Intentional Growth Framework: The Method To Grow Your Business Beyond 7-Figures

Speaker 1 You got to clarify what do you want from your business long term and why.

Speaker 1 To wake up every day and just do things without knowing why you're doing it and what the outcome is that you're striving for, not just a revenue goal.

Speaker 1 And like you said, Tommy, not just bigger, but like more dynamic. Like what do you want for your stakeholders? What are the intangibles that you want out of the business and why? Just a full list.

Speaker 1 And I'd say that the second thing is if you understand that,

Speaker 1 if you focus on growing the value of your company,

Speaker 1 you're going to create choices for yourself long term, which I think choice is a different way of saying freedom.

Speaker 1 You want to change something, you want to do something, you don't have to burn the whole shit behind you.

Speaker 1 And then I'd say the third thing is, is that doing whatever baby step you need to get less anxiety around the finance section of business, because that's really how the game is played.

Speaker 2 Welcome to the Home Service Expert, where each week Tommy chats with world-class entrepreneurs and experts in various fields like marketing, sales, hiring, and leadership to find out what's really behind their success in business.

Speaker 1 Now, your host, the home service millionaire, Tommy Mello.

Speaker 3 I'm here with Ryan Tantom, and we know each other from a way long time ago. I guess not that long ago, about four years ago in Utah.
Young Entrepreneur Council. Ryan lives in Minnesota and Stillwater.

Speaker 3 He's an expert in strategic planning, mergers and acquisitions, value growth, financial advisory, business consulting, and entrepreneurship.

Speaker 3 Arcona LLC is a partner co-founder and intentional growth podcast host.

Speaker 3 Ryan is a co-founder of Arcona with a mission to help entrepreneurs get clarity and control on how they grow the value of their company with an end in mind through value growth education.

Speaker 3 and strategic CFO services. It's intentional growth framework to help business owners shift their mindset away from annual income to focusing on long-term value creation.

Speaker 3 He hosts the Intentional Growth Podcast, a podcast for entrepreneurs and business owners wanting to clarify a path toward a more valuable business and turn their vision into reality.

Speaker 3 Ryan, pleasure to have you on today.

Speaker 1 That's me, man. I sent you over the right material, I guess.

Speaker 3 Perfect. So.
Let's just dive into it. You and I met years and years ago.

Speaker 1 Pretty good at marketing, sales, sales networking tell me a little bit about arcona when you got started with that it sounds like you've been doing this a while and just catch me up on uh how about the backstory you want to get the backstory like why the hell am i doing why am i doing this right yeah why was i in y why was i in yc why were we sitting at uh a mountain having cocktails no i'm going to go back even a little bit longer than that tommy so i actually got my entrepreneur start when i say start i got the itch because my dad seizure the emuth seizure man yeah i don't know, man.

Speaker 1 I think I completely bypassed the seizure because what ended up happening, Tommy, is my dad mortgaged our house, bought a couple hundred grand worth of Panasonic copiers back in the early 90s.

Speaker 1 And he said, hell, I'll sell it.

Speaker 1 He just was, that was it, man. And so sell the copiers and essentially he started our family business.

Speaker 1 And man, I, from day one, when I was like, as far as I can remember, Tommy, I'd be sitting at home waiting at nine o'clock at night, waiting to hear the play-by-play of what happened with business.

Speaker 1 And my dad barely graduated high school, didn't go to college. He's like, man, you can do whatever you want as long as you can learn how to sell.
It's like, all right, that's pretty good advice.

Speaker 1 But I'll keep it short, man. But the Cliff No version, so that company that my dad started, he grew it up to, we hit about 21 million in revenue, had 115 employees, three locations.

Speaker 1 I mean, very similar to a lot of home service businesses, actually, where you sell a piece of equipment. Like my HVAC technician was out today.

Speaker 1 So I just dropped 10 grand and just got the new ones and he came out today. But we did the same thing, Tommy.

Speaker 1 We'd sell a piece of equipment and then we'd have the service contract that was actually locked in bank finance for like five years. So what happened was he grew that up.

Speaker 1 And then, I don't know, man, like probably like when I was around in college, he went through some personal stuff. And then I joined full time.

Speaker 1 And then that year, the financial crisis hit and we essentially lost close to a million bucks. So I spent the next six years helping turn around the business.

Speaker 1 So I'd fired like 50 people by the time I was 25, new accounting system, built out the managed IT and the software to just become more diversified and not have it a commodity.

Speaker 1 Essentially, just Tommy just through sheer will and grit, helped turn the business around because I wanted to take it over. Like that was the whole intent.
And we got to this point, man, where

Speaker 1 I called it Groundhog's Day, where every day my dad and I were like, it seemed like every week we were having the same conversation, which I want to take it over. I'm running the business.

Speaker 1 And he's like, I want to take more money out. I'm like, I want to reinvest more.
So we could never figure out how to get out of this funk.

Speaker 1 And all these advisors that were very technically savvy couldn't like wrap this whole picture around to say, hey, what do you guys want? How do we grow value to help you guys both get what you want?

Speaker 1 So my dad and I, we just felt trapped, ended up selling the business in 2014 and sold it, fired like 60% of our employees because it was a strategic sale, paid a lot of debt off, paid a lot of taxes.

Speaker 1 And I went, what the hell was that?

Speaker 1 And so that was in 2014.

Speaker 1 And that set off what we're doing now, which essentially, after five years of kind of like freelancing and doing some things, figured out that education is one of the big issues.

Speaker 1 Like, hey, how does this all work?

Speaker 1 A lot of us have that seizure go from copier person to copier business owner or home service technician to now i'm gonna have that seizure now i'm gonna continue hiring more hvac technicians or more and more plumbers it's like wait a second ap hr i d there's all these other things associated with it so i just wanted to help people essentially teach them how to fish instead of having to rely on a bunch of consultants and advisors to help figure out what to do with their company long term.

Speaker 3 So what do they say? There's three things you could do with a business. you die, and it goes to whoever you give it, you pass it down to the next of kin, or you sell it.

Speaker 3 And there's a good book by John Warlow called Built to Sell. He wrote a lot of good books.

Speaker 3 He was on the podcast, I don't know, a couple years, probably about, I can't keep track of time, not since COVID. Um,

Speaker 3 still in the basement, yeah.

Speaker 3 So,

Speaker 3 you guys, tell me a little bit about the services because I think you hit the nail on the head here. Was as I'm reading your bios,

Speaker 3 CFO

Speaker 3 is probably the toughest position between controller and CFO. I got a good book.
It's called How to Double Your Profit in Six Months or Less by Bob Pfeiffer.

Speaker 3 And it was written in the 90s. And I have a guy,

Speaker 3 oh man, Leland Smith with service champions. He sold,

Speaker 3 he's roughly worth now around 800 million. And

Speaker 1 what to do with it?

Speaker 3 What a, what a challenge. He said, without reading this book, he would have never got there.
And he's one of the godfathers of HVAC and basically home service. And it's very interesting because

Speaker 3 I think sometimes pigs get fat, hugs get slaughtered, you know, that term. Tell me a little bit about the services and what you guys do from day to day because there's a lot, a lot here to unpack.

Speaker 1 I'll kind of take some of those people you mentioned and unpack them a little bit. So Warlow, he's been on my show quite a few times.

Speaker 1 I actually was back when I was freelancing before starting this business, I got certified from him and all this other stuff. And here's one of the biggest challenges, Tommy.

Speaker 1 I think when you talk about the three ways that people could sell, die, whatever the issues are, I think it's kind of this misnomer, man.

Speaker 1 Like, and it has to do with these two concepts where if you're solving, so like, let's break down what is a lifestyle business because you have the e-myth, right?

Speaker 1 So you have the entrepreneur seizure, and then all of a sudden you're now just hiring a bunch more plumbers, a bunch more HVAC technicians or landscapers, whatever it is.

Speaker 1 And then you realize that it's a machine, but then you're still potentially solving for annual income and you're in a lifestyle business. I want to just describe that first versus the other mindset.

Speaker 1 And then we can talk about what do you actually do with this business.

Speaker 1 My dad and I had a $20 million business in revenue and we were still a lifestyle business because we were solving for annual income, which is how much cash can we pull out of this company every year through distributions, perks, and salary.

Speaker 1 cars, cabins, boats. I mean, all the stuff within the legal span of like, hey, like, you know, we had employees and we'd have retreats and all these different things.

Speaker 1 But the reality is the mindset was at the end of this year, how much cash do we pull out of this company? And it wasn't, Tommy, what is this company worth at the end of the year?

Speaker 1 So those are the concepts of solving for annual income is equivalent in my vocabulary for a lifestyle business versus if you're an investor, you want to buy assets that grow in value.

Speaker 1 Regardless of what they buy, you buy some Apple stock. I want it to go up, right? I don't want it to go down.
And because they're building a more valuable business.

Speaker 1 And so by creating more sustainable, predictable, and transferable cash flow, it de-risks your company, increases the value of the business.

Speaker 1 And so how that manifests itself, Tommy, in the way that you run a business, think about like with my dad and I, when we were turning around, it's like, dude, firing a bunch of people and putting a new accounting system in sucks.

