Armando (0:00 – 0:36)
Hello, founder. You’ve built a successful business. Now it’s time to think about that once in a lifetime exit from your business.
You’ve come to the right place. Here, you will hear business exit professionals involved in the buying and selling of companies talk about what you should know before you exit. If you’ve never sold a business before, this podcast can be super helpful to you.
I’m Armando, host of the Founder’s Guidepost. Enjoy. If you like this information, please subscribe and share.
This is Armando with the Founder’s Guidepost here today with Donald Laughlin of Edgy. Donald, how are you?
Donald (0:36 – 0:39)
I am doing very well. Armando, how are you today?
Armando (0:39 – 1:11)
Doing fantastic. Donald, you do some really interesting things to help companies get over that stall that they might’ve hit. Maybe they’ve kind of plateaued.
Maybe they’re a certain place where they realize they could use some help. Maybe they don’t know what their problem is, but with your background and experience, you can certainly help figure out what’s going on and helping get beyond that. So Donald, maybe you can talk a little bit about yourself and your background first and the expertise you bring to the table that could be so beneficial to that business owner.
Donald (1:12 – 2:42)
Thanks, Armando. Appreciate that. So I started a company by the name of Edgy, E-D-G-Y, and the byline is don’t be in the middle because in the last 20 years, I’ve been in C-level roles in multiple sectors, a number of different kinds of companies.
And I’ve discovered over that time that true leadership doesn’t happen if we stay complacent. If we allow ourselves the normalcy of routine, that’s fine because that’s what we humans are driven to. But at the same time, if we want to be industry leaders, if we want to prepare for a future, if we want to develop a legacy, if we want to have an event, if we want to do something special with our organization, however you define that, there’s a process that you have to go through.
And as a result of the training and the things that I’ve done in the last 20 years, I’ve ended up helping a number of organizations through that process. Been very privileged to do that. I consider it a great honor when a company lets me come in and help them out.
And many organizations are sometimes aware that there’s needed change and some organizations aren’t even aware that there’s needed change, but know that they want to do something different. So it can look a lot of different ways and we’ve developed some very specialized tools to help guide that process that I suspect we’re going to end up talking about a little bit today. So maybe that’s a place to begin our conversation.
Armando (2:42 – 3:04)
Yep, certainly. So let me ask you, Donald, when you’re talking with a company for the first time, maybe they haven’t had somebody like you that they’ve spoken with before. They might not know what questions to ask, but what are some of the, maybe some of the common pain points that, that, or symptoms that you see where it would be appropriate for them to reach out and give you a call?
Donald (3:05 – 3:54)
So a lot of times someone that has developed a career around building a business, understandably has their expertise in building that business. Not necessarily in diagnosing gaps, diagnosing pain points, diagnosing what they can do different or a little better, or help position for an exit, or help leverage profitability, or any of those kinds of things. And because of my 20-year experience, because I have a couple master’s degrees, because I’ve done a lot of consulting and working with people, I’m aware of what questions to ask.
So for the business owner that wants to start a conversation somewhere, it’s really easy. Let’s just get together and talk a little bit.
[Speaker 4] (3:54 – 3:54)
Okay.
Donald (3:55 – 4:08)
There’s, there’s nothing that they have to pay for up front. There’s no process they have to go through. There’s no assessment they have to take or anything of that nature.
It’s really easy. Let’s get together. Let’s share a cup of coffee and let’s talk about what’s going on.
[Speaker 4] (4:08 – 4:09)
Okay.
Donald (4:09 – 5:13)
Because of my experience, I have a keen idea of what questions really need to be asked and how to ask them and what are the cues and how to look for those things. And it’s like following the breadcrumbs. Pretty easily, pretty straightforward.
I can have some idea of some, some of those gaps. Sometimes there’s additional research to be done. And we frequently, I and the few people that I’ve aligned myself with that have a lot of experience in these areas, end up having a conversation about some ideas of what an owner can do.
And then they get to make the choice. It really is very, it’s not a high pressure sales. It’s not anything of that nature.
It’s a, how do you really envision your future? Where are you at today? And what’s it going to take to get there?
Or what can that look like? What needs to be done? What has to be done?
What doesn’t have to be done? I mean, there’s a balance inside of that, that we as an organization tend to bring to businesses that are going through this process.
Armando (5:14 – 5:28)
Okay. And Donald, you mentioned before, there are about four main areas that you like to, that you have an expertise and maybe you can touch on those and you know, how that can help a company advance, you know, wherever they are in their life cycle.
Donald (5:29 – 10:06)
Certainly. Great question. So those four areas are leadership, strategic planning, operational excellence, and then finance and capital planning.
