1
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The base level threshold is this $1 million

2
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to $5 million in annual revenue.

3
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Now, I'm not categorizing these companies by profit,

4
00:00:11,050 --> 00:00:11,870
by EBITDA.

5
00:00:12,270 --> 00:00:15,430
I'm categorizing them by revenue because revenue is

6
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easy.

7
00:00:15,830 --> 00:00:17,630
We all know what revenue is.

8
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I don't want to get into seller's discretionary

9
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earnings.

10
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I don't want to get into how profitability

11
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is measured in all these businesses.

12
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Revenue is very easy to talk about.

13
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So $1 million to $5 million in annual

14
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revenue.

15
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I've used the term Main Street Mavericks to

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describe these people.

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And the reason that I think they're Main

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Street Mavericks is because they've created a business

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to enable their freedom.

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My experience, the people who are able to

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push through, and by the way, that first

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hurdle is a million bucks.

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And in order to push through that hurdle,

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they have to have come up with an

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idea that really resonates with a group of

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people who are their clients.

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And they've created this business for themselves to

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enable their freedom.

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That's what the business is all about for

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them.

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They need to develop trust in other people

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so that they can continue to grow.

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And what usually happens is the trust comes

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in the first key person they decide to

35
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hire, or the trust comes in the form

36
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of a partner that they decide to bring

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into the business or go into business with.

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And that's where it unlocks their strengths and

39
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they're able to pursue the things that they're

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really good at while their first key hire

41
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or their partner is able to pursue their

42
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strengths and they're able to grow the business

43
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in that way.

44
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The challenge for these people is that realization

45
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that they cannot or should not do everything

46
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themselves.

47
00:01:55,950 --> 00:01:59,310
So that $1 to $5 million mark, they

48
00:01:59,310 --> 00:02:03,710
go up that spectrum by the more authority,

49
00:02:04,390 --> 00:02:09,270
the more capability they delegate out to other

50
00:02:09,270 --> 00:02:11,450
people, the deeper the trust they have in

51
00:02:11,450 --> 00:02:12,170
other people.

52
00:02:12,910 --> 00:02:15,610
These people are worthy of your investment because

53
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to get through that million-dollar threshold, they

54
00:02:17,890 --> 00:02:21,190
trusted somebody at some point and they're willing

55
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to continue to grow and expand their business.

56
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And they will most likely be on an

57
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upward trajectory.

58
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And my experience is this is the fastest

59
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part of the cycle.

60
00:02:31,910 --> 00:02:33,790
Once they break through the million-dollar barrier,

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00:02:33,910 --> 00:02:35,690
going from one to five is the fastest

62
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part because they're like, oh, look, I can

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bring in a CFO and the CFO can

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00:02:41,430 --> 00:02:43,210
help me manage to the numbers and I

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can realize where my profit is leaking and

66
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I can reduce the leakage of the profit

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and put that money back into the business

68
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and then bring in a salesperson or two

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salespeople or a sales team and reinvest that

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money back in the business as it continues

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to grow and expand.

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Harry, your thoughts on the $1 to $5

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million area?

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00:03:03,550 --> 00:03:04,850
Yeah, no, I agree with everything you say.

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I think the one thing in the one

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to five you have to be a little

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cautious on is they're probably taking a lot

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of the profits and plumbing it back in.

79
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I think a lot of people make mistakes

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about the people they hire, the systems that

81
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they put in place.

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So I think you always got to operate

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with some level of caution and get to

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know your client.

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00:03:25,150 --> 00:03:26,870
You know, people do stumble, but I think

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that if you're growing with them at this

87
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pace, if you become a partner with them,

88
00:03:33,730 --> 00:03:35,550
then that's just going to do you, you're

89
00:03:35,550 --> 00:03:37,210
going to grow with them and you're going

90
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to do very well with them.

91
00:03:38,150 --> 00:03:40,410
So you can be more instrumental by making

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introductions for them that don't really relate to

93
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your business that could be helpful.

94
00:03:44,190 --> 00:03:45,670
So I think that's where you can get

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a lot of loyalty, you know, down the

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road.

97
00:03:48,590 --> 00:03:50,150
But I think this is the part where

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people really build on their relationships.

99
00:03:55,670 --> 00:03:57,130
And I think that's just better, you know,

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for the future.

101
00:03:57,790 --> 00:03:58,830
But you have to be willing to invest

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the time to do that.

103
00:04:00,730 --> 00:04:06,430
The one to $5 million area is, it's

104
00:04:06,430 --> 00:04:13,670
really liberating because it's like their first introduction

105
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to the drug of bringing in a team

106
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to help them.

107
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And they think that because they've done everything

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themselves and they feel the weight of that

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and pushing through the weight of doing everything

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themselves is what gets them over that million

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dollar hurdle.

112
00:04:31,230 --> 00:04:32,790
And then they bring in, usually it's that

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one key employee, right?

114
00:04:34,570 --> 00:04:36,810
In some cases, it's the salesperson.

115
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In some cases, it's an operations person to

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take the operations weight off of them so

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they can sell.

