25 Years of Business Advice in 27 Minutes

0:00 So I've been running businesses for fifteen years and I've hit this wall multiple times. It's somewhere around seven, eight, nine, ten million in revenue. Where suddenly your biggest problem, it's not a lack of ideas. It's a issue with you. You're the bottleneck. And so I've got this buddy named Ryan Dice. He's got this amazing quote. He says, The more valuable you are, the less valuable the company is. And I read that quote in one of his books a a while ago and it kinda changed my game and how I thought about business. And so I decided to have Frian come on and talk about the simple but very effective framework he has for running companies. It's changed my life and maybe it could change yours.

0:34 But on this podcast he shared everything. So he shared his whiteboard, his spreadsheets, his flow charts with his employees. It's basically like a thirty minute MBA, which is Pretty insane and very valuable. So check it out. Let me know what you think in the comments. All right, let's get into it. I feel like I can root Well I know I can be what I want to You have two things that I like. One is you have this quote

0:57 Which is the more valuable you are at your company, the less valuable your company. I think this is like For every entrepreneur you will hit this point. Especially when you want to sell. Where

1:10 It felt really good to be the man, to be the one creating all the value, to taking all the shots and having your name everywhere and your face everywhere and your Your fingerprints all over the business. It does feel good from an ego perspective. It does feel good to have control. But It sucks if you ever want to go on vacation or sell your business because the more valuable you are to the business, the less valuable the business is.

1:30 Yeah, you gotta you gotta decide. Do you wanna be down in the court hitting the last minute You know, jump shot to win the game. Or do you want to be up in the owner's box? Um that that is the choice that that you make. And so you're either going to be the most valuable player

1:45 Or you're gonna own the team. Most Entrepreneurs would much rather Be valuable. And they would rather

1:52 Do the things that Enable them to get started. then do the things that are going to enable them to actually Achieve the things that they say they want. But really

2:04 They kind of like being important. They kinda like being valuable. And I think that's You've got to decide what do you actually want. And the nice thing is it's it's your business, so you get to decide. Yeah, but a lot of times the the problem is impulse control. Like uh so like it says as he cuts you off. Uh it's it's impulse control, I think. Like

2:25 I can say that I want something and I do truly want it. But twenty years of previous behaviors have to be broken and it's incredibly challenging to actually do that. And I think that like evolving as a person is we actually just did an episode on the other day, it's way more challenging. Then um than a lot of people think.

2:42 I like this graphic you had here of the the the before and after. If the you know, I think the messy sort of entrepreneur which is Yeah, I've been guilty a lot of these things. You're working eighty hours a week, you're in the weeds. If you ask who owns this, the answer is me, me, me for each Each area. The whole team is asking, Hey, you got a minute to talk about X, you know, twenty hundred times a day, you're missing soccer games. You can't sell the business because it's all it's too dependent on you and the business owns you rather than you owning the business.

3:08 And then you have sort of the uh the the ideal sort of uh I'll come here at the end, which is You know. It's an hour a week for you. team executes without you, the team optimizes without you, the team decides without you, you can take a thirty day vacation.

3:21 You break revenue records while you're gone and your exit ready if you want to, right? Like as an ideal Uh end state. This is for an entrepreneur who wants to exit, you know, wants to build What? is sort of insultingly called a lifestyle business, but is I think the the

3:34 the main type of business I'm interested in. I use business to have a good lifestyle. Um so yes, that's that's kinda what I want. So what's the process? How do you do that that transformation? How do you go from player to the owner's box, Ryan? And the way that you begin to implement it. Is You have to establish default.

3:53 You have to establish certain default constraints. I'm going to Leave at five thirty every day. Like I'm just I'm going to do that. And I'm not going to show up until nine. And what do you know, magically I got my work done in that block of time'cause I did.

4:06 Um and so just the prioritization of that is going to do it. So I mean that I think that's the first thing. That is then going to to force you to At least stack rank your priorities, because you can't do everything. Because yeah, you're right. We got a million different ideas, but What are the ones that we're going to do first? I like to say like our ideas are like chocolate cake, not cotton candy.

4:26 You can only eat so much chocolate cake. It's delicious, but you can only eat so much of it. So What are those what are those things that that you're going to do to begin to Um to stack rank those. And it does come down to again just getting really good at constraint identification.

