September 30, 2025 • 23 mins
In this strategic episode, Justin Goodbread, CEO of Relentless Value Coaching, shares systems for building transferable businesses. If you struggle with low valuation or exit planning, you won't want to miss it.
You will discover:
- Why systems reduce owner dependency for stage 5 exits
- How to optimize eight key areas for higher valuation
- What mindset shifts drive decamillionaire success
This episode is ideal for for Founders, Owners, and CEOs in stage 5 of The Founder's Evolution. Not sure which stage you're in? Find out for free in less than 10 minutes at https://www.scalearchitects.com/founders/quiz
Justin Goodbread has spent the last 30 years building, growing, and selling businesses. His dedication landed him at decamillionaire status before the age of 40. He spends his time now helping business owners discover the proven system to make more money, grow their impact, and get their life back. Respected keynote speaker, bestselling author, and coach of high-performing financial advisors, Justin inspires advisors to rapidly scale their companies to 7, 8, or 9-figure transferable values. Apart from being a successful business coach, Justin is also a YouTube personality, top podcast host, serial entrepreneur, and dynamic business educator.
Want to learn more about Justin Goodbread's work at Relentless Value Coaching? Check out his website at https://www.justingoodbread.com/. Listen to his podcast DecMillionaire Decoded at https://podcasts.apple.com/us/podcast/decamillionaire-decoded/id1332958360 and grab a copy of his book on Amazon at https://www.amazon.com/Your-Babys-Ugly-Maximize-Business/dp/1732059934/ref=sr_1_1
Mentioned in this episode:
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Scott Ritzheimer (00:00):
Scott, hello, hello and welcome. Welcome once
again to the start, scale andsucceed podcast, the only
podcast that grows with youthrough all seven stages of your
journey. As a founder, and I'myour host, Scott Ritzheimer, and
we've got a great episode todayfor those of you who've had some
success in this entrepreneurialjourney, you've reached stage
four, stage five of the journey,you've got a business that's
(00:22):
working, and you've got an eyetoward the future, asking
yourself, what's next? And sohere with us today is Justin
Goodbread, and we'll get to hisbio in just a second, but he's
gonna help us think about ourexit, not just in terms of the
dollars and cents, which ishelpful, but the team that's
gonna help us get there and whatleadership looks like through
(00:43):
this changing process. So who'sJustin? He's spent the last 30
years of his life building,growing and selling businesses.
His dedication landed him at adecimal millionaire status
before the age of 40, he spendshis time now helping business
owners to discover the provensystem, to make more money, grow
(01:03):
their market and get their lifeback. He's a respected keynote
speaker, Best Selling Author andcoach of high performing
financial advisors. Justininspires advisors to rapidly
scale their companies to seven,eight or nine figures with
transferable values. Apart frombeing a successful business
coach, Justin is also a YouTubepersonality, a top podcast host,
(01:25):
serial entrepreneur and dynamicbusiness educators here with us
today. Justin, I love the book.Got me with the name your baby's
ugly as fantastic introductions.Very true. It doesn't have to
stay that way, hopefully. But inthe as I was reading, there was
this illustration that I'veprobably seen it a million times
(01:46):
in a million ways, but it juststood out to me. It was this
tale of two companies. And sofor those of you who haven't had
a chance to read the book, we'regoing to show you how you can
read the book. But basicallyit's this idea that there's two
companies, same revenue, sameprofit. Let's assume the same
industry, but then thesimilarities stop there. So one
of the companies has, it's gotthe systems and the processes,
(02:10):
the software, the financialreporting, but the other
doesn't, and so out of the gate,Justin, to start us off, how big
a difference does that make inan exit, you know, is it? Is it
like 80% is set by the profitand revenue and revenue, and 20%
by everything else? Or is therethis a bigger part of the
(02:31):
equation than we're giving itcredit?
