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Learn about Growing Profits and Transferable Value as Business Advisors 'Get Naked' about Client Cases and Running a Thriving Advisory Business. Host George Sandmann is an Author, Entrepreneur and Founder of Growth-Drive, the #1 best-selling business advising system.
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Hi, this is George Samman. I'm the founder and CEO of Growth Drive. Growth Drive is the number one best -selling business advising platform, and this is our podcast, The Business Advisor Hot Seat. Now in the hot seat, you're going to hear from industry leaders, thought leaders, your colleagues who are going to share tips, techniques, war stories about building a thriving advisory business based on delivering client wins. We're going to get into it. We'll get into it about the Growth Drive methodology, the clarity software, what we see out in the world.
so much more than just the system. And I'm also the author of The Growth Driving Advisor, which is based on over a decade of being an advisor to advisor, working with you and your colleagues, helping them build their practices, helping them through client engagements. And it's really proven strategies for leading businesses from stuck to best in class. Check it out. So strap in. We're going to light this up. Here we go.
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Our guest this week is my friend and colleague, Carl J. Cox of Forty Strategy. He's the author of Lost at CEO. Carl is super sharp. He gets hired by businesses and by private equity groups to come in, design strategy and make sure that that strategy gets implemented. We have a fantastic conversation. So settle in. Here we go.
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This episode is brought to you by Growth Drive. Growth Drive is the number one best -selling business advising platform with training, technology, and support you need to get the success you want. Find a way to engagements, expand your reach and impact, and build a thriving advisory business based on delivering client wins. Growth Drive, find out more at growthdrive .com.
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Well, welcome everyone. And I'm excited for this episode. In this episode, we have Carl J. Cox. Carl is the author of Lost at CEO. Carl is a deeply experienced and expert in strategic planning and importantly in the strategic doing and implementing. So Carl, welcome. Thanks a lot for agreeing to be on the show. George, it's absolutely fantastic. I'm excited.
to talk about what you created and how we've been able to implement it and just all the exciting things I think that's going on right now, being able to tackle tools and then more importantly, help our clients be more successful. So I'm really looking forward to today's conversation. Awesome, thank you. And maybe we should start Carl with, if you could take a second, describe who you are, what you do, why do clients hire you? Yeah, great question, George. We're 40 Strategy, that's the name of our company and once again,
You might ask why we call it 40 strategies because most organizations spend about 2 % of their time on strategy, which is equivalent to about 40 hours per year if you looked at one person's life. And so that's not that much. And the problem with that is internally within companies, you don't get very good. The other part that's interesting is even if you did hire McKenzie, which most small to medium -sized businesses do not have the money to do that, it's about a half a million dollars to get in with somebody. And I'm not just picking on McKenzie. That's just all the big firms.
have about a 20, only a 20 % implementation rate. That drives me crazy. Like who can afford a small to medium sized company to go through an implementation? But the old saying goes, and it's true, nobody gets fired for hiring McKenzie. So I come in and I'm motivated when those things fail. Except my life has been in the small to medium sized business. So when I'm talking, what does that mean? Small, meaning somebody's figured out the product or service or what they're selling.
So they have, you know, that's what I call small. To up to medium size. So meaning they have hundreds of employees, perhaps even thousands of employees, and they figured out the higher end. And we get brought in for two particular cases. One is the great company that just wants to get to the next level. And we help design a strategic plan for them. We make sure it's focused, a world -class plan. So instead of having that 90 to 80 % failure rate, depending on who you are,
terms of strategic planning, we get our clients to be in the top 10 % of success. So they do actually get things done. So that's number one. The second set of clients I get into is I get hired by private equity firms in a fair amount. Why? Usually in private equity hiring is because something is not going well. And so I come in and turn around situations with them. Typically, we fix something short term first. What are the short wins or fixes that we can do? And then we start building a long term plan from there. But
What's fun is we've had crazy good results and I have a passion now. You may ask George, how did I learn from this? It wasn't magic. I didn't just put up a shingle and say, I'm going to be an XYZ consultant. I was with seven different companies through my career that went from two X to seven X in size. And I actually thought the really weird part, George, when I opened up a strategic planning software company based out of Australia here in the US.