4:40 We can do Everything. Like we There's a All this stuff that we could potentially

4:47 Do. As Entrepreneurs, we are trained and adept. And identifying problems. We see them everywhere. We will never not see them.

4:56 But we we certainly can't fix them all at once. So what's the one we're going to do? Next. And that's the only question I'm ever asking. What is my right next thing?

5:08 What is the thing that I'm going to do next? And every problem in business is going to come down to one of two things. Is it a supply constraint? or he demand constraint.

5:19 Demand constraint, I just need more leads and sales. Supply constraint, please don't get me more leads and sales, I can't. Fulfill the ones that I got. And so once I've identified that category I'd you say okay. How do we get this done? So if it's not going to be me that does it.

5:34 Who do I need to bring in to do it? And ultimately what it's gonna look like is bringing somebody in. Who is better than me. At one aspect Of this. So I'm not gonna find somebody who's better than me in everything.

5:47 But I can almost certainly find Multiple people who are better than me. At one aspect of that. And that's what Assembling a leadership team looks like. What you have to first do is you have to map and visualize

5:59 What are the core value drivers of the business? And every business does three things. You make stuff You sell stuff and you fulfill stuff. And so if you will create a visual map of how that happens. And so we do this with visual process mapping. Like we literally

6:14 We'll get go to a whiteboard. And get sticky notes? And we'll say okay. How how do we get customers? Let's sticky note this out in flow chart form. And you're basically

6:24 creating like assembly lines that connect. Is that the right way to think about this? Like it's literally like a pipeline. Something. comes in at the start, then what happens to it, then then it gets handed off over here, then it geded off over here, right? That's kind of what you're doing? Exactly. So this is this is an example of one that we would do

6:41 Just in sticky note version. But like this is an example of the growth engine. So where we would start Is you know, how do we generate initial awareness? So like let's say for this business They run Facebook and Instagram ads, they run Google ads and they're doing

6:54 You know, reels and stories? Yeah. So we're gonna start here. And then we're gonna say, Okay, cool, then what happens? And so for this particular business, they're driving traffic to An email challenge.

7:06 So they're gonna Have people sign up. For that. Challenge page. And then all you're doing is just saying then what happens. Well, did they register? If not, then we're gonna retarget.

7:17 If yes, we're gonna deliver it. And all you do in this process just keep saying, Okay, then what? Then what? Then what? And if you just will map the process and I didn't invent this. This is call business process mapping.

7:30 But if if you will just say where does it start? Where does it end? And you will create a business process map for everything that you do as a company. And and specifically If you'll do it for

7:46 How you get customers? Once you what you do with them once you have them. And How you know, you could also do for your manufacturing process or your product creation process. Um

7:57 Then what you've done is you've visualized the core value creation aspect of your uh business. Have you ever done this, Sean? Yeah. But um the question is what are you doing it for? So You know, there's a couple of different ways you can look at that. One is You look at it and you identify where's the constraint.

8:14 Uh, you know, the problem is this part's working well. Like, you know, what we would do is we would overlay some numbers. We would say, Great, so how many How much are we spending on those Facebook ads? How many clicks are those driving? So I would have little numbers written on the arrows, basically. And then we would kinda circle the one, like where's the leak in our bucket? Um you know this is the this is where we feel weak. You know, uh we got a lot of demand But um

8:35 Maybe, you know, we're breaking in terms of how many we can fulfill. There's a long wait list, right? Or Um They're not coming back. Why aren't they coming back? And you try to identify the constraints. So is that why you do the business process map or is there a Is that the first thing you do with it or what's the what are the different things you do once you create the map? So this is kind of a a digital example of the growth engine I just showed you?

8:56 And this would be like their fulfillment engine? So what I would do is we would take this growth engine And the one of the first things that we would do is we'd say, Okay Which of these can we really not afford to screw up? So one of the th the biggest mistakes that companies make when they're trying to to

9:13 Systemized is they try to document everything. Don't do that. Just document the ones that are really, really, really important. The second thing that we do Is this how we figure out Um

9:24 Who we need to hire? So we create this thing called a high output team canvas. And so every single one Of the sticky notes. Every single step or stage on here.