Justin Goodbread (02:32):
It could literally be seven, eight or
nine figures in valuationbetween the difference of those
two data points. So, as youillustrated and Company A, they
have done vast improvements tomodernize the company, to
decentralize the owner, tocreate harmony and balance
across the 256 metrics that acompany can operate on. Whereas
Company B did not, they arestill founder LED. They are
(02:56):
still founder choking. They arestill working with old, archaic
systems, probably more thanlikely trying to maximize
profits for the shareholders orfor the founder. And while in a
lifestyle business, the vastmajority of business owners love
that idea of, Hey, how can Ibring home more income? How can
I create more liberty for myselfif I'm able to make $2 million
(03:17):
this year, $500,000 this year?Man, I'm living high on the hog,
so to speak, as we would sayhere in the south. But whenever
you look from a buyer'sperspective, they want to buy
ROI, they want to buy a returnon their purchase. And so they
do not. They aren't necessarilylooking for high income in so
much so as quote the goldengoose, the old proverbial golden
goose. So yeah, I mean, it couldbe, it could be significant
(03:40):
valuation differences between acompany that has prepared for
the exit and one that isreactive in nature to your exact
percentage point. There arestudies done by the Academy and
mergers and acquisitionsadvisors that so as much as 80%
of the value could be attributedto the intangible assets of a
company. The intangible assetsof a company our systems,
(04:01):
processes, people, things ofthat nature that we cover ad
nauseam in the book.
Scott Ritzheimer (04:06):
Yeah, yeah. So you lay this out, and it was
just a real simple, helpful way,and it kind of sets the
foundation for a couple morequestions that we're gonna ask
here, but just walk us through.What are these? What are these
ace eight aspects of taking careof our baby that we need to be
paying attention to. And thenwe'll one pack, a couple of
these that I think areparticularly important for our
(04:27):
audience.
Justin Goodbread (04:27):
Yeah, Scott, I grew up in the South man. I'm a
country boy at heart. That's whoI am. And I can remember, you
know, in this in the SouthGeorgia heat, we would go to the
playground, and there'd be thisthing called a merry go round. I
don't see many of them anymore.You know, I'm showing my age
here, but a merry go round was abig, round piece of metal that
had these welded bars onto it,and you if you could get it
(04:48):
spinning fast enough, it gotfun. We were holding on for dear
life, and he fell off. Youlaughed and giggled whenever I
was growing up. Man, we had thisguy named bubba. He was a
typical bubba. You can almostsee him in his mind's eye. He
was a man's man. Big old guy. Imean, he was bigger than
everybody else inside the group,and he he loved to use his size
to his advantage. And sooftentimes we would get Bubba on
(05:08):
one side of the merry go round,and us kids would be on the
opposite side of the merry goround. And then when Bubba fell
off, man, merry go round got outof whack. As business owners, I
want you to use my little,simple example of Bubba in your
mind. Now, in a business, thereare eight areas that have to be
in harmony for us to maximizethe enterprise value, or the
transferable value of business.There's eight key areas. And
(05:29):
every business has these eightareas. So the eight areas begin
with leaders and with planning,where specifically you're going
to go every every company outthere, every business owner, is
doing some sort of planning. Wemight call it strategic
planning, annual planning,something of that nature. Then
you have leadership. How are youhow are you imposing that vision
to others, whether they can takethe charge of the mantle and
(05:50):
execute on the vision? That'sleadership. We have sales and
marketing. That's number two,and that's number three and
four, two different things, twodifferent purposes. Oftentimes,
small business owners willcombine those two together, but
they have two differentpurposes. So you have sales and
marketing, you have people andoperations. So that would be
your internal people, yourcustomers, your vendors, all the
people who work within thebusiness or touch to the
(06:13):
business and operations is howwe delivery upon the product,
the service that the customersbought. And then the final, last
two is finance and legal.Finance is basically a P, A, R,
accounts payable, accountsreceivable. You know, looking at
almost like through the mind ofa CFO, a chief operating officer
and a CFO together. And thenlegal is all the risk things
(06:34):
right? That would be insuranceor legal documents. When you go
to exit the company, definitivedocuments, things of that
nature. What happens in businessis we all start out we're
founders, as you said, phaseone, we're founders. And, you
know, we roll our sleeves up andwe're tenacious, and we charge
hell with a water pistol. We'reout there making it happen as we
move through your seven phases,at some point, we're going to
(06:56):
reach the point to whereeverything is stagnant because
of us, our abilities have causedus to hit a glass ceiling. Our
leadership has caused us to hita glass ceiling. Our market,
whatever it may be, somewherewithin those eight areas, we as
founders find ourselves in thecenter of the merry go round.
