Preparing Your Freight Brokerage for Succession | Episode 307

Learn how to turn your freight brokerage into a business that thrives without you. We’ll cover the first hires you should make, how to protect and transfer customer relationships, and the smart way to structure your business for maximum value. Whether you’re selling soon or years from now, these strategies will set you up for long-term success.

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Episode Transcript

Speaker 1 (00:00):
Welcome back.
It's another episode of theFreight360 Podcast.
We're talking succession planstoday, and we'll probably
sprinkle in some other goodstuff.
We were just talking off-airabout things that you probably
need to clean up before sellingyour company or passing it on to
the next generation or whatnot.
We'll get into that in a bithere, but first please, as

(00:20):
always, check out all of ourother content.
Share us with your friends andcolleagues in the industry.
Make sure to leave that review,hit, subscribe All the good
things there.
If you're looking foreducational options for yourself
or for your team, you can checkout the Freight Broker Basics
course.
That's right on our website aswell.
That's a 40 to 50 module, veryin-depth course that will teach

(00:41):
you everything from getting yourbrokerage organized and formed
and founded all the way throughbuilding out your team and tons
of sales, operations, care,development all the good stuff
in there.
So check it out, ben.
What's happening, man?
We're coming up to back toschool season.

Speaker 2 (00:58):
My daughter started school Monday.
She had her first day of firstgrade Monday, so this is the
second day of getting up earlyand actually she just started
taking the bus this year so shewas like super excited, it was
so cool.

Speaker 1 (01:11):
It always blows my mind how in the South you guys
start school so early comparedto us up North, Like we don't.
Schools don't start here untilafter Labor Day, so we end up
going into like late June.

Speaker 2 (01:23):
And I think we definitely don't go into late
June.
I think it's also probablybecause it's getting hotter,
maybe, but it's still hot now.
But they also, I think, havemore days off during the year,
maybe, or maybe I just rememberhaving less in-service days.
I feel like there's just everyother week or every three weeks
they're off school.

Speaker 1 (01:40):
Yeah, I don't know, couldn't tell you.
My son goes to kindergartenthis year, so I'll find out.
Oh, producer Steven has said ithas to do with the harvest
season.
So there you go.
Fun little fact, all right,good deal.
Sports my boy, james Cook,running back for the Buffalo

(02:00):
Bills, finally got paid thismorning $48 million, four-year
uh contract, 30 millionguaranteed.
It was like big.
There's a lot of drama.
Some people were like you know,because basically like he's not
, he hasn't been practicing.
But they called it.
They actually the the hardknocks episode two that came out
this week.
They kind of like broke it downwhere they said he's basically

(02:22):
protesting the right way, he'sshowing up to practice, he's in
meetings, he's basicallyprotesting the right way, he's
showing up to practice, he's inmeetings, he's just not taking
part in practice, whereas in thepast people used to just like
not show up and they like workout on their own, et cetera.
So they did all the rightthings and Harden actually broke
it down.
Good, everyone wanted to getthe guy paid.
He's worth it.
It was a matter of letting theGM figure out what to move
around and restructure to beable to afford to pay him what

(02:44):
he's worth, because otherwisesomeone else is going to have
have their eyes on him.
So, um, bill's looking good,I'm excited for it.
How'd the Steelers do inpreseason?
Did you watch them at all or no?

Speaker 2 (02:54):
I some of it.
I mean they did really well andI mean all the recap was they
kind of played better thanexpected.
So I mean Aaron Rodgers didreally well, I think for the
little bit that he did play, butlike I don't know, it's pretty
positive I mean it's alwaysreally positive this time of
year but I mean like it wentfrom.
I mean because we didn't reallyhave our team put together

(03:14):
until like a few weeks ago.
So like most of the offseasonit was like, oh my God, we have
no quarterback.
We don't want Aaron Rodgers.
This is going to be a disaster.
We have no idea what the team'sgoing to look like.
And all of a sudden it's comingtogether and like even the
interviews I heard from trainingcamp, like yesterday when they
were up there, like they're likeAaron Rodgers is like actually

(03:34):
like engaging, even with likethe younger guys that aren't
even playing, like spending timewith them.

Speaker 1 (03:39):
Did you see his interview?
What he said, how like with theage difference and everything,
dude, it's so funny.
You got to watch the clip.
He basically said he's like Ikind of.
I walked up there and I waslike man, everyone's so young,
who do I, who do I?
Even know he's like.
I just kind of like did theBiden thing and like, looked
around, like all like and thenyeah, but eventually, like
you're going to have to embracethe younger players on the team

(04:01):
because that's your team andthey said, that's why it's kind
of working, because most ofthose guys grew up watching him
play, like idolizing him.

Speaker 2 (04:11):
So like there's this weird vibe of like he's the
superstar that they kind of sayidolize, but like for sure
watched when they were kids andlike it's having like apparently
a really positive effectbecause since big Ben left, like
there really hasn't apparentlya really positive effect because
since big ben left, like therereally hasn't been a leader like
russell kind of did, but notreally and nobody knew who the

(04:31):
quarterback was gonna be.
So it was like kind of maybewe're following this guy, not
this guy, and now at the veryleast there's consistency on
like who's leading and who'ssetting the tone for the culture
of the team, which, yeah, Ithink super important in any
company or any football team.
So we'll see how it plays out.

Speaker 1 (04:47):
Speaking of Russell Wilson, I saw him playing on
Saturday.
He came, him, and the Giantscame into Orchard Park for a
preseason game.
Josh Allen did not play at all,so got to see basically Mitch
Trubisky and Mike White competefor the backup job.
Bills didn't win it's preseason, so whatever.
But what was interesting is ourkicker is injured right now.

(05:12):
So what they did is, instead ofusing a backup, they went with
the emergency kicker route.
So Ray Davis, our second-yearrunning back out of Kentucky,
kicked an extra point and hemade it and everyone was like,
was that Ray Davis?
Like what?
But it was like the worst extrapoint I've ever seen made.
But then you think about it.

(05:33):
It's like actual kickers onlymake like 90 percent of those in
the regular season, so he's onefor one right now in the
preseason.
I'm just pumped, man.
It's that time of year.
You know I'm a big football fan, so we'll we'll see how things
progress the next couple ofweeks and, yeah, looking forward
to it.

Speaker 2 (05:50):
I'm just excited for winter.

Speaker 1 (05:52):
Yeah, and in news I had written down here in our
notes, the the FreightwavesCarrier 411 dispute.
If you guys haven't heard of it, just go on X and just look up
basically Craig Fuller's accountor just look up anything about
what's going on.
It's pretty comical.
You read more about it than Idid.

(06:13):
What's the down and dirty onwhat's going on from?

Speaker 2 (06:17):
what you've seen.
I'll let Steven kick it off,because he's read more of it
than I did.
I just caught up on it firstthing this morning in the gym.
But, steven, what is the, bythe way?
Shout out to?