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And all of a sudden when that weight

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is removed and they can leverage their strengths,

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that sense of freedom is what propels them

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forward.

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And it is exactly like a drug.

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And they're like, okay, this worked really well

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with sales.

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Now let me see what I can do

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with finance.

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Oh my gosh, I brought in a decent

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controller and the controller showed me what we're

129
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doing here and how to be more efficient.

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That's more money.

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I can take that money and then hire

132
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more salespeople or I can do more marketing

133
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or I can do more advertising and it's

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just fuel that continues to grow the business.

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So the mindset of that one to $5

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million entrepreneur is the mindset of like you

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basically unleash the kraken.

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You just release the beast and they feel

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finally like they can move forward aggressively and

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quickly.

141
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The five to $10 million area, this is

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the valley of death and I didn't coin

143
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that phrase, okay?

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That phrase has been told to me by

145
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no fewer than like six or seven people

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who are in that area right now and

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who have been told that they're in the

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valley of death.

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00:05:52,630 --> 00:05:57,330
And here's why this is categorized as the

150
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valley of death.

151
00:05:58,050 --> 00:06:03,270
It's because they try to take the people

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who got them to say $4 million or

153
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$5 million, they try and take those people

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and use those people to get them to

155
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$10 million.

156
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And the caliber of person to go from

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five to 10 is very, very different.

158
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To get to $5 million, you can be

159
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very tactical.

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You can be very action oriented.

161
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You can be very hands-on and you

162
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can get to $5 million.

163
00:06:29,970 --> 00:06:32,650
As long as you buy into, hey, I

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bring people in to leverage my strengths.

165
00:06:35,310 --> 00:06:37,970
I can be a day-to-day manager,

166
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a day-to-day salesperson, a day-to

167
00:06:40,610 --> 00:06:42,370
-day person with my nose buried in the

168
00:06:42,370 --> 00:06:46,410
finances and I can strong arm the business

169
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to $5 million.

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00:06:47,850 --> 00:06:50,690
But to go from five to 10, to

171
00:06:50,690 --> 00:06:53,950
scale that way, you need to be more

172
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strategic and you got to take a step

173
00:06:56,250 --> 00:06:59,530
back and you have to really start surrounding

174
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yourself with situational expertise.

175
00:07:02,870 --> 00:07:05,390
You got to surround yourself with people who

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are smarter than you.

177
00:07:07,630 --> 00:07:09,510
So to go from one to five, and

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this is, I'll give you my experience and

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I learned this with the ExecuState brand at

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Marriott.

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00:07:15,350 --> 00:07:18,330
To get from like one to five, I

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had great tactical people.

183
00:07:20,230 --> 00:07:22,870
I had people who could make everything work

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on time.

185
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But to go from five to 10, I

186
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needed people who had to think differently because

187
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working more hours was never going to be

188
00:07:31,790 --> 00:07:32,430
the answer.

189
00:07:33,230 --> 00:07:36,130
Salespeople who had to go after bigger clients,

190
00:07:36,690 --> 00:07:40,310
salespeople who were smarter about the way they

191
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used leverage.

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00:07:41,690 --> 00:07:43,910
They realized they couldn't cold call their way

193
00:07:43,910 --> 00:07:44,630
to $10 million.

194
00:07:45,190 --> 00:07:48,190
They had to do presentations and they had

195
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to put on events to put hundreds of

196
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people in the room so that we could

197
00:07:52,450 --> 00:07:54,450
pitch to them all at the same time

198
00:07:54,450 --> 00:07:57,790
to go from five to 10 versus one

199
00:07:57,790 --> 00:07:59,430
to five where we could sell to them

200
00:07:59,430 --> 00:08:00,310
one at a time.

201
00:08:00,750 --> 00:08:02,910
So the people who get you to five

202
00:08:02,910 --> 00:08:06,070
are way different than the people who get

203
00:08:06,070 --> 00:08:08,810
you to 10 and you as a professional

204
00:08:08,810 --> 00:08:11,710
servicing a business that's going from five to

205
00:08:11,710 --> 00:08:14,970
10 need to realize that the advice you

206
00:08:14,970 --> 00:08:17,250
give to a business owner who wants to

207
00:08:17,250 --> 00:08:20,090
go to 10 needs to be more strategic

208
00:08:20,090 --> 00:08:21,490
and less tactical.

209
00:08:22,010 --> 00:08:23,870
You need to get them to hire the

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00:08:23,870 --> 00:08:26,570
people to do the hands-on stuff and

211
00:08:26,570 --> 00:08:30,070
surround themselves with really smart people who have

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00:08:30,070 --> 00:08:31,710
situational expertise.

213
00:08:32,750 --> 00:08:33,710
Harry, your thoughts.

214
00:08:34,530 --> 00:08:36,049
No, I agree with that.

215
00:08:36,150 --> 00:08:37,990
One of the issues you always have with

216
00:08:37,990 --> 00:08:39,990
clients when they do grow between the five

217
00:08:39,990 --> 00:08:42,010
and 10 million, a lot of times they

218
00:08:42,010 --> 00:08:44,230
will change advisors because of the brother-in

219
00:08:44,230 --> 00:08:45,110
-law or somebody else.

