Case Studies

Key Takeaways

  • A business needs to compare itself with the best in class and understand how the company is performing against them.
  • When customers have a better experience through the purchasing process, they will come back and recommend other people.
  • It is important for businesses to look in the mirror and take both an internal and an external view at the company.
  • An internal look at your company notes the strengths and weaknesses, and an external view looks at the opportunities and threats.

Read Full Interview

Jeff: Getting the most and best out of your team, if you want to know what that means with examples of how human performance directly impacts your company's bottom line and overall value, you've come to the right place.
 
From our studio in Southern California, with guest experts from across the country and around the world, this is "Deal Talk," brought to you by Morgan & Westfield, a nationwide leader in business sales and appraisals. Now, here's your host, Jeff Allen.
 

Jeff: Hello and welcome back to the web's number one content source for small business owners committed to building a business for eventual sale. Here on "Deal Talk" it's our mission to provide information and guidance from our vast, growing list of trusted experts that you and all small business owners can use to help you build your bottom line and hopefully improve your company's value. 
 
This idea of human performance and the idea of getting more not only out of yourself but out of your people. We're wondering how does that translate to increasing the value of your company or certainly making it more productive. We've got somebody on the line today who I believe is going to be able to really give us some true insight into this idea. 
 
If you are wondering about how you might be able to improve your performance, improve the performance of others who work with you in your organization to get the best out of them and to be the best that you can be, you've come to the right place. This show is for you.
We're joined by our special guest today. His name is Darrell Gunter, he's Digital Publishing Executive, Executive Coach, M&A advisory, he wears many hats, as the President and CEO of Gunter Media Group. Darrell Gunter, I want to welcome you to the program. Welcome to "Deal Talk," sir, it's good to have you.
 
Darrell: Thank you so much, Jeff. It's a pleasure to be on your program.
 

There's something in the psychology term called Johari's window. It's the side that other people see that you don't see, and that's what a business wants to do, a business really wants to have someone to help them see their Johari's window so that they could address those particular issues.


Jeff: I was looking forward to chatting with you, Darrell, because we deal with so many tangibles on this program. We talk about the process of selling a business, the process of the M&A process, and the different stages and steps. We talked to people about how others can improve their businesses by things that you can almost touch, feel, taste and hold, the things we know about: financing, capitalizing and equipment purchases, real estate, lending, all of these things, and how to get legal, and how to do things properly, and how to grow your business, take it to the next level. 
 
The idea, though, of improving performance, this is something that is a little bit different. I know a lot of people may have different views on it. This is your specialty. Tell us a little bit, first of all, about yourself, how you got into this area, and how you've actually seen it work to improve those companies that you have consulted with.
 
Darrell: Absolutely. I'm a Seton Hall graduate, born and raised in Atlantic City, New Jersey, grew up in my family's grocery store business. I went to work for Xerox. I wanted to get the training from the best. That was back in '81. After two successful years at Xerox, I went to work for Dow Jones Financial News Services, which deals with the news wires, which becomes The Wall Street Journal the next day. 
 
And after a very successful year at Dow Jones, I was recruited over to be one of the first managing directors of Elsevier's regional sales office. They have four regions across the world, and I was interviewed for the Americas position. I was there for 11 years, led sales globally. After 11 years at Elsevier... I come from a family of entrepreneurs, so I decided to launch Gunter Media Group, focus on helping businesses to scale.
 
We've been in business now for over five years, and I'm also an adjunct professor at Seton Hall University, where my colleague and I, John Hoffman, we teach Consultative Sales to the MBA program. I also lecture at Rutgers-Newark, and I lecture to their Entrepreneurs Pioneers Initiative Program. And what I've been lecturing to them over the last five years is how do you build a high-performing team.
 

Jeff: Well, Darrell it's really fantastic getting to hear your story, and we appreciate you taking the time out to be with us today. I'm a business owner. I'm interested in taking my business to the next level. Tell me, is there any proof to show that improving my team's performance can, in fact, lead to measurable business growth that can also result in improved value of my company?
 
Darrell: No doubt about it. I'm sure if your audience is not familiar with the net promoter score, net promoter score is a device where you have folks give you a rating, one to ten. And nine and ten is what is considered positive, whereas six to eight is considered ambivalent. And of course, anything five and under is considered to be not good. And you always want to have a positive net promoter score.
 
And what you'll find is if you look at the particular critical path of your customer, and if you really look in the mirror and be honest with yourself, and you ask yourself, is it easy for people to do business with us? And when you look at that and get a look at how easy is it for someone to do a transaction with you, if someone is purchasing an item and you have to ship it to them, are there any glitches along the way? Are your folks being polite to your customers genuinely so that the customers would want to come back and also recommend?
 
What you'll find is that folks who are suffering from problems from their folks being polite, knowing processes and procedures, and managing the customers’ critical path through your business, when you find that that is not going well, you will see that your performance will be greatly affected. If you were to greatly improve all of those various different factors, you're going to speed up the process by which customers do business with you. You're going to get more transactions. People are not going to, as they say, get out of line and decide to buy it somewhere else. So absolutely, there's no doubt it. 
 
There's a lot of different studies where folks have shown that when folks have a better experience through the purchasing process, with the service process, that they will come back and they'll recommend other people. 
 

