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February 24, 2024 110 mins
In the quiet corridors of Larry Ramaekers childhood, his towering presence set him apart from his peers. Forbidden from participating in sports with kids his age due to his size, Larry found solace in solitude, cultivating an early proclivity for problem-solving. Navigating the complex tapestry of adolescence, he discovered the profound impact of collaboration and continuous learning. These early lessons laid the foundation for Larry's belief that embracing diverse perspectives and remaining open to new possibilities are indispensable virtues.As he stepped into the realm of Information Technology (IT) at the onset of his career, Larry swiftly gravitated towards 4th generation languages, leveraging tools like SAS, FOCUS, and SPSS to revolutionize how organizations harnessed computing resources. Soon, Larry found himself at the forefront of steering troubled corporate initiatives, using data analytics and visualization to expose inefficiencies and catalyze transformative change.The trajectory of Larry's professional journey took a pivotal turn when he transitioned to the turnaround and restructuring industry, joining the Ramaekers Group. Focused on dismantling operational and financial roadblocks, Larry's approach flattens organizational hierarchies to amplify the voices of those closest to the challenges, promoting honest communication and inclusive decision-making. Get to know more about Larry Ramaekers at https://www.ramaekersgroup.com/ and be enlighten about all the business wisdom he shares.
To learn more about myself, Michael Esposito, and find out about public speaking workshops, coaching, and keynote speaking options, and - of course - to be inspired, visit www.michaelespositoinc.com
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(00:00):
This show is sponsored by DN tenInsurance Services, helping businesses get the right
insurance for all their insurance needs.Visit dn ten dot io to get a
quote dn ten dot io and remember, when you buy an insurance policy from
Denten, you're giving back on aglobal scale. Hello all, my entrepreneurs

(00:22):
and business leaders, and welcome tothe Michael Esposito Show, where I interview
titans of industry in order to inform, educate and inspire you to be great.
My guest today is a renowned businessconsultant with over fifteen years of experience
helping senior leaders and organizations achieve profitabilityand success. He has a proven track

(00:44):
record of helping companies such as BlueCross, Blue Shield Centry, twenty one,
Dow Chemical, General Motors, andKmart, as well as medium and
small organizations such as the Catholic Diocesesof Wilmington Say millions of dollars by identifying
and fixing money leaks, collecting outstandingdebts, and increasing profits. His expertise

(01:08):
and guidance have helped c suite executivesachieve peace of mind knowing that their companies,
families and employees are secure and shareholdersare satisfied. He is on a
mission to help organizations save fifty thousandjobs across the US by twenty thirty three.
He's presented at the Association of ChangeManagement Professionals Global Conference and lectures at

(01:34):
the University of Florida on both ethicsand change management. Please welcome, Managing
director of ram Accurs Group, LarryRamakers. Welcome, Larry. Thank you.
That name does hurt from the lastguest you had that your intros are

(01:55):
are stellar. Oh we sound great. Oh that's so cool to here.
Thanks, thanks for saying that.I uh, you know, first of
all, I have to thank someof your your writers as well. I
mean, some of this comes fromyour bio. And then of course it's
it's practicing and rehearsing at toastmasters allof my public speaking skills as much as
I can, so right right,that's uh yeah, getting in front of

(02:22):
people and speaking practice helps you realizethat they're not as scary as you think
they are, and you're not asscary as they think you were. Yeah.
Yeah, certainly at the University ofMichigan or at the University of Florida,
you know, they're like, okay, they're all sitting there saying,
oh, this is a guest lecturer. Well, listen to what he has

(02:46):
to say. Then we'll just goon with whatever we were thinking about before.
Yeah, so you lecture at theuniversity and you're you're dealing with these
young, aspiring professionals and some ofthem already professionals. But you know,
it's interesting about this about you lecturingand speaking and being you here on the
podcast with me. Is your history, your story of actually growing up and

(03:12):
being more introverted. Maybe you didn'tidentify as an introvert then, but more
introverted growing up. And I'm veryinterested on how you were able to transition
from being kind of like the lonelykid to what you described into being this
like persona of an extrovert, beinga speaker persona being an extrovert. Yes

(03:32):
see, it took me a longtime. Well, the thing is is
that it wasn't until I read andlistened to Susan Kin. Susan Kin wrote
the book Quiet, which is allabout introverts, and learned that introverts are

(03:53):
not really shy. They just prefersmaller groups groups than bigger groups. Being
in a crowd discharges their battery,where an extrovert is charged by being around
people, and so when I speak, I have to create an environment where

(04:19):
I'm speaking to an individual or acouple people. I do much better when
I engage individuals in a sometimes heatedconversation, challenge them to think. And
the way I got here was,as I think I mentioned. When I

(04:44):
was a kid, I was aboutfive foot nine. By the time I
was in the fourth grade, Iwas bench pressing more than two hundred pounds
or whatever it was. Stories growlike fish, because I'm a fisherman as
well. But my size made itimpossible for me to play football or other

(05:09):
sports with kids my age, andthat was isolating I had. I was
told and believed I was fairly smart, and because I didn't have a lot
of extracurriculars, I annoyed the teachers, particularly the nuns. My penmanship was

(05:34):
terrible, and I had my fingersbroken by the nuns where they would wrap
it with that round you know,those long pointers with a little rubber tip.
Well, when those come down overyour hand, when I say broken,
it really was dislocated. Wow.But I would stick them in my

(05:57):
I would stick them in my pocket, walk home and then straighten them back
out when I got into my bedroomand not tell my parents because it was
my fault, you know. Theinstructor of the teachers, the nuns said
you're not trying hard enough. Andso it caused me to go further and

(06:24):
further into doing things on my own. So I spent a lot of time
reading. And I was never reallyinterested in comic books, so I read
books by Einstein and other people.Kan't im Manual Kant translated from German.
I didn't know German yet, butthese kinds of things. And I've heard

(06:50):
you speak of Stoics and other philosophersin the past and how they shape and
I was shaped a lot by ImmanualKant, and naigung is a concept I
use a lot when I'm talking withbusinesses, and and I can explain all

(07:12):
that how that works later. ButI read and read and read, and
it was my world. It justopened up the world and kept me in
my basement study. And then whenI went out, I would encounter a
few kids, and they like tosee what they could get away with.

(07:38):
And after they were it was proventhat a five foot nine kid can take
care of themselves, they stopped botheringme. Mhm uh. I was bored
in school, got out. Ithink my thought there still has to this

(08:01):
day. The letter, the rejectionletter from the University of Michigan that was
comically written, as we look atthe SAT scores and your grades, and
we're not sure that these are forthe same person, meaning we don't understand

(08:22):
how somebody with these scores had thosegrades. Which one was the better one
or the lesser the SAT. Ihad SATs mid fourteens, close to fifteen
hundred, and I don't know whetherthat equates anymore, and whether they've changed
the numbers. But I did quitewell. But yeah, Catholic school,

(08:46):
and so therefore, well I gotout of Catholic school. When we moved
from one city to another there wasn'ta Catholic school. But yeah, but
I played pranks as a kid becauseI was bored. I say, you
know, my father was a chemicalengineer by training, and I learned how

(09:07):
to make what I recall as potassiumiodide, which is a purple stuff that
floats in ammonious solution. When youtake it out and let it dry,
when you tough touch it, itcreates this purple poof of smoke. Well
that's really a lot of fun whenyou let it dry on a nun's chair

(09:28):
and she sits in it, andpurple smoke shoots out from all directions.
Sure, and that was the nunthat had a sense of humor at least.
But you could always collect snakes.And I put a couple of them

(09:52):
in the desk drawer and upside down. And so when she pulled the drawer
out, the snakes fell in herlap. Uh. Uh. When you
take a velvet peanut butter jar andfill it with grasshoppers, and I learned
this from one of the adults inmy past. Uh, you fill it

(10:13):
up and then you open it upin their desk drawer. And they opened
the desk drawer and grasshoppers start leapingout. Uh. And that was amusing
enough. But when she went tohand or handle hand yesterday's tests back,
all the tests came back with theiredges chewed on, lasting evidence of grasshoppers

(10:41):
in the door. And and sosomewhere along the line, somebody figured that
I needed a better, more usefulway of applying my creative antics. Yeah,
and so when I went into school, as I said, I was

(11:05):
terrible a student. I went tothe university of Michigan failed because I thought
that college was going to be aseasy as it was in high school.
I got terrible grades in high schoolbecause I got a's on the tests and
e's on the homework. They allaveraged out to seats, and so I

(11:28):
went to university unprepared to actually dothe work, and it ended up not
working out. So my father decidedthat what I needed was to find the
most miserable job he could find thatwas available, and so I worked at

(11:54):
a Pepsi bottling plant as the personthat stacked the cases. As they come
off the end of the line.You take the case and you put set
it down on the pallette by hand. They may actually have machines that do
this now, but then it wasmanual. And as you might imagine,

(12:16):
when you lift twenty four bottles orwhatever it was in a case from a
conveyor belt across straight across your back, isn't that strained. But try putting
it down on a pallette on thefirst row of the palette and then on
the top of the palette. Whenyou're done with that job, you're very

(12:39):
tired. And I remembered these kindsof jobs because there are people that do
that kind of work today, andI always appreciate the fact that there are
those kinds of jobs out there inthe factories and the other companies that I

(13:03):
go to work for, and atleast understand what goes on on the floor.
Anyway, I did that work,did find that that's not what I
wanted to do, and then Iwas able to go back to the University

(13:24):
of Michigan where I started. Iwent back, sat in the classes before
they let me in. Applied toschool. They said I could. I
could monitor the classes. They wouldsee how well I did and then decide
whether they let me in. Well, I did pretty good, I did

(13:48):
quite well, and so I continued. And so I came out of the
University of Michigan with an economics degree. And I took economics because it was
a quantitative degree had me focused alot on math. But also it took

(14:11):
a lot of philosophy classes along theway, because I wanted to know how
to construct an argument and both speakit and write it. And I had
been on the debate team in highschool and liked arguing with people. Some
continue to say I'm too argumentative.I'm not sure I agree with that.