Speaker 1 (06:26):
steven, somebody left a comment saying why does the
guy in the middle never talk?
And I think it's because we wedidn't edit you out of the one
of the episodes that you didn'ttalk in and you're just sitting
there the whole time.
Steven's our producer, butsteven what do you got?
I'm just uh, that's mostly fromvibes yeah, yeah, yeah.

Speaker 3 (06:44):
So back in July if anyone's been watching what the
Truck lately, they've had a lotof different people hosting
other than Dooner.
He left and it was relativelyquiet until yesterday.
Darren Brewer, Carrier 411,founder and CEO, he posted an

(07:04):
image of a law firm.

Speaker 1 (07:07):
That is it looked like a ancient artifact, like it
literally looked like like itwas from 1700s, with how like
crinkly and brown it looked.

Speaker 3 (07:17):
it looked like he put a sepia filter on it after like
having it bundled up in hispocket like a sweaty.
But apparently he's funding thelaw firm and it looks like
they're going after Firecrownand Craig Fuller with the.
For what?

(07:37):
I'm not sure, Just forspeculation, but I imagine it
has something to do with whatthe truck or how the exiting of
Firecrown is going.

Speaker 1 (07:47):
The exiting of what.

Speaker 3 (07:49):
Duder exiting Freightwaves and Firecrown.

Speaker 1 (07:53):
What's Firecrown?

Speaker 3 (07:54):
That's the media company that owns all the hobby
magazines.

Speaker 1 (07:59):
Oh yeah, yeah, that's right.

Speaker 3 (08:01):
So Firecrown.
So when they split off Sonarthey created Firecrown.
Firecrown owns Freightwaves andtheir plane magazines and their
astronomy magazines and all theother hobby magazines.

Speaker 2 (08:15):
I think Firecrown owns the airport country club
thing too airport country clubthing too, okay, and I wonder
who this is that is behindpopular aviation, because they
certainly didn't not jump in.
Sorry about the double negativeend of this conversation yeah,
there was some uh push.

Speaker 3 (08:36):
I don't know who popular aviation is, but, um,
they seem to be uh purist of thethe airplane magazines and they
are not happy with howFirecrown has handled the flying
magazine that they took over,and they're very the one quote.

Speaker 2 (08:54):
I'm just going to read this one.
Yeah, so we're at another greatinflection point in media
history, pondering whetherrobots can produce publications.
But it's not that simple.
We know AI can generatereadable, if not flawed, copy.
What we don't know is ifreaders will find sufficient
value in that content toconsider it credible and stick
their eyeballs to it widelyenough to make advertisers

(09:17):
willing to pay to support it.
Firecrown, in my view, neverunderstood what it had with
Belvoir's well-regarded titles,and understood even less what
quality editorial looks likeInteresting.
So, yeah, not exactly.

Speaker 1 (09:30):
So yeah, stay tuned on that.
In other news, ben I don't knowif you saw this this morning
interest rates people believemay get a small cut next month.
Inflation was below theexpected year over year, for I
think it was for last month, sothe stock market had a nice

(09:52):
little day yesterday because ofthat, and what does that mean
for us?
I don't know.

Speaker 2 (09:58):
I've seen it could be up to three cuts.

Speaker 1 (10:00):
What's that?

Speaker 2 (10:00):
I've seen that there may be expectations that there
could be multiple cuts by theend of 2025.
But, like there's overwhelmingand overwhelming majority, I
think, is, we're going to get acut in September, which is, I
think, good for the economy.

Speaker 1 (10:14):
What do you think?

Speaker 2 (10:14):
25 basis points yeah, probably small at first,
because they're going to want tokeep an eye to see if inflation
doesn't go up.
Because the biggest thing is,like, when the tariffs happen,
nobody actually knew how muchthat could cause things to get
more expensive.
And they are getting moreexpensive.
But there's a lag in that Right, like, just because companies
pay.
Even theoretically, if acompany pays that tariff right

(10:36):
in June, that doesn't mean theyraise their prices when the
products hit the stores.
And also those products don'thit the stores in June when they
come in they might not hit thestore shelves until July or
August, and then a company mightwait two months before it
raises prices.
So, like, just because thesehave been happening all year,
the Fed doesn't want to raiseinterest rates until they can
see how much of an effect thiswill have on people's budgets.

(10:59):
And it's having an effect, justnobody knows how much supply
and demand thing.

Speaker 1 (11:03):
You know what I mean.
Like literally, if I go toraise my prices today because of
a tariff that came in placetoday, it would be dumb, because
then my competition just keepstheir prices the same or below
mine, that's market share andthey get the business.
That's free market.
So the same thing happens intrucking, right, if the cost of
diesel fuel goes up this weekand you know, if you know in one

(11:28):
, one small slice of thetruckers decide that to you know
, raise what they want to getpaid, they probably won't get
the loads that everyone else isgetting that.
So that might have been not thebest example, but the same
thing kind of happens withmarket fluctuations anywhere, is
.
It kind of moves homogeneouslytogether and somewhat slowly, so
I guess, with the exceptionbeing post-COVID when it just

(11:50):
kind of like was real fast.

Speaker 2 (11:54):
So yeah.
And there's like I mean we coulddo like literally an entire
day's discussion on this.
But like there's a lot ofmoving parts that determine real
interest rates, like the Fedjust can drop the rate at which
banks borrow from the Fedovernight, but that does not
actually determine.
Like mortgage rates, forexample, like that's based on
real interest rates, which isjust.
Every time the federalgovernment puts out enough

(12:16):
treasury bonds to the wholeworld for people to buy, how
much are they willing to pay forthose?
And if people think the USgovernment is getting riskier,
even if the Fed drops theinterest rates, the real
interest rate does not go down.
That is determined by just theentire global market's demand
for the United Statesgovernment's debt.
And when you start a trade warand lots of other countries are

(12:38):
not wanting to invest in the UStemporarily, the demand for
those T-bills has been goingdown, or at least has not been
going up.
So there's a possibility thatand that's why the Fed's really
worried is because this happenedin the 70s.
They can drop interest rates,but if everything gets more
expensive and nobody still wantsto buy US debt, the real
interest rate still goes up.

(12:59):
So you have things that aremore expensive and people have
less money, which becomesstagflation.
It's just growth in prices andno growth in actual gross
domestic product.
Jobs and the jobs rates arelooking terrible, like the
revisions of those numbers.
They were estimated like two orthree hundred thousand jobs
were created in the spring andthen when the actual numbers

(13:20):
came in it was like fourteenthousand jobs, so like the labor
market has just basically cometo a standstill and that doesn't
look great.
And also like right now theytrack like the new home
inventory is basically there's9.8 months of inventory of homes
, meaning like if people boughthomes at the same rate,

(13:40):
basically it would take 9.8months to buy all those homes.
That has only happened sixtimes and in five of those times
it was right before a recession.
So it doesn't mean there willbe a recession, but almost every
indicator is pointing towardsexactly what happens prior to a
US recession.

