Tony and I talk about the surprising world of 3D printing today, what makes a valuable niche for commodity companies and eventually talk about when and why someone might need a business valuation.
I was really surprised to learn more about what 3D printing has become in manufacturing. We also talk about some of the critical factors that make businesses highly valuable when they sell, including creating a niche, what type of leadership team needs to be in place, and the personality of the founder/owner. Ultimately we talk a little bit about business valuation, what it is, and who does and doesn't need one.
GET IN TOUCH:
MARK LEARY:
www.linkedin.com/in/markhleary
www.leary.cc
ANTHONY CARDIEL:
https://www.linkedin.com/in/anthony-cardiel-cpa-abv-cfe-5b751b8/
https://mfgvaluation.com/
Production credit:
Engineering / Post-Production: Leo Medley
Art / Design: Immanuel Ahiable
February 16, 2020 | Wednesday
SUMMARY KEYWORDS
company, business, sell, sales, integrator, clients, valuation, visionary, product, good, part, great, people, buy, person, problem, day, evaluation, printing, find
SPEAKERS
Mark
Mark 00:00
So we're rolling. Cool. We are live. This is you're doing it wrong with Mark Anderson Leary and my name is Mark, and I have a passion that you should feel in control of your life. And so I want to help entrepreneurial leaders feel more in control of their business. And today we're here with my friend, Anthony Cordell, but you're telling me I can call you, Tony. Yes, please. Well, Tony is a total business nerd and been decades of business valuations and accounting and things like that. And it's really good to have you here, man. Thank you. I'm happy to be here. So what's been going on in your world of business valuations?
00:40
Well, Lately, I've been specializing in additive manufacturing. What the heck is that? So additive manufacturing is basically 3d printing. And the reason why I Why didn't you say 3d printing? But it's the technical name for it. Right? It's it's additive. additive. Yeah. additive manufacturing, manufacturing. Yeah. Like, I've
Mark 01:03
never heard of that.
01:03
Well, I think people that are in the industry have heard of it. But 3d printing is kind of the layman. I guess the differences are, what people want to distinguish is it's not, it's not the printer that you have at home. This is creating parts. A lot of them are basically metal now that are unique and very sophisticated. So metal, the printing metal, the printing metal, and
Mark 01:30
I've been so out of the loop on this the last time I saw a 3d printer was my daughter's High School. And it's just doing that like that little hot glue looking thing. And I'm thinking how do they make guns out of that? And apparently, they don't Apparently, they use metal and
01:42
other things in the material. Well, some people are still making plastic guns, which I recommend against, you know, if you're going to take the time to make something that's a little more trustworthy. But yeah, they're making metal now. So the new actually saw article just the other day, the new Boeing jet, the 777, X has over 300, 3d printed parts in the plane. And it's, it's just very interesting. And that's why I like it, it's, every day, there's something new, they're creating new materials to print with. And, like I said, airplane parts, so you can make them stronger, lighter. And you don't have to worry about inventory, you can just print on demand. So it's pretty interesting field, and a lot to be still invented and discovered and figuring out how to how to use it, I find it I find it just mind blowing.
Mark 02:35
But that's so. So where is that in terms of the level of maturity because it sounds as if I'm just kind of blown away by how little I know about it, I've realized something a little I know about 3d printing, and using it's adding cost savings, and I'm sure dynamics and limiting the need for inventory, and really powerful in that sense. But is this nascent is this or is this these businesses? Are they venture funded? Are they are they very mature and profitable right now?
03:08
Well, I think there's a mix. There's a lot of venture funding as far as new companies that create the printers. Okay, okay. But then there are other companies that are buying these and actually applying them towards the industry. I wouldn't say it's mature, I've, I've seen different people out there that say, Hey, this is a mature environment, but it really isn't, because they're trying to figure out how to do this faster. So instead of, you know, companies like GM, and Ford, they're interested in this kind of manufacturing. But there's, they can't mass produce things yet. So when you start seeing mass, mass produced parts, then you'll, then I think that we can say it's closer to being mature. But we still have a long way to go,
Mark 03:56
I believe. I mean, my mind goes in lots of places. And I want to I want to stay in the proper lane, because I had no idea we're going to be talking about 3d 3d printing. And that I guess, I clearly we are, but I mean, isn't 3d printing the sort of the opposite of mass production? Isn't it like the way to make one off parts cost effectively, as opposed to just bulk? Well,
04:17
yeah, right. Now, that's probably the most common uses. They're using it to prototype. But Exactly, yeah, some of these parts that they make can only be made with a 3d printer.
Mark 04:29
interest. Right. So the only way our honor, it's a totally different way of thinking in it. Yeah.
04:32
So the 3d printer may print something that no other machine can do because you can make it hollow on the inside. One of the things that is happening lately is that they will take something Say, say like you're just looking for support bar, and they will make the inside of that support bar, like a bone where it's not just solid, but it has five, almost like five In it to give it more strength, but you're still using less material. So in the end, you end up with an even stronger bar with less material. So it's, it's really interesting how they, you know, it's just every day, something new some some different way to make things happen. That's amazing.
Mark 05:19
That's incredible. So what do you what do you do for these companies?
05:22
Well, right now, I'm still, I'm still not seeing a whole lot, especially here in the Houston area of companies using additive manufacturing. So I'm doing a lot more work for just your traditional manufacturer, but it's really kind of getting getting ready for the future. One of the things that we see here in Houston, I believe there's something around 900 machine shops, just here in Houston. And we're totally right. And that's just your traditional manufacturing, making, maybe some oil and gas parts or some valves or whatever. And with oil and gas not being not using that same boom bust cycle that used to be, they really need to start diversifying, because they're, these machine shops can do more than just oil and gas. So I'd like to see more. More progress, I guess, towards the working beyond oil and gas and Houston area, because we have the expertise here in town to do just about anything. Okay,
Mark 06:26
so how does that happen? Because that's everybody. People have been saying that since the 70s.
06:30
Right? I don't I wish I had I wish it was easy answer. Right. I think that maybe we try to encourage that that kind of development here in town. I know that in Boston and kind of in the Midwest, there's a real move to to create these new technologies and to implement them as fast as they can. Because they want to keep that manufacturing there. Right. Boston wants to lead in, in technology. And historically, a lot of manufacturing plants were in the Midwest with the car, car area, industry area, so they call it the rust belt. There's there's plenty opportunity here. There's a lot more engineers here than there are in those areas. So I'd like to see more happening. And I think just in the past, oil and gas has been too easy. Right? I say easy. These people work hard. And they're really smart, smarter than I am for sure. But
Mark 07:28
well, but when the money shows up, it shows up big and so right. It's Yeah, I
07:31
get that. So there's always been a lot of opportunity there. And I think that I think that it's time to start thinking about other things. And really with the with the different materials and, and things that they're coming up with every day, they're basically inventing new materials to print to, to figure out what they want, right? Because they want a piece that can that can do X, they will add, they will use their chemistry and engineering background to create this material using two atoms of you know, iron one atom of aluminum to get just the perfect mix for whatever their whatever their
Mark 08:19
their need is the supply chain is getting super sophisticated.
08:22
Right? It's Yeah, it's it's, it's, it's just incredible. It's just crazy, crazy things happening on and I don't see a push here in Houston to I don't see a strong push here. Like there's not a additive manufacturing center here where you can go in there and print whatever it is that you want. And there are some builder shops here. I think that
Mark 08:46
there's more to say there builder shop kind of thing. But they're almost almost hobbyist,
08:50
I would say I would agree with that, that they're almost hobbyist and you're trying to use some sort of free software, it's maybe not the best software solution. And I would like to see just some more, but we'll get there. I think I think that when we look at the universities we have here. It'll happen. It's just there needs to be more of a push.
Mark 09:14
Well, I mean, my mind's gone a lot of different places right now and not, not the least of which is this idea of diversification and maybe not even diversification it's like maximization of the potential. And for decades it's been How can we get unplugged from oil and gas dependency and then it's gotten better and some people will assert that it is better but I still see a very interdependent circularly dependent industrials, you know, complex of everybody working together other than healthcare, healthcare sort of this
09:49
this parallel. Well healthcare, it's a good place to start. There's already a large presence here in town and making medical beds Good. They're 3d printing models for surgeons. That's another thing another use where they'll do an ultrasound say someone needs to go in for surgery for Scotts splint, spina bifida, spina bifida, spina bifida, or the where the backbone isn't formed correctly. So there's a major intensive surgery to correct that. So they'll use ultrasound to scan that patient's backbone. And then a 3d printer can print out what that's going to look like in great detail so that the team that the surgeon and everyone else related can basically do a practice run on that model, before they do the actual surgery. Okay, so
Mark 10:47
I actually saw a pitch presentation a few weeks ago from a company who does 3d printed organs for that exact purpose. And they do they do both sort of cadaver substitutes, so you don't so you don't have to have a cadaver, you can just take one of the default shapes and dissect it and those like CT or MRI, aren't they you see what their sources but they basically replicate your insights. Right. And so you can do the surgery on a 3d model beforehand.
11:16
Yeah, that's perfect. And so more of that, right. Yeah. I wouldn't expect our suspect that every hospital here in town would want something like that, especially when you have people coming in from other countries to have their operation done here in Houston. So yeah, that's, that's perfect. That's what I'd like to see more of and but beyond just that, right, because that's almost a special need. How many people need that surgery? Right? One in 1000? Hopefully, right. Sure. But
Mark 11:46
every surgery, right? I mean, I guess the issue right now is, if it's a really tricky, hard, big deal, difficult, life threatening surgery, then somebody is willing to pay a large amount of money for a one off very high resolution difficult to produce 3d model that's today. down the line, us talking about mass production, if you knocked the thing out, if you know if your iPhone app can transmit to the doctor, your internal geometry, because of the it can do that from your watch, and whatever else.
12:18
Well, I think that you have to get that scan anyway. Right? Like, how do they know that they need the surgery? So it's a twofer? Yeah.
Mark 12:23
But I mean, I dental at some point, like, you know, your, your dentist that you know, you they're, they're taking x rays now.
12:32
There's actually, there's some of that going on, too. So say you need a new tooth. Yeah. I know that in the past some people that you need a cap, they kind of design what the cat's gonna look like, and then you get a temporary cap and you come back two or three weeks later, and they put it in, well, now they have the printer where they can just print it right there. So hey, give me you know, I don't know how long it takes an hour, two hours. And then they have it. Customer Yo,
Mark 12:58
you can you can get this today. Like
13:00
I heard I fortunate enough not to have a cat. Okay. I've got great teeth. But that is what I've heard. I've heard that they've had that. You know, it's when we talk about mature technology. I think that's a little bit more common, then, say, the spine replicas.