(14:35):
Do you argue them on that,I argue, sorry, you left that
one open for me. I hadto go for it. I know,
I that was I think that wasseven forty seven hangar size that. So

(14:56):
that put me in in And Iknew I was never going to be an
economist. But my father was bigon saying that unless you're an accountant,
a nurse, or an engineer,college is not there to prepare you for

(15:18):
an occupation, you know, Imean, if you want to be a
nurse, you've got to go toschool to be a nurse. When I
was talking or thinking about law school, the lawyers I knew said the best
degree to be a lawyer is anythingbut pre law, because law is a

(15:43):
liberal arts degree. And they said, even after you graduate with a law
degree, you really don't know howto practice law. You've gone through you've
learned the skills of torts and otherfunctional things, but uh, you have
to actually practice in the area tolearn about that area. You don't know

(16:07):
maritime law until you are in maritimelaw. So I'm told, and I've
met you know, I made alot of bankruptcy lawyers who didn't have a
lot of bankruptcy courses in school.Right, and that wasn't wasn't a specialized
kind of degree. So I gotout and I was primarily in it,

(16:37):
but I was a terrible coder.I just didn't have the patience for it.
What I did, however, realizeI knew how to do was look
at things and ask what is thisgoing to be useful for and what problem
needs to be solved. So atthe time, they were a bunch of

(17:02):
fourth generation languages that were coming.This is focused SaaS SPSS, Yeah,
Statistical Program for Social Sciences, Ithink is what it means. And they
all had sort of a slant anda target of what they were trying to,

(17:22):
you know, what market they weretrying to target. But I was
able to use SaaS and some othertechnologies at a utility I was working for
to help the organization understand what productswere being used by whom, how often
in what ways. So the computereffectively did a survey of utilization and then

(17:55):
that allowed them to change the sourceallocation to those products that were being used
and at the time and in theway they were being used. And I
carried that thing forward to jobs I'vehad with helping retailers, specifically grocery stores

(18:25):
staff their stores. The way thatworks is when you can collect data when
you have an answer, when youhave a question that needs to be asked,
and there's the data available, youbegin to do things like I was
working for a grocer in New Englandand they wanted to know is there something

(18:51):
over needed to know that they werehaving staffing shortages. Now, one of
the first things they did was theyhad supervisors in the deli area that only
worked Monday through Friday. Well,if you know anything about grocery stores,
the busiest days are not Monday throughFriday. I'm told it's Sunday. It's

(19:18):
Sunday, Sunday followed by Monday,followed by Saturday, if I remember right.
And Monday apparently is the day thatpeople go in and say, oh,
I forgot to get that, andso they shop on Monday. That's
if you live in a certain kindof city. And I mean that is
that I was able to use thedata from the cash registers to show that

(19:42):
you could probably break the stores intofour different kinds of stores. If you
had a city store, people shoppedthe same amount pretty much every day.
And if you think about somebody livingin New York City, they grab their
groceries on their trip from the pathtrain to their apartment where they have a

(20:07):
small refrigerator. And so what theybasically do is they shop more like many
do in Europe, where they buytoday's groceries today. You get someplace out
like Poughkeepsie and it's eight miles tothe Gruro's grocery store, and these folks
shop once a week and so betweenthere. There's a couple other profiles,

(20:33):
but generally what it did was followto swoop. As you pointed out,
there are days that are very highand very some that are very very low.
Well, you can use that patterningand data to both schedule people in
the store but also know when youhave to deliver which product to the store

(20:59):
in anticipate patient of the demand that'scoming up. It's much easier to stock
the store on a weekday than itis to stock it on a weekend.
If you're going to build an endcap for the weekend, you do it
in the middle of the day.You put certain products on trucks when you

(21:25):
know that they're going to have alighter load. It just allows you to
sort of load balance your trucks fromyour warehouse in anticipation. If you know
the size of the volume the spoilage, you know you're not going to ship
meat or frozen fish to a storeon Monday for sale on Saturday. Curios,

(21:48):
on the other hand, might keepokay. And so you run these
kinds of profiles through analytics, andyou better load trucks. You run similar
analytics on a warehouse and identify whichproducts should be stored where, not only

(22:17):
given how frequently they're they're used,but if certain kinds of products only go
out on Mondays, you sometimes organizethe shelves so that this is the Monday
section, and this is the Tuesdaysection and so on, which prevents you

(22:37):
from having to drive all over thewarehouse to pick and pull products. And
all of this is I don't thinkthis is terribly rocket science logistics, but
as I said early on, it'ssometimes amazing that people don't take full advantage

(23:00):
of tools out there and thinking thatthey know and they just don't do it.
They I'm I'm sure I'm rambling.No, I don't think you are
at all. Actually, I meanI have to. I certainly have a
lot of questions, but you're you'reon a good path here. So don't
worry. So I mean, I'masked a lot of times. You know

(23:26):
what, if you had to ask, if you had to answer the question
as to what keeps companies healthy,I tell them two things. They do
the things they know they need todo. And I've asked. I've been
told by a number of clients andthey said, well, gee, we

(23:47):
could have done that, and Isaid, yeah, I know, but
you didn't. It took somebody fromthe outside who was actually willing to do
it. And sometimes that's good becauseI can be the jerk, I can
be hard, I can take andimplement difficult things, and then when I

(24:11):
go away, the employee's source ofpain has gone away. And as every
change professional is going to tell you, change is not comfortable. Rapid change
is even less comfortable. And sothe other thing that keeps companies moving forward

(24:37):
and out of trouble is waking upevery day and asking whether or not they're
doing the right things correctly, shouldwe be doing something differently or doing something
different? And the companies that askthat and are willing to act on it
had off all kinds of trouble.You know, My father, who was

(25:03):
also in this kind of business,talked about every time he walks into one
of these things, he knows he'sgoing to encounter one of three answers to
things, and that is the banksor the creditors need to give us more
time, I need more sales,or our business is different. And the

(25:25):
answer was always, you don't needmore time until you change something. Your
business is not that different. Cashis cash, controls or controls focusing on
what you need to do is notdifferent. And I forget which the third

(25:48):
one that I mentioned was in anyevent, they always say the same thing.
And when they say we're different,they also say I can't make this
change. We've been doing it likethis for one hundred years. My great
grandfather started this company, and wemake whatever it is we make in this

(26:11):
way. And what is becoming moreand more true with the speed of the
economy and the change in the globaleconomy, is that the way you did
it yesterday is almost certainly not goingto be the way it works today.
Somebody is always coming along with somethingelse that makes you obsolete, and you

(26:33):
either stay ahead of that. Maybe, if not obsolete, what you're doing
less effective. And if you're notasking those questions on a daily basis,
then you get behind them. Imean, I love everything you're saying.
You don't have to worry about aboutwhether you're continuing. I think you've followed

(26:55):
a really great path for us,or at least laid out a great path
for us of learning your your historyof going up through school and graduating in
your first job into where you aretoday. I think your example of this
gross of the grocery store there whereyou know it, I think it could

(27:15):
be used in so many different ways. And and I think you're one hundred
percent correct in that businesses and I'mand I'm guilty of this myself here at
Denten. You know, that's ourinsurance agency. And I definitely have a
lot of questions for you here onthat. But you know is it's hard
to do. It's hard. It'snot hard, it's it's more of the

(27:37):
way of thinking that if you knowyou have, like for myself, Let's
say I'll use myself as an examplehere if I have a way of thinking
which is more visionary in that oflike, here are the different things ideas
I have for the future. Hereare the goals I have for the company.
Here's where I want us to be. Here's what I don't think as
much of the logistics that you laidout there, which I can use a

(28:00):
very good example of of like notthinking about But while you were talking about
the grocery store, I was like, well, wait a second, maybe
we could do this differently at ourorganization. So it's hearing people like you
that help us think differently. Andit kind of like goes back to your
father's advice on college of college ifif you're not there for you know,
a nursing degree or something of theother, it's to help you think differently.