I thought everybody knew how to do strategy consulting because I had been doing it well for such a long period of time. The really aha moment for me was I found it as most people are terrible at it. And once again, it's just data driven. And that's what happened. I read about 300 books on strategy, execution, and leadership while I was there during that time at the strategic planning software company. I was like, you know, there's got to be a better way. And so I was able to take what I call real life experience of doing it.
and then put the research on top of that. And so when I had the opportunity to go off on my own and create 40 strategy, we've put that real life experience combined with research to develop what we call our captain strategy methodology. So we can help make sure that if you may, our companies can sail in the right direction to success. Yeah, absolutely. I love that. Similar, similar life perspectives, right? But you can tell looking over your shoulder, mine is a little out of view, but voracious readers.
And so Carl, you and I, from our first conversation, we kind of geek out together on this topic. So how are we helping you? And I love the fact that you have your own methodology, and yet what we're doing at Growth Drive is a net benefit to you. Yeah, so Jerry, let's go back and do a...
traditional strategic planning ideation, right? The traditional company or consultant does a SWOT, you know, and everyone who's not familiar with that strengths, opportunities, threats, strengths, weaknesses, opportunities, threats. Uh, this has been around since the fifties or sixties, depending on which data point you look at. So really this has become the quote unquote, the de facto methodology for brainstorming. The problem is if we're being honest with ourselves, it actually is not strategic.
So let me bear with me here. Usually small and medium sized companies don't have the data. And the only data they're doing is actually a survey from the company. And then what happens? So anyone who's done a SWOT will recognize something like this. What is our strength? It's our people. Great. What can you do with that? There's like, there's nothing in detail that you could do with, we've got great people. It's not, it's totally an opinion.
Usually people don't go into deeper level. They're not actually doing something like an employee net promoter score or something like that. It's just like, it's their feelings. It's everybody's feelings going into it. And then you have the opposite side of it. We go into threats and you're at a strategic retreat and people are spending hours and hours or maybe I'm exaggerating, but perhaps not on some remote likelihood of something that will probably never take place in your future. Okay. So these are the things that I, that drive me absolutely.
crazy. So when I put in my new methodology, we have this one skin seven step process to be more factually based. The reality, it still takes time. Yes, we do surveys. Yes, we do assessments. Yes, we even throw in elements of the swap behind it. It's just one small component behind it. The problem with it was is it would typically take me two days, right, to really get a good assessment. Usually this is in person. And so you're coming in with this.
you're learning on the fly, so to speak, right? As to what's really happening, getting a feel for the company and organization. Since we've been adopting growth drive and using the tools that you have, it has been a game changer for us because now we can do an analysis in two to three hours. Right? And just think about that from a time perspective, right? We have literally, you know the stories, right? But those who are listening would not. We're now using it as a baseline for us.
for one of the key elements of initial assessment. So we can now go, I like to call your tool the Holy grail for strategic consultants. And the reason why I say that. Thank you, the check is in the mail, sir. But the reason why I say that is because it takes data, right? So data from the client, current assessment, self -assessment. We like to actually do it with our clients. And the reason why we like to do this, the detail level, the clarity to level.
The reason why is because we want to get truth and we want people to, to like go through that. So we help clarify them. We were walking them through what does this mean? How does this really apply with your company? So we're going in some depth, but this is all pre -work once again. So what we get out of it and we use our 40, 40 strategies. So we, we believe there's 40 ish strategies out there that are most primarily used to help increase the value of a business.
Okay, that's not including the EBITDA stuff, right, Georgiou? And I know this is all talking about reducing risk. Okay, this is reducing risk of the company so it can help increase the multiple so your company can be sold for more. This is huge, right? If any company is thinking about being sold or they're looking to have a better lifestyle because it reduces risk, this is the type of tool for you, right? So that's what we see the value behind it. We go through this analysis. We apply our 40 strategies to your tool.
And then we could come out with and going, all right, we now not only know what we should be working on, but we know in priority we should be working on because actually the dollars that's behind it, that's the huge thing. So today if we're working with a client, let's say it's a million dollars. Well, we actually did this analysis of George and it's part of our new podcast. We're getting to launch, I hear going forward and I think you're aware of it.
We're calling it $4 million strategies and we're actually based it on analysis we did with growth drive. A typical company that has $1 million in EBITDA and we did this, we tested this with multiple of our clients. We put real data into this and we normalize it all to a company that has $1 million in EBITDA. We found out this, a typical company is worth $3 million. Meaning they have a three multiple. Okay. That's pretty common actually, you know, it's a three multiple, but this is the brilliant part behind it.