220
00:08:45,670 --> 00:08:49,290
I think that you need to be in

221
00:08:49,290 --> 00:08:51,750
a position to help them and you gotta

222
00:08:51,750 --> 00:08:53,310
be aware at the same time that they

223
00:08:53,310 --> 00:08:54,210
will just make changes.

224
00:08:54,390 --> 00:08:57,310
We had a situation where the client just

225
00:08:57,310 --> 00:08:58,930
says, well, we're evolving.

226
00:08:59,090 --> 00:09:01,610
I said, what the hell is evolving in

227
00:09:01,610 --> 00:09:02,170
the relationship?

228
00:09:02,390 --> 00:09:04,710
So you gotta be very careful about how

229
00:09:04,710 --> 00:09:06,270
you're seen and if you just let them

230
00:09:06,270 --> 00:09:08,490
grow without being part of that team, you

231
00:09:08,490 --> 00:09:11,330
could be part of that evolving aspect of

232
00:09:11,330 --> 00:09:11,470
it.

233
00:09:11,470 --> 00:09:15,030
But I think that the five to 10,

234
00:09:15,130 --> 00:09:15,690
I would agree.

235
00:09:16,070 --> 00:09:18,130
A lot of companies do fail because of

236
00:09:18,130 --> 00:09:21,050
a lot of bad implementation of systems, hanging

237
00:09:21,050 --> 00:09:22,550
on to the wrong people for too long

238
00:09:22,550 --> 00:09:24,750
of a time period, but not being able

239
00:09:24,750 --> 00:09:26,050
to identify that.

240
00:09:26,130 --> 00:09:27,110
And I think that's one of the big

241
00:09:27,110 --> 00:09:29,230
issues of what you call the valley of

242
00:09:29,230 --> 00:09:31,670
death where a lot of people fail.

243
00:09:31,910 --> 00:09:35,010
The other thing too is in that area

244
00:09:35,010 --> 00:09:37,910
there, you're losing part of that entrepreneurial part,

245
00:09:37,950 --> 00:09:38,810
as you mentioned, Dave.

246
00:09:39,870 --> 00:09:42,150
And once you lose that part, your company's

247
00:09:42,150 --> 00:09:42,610
just different.

248
00:09:43,850 --> 00:09:46,370
And I think, especially in today's world, a

249
00:09:46,370 --> 00:09:47,690
lot of us dealing with AI and a

250
00:09:47,690 --> 00:09:49,490
bunch of other things, how do you invest?

251
00:09:49,930 --> 00:09:52,910
Because you don't necessarily have the knowledge to

252
00:09:52,910 --> 00:09:54,310
do the investing in those areas.

253
00:09:54,430 --> 00:09:56,230
You need to bring in other people who

254
00:09:56,230 --> 00:09:58,770
have that experience, whether it's somebody on your

255
00:09:58,770 --> 00:10:00,910
team or you hire a consultant to help

256
00:10:00,910 --> 00:10:01,130
you.

257
00:10:01,610 --> 00:10:04,150
And that's where, even in our field of

258
00:10:04,150 --> 00:10:06,350
accounting, that's why you're seeing a lot of

259
00:10:06,350 --> 00:10:08,730
the roll-ups because you can't compete with

260
00:10:08,730 --> 00:10:08,870
it.

261
00:10:09,130 --> 00:10:10,370
It's just imposters too much.

262
00:10:11,010 --> 00:10:12,350
So that's where you have to really focus

263
00:10:12,350 --> 00:10:12,670
in on.

264
00:10:13,150 --> 00:10:15,610
So a couple of things to think about

265
00:10:15,610 --> 00:10:19,490
to Harry's point with you not getting thrown

266
00:10:19,490 --> 00:10:25,410
out with as they're changing the advisory team.

267
00:10:25,870 --> 00:10:29,330
If you're the person who's helping push them

268
00:10:29,330 --> 00:10:33,430
toward the change, you're less likely to be

269
00:10:33,430 --> 00:10:34,570
part of the change.

270
00:10:35,090 --> 00:10:36,310
This is the thing.

271
00:10:36,310 --> 00:10:40,950
You're either on the bus, driving the bus,

272
00:10:41,070 --> 00:10:43,010
or you're under the bus, right?

273
00:10:43,330 --> 00:10:46,770
So you don't wanna be under the bus.

274
00:10:47,210 --> 00:10:49,590
My preference is always to be the guy

275
00:10:49,590 --> 00:10:51,070
driving the bus.

276
00:10:51,450 --> 00:10:54,230
So if I'm sitting with my client and

277
00:10:54,230 --> 00:10:56,990
I say to my client, how fast do

278
00:10:56,990 --> 00:10:59,510
you want to get to 10 million?

279
00:11:00,030 --> 00:11:02,150
And the client says five years, I say,

280
00:11:02,310 --> 00:11:03,530
why not 18 months?

281
00:11:03,990 --> 00:11:04,770
And they look at me.