So I go by a one-to-one kind of structure. And what I mean by that is that fourth area, finance, capital planning, accounting, can be an organization or a department in an organization that really just kind of manages the numbers. That’s all it is.
Or it can be a department that’s designed to help influence the entire organization, help lead change, help drive change, help participate in strategic planning, those kinds of things. So that, that segment kind of fits out that outside. And we do a lot of financial analysis.
We can go through an entire financial system, just depends on what a company needs to prepare for an exit, if that’s the direction they choose to go. That’s the one. The two is, there are two paradoxes that every organization has to manage in its daily work.
The first is a structural paradox. And it’s the, and that is the interplay of strategic planning and operations. And what I mean is strategic planning by its very nature is dynamic.
You’re always brainstorming. You’re coming up with great ideas. You’re trying to figure out how to put things together.
You’re figuring out which direction you want to go. How are you going to get there? How are you going to plan for it?
And you’re doing 5,000 things at once and planning through that process. The challenge comes in as soon as you determine that plan, you have to operationalize it. You have to put it into place.
To put it in the place, you create a flow chart. A goes to B, goes to C, goes to D. You create a computer platform.
A goes to B, goes to C, goes to D. And by its very nature is not dynamic. So that dynamic pressure in an organization, how do you stay nimble?
How do you stay flexible? How do you stay responsive to the challenges of a business environment? That’s the interplay of that first paradox.
The second paradox is all about identity and culture. Identity in an organization is the I. How do motivated, intentional, experienced people manage themselves in an organization?
There’s ways as an organization you can facilitate that entire process. The culture is around how do you create a structure around supporting the environment and the energy of getting stuff done? And those two systems of I versus we either fight with each other or it can operate together.
That’s a dynamic alignment. So how you manage those two paradoxes, the structural alignment and the dynamic alignment, define how your organization will effectively and quickly get to clarity and transparency around issues and through issues or continually be fighting against each other, trying to figure out how to one-up each other, how to be competitive with each other, how to fight for resources, all of those kinds of things. So that’s the one, the accounting and finance. That’s the two, the two paradoxes.
And then that last one is the system that governs the entire organization. That’s leadership. Leadership is profound and it is the thing that is the glue that makes organizations work or not work.
Think about it. We’ve all seen an organization with a leader that is just caustic. They’re too egotistical.
They don’t know what they’re doing. They are in the wrong place. They shouldn’t be there at all.
They are not right for the position and it’s like a cancer. It affects the whole organization. Correspondingly, what happens when there’s a leader that is just dynamically engaged and they understand the industry, they know the people, they’re plugging people in, they’re pushing forward, they’re taking no captives, they are creating success for the organization.
It’s a power that just gels everything together. That leadership impact is profound in every organization. That’s why I started writing a fourth book.
We haven’t even talked about the books that I’ve been writing. Maybe now’s the right time for that or not. Sorry?
Armando (10:08 – 10:13)
Yeah, please. If it ties into what you’re talking about, then yes, absolutely. Please.
Donald (10:13 – 12:04)
Great. So I have written three books currently and the first one was leading a company through a capital raise because there’s no information out there about how do you prepare a company for a capital raise. How do you go through a capital raise and what do you do afterwards?
So being a CFO, as long as I have raised capital all sorts of different ways, this is a very tactical, it’s a workbook. It will help in many organizations out as they figure out that process. The second item was a cash assessment and management in a growing business.
This is a technical guide for people about how do you know what’s the right level of cash that I need? What really is my burn? What do I do with that?
How do I take that into account when I’m talking about strategic planning? What does that even look like? Without breaking the bank or having to add too many more staff, right?
There’s a balance there. The last one is a strategic planning guide because in my consulting work with boards and organizations, I found that there is many, many different misunderstandings of what strategic planning is and what it is not. There’s no mystic kind of sense to strategic planning.
It’s a process. There’s steps you have to go through and you have to be thorough in those processes to make sure you take the right things into account. And so then as I wrote these three books, it led me to the place where I’m realizing more than ever the importance of leadership.
And so I fought with myself. Why would I write another book on leadership? Because there’s so many out there.
You do a Google search on leadership right now. Any idea how many responses you’ll get?
Armando (12:05 – 12:08)
Probably as many as you’d find under the word management.
Donald (12:10 – 13:14)
5.6 billion. It’s crazy. You go to Barnes and Noble and there’s shelves defining leadership, right?
There’s you on LinkedIn or Facebook or any of the social media sites. There’s lots of people have lots to say about leadership. But what I discovered was that almost everything that’s out there talks about either an aspect of leadership or an application of leadership.
As opposed to what is leadership really about? What is the foundation of leadership? And how do we build up that foundation?