Once again, industry is going to vary, but let's just assume in general across the board, if you can maximize what in the tool is called your trap to value, you can be worth up to 7 million. And I don't know about you, George, but if I'm going to sell a business, I'd much rather sell for 7 million or 3 million. Now, let's be realistic here. It's hard to put in all 40 strategies. So what we've found is the top three strategies.
We'll get you about a million bucks. Can I get you to three to four million? The next five strategies, so total eight strategies will get you two million total. Get you three to five. That works in perfectly with our implementation. We basically we work with our clients to get one implement. You can do one implementation, meaning one risk area, a quarter, get it done. If you want to go overdrive, you do two a quarter.
But you don't want to do too many because the realities are probably won't work. There's once much of the politicians fail because they're doing too many things. But what we found is once again, it's not about all 40 strategies. It's the top eight. When we could focus on those top eight strategies, then we could get the big bang for a buck. And so this has been for us an absolute game changer to monetize ahead of time, make the best decisions, and then we implement a rock going forward. And so it is...
Once again, I will repeat what I said earlier. It's the holy grail of strategic consulting to accelerate knowledge. You know, everything about what's happening today with software and genera AI, chat, TBT, you know, it's same thing there. If you make so to speak, it's just a different tool. If you're not adopting these type of technologies, you're going to fall behind. Yes. And that's why we love this, right? Because it's taken real market data. What I love about this George Hughes, I go in and look at clients at different times.
and the numbers change because the market data changes. Most people have static data and you can save it, of course, but being able to look in the future and go, oh, it changed based on whether we made a change or whether the market changed, super fascinating. Yeah, absolutely.
that I'm obviously going to agree with all that you just said. So thank you very much. There are two things I'd like to, two threads there I'd like to pull on. One is, I agree with you. When we do a SWOT analysis and we can pick on any, many of the other business operating systems, they go in and they'll say, okay, what do we know in this room? What do we know? What do we see as our strengths? What do we see as the weaknesses? What do we see as the threats? And that's all fine and good, but we don't know what we don't know.
And so I'd love to hear your thoughts on how bringing this best in class, this strategic capacity perspective into the room helps your clients, helps educate your clients. Is that what you're finding? Oh my gosh, yeah. I mean, they are coming out and going, wow. I mean, there's this wow moment. One of my favorite responses, and we just actually published this in a...
So this is a highly successful operator. And once again, for those who are familiar with the PE world, they don't refer to them as CEOs, they refer to them as operators. There's the investors and then there's the operator, meaning we would typically call it a CEO. But these operators, the skilled ones are really good, right? They understand the numbers, but this is the best part. We showed them the tool, we showed them the data. This is just to clarify, fourth time operator, okay.
So that is really uncommon, right? To be a four time PE operator. That means you're really good, by the way. You know, if you've gotten to four of them. And he said, Carl, this is what I'm telling my team, my leadership team every day. If we work on these risk areas in our company, work on these strategies in our company, it's going to improve the value of our company. And he said,
Now I have a number to help reinforce it. Because some of the things are a little bit esoteric. Just give an area of an example, it might be like needing IP. A lot of small business owners, medium -sized business owners, they don't really think about it a whole lot if it's not their normal jam. But when you go through due diligence, it comes up.
And if you don't have clean contracts and if you don't have clear IP and if you don't have these clear areas, what is the risk to the buyer? Somebody else can copy it. Your contracts aren't real, right? These are legitimate risk on the legal and IP side that aren't there. So being able to say, wow, by doing this, you know, once again, throw into your company, I'm just going to just throw this out for effect by
by working on this thing that might improve the value of a company by $500 ,000. And I only have to put a $50 ,000 investment into this. That's a no brainer. Right. But the problem is when you go through due diligence, it's too late. They are the catch out of the bag. Right. You've already been caught. It's no longer perceived value. You're not going to convince when you are going through your, your,
integrations and you're talking with the investment banker and they're getting ready to sell your company, you've already lost that check in the box. It's too late. This is why, once again, you have to do these things ahead of time because you want to create the wow factor now. That's right. And those are the businesses that get the extra multiples. That's right. That's right. Exactly. And so that's what people miss is there is, yes, data behind it, but there's also all the feelings.
that are there when people go to things, it's monetizing feelings. That's what I love.