That's the safest place to be,dude, whenever a bubble was on
one side and somebody else onthe other, if I could get to the
(07:18):
middle of the merry go round,I'm not falling off. I'm sitting
there watching everybody hangingoff the side, waiting for them
to fall off, right? So we asbusiness owners get to the
center because it feels safe.Reality is, is that's not safe.
It's costly. What we want to dois totally exit the merry go
round and have our friends, ourbig clients being offset by
small clients, our dynamic keyplayers being offset by maybe
(07:40):
not the dynamic key players.You're trying to build a
business that is in harmony. Andif you can do that without you,
the owner, riding the merry goround. Am I a simple metaphor?
If you can do that, then, dude,you built a business that an
investor will literally line upand pay you bank for. Or you may
say, You know what good brand, Idon't want to sell the company.
I've been there. I'm rightthere. I'm on one of my own
(08:02):
companies right now. That'scool. Now, instead of an
investor paying you bank, nowyou sit back and you've got the
golden goose created that canoperate without you, and you can
collect your dividend, or youcollect your income, and just
sit back and enjoy the businessfrom a different angle.
Scott Ritzheimer (08:16):
Yeah. Speaking of different angles, you took a
different angle in the book thatI really, really appreciated,
for folks who are familiar withthe work that we do, we do a lot
around leadership styles and howthose relate to the actual
tactics and strategy andplanning of the business, and
you do something very similarusing the disc model. So why do
(08:36):
these different personalitiesmatter for these eight areas?
Justin Goodbread (08:41):
Yeah, so the disc is one that, I say, is an
owner's simple barometer. It's,you know, we could go to the
Myers, Briggs, we know 16personalities we can do. There's
a plethora of different types ofpersonalities exams out there.
To me, the disc is the simplestone that a founder, that an
owner can look at. Don't have toknow all the details, but can
recognize what's happening inthe company. So if you take
(09:01):
those eight areas and we go backto my merry go round, there was
one merry go round that when Iwould go to the park, one
quarter of the merry go roundwas painted blue, one quarter
was painted red, one quarterspainted green, and one quarter
quarters painted yellow. So wehad this. You can look at the
merry go round, and you couldtell that it looked like a piece
of pizza that had four differenttypes of pizzas together, right?
(09:22):
The same is true with withbusiness. So you have planning
and leadership. Is a quadrantthat, let's call that blue,
sales and marketing are inalignment. People and operations
are in alignment, and financeand legal are in alignment. But
if we look at a company, thepersonalities needed to be the
leader and the planner isdifferent than the company than
the personalities needed tohandle people, HR and deal with
(09:46):
operations. The personality isdifferent between the sales and
marketing team than that oflegal and finance. And so if you
take the disc theorem, discstands for dominant,
influential, steady andconscientious. So four different
personalities without divinginto the details of disc. Here's
a simple way to apply it. D isdominant. Oftentimes your CEO or
(10:09):
your leader is going to be ahigher D than any other
personality type. And so if youunderstand that you have
somebody in a leadershipposition and now they're an high
s personality, we're gonna havesome misalignment. There's gonna
be some problems. Or if they'releaders, maybe they need to be
leading the operationsdepartment, because that's where
the S would sit. So D isdominant, I is influential.
(10:31):
Those are the fun loving people,right? They're the life of the
party. You walk in the room,their personality is bigger than
the room, and you just love tobe around. They make you feel
good. They're just fun, right?That's not me, by the way. I'm
like a high off the charge. D,so these people are just fun to
be around. That's typically yourcreatives. That's your marketing
your s are your checklistpeople, right? They would like
to look through checklists.That's operations minded people.