Speaker 3 (13:57):
I was just going to mention that because I'm
currently looking for land.
I haven't been for like eightmonths and it's anecdotal, but
I've seen the reports of likethe inventory and when I've went
and looked at a couple of 40plus acre plots in my area and
they're just too high.
But these people bought wheninterest rates were rock bottom

(14:20):
so they don't care to sellunless they get the money that
they want, which is fine.
I mean get the money that theywant, which is fine.
I mean get your money, but itain't coming from me.
So but that is like I meanaround us.
I mean there are so many housesfor sale.
I mean I got.
I got 2.4% interest rate on myhouse.

Speaker 2 (14:48):
If I put it on the market, unless you give me some
astronomical high price, I ain'tgoing anywhere.
Same thing right and this is abig part of freight right.
Like when homes are being builtand remodeled like that's a big
portion of the commodities wemove in the country.
So when interest rates dropthat low, it basically locked
all those people into theirhouses almost indefinitely.
My buddy used to work with aTQL.
He bought like a $600,000 houseor 700, I think, and around the
Denver area at the lowestinterest rate, so like one nine
right.
His mortgage on that house islike $2,100.

(15:10):
It's like a seven bedroom house.
He pays like two grand and he'slike, dude, I could never move
out of this house.
Like he's like it would cost mea fortune to buy another.
He's like if I bought my samehouse across the street right
now, my mortgage would be like$8,500 a month and it's just
like.
I don't think people realizehow much that affects what your
buying power is when it comes toreal estate.

Speaker 1 (15:30):
Yeah, that's a great point.
Well, we'll see how things panout.
Let's get into today's topic,which is succession plan.
So this isn't you know.
We're going to try and cast awide net here and make this
applicable for a variety ofdifferent folks in different
scenarios.
But the whole concept here islike if you build up a brokerage

(15:52):
or you build up an agency, whatdo you do with that book of
business if you want to retireor exit or whatever you want to
call it, move on to the nextchapter in life?
If you're a W-2 employee, verylikely that book of business
does not actually belong to you.
So this may not be applicablefor you.
But if you ever leave thatmodel and start your own company

(16:12):
or build out an agency, ormaybe you are in a W-2 position
where it's structureddifferently and you can do
something with that book ofbusiness afterward, that's what
I want to talk about, becausewe've had this question from a
lot of folks in the past.
We've had the question comethrough of how do I sell my book
of business and all that.
We'll talk about it in somedifferent scenarios and whatnot.

(16:37):
Here's the deal.
If you start a brokerage andit's just you and you decide,
hey, you know I, I want to sellthis and do something else or
retire.
You own your job.
You don't really own a.
I mean, it's a businesstechnically Right, but you don't
really own a developed,transferable business per se.

(16:58):
You know, like a company thatoperates on its own.
You own your job.
So the way I always look at itis like this If you can step
away from your business 100%,will it operate effectively and
smoothly?
If the answer is yes, you're ina good place.
If the answer is no, you arenot in a place where you can

(17:19):
easily transfer your book ofbusiness or sell your book of
business, your company, easily.
You're going to want to makesome tweaks, make some changes,
and there's a roadmap to getthere.
So, ben, I'm curious have you,based on the folks that you've
dealt with in the past, have youhad people that have sold or,

(17:41):
you know, successfullytransferred a book of business
or company?
I've got a few differentexamples that I've I've seen and
I'm curious what you've comeacross.

Speaker 2 (17:48):
I've talked to a lot of folks with this, mostly folks
that have wanted to buybusinesses, which is the other
side of this right, Like thedemand side.
I've worked with more folks yeah, trying to help them identify
and evaluate the companiesthey're buying.
But the thing that I also wantto say is like it's a lot of
work.
It's a lot of work to buyanother business because like
and I don't think I think thatis often overlooked right Is

(18:11):
like, if you are going to buy abusiness, you need to get a
return on it, Meaning like, ifI'm buying this, there needs to
be upside and a reason for me tobuy it.
Like, not just buying it tostay the same.
That's mostly why anybody buysany business, and even other
companies buy other companiesbecause they're like well, hey,
there's unrealized value If weplug in what they have to what

(18:31):
we have.
One and one equals three.
That extra one is the reasonyou buy that other business,
right.
But then the problem is, whenyou go to buy someone's business
, everybody thinks, just likewhen they sell their house, that
it's worth way more than theperson that wants to buy it is
willing to pay Right.
And then what you really getinto is the debate on how and
what these things look like.

(18:51):
And with small businesses itgets even more complicated
because the owner of thatbusiness is usually the largest
shareholder.
They're usually taking moremoney out than maybe the person
buying it would.
So, like, their accountingstatements and what's actually
in it are even skewed.
Because, again, if I own thisbusiness and run it like, my
incentive is to take as much outof it as I can because, like,

(19:13):
it's my business.
But if you buy it from me,you're not going to take the
same things out.
You're probably going toreinvest that money back into
the business.
So it grows because you alreadyhave income somewhere else.
Money back into the business,so it grows because you already
have income somewhere else.
But then it comes down to OK, mybusiness is, and you'll see
people like oh, it also owns myvacation home and my business
also pays for all my family'scars and it pays for all my

(19:33):
family's health insurance andall their cell phones and like.
Those are just like some simpleexamples.
But that's all money coming outof that business.
So when the person goes to buyit, looks at your accounting
statement, they're like well,dude, the business only throws
off a hundred grand.
But then the guy selling itgoes oh no, it actually makes
like $1.2 million.
I just take all of this out anddo all these tax things, so I
pay no taxes, but it looks likeI don't make any money because

(19:56):
the incentive to run a businessis to show the least amount of
profit when you go to sell it.
You want to show the mostamount of profit because that's
the determining number that youget paid on.

Speaker 1 (20:06):
Yeah.
So the way that it should bedone is like, if it's just so,
let's say I own a brokerage andI've got five employees and you
know, I know that I make, we'lljust make it up.
Let's say I make, you know, amillion dollars a year is what I
, you know I get to take and,you know, do what I want with.

(20:27):
That is not the number you wantto look at.
You have to figure out if Iremove myself and I have to hire
somebody else to manage it andto run it operationally, that's
going to have to happen whensomeone buys that business,
right?
So you have, like, what wouldit cost to pay a manager to come
in and run this office?
Because you got to think ifyou're working in the business,

(20:49):
that's a salary that's going tohave to be replaced.
Take that out and then you lookat what's it actually valued at.
That's why what a lot of smartbusiness owners will do is they
pay themselves a reasonablesalary that equates to what it
would cost if they're in to sellit.
Someone else has to pay thatsalary to somebody and then the
rest is owner distributions andyou can totally do it that way

(21:10):
and that's a clean way tounderstand what is your business
truly worth at any given pointin time.
We're not going to go down thatrabbit hole today, but I at
least wanted to put that outthere, because we did start off
by saying if's just you, youjust own your job right.
And I've seen I've seen thishappen with people that have, um
, lawn care businesses, thathave insurance agencies, etc.