(28:23):
It's to help get you in frontof people that are going to help
you think differently. So what Ipicked up from your example with the grocery
store of you know, stacking thingson a Monday shelf, stacking things on
a Tuesday shelf, looking at youknow, days that there's less frequency,
less traffic in the store to useas stocking days, and then knowing what

(28:45):
your busy days are. And oneof the things that you may have left
out that you were kind of searchingfor in your story there was your margins
of like what is the most profitablething to sell not to sell more,
which is what you said to me, which is not that you need to
sell more, but that you needto sell more of your profitable things.
And I like that. I likeyou said it too, where it was

(29:07):
like doing the right things right,and I think that that's very similar to
that. Right, it's doing theright things right. And I know Shaquilo
O'Neil talks about people say practice makesperfect and they're wrong, and they look
at him and when he said,that's an interview, you know, it's
what I'm talking about, right,And he's like, they're wrong because it's
not practice makes perfect, it's perfect. Practice makes perfect makes perfect. That's

(29:32):
right, right, And so itis it is that and and so you
you say that, you know you'resitting in your own and you think about,
uh, how to run your business, the problem that any individual has.

(29:56):
And I mentioned that I find alot of things in movies that helped
me talk about change in organizations.So I'm now reminded of Winnie the Pooh
where Tigger comes up and says,the most wonderful thing about Tiggers is I'm
the only one. And the problemwith being the only one is a lack

(30:26):
of diversity in your own book.And I'm not talking necessarily about diversity the
way that colors and stripes and whatever. But I explained my background and how
I got to where I got to, and nobody else got to where they
are using the same path that Idid, and so nobody can think like

(30:51):
me. Fortunately for the world,nobody does. But everybody is a product
of their own experience, is theirown education, their own everything, and
so every person is sort of aunique tigger and that comes with it a
thinking that is not sort of aglobal diverse thinking. And so just like

(31:23):
the people who say I've been doingit like this for one hundred years,
even if they went and began tosay, what should we be doing differently,
they simply don't know any better.They don't have the world experience to
have seen other ways to do it. And so one of the advantages of

(31:51):
hiring consultants or ensuring that you reachout to people with different experience, whether
you bring them in as a consultantor a hire, is to make certain
that they will never yes you.You don't want them to be somebody who
backtalks all the time, but theyshould be saying, gee, have we

(32:15):
ever considered whatever you spoke about?Yeah, you say no, But then
I never knew about that. Yeah, you mentioned it actually in your bio
here about what kind of you know. When we first started your history,

(32:36):
we were talking about going from beingan introvert to exposing yourself to others and
being and being out there and becominga speaker and everything. And one of
the things that you mentioned about thatwhat helped you do that was collaborating with
others, was learning that you can'tdo things by yourself and collaboration with others.
And I think that, you know, I just so I do an

(32:59):
Instagram live every day and yesterday Ijust did one, and I was talking
about the power of collaboration, aboutwhen when you're collaborating and what it looks
like that collaborating is not just workingon something together, you know, parallel
to each other. It's crossing ideasand it's doing what you just mentioned there
in that there's going to be somedisagreeing and it's listening to the other person,

(33:21):
even if you disagree, but listeningto their ideas because maybe out of
that you can come to another conclusion. And so I love that you brought
that up. Yeah, And it'sit's interesting because I one of the things
in order to get rapid changed throughan organization, is we tend to flat

(33:45):
the organization when we're having meetings.I think I mentioned this in what I
wrote up and that the way Irun meetings is from the book The Mythical
Man Month. The Mythical Man Monthwas a book written by the guy who
I believe was the initial programmer forthe main IBM three sixty operating system that

(34:10):
runs the big mainframes, and whathe learned was that if you have two
people, a communication between them formsone line at a third person, and
you now have three lines at athird person, You now have six at

(34:30):
a fourth you now have ten.As you grow that size of a team
and attribute any non zero value tohow long it takes to conduct that line
of communication, you begin to seethat you spend all of your time talking
about something and none of your timeactually doing anything. And so this let's

(34:57):
form a team and get everybody involvedcauses you to get nothing done. It's
so true. I've seen that.I've experienced that so many times on different
committees or boards that I've served on. Is that the more people we have
involved, the harder it gets toget the idea across the finish line.
It's great to have a lot ofpeople involved when you can direct them to

(35:20):
do a task, but when youhave them all around the table thinking about
the idea together at one hundred percent, I've experienced that. And so what
he comes back with is the wayto fix it, and he says,
what you need is a surgical team, and that is there is one surgeon
who runs everything to the point.But they never try to tell the anesthesiologist

(35:45):
how to do their job, ordon't tell the nurse how to do their
job. I have my job,you have your job. I let you
do yours. Don't tell me howto do mine. And then we get
together and when you say I'm thinkingabout doing it like this, okay,

(36:07):
what's the perspective of sales? Youlook at the salesperson, what's the perspective
of whatever? And when people stayin their lanes and are given the I
want to say authority, but it'smore than just authority. It's they are
the authority. I want to knowabout sales. I don't know about sales.

(36:30):
You are the authority. You arethe expert. I want to listen
to you. And so the bestexecutives I've ever met realize they are nothing
more than the greatest conductors of agreat symphony. But they need that violin

(36:50):
player who is extraordinary to make thesymphony sound good. In every individual out
there plays their instrument to prospect toperfection. And all I'm doing is standing
here pointing at you and saying,hey, you do what you do?
Yeah and so. And they knowthose people's strengths because they take the time

(37:19):
to know the people and their strengths. And if a certain piece of music
came along, they would not askthem to do it. They would ask
somebody else to do it. Andthey would tell the person that, hey,
this is not your thing, butthere are great things you have.
And so I found I find thata lot of people very much appreciated when

(37:46):
they get passed over for a specifictask, when you know that they know
what they know and are good atit, and say this is just not
you. I had a boss thattalked about two really smart people. They

(38:06):
said, you can imagine if youcan imagine two doctors each graduated at the
top of their class from Harvard MedicalSchool. One is a brain surgeon and
the other is a gynecologist. Youwouldn't ask one to do the other's job.
Doesn't diminish the intelligence of either ofthem. You just wouldn't ask one

(38:30):
to do the other's job. Andso when I work with a lot of
companies, I generally don't pretend togo into a steel mill and say I
know how to make steel better thanyou do. But I do know how

(38:51):
to help you manage your cash better. I do know how to help you
think about change. I do knowhow to pull apart your financial statements to
help you drill into what's making youmoney and what's losing your money. And
I want to teach you someone howto do that when you're doing work like

(39:15):
that. So obviously you're talking aboutturnaround and in companies, and there's all
different levels of this, of alldifferent levels. Yeah, And you know,
I'm interested in understanding what it lookslike when you're talking about the financials,
because you talked about the p andls. Even in your intake form

(39:37):
here, you mentioned something about thep and ls, and you talked about
breaking them down into groups. AndI'm interested in these groups because when I
you know, in the at leastwhat I know of a P and L,
they're already broken into groups. ButI'm assuming you're talking about a bit
further here, And I'm also interestedin the application to analyzing this P and

(39:57):
L and how you apply it tothe organization in order to turn it around.
Sure, so let's take a lookat if you had General Motors does
this already, but they have differentdivisions, and they'll run a P and

(40:20):
L buy division. What they won'tnecessarily do is say how much money are
we making on corvettes? How muchmoney are we making on and I don't
know all their brands, but they'redifferent models. Are you looking at are

(40:43):
you looking at the profitability of anindividual product? And it makes sense when
you sell lots of them. Butso organizations that do multiple things or have
multiple plants or whatever, particularly smallerand mid sized businesses, they run one

(41:04):
P and L. They put allof their revenue together and all of their
expenses together and look at the bottomline and say, I'm not making as
much money as I want to,or I'm losing money in some cases,
and they don't know that it's oneor two specific products that have a negative

(41:29):
gross margin. They just lose moneyon every product they sell. I had
a cup manufacturer where I told themthat what they needed to do was to
take a five dollars bill for everycase they shipped, stick it in an

(41:49):
envelope, and mail it to thecustomer. They said, well, why
would I do that? Said,that's what you're doing. Every time you
sell that product. It's costing youmore than you're getting for it, and
you don't know it. And that'sthe important thing, because I also talked
about the grocery stores that know they'relikely losing money on every gallon of milk

(42:15):
that they sell, but that's okaywith them, because if you didn't have
milk, you wouldn't buy the cheeriosand the meat and the whatever. And
it's a known loss leader. Andso if you're intentionally knowing, if the
affinity of your lost leaders is positive, then you're making a conscious decision and

(42:38):
looking at a basket that makes sense. But when you don't know what you're
losing money on, then you justdon't know what you're losing money on,
right, and so you're trying tofind alternate ways to be more profitable.
But all you need to do isjust cut that one thing. Either cut

(43:00):
it or The first step is togo up to your customer and say,
I'm doubling the price and there's ait's a fancy term in economics called elasticity,
but it's really simple. That is, if you double the price and
only lose ten percent of your customers, you're still making money, right.