Because we have to do that first before we can talk about all the other things. And then we can be true solutions and then end up building the right kind of leaders for organizations. I have an assessment.
I’ve been applying it already. It’s gotten great results. I’m very pleased about that process.
And so those are the four books and I’m using it to help guide and instruct people inside of this process.
Armando (13:14 – 13:56)
Wow. Excellent that you’ve been able to memorialize your experience in books that can be shared amongst people, maybe amongst teams. So let me ask you, you talked about leadership and saying that that really is, as you said, it gels or it can gel and galvanize the people, the team to make the even more effective and on fire in a good way.
When you’re having that initial conversation with a business owner or a leadership team, whomever that typically is, and you’re informally asking conversational questions, when it’s a leadership issue that really is at the root of the problem, does that become very apparent to you quickly in the conversation?
Donald (13:57 – 15:00)
It really does because every organization has a certain feel to it. Every organization, when you talk to people, it’s very clear when there are roadblocks and when people are kind of stifled and shut down and guarded and hesitant or whether or not people are open and transparent and participating and visible. And so just meeting the receptionist, just walking through an organization, hearing the conversation, hearing, seeing how people are interacting with each other gives you cues to some of these kinds of things.
The whole environment that we operate in, we are operating in has changed fundamentally and leadership is simply a signal of those things. Since COVID came along, the economy was humming before COVID. None of us could believe that what transpired over those two years.
It’s like we all blinked and two years went away, right?
[Speaker 3] (15:01 – 15:01)
Right, right.
Donald (15:02 – 15:31)
So between COVID, between the global wars that have started and are raging, between the inflation that has taken place, the politicization of various aspects of our media, add to that we are inundated with information. How many newsletters do we all sign up for? Oh gosh, way too many.
I never get to all my newsletters. I don’t know about you, but God, just I never get to all of them.
Armando (15:31 – 15:31)
Right.
Donald (15:31 – 15:36)
And then the news media and CNN and whatever subscriptions I have.
Armando (15:36 – 15:38)
Information overload for sure.
Donald (15:39 – 15:52)
The result is we have become caustic, a little bit sarcastic about what is the reality. Is this really real or is this just how the media is representing it?
[Speaker 3] (15:52 – 15:52)
Right.
Donald (15:52 – 16:58)
Add inflation and there’s uncertainty. Our whole business environment has fundamentally changed from a couple of years ago to where at this point in time, the amount of uncertainty is off the charts. And yet, despite all of those things and the challenges with the labor market, there are certain segments of the business world that are just continuing to hit the ball out of the ballpark.
They’re continuing to hum along. There’s some sectors that are having some challenges because of supply chain and some residual effects from that kind of stuff, but some sectors aren’t even pausing. And so given the fact that we have a new normal, we’re never going back to a non-COVID world.
We’re not going to not be dealing with inflation and inflationary issues for the next five, maybe 10 years. And there’s some long-term kinds of stressors that are now the new normal. And so how does a business owner manage these things?
Armando (16:59 – 17:39)
Right, exactly. Despite whatever the heck is going on, companies still need to survive and get through it, plow through it. We’ve heard a lot about shifting or reinventing themselves or pivoting.
And yes, that has happened a lot, but there’s always something that comes about to cause that. So when you’re doing your work with a company and just describe what that, if you can, what does that company typically look like? Number of employees, departments, sales of X, are they one location, multi-locations?
What does that company, what can that company look like that you’d be able to have a conversation with to see whether you might be able to help them or not?
Donald (17:40 – 19:16)
The interesting thing is there’s very few constants in the examples of the different companies that I’ve worked with. And what I mean is some companies are very small in employee size and extremely productive. It’s like a SaaS company, software as a service.
They may only have 10 people. They’ve outsourced developers all over the world. They have a platform and now it’s used in a hundred different companies and they’re a $10 million business.
Or it could be, okay, we have a seven facility manufacturing company. We have 600 employees. We’re responsible for their whole families and we take it very personally.
And we have a strategic plan, but we really don’t follow it. We know we are dealing with some uncertainty kinds of issues. We haven’t communicated very well inside of our organization, but we can probably fix those things.
We just need to figure out how to have a plan and how to have a process. Those are the big Ps to me, those two Ps. How do you develop a plan?
How do you create an understanding of where you’re at today and where you’re going to go? What does that look like? And what really matters to you inside of the process?
Sometimes it’s profit. Lots of times it’s not profit and profit is the byproduct of being good business people. But figuring out that plan and walking through the process of how to figure out that plan, that’s worth the time and the effort.