(21:31):
And it's like what you'retrying to sell is a rolodex.
That's really yeah.
I mean yeah if you've got alawn care business without the
trust right.
Exactly, if you've got a lawncare business, you've got some
assets like some equipment andwhatnot, and steven did did off
air or offline, said he sees ita lot more often on the asset
based companies, which is true.
And there is more concrete.

(21:52):
You know, very easy to identifythe value of the assets there
because you actually have, youknow, trucks and trailers and
you might have real estate etcetera.
So we're talking about abrokerage in and of itself.
So if you are working from homeby yourself right now, running
a small brokerage that just youwork at, this is where you need
to really start to think wheredo I need to get my business to

(22:15):
a place where I can step awayfrom it?
And even if you're in your 20sor your 30 and you're not
thinking about retirement yet,well, think about how do I get
to the next step, which is to beable to take time off, to take
a vacation, to sleep at nightand not have to worry about the
phone ringing because somebodybroke down or missed an
appointment at two in themorning on an overnight pick or

(22:36):
drop, right?
So we've talked about hiring inthe past and I want to kind of
talk through what thatprogression looks like from
being a solopreneur throughbuilding an actual business that
becomes eventuallyself-sufficient.
So, when it comes to hiring, Iwant to preface with and we've
probably mentioned this beforein other episodes but I think

(22:58):
the first time you hire somebodyis one of the most difficult
ones to traverse, becausebecause first of all, you have
to think about what does thatrole look like?
What am I comfortable withhaving somebody do instead of me
doing it, and then who is theright person to do that job?
And most times, the first timeyou hire somebody, you either
hire for the wrong role or youhire the wrong person.

(23:21):
I've seen too many folks, evenwithin my own company.
You know they build up a greatagency and it's just them.
They're like you know, I'mready to bring somebody on and
they hire a family member orthey hire a friend.
And I can tell you 100 percentof the time when this has
happened and the sample sizeisn't small for us I've seen it
happen dozens of times.
100 percent of the time it doesnot work out, not to say that

(23:44):
family, you know family can'twork together, but it's the way
that you do.
It needs to be intentional andthere's got to be a lot of
thought and expectation, setthat like, hey, if, for example,
if I'm going to hire my son, myson's, you know, not working
age yet, but let's say, let'ssay I had a 20 year old son and
I wanted to hire him.
Well, when we're at work he'smy employee, when we're at home,

(24:05):
he's my son.
There's a boundary there thathas to be different.
So I've seen a friend hireanother friend and they're not
friends anymore because theydon't agree on things, they
didn't put stuff on paper, theydidn't have clear expectations
and it just went sideways.
I've seen family with nephews,nieces, cousins, et cetera, and

(24:28):
the family now has a big ripplein it.
So I think that determining thewho to hire and what to hire for
are two very difficult thingsthat people don't often think
about.
So let's talk about the what tohire for first, to start to
offload responsibilities,because you know, if you look at
it, if it's just you and younever hire anybody, you are your
own roadblock.
Right, you are the, you are thereason you can't grow, because
you have a finite amount of timein your day, you have a limited

(24:53):
amount of patience and youdon't want to basically
frustrate yourself and stressyourself out to where you just
say, screw it, I'm done Right.
So you've got gotta be able totake certain things off of your
plate to put on someone else'splate so you can focus on the
things that will help grow thebusiness.
And I always recommend and I'mcurious your thoughts right if
you've built up a good brokerageor an agency, you are the

(25:17):
number one best fit to producerevenue and profits right, so
don't go out hiring salespeople.
Produce revenue and profitsright, so don't go out hiring
salespeople.
You are the one that hasclearly done a good job at
building customer relationships,building rapport, growing and
scaling your business to whereit's at.
So don't trust someone else togo out there and tarnish your
company's name or think I'lljust hire 20 agents or sales
reps and they'll just grow thebusiness.

(25:37):
So I'm always for admin andoperations as the first set of
things to offload.
What's your take there?

Speaker 2 (25:43):
And I think the reason for that is because
people tend to hire for the jobthey like doing least and that's
the one that they try to hirefor first, even though that's
not the one they need to hirefor.
It's more of the emotionaldecision.
Nobody likes to deal with theconstant rejection of sales and
the constant grind of gettingtold no over and over.

Speaker 1 (26:06):
And dealing with hard conversations with customers
when things go bad, trying tosalvage his relationship.

Speaker 2 (26:10):
All of that Right, and I think the number one
position we hear from everybodywe work with on what they're
going to hire first is I'm goingto replace myself with a
salesperson and I'm going to godo back office stuff and, to
your point, they lose their bestsalesperson and take the
biggest risk.
Because it is very hard to hirea good salesperson, Even if you

(26:30):
just do this for a living.
Because if you're just arecruiter, right, Like, and you
get really good at askingquestions, it is really hard to
get a window into whether or notsomebody's going to work out
over six months or a year.
And even a two hour interviewthat you do three times, even if
you theoretically spent a weekwith them, that person's ability
to succeed is not determined inthat short of a time frame.

(26:51):
So it's just really hard tohire for that one out of one
time, Like you're probably.
If you're going to hire fivepeople, one or two is probably
going to work out maybe out offive, it's probably more like
one or two out of 10.
And every time you hire theperson that doesn't work out,
you spend a bunch of money, abunch of your time and you end
up back at the same spot.
It's like chutes and ladders.
You just take the ladder up andit's right back down to that

(27:11):
place.
The job to your point that Ithink makes the most sense to
hire for is to clean up theadmin side, to get the task
stuff done.
Those are easier to train,they're lower cost or lower risk
and that frees up your time togo sell more, which is what
people don't want to do.
But if they do the hard thingand keep selling more and free
up more time to bring in morebusiness now the business has

(27:33):
more income to actually affordto hire the next person Then you
do that again.
Now, if you keep selling andfreeing up your time to bring in
more customers and you can keepthat Now maybe once you've got
enough cash reserves and moneycoming into the company that you
can hire a salesperson to workwith.
You see how they work.
If they don't work out, thenyou do that again.
Right, but like the order of, Ithink growing your business with

(27:56):
the least amount of risk makesfar more sense to never hire the
salespeople first to to hireyour backend support and keep
like you said, you are the starsalesperson.
You are the person thatgenerated this business in the
first place, creates enoughrevenue, understands what your
business does and cares enough.
Because, also, there's thisother saying it's like nobody's

(28:17):
ever going to care as much aboutyour business as you.
You own it.
You get all the upside.
Even if you've got smallpartnerships like they're still
never going to care as much asyou because you have more
invested into it.
Right, so you want to be inthat most important role,
because without more businesscoming in, every business
shrinks and disappears.

Speaker 1 (28:38):
Some of the roles that I'll outline here, and
they're not in any particularorder.
These are some of your-.