(43:23):
And the other good news is you'renot doing as much work. You're doubling.
You're almost doubling your revenue. Notquite because of the ten percent loss.
But if you don't know the sensitivityto price of your customers, you

(43:43):
don't know what you want to beselling things for. And a similar company
I you know, I said inthe in the thing, I gave you
the story of the black straw.Anybody who works in sort of continuous manufacturing,

(44:04):
if you look at a clear straw, A clear straw comes from new
plastic. As you add color toit, you can no longer go back
to a clear straw. When theycut straws to a length, they have
head and tail scrap, which isthe stuff at the beginning and the end
of the run. They can takeclear and put it into red or green

(44:25):
or whatever. And when you goto run the black straw, you can
stick every color in the hopper andremelt it to make new straws. And
so what I had a salesperson comeback to me and say, is our
black straws are the least expensive tomake, therefore I don't have to sell

(44:45):
them for as much to maintain ourprofit. And I said, well,
have you asked the customers what thevalue of a black straw is? And
they said no, So we asked. And it turns out that black straws

(45:06):
are sexy. Black straws are soldto bars, they're sold to higher end
restaurants, they're mystical, whatever itis. They're perceived as a much more
valuable straw than the ones you sellthe McDonald's for kids, and so they're

(45:28):
willing to pay a premium price fora perceived premium product. And so it
wasn't about how much it costs.It's about understanding what the market views the
value of your product is. Anda lot of consulting they talk about valuability.

(45:52):
I made a lot of money sixtythousand dollars an hour because new auto
coder, you're going to have language. You're gonna have to break down down
sixty your language. It was anobscure language in the year two thousand that

(46:15):
a company h use this. Thislittle routine was buried in a in a
set of programs that build all kindsof customers, and if this program broke,
they couldn't send out bills. Andso they asked me, what what

(46:36):
would you charge to fix this program? And I told them, I don't
know, forty fifty thousand dollars.They said, great, fix it.
And it took me just over justunder an hour to fix. But they
were able to build three million customersand if they hadn't found somebody to do

(47:05):
this. And so while it soundslike a ridiculous amount of money and it
is per hour, the value tothem was way way more and they were
happy to pay that money to solvethe problem. And they ignored how long
it took me because I solved theirproblem and they had a big one.

(47:28):
They may have paid a double ifif you would have known how much they
were going, you know, whenwhen they first came and you know,
I told them the price and theysaid great start. Now I said,
well, gee, maybe coach,probably even money on the table. But
I was young and I was stupid, and I didn't know charge. You

(47:49):
know. One of the things that, yeah, are the things that has
been mentioned by at least one ofyour guests well, if you read Grant
Cardones books, he says, askfor more. Yeah, let them tell
you they're not going to pay it. Yeah, ask for more. I
was just having this conversation with apartner yesterday about sponsorship. We were talking

(48:15):
about we're working on events and we'vedone them in the past, and I
have this this goal, this visionfor this new event, and in our
conversation this isn't all. This isn'tpenned out yet, so this is just,
you know, kind of like abrainstorming. I said, yeah,

(48:35):
and you know, twenty five thousanddollars for sponsorship of this nature and without
getting too far into detail right now, and she looked at me, she
goes, what are you talking abouttwenty five thousand dollars. We're just trying,
well, we'll be happy if weget twenty five hundred dollars for this
sponsorship package that we're talking about.And I said, yeah, I completely
understand. But if we start attwenty five hundred, and this is kind
of like a little sales lesson here, and this is what I was taught.

(48:58):
If we start at twenty five hundred, then there's no room to go
up. There's only room to godown. But if we start at twenty
five thousand and we build around thattwenty five thousand, the person might come
back and say, hey, lookI only budgeted for five thousand, and
that's fair. We can re youknow, look at the sponsorship package and
change it to adjust it to thefive thousand, but we're not going back

(49:19):
to the person asking them for twentyfive hundred to go to five thousand.
They've brought it down to five thousandon their own and we didn't have to
negotiate there. They did it ontheir own by us going for the twenty
five thousand. And the great partis is that if we meet a client
like yours over there and we saytwenty five thousand and they say great,
sign us up, well we mightwe could have probably asked for more.

(49:40):
But now we have twenty five thousandto work with, and now the dream
plan that we have that we havebuilt out for this event could actually come
true. And isn't that more funto play with and brainstorm around than to
worry about twenty five hundred bucks?You know, we could always figure out
the twenty five one hundred bucks,but isn't it more fun to plan for

(50:01):
the twenty five thousand and figure outhow we can make that work. Yeah,
and and it it. I learnedthis when similar. There's a different
dynamic at play here as well,and I see it. And if I
came to you and offered you abrand new Catillac for five thousand dollars,

(50:25):
would you take it? The answermight be no, right, because what's
in your head is what's wrong withit? Right? Value? What?
Yeah? So things that are pricedbelow their perceived value are under bought because
somebody is always saying, no,that can't be right. That's there's something

(50:50):
that I'm that they're not telling me. And in the bread business, you
actually have to put more low onthe shelf. Then you know we'll sell
because no one will take the lastloaf of bread off the shelf. Now,

(51:12):
granted this is in normal times,and I live in Florida, and
when the hurricanes come through or whatever, they'll clean the shelves, that's right.
But under normal circumstances, a lonelyloaf of bread where there should be
dozens, it doesn't get bought,and it'll sit there forever because somebody's saying,

(51:32):
why, what's wrong with that loaf? I mean, I experienced it
and I know about this concept.You know, I experienced it when I
go grocery shopping and I see somethingfor a couple cents more than the item
I'm buying, or a dollar orso more than the item I'm buying,
and I look at that brand,I look at that that item, and
I go, what makes it better? And I start I start analyzing the

(51:55):
two, and I go, whyis that one better than what I'm buying?
And I'm like, and I knowI'm falling for the trick. I
know I'm falling for the trick.There's nothing better about that item. Maybe
they'd spend more on marketing, andthat's why they got to charge a dollar
more. But sometimes and I think, you know, in your experience,
it's really just they're they're they're creatingthis idea of more value just by adding
a few more scents to it,and it's making me, as the consumer,

(52:17):
think this has more value than whatI'm buying. Yes, And and
it's it's funny. Grocery stores havea thing called center store, and then
there's the specialties. Right when yougo into a grocery store, there's all

(52:38):
the aisles in the middle that containingbranded product, right, And if you
went from uh down here. It'sPublics and wind Dixie and whatever. But
if you went into one brand's storeand went into the other, you have
a reason to believe that all thecheerios are the same. Right, these

(53:00):
guys are not Publics is not sayingI have better cheerios than the other guy.
They can say we have a betterbakery, we have better fish,
we have right, this is whereyou can distinguish on product. Distinguishing on
product is all done by the manufacturer, the marketers, the whatever. Right

(53:22):
they're selling you frosted flakes over cheerios, and they're creating the the the differentiation
and value up kinds of things.But other than putting them on sale or
whatever, prices don't generally change.And you've got to be competitive with the

(53:45):
next guy down the street and soand so. Now what is interesting.
You know, we talked some aboutwhat I call skew rationalization, and skew
is what products should you carry?And you're talking the kue what products should

(54:09):
you be carrying? And it fallsinto that are we doing the right things
correctly? Right? What should webe stocking? Where should we be placing
them? And I think I wroteto you about the story of the giant
bear versus ps. And in retail, there's a concept called Jim Roy gross

(54:34):
margin return on investment, which theformula for it is your gross margin divided
by your average inventory. So ina grocery store, if you look at
ts, you only make about apenny or two. You make a very
small amount on every can of peasyou sell, but they have such a

(55:00):
velocity that you can restock that shelfover and over and over and over and
over again, and they just keepflying off the shelf and you only spent
I have to spend one hundred dollarsof inventory to get multiples of that for
that same one hundred dollars. SoI was working for a toy manufacturer or

(55:22):
toy retailer and they had this giantcandle bear, you know, like you
see that the people carrying this giantbear into the maternity words it took up
and they were really proud of itbecause it had like a four or five
hundred percent gross margin. And Isaid, that's wonderful. How many of

(55:45):
them do you sell? That's whereyou're going. And they'd say, well,
we've got to wait for that onerich uncle to walk in and buy
it and take it to the maternityward. We don't sell that many of
them, and so I say,well, gee, maybe you want to

(56:07):
think about selling something else. Butthen I began to think about the eye
an investment and think about the amountof shelf space you use. I mean,
when you go in any retail storelike a grocer, they only have
a fixed amount of linear feet ofshelf space. So it's not just how

(56:31):
do you use a dollar to buyto buy the product that will generate the
most gross margin, but how dowe use a linear foot of shelf space
to generate margin? Because if Itook that bear down and put canned peas,

(56:52):
I would both have a lower fashioninvestment, but I would have a
lower linear foot investment as well.And so thinking about investment across it,
across all of its things, whetherit's time, and this comes back to
the notion of when I start pullingpeople's p and ls apart, maybe rambling

(57:21):
back to a starting point. Whatyou have is a lot of companies that
look at fixed and variable cost andthey don't put enough of that fixed up
into the variable when they're thinking aboutthe profitability of their products. When you