(10:53):
Step one, step two, step three.Step one, a little b, step 1b, I
mean, they have this mindsetthat goes through this
checklist, and then your Cs areoften the very analytics there's
typically your CEO, I'm sorry,CFOs, your chief compliance
officers, your attorneys, theones who want to fuss over a
penny, where did that Penny comefrom? For me, as a D person, I
was like, I don't get a fly onflip. It's one penny. But for
(11:16):
them, it matters greatly, right?I also say attorneys love to
fuss over commas and exclamationpoints. It matters to them. So
why? Why these personalitiesmatter from a business owners
perspective, is, again, we wantto build a business where it can
operate without us. So if I'mlooking at the business and I
have a strong, dominant leaderon my team who is a D, A D, i
(11:37):
that means they're dominant andthey're fun loving, there's
going to be conflict betweenthat leader and the SC
personality, because thedominant person, they're not in
the weeds. The s personality isdown there building a checklist,
and the C personality is goingsuper deep into the weeds. When
the business, what we often willsee is most handedly, is your
(11:58):
marketing and sales people,because their eye personalities
are not in the weeds. They'renot super detailed. They're fun.
They can just say things andthey want everybody else to
deliver on them. Oftentimes,they'll have a great amount of
conflict between your the Cpersonalities, those extreme
detail persons. If you'rebuilding a team that's
transferable, that's the key,Scott, you want a team that a
(12:21):
buyer will adopt, and they'llthey'll bring into the comp
their their presence, and thecompany will operate without you
in the center of that merry goround. If you're building a team
that is transferable, then thosepersonalities have to be
weighted, using my little sillyexample of Bubba, they have to
be weighted to where you don'thave one personality so much
(12:41):
heavier than everybody else onthe merry go round that the
merry go round can't operate. Sofrom an owner's perspective,
just simply looking and saying,hey, you know, we're having some
struggling in our operationsdepartment, where they're
closing some deals, the salesteam's closing deals. But now
here we are in operations, andwe're just not delivering. We're
running lethargically. We're notliving on time. We're having a
lot of QC issues. There is adisconnect between the sales
(13:04):
department and the operationsdepartment. I would almost
guarantee you that it's apersonality misalignment in the
organization.
Scott Ritzheimer (13:12):
Yeah, it's so true, and there's so many things
that this start, starts to setinto order for us, but one of
them is just the recognitionthat you know, your idea of it
being transferable is up to thispoint, the team you've built
around you has always beenaround you. It's been the team
that you need to do your jobright and to do their jobs. And
(13:35):
this is really the first timethat we started thinking about
building a team that's going tobe here after us, and you need a
balance of all of these, andsometimes that means filling the
void that you're going to leavebehind, which is something a lot
of folks don't quite recognize.And what they end up doing is
pulling their their sales opsperson, right? Or, I'm sorry,
(13:56):
sales marketing person, who's ani, and putting them in a DC, and
the whole thing really starts tostruggle. So I love that
overlay. It's again, it's inthere in the book, and just adds
so much clarity and color towhat would otherwise be a really
rote process of trying to getall the pieces in place. It's
(14:17):
really a human thing.
Justin Goodbread (14:19):
Whenever you're a founder, or whenever
you're scaling a business toreplace you from being in the
center of the merry go round,what I would often recommend
this is how we coach ourclients, is find the person
opposite of you first. Mostfounders are going to be
dominant type of personalities.Why? Because you had to have the
grit and tenacity in order tocharge hell with a water pistol,
(14:39):
against all odds, against everybusiness plan out there and say,
No, I believe we can do this. Somore than likely you're a high
D, you may be a DI, a DC, one ofthose personalities, like I'm a
high D with a C, which is why Ilove building businesses,
setting up teams, and gettingmyself out of the way and let
them work. So that's mypersonality. So if I'm going to
hire somebody, I'm going to hirean S personality, somebody. I
(15:00):
can take those things off myplate that I don't care to know.