Speaker 2 (28:45):
Hold on one second.
This story just came to me andit's really important from that
point.

Speaker 1 (28:49):
Let's hear it.

Speaker 2 (28:50):
We were taking Ava to this was last year, we were
taking her to.
It was like a summer golf campfor little kids, right.
So it was mostly like themplaying, just learning to walk
around and be out there.
But there was a guy sittingnext to us who was an attorney
and he worked in like privateequity and we're chatting, you
know like, oh, like, what do youdo?

(29:13):
He's like, oh, well, like mywife wants to start a business.
And he's like, oh, you do likebusiness consulting?
I'm like, yeah, I'm like a fewdifferent things, but you know,
we just started talking about it.
I'm like, oh, and I startedasking her a few questions, like
, again, just met these people.
I was like, oh, what do youenjoy doing and what are you
thinking about doing?
Right, because I always feellike if you don't enjoy the
thing, you're going to start abusiness.
I'm like it's got a pretty highlikelihood of failure.
And the woman goes well, I wantto start a bakery.

(29:34):
And I go well, that'sinteresting.
I said, oh, no, I hate bakingand I don't know how to do it at
all.
And I went huh, and I went okay, well, like what, what's the
interest in opening a bakery?
Like why do you think thiswould be like a good business
that you would want to like goand build or run?

(29:54):
She's like oh, I just felt likeit's cause it's pretty easy.
Like you just hire a baker andthen like, put a menu together
and then, like you just cut thema check and then like, put a
menu together and then, like,you just cut them a check and
then you make money off of itand like to me it was like this
perfect example of what youdon't want to do and this giant
underestimation of what it takesto build a business where
people that have access tocapital right Cause she's like,

(30:17):
oh, you know, we can just getthe money to do this.
I'm like, yes, but like youdon't have any of the important
ingredients to make this work.
Like you, giving somebody elsemoney to go work at a bakery is
not going to turn that into asuccessful bakery and you hate
the thing.
To begin with, you're not evengoing to want to show up, which
means like there is zero chancethat this is going to work out
before you have even taken yourfirst step.

(30:38):
And it's like to me, thinkingabout this is that like building
a business is hard and riskyand takes effort and personality
.
If you don't want to be inthere doing that, then you
should find something else thatyou enjoy doing.

Speaker 1 (30:50):
Dude.
So I know probably four or fivepeople in my life that have
either started a restaurant or abar because they liked being
the customer at restaurants orbars.

Speaker 2 (31:05):
I like going to restaurants and bars.

Speaker 1 (31:06):
They didn't want to run it.
It's like and they all failed.
That's 100% accurate and I'mglad you shared that story.
So the tasks and some of thejobs and responsibilities that
are common for the first thingto hire for are your non-revenue
generating.
They're your support roles thatallow, they're going to free up

(31:26):
time for you to go generatemore revenue.
So things like billing,scheduling appointments, your
data entry, and you could alsoautomate some of these too.
This episode is not onautomation today, but there's
ways of offloading these tasksfrom you.
But there's there's ways ofoffloading these tasks from you.
So if you only have, let's sayyou only get two hours a week to

(31:48):
try and prospect new businessbecause you're too busy doing
whatever else, those whateverelse things are the things that
you need to look at and theeasier the task is, you can.
You can compile those into a, ajob description, essentially
Right.
So sometimes you'll bringsomeone in and they might do.
You know operations work,things like, all right.

(32:09):
For all these loads, we need tomake sure that they're updated
in the system.
Track and traces is, you know,accomplished either through
setting up and monitoring gps orconfiguring eld telematics
connection to the TMS or sendingout links for whatever manual
check calls, talking todispatcher, stuff like that.
Right, it could be.

(32:29):
You could take it a stepfurther and retrieving PODs and
invoices from carriers when theloads are delivered, calling the
receiver to make sure thedelivery was done.
It's customer service, it'soperation support, things like
that Delivery was done, it'scustomer service, it's operation
support, things like that.
And I would have them getcomfortable with all that before
they're customer facing andthat someone could be a stud and

(32:52):
pick it up in a few weeks.
Some people might take monthsbefore they fully understand
what this wild industry offreight brokering is that we
work in and live in every singleday.
Then you can get to more of thethe customer facing, things
like calling to make sureappointments are scheduled
properly and to make sure thatthe driver got loaded correctly,
because when you start havingyour customer hear another voice

(33:15):
, that's not you.
There's good and potential badto that, depending on how you
handle it.
The good is you can thenduplicate your efforts of well,
now the customer is feeling morecomfortable with this new
person and they know it's notjust me anymore.
But if you don't tell them that, hey, I'm going to be hiring
someone to help out to give youguys better service and all of a
sudden they hear from Jimmy oneday instead of Ben.

(33:36):
They're gonna be like what Bendoesn't know love from Ben
anymore.
What's going on here?
I like Ben, so the way in whichyou propose that to your
customers, I think is is just asimportant as picking the right
persons.

Speaker 2 (33:49):
Great.

Speaker 1 (33:49):
The bill is a huge one because you know you have to
invoice customers to get themoney in the door.
Yes, but it's you know.
It's also one of those thingswhere, like, if you spend all
day billing and you're usingthat part of your brain and
you're not doing the you knowdeveloping relationships,
business development side of thebrain, you know it's taken away

(34:10):
from your potential.
So, and on top of that, thefaster you get invoices sent out
, the better it is for havinghealthy cash flow, healthy cash
flow.
So if you are like I'll do allmy billing on the weekends, well
, you're adding potentially upto five days or six days of lag
time between when you could haveinvoiced that customer and when
you actually invoice thatcustomer.

(34:31):
And if your customer is on 30day terms to pay you, that clock
doesn't start until they getthe invoice.
It doesn't matter if itdelivered and you were ready to
invoice it on Monday.
If you don't send it out tillSaturday or Sunday, that's on
you.

Speaker 2 (34:43):
Yep Stephen, what was your interjection?
That you were saying?

Speaker 3 (34:48):
That you were talking about.
You know you want to stay insales and hire for whatever your
administrative roles.
So I recently took over ArborBridge.
I've been the top salespersonhere for three and a half four
years, but we never really hadmanagement.
So I did the opposite thing Itook myself out of sales.

(35:11):
But the purpose was to clean upour processes, make everything
faster, easier and better, andthen, in that meantime, the
people who are still selling theleads and stuff that I had I
would look at.
Okay, what does this personpredominantly do?
What's their network look like?
What's their book of businesslook like?
Ok, this prospect fits withthis person.

(35:32):
Let me make an introduction.
I'll go back to managing thebusiness and then filtering
things out.
That way, the last two and ahalf months, we've closed more
customers in that time than wehave in the last year, because
I'm giving these people warmleads and I'm also managing that

(35:54):
business better.
I've taken time.
I've taken tasks away fromthose brokers that could be
handled by a single personmyself, which is running me then
, but they have more time to dothe sales, bring in the revenue
and then eventually we cancreate jobs.