You know, it's interesting. Your comments are really good, and when I think about allocating, so obviously, we have inside the methodology, we have 24 growth driving objectives, and they're supporting key results. So it's 24 OKRs. Great. And they're prioritized to a point you made earlier based on creating cash flow, or I mean, creating predictable cash flow, sustainable growth.
and then linking those two to the value of the business. Very cool. But we need to reduce that into CEO speak. And one of the things that you just hit on that I find fascinating is one of... I was in a conversation with a... I'm not gonna name drop, but his point was that the CEO's fundamental role is strategy. My point is that, you know, that is partly true, but that they're really...
their fundamental role is to maximize shareholder value within the context of the business vision and mission. And part of that, and this is something that most CEOs don't get, and this is why it comes up at the deal table and not before, you just hit on two objectives. Defensible market, and that can be legal, IP, capital, there are ways to block the market. And then that broader legal base.
your governance, your IP, your contracts, your contracts with your key employees, your employers, your suppliers, your vendors, all of those contracts. And if they're not neatly in a box, so to speak, and able to be pushed across the table. So defensible market and legal, which would very rarely come up in just running a business and you're running a very successful manufacturing company. Well, the fact that you haven't been filing all your governance docs,
It's never really going to be a burn your saddle until you go to sell them. And the point you just made is, how do we educate the client? And it sounds like you've been successful educating the client and then saying, hey, you're accountable for this. And by the way, Madam CEO, you are probably accountable for things that shouldn't be on your desk as well. Yeah. And I would argue that...
is even though we think CEOs are strategic, they typically aren't. That's correct. You know, that's why they call them an operator. Yeah. That's why PE calls them an operator. The viewpoint from the finance world is they're the strategic guys. Yes. And just in my experience, they are the strategic guys, meaning they might not necessarily know the intricacies of your business, but they do know how to capitalize off of it.
And so this is the part that's missing that once again, for any small business owner or even medium sized business owners that's looking at this, when you go into a situation, they already know these risk areas. Yeah. And you don't, right? Most people only sell one business in their life. They're lucky, right? They're caught with their pants down and they don't even know it because the P guys come in and they know what the real value is.
this tool.
We're all in the naked now, so to speak. We're all bearing the kimono. We all now could be seen, right? What's happening. And so now you don't feel like you're embarrassed anymore because you're now coming in and you're increasing that value before you sell it. Now, let's think about it once again. Why does PE love? They love calling people owners up and saying, we want to buy your business at 3 million so they could turn around and sell it to 5 to 7 million. That's right.
And they do it based on leverage and then they pay off the loan and they even get more money off of it. But that's the game. That is the game. And that game, when they're playing chess, most CEOs are playing checkers. They're just running their business, not strategically. And then they try to sell it and they get way less than they expected. And this is the worst part, George. And let's talk to this for a moment. When somebody sells their company for 3X.
And just for simplicity sake, let's just say it's $3 million just for simplicity. But then after tax, it's 1 .5 million. Let's just assume for simplicity, you're the 100 % owner. It depends on what your lifestyle is. That's probably less than you expected to get for your business. 5 % of the net is not a big number. Right. And then for even a lot of service companies, it's even less than that. It's like way less than that. Because why? Because...
the value isn't there. Once again, they might even look at, I just talked to a business owner the other day and it was, it was less than one X and they seem to someone has less than that. So meaning you're getting one to two times your annual salary or three times or four times of your typical distribution or earnings that when you really do the numbers and that why are you selling, right? Why people end up selling? Cause they typically get too old or tired or concerned.
So they sell out of necessity. They're not selling out of value. And that's what I love about this tool is it sells it out of value. And George, and you said something important. It is 24 parts in the software tool, but we've broken up some of them because we think some of them are so big. For example, strategy planning and execution is one thing. Well, my whole, my core business is strategy planning and execution. They're three different things. You know, vision, let me clarify it. Vision, planning and execution.
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This episode is brought to you by Growth Drive. Growth Drive is the number one best -selling business advising platform with training, technology, and support you need to get the success you want. Find a way to engagements, expand your reach and impact, and build a thriving advisory business based on delivering client wins. Growth Drive, find out more at growthdrive .com.