282
00:11:06,230 --> 00:11:11,590
And there's a very famous story that's told

283
00:11:11,590 --> 00:11:15,610
about Peter Thiel, where he says, let me

284
00:11:15,610 --> 00:11:17,330
see your five-year strategic plan.

285
00:11:17,530 --> 00:11:18,950
And they give him the five-year strategic

286
00:11:18,950 --> 00:11:19,330
plan.

287
00:11:19,670 --> 00:11:20,510
And he looks at it.

288
00:11:20,570 --> 00:11:21,930
He goes, this is a great plan.

289
00:11:22,170 --> 00:11:23,390
He did a really good job on it.

290
00:11:23,610 --> 00:11:25,010
And the guy's really happy.

291
00:11:25,110 --> 00:11:26,550
He goes, now I want you to implement

292
00:11:26,550 --> 00:11:27,870
it in 18 months or you're fired.

293
00:11:28,790 --> 00:11:31,410
Five-year plan, implement it in 18 months.

294
00:11:32,670 --> 00:11:37,170
Your job as an advisor is to always

295
00:11:37,170 --> 00:11:41,350
be pointing your clients in the direction they

296
00:11:41,350 --> 00:11:42,210
need to go.

297
00:11:42,530 --> 00:11:45,110
You should always be taking your clients where

298
00:11:45,110 --> 00:11:46,670
they need to get to.

299
00:11:46,910 --> 00:11:50,270
Because if you are, you're driving the bus.

300
00:11:50,410 --> 00:11:52,610
You're less likely to be under the bus

301
00:11:52,610 --> 00:11:53,950
when it goes by.

302
00:11:54,710 --> 00:11:56,870
I can't stress that enough.

303
00:11:57,530 --> 00:11:58,450
Harry made the point.

304
00:11:58,610 --> 00:12:00,070
I'm just emphasizing it.

305
00:12:00,710 --> 00:12:02,850
You have to be the person to help

306
00:12:02,850 --> 00:12:05,350
them go from five to 10.

307
00:12:05,790 --> 00:12:09,170
You're the tour guide taking them through the

308
00:12:09,170 --> 00:12:11,670
valley of death as fast as you possibly

309
00:12:11,670 --> 00:12:12,150
can.

310
00:12:12,590 --> 00:12:17,090
And you have to be comfortable, politely challenging

311
00:12:17,090 --> 00:12:17,590
them.

312
00:12:18,170 --> 00:12:21,150
You have to challenge them to say, you

313
00:12:21,150 --> 00:12:22,890
have to challenge them and say to them,

314
00:12:23,390 --> 00:12:24,690
you told me you had this goal.

315
00:12:24,790 --> 00:12:25,970
You wanted to get to 10 million.

316
00:12:26,190 --> 00:12:27,230
You said five years.

317
00:12:27,370 --> 00:12:28,610
I told you you could do it in

318
00:12:28,610 --> 00:12:29,370
18 months.

319
00:12:29,850 --> 00:12:31,530
Let's talk about what it would take in

320
00:12:31,530 --> 00:12:32,810
order for you to do it in 18

321
00:12:32,810 --> 00:12:33,190
months.

322
00:12:33,530 --> 00:12:35,410
And then you challenge them and ask them

323
00:12:35,410 --> 00:12:36,770
in order to do it in 18 months,

324
00:12:36,850 --> 00:12:37,810
what's missing right now?

325
00:12:37,970 --> 00:12:38,790
Well, I'm missing this.

326
00:12:38,910 --> 00:12:39,330
I'm missing this.

327
00:12:39,450 --> 00:12:39,950
I'm missing this.

328
00:12:39,970 --> 00:12:40,590
And I'm missing this.

329
00:12:40,670 --> 00:12:40,850
Okay.

330
00:12:41,450 --> 00:12:43,230
Who do you know that can help you

331
00:12:43,230 --> 00:12:45,390
get those four things in place?

332
00:12:45,710 --> 00:12:46,890
Let's get to work on it.

333
00:12:46,950 --> 00:12:48,430
Let me help you get to work on

334
00:12:48,430 --> 00:12:48,530
it.

335
00:12:48,590 --> 00:12:49,830
I don't care what your role is.

336
00:12:49,870 --> 00:12:51,850
If you're a lawyer, you're their insurance advisor,

337
00:12:51,910 --> 00:12:53,370
you work on real estate for them.

338
00:12:53,650 --> 00:12:55,370
If you tell them you wanna help them

339
00:12:55,370 --> 00:12:57,310
get to 10 million, how are they gonna

340
00:12:57,310 --> 00:12:57,930
say no to you?

341
00:12:57,930 --> 00:13:00,470
They're gonna want you around because you're helping

342
00:13:00,470 --> 00:13:03,710
enable them to go from that five to

343
00:13:03,710 --> 00:13:05,010
$10 million mark.

344
00:13:05,590 --> 00:13:07,230
Now, one more thing about this, and Harry,

345
00:13:07,310 --> 00:13:09,030
I need your opinion on this as well.