9:34 We're gonna say okay, this one right here, Facebook and Instagram ads. Who is uniquely responsible for this one? And then we will create This canvas So I'll go down to the marketing team.

9:45 And I'll say okay. You've got You know, John here John is gonna, you know, collaborate with agencies to, you know, establish those those budgets. But ultimately it's gonna be our agency that's gonna manage and optimize these.

10:00 So every single sticky note. Every single box is going to have corresponding what we recall critical accountability bolts. And this is how we begin to assign roles and responsibilities.

10:14 So that's the that's the the second thing that we do with this. And it becomes interesting because As you go through these Instead of going to people And saying okay. What does

10:25 You know, what does Betty do? You know, what is what does Lloyd do? What is Carly do. You start with your value creation processes and you a

10:35 You assign stuff to the people and when you're done, you realize Who's got all the things? And who's got like none of the things? And so you can see on your team who's overburdened with work that actually matters. And who is underburdened with work that actually matters.

10:48 But To the point that that you made. This is how we create our scorecards. So for our scorecards Every single

10:57 One of The different squares, every single sticky note, if you will. Corresponding. metrics on the uh on the scorecard.

11:08 And so this is how we know that we're actually tracking the metrics that matter. And so when you look at your score c and our scorecards, if you work top to bottom That's gonna visualize. What we're seeing. as we work across here.

11:23 All right, check this out. So Ryan is giving away his entire operating system. I'm talking about the actual spreadsheet he uses to run his companies. Everything from sprint roadmaps and workflows to planning tools, the whole thing. The same system we're talking about in this episode. You can get it right now. Scan the QR code or click the link in the description. Now let's get back to the show.

11:46 When I see things like this, it's sort of like reading the book How to Win Friends and Influence People, where you're like saying stuff and I'm like, Oh yeah, that's obvious. That makes sense And yeah, I don't do it and I'm like, I would love to do this. I should do this. What mist what mistakes am I likely to make when I see this stuff? Because To me Has someone you know, what do they say, like uh Like uh it's easy to sell like it's easy to sell water to like a guy in hell. Like to me, this is like where I am now, where it's like, Yeah, I need this.

12:13 And so I see li I've there's like five or ten of these types of frameworks that I'm like I want all of them. I need all of them. Sam's gonna go run off and do it. What's the first place he's gonna stub his toe? Yeah. Where am I gonna screw this up? Let's first kinda talk about like the hiring. com component. Because that is one of the things that I see entrepreneurs as they're scaling screw up and they they tip they make one of two really big mistakes.

12:34 Um the first is they hire helpers. Or they want to try to hire Somebody just like them. And like it's these two opposite ends. It's like so they they either try to hire a bunch of helpers to just do the stuff

12:48 That that they don't want to do? Um or they're like Oh if only I could hire somebody just like me, if I could hire like a quote unquote integrator. Yeah, it is one of the biggest lies ever perpetrated on the entrepreneurial community. Is this concept of I as the visionary Snowflake can just hire this like one magical integrator who'll just do all the crap that I don't want to do. It just does not freaking work. It makes for a very good book. It just doesn't work.

13:11 Ever in practice. So It's not about you. Changing necessarily. What it's about you doing

13:19 is getting really good at identifying What is the single biggest constraint right now in my business? Right. What is that? right now in my business today for us to grow to the next level.

13:31 And it's never ideas. And this is the thing, as as entrepreneurs as business owners What we do In the beginning what what gets us going is I got an idea.

13:43 And so like that's the freaking hammer. that that that we take to every single nail is I got a new idea. And The last thing at some point that your business needs is another new idea. It doesn't need another new thing to implement.

13:56 What it needs to figure out is What is the thing that is holding us back from the level You know, of growth that you need. So the the first shift that needs to happen is shifting from I got an idea To shifting from cons to constraint identification. Once you have shifted from idea generation.

14:14 To constraint identification. Then the answer becomes okay. What's the best way to solve for this constraint? And it's almost Always.

14:24 System and people related. But it's almost never Hire a bunch of helpers. 'Cause when you hire helpers, what you actually did is you gave yourself a new job called management.