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So we've broken it out intentionally because we want to identify, eh, is it because you're not looking in the future long enough? Is it because you're not planning well enough? Or is it because your execution process isn't good enough? And so we look at them differently and we get that initial analysis so we can help understand faster, if that makes sense. But at its core, the 24 are legit. The combined areas behind it, and you could get to those assessments specifically through that.
Yeah, this tool, once again, I keep on going back to, it's such a game changer, but let me pull all that out. When I was working with the clients beforehand, I was always trying to solve that problem anyways. You know, that was my goal. Once again, whether it's working on behalf of the PE to help increase the value, because the value's been gone, like literally lost, or working with a private owner where they're trying to sell their business or increase the value of their business, or they're trying to have a business that's not so time consuming and so...
painful that they have no freedom. Make this thing easier, please. Yeah. Right. Right. And that's what's beautiful about the tools is when you work in these risk areas. That's why I keep on going back to, yeah, you could sell it. That's one thing. But I have a lot of other owners like, hey, I don't want to sell my business. I actually like what I do. But man, I'm just tired. Well, if you work on these risk areas, you could start acting more like a shareholder in your own business rather than an operator in your own business. That's...
Yes. Yes. And that is the difference between, yeah, everybody puts president and CEO on their business card, but they ignore the CEO part, right? The president thing, they got down. Yeah, absolutely. Absolutely. It's interesting when you talk about vision.
It's amazing how many coaches and guys and ladies and gentlemen, those of you listening to this, I would ask you to just test this, try this one time and you'll be a convert. They do not take the time to discover, as you just teased out, the strategic intent. What does this business need to deliver ultimately down the road? Not moving from three million of EBITDA to five million of EBITDA. That...
That is a waypoint on the way somewhere. What is our ultimate strategic intent? Private equity understands very clearly the ultimate strategic intent that they have for the business. Once we understand strategic intent, then we can look at strategic capacity, create a plan. And so that vision part is part personal and part professional. And I love to hear you. You're right. I put it into one.
growth driving objective, but there's a lot there. Oh my gosh. And what's interesting too, George, is just, you know, because I'm so excited, right? You know, as we talk about this, the vision, let's talk about that. What you'd say is strategic intent comes from the old concept of commander's intent. Yeah. Commander's intent is what most strategy comes from war. Why does it matter? Because you die.
Right. Or people die in the process. So that's why we have to be so good with strategic planning execution. But the difference, and let's go back to world war two for a moment and let's go back in Normandy in France when D -Day happened and then go to the point where ultimately, uh, Berlin fell. Yep. There, there was what people miss in vision, right? There was a vision of having a free Europe again. Right. That was the vision. So, and there, there was an initial intent, right?
commander's intent, we need to get Normandy. That's our beachhead. The next one is Sherbrooke. That was the next major factor. And then you continue on cities from that, right? And once again, forgive me for those who are not involved in World War II history, but this is the fascinating thing of this. There was a vision on D -Day to go and we're going to bring on and the strategies, when the strategies, once we got Normandy, we're going to take our Sherman tanks and roll through to Sherbrooke in three days. Problem.
Or not. There was hedge roads. Yeah. There was hedge roads. And anybody who's been in Normandy or been in that part of France or some parts of England is like this. These are hedge roads are basically trees that are covered over roads, really high embankments of farming things that have been there for centuries. Sherman tanks got trapped in those. They were sitting ducks. We had to completely change how we got there, the strategies. But we had an intent, commander's intent, strategic intent to get to Sherburne.
because of our independence and freedom of those on the ground, they were able to change their strategies to still get there. It took two or three weeks longer, right? It took longer than we expected, but we still got there. And that's what's beautiful, right? About you once again, having the right vision, having people buy into the vision and then recognize how you're gonna get there is going to change.
And so this goes to mean when we talk about vision, uh, setting up a plan and executing all of that has to be kept in mind. And what I love once again is your tool helps highlight this. It helps highlight cause there's brilliant way more brilliant than me and vision people out there. Like just like they will craft and do amazing things. Of course I love it now cause chat GBT makes it so much easier for me to compete. So I do that now, but, but while that being said, they're brilliant on that side.