(57:43):
have a manufacturing plant. Some productsrequire a lot of electricity, where some
require none at all, very littleat all. So energy, heat,
other things can be consumed in largequantity by the production side of the world,

(58:05):
and when you simply lump them intoutilities, then it becomes overhead and
you don't attribute that cost to theproduct. When you don't look at build
material costing, and you buy certainlinear feet of wood, let's say,
and it all becomes scrap, andyou don't attribute the scrap to the product

(58:30):
you're making, you're under costing thatproduct. And so by rethinking sort of
the overhead, is it really trulySG and a sales, general and administrative
kinds of costs the things we consideroverhead, can we really tie products more

(58:55):
of the overhead to the product.When you think of where house space,
a warehouse costs you so many dollarsper square foot, you can think of
it as cubic feet because you goup, but a lounge chair takes a
lot more of that space than pickanother small product. And so when you

(59:23):
begin to start looking at your fixedresources and what individual products take of that
fixed resource, you can then beginto ask yourself whether or not you're dedicating
the right amount of that fixed resourceto that product. You know, is

(59:45):
it consuming more than it's worth?And that comes to the gross margin return
investment. Everything that you have that'sin a fixed quantity is an investment.
Are we use a lot? Arewe utilizing this space to its greatest advantage?
Which is why we I was justgoing to say, which is why

(01:00:07):
we see now at those Marshals andTJ Max's that the lines they've maximized how
to use a line where you don'tjust check out anymore. It's like you're
going through a maze of sales.Yes, yeah, yeah, that's true,
and that I hadn't thought about that, but yes, it's maximizing space

(01:00:30):
instead of those rope lines. Theysaid, all right, well, yeah,
you know you think about advertising,which I think operates in terms of
eyeballs, but it isn't so mucheyeballs as it is eyeball minutes. And
when you're standing in a line,we have nothing to do but stare at

(01:00:51):
these products. And so your numberof eyeball minutes on that crazy cat oven
mitten, yeah, you start thinking, start thinking about all the uses,
all the people who would get akick out of it, and all of
a sudden it clicks and you go, oh, you know who would get
a kick out of this? Letme buy this crazy cat of and my
landlord would love it. And thatfive bucks is right out the window.

(01:01:12):
You know, it makes me thinkof this book that I'm crying my pocket.
It's in the yeah, you're butyou know, it makes me think
of the book. The compound effect. I don't know if you know it,
the comp right, and the andthat every five dollars you spend today
is actually equating two hundreds of dollarsin the next couple of years out of
your pocket in terms of investments andwhat you could have done with that five
dollars. And the other thing Ithink about concept that he brings up,

(01:01:36):
and I'm sharing both intentionally so thatyou can maybe elaborate on them, is
the other one that he brings up. I equate to your peace story there
in that he talks about the personwith a penny taking several pennies a day
and compounding that their interest compared tothe person taking three million. Right,
do you remember that that scenario there. I'd love for you to share a
little bit about that. I thinkthat that's that was such a good way

(01:02:00):
great concept. Well, if youif you take a penny and double it
every day, right, I forgethow many times, but it's just one
to the one, raise to somepower. You get to multiple millions of
dollars in not that long a periodof time. Yeah, he did it.

(01:02:21):
He did it as his equation didit in thirty days, and so
I don't know if it was thirtydays. Thirty becomes very But the power
of compounding, and the power ofcompounding is not just pulling one lever.
But there's a reason why organization andorganism are related words, right, I

(01:02:51):
mean, this is one of thethings that we have a lot of the
and you got to keep remembering whenyou're in turn around situations. There any
change situation is that like the movieSoilent Green that says Soilent Green is people.
Well, organizations are people, right, They don't move themselves. They

(01:03:14):
don't make decisions. The bricks don'tmake the decisions. It's the people in
them. And so when you affectone person, you don't just affect one
person, You affect multiple people.When you change one part of an organization,

(01:03:35):
you change multiple parts of the organization. And more importantly, when you
change two parts of the organization,because oftentimes one engineering relies on manufacturing,
lies on whatever. As you makesmall incremental changes in the chain of production,

(01:04:00):
you multiply the eventual profit improvement byjust taking small steps in each segment
of the chain. That compounding effectcreates a much bigger profit improvement. And
so the idea of taking a pennyand doubling it is a small change right

(01:04:29):
away, and you find that youdon't necessarily have to make tremendous changes in
an organization, but just get linkedto organizations in a chain to make small
improvements, and the compounding effect hasa big bottom line impact or upturn.

(01:04:54):
It's and I'm going to go backto that P and L conversation that we're
just having kind of related to theinsurance world. We experience it here,
you know, with our own company, where you know we're are our commission
structure that we get paid for bythe carriers is much greater when dealing with
home and auto, the and someand and commercial too, but I'm leaving

(01:05:17):
commercial out intentionally, but dealing withhome and auto, and when you think
about home and auto, it breaksdown to where you're actually getting paid more
for the bundle or for the homethan you are for the auto. But
to your point that you had saidearlier, it's like, if you don't
sell auto insurance, then you're notreally going to get much home insurance.
So I got to sell the auto. But where I'm going with this is

(01:05:41):
then when we go into the commercialspace, and more specifically the contractor space
and the high risk space, sonot just contractor but just high risk,
you actually get paid a lot lesson these on these types of cases.
And I'm going to say this,and I'm speaking to it from a small
insurance agency. I know that there'sa lot of larger insurance agencies who have

(01:06:04):
a different structure and payment structure fromtheir carriers, and they're different programs on
how they get paid and everything.So I'm speaking to it from who we
are. We're a small, smallindependent agency only for three of us on
the team. Four of us nowon the team, and we work through
the carriers and this is kind ofhow we deal with them. But what

(01:06:27):
I've learned on my P and Land what you're talking about here is that
when I'm dealing with these high riskcases, we get paid so much less
on them, and there's so muchmore work on them that we're losing money.
To your point, and what Iactually made a note what I just
picked up from you, is there'san opportunity on these cases where we can
actually charge a broker fee. Andit's very rare that I see a brokera

(01:06:48):
fee charged from small agencies like myselfto these types of high risk cases,
and it's because they don't want tolose them. But I think with what
you're sharing here and what I'm learningis that that elasticity conversation that we just
had a little earlier in that ifI charge a broker fee to these high
risk cases, well then we're gonnamake a little bit. We're gonna actually

(01:07:09):
make a profit off of bringing inthese high risk cases, and we're gonna
get the ones that we probably wantbecause they're willing to pay that brokera fee
with us, and they're gonna beworth keeping on the books versus the ones
who don't want to pay the brokerfee. And that is a true conversation
that we as a team have,is you know, when we're onboarding these
high risk cases, is it somethingthat is it a case that we want?
But then how do we say noto it. How do we turn

(01:07:30):
it away? And the answer isright there, it's charge a broker fee.
It's it's either taken in charge ofbrokera fee and actually make money on
it, or charge a brographee andthey're gonna say no to you. Yeah,
it is a It's funny how economicsone oh one gets missed by a

(01:07:53):
lot of people. I mean Imissed it until just now. Well no,
But what I mean by that is, if you want to sell less
of something, charge more. Raisethe price, right, charge more.
And so somebody says, all I'vegot more business than I can handle.
I tell them, okay, raiseyour price right. Some of them will

(01:08:16):
leave, some of them won't signup with you. But if you have
more than you can handle, truly, then you don't want them anyway,
and you'll just get more for thepeople to stay. And going back to
another part of the conversation is thosewho stay and those who are willing to

(01:08:38):
pay your higher fee implicitly, maybeeven explicitly, value you more. If
they're willing to pay more for that, they believe you're worth more. And
that's kind of the kind of customeryou want, right, People who think
more of you. So it's whichthen goes into retention and loyalty and loyalty

(01:09:03):
and retention loyalty, yeah, whichis which retention and loyalty are are huge.
Uh. You know you talked earlierabout the product that you went into
the grocery store and you saw wasworth was charging a few more cents.

