sell it for a lot more than it's worth.
• 44:43
  Speaker 3: A it's mostly a pipe dream.
• 44:45
  Speaker 3: B I bet you that it's not completely a genuine circumstance, because it just doesn't happen.
• 44:51
  Speaker 3: I mean, it'd be like buying a house you walk in and somebody has gutted everything inside and it looks like hell, and then you want top dollar for it.
• 45:00
  Speaker 3: Just oh, my god, I see it all the time in this real estate market.
• 45:03
  Speaker 2: Yeah, I love to talk about house buying because that's that's a great example.
• 45:08
  Speaker 2: It's like well, this guy saw on my street, you know there's three of my old houses for sale that I did on spec in fayetteville.
• 45:15
  Speaker 2: Right now the cheapest one is like 500 bucks a square foot.
• 45:19
  Speaker 2: Wow, okay, some of them are over six.
• 45:22
  Speaker 2: Geez, all right, which is a lot in Fayetteville.
• 45:25
  Speaker 2: Yeah, you know, and you know one of those houses there's like a 2000 square footer for sale for 1.2 right now, right next door.
• 45:34
  Speaker 2: They probably think, oh my God, my house is worth at least a million.
• 45:37
  Speaker 2: You know your house is worth 500 because it's a pile of crap and it needs 700 spent on it to make it look like this one over here that they're getting 1.24.
• 45:51
  Speaker 2: So, yeah, that same phenomenon exists in business selling.
• 45:54
  Speaker 3: Just because the market's great doesn't mean your business is going to be freaking.
• 45:58
  Speaker 2: Yeah, I'll never forget one of the best ones I work with this attorney.
• 46:02
  Speaker 2: I've mentioned him before George Cristodulo.
• 46:04
  Speaker 2: He is the best.
• 46:05
  Speaker 2: He's 76 years old, triple Harvard grad.
• 46:09
  Speaker 2: He was the only guy who was on outside director on Swag White.
• 46:12
  Speaker 2: Yeah, the first time we owned it.
• 46:14
  Speaker 2: Harvard undergrad, harvard law, harvard MBA.
• 46:17
  Speaker 2: Okay, grew up poor.
• 46:19
  Speaker 2: Wow, okay, very, very direct guy.
• 46:23
  Speaker 2: So we were selling this privately held environmental firm to a publicly traded company, okay, and we recast the numbers and we're getting them a ridiculous number which you know.
• 46:37
  Speaker 2: At the time, I mean, first off, let's say this company was doing maybe 21 million a year and it made like a $600,000 profit.
• 46:45
  Speaker 2: Okay, and in our industry at that time, normal profitability, let's say, would have been at least 10%.
• 46:52
  Speaker 2: So that'd be 2.1 million and it would probably have been worth about 70% of revenue, which would be about 14.
• 47:00
  Speaker 2: So we're getting like $19 million out of it with a $600,000 profit.
• 47:06
  Speaker 2: So what's the multiple of EBIT there?
• 47:10
  Speaker 1: It's crazy, right.
• 47:11
  Speaker 2: But we did recast the EBIT to show over $3 million, by the way, which is how we got to the $19 million number.
• 47:18
  Speaker 2: But the point of it is so we got these 40 owners of this company, you know, and this guy's got like half a percent You're talking about on the selling company, On the selling company.
• 47:29
  Speaker 2: And we're having this meeting where we're working all these details out and they're all there and this guy's like, well, no, wait a minute.
• 47:36
  Speaker 2: You know, it's like my brother-in-law has a high-tech company and he sold it and got like three times revenue or whatever.
• 47:45
  Speaker 2: And george hears this and he goes what the f does that have to do with anything here?
• 47:52
  Speaker 2: He just shuts the guy because we're not a high-tech company.
• 48:01
  Speaker 2: It was just fantastic.
• 48:02
  Speaker 3: And he was an owner.
• 48:04
  Speaker 2: Yeah, george's own contract.
• 48:06
  Speaker 2: He's like holding us up, george's just an attorney advising the deal.
• 48:12
  Speaker 2: Okay, he's like what the F does that have to do with this?
• 48:14
  Speaker 2: You're not a high-tech company.
• 48:17
  Speaker 2: Move on yeah just shut the guy down.
• 48:20
  Speaker 3: Boom like that but I mean that's a great illustration, though.
• 48:24
  Speaker 3: I mean we can really, we as entrepreneurs being the fact that we're dreamers not to be cliche, but we are dreaming, we're visualizing something doesn't really exist, or maybe yes, that would make it better we can fantasize about some of these things that we hear about and put ourselves in that, because we can see it clearly, like everybody that's an entrepreneur can really see the end, or they're not going to be an entrepreneur.
• 48:49
  Speaker 2: Right, You've got to have the quote vision of what you're trying to do Exactly.
• 48:52
  Speaker 2: Yeah, Believe it's possible.
• 48:55
  Speaker 3: The warning sign is don't fool yourself, watch out for fooling yourself, watch out for your own mind playing tricks on that scenario and be realistic and build a freaking company of value by investing in that company, and you're going to be investing in it for years.