But if you don't have a plan, your chances of getting there are so much lower. And if you don't adjust on your plan, on the execution phase, you're gonna probably end up dying. And that's why people typically have the strategic plan that collects dust and they get so frustrated about it. Yeah, let's pick up on that for a sec. First of all, love the World War II analogy. It's one I've used for a long time. Like, listen, our intent is to make a free Europe. So.
There's a great book out there, ladies and gentlemen. It is General Mattis, Call Sign Chaos, and he spends a considerable amount of time in the book. I've had the pleasure of, I bumped into him randomly in a hotel lobby and ended up, he was charming and approachable. Call Sign Chaos is another great one. I see Stephen Ambrose coming out.
There we go. So yeah, those are watching. I've got Stephen Ambrose D -Day and Stephen Ambrose, Citizen Soldiers, just magical. And you, of course, in Charleston, which is one of the most historic places in the United States, especially when it comes to military warfare, actually had no idea until I was there that there was that many, which was awesome. And it's, yes, I mean, but understanding the details is fun, but right.
Understand the deals is an interesting, but understanding the bigger picture is so important too. So important. And what you're insinuating and I love, I wanna pounce on is when the commander, when the CEO writes their intent and communicates that intent down and has the transparency, the authenticity, as our mutual friend Marcus will put it, the authenticity, the transparency to push that down into the rank and file, everyone understands the context, the context of what they do.
of why they're doing, why it's important. When we have to work a little harder, there's context and we understand the intent and where this thing is going. And that is, yeah, heck yes. Yep. And this is George is why we love chatting. It's like, oh, we could probably do this for hours today because there is, there's a joy, right? There's a joy when you understand it. But this is the problem, Mike George, who in your audience has a PhD in strategic planning? Yeah, essentially one.
that I can think of. Yeah. They're almost, they're almost unicorns, right? They literally almost unicorns. And, and even if they are very few of them actually have actually practiced it, right. It's, it's, it's more ideas. So that's why I'm thinking why we're typically so bad is because we actually haven't been trained enough and, and, you know, one NBA class even on it. Do you think that's enough? Right. And the real problem though, is that you're not doing it enough.
iterations, right? You know, you need enough iterations of pain and suffering and learning what's working and not working to get good at just like anything else that you're doing. That's right. That's why once again, issue why you should bring in somebody from the outside to help you out, to help you figure out a plan, figure out your vision is figured out a plan and help you get it done. And then once again, use your assessment tools better. This is why once again, we use growth drive because it accelerates it so much faster using data, not just our feelings that all our people are good.
George, a little side note, we used another tool as well recently to get deeper on the people side to help out with that SWOT thing. And for the first time in my career, they actually came out of a gun because the data was so.
Hainful.
They didn't say people were their strengths and they actually came out with a initiative that we need more eight players.
It's not as when, when you are that transparent and when you are that genuine and you're trying to figure out with the truth, you're going to get there more likely with somebody from the outside. Yes. When you internally are there, you have to defend yourselves and make each other feel better. This is why you bring us from the outside too, so they can, instead of having the one way mirror, it's a two way mirror, right? You know, they can reflect back and you can't lie anymore.
in the mirror, right? And that's the beauty of having somebody else to help you. Now, I don't know about you, George, but I often get hired because the CEOs know it.
But they're afraid to implement it because they know the impact it's going to have in their team. Right. And because this is the reality to grow and change, you have to change your people, process and systems, or you need to up, you know, you need to, sometimes your people could change. That's the best part. But often we make these horrible strategies like this, George, this is a classic one. Okay. Super awesome salesperson that helps you grow from one to five million. I'm just.
you know, keeping simple math here again, just for just simplicity. They crush it. They're like, they are the reason you go from one to five million. And then you go, Hey, good news. We're now going to go to five to 10. And you think that's like the same thing from one to five and it's not, but we're like, Hey, we're going to go five to 10 million. And then, and then, so you're all going to promote our, um, Joe Cougar. And I'm calling that on purpose because he is Hunter. Right. And we put Joe Cougar to the, to the VP of sales and what happens to.
bad things. First of all, you get rid of your best salesperson. That's number one. Your best salespeople on average are 93 % of your sales, which is roughly 2 % of your sales force. You people, if you're not watching the video, I'm smiling and bobbing my head up and down. Yep. Absolutely. And the second thing we do is we make them, so we try to make a managers and they're not a good manager. That's right. They're Michael Jordan's, right? They're hunters, they're killers, they're assassins.