Speaker 1 It's terrible. However, And not only does it, it's painful, it's headaches, you're going to have turnover and it's not going to be enjoyable, most likely, but you're spending money for the pain.

Speaker 1 So then the question would be is, well, why do that?

Speaker 1 Other than smoother operations and more pleasant culture and all that stuff, which is valid, which is, I hope to make that investment so that way I can have a more valuable business.

Speaker 1 So it's really just an asset that you're trying to grow.

Speaker 1 So the goal is to, outside of the lifestyle business versus growing a valuable asset, then you sit back and you say, okay, well, there's another concept, which is you have a job, which you get a W-2 wage for.

Speaker 1 Have market comp for the job you do. And if you have multiple jobs, kind of split out the percentages.
And this is like, it's not about sacrificing to the extent that you shouldn't have to.

Speaker 1 It's about getting the visibility to say, okay, Tom, you're the CEO, whatever the market comp is for CEO, then take the rest in distributions.

Speaker 1 And then you've got to say, okay, well, with the excess cash, pay our taxes and how much do we want to reinvest?

Speaker 1 And then where do we reinvest to grow the value of the company and so by layering these couple concepts on

Speaker 1 you become more of like this mindset of like hey i'm growing wealth

Speaker 1 of this business that i'm going to have choices with to pass on to my kids to sell to my managers to do an e-stop and sell to my employees sell partially to a private equity firm maybe tommy wants to buy me a strategic buy those are called choices because you focus on growing the value not just i'm going to work till i die which no thank you you hit the nail on the head i think this topic's really important i think a lot of people need to listen to this a lot of people we're so obsessed with revenue you've heard this the saying revenue is for vanity and profit is for sanity uh and cash is for

Speaker 1 kings

Speaker 3 so i i just had this this talk with all i got 21 guys that started Today's our second day.

Speaker 3 And I told them, I said, guys, I'm going to teach you how to make a lot of money, but if you can't save money making $40,000 a year, you're never going to be able to save it making $300,000 a year.

Speaker 3 I'm going to help you be able to make a lot of money, but it doesn't mean you're going to keep it. And I think there's a lot of business owners that are kind of in the same funk.

Speaker 3 I met a guy named Howard Partridge in the last year, and he said, Tommy, I had a $5 million business, but I wasn't keeping any of it. We were losing it.
Literally, I was spending all of it every year.

Speaker 3 And he met a woman named Ellen Rohr.

Speaker 3 And I've worked personally with Ellen Rohr quite a bit. And what we realized was, is you're not charging enough money.
And I can tell you, one of my new favorite books is Alex Hermosi.

Speaker 3 It's a big red, purple book, 100 million offers. And he says in there, most companies do not know how to price right.

Speaker 3 And it's so funny when I just had a big convention, I had 300 people there, and a lot of people raised their prices. And I got text message, email, Facebook messages, calls after calls.

Speaker 3 Nothing changed. The closing rate didn't change.
People just

Speaker 1 are scared. They're so scared, man.

Speaker 3 They're like, oh no, that doesn't work in my market. Ryan, I hear this every day.
It just doesn't. No, you don't even know.
I got so many competitors. You don't know my market.

Speaker 3 It's just in a rural area. You have no idea.
It's a different concept. Oh, it's not a demand job.
I've heard it all. Oh, you don't know.
Summers are different in my market.

Speaker 3 Everybody's got a reason why they're going to fail and why it's not going to work. And the fact is, they don't know how to drive value.

Speaker 3 And it's kind of like the Blue Ocean book where they explain the blender can do all kinds of things. It could chop.
It could slice and dice. It can be easy to wash.

Speaker 3 The real value of that blender is it chops up the nutrients in a way that makes you live longer and makes, you know, the color of your skin and the firmness of your skin and your brain work better.

Speaker 1 Have you ever read Bob Mesta's Demand Side Selling?

Speaker 3 I don't think so.

Speaker 1 Oh, dude, he's awesome. He's been on my show and he came up with this concept with Clay Christensen, who is now passed, I believe.
It's

Speaker 1 the jobs to be done. Like, what's the purpose of your service? And the purpose is to eliminate pain from your customer.

Speaker 3 There's pain or pleasure. You know, I don't buy a new phone every year.
I buy it because I want the newest features. I really don't need one.
People say I only sell things people need.

Speaker 3 I say, yeah, sell things people want.

Speaker 3 Yeah. But explain that concept.
I didn't mean to cut you off. No, no, no.

Speaker 1 The concept is just really like, what is the person trying to accomplish?

Speaker 1 Like you just said, get better nutritions into nutrients into my body that's not chunky and uncomfortable and annoying and gross tasting. I want it pure aid, whatever it is.

Speaker 1 And like, they're just going through this exercise of the blending to get to their outcome. And that's the whole home services industry is all about.

Speaker 1 Like, dude, I didn't want to do the HFAS technician today. Like, come on.
I wanted a colder home and I'm willing to pay people to make that go away so I can keep working and be with my family.

Speaker 1 Like being with my family and not dealing with that is what I'm paying for. I don't care about the widgets or this or or that.

Speaker 1 I want it to last long, have good service, and I'm willing to pay for that. I want to go back to your pricing thing, Tommy, because I agree, man.

Speaker 1 Like, especially right now with inflation and supply chain issues and stuff like that and our CFO business, I see inside of, you know, tons and tons of companies, financials, everybody from steel fabrication to consulting service to home services.

Speaker 1 I've worked with all of them. Everybody's dealing with this issue.
And that's a self-talk and a narrative that needs to go away.

Speaker 1 And I think the easiest way to have that go away is when you have the data into your numbers, man. And like, I was a copier sales guy, man.

Speaker 1 Like, I almost bought a garage door company a couple of years ago.

Speaker 1 Actually, right around the time we met, and you're like, oh, my garage doors. I've actually weirdly know a lot more about those before than I did before.

Speaker 1 But the reality is when you get into the numbers and you say, like, so for me, the thing that matters most for business is how sustainable, predictable, and transferable is the cash flow of the machine where stuff comes in and stuff stuff goes out you're either selling and servicing garage doors or you're selling this thing and servicing hvacs i mean all these things there's things that are coming in and going out and i want that cash flow machine to continue and i want it to grow period i don't care what kind of company it is i mean like i literally said like every single company that i go into we look on the cash flow statement it's called net cash flow provided by operating activities that tells the story of the entire business and then after that it's like what do you do with it well you pay your taxes you get some distributions you might buy some crap i mean whatever it is but like that in line, every private equity firm, every professional investor looks right at the line because it tells the entire story of the business.

Speaker 1 And if you go back up into the income statement, you say, okay,

Speaker 1 what are the line items of the things that we sell? Well, we sell some equipment, right?

Speaker 1 Potentially. And then we have some service.
And those revenue lines have a corresponding gross profit margin that you want to target.

Speaker 1 And if you're monitoring these trends every month and you have the right package, dude, you could see data that's like looking into the future, man.

Speaker 1 Like, okay, okay, well, the margins as a percentage of revenue are decreasing on this line item or this thing. Okay, well, what do we do about it?

Speaker 1 How do you take action on the information that you see going back to your pricing point and the narrative?

Speaker 1 If I don't have that information, Tommy, let's say I was trying to sell you a new HVAC system and I'm scared, right? Like, I'm scared that you're not going to buy it.

Speaker 1 We're in a pricing issue, but business owner to business owner, salesman to salesperson, whatever it is.

Speaker 1 And I can truthfully look you in the eye and say, Tommy, for us to provide the service that we provide i need to hit these margins so you can get the timely response and we're doing the proactive maintenance or whatever it is and we can't do we literally can't do that if we don't price it like this i mean in the my old world too tommy people would it was a race to the bottom and i mean it was copiers man

Speaker 1 like no one likes to deal with copiers so it was like a race to the bottom but at some point we have to say like we still need this stuff And in order to provide good service, we need a certain amount of margin.

Speaker 1 And so you can stick to that, I think, and be confident in their pricing to say, hey, we need these prices.

Speaker 1 And if you want the service that you're willing that you want to engage in, and the best thing that could ever happen is the person that is not agreeing with you doesn't become a customer.

Speaker 3 You don't need them. You know, it's interesting because you said it was a commodity.
And here's the deal.

Speaker 3 If you look at the majority of garage draw companies out there, they're commodity-based selling.

Speaker 3 They're saying, I bought a company less than a year ago and I talked to the GM and the owner of the the company we bought and they said i said are you guys offering a still back door on every job they goes well it's only a gross drawer why would we offer the nicest still backdoor on every one and i'm like

Speaker 3 well why wouldn't you i'm like it's the best product you know apples to apples i sell oranges you know people said coffee was a commodity and then starbucks came out if you make yourself different and you do a better job

Speaker 1 better people and making an experience and trademarking certain things and building systems and processes that that make you different you don't need to be in a commodity game oh and you're going back to solving what they want dude there's this great amazing commercial from like five or 10 years ago man it was these two little boys sitting at this creek and they're like 10 tommy and this guy one of the kids goes hey tommy we should bottle up this water and sell it.