• 49:09
  Speaker 3: It's going to take time.
• 49:11
  Speaker 2: And you're going to work your ass off and you're going to have lots of bad shit happen.
• 49:16
  Speaker 2: Yes, right, and you're going to have lots of bad shit happen.
• 49:19
  Speaker 2: Yes, right, and you've got to take action.
• 49:21
  Speaker 3: Incap baby.
• 49:22
  Speaker 2: Yeah, don't sit there and just lament your problems.
• 49:27
  Speaker 3: Everybody hates me.
• 49:28
  Speaker 3: I always have problems.
• 49:30
  Speaker 3: Why don't everybody just get things done?
• 49:31
  Speaker 2: Don't get paralyzed like a deer in the headlights that somebody's going to run over.
• 49:37
  Speaker 3: Don't be scared to take care of problems, that you have a gut sense about this person and it will not ever, ever turn around.
• 49:46
  Speaker 3: They will not see an epiphany.
• 49:48
  Speaker 3: Exactly, you cannot invest in that.
• 49:50
  Speaker 3: You have the conversation as fast as possible.
• 49:53
  Speaker 3: You be direct about it and you don't like it.
• 49:55
  Speaker 3: And it's understood that if it doesn't change that, you're going to be gone.
• 49:58
  Speaker 3: Be direct about it and you don't like it.
• 49:58
  Speaker 3: And it's understood that if it doesn't change, that you're going to be gone.
• 50:01
  Speaker 2: And then, if they don't change, dude, if they don't see the opportunity in front of them and the good things that you're doing, and the and the and the, the wonderful situation they could have if they change their freaking attitude move on.
• 50:16
  Speaker 2: Okay, take care of it, man.
• 50:20
  Speaker 2: And that wraps up the entire conversation.
• 50:22
  Speaker 2: We just came full circle, I know, I mean we.
• 50:25
  Speaker 3: it's almost like we were prepared and organized for this, I know, but we weren't.
• 50:33
  Speaker 2: We weren't, because we are prepared and organized.
• 50:36
  Speaker 2: We are entrepreneurs.
• 50:37
  Speaker 2: Okay, yeah, we have a thought process.
• 50:37
  Speaker 2: We are entrepreneurs.
• 50:38
  Speaker 2: Okay, yeah, we have a thought process.
• 50:40
  Speaker 2: We have a philosophy.
• 50:42
  Speaker 2: The philosophy guides the decision at the moment.
• 50:45
  Speaker 2: Love it.
• 50:46
  Speaker 2: Without a philosophy, everything's a crisis.
• 50:49
  Speaker 2: With a philosophy, you've got some guardrails around it.
• 50:55
  Speaker 2: You know where you're, you have your compass, yes, and even if you haven't encountered, that before you know where you're, even you have a, you have your compass, yes, and even if you haven't encountered that, before you know where the hell you're trying to go, you're I thought of this great analogy the other day about being entrepreneur you're a pioneer, yeah, you're a pioneer man right, you're like lewis and clark, like blazing across.
• 51:12
  Speaker 3: You don't know what the freaking hell you're gonna get into, but you know you're going there, yeah, and by all hell and high water, you're going to get there, and there's going to be some trauma along the entire way.
• 51:26
  Speaker 3: Exactly, that's the way it is, man, so don't be discouraged right, Don't be discouraged.
• 51:31
  Speaker 2: Keep you know, stay in the game.
• 51:35
  Speaker 1: Yeah.
• 51:35
  Speaker 2: You won't win the game if you're not in the game.
• 51:37
  Speaker 2: All right, you'll never win the game, so stay in the game.
• 51:42
  Speaker 2: It's an iterative process.
• 51:45
  Speaker 2: You're learning all the time.
• 51:47
  Speaker 2: You're going to be changing direction, you're going to be changing your mind sometimes, but you know where you're trying to go.
• 51:55
  Speaker 3: Yeah, and you may never arrive at your final destination, but you had one hell of a ride enjoy that.
• 52:02
  Speaker 2: Enjoy the journey.
• 52:03
  Speaker 2: Enjoy the journey.
• 52:04
  Speaker 2: Enjoy the journey, even though it's got struggles.
• 52:07
  Speaker 2: Think about what the alternative is.
• 52:09
  Speaker 2: You'd be bored, exact, going to corporate america every day and being bored, god man nuts, yeah, it's like I'm just looking forward to lunch.
• 52:17
  Speaker 2: Where are we going to go to lunch today, eric?
• 52:18
  Speaker 2: I'm thinking about it.
• 52:20
  Speaker 3: Applebee's or TGI Fridays.
• 52:22
  Speaker 3: Anytime I think about corporate America, I think about when I went.
• 52:26
  Speaker 3: I was a young entrepreneur, my first business, and I'd go to the post office because it was back in the yeah days when we mailed shit, had drop some shit off, get some stuff to people, and I got there one time at 4.59.
• 52:40
  Speaker 3: Yeah, and they slammed the door and Freddie— and this lady saw me running up hysterically and I could see her through the glass.
• 52:48
  Speaker 3: I'll never forget her face.