(01:09:26):
Oftentimes that's nothing more than brand loyaltyor brand and not brand identity identification.
Right, somebody who advertises a lothas brand awareness. But somebody who has
tried a product, loved it andnow comes back and is willing to pay
more for it because they've tried itand loved it, that's brand loyalty,

(01:09:50):
which is far more valuable than brandidentity. Yeah. And I mean we
see it with so many different brandsthat are out there where you know they
have such a fo I mean,the Jordan brand has a cult following,
doesn't matter how much that sneaker goesfor it is a loyal following. And

(01:10:10):
then you have the other sneaker companiesthat that come up that pop up on
your on your feed that are newsneaker brands and they'll sell a bunch and
then next thing you know, they'regone. But I think that that speaks
to that brand awareness is they'll sella bunch because they made you aware of
them, they sold them, butthey don't have that loyal following that like
the Jordan brand has. Yes,But the interesting thing on that is Jordan

(01:10:40):
brand had to do something after theygot you to buy them. Right,
It's fine to be that new brand, but if if they didn't see value
after they were bought, then theyget dropped. Jordan may have a culp
following, but ultimately, once youbuy that pair of sneakers, if they

(01:11:04):
don't perform, if they fall apart, if they don't have that extra Yes,
there's a certain I've got Jordan's lookat me. We saw it in
jeans in the eighties, right whereif you had jordash on your ass,
then it was something. Right.I don't know that they were any better,

(01:11:26):
but the name carried with it something. But if they if they fell
apart, then you they wouldn't continueto sell them. So there's a there's
a lift that comes from that cult, but it's not enough to sustain you,
right, right, you know,you know, we kind of went
into the idea of working with acompany and you're doing turnarounds and working with

(01:11:50):
a company that is looking at becomingmore profitable, obviously turning a profit,
maybe converting losing sales and profitable sales, winning sales. Uh, let's go
a step further here. I'm interestedin you mentioned bankruptcy attorneys, and I'm
interested in how do you work withcompanies organizations. I love the I love

(01:12:13):
the correlation by the way. Imake sure. I want to make sure
this isn't lost on anybody of organizationand organism and equating them to each other,
and that this is people we're talkingabout, not brick and mortar.
So when you work with an organizationnow that you know you may have they
may have gone through the scenarios oftheir P and L and discovered what they're

(01:12:34):
losing money on and they've gotten ridof that, but they're still not profitable
enough to you brought up what yourdad had said, make more sales or
pay their creditors and do things differently. And so they're really looking at,
you know, maybe closing their doors. How do you work with this company
to be able to help them maybenot close their doors if they don't have

(01:12:58):
cash flow, to be able tomake the changes that are necessary. Well,
most people, bankruptcy and insolvency arenot the same thing. Okay.
Insolvency is out of cash, outof credit. Bankruptcy is a solution to

(01:13:23):
that condition, if that makes sense. It is a process by which you
trade supervision because the court oversees whatyou do or protection from giving you room

(01:13:43):
to solve your underlying issues. Butno company emerges from bankruptcy as a poorly
run company. I'll say that tonguein cheap, right, But in order
to be successful after bankrupt you've gotto have an underlying business. And I
say that in light of someone likebed Bath and Beyond is using bankruptcy to

(01:14:13):
close itself down because they don't seea viable business after the bankruptcy. General
Motors used bankruptcy. Other companies haveused bankruptcy to restructure debt, push off
creditors, not say push them off, but renegotiate with creditors. But they

(01:14:35):
use the space within bankruptcy to setthemselves up for future success. And that's
sort of where the restructuring and turnaroundcomes into play. Any company that and

(01:14:55):
this is for the most part,there have been companies like Dow Corning that
is believed to have been in bankruptcyforever, not because they weren't cash flow
positive or whenever, but because theyhad this huge breast implant liability that put

(01:15:15):
their books underwater. You have companies. The headlines are full of companies that
have filed for bankruptcy, and thecreditors say that it's bad faith, a
bad faith bankruptcy. They have cash, They're okay, they're just using the

(01:15:39):
court in a way that it shouldn'tbe used. But bankruptcy is a is
a legal process. It's a it'san envelope in which a company can restructure
itself and rework it's debt, reworkit's related ship with predators, and come

(01:16:01):
out the other end as a healthy, functioning company. And so you know,
we don't deal much differently with acompany that is in the course of
a bankruptcy as any company that wantsto change. Sometimes the change is simply
more urgent, more things have tobe changed, but just change healthy companies

(01:16:31):
those watching cash flow. I mean, you can discard unprofitable business sectors and
customers well before you need to usethe bankruptcy system to shield you. It's
just that you do it within theumbrella of a bankruptcy and it's just a

(01:16:56):
legal process and a formality. Thereare bankruptcies where right now, where companies
are failing, they don't want tocontinue, but they still have something valuable
want to sell the company, andthey merely use the bankruptcy process to make
the sale happen. The creditors andthe debtor have reached a set of terms,

(01:17:24):
everybody agrees, and they basically walkinto court saying this is what we
want to do, and it justgets a legal stamp of approval that okay,
go forward if and then you getthe objections or the time period that
it takes for that. Yeah.I always wondered how that worked when when

(01:17:45):
you see these large companies that filefor bankruptcy as you mentioned, like GM,
but then they're still continuing and you'relike, well, wait a second,
I thought they want bankrupt. Yeah, they don't go bankrupt. They
use bankruptcy solve an insolvency problem.Hm hm or liked Bath and Beyond,
Like it's gone through linens and thingsand bed Bath and Beyond and then it's
like all these different names and soit's the same and it's and it's typically

(01:18:08):
the same company. It feels likeit's the same store with a different name
on it. Right, And therewas a there was a restaurant chain called
Sweet Tomatoes that simply closed and Idon't think they used bankruptcy. And Sweet

(01:18:30):
Tomatoes was a salad bar restaurant,and when COVID came along, there was
no make the salad and take itto the front door. Right. It
was their Their entire business model waseclipsed, overridden by the restrictions that COVID

(01:18:56):
placed on it, and they simplyclose the store because they didn't see a
viable path, or at least aprofitable path to get them through to the
other end. I'm assuming I nevertalked with them, but you certainly can
see that a salad bar restaurant whenyou're not allowed to go into restaurants,

(01:19:16):
would have trouble. Whereas a lotof organizations that sold muffins and coffee simply
moved a table out to the frontdoor, opened the door, and then
handed these coffee and muffins to peopleas they passed by on the sidewalk.
Who could keep six feet a distance? Who could you know that there was

(01:19:40):
an operational mechanism to continue their businessdiminished as it may be, there was
a way to work within the newguidelines. You mentioned too that you worked
with smaller companies, and so we'vetalked a lot about some big companies,
and I'm interested in some of thethe work that you've done in terms of
turnarounds for smaller companies and how you'reable to work with these companies that maybe

(01:20:05):
don't have the same resources that theselarger companies have, and how you're able
to help them turn what's going onaround well in the smallest cases, the

(01:20:27):
smaller companies generally have less complex issues. There there's not large syndicated debt that
has to be The debt is withthe bank down the street. The products
are not that varied as you likea larger organization. If once you get

(01:20:53):
them over the hump of admitting thatthey have a problem, they're willing to
come into group settings and share witheach other how they address problems. And
so I do a number of groupkinds of converse group coaching, group conversations,

(01:21:17):
help people set up their cash flowmodels, teach them more. Again,
these are generally, I don't wantto say less sophisticated, but certainly
less complex. They don't have thousandsof creditors, they don't have right they
know who they're paying their money to. The numbers are just smaller, both

(01:21:42):
in scope and volume and so,but because people are people, and in
some ways the smaller organizations are aremore difficult. And by that one I
mean is there's a very different emotionalconnection to the business from when you're the

(01:22:10):
CEO to when you're an owner,to whether you're the founder. When you
have a founder or the son ofa founder, your emotional commitment to the
status quo is much higher your attachmentto that as much time and more time
is spent with a smaller organization,or at least in those kinds of situations,

(01:22:35):
helping them understand that you're in businessto be in business, not to
make the product the way your grandfathermade it. Now, if you want
it to be a hobby, ifyou don't want to make money at it,
then it's a hobby and that's okaytoo. But if you want to

(01:22:57):
be in business, let's talk abouthow we can help you make money.
And so moving from a large organizationto a small organization doesn't really change the
approach to things. It just bringsin. It brings the team closer,

(01:23:23):
It reduces the complexity of the models. It allows for a little more rapid
change should they try to choose toadopt it, because there are fewer people
to go through, fewer layers inan organization to go through. But the

(01:23:43):
honesty and what we call integrity andintegrity is not a moral thing but more
a principle of being whole. Areall the same. They work, work
the same way. People work thesame way, They think the same way,

(01:24:04):
they feel the same things. Theyoften want the same outcomes, and
the smaller organizations generally have more attachmentto the people at the top. The
people on the assembly line of GeneralMotors often couldn't tell you what the name

(01:24:27):
of the CEO is, and thesmaller organization they've been with Joe for since
they opened the bun shop or thewhatever. Right, but I look at
and help. I call it thebol and dye shop syndrome. A tool

(01:24:55):
and die is a kind of thingthat happens in Detroit. They're the people
that make these widgets that help theauto companies bend the tailpipe so that it
fits on the corvette. They havecheck fixtures, and they have wiring layouts
that are just plywood with pins sothat the wiring harnesses can be laid out

(01:25:19):
and built. And these are thepeople that make the things that help the
big manufacturers make the things that theydo. And you go through an apprenticeship
or you learn how to do allthis and then you say, hmm,
I can open one of those onmy own. And they open it and

(01:25:42):
they find that they're a great tooland die maker, but they're a terrible
CEO, CFO COO. They justneed to get back on the floor because
that's where they belong. And soa lot of times in the smaller organizations,

(01:26:05):
I just say get out of thefront office because without you doing what
you do, your customers are notas happy and that's causing you to lose
money. I was watching a videothe other day Russell Brunson, who does
click funnels. Yeah, yeah,very familiar with him, and he was

(01:26:28):
talking with Tony Robbins and he wasstruggling with in this video should I step
down as CEO? I'm like what? And he faced the same kinds of
things he built this company. He'san excitable character. He's an exciting character

(01:26:48):
to watch. Yeah. He's highenergy for sure, high energy, and
his product is innovative, and neat, and he's excited about it. When
he began to talk about running theclick Funnels business, he turned off.