Speaker 1 And the guy goes, that's the dumbest idea I've ever heard. And it flash forwards with this guy.
He's like 40 and he hits the Aquafina button on a vending machine for $4.

Speaker 1 He's just like,

Speaker 3 yeah.

Speaker 1 It's like, there you go. Someone packaged up something that was free because someone wanted water while they were commuting in a portable bottle.

Speaker 3 Pretty crazy how that works. I thought you were going to tell me another commercial.

Speaker 3 My favorite one is when this kid, he gets out a Coca-Cola can and then he gets out another Coca-Cola can and he's putting the Coca-Cola.

Speaker 3 Coca-Cola, he's buying Coca-Cola and then he steps on all the cans to reach the Pepsi and then takes the Pepsi and walks away from it. I haven't seen that one.

Speaker 1 That's awesome. That's awesome.
Yeah.

Speaker 3 When you really look at the financials and Al knows Al Levy here

Speaker 3 as well, listening, financials were never fun for me until I was forced to just sit down and pay attention to them because they leave clues.

Speaker 3 And the financials kind of tell you, I think if your conversion rate, your average ticket, your booking rate is where it needs to be, be, the financials tell you everything you need to know.

Speaker 3 I think a lot of people they realize it's exactly like you said, and exactly what the emiss says.

Speaker 3 When you start in these businesses, you're a technician and you go, Oh, I can't believe that company's charging that. And I go, Well, why don't you come look at our shop?

Speaker 3 Why don't you come meet our recruiters in our training center? And the air conditioning is nice and cold, and they're brand new computers. I got four monitors, I use the most expensive CRM.

Speaker 3 We drive the newest trucks, the newest iPads. We've always got new shirts.
We buy brand new tools for the guys. We've got a dream manager to help them accomplish their dreams.

Speaker 3 We've got Dave Ramsey program to help them save money.

Speaker 3 These things cost money, but guess what? I'm not having a problem with hiring.

Speaker 1 Right. I mean, now everybody's wondering what you're doing.

Speaker 3 Oh, now it's like, now,

Speaker 3 and the thing is, is I literally made a video. last weekend of me just going out and recruiting people.
I brought my video guy. I recruited a guy from a bar.
I went to discount tire.

Speaker 3 He got all of his buddies doing ride-alongs now the discount tire. I got a fake haircut because I already just had a haircut, but I was like, I used to come here for like a decade.

Speaker 3 Can you just give me a fake haircut? I'm going to recruit you. And it's funny because it's just opening your mouth.

Speaker 3 And business is not that difficult, but I feel like I was never trained to run a business. So I had to go through trial and errors.

Speaker 3 I had to hire consultants and learn what manuals were and really go through the hard knocks of business. And sometimes it comes close to almost losing it all.

Speaker 3 And that's when you got to make decisions.

Speaker 3 Oh, my God, man.

Speaker 3 My manager told me you need to pull the curtain back. So the customers and prospective customers, how magic happens.
They don't know until you do this and you do it all the time.

Speaker 1 Well, and transparency, man. Like, especially nowadays, people don't trust anything.
They don't trust institutions or politicians or, you know, lead.

Speaker 1 I mean, it's just like, so what you're doing and being transparent about it is just helpful for everybody because people want to make the right decisions for themselves and for their circumstances.

Speaker 1 And I also would argue, and I think it would be an argument I'd be willing to go head to head against any kind of institutional buyer of a business, that everything you're doing is creating a more sustainable, predictable, transferable cash flow machine that therefore increases the value of the company, period.

Speaker 1 I don't know if you're familiar with Conscious Capitalism, man. It's like one of my favorite books.
It's like, you can make an insane amount of money and do an insane amount of good at the same time.

Speaker 1 What a concept, man. Like, there's a lot of people that could use that.
And you don't have to be a nonprofit or a greedy corporate Wall Street Street psychopath.

Speaker 1 Like, you can actually be an entrepreneur doing good while making money, and the stuff that you're talking about are all just indicators of that.

Speaker 1 Man, and this kind of loops back into you're talking about the three things you could do with a business, and I actually disagree with him because if you realize that you have a job, like you know, Tom, you know how many people call me because of the podcast and be like, Ryan, I want out like out of what your job or your asset?

Speaker 1 I've never had anybody call me, Tommy, be like, I really want out, I've got a million dollars. 401k.
Yeah, exactly. I really want out of this mailbox money clipping coupons while I sit at my house.

Speaker 1 It's like, what do you want out of? Do you want out of the job that 99% of the time they're stressed out? They're having all the burden. They don't have the information.

Speaker 1 So they don't know how to make the decisions. They're, you know, running up debt or lines of credit or whatever the heck it is with no idea.

Speaker 1 what's the end result. It's just like this perpetual hamster wheel.

Speaker 1 So then you sell for an annual cash flow versus saying, hey, because you could literally get, when you say get out, if you said, I don't want to be working in the business anymore, but I like to keep it because I have, I'm bullish on the industry and my company.

Speaker 1 Literally had a client like that. They went through our training and then we have CFO service, fractional CFO services.

Speaker 1 So their goal after going through the training, that was what they identified is like, I don't want to sell it.

Speaker 1 I want essentially these two guys said, we want to make a quarter million dollars in distributions, hire a GM. So then we build an entire plan.
Like how many months is it going to take to get there?

Speaker 1 then they got mailbox money they didn't want out of their asset they wanted out of their job i got other people saying hey i'm not so confident on the industry competitors are coming into town whatever it might be i really love what i'm doing but maybe i should partner up with a private equity firm or a strategic buyer because i've got company specific risk that is an issue my point is is it's not as easy as everybody thinks and it's not just binary because There's so many ways to structure what it is that you want if you can articulate to other people what you want.

Speaker 5 Yeah, not a lot of us think about it when we go into business. You know, here's what I hear.

Speaker 3 I want to be bigger. I want to be more profitable.
And I want to spend more time with my family. But there's no real plan.

Speaker 3 You see, if you want to get in shape, if you want to do anything really, you got to follow a strict diet. There's certain things that need to happen.
And building a budget is a pain in the butt.

Speaker 3 But I'll tell you what, it's like our North Star. It tells us where we're going, tells us what goals to have.

Speaker 3 And I have been the blind leading the blind at some points and i'm so glad those days are behind because it's tough to get out of bed it's like oh no it's tough to walk in that front door of work because you're like you're a firefighter and you're like what's going to happen today

Speaker 3 and it's just it really sucks and i feel bad one of the reasons i have this podcast is to let people know it doesn't need to be that way amen man you know michael mckellow spoke at that last event too

Speaker 3 And he came out with that amazing book called Profit First. And it's amazing how Parkinson's law works.

Speaker 3 You got money in the bank, you use it. And I see all these people that go out there, they have a decent business, and they have this thing about them that they say,

Speaker 3 we deserve to spend all this money, buy a brand new Harley, go do these things. And you know, a nice vacation is great.

Speaker 3 Having nice things matters, but why do you got to do it when the business is young? Why not reinvest it in, put it back?

Speaker 3 Well, that's another problem too, actually, that I think about it, Ryan, is a lot of people say, I'm like, where's all your money?

Speaker 3 Like, you just told me you barely have enough to make this week's payroll. They go, I put it all back in the business.
And that's another thing. A lot of times people think.

Speaker 1 They don't know how it's allocated, Tommy. Like, dude, my dad and I did this exact same thing.
And Mike McAllis brought it up in his book. He's been on my show too.

Speaker 1 So I am very familiar with the profit first, which I think is a stepping stone. I mean, no one has to be a financial engineer, man.
And like, that's what I want to get across.

Speaker 1 Like, same thing with my show, Tommy. I want to make this not intimidating.
I mean, dude, like, finance was one of my worst grades in college.

Speaker 1 And here I am teaching entrepreneurs and finance people how this stuff works because i was passionate enough to understand how the game works not everybody has to do that but to your point what we talked about is like a lot of people look at their budget their income statement and say okay we're just gonna scream forward and grow and then they look at their checking account and then they do this kind of like Are we good?

Speaker 1 We're not good. We're good.
We got it. And then they cut and invest going like this based on the cash and the checking account.

Speaker 1 And it is absolutely the blind leading the blind because that's no information, man.

Speaker 1 How many times we've onboarded quite a few clients in the last 30 days were like, they made decisions in Q4 because the tax tail was wagging the dog and they bought a bunch of stuff.

Speaker 1 And then now they don't have working capital, the funds for inventory with inflation. Don't you wish you wouldn't have bought that house?

Speaker 1 And so it's like all this information or this money is earmarked for things in the future. So I just want to predict the future to the best of my ability.
And I think a lot of people too do too.

Speaker 1 So like how that is seen in the numbers and why, like to your point about budgeting, man, I went from no budget with 115 employees and 20 million in revenue to like, I had to start somewhere.

Speaker 1 And here's what I want to say. This a budget is not ask your CPA or finance manager to see what you spent last year, divide by 12, add 5%.