346
00:13:09,510 --> 00:13:12,670
If they're in love with certain people and

347
00:13:12,670 --> 00:13:17,530
they don't want to abandon those people, maybe

348
00:13:17,530 --> 00:13:19,450
it's their son who's part of the business

349
00:13:19,450 --> 00:13:22,410
or another relative or someone that's been with

350
00:13:22,410 --> 00:13:23,610
them for 100 years.

351
00:13:24,010 --> 00:13:27,150
What you can do is you can share

352
00:13:27,150 --> 00:13:30,650
with them the educational opportunities that could bring

353
00:13:30,650 --> 00:13:35,170
that person along maybe to make them better

354
00:13:35,170 --> 00:13:38,790
and make them into a potential $10 million

355
00:13:38,790 --> 00:13:39,490
person.

356
00:13:39,850 --> 00:13:41,890
The example I'll give you in this is

357
00:13:41,890 --> 00:13:44,110
a company that I worked for called Concord

358
00:13:44,110 --> 00:13:44,850
Hospitality.

359
00:13:44,930 --> 00:13:47,730
They had a general manager in Allentown, Pennsylvania

360
00:13:48,270 --> 00:13:50,630
who was like a technology wonk.

361
00:13:51,050 --> 00:13:53,770
He always had the latest technology in his

362
00:13:53,770 --> 00:13:54,210
hotels.

363
00:13:54,370 --> 00:13:56,410
He was really into technology, would save up

364
00:13:56,410 --> 00:13:58,850
money from his budget to invest in the

365
00:13:58,850 --> 00:13:59,790
latest technology.

366
00:14:00,270 --> 00:14:02,550
The CEO of the company recognized this guy

367
00:14:02,550 --> 00:14:04,090
had an affinity for technology.

368
00:14:04,530 --> 00:14:07,230
He knew he couldn't afford a chief technology

369
00:14:07,230 --> 00:14:10,370
officer at that time in Concord's history.

370
00:14:10,890 --> 00:14:14,430
He invested in this guy, paid for him

371
00:14:14,430 --> 00:14:17,910
to go get a master's degree in something

372
00:14:17,910 --> 00:14:21,010
in technology, paid for him to learn about

373
00:14:21,010 --> 00:14:26,370
infrastructure and everything else, and he also invested

374
00:14:26,370 --> 00:14:29,970
in him going to every technology, hospitality technology

375
00:14:29,970 --> 00:14:31,130
conference there was.

376
00:14:32,170 --> 00:14:35,590
30 years later, this guy is now the

377
00:14:35,590 --> 00:14:38,710
chief technology officer for Concord Hospitality, which has

378
00:14:38,710 --> 00:14:41,990
like 190 hotels all over the US and

379
00:14:41,990 --> 00:14:46,430
Canada, and he's, by reputation, one of the

380
00:14:46,430 --> 00:14:51,310
best CTOs, chief technology officers, in the hospitality

381
00:14:51,310 --> 00:14:52,270
industry today.

382
00:14:52,930 --> 00:14:53,990
He didn't start out that way.

383
00:14:54,130 --> 00:14:56,810
He started out as just another general manager

384
00:14:56,810 --> 00:14:58,230
who had an interest in technology.

385
00:14:58,690 --> 00:15:00,830
They invested in him to make him the

386
00:15:00,830 --> 00:15:04,030
$10 million plus, now he's the $100 million

387
00:15:04,030 --> 00:15:07,050
plus chief technology officer.

388
00:15:07,770 --> 00:15:11,490
So if your client has somebody who, to

389
00:15:11,490 --> 00:15:15,390
them, is personally indispensable, help them find an

390
00:15:15,390 --> 00:15:18,670
education path that could potentially make them a

391
00:15:18,670 --> 00:15:21,510
$10 million person, but make sure they understand

392
00:15:21,510 --> 00:15:24,310
that that education comes with the price, and

393
00:15:24,310 --> 00:15:25,590
the price is time.

394
00:15:25,870 --> 00:15:28,710
If that person is critical to the growth

395
00:15:28,710 --> 00:15:30,610
of the company, you may be better bringing

396
00:15:30,610 --> 00:15:32,630
in a steward for that role while this

397
00:15:32,630 --> 00:15:35,310
other guy apprentices for four or five years.

398
00:15:35,610 --> 00:15:36,870
Harry, your thoughts about that?

399
00:15:37,490 --> 00:15:39,510
No, I think that's a great example.

400
00:15:39,610 --> 00:15:40,730
I think the other way you can do

401
00:15:40,730 --> 00:15:43,110
that in either, you know, let's say in

402
00:15:43,110 --> 00:15:45,250
the accounting or financial area, if you have

403
00:15:45,250 --> 00:15:47,770
somebody who doesn't have the experience, we have

404
00:15:47,770 --> 00:15:50,910
seen people either bringing in other mentors that

405
00:15:50,910 --> 00:15:53,630
the family knows or the business knows, but

406
00:15:53,630 --> 00:15:55,930
you can also bring in, on an interim

407
00:15:55,930 --> 00:15:58,710
basis, CFOs to help train them over time,

408
00:15:59,170 --> 00:16:01,630
where you're dedicating a couple days a month

409
00:16:01,630 --> 00:16:02,630
to do that process.