14:35 Or let me hire somebody just like me. 'Cause somebody just like you doesn't work wanna work for you. What you need to typically do is realize that that constraint is solved by a functional leader. And so What you need to get good at

14:48 is hiring very, very, very good and talented functional leaders. So Head of sales. Head of marketing. Head of product. And this is the thing that most entrepreneurs aren't as good at.

15:00 As they're scaling. They're good at hiring a bunch of little helpers. They think they're good at hiring a quote unquote COO, although the nobody actually knows what that is. If you can get really good at hiring a functional leader and building a team of those Now team leadership becomes

15:15 A lot easier when you have really when you have three or four actually talented, skilled people working for you. They have massive capacity because they'll build the teams under them to execute all your ideas. Today's episode is brought to you by HubSpot. Did you know that most businesses only use 20% of their data? That's like reading a book but then tearing out four fifths of the pages. Point is you miss a lot. And unless you're using HubSpot, the customer platform that gives you access to the data you need to grow your business. The insights that are trapped in emails, call logs, transcripts, all that unstructured data makes all the difference because when you know more, you grow more. And so if you want to read the whole book instead of just reading part of it, visit hubspot.com.

15:52 Sean, two years ago you were like I just hired this I think I think you said I just hired this VP of marketing or CM I forget exactly, it was a marketing position, I forget the title, and you're like What was that? Was it a CMO and you were like Why didn't I do this sooner?

16:06 And I remember thinking, Oh man, you found a winner. Like that's like The the highest leverage thing that we can do is just like find winners and it's so challenging. But I remember you like talked about finding this this this person and your like frame was broken. Yeah, there's a new test for is this person a good hire or not? Yeah, which is

16:24 You basically You switch from uh I I wish this would happen or I hope this would happen or I want this to happen to basically fear. that uh will this person leave because oh my God, this person is so good. And they are like they're so transformative to the business. And I just don't have to worry about that. And that if they ever left, I would have to worry about that area of the business again.

16:46 Uh, I think we had uh John Morgan on last last week and he has this phrase called send and delete people. He's like, there's people at your company that you could just send them the email and you could forward them the email and then you could delete the email because you know it's gonna get handled. And um, you know, Brian, this thing you just said is is so true. I I actually was talking about this last week about helpers. I was like Talking to somebody on my team, I was like Are you gonna

17:06 Be a helper. Like you so far this has worked because I needed you as my helper, but now I'm asking you to drive. But you still are acting like a helper. And like Well you wanna be a driver and we need a driver, so like it's time to be a driver. Now whether that person can can make that adjustment or not, I think is Is

17:22 is always just about that person and their their own kind of goals and self improvement and self development, their their self image. But uh It's so true that it's very, very tempting to hire other Just kinda entrepreneurial people like me. Great. Now I got another sort of like shiny object syndrome idea guy in the room. That doesn't help. Or I got a helper.

17:38 Who As long as I'm directing everything They help me get stuff done, but that means I always have to heep keep my eye on that area because I'm the one coming up with the plan. I'm the one driving the execution and they're just, you know, there to help. It's uh I've I've definitely felt this problem firsthand. The the biggest thing that people make when they when they map their their business process maps is they will map what they wish were true. Instead of mapping what actually is.

18:01 And and so you have to map what actually is happening today. Not like well, what we should be doing is this. Like that's generally unhelpful. You need to see all of those As points of future optimization. Because we've got to get a picture of what it is today because that's what's going to inform What are all of the people actually doing or what should they be doing?

18:21 Um Mm. What are the metrics that that we do need to track? The other Kind of

18:27 thing that you want to make sure that you're doing is that you are starting from the audit of those value engines. So you you you don't want to just say, I'm gonna build out my scorecard'cause that looks cool. Okay, but What are the metrics that you're picking?

18:41 that that you're tracking, if they don't all link back. So step or stage. Yeah, on one of those business process maps. then you could very well be tracking something that doesn't matter. I'll give you an example. When we rolled out our

18:54 Scorecards. To our team. We had somebody on a at our company who was like Hey. We don't currently.

19:02 have any metrics for this was a a Uh a digital marketer. One of our companies. We don't. We don't currently have any metrics for our email newsletter. Why don't we have that? And I was like, Well

19:15 We're Where show me where the show me where the newsletter feeds into anything. Like, oh well, you know, it's it's good for awareness and engagement of the list. Like okay. But How does it drive into anything? And the answer was it didn't.