• 52:50
  Speaker 3: She just looks at me and locks the door and I go to open it and she just walks off.
• 52:58
  Speaker 3: Yep, and I look at my watch and it's like five on the dot and right just between me and this glass is like thousands of dollars, man, Because it was $4.59 and some change.
• 53:11
  Speaker 3: And, by the way, there's like 10 people customers in there that got in before 5 o'clock.
• 53:16
  Speaker 2: It sounds like the Fayetteville Post Office.
• 53:17
  Speaker 2: It was the Fayetteville Post Office.
• 53:18
  Speaker 2: It was the Fayetteville Post office.
• 53:19
  Speaker 2: It sounds like it.
• 53:20
  Speaker 2: I bet I know who that was.
• 53:22
  Speaker 2: It's exactly where it was.
• 53:24
  Speaker 2: Was it the older Asian lady?
• 53:26
  Speaker 2: By chance?
• 53:27
  Speaker 2: I know her.
• 53:29
  Speaker 2: She still works there.
• 53:32
  Speaker 2: Okay, I know her.
• 53:35
  Speaker 2: A friend of mine dated her.
• 53:37
  Speaker 1: Okay, I know her.
• 53:38
  Speaker 1: A friend of mine dated her Okay.
• 53:44
  Speaker 2: All right, hey, we need to wrap this up today.
• 53:46
  Speaker 2: All right, we are looking for questions.
• 53:50
  Speaker 2: Yes, if there is a question that we can answer for you, send it on to us.
• 53:57
  Speaker 2: We will throw it in the hat, ooh, and we will pull it out and we will answer it and we will give you attribution for the question.
• 54:07
  Speaker 2: Yeah, or we won't.
• 54:08
  Speaker 2: If you don't want us to Just say anonymous, yeah, just say anonymous.
• 54:11
  Speaker 2: But we want your questions.
• 54:13
  Speaker 2: Yeah, we're equipped to answer anything.
• 54:15
  Speaker 2: We don't know everything.
• 54:17
  Speaker 2: We're equipped to answer anything.
• 54:19
  Speaker 1: We don't know everything, but we'll sure say something.
• 54:21
  Speaker 1: We sure got an opinion on it.
• 54:23
  Speaker 2: That's right, man.
• 54:24
  Speaker 2: So but seriously, we do.
• 54:26
  Speaker 2: We do want to hear from you guys out there.
• 54:28
  Speaker 2: We want to address what you're dealing with.
• 54:31
  Speaker 3: We know you have problems yeah, let's, let's say that right out of the gate.
• 54:34
  Speaker 3: Yeah, yeah, you have problems.
• 54:36
  Speaker 2: Yeah, you got problems, you got big problems, you got big problems.
• 54:41
  Speaker 3: Okay, that's like therapy, I mean, you can't solve them.
• 54:44
  Speaker 3: Therapy for entrepreneurs.
• 54:45
  Speaker 2: Yes, yes, it is so.
• 54:48
  Speaker 2: We're here for you.
• 54:49
  Speaker 2: We want to help you.
• 54:50
  Speaker 2: All right, we're not selling you a damn thing, by the way.
• 54:56
  Speaker 2: All right, that's right, there's nothing we're trying to sell you Right here.
• 55:03
  Speaker 2: All right, we don't have an $8,000 a day program for you to sign up with.
• 55:08
  Speaker 2: We're not frigging coaches, okay so?
• 55:14
  Speaker 2: Send us your shit.
• 55:15
  Speaker 2: We want to help.
• 55:18
  Speaker 2: It's really.
• 55:20
  Speaker 2: We got time to do it, yeah, and we enjoy doing it.
• 55:23
  Speaker 3: I mean, obviously this is really fun.
• 55:25
  Speaker 2: It's the best thing in the world helping other people be successful, and when they tell you hey, I did what you suggested and it worked.
• 55:32
  Speaker 3: Thank you.
• 55:33
  Speaker 3: Yes, I'm glad that that was there.
• 55:34
  Speaker 3: That's fantastic.
• 55:36
  Speaker 3: That's all we want.
• 55:36
  Speaker 2: That's it.
• 55:37
  Speaker 2: That, yes, why that was there?
• 55:37
  Speaker 2: That's fantastic, that's all we want.
• 55:38
  Speaker 2: That's it, that's all we want.
• 55:39
  Speaker 2: So until next week.
• 55:39
  Speaker 2: This has been an episode of Big Talk about Small Business.
• 55:45
  Speaker 2: Tune in and thanks a lot.
• 55:53
  Speaker 1: Thank you.
• 55:54
  Speaker 1: Thanks for tuning into this episode of Big Talk about Small Business.
• 55:59
  Speaker 1: If you have any questions or ideas for upcoming shows, be sure to head over to our website, wwwbigtalkaboutsmallbusinesscom and click on the Ask the Host button for the chance to have your questions answered on the show.
• 56:13
  Speaker 1: Stay connected with us on LinkedIn at Big Talk about Small Business and be sure to head over to our website to read articles, browse episodes and ask questions about upcoming shows.