I don't want to know the step bystep process on how we're going
to deliver this is what I wantto accomplish as the founder of
the company. I want to go inthis direction figure it out. So
I have to have a dynamic for me,as dynamic as I am on my high D,
I have to have an off the chartss, personality. So my chief
operating officer has got to bea stud. They have to be so if I
(15:22):
go my stud opposite first. NowI've got some balance. Well, my
other two quadrants on my merrygo round. They may not have to
have the same dynamicpersonality, but they have to be
balanced. Where the handoffbecomes is whenever I want to
replace myself with a presidentor a new CEO or a new visionary,
(15:45):
that is tough, and here's why.Title of the book is, your
baby's ugly. It's not byaccident. My dad used to say
growing up, he would say, Son,you never tell a woman their
baby's ugly, but if you do, youbetter run her duck, because
they're coming after you. Throwsomething after you. They gotta
chase you down, but you don't,because it's my baby, the same
pride that we have, like wewould look at our kids, and that
pride swells up within us. Itconverts to a hubris, pride real
(16:08):
quick with us, founders that noone can do this as good as me,
and that's just not true. And soas we build the systems out,
there comes a point and where wecoach our clients to do is say,
Go away for six months. Andwhenever I say that, if you're
listening to me and your heartjust fell, it means you're not
ready for this. Okay, so you canbuild yourself to the point, but
go away for six months. Let'sexpose the problems in a six
(16:29):
month time period, if you'vedone great leadership and great
systems, and the company is notgoing to flounder because of
lack of leadership if you builtthe structure properly, but
after six months, you're goingto need a dynamic president, are
gonna need a somebody within thekey position where I like to
lean into is finding somebodylike me. Now, here's the
conflict. Opposites attract,similarities often repel. So the
(16:54):
problem is that I often seewithin myself and with other
founders, is when we go toreplace ourselves, we start
micromanaging our replacements.Austin Powers used to have the
stupid video. They have mini meon there, right? We're literally
finding the Mini Me, not in acomical sense, but you're
finding somebody who can replaceyou. And when you do that, we
end up seeing all the things wedon't like about ourselves in
that person, and we micromanageand that, I gotta tell you,
(17:17):
Scott, I've seen that cost infounders eight figures before,
just not able to least control.
Scott Ritzheimer (17:22):
Absolutely, absolutely. Justin, I think we
could talk for about seven morehours, but I wanna be conscious
of both your time and ouraudience's time here. So before
I let you go, I've got one morequestion for you, and that is
this, what would you say is thebiggest secret that you wish
wasn't a secret at all for thosefounders that are listening,
that are in this place rightnow, what's that one thing you
wish that they knew?
Justin Goodbread (17:43):
So we have a podcast called the DECA
millionaire way. A new book iscoming out. It's gonna be
talking about the DECAmillionaire way. And the biggest
secret that should not be asecret is the sheer amount of
money that you're going to needto have freedom. So I want you
to think about it this way rightnow, you may be made paying
yourself, let's say, a quartermillion dollars. That seems to
be a number that seems to be anumber that founders want to get
to pay yourself. 20,000 a month,take home, pay more than likely,
(18:06):
in your company. You're alsoperhaps paying your significant
other. You're perhaps buying acar, cell phone, computers,
trips, whatever else goingthrough the company that your
tax advisor has allowed you,when you start adding up all the
benefits of your company interms of compensation for
yourself. It is not uncommon tosee founders who are been to
Finney economically at $400,000a year, or $500,000 a year, or
(18:26):
$600,000 a year. So I want youto think about this when you
when you're building a company,and more than likely 80% of your
net worth is wrapped up in thiscompany, and the only way that
you're going to gain truefreedom is to turn this highly
illiquid asset into a liquidasset. Because even if you build
(18:48):
it to where you have the goldengoose and you're out on the
beach one day, your still mindsgonna be back there wondering,
What if so, the only way you'regonna have true mental freedom
is to turn it from an illiquidasset to a liquid asset, which
means that the amount of moneyyou're gonna need to say in your
life is far greater than youever imagined. So let's per
venture, say that you sold yourcompany for $10 million by the
time you pay Uncle Sam, by thetime you pay the broker, by the
(19:09):
time you pay the attorneys, theCPAs, the advisors, the broker,
whoever else involved, it's notuncommon to lose 1015, 20, 30%
of the value. So let's say it's10 million. And let's just do
some simple math, and let's saythat you lose 40% because you
live in a high tax state and youdidn't do the planning right.