Mark 13:23
Yeah, that's a different thing. For sure. It's the same thing but the if every consumer who is going to get dental work done or any kind of surgery or tonsillectomy, whatever you're trying to get done. If you can do that aided by the 3d model that for everything, that's that's the future, but right now, it's sort of life changing with rehearsal.
13:47
Right. So I'm looking forward to it. I'm, I think that there's going to be many miniaturization to I saw just last week that there's a company that prints electronics, right, so I think about 3d printing a circuit board. And if you can make those channels small enough, how, how small a device can you make, when it's all all built in printed off of one thing, right, so I feel like phones and stuff already smaller. But if you can miniaturize even even greater that components, then it gives you more room to have a giant battery. Right? Yeah.
Mark 14:28
Can't make them all yet. Yeah, exactly. Exactly. So then you've got more power. So it's good. That's awesome. So what else you find in these days? What's going on?
14:39
Besides my, my pursuing, it's almost like pursuing a hobby for work, right? It's the 3d printing stuff, the 3d printing part because they always say do what you love, right? Or if you do, do what you love, you don't work a day in your life. And I think I finally found a spot where it's like, I can kind of combine both together, I'm working. And I get to read about this new technology that happens every day at the same time. So I'm still doing just the regular old valuation stuff, too. That keeps me pretty busy. I can imagine. Yeah, it's, you know, it's that time they, they've been talking about it for years and years, the, the baby boomers retiring and getting ready to sell their business, well, what do they do? So, either they sell, or they come up with some halfway half measure to get it done, and it's just the next, you know, 10 years or so it's just going to be very busy.
Mark 15:40
So tell me more about that. So I see people frequently, at that stage, they're somewhere in their 50s, or 60s, and something in their language has changed. They're saying, you know, hey, I thought I was gonna be, you know, independently wealthy by now, or that. I've heard that's one comment. But But I, there's an emotional part of the conversation, which is, you know, why why do you want to get the business to be better. And you know, what, you know, what, what's at stake here, and it is, like, you know, it's like, a lot. They're saying, I've got not that many more years of, it's not even life, it's interest, it's like, I'm kind of ready to stop being on the frontlines of the battle with this company, I want to find a way out. And I see a lot of people trying to figure how to handle it, hand the reins over and try to get out of the every day and move into the more visionary roles or even the ex officio roles, or an or, and or totally sell the business. So I'm seeing more of that. And I think that's exactly why they the age shouldn't be surprising, I suppose. But what what are the trends? What are you seeing that's common? It's going well, people are not surprised. People are very surprised about how far they off, you know, what do you what are you seeing?
16:56
Well, I'm actually not seeing a lot of people that are getting ready to retire, I see a lot more of people buying partners out. Really? Yeah, a little bit. Well, I mean, that's just what falls in my lap. I know that it's out there. And there seems to be a mix. Right? So there's a mix of people that are they greatly value the the expertise, right? Have have some like evaluation person, okay, right. But then I think also some of them just get some advice from maybe an investment broker or banker saying, hey, look, I can do and get your valuation for free, we just go to this website. And we'll type in your numbers. And I think, to your point of saying that it's important, it really is important, it's something that I don't think the general population knows what a valuation is, or what it entails. And Okay,
Mark 17:57
so let's go there. Because I, I'll tell you right now, I know what you do is valuable. But but in functional terms, I mean, having bought businesses and sold businesses, like I've never had to use for evaluation, like an official valuation, because to me, it's a marketplace, right, and somebody is buying this or they're not. And there's really buyers and who think that what they can buy is highly leverageable, or just a standard tactical buyer, which is like it needs to make dollars and cents as it is now that you know, EBIT, ah, type multiples. And so, you know, what is evaluation?
18:28
Well, you hit the nail on the head as far as market because what we're always trying to do is get to the market approach, right. So sometimes people get evaluation, they're not actually selling the business, they are just trying to figure out what the business is worth, because they've got something going on important in their life. Like you said, retiring is one of the things but another reason why people get a business valuation done is because they're trying to buy out a partner, or they're trying to and they want to do like a fair amount, or they're trying to not trying to but they are getting divorced. Okay. Right. You know, state of Texas. We're trying not to get a divorce, but they have, right. Yeah, exactly. They were trying or not trying, they have to get their business valued. So what we're trying to do in those kinds of situations, and sometimes it's also like a state like def tax type purposes. If there were sale, how much would this sell for?
Mark 19:27
Okay, so oftentimes, it's tax, there's actually no real transaction, you're trying to imagine a transaction for purposes of tax or liability or selling a portion of the business and
19:38
coming up with a fair price
Mark 19:39
wills and that kind of okay, yep.
19:40
So, but what we do, what the preferred method is, because there's different, there's different approaches. And then there's different methods. So there's like an acid method, or I'm sorry, acid approach, which would basically be this business isn't usually when we use an app. approach. It's either a business that's losing money, or it's in bankruptcy. Okay, right. So it's just what are the pieces worth? There's an income method, which is how much cash is the saint going to generate over the life? Or how much can we expect it to generate on this specific day. And then there's the market approach, which is trying to find comparable companies, and using what other companies are comparable. That's the price for this. And that's really kind of a challenge, because no, business is the same, right? businesses are almost like people, every single person is different. Every single business is different. Yeah. So that is really the challenge where what works here at Company A doesn't work at Company B. But that's also for me, that's the fun part of it. It's getting to see these companies and how they work and kind of peeling back the layers of the onion. Which that's fun for me. But that's what you don't get when you punch it into a website.
Mark 20:58
Yeah. All right. Well, so I don't have a relevant This is for everybody is listening. But I just know that whenever I was trying to figure out evaluation, well, there's, I mean, some of this is just, you know, my baggage from selling the business. But
21:15
well, let's talk about that. Was it a good experience or a bad experience? What would you have done different? If you had to do it over again today?
Mark 21:21
Oh, my God? Well, the answer to that is that you know, the problems you you're dealing with on a day, you're selling the business, you created 10 years before that, and so or some some distant time, it wasn't 30 minutes before that, in most cases. And so I would have had a wholly totally different approach to running my business. And when I sold the business, it was, I think I had very good experiences with the people who helped me through it, I think good advisors for sure.
21:52
Well, that's step one. You had a team of advisors. Yeah. Right. Yeah. So who what were the pieces of your team?
Mark 21:58
Well, I had, I'm trying to think, because I'm thinking when I sold my business, it was I had been approached, and I had a team of some some advisors who had been working with me to help grow the business. And there was the the team who was helping the acquiring company find come find businesses that fit their, their model. And so the integration side came from the purchasing team. So they were they helped, it was a services business. So it was important to understand that this is not like just a quick transaction, like you just hand over the keys and walk away. It's like, there's all kinds of, you know, transitional expenses and costs, and it was a dynamic valuation based on performance. And in terms of, you know, take this urn out type of pieces and understanding that the transition and integration had to go well, the client had to come over and stay over and employees didn't come over and stay over. And there was an it was there was a lot of moving pieces. So I mean, in the short answer is I had a very good experience with the process. My regrets come from, you know, if I had had the tools 15 years ago that I have now the tools I teach my clients and friends and talk about, man, I would have had a totally different life having a very much more focused business. So I mean, we could really go into lessons learned, and maybe we should, but I don't know.
23:19
So the tool set that you have now. So what was your motivation to sell? Was it stress? Was it just time for you to get out? What Why did you decide? Or you just thought it was? Yeah,
Mark 23:31
that wasn't at all it was? Well, the short answer is, well, there's no short answer. So let me just stop that lie right there. One of the many and answers is that I had acquired a small company, it's why I took two small companies. And the second one had some we'll call them non cultural fit employees and uncultured clients. And at the same time, I had a couple of key employees who were really holding together my culture. And it was they they left for one of them left, because we're just trying to move on one of them left. Probably similarly, both of them left on good enough terms. I underestimated the counteracting effect. And so I found myself with a way out of balance, non culture fit, essentially toxic mix of non fit clients and non fit employees into kind of a vacuum. And so six months after that had happened, I found myself struggling to want to have to have the desire. And this is a very sad story. But you could go down this path. I had had a very ambitious, very aggressive growth path for the business and we were supposed to be the acquiring company. We had done those acquisitions, but then when I took it on the chin, I was going through a divorce. And there were other factors in play, and I just thought I don't have it in me and I Think for the greater good of the company. There's enough asset value here in terms of the customers and our clients and the employees that maybe we should accept one of these offers, or at least entertain one of these offers for somebody who's interested in potentially buying us. So we did that we listened to half a dozen offers, three of them are serious and took one
25:19
that's great half dozen offers.
Mark 25:21
Well, you know, in that time, it was IT services, everybody was trying to, and it really hasn't changed much since then. But there was always trying to find those good deals. So many of those offers were not serious, or at least not either way to market or way to lowball or wait to something out of March, there was at least one of those deals system work because of the they were geographically not not viable. So by the time we had a couple of legitimate offers, I think I think that was that was fair. In the end, that was really all that was out there for me at the time.
25:50
Right. Well, that's great. I'm glad that you have that team and multiple offers. I think that my worst nightmare for a client is someone that takes the first offer that they get, right. Because it may not be a great offer, and maybe a terrible offer. And I think that what I've seen so far, like I said, most of them are just partner. So that one's still in the business or they're thinking about taking a partner on. But the ones that I do see, there's there is that emotional aspect of the business that it's hard for them to let go right out a friend at sold his business probably about two years ago now. And he had he had actually sold the business before. Okay, okay, so it was willing gas brokerage slash information company, and he had sold it before, whoever you bought it, or whoever you sold it to didn't really run it very well. He came back maybe five years later and bought it at maybe 5% of what he had sold the original company for. So he bought it back, and then built it huge, huge, huge company. So huge, but it had 50 plus employees, which is a fairly large company and and now now, he sold it the entire time that I knew him he was thinking about selling right yeah, there was p coming in there was just different. It was always a P e company coming in taking a look at his company, kicking the tires. And he's doing the same with with the buyer. For years, I would probably say seven years, he just talked about selling the business. But then, you know, when he actually did it, I was shocked. Oh, he's he actually did it. Like I just got to talking about it. Because you've been talking about for so long. And you know, and I think he probably sold at the right time, being the oil and gas and brokerage. He got out at probably the perfect time. But now what I hear is oil and gas is probably just not risky enough for him. I hear he's in a horse racing now. It's a couple things
Mark 28:03
crossed my mind. So one thing is like when I sold my business, I was like I was in a low personal spot. And I was ready to for something different and a lot a lot of levels. And that's a whole other episode, maybe I don't know, well, maybe another day, we'll go back and revisit that. Because as we touched the nerves on that are like magic, there's a lot there. But I was ready to go. A lot of people are not a lot of people, we were looking at various companies to buy a very common scenario was when they're under the stress of some kind they're interested in selling and then suddenly the nose two points up, and they're like, feeling smart again, and they don't want to sell and and when if they do, they're trying to sell for some ridiculous multiple. And so both sides of that coin as the as the buyer, potentially that's super frustrating or like, you know, pick up value, stick with it and sell it and don't, you know, dangle that in front of me and tease me. But but there's a psychology of the seller, which is can you really sell when it's, I mean, some people do they sell when the value is high, which usually feels like you're leaving with all the opportunities still on the table. It's like selling in the stock market when things are still cruising toward toward the sky. You don't ever feel like you want to sell and the businesses that kind of have the same problem. So now just talk about that experience because I don't have any real answers there. But you know, what's the experience? You see when when people are trying to pick the path pick the you know, it's so good. I have to sell it as the ideal, right? It's like it's so great. I don't want to sell it. I mean, I need to sell it. Yeah, I'm
29:34
not sure I haven't seen I haven't experienced too many people with sellers remorse.