Speaker 1 (36:11):
This is exactly the progression that we're talking
about that someone should be infor.
So if I'm running a brokeragemyself and I am, so I'll paint
the picture this way.
If I'm running a team, I'lljust give you a hypothetical
scenario.
I've got a book of business I'mdoing, let's say, $2 million a
year in sales and I hire anoperations person, and that
allows me to boost myself up to$3 million a year and then to $4

(36:34):
million a year.
And now I hire a secondoperations person and maybe the
first operations person has beenintroduced to my customer and
helps out with some of theaccount management.
Right, we're not talking aboutnew business or sales.
We're talking about managingexisting business that I'm able
to keep coming in the door.
Right, that allows me to go outand get more and more business.
So maybe now I'm at $6 million,or $6 million, $10 million, and

(36:56):
I've got a team of three.
The goal, eventually, is to getyourself doing less and less and
less of the day-to-day andallow yourself to hand off those
business activities to otherpeople.
Right, so you could.
There's all different ways todo it, but it could be that your
core business that you know wasable to fund and grow this
whole thing.

(37:17):
You are still a relationshipowner with those group of
customers.
But you've got account managersthat are dealing day-to-day
with quoting and dealing withany issues or customer updates.
You've got an operations teamthat's helping out with track
and trace.
It could be cradle to gravemodel, where these folks are
doing both.
There's all kinds of ways toskin the cat on it and then
eventually your goal would bewell, how do I pass now this

(37:40):
beautiful role that I'm in,where I don't have to show up to
work eight to five every day, Idon't have to worry about
answering the phone when acustomer or a carrier is an
issue, but I'm still therelationship person, right?
Well, that's when you look atall right, maybe I need to get a
sales manager, right, and itcould be an account manager that

(38:01):
moves up, it could be anoutside hire, it could be all
different things, and that's awhole other discussion of how do
you pick the right person forthose roles, based on their
strengths and all that stuff.
But eventually you just get tothe point where you own the
business, you've got someonewho's managing the sales side of
it and they've got accountmanagers.
Maybe they then have somehiring classes of some new sales
reps that are going to come inand make their own cold calls,

(38:23):
try to build up their own bookof business.
You might have an accountmanager who really loves dealing
with customers and says, hey,can I make some calls myself?
I'd really love to do this.
So maybe you give them a chanceat trying that chessboard and
the entire puzzle and make sureeverything is still together

(38:43):
while giving your folksflexibility to grow and develop
on their own, because if someonejust stays stagnant and never
has an opportunity to grow ortry something new, they're
probably going to get sick of itafter a while.
But exactly what you said,steven to move, you know be in
the top salesperson.
Well, if I'm a one personbrokerage, I am am the top
salesperson.
If I want to eventually get toa point where I'm not doing that
day-to-day, I have to find away to replace that.

(39:05):
Your example is amazing becauseyou can then take all your
experience and knowledge of whatyou know goes on in your
brokerage and then you can takeall those other back-office
areas and make them moreefficient and run smoother and
let the other brokers andaccount managers manage what's
going on and help grow thatbusiness.
So that's exactly the thethey're not mutually exclusive.

Speaker 2 (39:26):
We were just kind of outlining, I think Nate and I
when we started the conversationof what it kind of looks like
from one person as they'regrowing to that place.
Right, where you're coming fromis like if we're going to come
into like a 20 to $50 millioncompany, for example, right,
even if somebody brings me onthis at multiple times, you're
like well, just go bring inbusiness.
Like you can go close salesmore than everybody else, and

(39:46):
I'm like agreed.
But I said also we have to lookat the whole business first in
its entirety.
Like Nate is saying it's likeokay, like let's go through and
see what everybody's doing.
Are they doing the mostimportant thing?
Are they just doing necessarythings?
Do they have like creativeavoidance and like that is even
going into like accounting?
Okay, what is happening there?
What are our average days toinvoice?

(40:08):
How many days are we waiting toget cash in the door?
Are we efficient there?
Answer might be yes, might beno.
Might need more people, mightneed less people, might need
people doing different things,might need different software.
Right, then it's, you're goingto that one level up.
Even I'm going okay, like howare we actually doing with
retention of the existingcustomers, because, yes, there's
bringing more in.
But I always use the analogy oflike if you have a hole in your

(40:31):
and you're fishing well and youkeep catching fish, but they
just keep swimming out everytime you catch them.
Like I can be really good atfishing but I'm still going to
end up back at the dock with thesame amount of fish because no
one's paying attention to myfish keeps swimming away.
So then it's like going throughand, like Nate said, like
account management, how are wedoing?
Is our business going up ordown with these customers?
Are they seasonal?
Are we managing them well?
Are we missing basic,fundamental things like track

(40:54):
and trace, getting PODs in thedoor?
Are we servicing them in theway that they should?
What is taking up most of theirtime?
Are they the right things?
And then you kind of go all theway upstream and once you've
kind of got your arms around allof it, then you can decide like
, okay, does it make sense forme to just do a little bit of
sales, a little bit more sales?
Maybe it does make more sensefor me to spend more time
getting more salespeople in now,because the business is

(41:16):
generating enough consistentcash flow that we can make those
gambles and hire salespeopleLike that's your next growth
level, because ultimately, oneperson is not going to grow a
company to $100 million.
You need more salespeople toeventually get past these
benchmarks.
One person can get you to $20,$30 million probably, maybe even
arguably, two or threesalespeople can get you to $50.

(41:36):
But when you're startingtalking about bigger numbers and
larger companies, that feelslike a lot to me, but, but you
know this is an exaggeration.

Speaker 1 (41:43):
It makes the point, though.
Yeah.
So the other thing I want tohit on here too is you know, how
long does it take to transitionthose relationships and and how
do you do it?
So something to think abouthere, because if people are like
, well, I don't want to make mycustomer nervous that all of a
sudden.
Something to think about here,because if people are like, well
, I don't want to make mycustomer nervous that all of a
sudden, jimmy's calling them now, well, you have, you propose
that in its positive sense, likehey, I'm, I'm bringing this guy

(42:07):
in or I'm moving into this roleso I can help service you guys
better.
Now there's going to be, um,basically two of us, right, and
this person's going to focussolely on x, y and z.
I'll back them up it if needed,and someone else can back them
up as needed, and I'm here tomake sure our relationship and
our service levels are stellar,right, and that happens slowly
and over time, but you prefaceit ahead of time.