Speaker 1 That is not a plan. It does not work.
If you want to do what you've always done and hope it works and you have different outcomes, go for it.

Speaker 1 What I would suggest is that budgeting is just a business plan, man. Like, so I sat down, three division leaders.

Speaker 1 So again, we had our equipment division, which I know everybody listening and most people have equipment division or then it's service and labor.

Speaker 1 And then what we did is we said, okay, month by month by month by month in the next 12 months per revenue line, what do we think we're going to do?

Speaker 1 And I sat down with my sales manager and we did that. And we had a seasonal business just like everybody does.
And it was like, okay, well, 40% is in Q4. So don't divide by 12.

Speaker 1 And all we did, Tammy is is we said, okay, per month, what do we think we're going to be able to do in all this at the margins we want? So now we're addressing our pricing.

Speaker 1 I built my comp plans off of that.

Speaker 1 And then if you actually build out all three financial statements, which we don't have to get into, how much cash is going to be in your bank at the end of each month and you can project all of that forward.

Speaker 1 It's totally possible. I didn't make this stuff up.
I think when the desire to want the information, is when that's greater than the pain of going, I don't know what these terms mean.

Speaker 1 Well, we all have the internet now.

Speaker 1 And like, as long as they're not sitting across from it, some advisor that's being condescending, which happened to me a lot, then people that are willing to teach and people willing to learn, there's a lot, lot to be said to get the information.

Speaker 3 Yeah, this is really good stuff. I feel like everything to me is marketing.
And the reason I say that is I had to know how many calls I needed to get. Either I raised my prices.

Speaker 3 I've been in business 15, 16 years.

Speaker 3 Conversion rate is not going to change a whole heck of a lot. It's a pretty good number.
My booking rate is where I needed to be.

Speaker 3 if i raised price a little bit the thing i know i could change is the amount of calls i could hire more technicians i could increase calls are you sure you weren't a cop of your sales rep years

Speaker 1 this is how my dad grew me up 400 phone calls 15 net new appointments five proposals those 50 grand in sales beat me over the head with that every single month and guess what we could literally go to our bank we had 25 sales reps 33% of that would convert every single month.

Speaker 1 And then you start to it really does.

Speaker 5 I know what my payroll is going to be, and it's a huge number. There's almost almost 500 employees.

Speaker 3 I know usually within 15 grand a week, which is crazy because I'm talking about a lot of money.

Speaker 3 And it's crazy to know, I can tell you what most of my technicians that have been with me five or more years are going to make within 3% to 5%.

Speaker 3 And it's crazy the law of numbers, unless something catastrophic happens, COVID hit pretty hard. But all of a sudden, there's a lot of things out there.

Speaker 3 like the PPP and the employee retention credits and all kinds of crazy stuff that I didn't know what advanced depreciation was. I didn't know what a cost segregation study was.

Speaker 3 I had no idea the opportunities out there with the tax law, the Augusta law, that I could rent out my house to myself for two weeks and have the employees there.

Speaker 3 There's so many advantages to when you start making money. It's almost not even fair.
This is why I think the risk get richer, but it's all out there. I talk about it all the time on this podcast.

Speaker 3 And I think some people are like, whoa.

Speaker 1 this stuff is not that complicated if you simplify it down and you know what one of the biggest hurdles i think because i agree with everything you just said, Tommy, there's so many mechanisms, I'm going to put it in air quotes of like strategies that once you have money, you can leverage it up, you can borrow against it and just snowballs into like anything you could think of.

Speaker 1 That is exciting. That's fantastic.
Oh, that's awesome. But like, how do you get above that snowball of cash flow?

Speaker 1 where you're on top of it and not in the cyclone along the way or in like in the wave that's being tumbled around. I think there's an easy equation to try and figure out.

Speaker 1 It's not an easy equation per se, but it's an easy question to answer to ask yourself, excuse me. Because,

Speaker 1 so, Tom, you know, if you think about like the numbers, I'm going to give some backstory before I give it is the amount of companies, there's only 6 million privately held companies in the U.S.

Speaker 1 that have employees. There's 27 million incorporated entities.

Speaker 1 Only 6 million of them have employees. Listen to this breakdown.
This is from the U.S. Census Bureau, man.
So there's only 20,000 that are over 100 million in revenue out of the 6 million.

Speaker 1 And that's like 0.5% or whatever the hell it is. And so then you go a notch below, and that's between 5 million in revenue and 100 million in revenue.
There's only 350,000 companies.

Speaker 1 And then below 5 million in revenue, there's 5.6 million companies.

Speaker 1 And so the lower 5.6 million, they employ like, I think it's like 60 million Americans. And then the other two chunks employ like 30 million.
So it's a huge chunk of our economy, man.

Speaker 1 But the problem with the bottom chunk of below 5 million in revenue, which a lot of companies, you name the industry, a lot of trades companies are as well. And

Speaker 1 how do you get to the point? So like if you think about this, how many times you heard this in your industry where I'm finally doing two and a half million in revenue.

Speaker 1 I'm finally paying myself 100 grand.

Speaker 1 And now it's like, oh, in order to get to 7 million, you have to pay 100 grand for an ERP system, buy more inventory, hire VP of sales, and you're going, with what money? I'm finally paying my bills.

Speaker 1 So they literally get whoop. And it's like lifestyle-based.
Like, I'm capable of being here paying my bills, but there's no plan to get over that hurdle.

Speaker 1 And like, that's where the budgeting and the financial, and this is just a plan.

Speaker 1 Like I said about those two guys, at what point can they get, and there's like, you know, eight to 10 months out, we can accumulate enough cash, tie the sales into the forecast that at this point in time, they will be able to afford to hire that CEO and step out of the business while maintaining their income through distributions without suffocating the company.

Speaker 1 That is the way out of that bottom tranche into the next one.

Speaker 1 There's no amount of balance or the checking account budgeting that'll ever get you through that unless you have a good business model where you use other people's cash, which is a whole different story.

Speaker 1 But I don't know if that helps, man.

Speaker 1 I just, I see so many times people just want to to will their way into like those and the ability to have the cash to make those investments to get on top of where you're kind of just playing with things instead of actually doing the work.

Speaker 3 You know, I've never missed the money. I didn't have, for example, I think right now I'm putting 15,000 away a month right out of the account.

Speaker 3 Not to mention, I give myself a really, really nice salary these days. Like that's going into an LPL account and it's a strategic asset management account.

Speaker 3 I don't look at that as much because I'm not pulling it out of the next couple decades anyway. It's a long-term play.

Speaker 3 I would say I'm not ultra-conservative, but that account I'm a little more conservative with. I try to do things just slow growth, seven to ten percent.
I'm happy.

Speaker 3 It's amazing that if you pay yourself and you put that money in your retirement,

Speaker 3 when I was 16, I sat down with my cousin, we were in his Red Corvette, it was in'86,

Speaker 3 and we're sitting there listening to,

Speaker 3 I think it was um, don't

Speaker 1 little red Corvette.

Speaker 3 I think it was No Doubt.

Speaker 3 No doubt, don't speak. And he goes, are you putting any money away into your Roth IRA? I said, what's a Roth IRA? He said, I recommend you open one.

Speaker 3 He goes, I don't know a lot about financing, but I know that it gets taxed when you put it in. And that way you'll let the money work for itself.
And then you can pull it out of 59 and a half.

Speaker 3 And I said, how much? He goes. I know this is a lot, but you've had a job since you were 12.
Can you afford $300 a month? And I said, I can try.

Speaker 3 And that's where it started. And that was the smallest amount I've ever put away a month.
And people might say, oh, I don't care what they say. They've got every reason.

Speaker 3 No matter what I was destined to be, I have money in my life because of that, because of the day in the Red Corvette, $300 a month when I was,

Speaker 3 that took finite math. And when you see the calculator, you see a table of what it does.

Speaker 3 10 years, 20 years is good. 30 years is great.
But 40 years

Speaker 3 is where you see that multiple every year. Pow, pow, pow.
It just goes up dramatically. And it's the same thing in business is I feel like people spend it because they have it.

Speaker 3 And a lot of times they don't realize that they're losing money. But what the worst thing in the world is when you get a call from your CPA and they go, it's tax time.

Speaker 3 You owe 200 grand or 500 grand or whatever it is.

Speaker 1 And you go, with what? Cash.

Speaker 3 That's impossible. I didn't make any money.
Like, well, you did, but you spent it. You spent it all.

Speaker 1 That's because you don't have it earmarked for the things in the future.

Speaker 1 You're literally looking at your checking account and on a day-to-day basis and you're making decisions today versus, you know, I had this guy on my podcast, Tommy. He was a pilot,

Speaker 1 serial entrepreneur, very, very smart guy. And I love this analogy.
And this is really what intentional growth, our whole framework is all about. Like, where are you going and why?

Speaker 1 Like, dude, I give vistage workshops and EO workshops like all the time. And like very, very successful businesses.

Speaker 1 And it's like, at the end of the day, the most important thing that they take away, even though there's all this tactical strategy stuff, it's like, I need to figure out what I want and why.

Speaker 1 It's like, no shit.