(01:27:11):
He just like and for something toturn him off is like, it's like
taking the batteries out of the energineeryour bunny. Yeah, And he realized
and was told and I had neverseen this before. I mean I said
it with companies before, but thensaw it with someone like him that said,

(01:27:33):
go back to doing what you love, because what you love makes your
customers far happier. And find somebodywho loves running the business who gets excited
geeked up about looking at financial statements. It's not your thing. Don't try

(01:27:55):
it. You're bad at it.You don't like it, which makes you
worse at it. It's funny.It's the opposite of the emath, you
know, Michael Gerber's book of likeyou know, taking the baker out of
the bakery to run the business,working on the business rather than in the
business. This is like, goback to working in the business. You
need somebody else to work on thebusiness for you. Well, I think

(01:28:16):
that, yeah, But but Ithink when you read that, it's it
has to do more with if you'reworking in the business. You're not paying
attention to what's going on around you. You're not paying attention to what's going

(01:28:40):
on you, and you do not. And I tell people this all the
time. An accountant, a goodaccountant cannot make your company great, but
a bad accountant can cause you tofail. Right, So it's it's it's
you need the product, you needthe chief chemist, you need the great

(01:29:02):
engineer, you need the Russell Brunsonthat is out there creating excitement beyond what
anybody else can do. But thenyou need the person to run the business,
to monitor the cash flow, tosay, hey, I mentioned we
talked about Grand Cardot that pushes sales. Sales, sales, sales, and

(01:29:26):
I'm like, well, wait aminute, wait, win sales is not
the answer. Starting with sales islike running on quicksand right, you know,
if you're not selling a profitable product, don't sell it. Yeah,

(01:29:47):
that's what we were talking about earlier. And so I think it's great that
when you want to transform a salesorganization you go to people like him or
people who know how to effectively frame, motivate whatever sales organization. But until
you've given them profitable products and guidelineswhat's going to put cash in the bottom

(01:30:12):
line. Then you're simply making abad problem worse by increasing sales. Yeah,
I was just listening to a podcastabout a company that did just a
tremendous amount of sales. They werea skincare or haircare line, and they

(01:30:33):
got into Sally's nationwide. They gotinto they had started their contract with eight
thousand stores or something like that,and then they ended up in all the
stores and sales were through the roof. And when she was asked about this
about like, you know, salesare through the roof, what's going on?
How's the business? You must bedoing great, and she said,

(01:30:53):
no, we weren't. And itwas to your point, it was the
accounting. They weren't profitable. Theywere it was costing them more to ship
out. It was all of theissues that you've kind of outlined in this
this meet, this meeting today,this conversation that we've had today, she
had and she said, you know, when you looked under the hood,
you know, on the outside,we were making kill our sales, we
were crushing it. But when youlooked under the hood, our profit margins

(01:31:14):
were thin because of the different distributorsthat we were selling to our profit margins
were thin because of the manufacturer wewere working with and all these different things,
and so they weren't profitable and theywere selling, they were doing millions
in revenue, but they weren't profitable. So it was wasn't until they changed
that that they became a profitable business. And you see this a lot in

(01:31:36):
rapidly expanding companies. It's a lotlike the problem that Los Angeles had with
its roads. Right. Never expectedthere'd be that many cars on the roads.
We didn't build the roads to supportit. And so you have this
garage sized skincare operation. And I'mnot saying I know you're this person you're

(01:32:01):
talking about, but figuratively, youhave somebody who has a great idea.
They start it in a garage,they sell it from their home, they
put it out on the internet andthey say, boy, I hope we
get one hundred sales today, andthey get four hundred thousand, and they
go, well, we don't havethe infrastructure to support this. And unless

(01:32:31):
you sort of put the brakes on, things grow at a sustainable pace and
realize that with growth, with growthcomes even more complexity and infrastructure. And
when you were doing it with.When you were Steve jobs in Wozniak building

(01:32:56):
Apple computers in your garage, youknew who you were working with. You
like them. I think they likedeach other. Maybe they did, maybe
they did, but they knew whothe other person was, right, and
and I could you know, onecould look over at the other and know
what they were about to do givena situation. Once you grow an organization,

(01:33:18):
you know less about the people inthe organization. You're less attached to
them. They're less attached to youand dedicated. And I've had companies that
I say, do you really wantto grow? Do you really want the
added complexity, the distance from thepeople, the it becomes impersonal, you

(01:33:42):
know, it is that what youwant? And some people doing some people
don't. Some people don't know whatit's going to look like when they get
four hundred thousand and they've got factoriesand have to travel to Asia. I
don't know what it's like to getout of sit on a plane for twenty

(01:34:03):
four hours and I don't have themoney for first class, so I'm sitting
I'm sitting in the back, youknow, And I gotta do this every
other month. Yeah, this isa drag. Isn't that fun? Got
it? It's funny. We werejust actually just talking about this with my

(01:34:24):
business where we're situated in the HudsonValley, and it was looking at our
local chambers and then expanding into theWestchester chamber or the Saratoga chamber. And
it was interesting because we have clientsin the Saratoga region and when we were
talking about Western room, I'm like, I was thinking exactly what you just

(01:34:44):
said. I was like, well, if I'm going to spread myself thin,
I'm going to need to spread myselfthin where my clients are, not
where they're not, you know,because both are good regions for us.
But in terms of like my timeand being able to go back and forth,
yeah, Westchester market is a fanantasticmarket and it actually is quite It's
actually a lot a bit closer tome than the Saratoga market. But when

(01:35:05):
we think about to your point ofwhat we're talking about here in terms of
like understanding that growth and what itlooks like, if I'm going to be
going down to Westchester all the time, I'm still going to have clients call
me in Saratoga. I got togo up there. Now, I'm going
back and forth and pingponging four hoursdifference between each other, three hours difference
between each other. It doesn't makesense. So it makes more sense to
go to the Saratoga region start continuouslybuild that out and eventually build out the

(01:35:30):
Westchester. But it has to dowith that thought process of growth of how
can we sustain it? You know, you know, how can I sustain
being able to go to trade showsand networking events on both ends? I
can't sustain that right now, youknow. So it's interesting, it's it's
all of that. When you talkabout a product like beauty care, we

(01:35:51):
have a differentiator, and sometimes thatdifferentiator is handmade, natural ingredients, whatever
made you you right, And that'syou know, it gets back to your
unique selling position, and as yougrow your organization, you begin to have

(01:36:14):
less and less control over that uniqueselling proposition. Now you're going to a
factory far away and you've got toare they doing it the way? There's
there's complexity, there's headache, andyou've got to decide whether that's something you're

(01:36:34):
willing to do and whether it getsyou to where you want to go as
a smaller organization. Larger organizations,those with CEOs and boards and whatever our
faced with it. You know they'redifferent, right, It's not as personally

(01:36:55):
impacting as it is with an owner. Yeah, I mean, you know,
this has been a really great conversationaround this. I think we've gone
through several models and situations here,which is which is really cool. I
feel like this interview that we've hadtogether, this conversation that we've had together,
has been a great learning process forour listeners and for myself in our

(01:37:17):
businesses. And there's so much tounpack and ravel in everything we've talked about.
And you know, one of thethings that I want to highlight here
is going back to the P andL because so many businesses are taught to
live and die by their P andL. Well, we don't want them
to die by it, but wewant them to live by it. And
one of the things that I wantto make sure that we highlight for everyone

(01:37:41):
is breaking that P and L downto what's profitable. And I really liked
your analogy there of like you gotGM and if you were to put in
your P and L, if you'relooking at yourself as a small business owner
and you're saying you own, let'ssay an auto manufacture a small one.
You have your P and L,you have your profits, and you put
cars and then you put suv.That's the issue that you are identifying there

(01:38:02):
is that that's what most small businessowners. That's what most business owners do
is they put cars, they putSUVs. And what you're saying, and
what I want to make sure wehighlight for everyone here is that we don't
just say sedans and SUVs. Wesay Cadillac. We say not Cadillac,
we say Malibu, we say Corvette, we say Escalade. We say we

(01:38:25):
name each individual one and we understandwhat their profit is and we understand what
their losses so that we could startmaking decisions. And I think what you're
saying here, and I love thisterm is informed decisions on what we're doing.
And you talked about also these lossesof like okay, in our let's
say, on our on our floor, you know, on our sales floor,

(01:38:46):
we might learn that corvettes are alosing proposition. But it gets people
to come into our sales floor andbuy the Malibu. It gets people to
come in, just like the gallonof milk. It gets people to come
in. They come to our salesfloor, they speak to our salesperson,
and the Corvette is why they're there. But they might be priced out,
and it also maybe it's not pricedout, but you know, a two

(01:39:06):
seater might not work for their family, and so they buy the Malibu,
they buy the minivan, and that'swhy, you know, that's part of
it. So I think it wasso important. I love how you brought
that up. I love how youarticulated that. What I want to say
here, and before we get intoyour mantra, because I want to talk
about your mantra, is we havea unique opportunity you and I and we
talked about this early on, andI want to share this with our audience

(01:39:28):
in that we already knew going intothis conversation that we were going to have
a follow up interview to this.And what's really cool about this for our
audience here is that today we're havingthis conversation via zoom and you're in Florida
and I'm in New York. Andthe coolest part of how we opened up
our dialogue and learning that we weregoing to have a follow up to this

(01:39:50):
is that when I mentioned to youthat we're in Poughkeepsie, New York,
I would like you to actually takethis story away from me and you share
it in your own words for ouraudience here as to why we're going to
have a follow up interview and whyyou are going to be right here in
the iHeart Studios and Poughkeepsie. Whatsignificance it has for you and your family.