(42:34):
You have to remember also, yourcustomers are going to have
personnel that change over aswell, so this is a constant
thing of keeping caught up with,as you have new reps in your
company that are customer facing.
The person at the customer islikely going to change as well,
right?
People get promoted, peoplechange jobs, they grow their
departments, et cetera.
The way I've seen it play out,timeline wise, has varied
depending on the situation.
So I've seen a book of businessthat someone was able to

(42:54):
transition the day-to-dayrelationship with the customers
in as little as six months, andI've seen someone do it over a
10-year plan.
They're like, hey, I know thisops guy right here who his next
role is going to be in amanagement or a leadership
position and the goal is he'sgoing to eventually take over
this company from me in 10 yearsand that person becomes very

(43:19):
well known by the customers overa decade, whereas if you have a
six month window, it's a lotmore.
There's a lot more chance foryou know things to, you know go
south or someone like, yeah, wedon't really like working with
this person, et cetera.
It's definitely not overnight,right?
And that's why I say that youknow this stuff.
You need to have it in a placewhere you are not the sole
person that is doing everything,because if you want to sell it

(43:43):
or pass it down to your kids andthe new owner or your kids have
never talked to the customers.
Well, the customer is probablylike all right, well, that
service level is totally gonebecause so-and-so just decided
to retire.
So we'll go over the other fivebrokers that have been
providing good service to us.
So, and again, low is, you know, as slow as you can do it,

(44:04):
right Is the ideal way to do it.

Speaker 2 (44:06):
And here's the thing, right, like, keeping it very
simple is like if you're goingto sell a business, you need to
think how much of this businessstays together, generates the
same amount of money coming inand money that goes out of it.
If somebody else was hereinstead of me, right, and what
is the risk?
That when they take it and Ihand it off to them, some of
that just disappears and goeselsewhere.
Like there's some portion ofthat.

(44:29):
That is almost always going tohappen, right?
And if you think about it, likelots of businesses run that way
, just think about how we are aspeople, like, if you trust,
going to a local sandwich shopand the same person makes your
sandwich over and over and youget to know them and you see
them two days a week, everyWednesday and Friday you go and
get a sandwich and then nextweek they're gone and all of a

(44:51):
sudden there's a new owner there.
You'll probably still eat therefor a little bit, but a lot of
the reason you go there isbecause, like, you like to see
that person, you know them andlike it's weird, but like the
food even tastes different ifthey use the same ingredients.
Someone else puts it and it'sas simple as a sandwich, right
when, like I know, there wereplaces I'd go to for years and
then, once they're gone, like Ijust didn't feel like I wanted
to go.
Like in our twenties, like thebest example was like bars and

(45:13):
waitstaff.
We would go with our friends tocertain restaurants and bars
where the food is like probablyjust as good as the one across
the street, but you like thewaiter, you talk to, you like
the bartender, and that was partof why you enjoyed doing
business with that business andthen someone else buys it and
it's like, yeah, it's the samefood, but like I just kind of
don't know this person.
It just doesn't feel asfamiliar.
So like let's try the placeacross the street and little by

(45:35):
little you get to know thosepeople and then you start to
frequent those places.
Right, the same thing happensin really just about every
business to some degree, butit's very, it's very exaggerated
in hours because like there'snot really contracts and the
most of the reason yourcustomers are doing business
with your brokerage is thepeople that they're talking to
they choose, to the name and thebanner on the window.

(45:57):
That's why non-competes havebeen so prevalent for so long.
It's like even large companieslike CH and TQL kind of knew
this.
Is it like their customers haveloyalty to that broker?
Not the name on the invoice,not the name on the email?
And when those people wouldleave to go to another brokerage
, the customers are like yeah,man, like I know Nate.
Nate knows my supply chain.
Nate's an extension of mybusiness.

(46:18):
My people trust Nate when hesays he's going to get something
done.
And if TQL gives me a differentperson, they go well, he'll do
just as good.
And I don't know them.
Yeah, I'm still going toprobably do business with them,
but like I'm going to startlooking at who's the guy that I
liked almost as much as Nate,that I just didn't give him as
much to.

Speaker 1 (46:43):
And I'm going to give them a little bit more, little
by little.
And that's why the businessstarts to funnel out.
I'll give you two examples oneon your restaurant side and one
in brokerage.
So, like one of my favoriterestaurants in the town over
from me, I've been going to foryears.
Since I was a kid my parentswould take us there and to this
day, the owner he's much oldernow, he's still on a Friday or
Saturday night comes in thereduring dinner hour and walks
around and says hey to all theregulars, but he's not flipping

(47:04):
burgers, he's not waiting tables, he's not managing the bar
staff.
He is the owner and he walksthrough there because he loves
that business and he knows if hewants to leave for three months
and go to Florida, he sure can.
And when he comes back peoplewill be happy to see his face
there and that's a greatsuccession right there.
And you know he, if you've gotkids, that's a great way to pass
it down, like now, kids, themanager and you're still showing

(47:25):
face.
But even the brokerage I workfor Pierce Worldwide, my, my
boss, the owner, kevin.
He's been there for over 40years and is he calling
customers, cold calling?
No, is he dealing with bigpicture things for a customer
when needed, yeah, he'll step inthere and do that.
But he has been able to createa subordinate level of

(47:49):
leadership and expertise aroundhim over many, many years to the
key relationships with thatcompany have gotten to know the
you know the next generation ofof the Pierce's over the last 10
plus years.
So that is the.
That's a great example of a slow, you know, a slow burn, slow

(48:10):
transition.
You know to to get these folksin there.
And if it's not family owned,that's fine.
Right, you, you could own arestaurant and you've got a stud
.
Maybe the guy starts off as aserver and then becomes a
bartender, then a bar manager.
You know that he's going towant to buy it off you when
you're ready to throw the towelin.
Well, you could do the exactexample I gave, where this

(48:32):
person is learning how to runthe business while you're still
somewhat present there and stillshowing face, etc.
And then, when the time's rightand you've you've had enough
right People know who that nextperson is and it's you know
whether it's taken six months orit's taken 10 or more years.
Um, you have to kind of do itat whatever pace works for your
you know your business and yourand your customers.
But, um, you know, you can'tjust have it be a flip of a

(48:55):
switch overnight and think aboutlike, um, right, like, I'll go
to the restaurant example, andit's probably the same for you
know, trucking company orbrokerage, if a, if a restaurant
that you love going to shutdown during COVID, right, and
somebody bought that buildingand tries to open it up and make
the same kind of restaurant,you might have that like initial
buzz at first, like what's thisplace like?

(49:15):
And then like usually you figureout pretty quickly like is it
gonna last or not?
Because they're, they're trulystarting from scratch.
Right, it's the same buildingthey might have.
I've even seen pizzerias thatlike sell the uh, their sauce
recipe and everything and thenthey just it's not the same vibe
, right, like we had one in ourtown where this guy was for
years great pizzeria sold it toum a family, an indian family,

(49:40):
who still sold the pizza butthen started doing more Indian
cuisine and they gained a lot ofpeople that liked Indian food.
But the regular pizza goingcustomers were like no, they,
they just, it's just different.
You know, they still got thepizza, but like they're not,
they're leaning in on the, onthe Indian cuisine thing and
it's just.
You know, I'm going to go tothe pizzeria down the street.
So that's really how it can gowrong.