Speaker 1 And why is it that you're doing all of this? And what is the end result? Is the goal to have a more valuable company or is it to have a lifestyle? Or is it to have community or family and friends?

Speaker 1 Or like, just articulate these things because it's going to indicate what you're going to do today. Going back to the pilot analogy, every time a pilot takes off, what do they have in mind?

Speaker 3 They're all

Speaker 3 going somewhere.

Speaker 1 I'm going somewhere, right? Like, do I have enough gas?

Speaker 3 What's the weather going to be like?

Speaker 1 How long is it going to take to get there? Are we taking any stops? Who should be on there?

Speaker 1 And then when they're on the flight and on the route, they course correct immediately to stay in line with their destination.

Speaker 1 So if you have no destination, there's, well, you could nosedive or you could go all the way up or you could go all the way over this or you could figure out you want to be to be in the Ferris wheel instead of a plane.

Speaker 1 I don't know. And it all is at the whim of emotions or like COVID or supply chains versus saying, and I'm just going to give you an example.

Speaker 1 Like someone walks out in the Vartra and they go, okay, I've shifted my mindset. I get it all.
This is kind of like the narrative that someone would say.

Speaker 1 I want to go from 10 million in revenue and a million dollars in EBITDA, which I now know is only maybe worth five or six million bucks. Pay some taxes, pay some debt.

Speaker 1 I'd only put a couple million dollars into my bank account, which I'm not poo-pooing a couple million bucks. It's that's good money.

Speaker 1 But if the person wants more than that, like this person, their financial advisor said, Your company's worth $7 million.

Speaker 1 They put the enterprise value on their personal financial statement, not what we call net proceeds. After you pay the taxes, paid on the debt.

Speaker 1 And you're like, okay, wait, it went from $7 million to $2.5. Where'd the other five go? I wish I would have been focused on how much I'm going to take away from this.

Speaker 1 So they said, I want to go from $1 million in cash flow, EBITDA,

Speaker 1 to $2 million. And And then I'm going to go from a $5 million valuation to 12.
I'm going to do this over the next 36 months. And I'm going to roll my strategic plan into that.

Speaker 1 And then I'm going to sell to my employees via an ESOP. And then I'm going to net $8 million.
I watch people do this all day long, Tommy. And it's because they have a point B.

Speaker 1 They're going, this is where I'm going. And so throughout COVID, they pay down debt.
They did all these things. And all of these strategies.
It's not like this hurricane came and they had no plan.

Speaker 1 It's like this came, but I'm going to navigate it through it so I can get to where I'm trying to go.

Speaker 3 You're right. I actually interviewed a guy named Benji at Breakthrough Academy, and I'm really good buddies with Danny Kerr, a great, great little company over there and Canadians,

Speaker 3 best people. And he said that there's a few things that I've noticed after doing 2,000 business, basically analysis of each business.
He said, number one

Speaker 3 is they've got an exact plan. I mean, they know where they're going.
They know their revenue. They They know their profit.
They've got it benchmarked by week, by month, by quarter, by year.

Speaker 3 And they've got meetings to check in on it. And they're always self-correcting.
It's like, man, they know their KPIs. They've got objective goals.

Speaker 3 They understand if they missed a month, what they got to do next month. They've got this stuff down.
They live, die, and breathe it. He goes, those people are always successful, Tommy.

Speaker 3 He goes, number two, he goes, it's the ability to have some tough conversations. And there are always times that there are tough conversations.

Speaker 3 The guys that let their business run them, they let the prima donnas take over the meetings, they let the eye rolling happen.

Speaker 3 They're afraid to lose somebody, they're always afraid, they're always stepping on eggshells. He goes, That's a big one.

Speaker 3 He goes, Sometimes it's the big guys with tattoos, too, that are just afraid to step up to their top salesman. Number three, so tough questions.
Number going, and he said, Um, I'm brain farting.

Speaker 1 This is the ability probably to make decisions, knowing how to course correct. And I don't know what the number three is, Tommy, but like, let me relate a story.

Speaker 1 Um, that no, no, it's a good context, man, because I'll tell you what,

Speaker 1 I am one of those guys where, like, I actually don't like confrontation, man. Like, I'm an affirmation junkie, like, that's my love language.

Speaker 1 We don't have to go there, but like, I'm like, hey, man, you give me a data boy, and I'll do whatever you want.

Speaker 1 So, like, my point is, when I was turning around the family business, there was no choice, man.

Speaker 1 I like these people. I've been hunting and fishing with them for 20 years.
Their family, I've been to their kids' graduation parties. And it's like, so how did I handle that?

Speaker 1 Even though it was so hard is

Speaker 1 I like data because, for example, let's say you were on my team and like I build the numbers. And this is why I learned all this stuff.

Speaker 1 Now when I reflect, it's like I could sit and down instead of me versus you, Tommy. Like it's subjective.
Ryan doesn't like Tommy.

Speaker 1 So Tommy's going to be under a write-up plan and we're going to work through this. But it's, it's this power dynamic that I just hate that stuff versus saying, Tommy, here's the goals.

Speaker 1 Remember, we remember we made these goals together? We're going to 10 million, right?

Speaker 1 We're going to have this much come from the equipment division, this much come from the service division and the service contracts.

Speaker 1 Remember we did that together and we talked about like the things that you were going to be doing to go there? Like you're missing them. What can I do to help?

Speaker 1 But what happens is it was like us side by side looking at the data and the data and the actions are the enemy, not me versus you.

Speaker 3 And so what I did is like, I mean, going through that many people turning around, man, I can get to the point where I literally would rather punch someone than fire them because I'd still give a stomachache firing them but i'd rather just like get in a fight instead never done it never been in a fight but like hopefully the point's getting across versus then say like when i should no they helped you you're 100 what i let them come up with the budget this year because i am so out there if the cup is half empty i still think it's full i mean i'm just that guy that's like cut the cup in half and it's full i got these crazy goals the third thing was but it just came to me a minute ago is you got to be a magnet for great talent and we are a magnet for great talent and i talked about that earlier, but here's the facts.

Speaker 3 What we started using was this presentation that we have the managers, the C-level managers, they present to us.

Speaker 3 And they tell us what they did great that last week. They tell us where the numbers are, what they're going to do to self-correct.

Speaker 3 And the conversation is we worked really, really hard to come up with compensation programs that keep us on our goals.

Speaker 3 They have way more

Speaker 3 just as much as I do. Like when I miss my goals, everyone in here is missing their goals and they're they're not making the money they want to make or they planned on making.

Speaker 1 Are you familiar with open book management?

Speaker 3 You keep giving me all this stuff that I don't have. So that's what there's.

Speaker 1 This is what 300 podcast interviews and a couple hundred books will do for you, Tommy. So Jack Stack, he's been on my show a couple of times.
I'm happy to put you in touch with their team.

Speaker 1 And he's the father of open book management and it's called The Great Game of Business.

Speaker 3 And he's like,

Speaker 3 oh, yeah, he does. I got that book.

Speaker 1 Yeah.

Speaker 1 The Great Game of Business, Tommy. And guess what?

Speaker 1 All in the numbers. Jack's like, hey, man, we have our weekly huddle.
So if you're running EOS or traction or OKRs or scaling up, I don't, it's all the same stuff.

Speaker 1 You have weekly meetings, you have accountability and your KPIs. But Jack has the based on numbers because they're very ingrained in the ESOP employee stock ownership community.

Speaker 1 And my partners have done ESOPs and I'm a big proponent of them. But what happens is, I'll talk to you about it here in a minute.
Yeah, it's very, very familiar with that whole universe.

Speaker 1 Point is, well, you know what Jack does?

Speaker 1 And he teaches people how to do this stuff too. He has a picture of someone's face, Tommy, next to every line in the income statement.
I was like, that's freaking brilliant.

Speaker 1 Cause everybody is responsible for something. And you can't have two faces next to it.
Someone's got to be responsible for that. And that's their KPI.
Like shocker.

Speaker 1 I actually, when I did the podcast interview, I had this one of the little videos that went on social media. It was like.
The best way to find your KPIs is on your income statement.

Speaker 1 Yeah, you don't have to make them up. You don't have to go like scour through your CRM or scour through your service.

Speaker 1 I mean, I know that there's first call effectiveness and all these other things that are in there, but those all show up in the income statement at some point, which is parts expense, labor expense, whatever it might be.

Speaker 3 No, that's genius. I'm putting that into effect this week.
You know what? The difference between me and most people is I really implement pretty fast.

Speaker 3 And we do it and not all of my stuff works perfectly, but they do work most of the time because they came from great people.

Speaker 3 L had a quick question: How much does the owner need to know from a financial education to read and understand what's being given to them?

Speaker 1 From my own.

Speaker 3 Basically, do you need to have a PhD?

Speaker 1 So, I'm going to go back to: I was a copier salesperson, and my dad was a copier salesperson. And financial accounting was the worst degree I got in college.
And this is now what I do.

Speaker 1 I have become over the last decade, I've put in way more than my 10,000 hours to get to this point. Now, my point is that anybody's capable capable of this, Tommy.