Jeff: Many business owners may already feel that they and their teams are giving it 110% every day. Just touching on some of those things, for example, that you just talked about, about understanding the true significance, the value of the relationship that you have with your customers, and the regular nuts and bolts thing, the pencil pushing that we have to do, and the calls that we have to make, the orders that we have to fill, the people we need to speak to. We're trying to cram as much stuff as we can into every day that we go to work. How can we possibly give more than that, Darrell?
 
Darrell: I think each business has to really look in the mirror. I’m always talking about looking in the mirror. They need to compare themselves against the best in class. If you compare yourself against the company that's best in class, you're going to find some serious warts on your own business that gives you the opportunity to address them. 
 
There's something in the psychology term called Johari's window. It's the side that other people see that you don't see, and that's what a business wants to do, a business really wants to have someone to help them see their Johari's window so that they could address those particular issues. And sometimes those issues, especially in small businesses, family-owned businesses, it could be a relative that is underperforming but no one wants to talk to Jimmy's nephew because they're afraid there's going to be some repercussions. Or it could be a husband-and-wife team, and of course, you have those dynamics that you have to deal with. And then there's the inconsistency of managers, how they might treat one employee one way and another employee who's doing something similar a different way.
 
It's a lot to look in the mirror and say, "What is my SWOT analysis, what is PMI, my pluses, minuses, and interesting points?" Because, as you know, we're all humans and we're all capable of making many mistakes. But what does Einstein say? The definition of insanity is doing the same thing over and over again expecting a different result.
 

Jeff: Darrell, Einstein was right. I believe that absolutely to this day, and I think about that every so often because I can do some pretty insane things. Quite frankly my wife will make sure that she lets me know about that. But tell me, you talked about SWOT analysis. I've heard about SWOT analysis. There might be members of our audience who aren't familiar. Can you tell me what that is and how that works with you and your clients, and how you use that SWOT analysis?
 
Darrell: Absolutely. Back in the day when I was at Seton Hall, still in the School of Business as an undergraduate, we were not taught SWOT analysis. I did not get that until graduate school, at the Lake Forest Graduate School of Management. Now they are teaching the SWOT analysis in undergraduate business school, and I think it's very important. 
 
When you look at a business, a proprietor needs to look at whether there's strengths, whether there are weaknesses. And this relates to their product, their pricing, their process and procedures, all of the different dynamics that make up a business, and that's an internal look. And then the opportunities and threats is an external look. Whether there are opportunities in this marketplace that we’re currently not taking advantage of that we could take advantage of if we do some things differently, or after some new blue ocean space, and then what are the threats. 
 
And we think about threats, threats, of course, you're competitors, it could be technology, it could be government sanctions, it could be a host of things depending upon your business. I'll give you an example. You know those hoverboards that people are riding now? 
 

Jeff: Yes.
 
Darrell: Now people are saying, "This is a great business." However, the government has started to clamp down on those particular products because they're not safe and they're catching on fire. When you look in that particular business you really need to understand the macro and microeconomics of your business. And so your strengths and weaknesses focus on your internal look, and then your opportunities or threats is an external view in regards to how you have to look at your business as well as your competition. 
 
And you need to understand and look at everything from, like I like to say, a macroeconomics point of view, and microeconomics in regards to your local environment that you have in your city, state and county government. And so it allows the individual to do the self-analysis.
 

This is going to be a day-in and day-out process. But with a road map or with a plan you'll be able to mark that improvement, and see that improvement, and see that improvement drops right to your bottom line.


Jeff: Darrell, how do we get from where we're at now, from the level of performance that we're seeing not just in our people and in ourselves, but at the end of the day the level of performance of our company. We're bottom-line type folks. We look at the dollar signs at the end of the day, the amount of money that we have in our bank accounts. We know where we're at. We also know where we'd like to be. So how do we get from point A to point B?
 
Darrell: You’ve got to establish a performance dashboard for yourself, you have to measure yourself, you have to set goals for yourself and measure yourself against those goals. Just recently I was talking to a gentleman, David S. Rose, who has a great book called “The Startup Checklist.” One of the things that he said is very key and applies to everyone is that you have some people who talk about starting a business, then you have people who start a business. It's about the business of doing.
 
But in the business of doing, you have to establish performance goals and measure yourself against those performance goals. And then you need to understand if you set a particular goal and you overachieved it, so maybe the goal was a little bit too easy and you need to set a tougher goal. Or if you set a goal with a performance measurement of 10 and you only got 2, maybe you made it too hard. What are the particular nuances about that particular performance measurement?
 
And what you do is that you say, "OK, in this business that we have we're going to use these measurements to gauge that success." And then you have to measure that every week and determine where are you in that process. And then you see that you're achieving your goals, then you need to establish higher goals for yourself. 
 

Jeff: But I think the thing here that is important too to follow up with, Darrell, and I'm sure that you'll agree with me, and we can come back and talk about it after the break, is the fact that if you're going to make this commitment toward improving the performance of not only you but your team, and you're going to be checking these goals and you're going to be finding out how you're doing, and you're going to be doing a lot of self-evaluation, you need to stick to it. You need to be consistent about it. You need to follow a routine schedule, and like you said, regular commitment to this is really, really critical in order to make sure that the process works and you can, in fact, get to where you want to go over time.
 