Mark 29:42
Right. Okay. You if they push themselves out out of the nest, they're there. They're happy they did
29:48
you know? Yeah, I think I think most of them are happy that they did because they're less, less stressed. Right? But they need to have something else in their life. Right. I know. So many people that their, their entire life centers around their business.
Mark 30:03
Well, I actually had that too, right. So and I know that's a thing. So for when I sold the business, it was the right time to do it was the right thing to do. It totally changed my identity. Right? It was a different human being. Yeah, I was no longer a business owner, I was a former business owner and that, that, you know, that membership card fades fast. And in terms of like, Who are you? Well, tell me about your business? Well, I don't have one. Yeah. So it was in fact, I've had two or three years where you're working for someone else, I was working for the company who bought mine. And so that was fun. I was learning a lot. But my whole plate of problems changed. Because, you know, I had, really a boss had a boss. I didn't have my client base I had, Yeah, I did. But it was a little different. I had a boss. And it was really fine for almost two solid years, just a bunch of great people working together, solving great problems. But my identity was really different. And it was and it was really weird, just a walk around the world and feel like I was a different person. Now, I had the added issue of going through divorce at that time. So my identity was changing at all levels. And so it was tough to kind of hold on to reality at certain times. But I do know that that's a challenge for a lot of other people. There. They they want to be out of the challenge of their business, which is really very, some businesses beat you up more than others. And if you're like in an IT services business, everybody I've ever talked to who sold an IT business was like, thank God, that that we're going to start another one. Oh, no way, will I go back and do that managed services? No way. I'm so glad I survived. But other businesses aren't like the other businesses are just sort of like, you know, you catch a breath, and you go back at it. So I think everybody has different feeling. But what do you experience people with that identity crisis?
31:43
So I haven't seen it firsthand. I think I suspect that it's going to be out there more often. And it really has to cough into the mic. Yeah, I'm trying not to, like I got the sanitizer, we need that. I think it really has to do with what, what are they doing afterwards? Right, they have to stay busy. And I've, you always hear about the serial entrepreneurs that they get out of one business to start another one. I'm actually on my third iteration of the business, okay. But it's all similar, right? I was an audit only firm, and then an evaluation firm. And then now I'm on my new valuation firm. So it's, you know, it's the evolution, and I have a lot of the same things with, with why you why you left, I was just tired of audit, right? Got it only CPA firm, just valuation was just so much more interesting to me, because each engagement is different. So each, where I was doing audits, and, and within audits, like a governmental industry, so everything was kind of the same, it's very, it's become very routine. So even though each, each client was different, that the objectives were the same. And with valuation, I just feel that each one's different. And then also, what I like and why I enjoy it the most is I try to find ways to increase the value. Right? So giving all these valuations I've performed or companies that I've worked with, I can usually spot something that could be worked, that could be done easier. Most of my clients in terms of process, yeah, and terms of process are building the team. Most of my companies are small, smaller, right? So they don't have that, that management team. And basically one entrepreneur that's kind of done everything on their own, okay. And they're stressed and they're stuck. And what do I do? Right? Well, why don't you have someone come in here? You need a right hand man and a left hand man, and a sales manager, right? Why are women female? Right, right, right. Someone that you can depend on and help help help handle this, and keep you doing what you do best. So that's what I try to, to give to my clients. And that's where I try to bring value that they may not have seen before, you know, really, once they let go or because some some people just have a hard time giving away that responsibility, right? They want to they want to do it all themselves and be be the person in charge. Once they have the trust to turn that over to someone that's good at that, then their stress level goes down. The business is easier to run. And when the business is easy to run, if it's a turnkey operation where I can just walk away from it. And the business still going to run like I had been there every day. That's when you really have a valuable business. And it's also it's kind of funny, that's when you don't why sell it if you don't have to be there every day.
Mark 34:59
Well, yeah, it's So there's a there's a lot there's a so kind of working backwards, I think the thing is, the thing that I see is when some when somebody says I want to sell the business, I'm finding more and more people catch themselves and say, Well, I want to be able to sell the business, right? And so that's a different, that's, that's a huge difference. Yeah. And so when you get to that spot optionality is so critical. And if you're, if you're saying, I own this business, because I want to not because I have to just that is powerful, you know, hey, this, it runs great, it's super valuable, I could sell it, it's so valuable. And I could sell it so easily. I'm not because I want to own it for the same reason somebody would want to buy it. Right. So that's pretty powerful. That's where you want to be. Yeah, that's, that's, that's the challenge. Well, I'm glad we had that cuz I verbalize that now in a way that I think will be useful to describe to people, it's, you know, the power of, of doing things like the delegation and structure and process on what kind of go back to, as you imply there is not necessarily with the outcome of selling it in mind. It is about if you can create a company, that's that's worth owning, for somebody else to own it, you'll probably enjoy owning it too. Right? Yeah, more so than you do now.
36:18
And it's, it's an investment, right? From a business owner, if you're gonna bring in, say, a CEO, and you're gonna pay this person, a six figure salary, like that's directly coming out of their pocket, and they think, Wow, that's a lot of money. But the amount of value that that can bring in to their company, is unbelievable, because if you bring in the right pieces, they're gonna they're gonna up the whole, the whole level of the of the business, right, having having the right managers and having the right team, and being able to develop process where you can. If someone were to leave, it's not just this one critical thing, right? Where the whole company isn't worth as much because Mike from sales left,
Mark 37:03
right. So when I work with companies, I point to, you know, the six key components of EOS? And did you say 66? I'm sorry, I realized that there's that many keys, six key components of EOS, particularly the process component as what, but when when a purchasing company looks to why they think that company is so valuable, that's where they point they say, like with this was this was processes were documented and clear. And it was there was the essential secret sauce, we could read it, we could understand it, we know this is replicable. And that success is not an accident here. And we can we can take this other places, and we can replace people and still have the good outcomes. But that's only part of it. And it because you're pointing more towards that it's might be a size thing. It's not like you work with a lot of very small companies. And the companies that I'm thinking of are various sizes up to several 100 employees. And so it's all the same stuff in terms of what they need. But it sounds like a lot of the companies you're working with are struggling with just even the delegation piece. Well, empowering a leadership team.
38:08
Yeah. And if you want to get from one to 10, and then 10 to 100. Those are the pieces that you need. Right. So. So yeah, there's, there's I wouldn't say all of them, but some of them really do struggle with a delegation. And then you've got every once in a while that business owner that he works on his business One day, a week, you know, pulling in all sorts of cash, because he has that team.
Mark 38:32
So what's the difference that so in the leader, I don't even know what I'm asking for here. I know, because I it's definitely that question of some people are getting everything they want from their business, and some are struggling. And I see those leadership teams who are just kind of chasing their tail, same bad habits over and over again. And then I see other other teams who really kind of gravitate to the good habits quickly they see them they implement them. So when you see a company that you're looking to evaluate or just doesn't even matter where this was the individuals working on it once or twice a week or a couple days, and it's highly delegated. What do you see in the leader, that's different than the one who's just running around working seven days a week still.
39:10
So some of the biggest differences I see. One, it's personality, some of its just personality, right, controlling or wanting to have things in a specific way that they can't allow their marketing person to do this brochure, because this logo has to look like this and be in the spot with this kind of color. Right. But then other others, you know, they just can't have a hard time trusting someone to take over that. Some of it I think, at least in my size companies are the professional background, right? It's a salesperson that's just really really good and making sales so why do I need Why do I need to work for them? I can I have the relationships again, right? I'm I'm the one that that provides the service. Right? So, so they have that relationship with the client, they're just now they're doing their own company, they're providing their own service. And when you think about it that way that because of my relationship with the client, I was able to start my own business, they're me less, less willing to let someone else manage that relationship. Yeah. So so they get kind of stuck. And then, and then maybe they don't have the professional training to handle the back end, or the operations part of it, the great salesperson, but not not the best operator, probably not the best accountant, these are all little pieces of the business that add up to, to the overall value. So I see that quite often. And in what I do,
Mark 40:55
interesting. So on the sales side, so I have long since said that if you're going to pick a discipline, to go into entrepreneurship with other than the craft of your business, meaning if it's a plumbing business, and you assume you're a plumber, perhaps perhaps not the skill set you have the discipline you want to have going in is selling, if you're as an entrepreneur, as a business owner to be able to be in that, because selling led companies and marketing led companies tend to grow well, versus craft lead companies, if you're a plumber, or a struggle that get really good at the craft, and they're just not good at building the rest of the engine. And so when you said, Well, this person's kind of the salesperson, they manage all the relationships that kind of run essentially run out of bandwidth, the whole business runs through them, and they become the relationship hub. And so they don't delegate that piece, either. That's interesting.
41:55
Well, you know, that's just a specific interest. But I agree with the with the sales statement, it's not something that you go to college they don't there's no sales class, at least there wasn't in mind.