Speaker 1 I struggled so much back over a decade ago. I was young and I had people in suits that had a lot of acronyms behind the back of their name that made me feel dumber than I thought already felt.

Speaker 1 And I think that that is the biggest disservice to business owners. And there's really good advisors out there.
I'm not saying they're all bad.

Speaker 1 I'm just saying, like, to directly answer the question, I'd say, whatever you have right now is fine.

Speaker 1 And the person sitting next to you, which typically a role of a CFO or some mentor or some of the podcast like yours start to learn i mean it's just like a language man my the hvac technician was coming over here and i told him tommy that i know so little about motors and mechanics that my car if the car is not empty needs oil or tires i'm totally screwed

Speaker 1 like that's just me but like then he starts talking about all these words and like what's actually wrong with the system and i'm like I have no idea what you're talking about.

Speaker 1 You could be talking about AI and NFTs right now, for all I know. My point is, he was extremely nice.
He explained to me what those words meant, how they impacted what I was trying to do.

Speaker 1 I understood because I'm, I bet just I listened. He explained it very well.
And then I learned it.

Speaker 1 My point is, whether it's a mentor or the finance person sitting next to them, they should meet them where they're at.

Speaker 1 And that should be the person that's responsible for bringing that person to the next level for education. And like you said, we all have these seizures, man.

Speaker 1 Unless you came from private equity where you're a spreadsheet junkie on Wall Street, none of this stuff is.

Speaker 3 Those guys don't know. Trust me, I know a lot of these guys, they know arbitrage.

Speaker 1 They know how to buy. They know finance.
They call them spreadsheet jockeys for a reason. And like

Speaker 3 the tables, macros, you know,

Speaker 3 yeah, exactly. So what will the intentional growth framework help me with if I was to join up and be part of this with you?

Speaker 1 So our company has two revenue streams.

Speaker 1 We have a training revenue stream, and then we have a fractional cfo services or professional services the training it's an online if you can do it yourself or you can do it with uh four calls with my partner and i and it's five principles that teach people how a lot of the stuff works and it's a couple grand and that then some people go into the fractional cfo services domi and very similar i don't know if you talk a lot about eos or any of those other systems yeah gina wickman on and all those guys yeah so like our fractional cfos they integrate into the management team.

Speaker 1 So it's an hourly rate, no flat rate contracts, no annual contracts. And they're saying, okay, your goal, we're going to actually build that goal.
And then we're going to hold you accountable.

Speaker 1 They're sitting in the reporting to the people internally reporting to them. So it's really just like, here's how to learn this using these five principles.
I just want to give everybody the picture.

Speaker 1 Like, here's the structure of how this all works using the case studies. I think that's a good way to have a foundation, kind of like the Coke cans to get to the Pepsi.

Speaker 1 You're just kind of building that foundation to say, okay, because I'm convinced, man, that like every entrepreneur has the question, they know what questions to ask, they've got a pretty clear vision of where they want to go.

Speaker 1 They're just having a hard time getting that rubber to hit the road to get to that point where they want to go.

Speaker 3 Oh, I think the problem that I have with most entrepreneurs is they're really not entrepreneurs. They like that.
It's a fancy word for them to say, I work for myself.

Speaker 3 But the fact is, that's what you do. I got lucky.
I got lucky that I hung up my job probably four or five years ago. I've owned a company for 15, 16 years, but I hung up the job.
I come in here now.

Speaker 3 I still come in a lot, probably here

Speaker 3 more than often. You know, I come in on the weekends and I enjoy being here.
I've got a lot of books and a lot of games and fun stuff to do.

Speaker 3 But the point is, if I don't show up for a week or two or a month, then I don't think I've ever left for a month, but there are times I've traveled to different markets and stuff.

Speaker 3 We hit records when I leave.

Speaker 3 It's weird. The good news is, is like everybody tries a little harder when I'm gone.
But I love that. I love the

Speaker 3 pride that you built something that sustains without you like that's something to be super proud of man i feel like this is bad i feel like i could walk away for a year i still want some reports if i just had a cell phone i could log into my crm i get the monthly reports i'd be fine i just probably put a little bit of gas a little bit of pressure on marketing a little bit of pressure on sales

Speaker 3 those are my two favorite things i'd say all right let's generate some more calls but when you think about marketing i think about recruiting i think about companies i want to buy.

Speaker 3 And I think about customers. I think about internal customers first.
Those are my people. I'm writing a book about this right now.

Speaker 3 It's so many times, you know, Trump said this, whether you like him or not. He said, the worst employee is a good employee because a bad employee, you fire.

Speaker 3 A great employee, they bring you to your goals and beyond. A good employee is just there.

Speaker 3 And I think too often we go looking at the spreadsheets and our KPIs that are CRM instead of looking at the people around us.

Speaker 1 By the way, that note is why, like, dude, there's going to, it'll be interesting with this a whole long, like long conversation, but like the private equity firms that have gone down market.

Speaker 1 Like I'm watching all these PE firms in the Twin Cities here roll up all these service companies, Tommy.

Speaker 1 And I'm like, I don't know, I've ran plenty of service companies in my day, and you need to have a good company with a good culture and all the stuff you talked about when we got on this call.

Speaker 1 And they're just looking at these spreadsheets.

Speaker 1 And I'm like, how are you going to deal with the crabby tech that shows up at someone's house, doesn't take off their shoes and treats the homeowner like it, like a jerk.

Speaker 1 And it's like, that's not in the spreadsheet. The spreadsheet tracks the historical and projects the future of the money and the KPIs, but like you, this is all based on human beings, man.

Speaker 3 I think that's the hard part about a business is

Speaker 3 I put up with a lot of stuff, but you can't lie cheater still here. We all have families and we've all had stuff happen.
If someone walks in this door and I say, damn it, you missed your mark again.

Speaker 3 This week is the second week in a row. What's the matter with you? I'm putting you on a PIP, a performance improvement plan.
This is it. This is the final straw.

Speaker 3 Or if I said, hey, Ryan, come in here for a minute, dude. Seriously, talk to me a little bit.
What's going on with you? What's going on in your life these days?

Speaker 3 I'm really worried about you because we worked with you really, really hard on your goal.

Speaker 3 And that's what the dream manager program is all about,

Speaker 3 their goals, their dreams.

Speaker 1 And then I say this, Ryan.

Speaker 3 You know, I don't know this about you, but I say, you've got two little boys. You've got a wife.
You've got a dad you wanted to take on this fishing trip.

Speaker 3 I've got exactly every dream, every goal, everything that you wanted. You wanted to buy a house by this date.

Speaker 3 We said you were going to work every other Saturday for nothing else, but you to hit your goals and your dreams. I love it.
This is everything you want.

Speaker 3 You made me promise to you to hold your feet to the fire. And this is what we're doing today.

Speaker 3 Listen, I'm here to give you anything you need. I'm not going to give you a handout.
We're going to work together at this, but let's fix this now. That's a much easier conversation, isn't it?

Speaker 1 I think think it's the only way because like i've watched all the other ways not work and like and again it kind of goes back tommy i mean like we're all humans man i don't know if you ever dug into jordan peterson he's a guy that yeah i've met him a few times he's at 100 million mastermind he is like him or any oh yeah the psychologist yeah Any psychologist will tell you that you need to have a point B.

Speaker 1 Why are you here? Where are you going? What is your goals? What is your dream? And then the whole world organizes itself for you to go get it.

Speaker 1 And so if you don't have any of that stuff, whether it's an employee, you should help them build it because that's these five principles are very similar to like what someone should do to help find their own career, figure out their financial targets.

Speaker 1 All of this stuff is helping you figure out what is your point B. And then that's the same.
So how you just worded that is exactly what we do with entrepreneurs to help them clarify all that stuff.

Speaker 1 So you ask like, what does the training program do? It helps them clarify what they want from their business and why. and how all these evaluations and strategic planning finance work.

Speaker 1 Then the fractional CFO service is exactly what you just said.

Speaker 1 It's like, I equate it to tell me, I've never hired a personal trainer, but like, again, the personal trainer says, okay, I'm going to meet you where you're at. You tell me your goals.

Speaker 1 And like, if you're not an Olympic athlete, I'm not going to hold you to Olympic athlete goals. Like, that's just ridiculous.
The trainer says, okay, here's how the world works.

Speaker 1 And now we're going to put a plan in together for you and hold you accountable. You told us it was important to you.
So we're saying, hey, by the way, this is going to get you off track.

Speaker 1 You just bought that cabin for half half a million bucks and now we don't have any working capital and that's not going to be bad you know what i mean so it's like we don't really care but like i mean we do care but it's like it's just helping them because you're the ultimate decision maker but it helps calibrate everything and how the trade-offs of your decisions actually impact your long-term goals you know it's interesting and i've got a trainer just left before here i literally threw my shirt back on some deodorant well thank you very much yeah

Speaker 3 and i told him we got to get ready for summer dude let's let's do this and he said all right, we're going to modify your workouts a little bit, a little higher on this.

Speaker 3 But he said, your workouts aren't the problem. He goes, you're my strongest client.
He goes, take that for what it's worth. You're strong, dude.
He goes, the problem is your diet.