You have $6 million 6 milliontimes 5% is only 300 grand. The
reality, the secret to what I'mthe answer to your question,
(19:31):
Scott, is this, you need to aimfor a valuation of 10 million
plus in today's value if you'reeven the least bit successful.
And what got you to the pointwhere you're at today is not the
same pathway that you're gonnahave to take to shift it from
your current valuation to a DECAmillionaire valuation. It's a
whole different amount ofthinking. And that single thing
(19:54):
that I wanna shout from themountaintop and wave the Yellow
Flag, the caution flag outthere, is to say, friends, you.
Don't wait. Start buildingtoday. Start building your
journey today. Figure out whatthat exit needs to be. Let's
backwards in calculating thatdata points and build that
journey and then charge hellwith a water pistol. Believe you
can do it and make it happen.
Scott Ritzheimer (20:12):
Yeah. So good, so good. Justin. Just fantastic,
fantastic information, both inthe book and here on the
podcast, clearly an expert inwhat you do. I really appreciate
your time and attention cominghere and spending with us today,
and for those of you who arewatching and listening, you know
that your time means the worldto us. I hope you got as much
out of this episode as I know Idid, and I cannot wait to see
(20:35):
you all next time, take care.
Scott, hello, hello and welcome. Welcome once
again to the start, scale andsucceed podcast, the only
podcast that grows with youthrough all seven stages of your
journey. As a founder, and I'myour host, Scott Ritzheimer, and
we've got a great episode todayfor those of you who've had some
success in this entrepreneurialjourney, you've reached stage
four, stage five of the journey,you've got a business that's
(00:22):
working, and you've got an eyetoward the future, asking
yourself, what's next? And sohere with us today is Justin
Goodbread, and we'll get to hisbio in just a second, but he's
gonna help us think about ourexit, not just in terms of the
dollars and cents, which ishelpful, but the team that's
gonna help us get there and whatleadership looks like through
(00:43):
this changing process. So who'sJustin? He's spent the last 30
years of his life building,growing and selling businesses.
His dedication landed him at adecimal millionaire status
before the age of 40, he spendshis time now helping business
owners to discover the provensystem, to make more money, grow
(01:03):
their market and get their lifeback. He's a respected keynote
speaker, Best Selling Author andcoach of high performing
financial advisors. Justininspires advisors to rapidly
scale their companies to seven,eight or nine figures with
transferable values. Apart frombeing a successful business
coach, Justin is also a YouTubepersonality, a top podcast host,
(01:25):
serial entrepreneur and dynamicbusiness educators here with us
today. Justin, I love the book.Got me with the name your baby's
ugly as fantastic introductions.Very true. It doesn't have to
stay that way, hopefully. But inthe as I was reading, there was
this illustration that I'veprobably seen it a million times
(01:46):
in a million ways, but it juststood out to me. It was this
tale of two companies. And sofor those of you who haven't had
a chance to read the book, we'regoing to show you how you can
read the book. But basicallyit's this idea that there's two
companies, same revenue, sameprofit. Let's assume the same
industry, but then thesimilarities stop there. So one
of the companies has, it's gotthe systems and the processes,
(02:10):
the software, the financialreporting, but the other
doesn't, and so out of the gate,Justin, to start us off, how big
a difference does that make inan exit, you know, is it? Is it
like 80% is set by the profitand revenue and revenue, and 20%
by everything else? Or is therethis a bigger part of the
(02:31):
equation than we're giving itcredit?