My name is Jeff Allen. We're talking about the correlation between performance improvement and increased value of your company, how you go about it, can it, in fact, be done, and what in fact you need to do in order to put all of these things in place in order to have the success that you want for your business. My name is Jeff Allen. I'm going to be back with Darrell Gunter, he's CEO of Gunter Media Group, when "Deal Talk" continues right after this.

If you'd like to share your knowledge and expertise on any subject related to selling businesses or helping business owners improve the value of their companies, we'd like to talk with you about joining us as a guest on a future edition of "Deal Talk." Interested? Contact our host Jeff Allen directly. Just send a brief email with "I'd like to be a guest" in the subject line. In a brief message include your name, title, area of specialty, and contact information, and send it to jeff@morganandwestfield.com, that's jeff@morganandwestfield.com. 
Selling your business may be the most important business transaction you'll ever undertake, so don't go it alone. Work with an organization that has made it their business to sell businesses and that's all they do. Morgan & Westfield at 888-693-7834. At Morgan & Westfield we know that selling your company is not something you should take lightly. It can be a stressful, difficult, even emotional process. That's why it's important to work with a team whose one and only specialty is selling businesses throughout the United States. And Morgan & Westfield will help you every step of the way, from helping you plan your exit strategy, to preparing a comprehensive appraisal and locating the right buyers. 
 
Without the right team behind you, you could be leaving money on the table. So don't leave your most important business transaction to chance. Call Morgan & Westfield for a free consultation at 888-693-7834, 888-693-7834, or visit morganandwestfield.com.
Are you a professional adviser, accountant, attorney, or a wealth manager, or do you provide other professional services? Contact us today to see how our reliance program can help you increase your firm's revenues. Call Morgan & Westfield at 888-693-7834. That's 888-693-7834.
 

Jeff: I'm Jeff Allen. Welcome back to "Deal Talk." My guest is Darrell Gunter. He is in New York and he is head of Gunter Media Group where he's President and CEO, a lot of experience as an M&A adviser with some of the biggest names in the industry. And he's put together high-performance teams that have led their industries. 
 
And he's joining us today because the idea of performance is something that is near and dear to his heart and he has been able to over the last 10 years work with a number of organizations both small and large across the country, coast-to-coast, to help them get the most out of their people, the most out of their organizations as a whole in order to take the performance of the companies to a higher level, and in the process, by the way, increase their values.
 
Darrell, I wanted to continue our focus on getting the most out of our teams. How can we begin the process once we know that we can, in fact, do better? Let's take a look at our teams. Let's say I've got it all together, I've got things figured out as the owner. You come in and maybe you'll evaluate and say, "Yeah, Jeff gets it." So how can we start to address the issues with our team in order to make sure that we are performing at the highest level possible?
 
Darrell: As I mentioned before, I think it's important that you have to really compare yourself to the best in class, and understanding where the top company in your particular business, where they're performing, and how you're performing against that. 
 
There's a great book called “How to Outthink The Competition.” And it's all about comparing yourself against the best of class. And then doing a gap analysis on your own business and being honest with yourself in regards to where you're doing well, where you're not doing well, where you could do better. And then seek out the various different tools and mechanisms that you can utilize to help you to achieve that, and realize that you're not going to change your organization overnight. This is going to be a day-in and day-out process. But with a roadmap or with a plan, you'll be able to mark that improvement, and see that improvement, and see that improvement drops right to your bottom line. 
 

Jeff: Have you seen instances, Darrell, where a business owner, or a CEO, or C-suite executive maybe at another level, will go in and he'll talk to his team, and have trouble getting buy-in right away because a lot of folks might think, "You know what, I'm doing as much as I possibly can do. I'm doing everything you're saying that you need me to do and then some.” But you just at first have trouble getting others on the team convinced that there are changes that need to be made in order for the company to perform at the level that really would benefit everyone.
 
Darrell: That's a very good question. You have to look first at… you got to have the right people on the bus. In Jim Collins’ book “Good to Great,” it's hard to get the right people on the bus. Which means that you really have to have your business well-defined in regards to what is the business that you're in and what type of people with what skill sets, and knowledge, and experience that you need to help fulfill that vision. 
 
And then, of course, meeting with your team and working with them. Make it a group think type of project where they're going to have input and they're going to be able to provide you with their feedback. And when you do that, when you're working with them hand in hand, it's coming from the ground up, which is a very, very good thing. 
 
You might have heard of Total Quality Management. Taguchi was the godfather of Total Quality Management. And it's really helping everyone who is in that value chain of events for your customer having them to be fully versed in regards to what their role is, and how they need to interact and communicate with their team members.
 
You do it in that type of way. You're going to get buy-in. And then for those who, let's say don't want to do it, they have the skill but not the will, they will most likely self-select out of the company.
 

Jeff: That sometimes can make somebody, a hiring manager's job, actually either easy or really, really difficult depending on the needs of your organization and how prepared you are to fill those shoes. Darrell, let me jump into something else right now. Actually, it's not completely disconnected because I know that you have some experience as an M&A adviser and you have had a chance to witness a number of deals and transactions over the years, and play a variety of roles within that. 
 