Mark 42:06
Yeah, I wasn't well, of course, I was in music school for a large portion, but I it wasn't as common but now I there are sales programs, university, Houston has a certified sales program of some kind, I certified I don't know if it's certified, but they do have a sale selling program. And I think it's might be related to the entrepreneurship school. And so
42:23
I'd be interested in learning more about that. Because I feel like that is something that almost every business person should have. Right? I my major was an accounting, there's no sales, right? But if you want to perform well and get to the top tier of your, of being an accountant, you have to be a salesperson, right? If you're a partner at a firm, well, maybe you don't have to, but the way to get there traditionally has been an accountant, someone that can do the accounting, but also sell to other people they used to call those people rainmakers. Yeah, the game's changed a little bit, but still not a lot. Yeah,
Mark 43:05
I mean, I still work with companies who are traditional professional services. And they're trying to create a very structured, scalable, efficient, leadership oriented culture. And it's very hard because all the conventional wisdom of being a lawyer or an accountant, is that traditional Rainmaker model, it's essentially an MLM I had that epiphany the other day, now, I'm just testing it out if you if you MLM multi level marketing is a pyramid. So like, the idea is that like, you can do a certain amount of work. And you can bring in some clients any run out of bandwidth. And so to make a big firm, you just got to get more of those people and stick them together. And the people who can do it a little better than the others and have the most experience and can bring the biggest name accounts in and delegate most of the work, they make the most money. So it's really this multi level marketing pyramid scheme. That just it works, it does work, but it has a lot of side effects and people and everybody in the organization works really hard right all the time. And there isn't really a concept of highest and best use if you know if you don't get to be specialists in your discipline, it's everybody's to kind of do everything right. So that's, that's interesting, but it kind of back to that concept of settling. I was realizing like my daughter recently, she's she's in college, and she's studying musical theater and there's a whole track to being successful with that requires a whole lot of knocking on doors and I tried to get her in the mindset of you know, it's a lot, a lot more nose than yeses. And then recently, she picked up a part time job selling Cutco knives. And so that's a tough gig. Yeah, so I was like, like this, you know, but if you if you if you learn this, you'll learn some selling skills. Well, it's been like, a couple months, two or three months and she loves it. She sees selling and she went to the conference and she's just she's just has no problem. Get the reps in and ask them for referrals. And I'm like, Man, you can sell Wow, wow. You can survive and like I know you now have a future where you can be in control. Because if you can sell, you can kind of do anything,
45:03
right? It's, that's what she must be natural. And
Mark 45:07
maybe maybe I mean, of course she attributed to her acting skills. He's okay, I've been an actor for a while. And this is going to be no problem. And it was startlingly No problem, actually. So I don't I don't know where this is going to go. It is it's relatively early in the journey. But the fact that she knows she can do that was kind of a nice thing. And I think that applies to entrepreneurs. So if I like I really push that to anybody that, well, there's two sides of this, and I don't know how far down the path we want to go. But if you have a sales background, and you are starting a technical business, or any other kind of business, where selling is not the product, that's a good ingredient, because you have to delegate the technical pieces, the other parts that are not selling and you're likely to be in control of the growth of the business, you're likely to gain lots of insight into the needs of your customers. And you're likely not to get bogged down in delivery, hopefully, and that's a, it's a good, it's a good ingredient. And the flipside is also true. And I definitely want you to respond in any part of this that you think is interesting. But the companies who are stuck, I see people stuck. And this is the conversation I had with with Mike the other day talking about sales, don't mean I'm Mike Verity. And he, we were talking about what happens when the company is trying to grow, and you ask the owner what's going on, and they don't know, it's because they haven't pushed themselves and they haven't stayed involved in the sales process well enough, they haven't collected enough information about what their clients need. And so there is oftentimes a technicians bias away from selling for a lot of reasons for that rejection, or the lack of interest in the process, or anything that's kept them from it. But it's really dangerous for the for the leadership at a company to to not have that intelligence and to not be as plugged into the customers, they could be because the the technical side of the business or the doing service, it kind of pulls them in.
46:58
Yeah, that's, that's, to me. In some ways, it's kind of crazy. But I think I've seen that before, where they're just basically so in love in their product, that with their product that they forgot to make it easy for their consumer, right or their customer, I see that I have seen that before where in this case, it was a software company that, you know, partner splitting up or whatever. And I, the product was fantastic that the downside was, they're trying to compete with Salesforce, which is just a huge monster in their field, like CRM type stuff. But the good thing is they were in a niche, right, they were in a very nice, they're in the right spot, their software could be applied to a lot of different types of industries where there was a need for that, and that software would have made those companies that adopted it more profitable, easily very more profitable. So great mousetrap, I happen to know the CEO of a very large company that this would have been perfect for. And the owner, my client didn't want to break away from working on his product to meet the CEO, which would have you know, it was huge, it was huge been, I think that it was one of those things where he was just so into the technical side of it. And that was the company's struggle is that there was no sales team at all. And when you get that far away from actually knowing what your client needs, and and what's the person in the field, how's the person that field going to use this? Sometimes there's a disconnect there. And even though this guy saw it, he had a hard time expressing that to the client. And I don't know, whatever happened to that to that business if they're still around or not. But it's, it's pretty crazy.
Mark 48:57
Well, that's interesting, because I do see dramatically different types of businesses. If you compare an artificial intelligence company that has got a roomful of floor full of data scientists trying to figure out very, very tactical things. There there is it's a different ecosystem, I would call there's taking raw technology and making it work. And then there's the commercialization side of that. How do we take a an algorithm I'm thinking of a friend's company, the algorithm increases the accuracy of facial identification by some seemingly small percentage that makes it makes it from from 97% to 99%. And so then, that sounds like not that much. But 97% is basically useless. Right? And 99% is basically always right. And so you know, that 3% difference or whatever was a big bill and so they were looking at all the obvious use Have that like, security and you know, NASA related stuff. And obviously this is this is gonna go the airport, that's where they're going to use this clearly right? No, they use it in events, high volume VIP event, attendee identification, and that's where they're marked as for what like security for now for, like tickets, really, like you show up at a big event. And like, Oh, Mr. Leary is ice here, just come on over here, we'll get you right to your VIP section. And, you know, instant online registration and right and so, so so it's improving the VIP experience VIP, and you can use it across, I think it's primarily targeted VIPs. And I should read on his more recent newsletters, but I know that it could be applied to just, you know, 1000 people walking into event at once and basically read bulk read, you know, book receiving instead of tickets, you can identify the whole crowd, and you can tell the story, people are not registered, you know, I sent somebody down the line, I don't think it's nearly that, that sophisticated yet. But so I'm just saying that there's, there's a commercialization component that is very sophisticated, as opposed to, I'm a marketer, you know, if I'm a marketing company, and I'm trying to understand the marketing products that I'm building, and providing, I need to really have a relationship with my customer. And in the technology scenario, I think it's just easy. And I'm kind of thinking out loud here and thinking does it do you need to have an abstracted layer? Do you need to have a person a team out there talking to customers and figuring out how they might want to use it, because you're so because the chief scientist is really just so much into the technology, they don't really have time to meet with customers. And I'm just, I'm just finding that I don't, I don't buy that I don't buy that at all. I think that it's really about, you have to own the voice of the customer. And if you're trying to commercialize a product that's highly technical, then that just makes it that much harder. And you've got to be having that many more conversations with your potential audience and buyer, because you may have to make a decision that says, you know, that the NASA or the airport system thing sounded really good, but I see a bigger opportunity in Event Registration like that. Who's gonna make that call? And that's a huge call.
52:09
Yeah, well, I mean, you can really, it's the same product, just market it in different ways, right?
Mark 52:16
Absolutely. That's exactly. That's the art of commercialization. Yeah. And you find you've got a, you know, you've found a way to synthetically grow Sapphire, right, because I knew a guy had a company did that. And he would, and that was years ago, and I don't know where that company went. But he was like, I can grow Sapphire in a lab. Like, what do you do with this? I don't know. No idea. I always wanted to be a jeweler, right? Like, the idea was like a film that could create a sapphire film that you could potentially put on aircraft windshields, or something like that. But I think even that was an idea. Right at the time. I don't know what they did with it. If they did anything with I have no idea. Yeah, I don't know where that guy is now. I should look it up. He's
52:52
president Sapphire carbon.
Mark 52:55
Well, yeah, Sapphire and diamond are very, very close. Alright. Yeah. So it's just an and so this of course with sapphire crystal like, not this watch. But like other watches I have that are Emma sapphire crystal. It's it's very, very hard. And so it doesn't scratch. And so it's very
53:08
nice utility heart as a diamond basically. Yeah. Well, you know, that substance called graphing. It's basically pure carbon. That's, we're going back to the 3d printing here. Okay. So, graphene is it was meant here in Houston at Rice University, okay. And it's basically pure carbon, what, what they're finding that the nano level is that materials don't behave the way that we anticipate when it's just pure carbon write a line of just pure carbon, so it can transmit electricity, it's very strong. And they're using those kinds of materials, too. So the idea is that you would have some huge building. I mean, we're talking about stronger than steel. Just graphene. What? Yeah, it's it's stronger than steel. I don't know how many times stronger, but it's very stronger and steel. And it's carbon. So your your friends, Sapphire business, I think is probably got a lot of potential. Because if you can do that, I think the blue in a sapphire is probably a considered a impurity for those people that use Sapphire can be clear. Yeah.
Mark 54:24
So you can be able to Okay, yeah, there's totally transparent.
54:26
So if it's, if it's clean enough, and he can make sheets, they can make a battery out of that that is just unbelievable. I saw something just the other day where they're using this pure carbon to make some sort of nuclear battery using nuclear waste. Right. So the radiation that comes off of it, they put it in this carbon box, that radiation somehow creates energy, and they're thinking about using that is, yeah, it's pretty, pretty neat stuff. But how small they can make batteries and batteries that would potentially last forever, if using nuclear waste, which is what that sounds
Mark 55:04
amazing, yeah, cuz that's the big problem with it with nuclear waste is that it lasts for 10s of 1000s of years or something like that, right? It's like you can't get a phone that can last more than 24 hours, you know, to 10,000 year battery would be great.
55:17
That sounds awesome in some ways, but also like, we're just gonna give nuclear waste out to people or charge them for it. And the battery just, you know, it's apparent maybe the phone will last forever. But is that's not why people get rid of phones, right. It's
Mark 55:31
a problem for different Yeah, a different day. But yeah, we'll just kick that down the road. Okay, we'll do that. To see what up really well. So don't drop the phone.
55:41
Right. or lose it? Or drought? Yeah, exactly. In the while you're swimming or whatever, at the bottom of the ocean. Yeah, so I don't know. It's just it's very, very interesting. All the different potentials and, and where you can go with, with this, all this different technology. And you're right, it's you never know where where you end up with?
Mark 56:03
Yeah, I totally agree. Sorry, just take a little note there.
56:11
There's a lot of notes there, sir.
Mark 56:16
Well, I guess I'm kind of torn. I want to talk more about the really cool, geeky stuff, because that's, that's really interesting. I also want to make sure you don't skip anything around. You know, come company trying to become more valuable. Around delegation back back to that concept, delegation leadership, I talked about processes. A lot of times companies are trying to find their number two. Let's see that one a lot, right. And an EOS terminology, that's usually what we call the integrator. This is somebody who can drive accountability, an organization can keep a plan on track, really a leader, truly a leader that can run the business, but doesn't necessarily have to show up with all the vision and all the ideas. Typically, there's the founder, visionary type person who provides all of that there's plenty there. And there's a great chemistry between those two leaders. And I find that to be the most impactful transformative delegation that happens. But that doesn't happen that quickly for all companies, sometimes it's just a small company bringing in a really serious, big gun leader, General Manager, President, CEO type. Where do you see people making their first step?