Justin Goodbread (02:32):
It could literally be seven, eight or
nine figures in valuationbetween the difference of those
two data points. So, as youillustrated and Company A, they
have done vast improvements tomodernize the company, to
decentralize the owner, tocreate harmony and balance
across the 256 metrics that acompany can operate on. Whereas
Company B did not, they arestill founder LED. They are
(02:56):
still founder choking. They arestill working with old, archaic
systems, probably more thanlikely trying to maximize
profits for the shareholders orfor the founder. And while in a
lifestyle business, the vastmajority of business owners love
that idea of, Hey, how can Ibring home more income? How can
I create more liberty for myselfif I'm able to make $2 million
(03:17):
this year, $500,000 this year?Man, I'm living high on the hog,
so to speak, as we would sayhere in the south. But whenever
you look from a buyer'sperspective, they want to buy
ROI, they want to buy a returnon their purchase. And so they
do not. They aren't necessarilylooking for high income in so
much so as quote the goldengoose, the old proverbial golden
goose. So yeah, I mean, it couldbe, it could be significant
(03:40):
valuation differences between acompany that has prepared for
the exit and one that isreactive in nature to your exact
percentage point. There arestudies done by the Academy and
mergers and acquisitionsadvisors that so as much as 80%
of the value could be attributedto the intangible assets of a
company. The intangible assetsof a company our systems,
(04:01):
processes, people, things ofthat nature that we cover ad
nauseam in the book.
Scott Ritzheimer (04:06):
Yeah, yeah. So you lay this out, and it was
just a real simple, helpful way,and it kind of sets the
foundation for a couple morequestions that we're gonna ask
here, but just walk us through.What are these? What are these
ace eight aspects of taking careof our baby that we need to be
paying attention to. And thenwe'll one pack, a couple of
these that I think areparticularly important for our
(04:27):
audience.
Justin Goodbread (04:27):
Yeah, Scott, I grew up in the South man. I'm a
country boy at heart. That's whoI am. And I can remember, you
know, in this in the SouthGeorgia heat, we would go to the
playground, and there'd be thisthing called a merry go round. I
don't see many of them anymore.You know, I'm showing my age
here, but a merry go round was abig, round piece of metal that
had these welded bars onto it,and you if you could get it
(04:48):
spinning fast enough, it gotfun. We were holding on for dear
life, and he fell off. Youlaughed and giggled whenever I
was growing up. Man, we had thisguy named bubba. He was a
typical bubba. You can almostsee him in his mind's eye. He
was a man's man. Big old guy. Imean, he was bigger than
everybody else inside the group,and he he loved to use his size
to his advantage. And sooftentimes we would get Bubba on
(05:08):
one side of the merry go round,and us kids would be on the
opposite side of the merry goround. And then when Bubba fell
off, man, merry go round got outof whack. As business owners, I
want you to use my little,simple example of Bubba in your
mind. Now, in a business, thereare eight areas that have to be
in harmony for us to maximizethe enterprise value, or the
transferable value of business.There's eight key areas. And
(05:29):
every business has these eightareas. So the eight areas begin
with leaders and with planning,where specifically you're going
to go every every company outthere, every business owner, is
doing some sort of planning. Wemight call it strategic
planning, annual planning,something of that nature. Then
you have leadership. How are youhow are you imposing that vision
to others, whether they can takethe charge of the mantle and
(05:50):
execute on the vision? That'sleadership. We have sales and
marketing. That's number two,and that's number three and
four, two different things, twodifferent purposes. Oftentimes,
small business owners willcombine those two together, but
they have two differentpurposes. So you have sales and
marketing, you have people andoperations. So that would be
your internal people, yourcustomers, your vendors, all the
people who work within thebusiness or touch to the
(06:13):
business and operations is howwe delivery upon the product,
the service that the customersbought. And then the final, last
two is finance and legal.Finance is basically a P, A, R,
accounts payable, accountsreceivable. You know, looking at
almost like through the mind ofa CFO, a chief operating officer
and a CFO together. And thenlegal is all the risk things
(06:34):
right? That would be insuranceor legal documents. When you go
to exit the company, definitivedocuments, things of that
nature. What happens in businessis we all start out we're
founders, as you said, phaseone, we're founders. And, you
know, we roll our sleeves up andwe're tenacious, and we charge
hell with a water pistol. We'reout there making it happen as we
move through your seven phases,at some point, we're going to
(06:56):
reach the point to whereeverything is stagnant because
of us, our abilities have causedus to hit a glass ceiling. Our
leadership has caused us to hita glass ceiling. Our market,
whatever it may be, somewherewithin those eight areas, we as
founders find ourselves in thecenter of the merry go round.