Have you seen situations where in your experience, a sell-side company, for example, may not have gotten all that it wanted to or expected to out of a deal, or thought that it might mainly because there might have been one issue somewhere down the line that actually was a flaw that was easy to fix but maybe the business owner or the people in charge were just too close to it? And maybe this has something to do with performance-related factors. 
 
And you were there and you thought, "Gosh, if they had only taken care of this and addressed it years ago or even last year before we sat down today they could probably be getting a heck a lot more out of this deal than they're getting today.”
 
Darrell: I call that the pebble in the shoe syndrome. As I walk to the train from South Orange to the train station to get to New York, sometimes a pebble will jump in my shoe. And I feel that pain, but because I'm trying to make that train I don't take it out. But when I get on the train I take the pebble out of my shoe. A lot of times businesses, they know where the pebble in the shoe is, but for whatever reason, they choose not to deal with it. And that pebble in the shoe doesn't go away. So when it's time to sell the company it's one of those issues that to the buyer is a huge deal. And it can really, really hurt the valuation of the company.
 
Let me tell you a true story. There was a company once, and I'll leave the name blank just to protect the names of the innocent. The company didn't have a CFO. And one board member said, "If you don't have a CFO by April, I'm going to resign from the board because your processes are way off. Your pricing doesn't make sense." The CEO eventually did hire a CFO. But unfortunately, the CFO started drinking the CEO's Kool-Aid. Therefore the pricing was still not consistent. 
 
Let's fast forward. We're now in a meeting with a company to acquire us and they asked the fundamental question about our pricing metrics. And the CFO could not answer the question. I think that company that day lost $5 million off of their valuation because of it. 
 
When you think about it ― if the CEO had truly addressed that issue that that board member had complained about... And by the way, that board member eventually did resign. He was just fed up with the inconsistencies. But had that problem been addressed, that company probably would not have needed to sell at that point, and if they did, they certainly would've received a higher amount.
 

Jeff: Absolutely. But right there that's a sobering story and a sobering reminder about having that pebble in our shoe, take the doggone thing out. You'll probably make your train anyway.
 
Darrell: That's right.

I think each business has to really look in the mirror. I’m always talking about looking in the mirror. They need to compare themselves against the best in class.


Jeff: Darrell, we're starting to wind down this program and I really enjoyed this conversation today. But what I like to finish off with today is to find out maybe a thing or two or three that you can share with us that you yourself practice in order to perform at your very best each and every day.
 
Darrell: Number one is that I have a couple of mentors and I have a couple of mentees. I often take a course in Coursera once or twice a year on something that I know absolutely nothing about, which allows me to what I call to sharpen my blade. Then I always try to teach someone something, because if I believe I know a particular topic I could be more effective in doing it if I can teach it.
 

Jeff: I don't think we can end on a better note than that. And with that in mind, I think it just serves as a final thought that if there is someone that we can help or someone that we can help improve, make their job easier for them, or help them perform at a higher level. And there's something that we can share that we know might add value to their life, to their job, to their company, and to others that they touch, that we're foolish not to share that with. 
 
Darrell, I just want to thank you so much for that. I know that we have a number of people who might be very interested indeed in talking to you about how you can probably help them in their particular situation. We know that everybody is different. Every situation in every company is different. But if they'd like to reach out to you, how can they connect?
 
Darrell: Two ways, one is my email address which is d.gunter@guntermediagroup.com, or via our website, guntermediagroup.com. I'm available on LinkedIn, Facebook, Twitter. I can be reached at 973-454-3475.
 

Jeff: This guy is real, he's grounded, and he knows a lot of stuff, folks. Please if you would, get in touch with Darrell when you can. It's going to be a great conversation you'll have with him. And I'm sure that he can answer some basic questions and his service is also there, of course, provided for you. If you have reason to call upon him for the purpose of seeking greater performance out of you, your team, your company as a whole, he'd love to talk to you more about what he can do for you.
 
Darrell, that's it for our time today. I want to thank you again for joining us on "Deal Talk," really enjoyed it.
 
Darrell: Thank you so much, Jeff, it was a pleasure.
 

Jeff: Darrell Gunter, CEO of Gunter Media Group, has been our guest today. He is a digital publishing executive, executive coach, and M&A advisory, and I hope that you enjoyed our conversation.
 
"Deal Talk" is available at morganandwestfield.com where you can find the complete show notes from this discussion. So after listening to the program if you'd like to go ahead and print that PDF and have it where you can find it and get access to it, look up some important key points from this discussion and share it with others, it's right there for the taking. Once again, the website is morganandwestfield.com. You can also listen to "Deal Talk" in any one of three other channels, available at iTunes, Stitcher and Libsyn. 
 
"Deal Talk" is brought to you by Morgan & Westfield, a nationwide leader in business sales and appraisals. Learn more at morganandwestfield.com, or by calling 888-693-7834. I'm Jeff Allen, I'll talk to you again soon. Here's to your success.

 
While we take reasonable care to select recognized experts for our podcasts please note that each podcast presents the independent opinions of such experts only and not of Morgan & Westfield. We make no warranty, guarantee, or representation as to the accuracy or sufficiency of the information provided. Any reliance on the podcast information is at your own risk. The podcast is for general information only and cannot be considered professional advice.
 