410
00:16:02,770 --> 00:16:04,730
So I think you can attack what you're

411
00:16:04,730 --> 00:16:06,490
talking about in a couple different ways.

412
00:16:06,550 --> 00:16:08,530
You just have to be open to what's

413
00:16:08,530 --> 00:16:10,050
going to work best for the company and

414
00:16:10,050 --> 00:16:12,090
not drain all the cash and doing it

415
00:16:12,090 --> 00:16:12,590
in the meantime.

416
00:16:13,090 --> 00:16:14,730
So there's a lot of different ways to

417
00:16:14,730 --> 00:16:16,910
slice it, but I think that whole process

418
00:16:16,910 --> 00:16:18,870
of doing that, what you also get out

419
00:16:18,870 --> 00:16:21,910
of that, Dave, too, though, the loyalty that

420
00:16:21,910 --> 00:16:24,070
is then going to be seen by everyone

421
00:16:24,070 --> 00:16:27,290
else by keeping those people and showing that

422
00:16:27,290 --> 00:16:29,730
you're willing to invest in people is huge

423
00:16:29,730 --> 00:16:32,910
from keeping your turnover down and long-term

424
00:16:32,910 --> 00:16:33,750
people want to stay.

425
00:16:34,290 --> 00:16:35,670
Some of those people are going to leave

426
00:16:35,670 --> 00:16:39,390
as you're growing, but I'm not a proponent

427
00:16:39,390 --> 00:16:43,250
of throwing them overboard just for the sake

428
00:16:43,250 --> 00:16:46,730
of saying, well, you're only a $5 million

429
00:16:46,730 --> 00:16:48,110
person and I got to go to $10

430
00:16:48,110 --> 00:16:49,610
million, so I got to jettison you.

431
00:16:49,950 --> 00:16:53,430
I think you try to elevate everybody.

432
00:16:53,670 --> 00:16:55,890
You try to bring everybody along, but there

433
00:16:55,890 --> 00:16:58,110
are three or four key positions.

434
00:16:58,330 --> 00:17:00,430
And Harry, I'm curious as to your thoughts

435
00:17:00,430 --> 00:17:00,810
on this.

436
00:17:01,090 --> 00:17:02,550
For me, there are three or four key

437
00:17:02,550 --> 00:17:04,230
positions that accelerate growth.

438
00:17:04,849 --> 00:17:09,730
So strategically, the first one is in the

439
00:17:09,730 --> 00:17:11,410
finance space.

440
00:17:11,609 --> 00:17:14,210
I think you go from probably at $5

441
00:17:14,210 --> 00:17:16,970
million, you go from a glorified bookkeeper to

442
00:17:16,970 --> 00:17:22,349
a real finance person who knows what your

443
00:17:22,349 --> 00:17:24,470
books should look like, knows how to use

444
00:17:24,470 --> 00:17:26,970
the financial reporting in order to manage the

445
00:17:26,970 --> 00:17:27,329
business.

446
00:17:27,730 --> 00:17:29,030
And then at 10, you might even be

447
00:17:29,030 --> 00:17:31,290
able to go to a real CFO, correct?

448
00:17:32,410 --> 00:17:33,510
No, that's about right.

449
00:17:33,630 --> 00:17:35,270
But again, in the meantime, you can also

450
00:17:35,270 --> 00:17:37,650
bring in people to assist in that process.

451
00:17:38,270 --> 00:17:39,790
Look, I mean, the three areas of any

452
00:17:39,790 --> 00:17:41,930
company is going to be financial, operations, and

453
00:17:41,930 --> 00:17:42,210
sales.

454
00:17:43,230 --> 00:17:44,950
That's the three that you got to get

455
00:17:44,950 --> 00:17:45,230
right.

456
00:17:45,230 --> 00:17:45,950
Yeah.

457
00:17:46,410 --> 00:17:48,270
And, you know, depending on what's going on.

458
00:17:48,410 --> 00:17:50,430
So it's a limited number of areas.

459
00:17:50,530 --> 00:17:52,870
Now, depending if you're in a regulatory environment,

460
00:17:52,970 --> 00:17:54,010
you might need legal more.

461
00:17:54,170 --> 00:17:55,950
But those are the three main areas you

462
00:17:55,950 --> 00:17:56,790
got to focus in on.

463
00:17:57,150 --> 00:17:57,350
Yeah.

464
00:17:57,550 --> 00:18:00,010
So to Harry's point, one of the places

465
00:18:00,010 --> 00:18:01,450
that I worked had a laundry, had a

466
00:18:01,450 --> 00:18:02,190
commercial laundry.

467
00:18:03,190 --> 00:18:06,930
And during a recession in, actually when the

468
00:18:06,930 --> 00:18:09,090
dot-com bubble burst, like right around 2000,

469
00:18:09,890 --> 00:18:11,350
most of you weren't even born yet.