They are terrible managers. You know, they are not your HR person. If anybody watched any of the Jordan films, Michael Jordan films, you would recognize he was not a good manager. You needed to clean up after him because he was a mess, right? Of how he treated his teammates, but his killer instinct got him to win. Right. That, that was the difference in the way, how they did. They needed that killer instinct. They needed that hunter mentality.
But once again, this is when people do strategy wrong, right? Is they think that, oh, we're just gonna get with the same people all the way through or all of a sudden just promote them, they're gonna be great. No, the best thing would have been is bringing somebody different to manage that team. Absolutely. And then keep that hunter hunting, right? Give them more stuff to hunt and kill. Let them make more money, let them make more than you as a CEO. It's okay. It's better than okay, yeah. Yeah, I...
You and I could probably trade stories of stupid things we've seen, but the capped compensation plan is among the most stupid things. It's like a litmus test. It's like, okay, you're kidding me here, right? I don't know when that happened, but target compensation is one of the biggest killers in companies that why they stopped growing. And if you go back to the root cause, it's often because they put in target compensation. What I mean by this, and you know it if you're using it, we're going to pay our salesperson $200 ,000 a year.
And so you basically adjust the commissions in the base to make it work at 200 ,000. You should never, ever, ever show your salespeople that information. Even if you're doing it, you shouldn't tell them that because you want great salespeople think you can make a million dollars a year. You want their motivation. And for it to be true. And yeah, yeah, that, that, that I can make it when you tell them their target comps 200, they're going to work to 200 ,000. That's right.
And actually worse would probably give me a little demotivated and do about 180. Right. There's just like these tactics, these strategies and things like that. And the problem is when you're internal and you're looking at your team, you're like, Oh, I can't make these changes and I can't make, can afford this. What you can't afford is getting rid of your hunters. Right. You can't afford those different tactics and you need somebody else outside to help validate that. That yeah, Joe Cougar, we need to keep. Right. Because, because he is.
He might be a little difficult. He might not do his expense reports. You hear what I'm saying, folks. Come on. How many Joe Cougars are good salespeople? I mean, get their expense reports done. By the way, they are. Yeah, horrible at it. Don't worry about it, folks. Hire a VA to do their expense reports. Have it automated. It's worth the money. Don't let your accountant kill Joe Cougar, your hunter killer, salesperson. Sorry, we've gone down a little path in the - No, no, no.
Yes, it is a good path though. Your point's a good one. There are several points here. There's a point here about process, about sales process. There's a point about transparency. But the one I want to circle back around on and pounce on, and if anyone who's read my book knows that this is paragraph one, sort of sentence one is get...
an outside perspective. You don't know what you don't know. And I will say that as a guy like you, Carl, 30 years as an entrepreneur. And an entrepreneur, not in the Silicon Valley way, in the starting businesses, building businesses, certainly we've acquired, we've had series A, series B, but get an outside perspective because that outside perspective, one is a foil.
to is going to hold your feet to the fire, hold the mirror up to your face, all those things that you, Carl, do for your clients. And the reason that the private equity firms bring you back again and again is you understand that role, you understand the value of that role. And I would wager that your clients understand the value you're bringing to the table. And for those of you who are running companies out there, it is sometimes uncomfortable. But I don't know, I go to the gym and it is...
hardly ever comfortable, but it is always good for me. Right. And that's the name of the game. I love it. George, you said that, you know, it's, if you want to be great in golf, you play a lot and you hire a coach, right? If you want to be great in writing a book, you know, if you want to be really good at it, you're probably going to hire some type of coach to help you write that book. Why in the heck would you not hire a coach or consultant to help you be a better CEO?
It's one of the weirdest, most arrogant things we do. And by the way, I'm guilty as charged. I've done it myself as well. But I've also learned, and now I do, I mean, in my own business myself, where I am a strategic consultant, I've hired five to six different coaches just in my first five years of being in business with this new company. Why? I don't want to wait three years to figure it out. I want to accelerate change.
so I could get there 70 % faster by using a coach. I'm still gonna have to try on ours. They're gonna learn, have stuff to apply their concepts to our specific business to get it to work. That's the challenge, right? It's hard to be DIY and grow like crazy. You have to learn some of these things and to presume we know all things, we should never try to be the smartest person in the room. Yeah, that's absolutely right. And maybe we can wrap it up. It's hard to believe we've already...