 

Key Takeaways

  • Again, you have to know your people, you have to know your data points, and you have to be comfortable with just trusting what your data tells you. That seems to be one of the biggest issues.
  • And whether you're looking at it through a database, or you're looking at it through sales reports, you're looking at it through something of those nature. That is the data you need to know. And if you don't know if you're going to do miss something, you're going to spend more money than you should. 
  • Correct. Sometimes the problem is simply going to Staples once a month instead of ten times a month. That's an easy problem to fix. And sometimes that is one of the biggest problems.
  • If you are looking at selling your business, one of the thing that a buyer looks at is cost containment.

Read Full Interview


Jeff: Welcome to Deal Talk brought to you by Morgan & Westfield, I'm Jeff Allen. If you're a business owner, entrepreneur, or investor this is the place to be. It's our mission is to educate and inform you with the help of some of the most credible, highly-regarded experts in the industry of transacting businesses so you'll be equipped with the knowledge to help you make some important decisions when the time comes to sell your business or buy one.

What we're going to talk about a little bit about today, the importance of efficient operations and effective communication, because I don't really think you can have one without the other. They may sound like two different things, but really, for today's business owner in the age of the internet it's really taken over as kind of a primary source of communications among the business owner, his clients, his prospects, his staff in some cases, and today's guest knows a lot about this. He spent 22 years in fact in IT-related capacities, his name is John Ragsdale. He's the president of Innovative Resources Group and RPR Hawk Manufacturing. John Ragsdale, it's good to have you on Deal Talk sir, thank you.

John: Thank you very much, I appreciate being here. 

 

Jeff: John, let's talk about you, just to kind of start out here on the program, a little bit more about what you're doing with RPR Hawk Manufacturing and Innovative Resources Group. Are those two companies tied together somehow or are they two completely separate entities?

John: Over the past year we have combined Hawk Manufacturing and RPR Hawk into Innovative Resources Group. Innovative Resources Group is a manufacturing company. We manufacture products related to water purification, to water production, that kind of product line. They are mobile, they are in 20 to 40 foot containers, and that's why we’ve cross traded the business because that's where we have found over the last 12 to 18 months that the business has taken us. Originally it was going to be a sales organization and a manufacturing organization, but we realized to leverage our efficiency we needed to be all one organization.

 

Jeff: John, this is a little bit off topic but I've got to ask you about the types of products that you make or manufacture. You've got that desalination in a box unit. Why is it that we don't see more of these types of things in operation in the state of California where the drought is just crazy and there's a lot of attention and concern about really something that can become more of a crisis because of the lack of water and rainfall we have here. Just kind of wondering. I know that there have been a lot of times in the past, we've heard about these types of things. The drawing board as far as municipalities putting these types of things in service, but we just don't see many of them. We hear about them and use oftentimes overseas. Why is it we don't see more of those in use in the United States, in places like the West where we don't see as much rain as other parts of the country? 

John: What we seem to see is that the idea of distributed systems, which is basically what we have, wherein you can distribute the capability over a wide area, provide large amount of water over a very wide area. It's not the way the US infrastructure is setup. Our infrastructure is set-up more in a hub and spoke system where you have a large, central desalinization system or a large central processing system. And then a smaller pumping station all throughout the community. Our system does help out in the efficiency, it does help a number of areas along those lines too. But the change in thinking and the way that places like municipal systems in California and other places need to think. 

Overseas they're thinking more along those lines because it gets them to where they need to be quicker. We've spent 100 years building our systems, building our large, fixed infrastructures. Countries like India and China and other places are developing very quickly. They don't have the time to spend 100 years developing these fixed systems. So they're working at ways to get the same capabilities through more of a distributed system. That's kind of the way that we look at it. We could be completely off base. That is the ultimate battle that we tend to fight it's when we do go to Sacramento or any of the places here in the United States. The question always is how does this interface with my current system. And so that's always the question we have to overcome.

The issue always is if you're in something like IT, or sales, or something like that and you want to jump into manufacturing. If you're in sales you want to jump into IT, or something like that, it can be hard. It's a skill set that you have to learn sometimes. And it's a skill, if you don't have it you have it, you have to find someone who can help you work that skill set. Or you're just going to have to trial by error sometimes. It's sometimes the best way to go. So it can be difficult. It is rewarding when it does work out. If you do it right it does end up working out best for you usually.

Jeff: John, good luck to you on that venture. I know that it's a very exciting time for your company and you found a lot of success so far in the markets that you've been able to exploit. Really, very, very exciting indeed in terms of the technology and the hope that you can bring to those areas that need in fact, drinkable, fresh water from the types of systems that your company built. Let me ask you a question John. As an entrepreneur who spent a number of years in IT-related capacities, for those people who might be listening right now, maybe they're doing something, they're thinking about making a jump, maybe doing something completely different from what they're doing and that means investing in a business or buying a business that's already up there, it's already in place, it's already operational that might be completely different, 180 degrees different from what they're doing now. How easy did you find it transitioning to a manufacturing-based business from IT?