Armando (19:17 – 20:06)
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More information at ScottsdaleFoundersForum.com. And then as part of your role in helping that business develop, are you that of facilitator? Are you that of experienced consultant bringing to the table that experience with you to help have some thoughts and ideas constructively that they might consider or think about or begin to put into the plan?
What is your role? And then as you’re working through that, how does that roll out for that business?
Donald (20:07 – 21:37)
Great questions. So an engagement can look a lot in different ways. Right now, our engagements are typically longer term and inconsistent.
What I mean by that is we don’t have a certain number of hours every week, every month, but we’ll have a long-term partnership with someone that we’re tracking and working with them through different kinds of events where they’re taking some aspects of a project and implementing them themselves. And then we come alongside, help ensure that it’s done the right way, help ensure that the plan is complete, help making sure that they get to where they want to go. So that off-site, remote kind of assistance or advisory kind of firm, that is one example of what we will do.
Another example is where we will actually come into their office and help them put together a strategic plan, soup to nuts, or figure out a capital planning structure, or figure out, you know, what kind of efficiencies can they gain inside of their organization in preparation for an exit? You’ve kind of cooked along for however, for 20 years, and it’s a great lifestyle business. You’re making some solid profit.
You haven’t needed to push. You’ve been enjoying life with your family. Okay, that’s great.
And now that you need to figure out what you’re going to do, okay, that’s a three-year process to do it the right way.
[Speaker 3] (21:38 – 21:38)
Right.
Donald (21:38 – 22:40)
Because in some organizations, you can leverage another 20% of profitability without any significant additional investment, simply by going through some continuous planning, some training, some restructuring, some of those kinds of things. There’s another company right now that I’m helping, that I’m bringing a million dollars of liquid capital out of their current organization without any additional investment, simply because there’s some programs that they weren’t aware of that I was able to get them lined up with. And with a little bit of work, a little bit of time, a little bit of effort, they’re going to end up with about a million dollars of liquid capital coming in through the door.
So there’s a number of things from experience that we can use and apply to help an organization really quite quickly in that process. And again, it can look like a very remote kind of relationship, or it can be a very hands-on relationship. It really is dependent on what an organization needs and what the owner wants.
Armando (22:40 – 23:41)
Okay. I like that point you made that, you know, with some tweaks, if they have had this company, it’s provided a certain lifestyle, and they’ve enjoyed that for a number of years, but as they begin to look down the road, that they may have to have an exit in, say, three or five years or so, if they begin planning soon enough, that without making any significant investment, they can make it more profitable.
Right. Even if they get the same multiple without doing any of those changes, but the same multiple with an extra million in profit a year is going to get them a lot more money when it comes time to sell. Substantial.
So they could certainly just cruise on through and then get to a point and say, yep, let’s go ahead and list and sell it. But by planning ahead and having you and your team talk with them a bit and help look at that from a different lens, you can help identify some of those areas possibly that can certainly lead to a healthier exit for them when that time comes.
Donald (23:41 – 24:07)
Exactly right. And again, it all begins with a no obligation, just conversation around a cup of coffee. And I’m happy to kind of talk about kind of the process that I go through a little more detail there, allow someone the chance to see me and get to know me and kind of what I’m about.
You know, there’s a certain level of trust that has to be generated for that process to take place. And we’re very used to that.
Armando (24:09 – 24:35)
Right. OK. So what are some of the surprises that that company mentioned that has more than liquid cash suddenly available?
Were they shocked when when when they they heard it, they probably might have been a little bit surprised, but when they saw it or begin to see it and it becomes real, what kind of reaction or response are you getting from them?
Donald (24:36 – 24:41)
Oh, it’s great because it’s just it’s found money. It drops automatically straight to bottom line.
[Speaker 4] (24:41 – 24:41)
Right.
Donald (24:42 – 25:15)
There is a little bit of expense to get there, but it is minuscule compared to the the liquid capital. And so those kinds of events are always really fun. Bringing that kind of value to an organization because it is because like what you were saying, as soon as you do that and change the bottom line number, then you profoundly affect a potential valuation of an organization because of how the valuation calculations are done.
Armando (25:15 – 26:28)
Right. And using that example of what you just touched on, the million dollars in liquid cash that is now going to be there. And if that is purely profit, you know, say for this year, just this calendar year, and the multiple is a multiple of, you know, six, then that’s six million dollars more in sales price when they sell that company.
Or if it’s a multiple of eight million dollars, but it can be really substantial for them. And they just have to understand that that’s how those numbers work. You know, often when a business owner has had a company for quite some time, they might be reluctant to to spend a big chunk of money on either the attorney or the or outside consultant because it’s a big chunk of money.