57:36
Well, I think that that it depends on the company. Right. But I do think that that's an important piece that a lot of people struggle with. I see one or two things, either a, that integrator part that are the integrator, yeah, integrator part, that aspect that just, the owner just can't do everything you need. You need that integrator to, to execute the ideas and to make sure that things happen, and that the company is moving forward. But I also see parts where company owners, they don't know what to do, at least here in Houston with the manufacturing part for sales, right, going back to the sales. Okay, I've sold to my three same oil and gas guys, for 10 years now. I've got these capabilities to make all these different tools with my with my factory, but I just haven't done it. I haven't made that step. Who do I call? How do I? How do I use this empty capacity? Because I think maybe all the machine shops, the 900 machine shops in Houston right now. They're like half capacity, all of them. So how do I fill that empty capacity was something that's not oil and gas?
Mark 58:57
I think that's a complex problem, because I'm hearing potential massive decisions. One is, am I am I not selling enough? Is that ever
59:07
sold because it's you know, some of these machine shops were only founded because a a distributor or someone that used it had a hard time obtaining this product. So they said hey, look if you can make this
Mark 59:23
nice for me there was like, Yeah, I can't find a certain thing. Right? You make that?
59:27
Yeah, can or it's too expensive, right? Yeah, can you because we know that it's, you know, just uses with this machine. You press a button you come back, right? Eight hours later, it's done. Can you do this for me? Oh, yeah, I know how to do that. Okay, if you do that, I'll buy all my things from you and I'll pay X amount. So now this guy's got a business. Right? Right. Right. And and over time you start selling someone else and someone else so he's only makes, you know, a handful of products. has a handful clients. And because of that they fell in his lap, right? He never had to make a concerted sales effort because he was always busy with oil and gas. And, and the business just came to him. So now he has to figure something out. Okay, so and I say hey, there's like arshi Yeah, and there's, you know, 900 people just like him in the city that
Mark 1:00:18
so so to me that there's some scary questions there. It's, it's where do you start because the excess capacity is there. And the temptation is I can make this product, therefore I should make more products. And I'm generally in the habit of advising people to stay focused. And so the danger, a danger, I see is people pursuing diversity for the sake of diversity, but randomly, like we can make screws and was there we can make this other kind of things. And, and and what in two years from now, and we'll make all these rent we make what do you make you make screws for oilfield and healthcare and for you know, telecommunications? Like Well, what what do people know you for? That becomes a very difficult question to answer, right? I mean, sometimes you can say, Well, we've got a certain type of material in any industry that uses this type of process. We're the we're the market leader in this process. Yeah. Like I talked to a guy a guy I'm working with to kind of advise him He specializes in non woven fabrics. Okay, so like if you now he was describing this to me, and suddenly I realized her everywhere, right, so like a baby wipe is a nonwoven product, a weed barrier and put in the ground might be a non woven product. So it's not woven together with interlaced fibers, they put them together in a totally different process. And so he's he actually specializes in fire retardant nonwoven one product that goes in mattresses, okay. And he's looking at other applications and things he can use his nonwoven equipment for,
1:01:59
say, is he trying to move beyond fire retardant or,
Mark 1:02:03
well, that's part of this conversation, but he's got plenty of market in the in the, in the fire retardant side right now. So, so my advice to him is, well, let's, let's understand your buyer, what do they need and make sure we really get behind? Get behind that curtain? Because the most foolish thing you can do, I think, but that's dramatic statement. I think the most way a very wasteful decision is to go enter a new market, before you've even had done any intelligence to figure out what percentage of the market you own, like you may own none of your current market and have all the opportunity in the world to take it over. And there's no need to diversify in that sense. I mean, that's a secondary concern. If you're worried about growing from a half a million dollar company to a $500 million company in one segment, and you're thinking I'd like some diversity, that's fine, to totally different question as opposed to like, Hey, I'm a half a million dollar company, I'd like to get to a million. So let me enter another market. Now. That's, that's a terrible idea. That's incredibly expensive in terms of marketing, it's incredibly inspect expensive in terms of learning and references and repetitive processes and all the things. So you know, you have to understand the cost of diversity, which is a formula, right? So if you if you're entering a totally different market with totally different regulations, that's very expensive. If you're, if you're just making a slight shift, because 99.9% are the same and you understand it, well, I'm not gonna erode your branding in the marketplace, it's a totally different thing. So I'm always coaching people to you know, why Why did you do this? Why'd Why are you what, what kind of things do you like to solve? What kind of things you have to create what's what's, what passion is driving this? And where are we playing, where you playing at the highest level, and let's make sure we're crystal clear on that formula. And at us, we call it the core focus, and it's really important to have some clarity on that, before we do something, like add to diversity,
1:03:49
I would agree with with, with what you're saying, I think that maybe part of the, the machine shop example problem that they have is that their product is basically indistinguishable, right between these 900 machine shops. At the end of the day, if it's a valve, that Valve should be built to a certain standard. And it should be exactly like the valve perform, you know, built by all these other all the other manufacturers. And the difference might be if it's a special order valve, right, where it's a different heat or whatever. But that's that's kind of the problem is that they don't own any of the market. No one knows they're putting their their product from the one across the street. But so, so that there's commoditization, yeah, exactly. It's commodity.
Mark 1:04:37
So I work with commodity businesses all the time, and I and I get that it's not the same. So like with that I work with a high technology company that really has like an earth shattering the new product. That's really fun, because you're like, everything is new and everything is different, right? But then but then has its own set of costs because you're educating the market on something that's never done before. And so that has its own challenges, but the opposite side of that is is high commoditized businesses where we're nobody of the 900 machine jobs, like, how many of them actually chose to be, or thought about uniqueness? Like even even gave rise to give any thought to uniqueness? Because I'm because then I, when I find the ones that are like, Look, we're the same as everybody else. I don't, I don't think they are. When we say like, really? What do you value? Are you? Are you have a high volume, like why did you get here it is quality really matter to you, which sounds like something that could be commoditized. Like lots of the 900. Many of them are perfectionist. But I can assure you that not all of them are perfect. So we can kind of tease that out. We can say like, Look, are you really obsessed with precision? Yeah, okay, well, then let's write that down. And let's add that to the pile, like what else matters to you, you know, sophisticated complex products or high volume simplistic products. And we start to what kind of problems you want to solve? What kind of age culture Are you trying to create? Are you just a teaching culture where you want people to learn a craft is this like a transient place where your people kind of in and out, you know, and so once we start to pull apart the uniqueness of the culture, we can start to figure out why you're at least a little different. And we can start to call out bad clients, bad, bad relationships, bad products, and we can give maybe a way to go to a way to go forward. Right? Because I think it's critical to have those I mean, I'm really combining two conversations, core values, and core focus, core values, whatever you hold sacred, and that changes the culture and an important point in a way, that's what the people walking through the halls and working with you only to kind of this core beliefs that you need to share, and that we need to have good crystal clear conversations about that, then the core focus is really why did we start this company? And where do we compete at the highest level? And how can we find our real sweet spot for work that we do that's high value for our clients, we love doing it, it always goes well, and we do it, we want to get more of it. And we will get more of it. And if we can have those conversations, it goes back to sort of the circular conversation. Like if you've got this unused capacity, it's it's a scary thing. To say like, we'll go sell it out, right? Who's going to do that selling? And what are you going to sell? And if it's the owner, it might be a good thing, it might be a great place for you to learn what's out there, and what do you like, and what do you not like, and it might be very expensive, like meaning like, you might get some contracts that are really going to hurt you. I can't really, you can, Oh, I got a million of these things. And it's been a disaster. And they're six months late on payables and receivables in there. And there's all these all these reasons why I would want to be in that industry. But at least the owners learning that. But it's really dangerous when you just say go sell something and people buy, that's good, because two years down the line, like what are your specialties, you really don't have anything and you're going 18 different directions and nothing's efficient for you.
1:07:48
Yep. I agree with that. It's, it can be a pretty good challenge. I mean, that's, that's I see the challenge for a lot of these. I don't want to see the smaller manufacturers here in town, it's that they just don't have that support. It's just, that's all we did was build this one part. So are two parts or three parts. And now, now that's there. So it wouldn't surprise me if a lot of them. This is a tough year, I just before we came on here, I just saw that. Texas manufacturing optimism is up. Okay, a couple months, okay. But I still feel that come here next year, a lot of these manufacturers are going to be gone, because it's just not the same. Right? Maybe there'll be around and kind of humming be okay with whatever sales level they have now. But over time, I think that some of these some of these manufacturers bought the machines when the boom was there, and now they have a hard time making payments on those manufacturing parts. So are you know much
Mark 1:09:03
of equipment and they're doing materials?
1:09:05
Right, right, right, lower? Yeah. And iron still are still still very expensive. It's gonna be it's gonna be a tough year for them. Well,
Mark 1:09:14
so maybe this is kind of the final point. Two years ago, I started wondering when the economy was going to kind of slow down. And last year I sort of asking people, what are you doing to prepare for the slowdown? And it was kind of a funny question, because about half the people I talked to would be like, What do you mean, right? The other half would be like, Man, you know, I'm really worried. I'm hoarding cash. I've been I've been I've been going to cash for the last several months. I can't believe it hasn't crashed yet. And that was a year ago,
1:09:38
right. About a year ago, everyone was talking about how the economy is going to crash.