John: I spent a lot of my career as an IT director and different things like that, working around manufacturing. For me it was not that hard even though I'd gone from running an IT department, setting up IT infrastructure. In a large case it's still a lot of the same type of processes that I was involved with when I was just in IT. But overall it can be difficult. The issue always is if you're in something like IT, or sales, or something like that and you want to jump into manufacturing. If you're in sales you want to jump into IT, or something like that, it can be hard. It's a skill set that you have to learn sometimes. And it's a skill, if you don't have it you have it, you have to find someone who can help you work that skill set. Or you're just going to have to trial by error sometimes. It's sometimes the best way to go. So it can be difficult. It is rewarding when it does work out. If you do it right it does end up working out best for you usually.

 

Jeff: One of the things I know that you do John, and you're really a man who wears many different hats. In fact we can go ahead and get that out there right away. You're someone who has really learned and has excelled in a number of different things that you've done throughout your career. One of those things is working with companies to help them kind of re-engineer their business processes. I'm taking that right by the way from your LinkedIn profile as I'm looking at it right now. And you also helped them become more efficient. You kind of helped them to understand those areas where they can save money. What are some of these key areas that businesses you found time and time again are losing their money but for only a few small changes, could probably actually create greater efficiencies and keep more of their money?

John: Right. A large portion is human resources. Those tend to not understand how to efficiently schedule. Whether it's scheduling people or scheduling shifts, or however you want to look at it, businesses tend to think that it's better to what I will call over schedule a shift than it is to know your data points and hit the schedule like what it should be. Now, there are all these issues in following the schedule where a person calls out sick and it makes the schedule harder to maintain. That's stuff you can't control. But if you know your data point, 9 times out of 10 you can schedule your process and your business much more efficiently than you can by just, say, "I know that I need 10 people for this." You many actually need six or you may actually only need four, you may need nine. That is a situation where you can save large amounts of money in a hurry. Again, you have to know your people, you have to know your data points, and you have to be comfortable with just trusting what your data tells you. That seems to be one of the biggest issues.

Now the other issue is IT. Businesses think, I can always spend $100 on a computer here or a thousand dollars on a piece of software here and that'll solve the problem. That's again not always the case. Sometimes it's as simple as if you're using Windows 7 as an example, upgrade to Windows 8. That'll run your system much more efficiently. That'll run everything in a homogeneous way. There's a lot, it's very essentially that you end up looking at, but again, a lot of them are, I'll say probably 80% of the time it’s based around simply knowing the data. And I say that simply because all the data you need for your business is somewhere in your business. And whether you're looking at it through a database, or you're looking at it through sales reports, you're looking at it through something of those nature. That is the data you need to know. And if you don't know if you're going to do miss something, you're going to spend more money than you should. 

And so that's where we look at. We look at helping businesses first understanding what their business actually is doing because you'd be surprised how many owners who said, "Did you know that you're spending 20% more on human resources? And did you know you're spending 15% more on supplies, you're spending 10% more on going to Staples and those kinds of things that you should." A business owner will say “I had no idea”. So those are a lot of things that we look at when I go into situations like that and see. Let's find out what you're doing. Let's find all of the different data points of your business. Let's consolidate all those data points. Let's make sure that you know what your points are and then schedule or do whatever you need to do to meet those points. It's a long process. And again, it helps a lot of business owners and when you first start they are very uncomfortable with that because when you look at it... If I go to Staple as an example once every week and now I go once every month, and I go we run out of paper, and I go we run out of all these sort of stuff. No, because you buy it once, you buy it in larger bulk, you buy it cheaper, those kinds of things. All things that you will get to save money. If you save 1% off every single data point in your business you're going to save a lot of money.

Schedule six people, and have one person as a fall back that knows, "Okay, if someone doesn't show up this is my day to go in on the fall back." Those are very easy fixes. But again, they can save thousands and thousands of dollars in a very short period of time.

Jeff: John, it really sounds like once someone has finally got their head wrapped around all of this and sometimes look, it's just a matter of deciding to do it. Today is the day I'm going to take a quick look at this. And then if it takes you longer, maybe it takes a week or a month of analysis to really find out where the money's going and where you can fix things. The fix, in fact, the repair could actually be quite small and not a very complicated type of solution to solve a problem that could be sucking thousands and thousands of dollars away each and every month from someone's business, could it not?

John: Correct. Sometimes the problem is simply going to Staples once a month instead of ten times a month. That's an easy problem to fix. And sometimes that is one of the biggest problems. Or like I said before, sometimes the problem is instead of scheduling three people over on a shift and you have three people standing around fiddling their thumbs, you know your shift is six people. Schedule six people, and have one person as a fall back that knows, "Okay, if someone doesn't show up this is my day to go in on the fall back." Those are very easy fixes. But again, they can save thousands and thousands of dollars in a very short period of time.

 

Jeff: John, let me ask you a question. Is it your professional opinion as a business owner and someone who's been helping companies for years now run more efficiently and take advantage of these streamlining processes that by saving money like this and running more efficiently, and running lean and mean if you will, that this could really have an overwhelmingly positive impact, not only on a company's bottom line, but really on the value of your business, particularly important for those people who have an idea about possibly selling their business in the next two, three, four years.