19:27 Because the newsletter didn't show up as a sticky note. on any of our growth engine because at no point in the newsletter did we ever link off to anything that was meaningful. It never showed up. It never wound up as a sticky note on anything. Like that's That's why it never showed up on a on

19:43 One of our You know, growth engines, which is why it never showed up. On the scorecard, we're not tracking the metric. So I had to say to the person, like, look, if if you can show us where this actually has an impact. On one of our Uh you know, on on on our growth engine then then you'll get some metrics to track. And until then

20:00 You won't, and if you don't, then we're gonna stop doing it completely. There's so many orphaned activities that companies are doing. That It's because You're doing things that don't have a a a sticky note that's represented anywhere. And so that's the other kind of mistake I'd say that people are making. I think I read somewhere that someone said like I think it was Jason Lemkin. He was like if you get to a ten million in revenue, it's you one hundred percent your business can one hundred percent get to a hundred million in revenue.

20:24 Do you think that what stops people from growing from ten to a hundred million or whatever this arbitrary um like It's kinda working too. It's a huge home run. is like being better operators, like being systemized and things like this. Yeah, it's almost always systems. At the at the end of the day I think it happens earlier, like really this swamp of scale happens at kind of four to six million.

20:46 That's no man's land. That's when you probably need three people. That you absolutely can't possibly afford. There's like Three, you know, VP level kind of roles. That that you can't afford yet.

21:00 But if you could get'em. They would take you up to twenty million at that point. You would have the the margin, you would have the cash flow. to be able to get the rest of the people to then be able to scale to the next level. Any Only way that you can bridge that gap is through systems.

21:14 You're not gonna be able to bridge it through through just brute force through just chewing rocks. Like that's what's gonna get you. From a million To two million. Like you said, maybe for for really

21:25 you know, motivated people up to seven, eight, ten, but it is not gonna get you beyond that. You're gonna have to get really, really, really talented people and really talented people Are expensive. And the only way you're gonna be able to create that margin Is through systems.

21:39 Also Really talented people want to work for good companies. One of my like least favorite. Pieces of advice. Is like oh just go hire talented people.

21:49 That's like saying to like your sad, lonely, pathetic friend. Just like oh just only date tens. That's not helpful. You have to become the kind of person that a ten would want to date.

22:03 And it's the same if you want to attract Talent Mm. As a business, you have to become the kind of business that A players want to come and work for it. It's why I say like my goal is not to hire like rock stars and eight players. My my my goal is to build a company that doesn't require them.

22:17 Because I know that that's the kind of company that Rock Stars and A players want to come and work for. So That happens through better systems. If you can put those in place. then great people want to come and work there. You know, big companies get even bigger.

22:32 So me and Tyler, the CEO of Beehive, came up with a little challenge for you. It's the newsletter challenge. Now, if you know me, you know that I'm a big fan of newsletters. I got my own newsletter. I also had a business that was a newsletter business that was amazing. I wrote this newsletter about crypto, we grew it to quarter million subscribers, and we ended up selling it after a year for millions of dollars. And I want you to be able to do the same thing in your business. So we're doing a challenge. 10 grand is on the line. Plus, me and Tyler will actually be in your corner as growth advisors. You just need to go to bhy.com slash MFM and you either start a new newsletter or you move your current newsletter over there and five finalists will get picked to pitch me and Tyler sort of like Shark Tank and the winner gets 10 grand. So go to bhy.com slash MFM. That's bhy.com slash mfm to enter the challenge today. Is the company of um selling this like license of of scalable of the scalability company, is that gonna be the best business that you've ever founded? I mean, is it s it's sort of gonna be like EOS. I heard EOS, which is like, you know, an operational framework. I heard that company sold for like I think ninety million dollars.

23:32 Yeah, it won't be from that perspective because we we talked about doing the licensed practitioner model with it. We don't want to. So Our model is When when we work with clients, we do it all internally. And so

23:45 We're somewhat limited. In in terms of what we can do, but that's because again For us, this is us getting paid to do due diligence. 'Cause we want to basically have access to the deal flow. And so if we were to license

23:57 our model to other kind of coaches and consultants like EOS did. It would be a simpler business. It would arguably be be more scalable. But we would lose out on all the deal flow. And so we talked about it. But we don't do it.