Mark 1:09:42
Now I feel like everybody sort of forgotten about that. And but guess what, you know, it's it's not didn't go away. Like it didn't it didn't forget something. There is going to be a change in the economy at some point. So what's your take on that? Well,
1:09:53
it's you know, it's hard to say I'm not really the best economist out there, right. I end up having I subscribe to a lot of different economic stuff, because it's hard for me to see all these signals because there are mixed signals, there's a lot of fear in the market, there always is. But from what I see most, most businesses, even if they're, they're, you know, quote, unquote, down, they're still profitable. So, you know, a lot of that has to do I think with with the tax changes, they're making more cash, they're putting more cash in their in their pocket, even though business is down, they're still gonna cash happy. So I really don't i don't foresee anything drastic as far as industry wise. Right. I think that I think everything should keep humming along a little bit. And you know, what I what I foresee is for at least oil and gas pressure on what it takes to drill a well, as as far as right now, there's not as you know, the, there's not a lot of demand right now, we're not drilling a bunch of wells right now. But when you do drill one, it has to be more cost efficient than what has been in the past. So I think that there's going to be pushed down on prices. And then you know, everything else is just kind of just riding like, with with inflation and whatnot. I saw somewhere that the sales of new cars are at an all time low, even though Yeah, even though they keep talking about how India is going to start buying cars, or China's going to start buying cars. And that's where the growth is at. But here in the States anyway, it's, you know, we were coming at a point where we're, we're just replacing cars, everyone has a car. Yeah, everyone that needs car has a car, and people are starting to rethink, do they really need a car, I go, just Uber, wherever I want to go. And that's a tough town. I mean, Houston doesn't have public transportation. But there's a lot of Uber and going on, I think I see more and more where people they don't even own it. They just Uber to the to the breakfast meeting or the lunch meeting, and they don't have to worry about parking. makes their life a little bit easier. But also they apparently live inside the loop. Right?
Mark 1:12:16
That Well, maybe. And it's interesting, because I think about the idea of a reliable car. Like that was life or death before. And now I'm thinking, you know, if my car like kind of almost anywhere, like between here and like a long drive, if it's a three hour drive, I'm thinking if I get stranded in the middle, that could be a challenge. But anywhere else in the city, I'm just I my plan B is, well, I would park it there and I would take the Uber, right fine. So like, if there are a lot of the cars not reliable, like that, just I'll be 10 minutes late,
1:12:43
so you're gonna drive your car till it dies.
Mark 1:12:46
That's apparently desire. But that is that is apparently what's happening.
1:12:52
That's always been my dream is what you know, my car, it gets hauled away and just sent straight to the dump. Right? Like the parts aren't even worth anything. Just drive that thing to the wheels comes off. And hope you know, hopefully we can do it. I think my last car I traded it, and I got 100 bucks for it, which is perfect. In some ways. Wow.
Mark 1:13:13
Wow, that's all the way down. Yeah, I gotta figure this the metal traded scrap value? Well, there's a cost
1:13:20
of taking it apart. Right? There's probably a lot of plastic involved in that one.
Mark 1:13:26
Man, this has been good. I think it's probably a good place to any to stop. Anything else last you want to share things, things that are crossing your mind?
1:13:33
Yeah, I don't think so. There's a long discussion. I don't know if we really even got that much into valuation. But it's no
Mark 1:13:41
we did. And so that's kind of like how these things go. But I kind of write into the notes like what we talked about. Right. So. So we'll do one on valuation at some point.
1:13:50
Yeah, exactly. So we maybe this will generate some questions. And yeah, for sure. Yeah.
Mark 1:13:55
So in the meantime, if somebody wants to get a hold of you, how do they do that?
1:13:59
So the best way to track me down is to go to my website. And it's mF g valuation calm. And from there, you can email me call me learn more about what evaluation is or what it takes to win done. So that should be a good resource for someone that's trying to get hold of me.
Mark 1:14:17
Awesome. Thanks. Thanks for that, man. Well, thank you, sir. Thank you. Thanks for having me on. It's good. It's good experience. How do you feel? feel all right. Yeah, yeah. Did we talk about what you wanted to talk about? Say No, you know, it's it's okay. I'm,
1:14:35
I'm glad that it was, I think conversational. Right. So that's a good thing. But no, I didn't I barely scratched the surface as far as valuation. That's kind of what I was trying to like, gear myself up to speak about and maybe one of my struggles really is educating what is evaluation not just to my clients, but also to my referral source here. Yeah. So that you know, whenever we can get that out there, but it may not also may also not be the most interesting thing to talk about. Right? Like, you know, that's one of the things on my website, it's like, putting together a short little PowerPoint, these are this is what evaluation is. And that's it, right? Because most people don't know, or what does it take to do? And that's a tool I can give to my referral sources so that they can hand it out to their clients, because they're the gateway. Right? Sure. So just a little tools like that. But, uh, yeah,
Mark 1:15:34
so is there anything you want to share about what a what an evaluation is at this point? I
1:15:42
mean, it's just, it's, it's a process, right? It's a process that it's not, I don't feel like it's that bad. But it is a process where we go and we look at your information, your financial information, we sit down, and we talk and dig into your industry, and what makes your company where your company fits in that industry, and what makes it different. And then try to try to figure out what I like to do. That's my favorite part. I call it valuation, but it's really almost consulting. What makes your company successful in its industry, and what you can do to make it more successful are growing. That's, that's my favorite part of doing this.
Mark 1:16:26
How do you do that?
1:16:28
Well, usually, there's a decent amount of data out there where I can compare a company. Right? So say, one's more comfortable, one's more profitable than the other? Well, why what what is it that you've done? Are you spending more than than other companies? are you saving more? Right? Like somehow, and actually, a lot of the clients that come to me, are usually more profitable than their peers? Right? So then I start having a day out why, like, Is it because of rent is because of your labor costs are less? What is going on? So? And then what can you do with that? If your company is 10% more profitable than every other company out there? You're doing something, right? How do you grow your company, and keep that advantage to you, you know, to yourself, then we usually what I see, for a company that is more profitable than others, it's because they've done some sort of specialization, like you said, they've, they're found some sort of niche and are exploiting it to the full extent, and, and usually some sort of new service or something that they can't get anywhere else. So what are some examples? So I had a client about a year ago that made uniforms. Okay, right. There. There's not a whole lot of money in uniforms. Right. But they had found a nice and I don't want to talk about because I want to give up their secret, okay. But it was, but is basically bowtique and upscale. And they could, as a smaller company, provide a higher level, like a higher level uniform, like this isn't for janitors or something like that. This is for a business that is a business is catering to upscale clients, right. So they want their people to look upscale. Okay, so there had upscale uniforms. And
Mark 1:18:34
I mean, I don't want to get into this. Yeah, like businesses this I mean, this is not like it's not uniforms for attorneys. This is not this is Yeah,
1:18:41
universal returns, but like restaurant, like, like tality Yeah, hospitality, absolutely. hospitality, but hospitality upscale hospitality. Right. So what are your choices? You know, TGI Fridays, is just like a polo. Right. But say you were to go here to one of our fancier hotels, their, their uniform isn't the same as it would be at the Hilton or, which isn't to say it's not upscale, but definitely more than, say, the Best Western or Sure, oh, you know, like, they, they and some of these companies, some of these boutique type hotels. It's also they're also having a hard time finding the right people in the job, right, hiring someone that's willing to work, good people to do that job. So they almost use having those nicer uniforms. As a recruiting tool, they want something that's nice enough where this person isn't going to want to take it off. When their shift ends. They're going to go have a drink with friends, right? Like it looks that nice that I'm just gonna wear this out and meet up my friends after work. Where you may not do that, if you're you know, if
Mark 1:19:56
so as part of their business, the design of the of the the unit forms are they just I think here for them in a certain way that
1:20:02
part of it is the design, okay? Because they can take something that is being shown on a runway, right? It's almost fashion. It's like clumsy fashion. But at the same time, they are using their sourcing the production, non China, but like maybe, I don't know, like the Caribbean or somewhere else where nice low cost. Yeah, low cost. And, and they're very good about making, making the, you know, there's some, there's a computer involved, right? Or here's the, here's the design, and then they can transmit that to their tailor. And then they can just start printing on whatever kind of material and whatever kind of shapes that they told them to, to produce it. Okay, so if if I were to look at that business and look at its profit margin compared to all the other in that little industry, they're growing, everyone else is shrinking.
Mark 1:21:03
Yeah. Well, they've got a unique value, and it can be known for something they have that. Yeah, I think they are. I think that's a great example. And people struggle with the idea that industrial anything is commoditized. And I think what's especially deceptive about that, is that you look at a business like that and think Well, well, that's a great idea. I should do that. Well, maybe maybe not. The fact that they found this simple niche, yeah, of upscale hospitality uniforms, where they can really get good at that. That was not a small decision. for them. They either they either were almost on the edge of not realizing it was high value, or they beat themselves up over and over again until they finally decided that was where they were going to commit. Because it just this simple decisions always look so easy in the rearview mirror. But when you're when you're a got a commodity business, and you're trying to D commoditize it right, it's so hard to try to figure out what do we do this different, especially if we got customers and all I bet you that customer has totally low value? I mean, that company has a totally low value commoditized customer somewhere in their past or even in the present.
1:22:12
Oh, yeah. And yeah, I think it actually started by you know, the owner's father was making aprons for grocery stores, and it was all based off personal relationship, right? Yeah. Yeah. Can you do this one? We're like, Yeah, okay. And he's, you know, doing it, doing it at home at night during the days is making sales at night, he's actually making the stuff, which is kind of, you know, you're working 80 hours a week, doing that kind of work. But over time, I think they, they evolved to figure out, okay, we can make police uniforms, but that's bid out to the lowest bidder. Right? Okay, so, so the money's not there. And where, where do we find? Where do we find the company that wants something better? But and is willing to pay that? Because there's other company? You know, there's, I can't recall the names of like, I say, Cisco, I'm sure. No, no. There's like a uniform company called Cisco. I know, their Cisco foods and their Cisco computer. There's, I think there's a uniform, you know, totally generic, right? Yeah. And so it's a big time uniform company that's got locations all throughout the US, but they're not going to, they're not going to take the time for some, you know, Boutique Hotel in New Orleans that wants some sort of special thing. Here's the catalog, choose out of this catalog. Oh, yeah. And and lets you know, and then we can help you. But that's the thing is, it's a bowtie hotel, it doesn't want to be like everyone else. So they don't want the same uniform as everyone else.
Mark 1:23:45
It made this point. I mean, I want to make sure if you have something else you want to add devaluation, but but that's I love that story. I love that is that 10% better. And, and we just shaved a little bit off of what we were doing before, which is kind of anything for everybody. And now we just do a little bit nicer stuff. And that's a saleable business. Right? That's, I mean, you can shop that business and you can and people want to buy that business. And you're, that's, that's just
1:24:11
Oh, yeah, they're getting offers by the time I was, I mean, I think that might have been their motivation. Yeah, is that they were approached and they're like, Well, okay. If I'm getting approached, how much does how much am I worth? I need someone else to say if this is worth pursuing or not. So when I came up with the value, they're like, they were actually very happy. Okay, that's not everyone. Not I can make everyone happy. Sometimes it's it's not that easy, but they were very happy and they said, Well, you know, what about the economy the next year? Should I sound like, I can't tell you, you know, because they're their niche is dependent on people traveling, right. And if you if the economy goes down and people don't travel and then hotels go out of business, no. Yeah, so I think they may be trying to diversify for that reason, too, right?