Speaker 3 He goes, I'm going to give you this girl's number. You can afford it.
You're going to get this woman to cook for you. She's going to come in.
It's not going to be cheap.

Speaker 3 It's about a grand a week, but that includes all the food for you and your girlfriend. So it's probably going to save you money from restaurants.
And she's going to give you snacks.

Speaker 3 She's going to tell you to put on a learner when to eat it. I said, okay.

Speaker 3 And the only reason I mentioned that is because to me, that's kind of what a controller does is say, listen, here's who we need. Controller and a CFO.
They help you understand.

Speaker 3 Need to raise your prices here. For me, if I would have had someone great in the financial department five years ago,

Speaker 3 I mean, I had the privilege of seeing a lot of businesses, the back, like they're both.

Speaker 3 And oh my God, I'm telling you, I'm like,

Speaker 3 what is this? You're not even caught up on last year. I mean, we're going into June.

Speaker 1 And it's just an administrative, like, it's the same thing with the gym membership, man.

Speaker 1 Like, so you can have the trainer, you can have all that stuff, but if you don't do it and you actually don't want it that bad, you're just going to piss it away. Right.

Speaker 1 I mean, versus saying, like, okay, I want the information so I can take action to get to my goal. That's it, man.

Speaker 1 And like, whether it's my children, I actually, so instead of two little boys, I got twin girls that are five and a half, but like,

Speaker 1 well, yeah, you're close. But it's like, here's the goal.

Speaker 1 Let's clarify the goal and then let's work us towards that. And, like, you know, it's so interesting, man.
We brought on this steel fabricator last year.

Speaker 1 I mean, after getting this information, we found out that they were selling their steel at 40% below their cost because of inflation. Wouldn't that be nice to know? Yes, now we can take action on it.

Speaker 1 Their narrative and their fear, Tommy, was that if we increase our prices, the customers will leave, just like we were talking about. But also, they had these insane payment terms.

Speaker 1 So, like, their way of closing a new deal is hey you can pay in 90.

Speaker 3 well guess what they ran out of cash like well so then they're like holy crap this is really important so they raised their prices they were started collecting a good chunk of money down with the project boom next thing you know we got tons of money coming in life is a lot less stressful last little piece that i'd really equate this to is we hate going to the doctors but when we find out there's something wrong we'll go to the doctors every day to get better when we know there's something indeed wrong but a lot of times we're not checking, we're not doing our normal physicals, we're not going in there like we should be.

Speaker 3 And I think it's sometimes time gets in the way, but I think more importantly, it's a lot of people don't want to know.

Speaker 3 I mean, my dad just lost his girlfriend of like 19 years because of it, and she just neglected symptoms that were very clear that she didn't want to know. And boom, stage four, boom.

Speaker 3 And I think that's that's when a business goes bankrupt. That's when they get out of business.
And it's sad.

Speaker 1 Talk about the last two years. I mean, we got COVID and lockdowns and inflation the great resignation.
I mean, like, how many things do we need to keep going on?

Speaker 1 The DI, all the, like everything is going at entrepreneurs all at once. And again, if you have the point B and you've got good habits, you're just taking it as you're going, right?

Speaker 1 Versus the amount of people that got into that position, like you just said, where now after the 12-year bull run where everything just went up. And it wasn't that hard.
Now it's hard.

Speaker 1 Well, the people with the good habits are slogging through it, making their, you know, intentional choices and putting you know bet certain things that might make sense versus just getting hammered every single day man and like i went through that after the financial crisis and i'll tell you what man it's every two weeks on thursday we'd the quarter million dollar payroll and then we'd hit it like

Speaker 1 let's go to the cabin it's like That is not sustainable, man. That is so exhausting and it's so miserable and it doesn't make it fun.

Speaker 1 And I'm completely convinced, man, that there are three things that every entrepreneur wants to do. And it's create wealth, enjoy work, and make an impact.

Speaker 1 And it's like three little circles with a Venn diagram. So in the middle is intentional growth.
Like, I want to make a lot of money, make an impact, and have a lot of fun.

Speaker 1 If you're missing one of those, like you could be making a lot of money, you could be having a lot of fun.

Speaker 1 And if you're not making an impact, I swear to God, at some point, you're going to end up on my podcast. And people are going, I don't know what, what's this all for? What's why am I here?

Speaker 1 It's like, okay, or you could be having a lot of fun and making a huge impact and you could be broke as hell. And you're going to go, well, at some point, I'm going to have to fix this.

Speaker 1 So I think that just those three things, you keep them focused and that can help clarify the long-term goal. And it's like, man, then it's enjoying the journey because that's what this is all about.

Speaker 1 If you enjoy the journey, then you don't have to, I don't know, either sacrifice a bunch of stuff for a hope of some big thing in the future. You can actually enjoy every day.

Speaker 5 That's what I always say is.

Speaker 3 all the money that might, you know, we've got a lot of plans here in the future. And I'm like, what good is it if I don't have somebody to enjoy it with and enjoy the journey?

Speaker 3 And not only someone, you know, your family, but man,

Speaker 3 it's really cool. I understand an ESAP, and there's a lot of fancy things we try to do with an ESAP that have ever been tried in court.

Speaker 3 But there was this strategic move we were going to do: sell the company to the business. I was going to own 49% still.
I was going to put that money in actually a Roth.

Speaker 3 And because. The company's worth zero, my 49% of it's worth $0

Speaker 3 the day it sells to me.

Speaker 3 Because technically,

Speaker 3 the company's worth

Speaker 1 because it's leveraged. So you're saying your equity?

Speaker 3 So what I was saying is you sell 100% of the ESOP, you sell 51%,

Speaker 3 but my 49% gets thrown in to a Roth is how it strategically works. And then that Roth builds all kinds of money.

Speaker 3 And this is, I mean, this has been checked out by some of the best law firms, the best CBA firms, but it's never been tried yet. And there was a lot of fun, kooky things they were doing with Roths.

Speaker 3 And it wasn't strategically best for us at the time. I think ESOPs do a lot better earlier than later.
It depends on the goals, though.

Speaker 1 I don't say, man, the API group is, they just sold, they were a $2 billion ESOP, Publix, Hy-V. So, SRC, Jack, Stacks.
Like, literally, this is the one I named the podcast.

Speaker 1 So, he did his ESOP in the early or the mid or mid-80s or something like that, Tommy.

Speaker 3 Yep.

Speaker 1 They have 1,600 employees. He said they have a war chest of $100 million in cash.
They've created more millionaires than you can count.

Speaker 1 And they have launched like 70 businesses from their employees by funding them to go out.

Speaker 3 So I like that. No.

Speaker 1 Me too.

Speaker 1 What's point? 100 million in cash or just like, like, just

Speaker 3 investing in, you know, but here's the deal. Realistically, one of my financial guys came from an ESOP.
He was there 20 years. He's getting 500 grand.

Speaker 3 It's one of those things. If they sell police, there's a lot of great things.

Speaker 3 I won't say it's right for everybody. I'll say I'll probably in my lifetime, I'll probably own a couple of ESOPs.
I'd love to, I won't own it, but I'll develop it because I'd be a part owner in it.

Speaker 3 So, here's what we do now, Ryan.

Speaker 3 First of all, I'd like to know more about your program a little bit. Tell me how to get a hold of you.
Tell me how to get a hold of the program if I want to get my hands on it.

Speaker 3 It's something that I think I'll go through just because I always like to support the guys and gals that come on the podcast. Plus, I think I'll get a lot out of it.

Speaker 1 Arcona.io is our website, A-R-K-O-N-A.io.

Speaker 1 And we have a lot of content out there. So the home page is a full overview of the training program.
So it's based on these five intentional growth principles. There's about six hours of videos.

Speaker 1 And Tommy, this is, it's a, the right balance of like insane amount of meat and value. And then the average video is like eight minutes.
So it's like animation.

Speaker 1 It's for like ADHD entrepreneurs who also want to learn all this stuff. And so there's a couple of different ways you can consume it, do it yourself for a thousand bucks.

Speaker 1 You can can hire me for four calls for 3000 bucks. Or we have a peer group like mastermind option that we do with channel partners.
So that's not open to the public.

Speaker 1 But essentially, there's this training program. There's also another page on there for fractional CFO services.

Speaker 1 So kind of like this whole concept that we've been talking about, people that want to engage with us and see on fractional CFO services, they go through the training as part of the onboarding.

Speaker 1 We'll do a complimentary financial assessment.

Speaker 3 And then it's a go or no go.

Speaker 1 That's why there's no contracts, man. It's like, essentially like your trainer, right?

Speaker 1 If you want your trainer and you respect them and you're willing to listen to them, then you want to work with them. And that's, that's the long-term relationships that we like.

Speaker 1 So those are both around there. There's a, I would recommend for everybody, there's what we call the intentional growth financial assessment.
It's 22 questions. They go through.

Speaker 1 You don't need your numbers or any of that. So just like questions of like, hey, how are you building your numbers right now and organizing them? The results page gives a couple of scores, Tommy.