But if they’re really looking for that exit and trying to make that the most beneficial exit to them as possible, meaning, you know, the most profit or whatever they’re really looking for, they need to put it in context. If my company’s going to sell for 10 million dollars, have I got to spend 50 to 100 thousand dollars now to lock in that, you know, lock in that number? Is it worth it?
Well, most would say yes.
Donald (26:30 – 27:03)
If we just look at what’s happened inside the stock market, every one of us would be willing to pay that amount of money to have our stock value back, you know, just from six months ago, right? But you’re very, very true. The challenge in working with some business owners is they oftentimes underestimate the time and resources necessary for scaling or for preparation for an exit.
And that’s normal because that may or may not be their level of expertise.
Armando (27:03 – 27:19)
Right. And it may be the only exit they will ever have in their life. So why would they know?
They wouldn’t. They wouldn’t know. No.
But they’re certainly going to help themselves by having a conversation with somebody who does know and who can help them walk through that path.
Donald (27:20 – 27:27)
And that can all be addressed on a high level in that initial kind of just meet and greet kind of conversation.
[Speaker 4] (27:27 – 27:27)
Yeah.
Donald (27:28 – 28:34)
And then depending on how that conversation goes, I have some assessment tools that are extremely thorough that then, depending on which path the business owner may want to go, we can go through and apply them to the organization or to the executive team or to a department or whatever the case may be. Because that whole issue of operational excellence, it is easy for the routine of daily activities to miss increases in efficiency. And so simply starting to have the conversations, many times those kinds of efficiencies can be implemented by current staff.
And then you just need to have someone kind of tracking and following and making sure that those efficiencies are realized. There’s oftentimes found money in some of those kinds of activities as well that business owners are always very pleased to realize.
Armando (28:34 – 28:40)
Okay. And when you talk about operational efficiencies, give me an example of what that could look like.
Donald (28:45 – 32:46)
So an operational efficiency, one of the things that we oftentimes do as leaders is we think that we have to be involved in all the decision-making processes. So rather than truly delegating and letting go of stuff and empowering our staff to make decisions, we feel like we have to be involved. Unfortunately, that’s not accurate.
And your staff, they want to run, they want to take it over, they want to operate quicker, but they’re willing to track you down and have you be the decision-maker because that’s what they’ve been requested to do. And they’re being faithful and responsible individuals. So it is not uncommon at all to find a number of areas where the decision-making process is slow, outdated, not responsive, the roadblock in the process and helping a decision-maker walk through those efficiencies is just like stepping on the gas pedal because suddenly your staff, they don’t have to go track you down anymore.
They can just make a decision and go forward. So then they’re like, wow, this is great because now we can just go do stuff. And so it released, so a normal byproduct of going through this kind of cycle is it kicks off all of this energy and all this motivation and it creates a momentum of change and new energy and path forward.
That momentum is almost harvestable. And what I mean by that is you can take that and you can use that to create new ideas, to create new processes, to do continuous improvement, to bring change to the organization in preparation for what really matters most, which is some kind of exit or event, or maybe it’s not an exit, maybe it’s an ESOC and you’re going to rather than sell the company out, you’re going to sell the company in. And for all those employees that have worked for someone responsibly and respectfully and trustfully for those last 10, 20 years, help them step into a fractional ownership kind of role.
And then that allows the owner to step out, step away, recognize an income strain for a period of time, recognize the value of the business. I mean, there’s lots of ways to create very successful situations as the dynamics are defined as that question of what really matters gets dialed in and then you start to figure out what the plan is. Now, sometimes talking about surprises, you may think you have it all dialed in and the path in place, and then it may all change a couple of different times as you walk down the road.
That’s normal. Sometimes people aren’t aware of that, that that is normal, or aren’t aware of some of the stress or challenges that that brings. But at the end of the day, the lenses, the glasses that you’re looking through is what is best for the owner, what’s best for the people, and how do you manage that process.
And it is not difficult to do from the outset. Now, sometimes it gets a bit sticky in the process, but you can figure your way through those things. And as long as you’re taking care of people, you can do some pretty amazing things.
Armando (32:48 – 33:24)
It’s like you said a moment ago, the strategy, you may set it, but you may have to change it. And you may have to adapt it. And it’s a continuous process, because things outside the company change, as well as things inside the company may change.
So what have we now touched on up to this point, Donald, in this conversation of that business owner who’s got some things that need to be addressed? Maybe they’re not exactly sure what that is. And they’re wondering if they should have a conversation with you.
What have we not touched on so far in this conversation?
Donald (33:25 – 34:30)
I appreciate that question. So in my mind, we’ve touched on most primary aspects of what I do and how I do it. At the end of the day, the things that I do are not overly complicated from a high level.