Speaker 2 (50:01):
And the other thing, too, is the trust between
ownership or management and theemployees.
Right Cause the bar, example.
My uncle owned a bar for like25, 30 years and the one thing
he used to tell me cause I usedto ask him when I was like
younger, in my twenties I'm likelike, why are you there as much
as you are at this point?
Right, because he's like almostretirement age and it was right
before he saw him.

(50:21):
I'm like you know, you're stillthere on like all the busy
nights and you're still spendinga lot of time.
Like, do you, do you need to atthis point?
And he said, well, here's whathappens, ben, he goes when I'm
not there.
People act differently.
And he's like okay, if there'sa new manager there that the

(50:42):
bartenders don't trust, guesswhat?
All the regulars, instead ofgetting one ounce in their drink
, of whatever they're drinking,they're getting one and a half
ounces.
Why?
Because the bartender gets alittle bit of a better tip and
the bartender's like, well, youknow, red's not here and like
the new manager is not going tocare as much.
And then, a little bit at atime that starts to erode your
profits, then, little by little,they're showing up a little
late, or they don't care as muchbecause they don't feel like

(51:02):
the new owner cares as much asthe last guy.
Why not?
Because they're not there asmuch when the owner's just
physically at work with his team.
People work differently, caremore because they feel like
they're working with that person.
And that's another risk you'vegot to kind of think about is
like as you scale yourself upand out of the business at a
certain point the culture willfeel different, because they

(51:24):
don't feel like they're workingwith you.
They feel like they're workingfor you, but you're not there.
So then people just start to doa little bit less, work a
little less harder, pay a littleless attention until, little by
little, all these mistakesstart to add up and you're like
what the hell is going on?
All these mistakes start to addup and you're like what the
hell is going on?
25% of our business is out thedoor.

(51:45):
None of our invoices aregetting paid and nobody noticed
that, like we didn't send any ofthis stuff out.
And everyone's just like oh, Ididn't really notice.
And you're like wait a minute,this is somebody that's cared
for five years working for me.
All of a sudden, when I'mstarting to scale myself out of
the business.
Everything starts to fall apart,and that's what people buying a

(52:05):
business are worried about.
Is that like, yeah, you builtthis great team that works with
you, but most of that isn'tgoing to transition overnight to
another company that buys yourcompany in 45 days to 60 days,
to your point?
When you transition it tosomebody that works there, that
has been with those people inthe trenches, it tends to go a
lot smoother and there's lessrisk.
When you're selling thisoutright to a whole other
organization that comes in,that's a different feeling.
I mean, think about anybodythat's ever worked at a company
and new ownership comes in.

(52:26):
How does everybody feel?
Are they all super excited?

Speaker 1 (52:28):
I quit the last company that did that to me, so
that's a whole otherconversation, but here's
something you can do too I knowwe're getting towards the end
here, but you talked about themanager at the bar and this
could be a sales manager or anoperations manager at a
brokerage.
As you're grooming them forthat next role, you can give
them skin in the game and thatcould look like a quarterly

(52:49):
bonus based on profitability, ora quarterly bonus.
If you look at things like didwe keep our days to invoice as
low as possible?
Did we keep our rating on DAT,our days to invoice, as low as
possible?
Do we keep our rating on DAT?
You know, are we staying atthat 97, 96, whatever it is?
Is our?
You know our Google?
You know X amount of starsrating?

(53:09):
Is that still maintaining?
And if things start to slip oryou've got negative results, and
those KPIs can be all differentdepending on what you're.
You know what matters most toyou.
But you can then correlate thatperformance to some sort of
incentive, and that incentive isdifferent for everybody, based
on what's important to them.
But that then gives them skinin the game.

(53:30):
To make sure that thatbartender is not pouring, you
know, extra drinks for free,Right, Because we're going to
see how much liquor we wentthrough versus the amount of
sales that came in, the amountof that got thrown out because
it was overordered and it gotspoiled, stuff like that.

Speaker 2 (53:46):
So, and that's why earnouts come in, and again
we'll kind of wrap with this,but like an earnout is just, if
Nate buys my company, I agree tostay on with Nate for some
period of time a year and a halfor two years and I'm only able
to get the same money thatNate's paying for my business by
keeping the business doing whatit was doing as I'm leaving.
So basically, you have skin inthe game after the transactions
happened and then the previousowner stays on under certain

(54:08):
metrics to make sure things arebeing kept up as it switches,
and that's really common withsmaller companies too.

Speaker 1 (54:14):
I'll give you, I'll give you a great example in a
brokerage setting of that.
Right, if let's say you, yourbrokerage, you, um, let's say
bottom line, it does a milliondollars a year and, um, you, you
come to a forex evaluation onit, right, so four million
dollars is the sale price.

(54:35):
Well, the way that I I'veactually seen this not with
those numbers, but I've seen ithappen this way is they said OK,
it does a million dollars ayear, $4 million purchase price.
The way that we're going to dothat is that I am going to as
the seller, I am going toreceive all of the profit.
The buyer comes in and gets asalary as the manager to run it,

(54:55):
and I get all of the profitsfor the next four years, up
until $4 million If we don't hit$4 million.

Speaker 2 (55:01):
So you take my job.
I keep all the money until thebusiness pay me what it's worth.
I just don't have to do thatday to day.
I have some responsibility, butexactly but.

Speaker 1 (55:10):
I have skin in the game because if, if, four years
comes and it only made $2million, well, they just got it
for half price because I didn'tdo my job to make sure I got my
$4 million by making sure thatover those four years we
transitioned it properly.
And I have seen that.
And I've seen it done in otherways too.
Where it's it's tiered atdifferent dollar amounts or
percentages each year.

(55:30):
I've seen it three years, I'veseen it for five years, I've
seen it done over a year andthat didn't work as well.
But those are creative ways toensure that.
That's kind of like your ownerfinance way of doing it.
So, instead of just getting acheck and selling off the paper
you have to make sure if I'mgoing to get this price, it is
because it's structured this way.
And then I have to make surethat the person I'm selling it

(55:52):
to is set up for success,Otherwise.

Speaker 2 (56:02):
I don't get paid.
So I have a buddy of mine rightnow we're doing with.
He's buying a dentist officewith the building and he has
another practice and that'sexactly the way we're trying to
structure it for him is to beable to get the earn out.
The guy who owns the buildingowns the practice.
He gets a small cash payment upfront but then basically that
practice is going to pay him outover the next few years and
then there's little incentivesand kickers.
But yeah, but I mean theconcepts hold true, no matter
what business you're doing with.

Speaker 1 (56:25):
They're all kind of similar principles, Absolutely
so, no matter where you are inyour journey, think about what's
that next step right?
What is that next hire?
What's that next landmarkachievement I want to get to to
get me one step further down theroad towards that end goal.
So good episode, good episode,Good discussion.
Let us know your thoughts inthe comments.
Ben, final thoughts here.

Speaker 2 (56:43):
Whether you believe you can or believe you can't,
you're right.

Speaker 1 (56:47):
And until next time go Bills.