470
00:18:12,210 --> 00:18:14,090
Sheldon was born.

471
00:18:14,090 --> 00:18:17,310
But everybody else probably wasn't even, you weren't

472
00:18:17,310 --> 00:18:18,270
working at that time.

473
00:18:18,370 --> 00:18:21,130
But around 2000, we decided we were going

474
00:18:21,130 --> 00:18:24,810
to take laundry from other hotels and charge

475
00:18:24,810 --> 00:18:26,070
the other hotels because we were one of

476
00:18:26,070 --> 00:18:28,470
the only hotels in our geographic area that

477
00:18:28,470 --> 00:18:29,970
had a functioning laundry.

478
00:18:30,750 --> 00:18:33,470
So the laundry became a profit center, but

479
00:18:33,470 --> 00:18:34,350
we were overwhelmed.

480
00:18:34,550 --> 00:18:35,910
We were already, we were working seven days

481
00:18:35,910 --> 00:18:38,490
a week, two shifts because we were doing

482
00:18:38,490 --> 00:18:40,350
our own hotel's laundry, but we had some

483
00:18:40,350 --> 00:18:42,870
capacity on the evening shift.

484
00:18:43,410 --> 00:18:46,810
So we were doing such a good job

485
00:18:46,810 --> 00:18:51,850
that we filled that second shift and we

486
00:18:51,850 --> 00:18:54,590
thought we needed to buy more equipment to

487
00:18:54,590 --> 00:18:55,550
handle the capacity.

488
00:18:56,750 --> 00:18:59,270
And my boss at the time was smart

489
00:18:59,270 --> 00:19:01,930
enough to say, well, the equipment is going

490
00:19:01,930 --> 00:19:05,030
to cost basically like two whole years profit,

491
00:19:05,370 --> 00:19:07,150
and we probably won't be in a recession

492
00:19:07,150 --> 00:19:07,870
in two years.

493
00:19:07,930 --> 00:19:09,910
We don't even know if we'll continue to

494
00:19:09,910 --> 00:19:12,630
be doing outside laundry in two years.

495
00:19:13,730 --> 00:19:15,690
Maybe there's another way to do this.

496
00:19:16,090 --> 00:19:18,950
And we called a guy who all he

497
00:19:18,950 --> 00:19:22,170
did was consult with commercial laundries.

498
00:19:22,450 --> 00:19:24,250
His name was at the time was Charles

499
00:19:24,250 --> 00:19:27,250
Eiffel, and he was literally the guru of

500
00:19:27,250 --> 00:19:28,330
commercial laundries.

501
00:19:28,870 --> 00:19:35,510
And he in 48 hours transformed that business,

502
00:19:35,630 --> 00:19:37,410
made it an incredible profit center.

503
00:19:37,770 --> 00:19:40,390
And all he did was show us how

504
00:19:40,390 --> 00:19:43,750
adding a third shift, the expense of hiring

505
00:19:43,750 --> 00:19:45,830
and adding a third shift could be easily

506
00:19:45,830 --> 00:19:50,650
offset in just four months by making that

507
00:19:50,650 --> 00:19:55,230
third shift at least 50% capacity five

508
00:19:55,230 --> 00:19:55,910
days a week.

509
00:19:56,610 --> 00:19:58,910
So we were absolutely able to, we got

510
00:19:58,910 --> 00:20:01,410
it to 100% capacity five days a

511
00:20:01,410 --> 00:20:03,350
week and then eventually expanded it to six

512
00:20:03,350 --> 00:20:04,030
days a week.

513
00:20:04,430 --> 00:20:07,310
And it was an incredibly lucrative opportunity for

514
00:20:07,310 --> 00:20:07,450
us.

515
00:20:07,450 --> 00:20:10,650
But we didn't think of going to a

516
00:20:10,650 --> 00:20:12,650
third, it's a hotel open 24 hours a

517
00:20:12,650 --> 00:20:12,870
day.

518
00:20:13,090 --> 00:20:15,170
We didn't think of running a laundry on

519
00:20:15,170 --> 00:20:17,490
a third shift in the hotel because for

520
00:20:17,490 --> 00:20:19,010
the entire life of the hotel, they only

521
00:20:19,010 --> 00:20:20,230
had one and a half shifts.

522
00:20:20,310 --> 00:20:21,330
They only had a half of the people

523
00:20:21,330 --> 00:20:22,270
on the second shift.

524
00:20:22,650 --> 00:20:25,630
That guy bringing in that consultant different thinking,

525
00:20:25,930 --> 00:20:31,110
$10 million plus thinking completely transformed that entire

526
00:20:31,110 --> 00:20:35,170
business and made the hotel a ton of

527
00:20:35,170 --> 00:20:37,930
money from a department that was supposed to

528
00:20:37,930 --> 00:20:39,330
be an expense.

529
00:20:40,230 --> 00:20:44,010
After we experienced that, just FYI, the division

530
00:20:44,010 --> 00:20:46,010
that I worked in was responsible for housekeeping,

531
00:20:46,310 --> 00:20:47,170
laundry and recreation.