24:11 Um, on one hand, I mean scalable this year is gonna do Just write in about ten million dollars in revenue. Which is good and it's really good healthy margins. But what we generate from the deal flow is way better than that.

24:25 There's there's one deal that we're gonna have. That we got from it. that it won't happen this year, but it should be this next year. Three hundred million dollar company. It's not we're not gonna get twenty percent of it. We'll it'll be

24:37 a much smaller percentage of that with a baseline. But if this business winds up going public in a couple of years Let's just say that's That's a couple of EOSs. For me.

24:46 D this is why you're fascinating to me. When you've I think that when you ha like I think Sean uses this phrase generative. Uh I use the phrase prolific. You've been like doing stuff for like thirty or Twenty years now. Yeah.

24:59 No, and look, a lot of it's just being old. Uh having done having been around for Yeah. For twenty plus for twenty plus years and being and being in the being in the game for a long time. And that's why I tell people like So much of this is is Is

25:13 Is patience and and just Allowing You know, I think it's a good thing. Just getting in the stuff and doing it. I mean, the again the first thing that I sold online was an ebook on how to make your own baby food for fourteen dollars. So y your first thing does not have to be I went out there, I had an idea, I flew out to

25:30 San Francisco I I got Yeah, it was in the Y C batch and you know, next thing you know, I'm a a a billionaire. Like that's not how it it has to be. It's not how it is for most people. It can start pretty humbly. When did you first feel rich?

25:43 I still don't feel very rich. Why not? Part of it's because We still live relatively below our means. I've got four kids and I I never wanted

25:52 To live in kind of You know, they they weren't around, I guess, normal kids, if that makes sense. I I've seen some of my other friends who they they moved When they hit it big, they move to like

26:05 Very ritzy areas and and there were no kids there for their kids to play with. And so my wife and I talked about that. Like we just sort of stayed in the same place that we were in the whole time. And so I I I haven't really expanded my lifestyle that much. Are you still chasing money? Yeah. I think and the the main reason though is is I still live in a

26:22 The perpetual fear that it's all going to go away. I appreciate the honesty. I I I feel like most people aren't Uh Honest with themselves or others about about that. You know the same distance. Are you chasing money? I think most people Would uh

26:35 You know, reflexively deny that. No, I I just love what I do, blah, blah, blah. And then it's like everything you do Is about making money and if there was no money you wouldn't do it. Uh you know what I mean? Like um and so I appreciate the uh The I am completely coin operated. I I'm in this for the money. Um I I wish

26:55 Uh you know, and and I and I acknowledge the brokenness of it too, by the way. Like I I wish I don't know that that there is like some Some number of And it's it's it's also one of those things like I don't even know how much I have. It's it's I don't look at it because

27:11 It's not about like stacking those kind of things. And it's the same even with the businesses. Like I can tell you more about The businesses we have that are broken. than I can the ones that are working well. You know.

27:23 Like it's For whatever reason, my focus is always on the things that that aren't quite right than on the things that that are. You're you're interesting to me because you come off like a fairly conservative person, meaning like um uh super well operated. And yet there's this other side of you that comes off like a gunsling.

27:43 Like uh screw it. Put it all in red. Let's do it. She looks like a guy who I'll see at church every weekend, but also has a bookie. Who calls them? And it's like, Whoa. Okay, great. I like it. Very close to home, Sean. Thank you. Um all right, that's it. That's a pod. Well I know.

28:02 But I want to I'll put my law in it like a day's off. On a roll, less travel, never looking back. All right, everyone, if you're listening to MFM, you probably want to make more money. Well, I want to tell you about a podcast you might want to check out. It's called The Sales Evangelist, and it's hosted by Donald Kelly. Each week, Donald interviews the world's best sales experts who share their strategies to succeed in sales. They share actionable insights and stories that will encourage, challenge, and motivate you to hustle your way to the top. If you're someone looking to raise your income level, check out the sales evangelist. You can find it wherever you get your podcasts.

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