From a high level, I’m coming alongside a business owner, and I’m a solution. Now, it happens to be cloaked under this company that’s an advisory firm, and we have all these talented people, we can restructure an organization, we can change legal structure, we can help modify staff, we can help retrain staff, we can help do lots of different kinds of things. But from a high level, we’re guys that have a lot of experience.
One of my favorite sayings is, I fell off the turnip truck, but not yesterday. We come alongside, and our experience is not your business. Our experience is helping you manage your business.
And that’s what we do.
Armando (34:31 – 34:58)
Yeah. And sometimes people, there’s an expression, can’t see the forest through the trees, because they’re in maybe the company so deep and so longly entrenched and all these relationships within the company and outside, it’s hard for them to see. And so bringing somebody from the outset with a fresh set of eyes and a whole different set of experience can be helpful to them as they’re trying to see this in an objective way to help them reach the goals they want to with that company.
Donald (34:59 – 35:32)
Right. Some people just, it’s really interesting because a number of people delay and delay and delay because they’re just not sure what goal they want. How do you even decide what you want for this baby of a company that you have spent 20 years of your life developing?
All these people that you’ve been responsible for, and you know their families, and you’ve seen them raise their kids, and now you’re supposed to make a decision about what you do with this, and you’re going to say goodbye to them?
[Speaker 3] (35:33 – 35:33)
Right.
Donald (35:34 – 35:39)
What does that even look like? How do I, I don’t even know how to have, how to get there.
[Speaker 3] (35:40 – 35:40)
Right.
Donald (35:40 – 35:45)
And I have to talk to investors, and I don’t know what to say to investors.
Armando (35:45 – 37:29)
Right. And that’s an excellent point you bring up, that there are different ways that, different directions they can go with that business. And everybody is different.
They’ve got to look at the way and understand the way that is the best way for them. Is it for them to let the management team, maybe they buy them out and the owner becomes an absentee owner or something, or like you said, an ESOP, or maybe it sells to private equity or, but there are lots of ways that they can remove themselves from that business. And it’s got to feel, when they sign on that dotted line at the very end of that process, it’s got to feel good.
It’s got to feel like it was the right decision for them. And hopefully as they’re thinking about that, they’re having some conversation with you or somebody else who can just help them talk through some of those areas. But what we’ll often do, if it’s a couple that owns that company, we’ll talk with a couple about, what do they want to see?
Do they want to take care of those employees who helped them grow that company and grow that wealth? If that’s number one, maybe an ESOP is what should be looked at first, or maybe bring in a professional CEO who can run that company and take care of it as best he or she can. And it benefits those families going forward, even when the owner decides it’s time for him or her to step out of the business.
I think that, as you’ve probably seen as well, business owners often feel isolated and they can’t really talk to people in the company about the company, and they’re not really sure who to talk with. And so, as you said, they don’t take action.
Donald (37:30 – 39:35)
Well, and that brings up a couple of points. A lot of business owners are very isolated and they miss the value of having a confidant. And that ability to come alongside and listen to someone talk about their concerns and their feelings and their passion about this and help them figure out a way forward and then hold their hands through that process.
We can certainly do that. That’s part of what we do. But it’s not just us.
It requires a team of people. And that’s part of what I appreciate about what you’ve done with your firm, is you’ve isolated a number of different kinds of specialties and you have informal relationships that create those partnerships. That’s exactly what we do on our side in the broader context of what you do with the business.
So whether or not it’s a legal restructuring, whether or not it’s a change of a divestiture of a whole division of business, whether or not it’s a recognition that you need to go through a continuous improvement process, or you need to restructure your entire financials because they’re not clean and clear, whether or not it’s all of those require different levels of expertise. It requires a team. And at the end of the day, the question is all about how do we come alongside and help an owner realize the value of this asset that they have called their business.
And it can look a lot of different ways. We’ve talked about that a couple of different times. But any way you slice it, it does require a team.
It does require someone that knows how to come alongside and help sort through that process, help guide that process, help figure out the right role, the right balance. And then that’s figured out together between the owner and myself or whoever the right person is.
Armando (39:37 – 40:34)
And sometimes there are due dates or things coming that require action, and they’ve got to make a decision. So as an example, currently we’re hearing about supply chain issues and manufacturing shifting from maybe one continent to another and different things. So then decisions just have to be made.
So I imagine when some of those decisions have to be made, if they aren’t quite clear inside the company on what they should be doing, or maybe they don’t have anybody, as you said, a confidant that they can talk with about some of that, having that outside person come in like you, who can help have some of that dialogue, do maybe some of the heavy lifting with understanding what to look for and what to look at, how to look at it, to help that decision become much more clear for them.