Mark 1:25:05
There's a cost for that. Yeah. I don't think that idea but you know, yeah, you got to every every business is different case of case on cost of divorce.
1:25:13
But um, you know, so well, what can I do to increase the value of my business? like, Well, look, you've got everything here. If you want to get X amount for it, then you need to hit X amount of sales. And if you think you can do it, because he said that I can do this, we're going to grow 30% this year, do you think you can grow 30% this year, grow 30%. And that automatically increases the value of your business by 30%.
Mark 1:25:39
So they'll do maybe more of evaluation arbitrage if you're getting right to a bigger ceiling. That's true. Yeah. So and I think it was a PE group trying to kind of roll up, right, because they're not the only ones with that idea there. They have competitors, even in their little niche. But I want to skip over that concept for people who don't know what is what valuation arbitrage is. But basically, this idea that if $1 million company met might be worth one multiple. And we'll call it will just for simply simplicity, we'll call it, you know, one times revenue, probably wouldn't be just a simple simple math is one times revenue at a million dollars. But as you get closer to 10 million in revenue, we might see it worth 1.2, multiple on revenue, because what we know about a company that's $10 million, as opposed to a company, that's $1 million, is I can probably grow a $10 million company to a $20 million company without dying. If I have a $1 million company, I have no idea if I can even make it to 2 million because we haven't passed the thresholds that go with growing a company. So understand it. So understanding that like, when you're selling your business, the value is not exact multiple. As the company gets bigger, it ostensibly gets more valuable on a multiple, because bigger and bigger players can use it in a way that where they know they can grow it and add to it that it's just not a guarantee of a small unproven company that may not have processes that may not have a leadership team that may not have the missing pieces to allow them to grow and roll it out.
1:27:09
Absolutely correct. We call that a size premium.
Mark 1:27:11
Okay. Sure. Right.
1:27:12
Or sometimes it's a discount for having a small
Mark 1:27:15
Oh, yeah. Yeah. It's a great way to see Yeah, yeah. People have friends who sold their business for x. And it's like, well, yours is smaller is a discount for that.
1:27:23
Right, exactly. I think that a lot of times people get caught up in that, oh, my friend got x times for this. And it's like, well, that's not the same either. Right? Like, it depends on what multiple you're using. Someone was, I had lunch with a friend of mine on Friday, and he was talking about how, like how much this gross revenue was, and I was gonna pay one times gross revenue, and I'm like, you don't want gross revenue? That's, that has nothing to do with profitability, right? Like, who cares if it's $1 million? If it's $1 million in sales, that they're losing half a million dollars? It doesn't make any sense? Yeah. So you always have to be careful with that, and especially if it's different industries, that that's not even comparable,
Mark 1:28:08
right? Oh, yeah. And she told me totally different.
1:28:10
Yeah. What else? You see? That's as far as as far as what like, different really on your success rate? Sure.
Mark 1:28:19
There's something you want to you know, you know, what's what's welling up inside you to share about valuations, given we're kind of back into the valuation back into
1:28:26
valuations, you know, what, I can just like blow steam. Yeah. You know, I think another thing that I see which I've done a better job over or job with over the past year is that, like I said, I do a lot of smaller businesses. And when they look at my fee, they think it's big, like an attorney fee, right? Yeah, this is these are people that aren't always necessarily work used to work with professionals. Alright, because a lot of times, I feel like when evaluation by the time valuation is done, what the value I provided is 10 times more than what I've charged, right? If I can get Oh, yeah, yeah, absolutely. Yeah. If I can give you a pathway to double your revenue. Hey, if you can do these three pieces, right, that's, that's what I want to do when I walk away. Look, if you can do these three pieces, and I prioritize these, and things that are going to have the most effect, then your business is going to grow or should be able to grow very rapidly. And I want you to call this person here and this person their right to help you because I can't say it's a manufacturing, I can't fix their production line. Right? I right. I'm an accountant that seen a lot of manufacturing companies. I can tell you where your problem is, but I can't always fix it. Sure. So that's what that's what I'm in the process of doing now is finding the people They can fix that problem for you. So that when I will, when I leave my client, call this guy, and he will fix that problem, or he can fix that problem. He will, you know, there's obviously a price to be paid, but I'm very good at quantifying what that what that benefit is okay?
Mark 1:30:20
Right? It's a big factor,
1:30:21
it is a big factor. I think. Maybe it's just because I'm a, I'm a numbers guy, right? I can figure out Look, if this is the value of your backlog, right. And right now, if it takes you six weeks to make your product, it takes you six weeks to earn this money. If I can get that reduced to four weeks, you're making this much money faster, right? There's a time value of money. There's a time like, you can put more through your your money making machine. Yeah. Right. So then you can make more money. Yeah. So we, you fix the machine your process? And then you can work on your input your sales, so that you can you know, and that's something too that we have to consider in your in a manufacturing valuation is what's the cap? Right?
Mark 1:31:10
How big can the company be? or? Yeah, this
1:31:12
is if this is your money making machine? How much can you shove through that machine? Now, right? Cuz Yeah, cuz you can't, you can't just say I'm gonna do a million dollars in the shop, you're gonna have to buy more pieces.
Mark 1:31:24
What Yeah, so any, anytime when financing is a critical part of the business, if there's if growth eats cash in the form of inventory, or labor you got to hire or things like that, we're fine. I like leasing business, people who are like, oh, we're going to we're going to create a leasing business. I've seen it in it, I've seen it in places where they want to consume some sort of asset that's, like hardware as a service, like people, instead of having to buy these expensive servers will buy servers, and will this lease it back to the client, you know, that's, the faster you grow, the faster you run out of money, like, like your customers is gonna pay you $1,000 a month for a $10,000 server? Well, who's gonna buy the $10,000 server, right? That's all of a sudden, you've got 50 clients, you're like, well, who's gonna buy all those servers today, while they pay you over the next three years. And so that's, that's that problem happens?
1:32:11
Yeah, any kind of place where there's capital required to serve to grind? capital? Yep. So that's another thing that we try to look at is capital requirements for your growth is, you know, if you do not have an invest to grow, then your capital, you're still gonna have increased capital needs, just in the fact of your your AR is going to grow or your payroll payables can grow, right, if you're doing providing a service, or whatever. But it's, you know, this is a lot to think about. And like I said, I'm kind of a business nerd. I like thinking about those kind of things.
Mark 1:32:46
So the valuation, the reason people come for evaluation is probably not often for remediation, they're not trying to fix it, then necessarily, they may want to fix it. But there, I'm hearing the scenarios where people really come for evaluation is not the same thing as I want to sell my business. Not necessarily, it's like I have to sell it, or I have to pretend I'm going to sell a business great for all that. And so that's generally a static exercise, like, go take the number back to your attorney, take it back to the drawing board, take it back to whatever we're over. But that's the missed opportunity. Exactly. And what you seem to be doing, which is great. And I don't know how often that people who come to you are actually needing what you can do. But that's sort of the the secret sauce, it's like, hey, by the way, you didn't like what we came up with. It's not too late. It's not that you can go do some stuff and right, you can pull some levers and you can really get a hold of this.
1:33:41
Right? Exactly. Or, you know, every once in a while, it's just a pattern back and you keep on moving on down the line. But what's what's the chances that something can't be improved, right? Like even even the top performers in, let's say, baseball, if you have the number one hitting, hitting average, it doesn't mean that you can't improve, right? So I
Mark 1:34:06
saw all my clients can improve. That's true. But like, that's a very interesting metaphor, because I couldn't find a higher contrast scenario. Because we're in baseball, it's stats driven, like everybody knows, like the it's like the stock market, all the all the data is public, everybody can crunch the numbers in baseball, small business, like nobody knows the numbers of all the people who run the business, right? And I see people all the time, we're kind of in I was this way for several years, and I just I didn't know I didn't really have a good clear sense of like common size financials like common size, p&l like meaning. If I broke my p&l down to like four or five critical components, like cost of goods sold, and my SGA and breaking even that further down it just general cost of selling in three or four key metrics, like what were the ratio of my dollar spent on selling relative to my revenue, like am I off like what All right, and how far how far off? And how would I fix it? And the power of knowing something like gross margin and general profitability? You know, are is this industry really running great at 5% of the bottom line? Or is 25%, much more normal, which is pretty high for most industries in general. But understanding that, like how many I mean, I've seen, I see businesses struggle, they're like, I, they've got a sales team or a family business. And the sales team is pushing for more and more selling investments and marketing investments. And the CFO might be a family member is sort of like, Is this normal? Aren't I think we're spending too much on selling? Right? Shouldn't we have a better return on investment? And they don't have the data? They don't know?
1:35:44
Well, so the thing is, I can find that data, right? If you're spending X percent of gross sales on marketing, I can find that data, but it's more than just that. It's also spending it wisely. Right? That's a whole nother thing. That it's it's that's, I think, even greater challenges. For every dollar spent on marketing. How effective was that dollar?
Mark 1:36:11
Well, that's why it's critical. If you can say like, Hey, your industry is Belle's spends 12 and a half percent of revenue on sales. And if you're at 20, and you're not growing, yeah, that's your flag, right? Stop the spending now. Right? You know, like, it's not working it right, you're doing something crazy. And so that's, that's where I, you're exactly right. Like, if you can go back and start really doing more efficiency, or be more efficient with your money, that's and be more effective. That's absolutely right. But a lot of companies I work with, they don't even know that they still have somewhere, someone in the vision in the visionary seat or in the sales seat who's like, you know, for just have more reps, if we just had more brain if we just had another website. Yeah.
1:36:51
We just had an app, you know, we could we could grow. It's like, No, you gotta to me, you got to stop some stuff.
1:36:58
Right? Right. I would definitely say I see that a lot for a business owner, where the focus is on sales, more sales, more sales, more sales, more sales, more sales, and it's, Hey, what about carbon some of your costs, right? Like there's water in water out, like you need to kind of, you know, hold hold a cup and keep some of this money. Yeah. So, yeah, I see. I do see that quite often. Because, well, it's like I said, a lot of times it's a sales guy. That's just founded business. Right? So that's what he knows, that's what he's good at. So I'm gonna do what I'm good at, I'm just gonna keep growing even though the money may not always be the spent, you know, may not always be spent the best way. So he needs that team, right, that team that he needs that is an implement implementer integrator, integrator, yeah, integrator.
Mark 1:37:47
The integrator is the person who's most driving accountability through that entire leadership team, right?
1:37:53
Like, you almost need that. Because if you have a cost focus person, like a traditional accountant, that's saying, Hey, we need to pull these reins back, they may not be able to communicate that as well to a purely sales driven person. Oh, my God, I got any idea.