Speaker 1 And we've got. I think my partner and I did like five or six videos walking through what good looks like.

Speaker 1 Even if you didn't want to engage with us, you could literally show your CFO or your controller, like, build me that. It's just a spreadsheet model, man.

Speaker 1 And like, we didn't invent any of this stuff, right? We're just hopefully giving it to people in a way that is digestible and makes sense.

Speaker 3 Love it. And then you mentioned a few books, Demand Side Selling.
I think Clay Christensen and Bob.

Speaker 1 Moesta, Mob Nesta, but it's M-O-E-S-T-A.

Speaker 1 And Conscious Capitalism.

Speaker 3 Capitalism and then Open Book Management were the three. Any other books that you'd recommend for us to listen to or or read?

Speaker 1 It all depends on, it's kind of like music. It all depends on what mood I'm in.
So like, I really like books that give me frameworks to think by.

Speaker 1 One that I just read, which most people probably won't, but it's called Changing World Order by Ray Dalio.

Speaker 3 That's a great

Speaker 3 book.

Speaker 1 The Changing World Order.

Speaker 3 The Changing World Order.

Speaker 1 Yeah, I know the book. It's one that you could use as an

Speaker 1 anchor if you wanted to.

Speaker 1 But I really like that one.

Speaker 3 So last thing is we talked about a lot of stuff. I want to get a quick question in from Josh here.

Speaker 3 He said, do you keep a current bookkeeper and bring them through the program or do I get myself through first and then hire on a CPA?

Speaker 1 So a good question. I want to kind of separate the question into two.
One is that the training is for business owners and stakeholders.

Speaker 1 I got a lot of people from like partners, family members, whatever it might be that go through the training. You do not have to engage in CFO services through the training.

Speaker 1 So we've had hundreds of people over the last two years since we digitized this go through the online and not everybody is a CFO client.

Speaker 1 So for the CFO services, the cfo that so we they're on our payroll we pay them a lot of money because we're taking people from the bigger ends of the marketplaces and giving them four to five clients so just to kind of for some clarification you have your cpa that moves your numbers into boxes to make sure that your taxes are done the right way you might have an audit compilation to review then you're hopefully on gap accounting The CFO is a strategic business advisor that knows, hey, like, what's the value of this thing?

Speaker 1 If we do these things over the next four years, what is the impact on cash and the future value of the company? And they're taking the ideas and rolling them into the strategies and the budget.

Speaker 1 Then the next level down is a controller. Controllers usually run about 120 grand.
A CFO in America could, you know, a good one could be a couple of two, 300 grand.

Speaker 1 So a controller, about 120, some thousand. Their goal and their main duty is to provide timely, accurate, and useful financials, month end book close.
That's it.

Speaker 1 I mean, some of them might be a little bit more strategic in nature. And then you kind of get into your bookkeepers and then your AP and AR.
So, like, there's all these roles.

Speaker 1 And what happens is most people do not have a CFO because of the numbers that we talked about and, like, where the size of companies are. You're a $5 million company.

Speaker 1 You're not going to pay your CFO 300 grand if you want to make 300 grand. So, and you don't need someone full time.

Speaker 1 So, I don't know if I'm answering that directly, but it's the training is for any entrepreneur and their stakeholders.

Speaker 1 And then, if people want to explore engaging in CFO services, we have a complimentary assessment that we'll go through.

Speaker 1 That CFO and that question, we would work with the CPA, work with the bank, and then we would actually help manage the bookkeepers, controllers, et cetera, if there was a good fit.

Speaker 3 Does the training work for people in the UK?

Speaker 1 I have not tracked it, to be honest, but like in some crazy different countries that like from Australia to South America to Canada to UK, we actually got a couple of people exploring.

Speaker 1 We're trying to figure out if we can get some international finance people on our team to explore the CFO services too.

Speaker 5 Perfect. I think we answered most of the questions.

Speaker 3 So here's the final thing I do, Ryan: I'll give you a few minutes. Maybe we didn't talk about something, maybe we talked about a lot of things, but I really love this podcast.
This was great.

Speaker 3 It'll clarify some things, even in my mind. Here, uh, got a lot of great notes.
Those are some great facts about the businesses and the census as well.

Speaker 3 But I'm going to give you a few minutes just to kind of close this out. Maybe we didn't hit on something that you thought everybody needs to hear right now.

Speaker 1 I think that there's two things. One is you just got to, there's three.
You got to clarify what do you want from your business long term and why.

Speaker 1 To wake up every day and just do things without knowing why you're doing it and what the outcome is that you're striving for, not just a revenue goal.

Speaker 1 And like you said, Tommy, not just bigger, but like more dynamic. Like, what do you want for your stakeholders? What are the intangibles that you want out of the business and why? Just a full list.

Speaker 1 And I'd say that the second thing is if you understand that.

Speaker 1 If you focus on growing the value of your company,

Speaker 1 you're going to create choices for yourself long term, which I think choice is a different way of saying freedom. You want to change something.
You want to do something.

Speaker 1 You don't have to burn the whole shit behind you.

Speaker 1 And then I'd say the third thing is, is that doing whatever baby step you need to get less anxiety around the finance section of business, because that's really how the game is played.

Speaker 1 The language of business are the financials. So I'd say whatever way seems possible to start inching towards those things.

Speaker 1 I just believe, man, like, I believe people can get whatever the heck they want. We're in America.
Like you can start a business.

Speaker 1 You can use other people's money to grow a company and then create a bunch of wealth and have a lot of fun and make a big impact.

Speaker 1 And I just think if people understand that, then just finding the right resources, I mean, it'll avoid what we went through, which I didn't think I had any options eight years ago.

Speaker 1 And I don't want that for anybody else. I want people to all the risk and the hard work and all the blood, sweat, and tears and time and sacrifice we put into this, make it worth it.

Speaker 3 I love it. You got to make it worth it.
You know, so many people, they call me up, but they're ready to sell their business. I've been doing this 32 years, 35, 40 years.

Speaker 3 I'm like, all right, tell me a little bit about your employees. Well, I don't have any.
Well,

Speaker 3 how many calls you're getting a day? I don't know, three to five. It's like, I'll pay you for your phone number because you thought you had this business that you built worth millions of dollars.

Speaker 3 And on paper, it's not worth anything. It's not worth the paper it's written on.

Speaker 1 And just one last part on that too, Tammy, is that like, kind of going back to out of the three takeaways, figuring out what you want from the business and why, grow enterprise value and use your financials as a roadmap to get there.

Speaker 1 The first one is if you've articulated what you want and why,

Speaker 1 no one else can tell you that it's the wrong thing. And I'm going to use that story that you just said as an example.
If your goal is to make a couple hundred grand doing three service calls a day,

Speaker 1 save for retirement and don't expect it to be worth $2 million.

Speaker 1 And if someone says, Tommy, I don't want a business. I want an assistant and to do three service calls a day.
I'm going to stash away my 401k. And that's my expectations.

Speaker 1 I think the big misalignment happens with the expectations of

Speaker 1 I'm going to take all the money out of this and it's going to be worth $10 million and everybody should give me a lot of money for all the stuff I've done. It's like, no, no, no.

Speaker 1 They're like, you get rewarded for the hard work of building value. And so I think it's just more expectation setting.

Speaker 1 And if people clarify that, then they're going to be less disappointed down the road.

Speaker 3 Correct. Couldn't agree more.
Have you ever heard of Jeffrey Giddamer?

Speaker 1 Oh, dude, the little bit red book is selling. How do you think I was making 400 phone calls drowning in a suit when I was 18 years old, man?

Speaker 3 I didn't realize he had the little gold book of yes attitude. How about I? The book of Cha-Ching,

Speaker 3 the sales manifesto, the little green book of getting your way, the little teal book of trust, the little black book of connection. Whoops.

Speaker 3 I love these books, man. I'm really into them right now.
There's a lot of golden nuggets in them. Yeah.

Speaker 3 It's very tactical. technical.

Speaker 1 I will also add to that if we're on the sales is Jeb Lunt, Fanatical Prospecting.

Speaker 3 Fanatical Prospecting. And then he's got the Fanatical Prospecting for Military Recruiting.
And I read that book because I'm really huge into recruiting right now. I'm working on a book by it.

Speaker 3 And yes, no, I what I do is I take Audibles and I cut them up into like two, three minutes. And then I talk about them for every Thursday morning meeting.
I'll put like two books. That's awesome.

Speaker 3 And then I interview a couple of my best technicians and really just, because I couldn't do live meetings for off three time zones.

Speaker 3 Unfortunately, on Thursdays, I'm not getting up at 3.30 in the morning to show Michigan and Florida what's up. I'm just, it's not going to do that I'm not willing to make.

Speaker 3 But anyways, this has been great, Ryan. I really appreciate it and appreciate your time today.
This has been a lot of value given here.

Speaker 1 I really enjoyed the conversation, Tommy.

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Speaker 4 And we're just, we're telling everybody our secrets, basically. And people say, why do you give your secrets away all the time?

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So check it out.

Speaker 4 It's homeservicemillionaire.com forward slash club. It's cheap.
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