Donald (40:35 – 41:21)
Well, and many times, if any of us looks at a decision that we’ve never made before, I have to go buy a car. I’ve never bought a car before. It’s an overwhelming process.
Like how in the world do I know where to go? Where do I start to research? How do I line up the money?
Do I need to go to a bank first? Do I know? And it’s no different, but much more complex when we’re talking about a business owner trying to figure out what they’re going to do with their business.
So, and I don’t want to make glue out of this horse, but at the same time, it’s a really important point that most business owners don’t have any idea how to approach some of these things and they need some assistance.
Armando (41:22 – 41:52)
Yeah. Yeah. So we talked about the four areas.
You mentioned leadership, leadership, organization, excellence, and a couple of the areas as well, the financial capital space. Are there some common things that you’re working with within those areas? Those four pillars, as you think about them, some of the more common ones that people might be feeling pain points now, and if they are, what might those pain points be where they might want to reach out and just have a conversation with you?
Donald (41:54 – 44:01)
So when we go into an organization, we don’t assume it’s going to be like anyone else. And because of that, we oftentimes will develop tailored approaches specifically for an individual organization. So when you say common kinds of approaches or common kinds of issues, yeah, there’s financials are up to date, they’re delayed, or are they really taking care of all of their tax credit incentives?
Or are they as clean and transparent around decisions? Or are they, I mean, there’s a whole bunch of different kinds of things. Yet when we meet with someone new, and when we start the process of talking through those paradoxes, and start exploring leadership issues, and where they may or may not be as efficient as they could be operationally or any of those kinds of things, we approach it from the standpoint that this organization is entirely unique.
Because to that owner, it is his company, it is not like anybody else anywhere. And we have found that that approach helps us connect with business owners, and helps us really tailor designed solutions for those companies. So that didn’t answer your question directly.
But it did answer it indirectly. And we found that people are very responsive to that process, because then when they’re brought into what the issues are, when they’re brought into what those unique items are, then it is all theirs, and they get it, and they live it, and they breathe it, and they want to help find solutions. So there’s a little bit of a method to our madness from that sense.
And it’s been very effective.
Armando (44:01 – 44:32)
Hmm. Wow, fantastic. And you said in terms of industry, doesn’t really doesn’t really matter, you know, service, manufacturing, just a business has to have certain things in it, no matter what the business is.
And so you’re looking more from an operational standpoint, leadership standpoint, capital financing, industry is less important than getting those core processes and core necessities functioning the way they should function.
Donald (44:32 – 45:16)
Couldn’t have said it better. And that’s exactly right. So the efficiency of, for example, strategic planning.
So whether or not you manufacture chips, or you are a manufacturing company that creates ceramic mugs, you still have to have some kind of capital structure, you still have to have some kind of workflow management process, you still have to have some way to manage your people, you still have to have some way to all of those basic kinds of things are all in place. So that’s why I say it’s not sector specific.
Armando (45:19 – 46:10)
Hmm, okay. Okay. And so it’s much broader, it’s, well, that sounds like you’ve got a lot that you can certainly have conversation with them about.
And I made some notes here, I just made a few notes, because I had, I think you pulled me into the conversation enough that only made a few notes, not as many as I would like to probably have. But I remember you saying, talking about strategy, having a plan, having a strategy, and then break it into a flowchart, and step by step, actionable items. But I thought it was interesting, you said that as the strategy changes, it’s dynamic, well, then you’ve got to go back and look at that flowchart, and redo that, update it, modify it to fit again.
But that is business. Businesses change, the customers change, the product exchanges, and it is just part of how business functions.
Donald (46:11 – 47:51)
Right. Well, and leadership can effectively guide through that process. I mean, you’re, the best practices now around strategic planning aren’t to do it once a year in an offsite, and then create a binder and put it on the shelf and visit it in another year.
That’s never really been best practice. But in reference to how do you create a strategic plan, tie it into where you’re going to take the company? How do you include your staff in that process, and plan out your CapEx or your growth structures or your plans to understand what your capital needs are?
How do you back that into where you’re going to be in three years? Now, there’s a very profound way to do some of these things. And then what do you do with it once you have it created?
Does it become a hundred page document? Does it become a 50 page document? Is it a five page document?
It doesn’t need to be a hundred page. It needs to be as brief as possible to be useful, because then people can actually refer to it. And then how often do you go back and revisit it?
You don’t wait a year, but you could revisit on a quarterly basis. You could put your metrics together and your guidance process and make that part of your monthly financial review with your executive team. So now I’m sharing some of the secret sauce, but that’s okay.
That’s good. This is how you tie these systems together and do it in an efficient way without making it cumbersome or overly bureaucratic.