John: Certainly, yes. If you are looking at selling your business, one of the thing that a buyer looks at is cost containment. If a buyer looks at it and tries one or two points where you've blown your cost out through the roof, they're going to say, "Okay, this is a great point where I can make some additional money." Well, you as the business owner, you'll lose money because you'll be looking at your bottom line of being “x” and it should be “y”, you get so much above that bottom line as far as multiple that bottom line. If your bottom line is higher than what you get for your business is higher. Again, business owners do look at it from the standpoint sometimes of I don't want to have a huge bottom line because of tax purposes. Obviously, you have to take all that kind of stuff into account too. But, you need to be able to have an efficient bottom line to where when you're arguing with a buyer like me potentially, or you're arguing with a buyer like us, you can say, "Hey, we are selling a zero bottom line. Here's why it's…..here’s the areas we are inflating or however you want to call it….our expenses. Here's all the expenses, if we were running it. If you can get that kind of justification, most buyers will understand what you're doing. A talented buyer will understand what you're doing. Obviously, I don't want to pay 30% in taxes on my income or whatever that comes up to be. The buyer will understand that. But if you're saying, I don't want to pay 30% on my income, and then I can't justify why the business is worth and “y”. Well buyers are going to look at it, "To me it's worth this. Tell me why you think it's worth more?" Just so you know, you're going to become the stuff between the rock and the hard place. You have to be able to justify whatever price you're asking for your business. And the best way to do that is just have faith and be able to prove what you're able to do with this business.

You have to be able to justify whatever price you're asking for your business. And the best way to do that is just have faith and be able to prove what you're able to do with this business.

Jeff: Owning a more efficient business, that's what we're talking about today on Deal Talk, I'm Jeff Allen and I'll be back with my guest John Ragsdale after this.


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Jeff: Welcome back to Deal Talk, I'm Jeff Allen with my guest John Ragsdale, president and CEO of Innovative Resources Group and we're about running a more efficient business today, and why that's important. John, I'd like to ask you a little bit about kind of your own experience in doing this. I often wondered how likely, or how possible it is, and how often this happens that a company wants to grow and wants to expand, and yet at the same time they want to control costs. And I think this probably applies to about 100% of the companies out there that want to grow beyond their borders, or want to grow their product lines. But I was wondering if you could give us a practical example of how a company could grow and yet at the same time reduce its expenses. Tell us how that could be possible?

John: Let me caveat by saying if you have 100 people as compared to ten people, your expenses are not lower. Your expenses as related to revenues, or as related to another data point can decline. It's not necessarily spending less money. It’s instead of spending 60% of my money on expenses I'm spending 58% of my money, or something along those lines. I'm actually spending more money, but my margins have increased. The way we do this is we look at opportunities for us to leverage volume. By leveraging volume we're able to buy things cheaper, we're able to put efficiencies into the manufacturing process through automation, a lot of those kinds of things. That allows us to drop our expenses or our expense margins. So like I said, instead of spending 60% on expenses, we're spending 58% or 55%. But again, we are spending more money. But again, but overall we are making more in each product that we sell because we have a higher margin. The way we tend to do it is like I said, we leverage volume, we go and we'll look at opportunities for us to do a larger volume deals. We'll work those through our manufacturing processes so that we can buy larger amounts of raw materials. Those raw materials will last us a longer period of time. Throughout our entire process then we have spent less per unit than we would've spent it for building one unit at a time. Our goal is always to build akin to 100 units at a time rather than just one, because that way we're able to reduce expenses on a per unit basis. 

And we do it through a number of ways. One of the biggest ways is we look at leveraging other businesses' capabilities. We'll go and acquire a business that has certain capabilities where we might be missing, that might help us reducing on our overall expenses, give us assets that we need, so that we buy the assets. It's cheaper for us instead of buying it on the open market. All of that comes in to play as we look at potentially a deal in acquisitions on our side.

One of the biggest ways is we look at leveraging other businesses' capabilities. We'll go and acquire a business that has certain capabilities where we might be missing, that might help us reducing on our overall expenses, give us assets that we need, so that we buy the assets.

Jeff: And so right there again, just a note to those people who are listening today who may be considering down the line, maybe you've already got an exit strategy or maybe you're just getting started in your business and you already know the scalability of your business. And you've got your site set on, whether it be growing domestically or growing overseas, you take on those assets. If it allows you to run your business more efficiently, and you're able to buy quantities, you're able to use those assets that are already in place and are healthy assets. You bring those on. You can really increase the value of your company while increasing the profits, and still not spending that much more money really when you think about it, to own and operate those assets at the same time. So it's really a great lesson to be learned there John and I think it was important to point that out. 

We talked about your IT background and I'm just wondering, many of us I think today take the internet for granted. It's here, this is part of it. Checking our emails is as simple as making a phone call used to be. And hopefully people still pick up the phone and they talk to people, and still have these personal relationships and email that does not always translate well for. But do you think that business owners need to do a better job of keeping up to speed on the technology advancements in their industries in order to stay ahead of the competition? Are we starting to see technology evolve so fast with obsolescence six months after something is introduced that we just can't stay ahead of it enough? What are your thoughts about that?