(01:40:10):
Well, as it turns out,my my partner girlfriend at sixty,
yeah, girlfriend just seems he makesit makes it makes sixty young right and
find oh yeah, but but herfather came in from was an immigrant and

(01:40:32):
came into Poughkeepsie. And what I'veseen is is pictures of a train station
in Poughkeepsie, the Poughkeepsie train stationwhere his likeness an artist put the likeness
up. I think it's a stainedglass that's up there. Uh, And

(01:40:55):
it may or may not be therenow. But he wrote a book.
I think the name, I thinkpronunciation is lp Pebay, but that talks
about the immigrant experience him coming in. And there's there's some family that's still
there in the Poughkeepsie area, andI think she would be happy to come

(01:41:15):
to Poughkeepsie and and we'd have combineit be a family like vacation. It's
it's and she loves New York anywaytoo, So it was so cool when
you first started speaking to me aboutthat, when we when we first turned
on to zoom that, you know, I got excited. I'm excited right
now because, uh there, there'sno way that you're going to go to

(01:41:38):
that train station alone with her.I'm coming to meet you guys there,
We're taking we're taking pictures. We'remaking a fun day out of this,
that's for sure, because this issuch a it's such a cool story to
share. And then of course,you know, having her her dad's likeness
painted there, I have a feelingI know what you're talking about. I'm
actually interested to go there today andgo find out and take a picture of

(01:42:00):
it and send it to you,so I'll see what I can do.
But for our audience members, thisis why I'm sharing this with you,
is that this is really cool andwe knew this going in and that's why
we were able to really dig intosome concept and we didn't have to wrap
up in a timeframe because we knewthat we would be having a follow up
interview. So if you like thisone, stay tuned because we're gonna have

(01:42:20):
Larry on again, and he's actuallygonna be here in studio. So this
is really really cool. So allthat being said, what I do like
to do, and you know,it's it's kind of serendipitous that this happened,
is because the way that I typicallyconclude my show, all of our
shows is with a mantra, iswith me maybe a hobby that you do,
or a mantra and you elaborating alittle bit on this mantra, and

(01:42:43):
it's so cool. What's so funnyabout this is not knowing that we were
going to do a follow up show, is you actually put two mantras in
your intake form. You didn't putone, you put two. So we
have one that we're going to dotoday and we'll have the second that we'll
do when you come back. Andthe first one that you put here that
I thought really goes well with ourshow today was a mantra that came to

(01:43:08):
you and from AA and doctor Philsaid more plainly as you said here,
is that you cannot change what youwill not acknowledge. And I think it
speaks to so many things that wejust talked about about acknowledging your p and
l acknowledging your people acknowledging everybody.But I'm interested into this quote for you

(01:43:29):
and its significance to you in yourlife. Well, I think, as
we've talked, not only in mylife. I mean, it's very difficult
to do to yourself to say,you know, and I put on the
other form because I'd learned these thingsfrom movies. You got Buck Rubanzai across

(01:43:51):
the eighth dimension, who is famousfor having said, wherever you go,
well there you are. And Iuse this a lot in turnarounds and use
it because if you don't start withknowing that you are where you are,

(01:44:12):
let's not put let's not use blame. Blame is a is a useless amount
of energy that we all define andaccept that you're either in serious trouble or
you want to change, or whateverit is that you say, this is
where we are. And it differsfor every company. We're losing money,

(01:44:35):
we're wanting something better, we're lookingto move into a new new market.
This is where we are. Uh. And so you can't move forward unless
you acknowledge where you are. Youcan't begin to make money if you don't

(01:45:00):
accept the acknowledge that what you're doingisn't working. And you know, that's
what doctor Phil said. And withAA, they say, you've got to
first acknowledge that you have a problem, because you can't fix the problem unless
you acknowledge you have one. Andthere are a lot of organizations that think

(01:45:25):
that if they ignore it, itwill go away. It doesn't. It
generally gets worse. And so Ijust have always felt that the starting place
is a blameless, honest acceptance ofthe current condition faced by the people and

(01:45:49):
the organization, and from that youget a very solid platform from which to
move forward. I absolutely love thatabout acknowledging where you are and and you
know, knowing who you are.I think that you know, I speak
a lot about mindfulness and checking inwith yourself, and I think that that

(01:46:12):
has a lot to do with it. Is that you know, when you're
checking in with yourself, when you'rechecking in with your business and you're uncovering
some of the pain, it's it'sacknowledging that pain and then trying to figure
out how to fix it. Andyou're one hundred percent right, I mean,
like you know, and and we'reall I can't say we're all guilty
of this. I certainly am oflike you know, when something's painful,
we want to ignore it. Wewant to ignore that pain. We we

(01:46:33):
don't want to look at it orfeel it. You know that ignorance is
bliss because you know you're able tojust continue moving on, move on,
sell more, sell more. Youknow that'll solve the problem. But you
know, until you acknowledge that problem, you're never going to fix it.
And as you said, it's justgoing to grow and get worse. So
I really love that you brought thisup and brought this to the show today.

(01:46:56):
So there's there's two questions that Iknow are still out there. Is
you You mentioned it early on yousaw me kept looking left, So one
is what's to my left? Andwhen you're in studio you'll see the full
effect of it all. But whatI'm going to do for everyone and for
you is just change my camera angleso you could see this is the all
of the controls are here to myleft. So that's that's what I'm looking

(01:47:16):
at. And I checked to seeif this is recording properly, and if
we're still recording where we're at inthe show, where your audio levels are
and all of that, So thatthat's what I keep checking in on every
once in a while, and it'salmost like almost like a tick that I
have. And same thing with movingthe microphone. The other one, I
think it's a technician that's saying areyou Is this guy glittering your what?

(01:47:39):
No? No, no, no, it was me. The other question
that I know that we all havethat's burning inside that I have to know
as a basketball player is if youwere five to nine in the fourth grade,
how tall are you now? Wow? Okay, so you had a

(01:48:00):
big growth spurt when you were younger? Yeah, yeah, yeah, and
it and it stopped. Wow.Yeah, I have no one often believes
me, but I got pictures ofmy brother and I playing hockey and he's
at my waist. He's one yearyounger. It was a fluke thing.

(01:48:21):
It was a fluke thing. Theyyou know, they the doctors predict from
you know, a curve, I'mgoing to be seven foot something or other,
and it just didn't go that wayright right, Like you know,
Tony Robbins had something like that withthe growth hormone that kept happening for him
later on. So he had itlater on in life where he had a

(01:48:43):
huge growth spurt later on in life. And they had thought it was a
tumor in his brain from what hedescribes in his story, and and turned
out that it was like growth hormoneand next thing, you know, I
mean, the guy just ended upgrowing later on in life. Is from
what I understand from what I mightremember. Actually I don't know, but
yeah, it's growth hormone thing.But he makes it work for him.

(01:49:04):
He's a fun character to watch.He has a fun character to watch this.
This has been a ton of funlearning from you. I feel that
I just I just took a PhDcourse in business here today. Was it
was fantastic and you really lay itout really beautifully for our audience members and
for myself to understand the concepts.And I can imagine why you're able to

(01:49:28):
lecture at the University in Florida there. So it's really really cool and I'm
looking forward to having you here instudio in person. It's going to be
an exciting event for us to beable to bring this here and to go
to Poughkeepsie and to see the trainstation which isn't far from from the office
here from the studio here, soit's really really cool. I want to
thank you so much for coming onthe show today. It's been a really

(01:49:49):
exciting Thanks for having me. Thankyou for listening to The Michael Esposito Show.
For show notes, video clips,and more episodes, go to Michael
Esposito Inc. Dot com backslash podcast. Thank you again to our sponsor dn
ten Insurance Services helping businesses get theright insurance for all their insurance needs.

(01:50:09):
Visit Denten dot io to get aquote that's d E n ten dot io
and remember when you buy an insurancepolicy from Denten, you're giving back on
a global scale. This episode wasproduced by Uncle Mike at the iHeart Studios
in Poughkeepsie. Special thanks to LaraRodrian for the opportunity and my team at

(01:50:30):
Mike Lesposito in Ink
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