Armando (47:52 – 48:17)
Yeah. And I was going to ask you about key performance indicators, maybe scorecards, measuring how often do you measure? Is it a weekly?
Is it a monthly? You know, why wait to the quarter when it’s already a done deal? Can you do some course correction along the way if need be?
But all of those, all of that, as you think about that, that brain dump I just did, all of that, those are areas that you can help them address and work with them to get those. Correct. Correct.
Donald (48:18 – 48:21)
Because it’s going to look different for every organization.
Armando (48:21 – 48:22)
Yeah.
Donald (48:22 – 48:54)
The ship company that is spending $4 billion to make a ship manufacturing plant, they have the process down, you know, they have a six sigma system and they’re not deviating an inch, an iota, a tiny little mu from that process, right? Otherwise it’s going to destroy their whole cycle. So that doesn’t mean they don’t do strategic planning.
It just changes what the strategic planning is about and how it’s, how it’s useful for that organization.
Armando (48:54 – 49:03)
Mm-hmm. Yeah. That’s a good example though, of how to get that chip, right.
All those steps have to be right all along the way.
Donald (49:03 – 49:24)
Right. And that just looks different for every company. There’s nothing wrong with that.
That’s part of the beauty and the fun of business. That’s part of what keeps us all engaged. And it’s like, wow, I never thought about that.
I got to think about that. I got to see how that kind of fits together and fits into the process and whether or not that needs to be, you know, a higher priority or not, or some of those kinds of things.
Armando (49:25 – 49:45)
And you mentioned, you’ve talked about leadership a few times. You’ve got that book, of course, it’s about to come out at some point, your fourth book. What would you like, what would you like people to know about that leadership book?
As you said, there are lots of leadership books out there. Why should they read Donald Laughlin’s book that’s about to come out on leadership?
Donald (49:47 – 51:11)
I don’t know of any organization that doesn’t need additional leadership skill and ability. And this is the result of having access to 5.6 billion different articles on Google and seeing shelves of books at Barnes and Noble and all sorts of blogging and comments inside of LinkedIn or Facebook or other social media. The reason why I’m recommending people consider a different approach to leadership is because somehow we have to get to training people better.
We have to get to training our staff in a more thorough way. We have to get to helping people conceptualize and understand that how they walk through a certain decision making process has more implications than they’re giving credit to currently. And the only way we can do that is by backing up to the foundations of leadership.
And there’s a seven step process that I go through in my book about what are the basic components that create leadership opportunity? And then how does that translate into actually impacting the world around us?
Armando (51:13 – 51:15)
So when will your book be out?
Donald (51:16 – 51:23)
It’s going to be a couple months yet. I’m deep into the writing process. Let me put it that way.
Armando (51:24 – 51:56)
Yeah, books can take a while. It can take a while to write, edit, review, all that. But you want to make sure obviously that it’s right and that you’re happy with it once it is ready to be released.
So if it takes a little longer, then that just happens sometimes. That’s correct. Well, good.
Donald, anything we didn’t touch on in this conversation as a business owner who might be listening to this and hearing you talk and hear what you said, any key points that we did not talk about in this conversation yet?
Donald (51:56 – 52:20)
You know, not really. I think we’ve covered everything that we need to cover. We are very approachable.
We’re friendly. We’re likable. We love talking business and we love seeing how we can help people out.
So please feel free to reach out. Happy to share my contact information to give people an opportunity to have some conversations.
Armando (52:20 – 52:26)
And Donald, if somebody was listening to this and thought, I really want to talk with Donald, what’s the best way for them to reach you?
Donald (52:27 – 52:43)
So the best way for you to reach me is via my email. It’s Donald at edgy.us. So Donald at edgy.us. Okay.
Armando (52:45 – 53:12)
Okay, good. We’ll make sure to get that in the notes below so people can see that as well and find you. So Donald, thank you so much for the conversation.
Very, very helpful. Very insightful. Anxious for your book to come out here sometime in Q1 of 2023.
And let’s hope that the right person was able to hear this and can reach out to you with questions and, as you said, that initial conversation just to see where that might go.
Donald (53:12 – 53:23)
Sounds great. Armando, thank you so much for hosting. Really appreciate your role in the Valley and what you seek to do to assist businesses in this kind of space.
So thank you very much.
Armando (53:23 – 53:29)
Certainly. Our pleasure. Great.
Well, enjoyed the conversation with you today, Donald. Have a fantastic afternoon.
Donald (53:29 – 53:31)
Very good. And the same. Bye now.
Armando (53:31 – 54:01)
Thinking of exiting your business? You may have only one chance to get this sale right. Your family depends on it.
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