John: Yes to both extents. Yes, business owners need to know what technology is out there. They need to evaluate each advances to how it would benefit their business. If it means that you have to change more rapidly than you had originally budgeted, then you have to change your budget. It is just that simple. Can you change as rapidly in most cases as technology advances? No. Like you said, a new microchip comes out every six months, or every three months. There's no way you can go and buy a new computer every 6 months, or 3 three months. There's no way you could go buy new cell phones twice a year or whatever all those come out now. There's no way you can deal with all the rapid advances as fast as they come. But you still have to know what's there. Maybe instead of upgrading every 18 months you move your upgrade cycle to every 12 months. That is what you need to look at, is what makes the most sense for your business considering the rapid advances of technology. Maybe it's still every 18 months, or maybe that works out just great. 

Software, most of the software is moving to the internet. Now a lot of it software as a service. Upgrade really doesn't matter for that anymore. You will always have the most up-to-date software if you use software as a service. If you buy a software off the shelf, then you probably need to look at budgeting and some kind of upgrade cycle to make sure that you continue advance as fast as you can afford I guess, is the best way to say it. But you could never let your software sit and I've seen it where you go into a business and they have three or four generations back of software. With the way stuff, even software's advancing today. You cannot go that far. You have to say one, there's not two generations behind it, only one. That is the best you have to do. That maybe where you have to.... If you're buying software as a package not as a service where you have to upgrade every 12 months or every six months. Well that's the case you have to budget for it. 

If your competition is upgrading every six to 12 months and you're not, you are going to be left behind. There's just no way around it. It's different in a lot different industries. The restaurants are always different than manufacturing, but the general rules still applies. You can't be using punch cash registers as you see it in a five and dime store when we were in our younger days. Anyway, you have to be using radiant systems or something like that. You have to be in some kind of upgrade cycle. And if you're not, you are going to get left behind on the technology and software side. 

Not everything applies equally. Manufacturing, yes. Our CNC machines change every 12 to 18 months. Do I need to go out and buy 80 or 100 new CNC machines every 12 to 18 months? No. Generally we can get by with just large amounts of software upgrades to retain our CNC machines to the point that they need to be maintained. The companies that make these things, they provide a lot of support for companies like ours to allow us to keep our CNC machines running for five to seven years. So as long as those kinds of things are out there and you get the right partner on those kinds of equipment, you're fine not upgrading every 12 to 18 months. But if you get the wrong partner even on things like CNC machines or punch welders, or whatever, you're going to be in a situation where your competition has something that is a generation better than you and they're going to be more efficient than you, and they're going to get more business than you. Because they might be able to price underneath what you can price and make more money out of it than you can because of the way that their systems works well.

You're going to be in a situation where your competition has something that is a generation better than you and they're going to be more efficient than you, and they're going to get more business than you. Because they might be able to price underneath what you can price and make more money out of it than you can because of the way that their systems works well.

Jeff: John, as we wrap up the program today, and this time has really gone very, very quickly, I want to kind of go back to the beginning of the program and end it with a quick chat on the idea of communication. We here both see where it's communication and collaboration used interchangeably all the time now it seems with business owners who more and more these days are meeting one another, networking with one another to try to work together in some cases. Sometimes you could probably wonder about any hidden agendas that each business owner may have. Sometimes there aren't any and sometimes there actually seems to be kind of a genuine spirit of communication, cooperation, and collaboration to help improve the successes. Why is it these days that we're starting to see more and more of that, where a business owner isn't just simply going through life each and every day at the office with his head down at his desk. But rather that business owners now are starting to work more together. Why are we starting to see this happen?

John: I think a lot of it has to do with things like LinkedIn, and even to a lesser degree at least in business, Facebook, and different things like that. We're learning as a business community, we're learning as a society. But as a business community, as a society we're much more connected than we've ever been, which allows us to communicate more effectively, more efficiently, and easier across industries, across businesses, across countries, across continents, across the planet. It has and it will continue to change the way that we all do business. Even if you're a small bakery, you're going to have networking meetings, which you never did 10 years ago with other bakeries in your local community. Or you'll join groups like BNI or something like that to meet other people that can help you in your business. Again, I think a lot of that comes from things like LinkedIn. We learn through LinkedIn that business owners want to meet each other and they want to know what others are doing out there, that they want to talk to each other. And there's not always a hidden agenda. Like it or not, that is what in the end kind of LinkedIn has given us. It's given us the knowledge, and the ability, and the desire to talk to each other.

 

Jeff: And on that note we're going to go ahead and wrap this particular edition up John. I want to thank you so much for agreeing to join us. One real quick plug though for you. I want people to know that they can reach out to you if they have any questions about what you do, what you're doing, or how you can help them run their business more efficiently and effectively. Streamline those processes, communicate better, whatever the case may be John, how can people get in contact with you?

John: They can always call me at 843-817-6106, or they can always email me at jmragsdale@irggroup.co, and I'll be happy to respond to anyone who calls or emails.

 

Jeff: There you go, John Ragsdale, thank you so much. Hopefully we can have you back on again soon.

John: I would enjoy it. Thank you very much.

 

Jeff: John Ragsdale, president and CEO at Innovative Resources Group. 

Deal Talk is presented by Morgan & Westfield, a nationwide leader in business sales and appraisals. If you'd like more information about buying or selling a business call Morgan & Westfield at 888.693.7834 or visit morganandwestfield.com. And make it a point to check in with us again soon for valuable information and insight from our growing list of small business experts on Deal Talk. My name is Jeff Allen, thanks again for joining us. I'll talk to you again.