532
00:20:47,770 --> 00:20:49,790
We had an indoor pool in New York,

533
00:20:49,910 --> 00:20:50,090
okay?

534
00:20:50,230 --> 00:20:51,850
We were one of the only hotels in

535
00:20:51,850 --> 00:20:53,730
our area to have an indoor pool.

536
00:20:54,430 --> 00:20:56,630
So we said to ourselves, shit, we brought

537
00:20:56,630 --> 00:20:58,990
in this outside guy who was really smart,

538
00:20:59,190 --> 00:21:00,130
had fresh eyes.

539
00:21:00,610 --> 00:21:02,350
If we did that, if we do that

540
00:21:02,350 --> 00:21:05,850
with recreation, let's see what a consultant in

541
00:21:05,850 --> 00:21:07,610
the recreation space comes up with.

542
00:21:08,050 --> 00:21:12,330
And sure enough, we started selling memberships to

543
00:21:12,330 --> 00:21:15,570
our health club for the hotel and to

544
00:21:15,570 --> 00:21:17,130
the pool, okay?

545
00:21:17,310 --> 00:21:20,790
Indoor pool, retractable roof, great facility.

546
00:21:21,450 --> 00:21:24,390
And because the hotel wasn't busy, it was

547
00:21:24,390 --> 00:21:26,810
a freaking recession, we went nuts.

548
00:21:26,970 --> 00:21:29,110
And I had people going door to door

549
00:21:29,110 --> 00:21:33,230
selling memberships to this fancy hotels health club.

550
00:21:33,230 --> 00:21:36,610
The recreation department went from being an expense

551
00:21:36,610 --> 00:21:38,050
to being a profit center.

552
00:21:38,170 --> 00:21:39,910
We had a consultant, a health club consultant

553
00:21:39,910 --> 00:21:43,490
come in, brought us the entire operating procedure

554
00:21:43,490 --> 00:21:46,930
for a fraction of what we made in

555
00:21:46,930 --> 00:21:47,710
the long term.

556
00:21:48,250 --> 00:21:51,810
Again, we were $5 million thinking these people

557
00:21:51,810 --> 00:21:56,030
are $10 million plus thinkers, that situational expertise,

558
00:21:56,470 --> 00:21:58,390
that's what breaks you out of the valley

559
00:21:58,390 --> 00:21:59,270
of death.

560
00:21:59,990 --> 00:22:00,890
Harry, your thoughts?

561
00:22:01,750 --> 00:22:03,570
No, those are great examples, Dave.

562
00:22:03,650 --> 00:22:04,910
I mean, that's why you need to bring

563
00:22:04,910 --> 00:22:05,550
in those people.

564
00:22:05,710 --> 00:22:08,250
The issue you always have is finding those

565
00:22:08,250 --> 00:22:09,990
right people because there's a lot of consultants

566
00:22:09,990 --> 00:22:10,510
out there.

567
00:22:11,110 --> 00:22:12,430
So that's gonna be the real issue.

568
00:22:12,510 --> 00:22:14,230
You need to talk to someone else who

569
00:22:14,230 --> 00:22:16,170
really has worked with them to see how

570
00:22:16,170 --> 00:22:17,430
instrumental they have been.

571
00:22:17,810 --> 00:22:19,030
But those are things where you gotta start

572
00:22:19,030 --> 00:22:20,990
thinking, how do you get to that next

573
00:22:20,990 --> 00:22:22,190
level and how did you break out?

574
00:22:22,430 --> 00:22:23,850
You know, the other thing too is even

575
00:22:23,850 --> 00:22:26,490
people in business, we've had this with clients

576
00:22:26,490 --> 00:22:28,430
who have told me this, is going to

577
00:22:28,430 --> 00:22:30,410
talk to other people who have broken through

578
00:22:30,410 --> 00:22:32,310
it on their own, even if they're competitors.

579
00:22:34,010 --> 00:22:35,810
A lot of times they'll open up because

580
00:22:35,810 --> 00:22:36,610
they want to help you.

581
00:22:37,730 --> 00:22:39,510
Whatever the case may be, we had one

582
00:22:39,510 --> 00:22:41,930
where a competitor told one of our clients,

583
00:22:42,050 --> 00:22:43,330
you need new trucks.

584
00:22:43,890 --> 00:22:46,750
You gotta have new trucks because you'll make

585
00:22:46,750 --> 00:22:48,030
a lot more money because people are going

586
00:22:48,030 --> 00:22:50,470
to think it's another level of professionalism.

587
00:22:50,870 --> 00:22:53,070
And he did it and things went very

588
00:22:53,070 --> 00:22:53,830
well after that.

589
00:22:54,570 --> 00:22:57,790
So, you know, you gotta get the Steven

590
00:22:57,790 --> 00:22:58,510
Jobs theory.

591
00:22:58,510 --> 00:23:01,450
People will give you good information if you're

592
00:23:01,450 --> 00:23:03,370
willing to ask, even if it's a competitor.

593
00:23:04,110 --> 00:23:05,470
Yeah, that's great advice.