Mark 1:38:10
When I sit in the room, and I've got literally the finance, head of finance on one end of the table, and the other end of the table is the head of sales. They are that the poor finance guy is like, by the way, I looked at the numbers, and they're not good. Or they're what I know what they are, you know, and they're fine. And then No, no, we're not getting Tesla's all around. You know, it's uh, you know, we're, we're fine. And then tell me about the sales forecasts. And the sales guys like ready to just like we need more. Why are you right? Why are you braiding on our parade? you're
1:38:42
slowing us down? Exactly. And so why are we having this meeting? I should be out making sale eggs. Oh, my God.
Mark 1:38:47
That's exactly yeah. And so we need more reps. When you got to meet a broader reach, we need to invest more and more materials, more website, more marketing and more outbound and everything. And and I think the job of the integrator is to listen to both sides and say something like, okay, happy to invest in the sales endeavors? What are we going to stop doing? Can I ask you to, like, look into the portfolio and say, what's not as effective, what could be curbed? And then look over on the finance side, and say, like, you know, here's the plan, here's where we're going to be, we're going to stretch a little bit, we're going to end this is how much risk we can take and, and I need you to bear with us or not, or you're exactly right in our cash reserves are not where they need to be, and we're going to make some decisions. And the integrators job really is to glue. And this is where a visionary is bad, right? So the founder of the company was typically the visionary is just much more heavily on that finance on that sales side, they really want to buy a bigger and bigger buy to the future. And the finance is usually the negative sounding to them. So the integrators job is to really bridge the gap into a plan and say like, this is how much of the future we can afford to eat now, and here's how much risk we can take on the finance side. And here's the plan, and it's going to be my job for the next quarter. To make sure that there are no obstacles or the obstacles that do arise, get tackled and knocked out. way. So we land pretty close to where we're going, and we're going to, I'm going to make the call, and then I'm going to take the consequences for whatever happens. And so that's really what the integrator is trying to do. Yeah,
1:40:10
absolutely. It's, it's the struggle, right.
Mark 1:40:14
And I think you know, so I've asserted for a while that that's if not all businesses have somebody who's able to do that work?
1:40:22
Well, it's hard to find some of that hat that's that balanced, right, that has that skill set where they can understand the finance and understand the sales and understand the operations. Right gets. I mean, you're looking for an all star. Well, you aren't.
Mark 1:40:35
But the reason it's it's possible, though, is because what you don't need is another visionary.
1:40:41
Oh, I'm not saying it's impossible.
Mark 1:40:42
No, I guess when you say that I yeah, there's some people so many people have struggled with it and finding that number to
1:40:48
baby, they they correlate all star with visionary. And that's not necessarily the same.
Mark 1:40:56
No, not at all. So you need the visionary to be pulling in the right direction. And being the sort of the high priest of our culture, culture, our core values, and the vision and the product and the, and having clarity on where the markets going and owning the voice of the customer in so many ways, and maybe being a thought leader, but having somebody on the opposite side that is data driven, who is saying like, Okay, I got the plan, and I'm going to make sure this plan happens. And I'm going to have the hard conversations along the way to make sure that this plan happens. And that is that is really the biggest value to allow your business to be sold and be sellable.
1:41:33
So do you happen to see a like a personality profile that fits that more often than others?
Mark 1:41:41
Yeah, I mean, they're there. They're very clear, clear thinkers, clear speakers, very direct. Asked Questions can cut people off quickly, and I get to the point, are not as concerned about hurting people's feelings. They're not dispatched, or I mean, higher that it's not Yeah. But they're, they're much more concerned with what's right than who's right. And they build trust really fast, because they're not wrapped up in politics. And they're not getting so emotionally motivated. They can, it can plug into the data quickly and easily. And they're open to the emotional side. And they're open to the visionaries, passion. And they're usually inspired by the visionaries passion and there, many of them will self report that they can get a plan on the ground, they're not the one that brings the vision like I don't like I don't know what the future is going to bring. And I like hanging out with so and so because they're so inspiring that as I hear them talk, I start seeing how it's coming together. And I start to see how like, this is what we're going to do. And I see where the weak spot is. And I see the leader over there is not doing what they need to do, and I can't get him out of the way, or get them out of the way they get pointed back in the right will get a point of hydration or get them out of the organization and they understand the limit, like it's not about because I've seen leaders do that, where they're like, Hey, you know, everybody who was on the ship at the beginning is going to be on the ship at the end, it's like, right, you're gonna be in the same spot in the water. If you have that mentality right there, you're gonna have to move people in and out of the organization into other parts of the organization. But definitely, you have to be willing to take people out of the organization who are not for the greater right helping the greater grabit an integrator personalities understand that and they can execute on
1:43:22
Yeah. And it's not just for the company to it's for them to, you know what I mean, when, whenever I have to let people go. I usually see it as
Mark 1:43:32
everyone's best interest, I'm sure for like the employee, you say the non Yes. And that's 100%. Right? Right.
1:43:37
If you're keeping this person in a position where they're not going to be successful, right, they're not going to be able to move their career forward, then you need to have that conversation with them and send them someplace else where they can.
Mark 1:43:52
I couldn't agree more I speak to that point, all the time, every time I do a talk or Keynote or something, I point to the structure of the organization. And I say this is the accountability chart, this is going to replace your organizational chart. And this is going to be how all of the accountabilities in the organization fit together simply and clearly. So you know, the map of who's supposed to do what and who's accountable to what, and you're going to see that some people are in seats, that they can't be successful. And because this structure you built is based on the needs of the organization, not on the capabilities of the people you have, because you have to build it on what the organization needs, because the people will move in and out. So you build a simple, clear, efficient structure for your organization. You've got a seat, you got somebody in it and you think you realize this person can never do that job well, right. If you leave them there. You are a bad leader, you are leading them into failure. You have to lead them to success even if success is outside your company. Right. And that is that changes people's thinking quickly doesn't necessarily make it easier, but it but it raises the urgency that they realize they gotta rise to the occasion. Right. And that's kind of when people as leaders start to seek what think like, well, maybe I don't want to be in this seat, because this is where I tell people, right? Like, yeah, that's what that's why not everybody's in this room. Yeah, it's not fun. Because, right? Because there are those people out there that you love, right? who share the core values. You don't want to hurt them. It is and nobody, nobody's saying that. That's easy. It's not easy. And you have to be able to talk to somebody who's saying, put me in coach, I can do this job, I want to help I want I really want to help, right? And you have to be in that position. Many times, we're like, I know you want to help. But it's not working out. And we got it, we got to make a change. And and that's not fun. It's not for everybody. And I coach my teams around that. And I'm the first one to admit, I'm bad at that. Very bad. I need I think I need accountability to do that. I personally, if I'm in a spot where I need to push somebody out of a seat where I know they can't be successful, I probably need to have somebody look over my shoulder who's saying like, Did you do it? Yeah,
1:45:57
yeah. accountability. Coach. Absolutely. Absolutely. My, I don't know why this popped in there. But my wife actually is helping someone as being her accountability coach for dating. Whoa, yeah. It's, I don't know, I just thought it was pretty interesting. But so you're your wife is the coach or your wife is dating. I don't think she's dating. No, she has a friend that's dating. And she asked her to be her accountability coach, but I think that she's working for it's fairly large company, that that's obviously built into their culture now. Right? And accountability coach, she probably has several that works. And now she's got one outside of work to make sure that she's taken the right steps to move forward and hold her accountable for I don't know what it is right, like going on a date, or you know, not going it might be like telling him back if he drew like, yeah, you know, that's, that's hilarious. And maybe, maybe so maybe true. But, uh, yeah, it's just, it goes a long way. And it's, I think, from an entrepreneurial standpoint, something that a lot of people forget or miss. Right? Yeah, absolutely. So I see more and more of that, actually, is something that I've started adding to my recommendations when a company is big enough, is some sort of coaching. Okay, yeah. Because not everyone has that tool set, right? Like most people don't have that tool set where they can do everything. So if you can't afford to bring in an integrator or you know that you're weak in one certain area, having a coach.
Mark 1:47:41
Well, that's, that's a huge point. So I believe that everybody needs a coach and I have multiple coaches at any given time for helping me through the stuck spots for myself. But that's right in the integrator function is very easy to describe, like I can draw it out, I theoretically, you have to have an integrator to run your xinyi Dr. drawdown was great. So when people think well, but I is there's five seats, if they're a head of sales, there's the head of operations, the head of finance and integrator and a visionary. And on the only employee, what do I do? Well, you're in all seats. And so that's not perfect, but it's all you can afford. That's what you got to do is you got to optimize that, at some point, you'll have to hire to each of those seats. And so, and that's somewhat straightforward for a lot of people, but the integrator seat person tends to be the sticky spot when they think like, well, I need an integrator, but I can't afford one. Well, what do you do? And what you do is you realize that you as the visionary are in that seat, and you're sucking at it. And the question is, how bad Are you sucking at it? Is it is it? Is it possible? If you use something like EOS, the entrepreneurial operating system is that helping you get clarity on what you need to do enough to get some more time which I see that happen if you're using EOS, you can probably buy yourself between two and six quarters of growth in the company because it's a little bit more manageable to do the integrator function as a visionary with those tools in place, but you're definitely going to run out of it and you're definitely not going to be the best visionary you can be if you're in that seat. And so coaching is a part of that so having somebody to help you do the stuff that you're terrible at because you know you're terrible at it. But you got to get past it because some visionaries are able to do a lot of integrator work and get the company up to a good size. Other visionaries like myself can't get very far they're just so bad at doing integrator work. I'm bad at doing integrator work, did I really need accountability and clarity and simplicity, and I need it from all directions because I will just avoid it. And so a lot of other people are so they would need a coach to say like, hey, you're in a seat. You're not the right person. You're the You're the one to do it. For now, though, based on budget and timing and stuff you got to learn sometimes there's something to that. Just being in the integrator seat long enough to learn that discipline of gluing an organization or appreciating who you hire for that. And being able to lead them yeah appreciating it, understanding enough to that You can lead those people that's that's a critical component as well. But yeah, that's a great point. Oh, man, we covered a lot more stuff in in the in the epilogue here. Yeah, sorry. We cover some more evaluation stuff for you. I think we're good for now. Okay, we can we can sort of think about it when we do this again. So just one more time for anybody who's still here still listening. How do people get ahold of you?
1:50:21
Oh, the best way to find me is my website MFG valuation Comm. From there you can schedule a phone call, send me email, whatever works best for you. Awesome, man.
Mark 1:50:32
Thank you, Tony. Thanks so much interesting conversation for sure. we'd win a lot of different places. And we'll have you back on and we'll talk about whatever is interesting at that time. Sounds good. All right, man. Thanks. Thank you.