use the, well use the, the clocks will use, but when you're contemplating monetizing the value of your business, if you have, if this is unlike your client who was on his fourth rodeo, if this is your first rodeo, I will please, I'll get on bended knee and beg you, you think you've got this and you don't got this. You can.
but you need someone to sit down and take a good, hard, clear -eyed, data -driven look at your business, at your numbers and your ops, right? Oh yeah, you nailed it. It is exactly taking, once again, have a data -driven, experienced person, somebody who's done it before, could look at it independently and is not trying to blow sunshine.
you know, up here, you know, you know, you know what, right? You know, we want to make sure that we're making the right decisions. And the difference is like, I remember I have a client currently working with and walked into the meeting and met with them. And I'm like, do you understand if we do X and Y and Z? This is not just my cost is irrelevant. This is going to make you millions of dollars. Millions. Like millions and millions and millions, you know, it was not.
small, small amounts. And, you know, it's funny, it took him a little while because he hadn't done it himself, but he did it. And sure enough, we're heading down this path where he had such a fixed mindset because he didn't know what he didn't know. And then when he was able to listen, able to get the connection, he was like, oh my gosh, there's so much more that can be made. And because you have to look at the different equations and see how the world looks like from the PE side.
Right? That's how things are valued, not how you value it, but how the outside world values it. That's right. And, you know, and that's what reality is, right? That's the reality of a business and what it's worth. And the more you understand that, and I just said, man, if you end up wanting to stay and become a shareholder of your own business, that is one of the best things in the world. You can actually have this wonderful lifestyle and have it be managed because you're doing the right thing. So I want to, that's what I'm saying to this. You can go two paths.
Yes. Right? You know, you can go down the sell your business path, but you can go down the, I want to be more of a shareholder rather than operator. Both are wonderful paths, but you're not going to get there without decreasing your risk. And your, you know, your tool helps accelerate that understanding. That's right. Make your business immortal so that it can go on greater without you. Absolutely right. And I'm a point, maybe this is our closing point, Carl, you just nailed it. Exit doesn't need to mean leaving, right?
That's right. You've become the chairman of your business.
And yes, George, you get a little final point in this. I've sold a business. One of my businesses, it was like in the early, it was about 10, 15 years ago. I'm kicking myself that I sold that. I should have never sold it. I should have operationalized it. I should have done exactly what we're talking about, but I was too busy.
caught my own staff and I was just like, Oh, I'm just want to get rid of this and sell it. You know what? I made decent money off of it, but it could be providing me so much cashflow today.
It would have been amazing. But that's the thing, folks, is you can make more sometimes by holding on, but not if you don't have a plan and not a heavy strategy to get there and not if you don't understand the risk areas. That's how you can end up doing these extraordinary things that will completely change your life for yourself and for your family. And ultimately for all of your stakeholders. Yeah, for you and your family and for all of your stakeholders. That's right.
And because we as business owners care deeply about everyone who's contributing to the good things that are going on. And yeah, absolutely, man. Well, listen, Carl, thank you very much. This is a fun conversation. We will do this again, I hope, if you're willing to come back. And I really appreciate your time. Anything you want to share in closing? Yeah, if people want to connect, you know, feel free to reach out. There's a few different ways of doing that. First of all, the easy thing is you can just Google.
Carl J. Cox, the reason why I do that is there's a famous D &M, Carl Cox, don't do that one. But Carl J. Cox is that's how you get used to Google. The other thing is, is our website 40strategy, 40strategy .com. We also have a podcast, the most famous podcast. And George, if I could do a shameless plug here, really excited. We have a brand new podcast coming out here in June, and I know you're aware of this, because why don't you be a part of it? It's called $4 million strategies.
And it's a four minute Monday through Friday podcast on experts like you giving strategy tips on how to increase the value of your business. So I'm looking forward to anyways to be a part of that. You'll be seeing coming out here soon, come out June of 2024. And then of course, people want, they could also pick up our book, Lost at CEO. But anyway, so forgive all the shameless plugs, but that's just some other ways you could connect and learn more, even if you never contact us. Love it. Love it. Awesome.
Carl and and also folks if you forget all of that in the growth drive community Carl is there So alright awesome Carl. Thank you very much, and and I will talk with you soon Okay, George. Thank you so much be well. Thanks
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