That's the safest place to be,dude, whenever a bubble was on
one side and somebody else onthe other, if I could get to the
(07:18):
middle of the merry go round,I'm not falling off. I'm sitting
there watching everybody hangingoff the side, waiting for them
to fall off, right? So we asbusiness owners get to the
center because it feels safe.Reality is, is that's not safe.
It's costly. What we want to dois totally exit the merry go
round and have our friends, ourbig clients being offset by
small clients, our dynamic keyplayers being offset by maybe
(07:40):
not the dynamic key players.You're trying to build a
business that is in harmony. Andif you can do that without you,
the owner, riding the merry goround. Am I a simple metaphor?
If you can do that, then, dude,you built a business that an
investor will literally line upand pay you bank for. Or you may
say, You know what good brand, Idon't want to sell the company.
I've been there. I'm rightthere. I'm on one of my own
(08:02):
companies right now. That'scool. Now, instead of an
investor paying you bank, nowyou sit back and you've got the
golden goose created that canoperate without you, and you can
collect your dividend, or youcollect your income, and just
sit back and enjoy the businessfrom a different angle.
Scott Ritzheimer (08:16):
Yeah. Speaking of different angles, you took a
different angle in the book thatI really, really appreciated,
for folks who are familiar withthe work that we do, we do a lot
around leadership styles and howthose relate to the actual
tactics and strategy andplanning of the business, and
you do something very similarusing the disc model. So why do
(08:36):
these different personalitiesmatter for these eight areas?
Justin Goodbread (08:41):
Yeah, so the disc is one that, I say, is an
owner's simple barometer. It's,you know, we could go to the
Myers, Briggs, we know 16personalities we can do. There's
a plethora of different types ofpersonalities exams out there.
To me, the disc is the simplestone that a founder, that an
owner can look at. Don't have toknow all the details, but can
recognize what's happening inthe company. So if you take
(09:01):
those eight areas and we go backto my merry go round, there was
one merry go round that when Iwould go to the park, one
quarter of the merry go roundwas painted blue, one quarter
was painted red, one quarterspainted green, and one quarter
quarters painted yellow. So wehad this. You can look at the
merry go round, and you couldtell that it looked like a piece
of pizza that had four differenttypes of pizzas together, right?
(09:22):
The same is true with withbusiness. So you have planning
and leadership. Is a quadrantthat, let's call that blue,
sales and marketing are inalignment. People and operations
are in alignment, and financeand legal are in alignment. But
if we look at a company, thepersonalities needed to be the
leader and the planner isdifferent than the company than
the personalities needed tohandle people, HR and deal with
(09:46):
operations. The personality isdifferent between the sales and
marketing team than that oflegal and finance. And so if you
take the disc theorem, discstands for dominant,
influential, steady andconscientious. So four different
personalities without divinginto the details of disc. Here's
a simple way to apply it. D isdominant. Oftentimes your CEO or
(10:09):
your leader is going to be ahigher D than any other
personality type. And so if youunderstand that you have
somebody in a leadershipposition and now they're an high
s personality, we're gonna havesome misalignment. There's gonna
be some problems. Or if they'releaders, maybe they need to be
leading the operationsdepartment, because that's where
the S would sit. So D isdominant, I is influential.
(10:31):
Those are the fun loving people,right? They're the life of the
party. You walk in the room,their personality is bigger than
the room, and you just love tobe around. They make you feel
good. They're just fun, right?That's not me, by the way. I'm
like a high off the charge. D,so these people are just fun to
be around. That's typically yourcreatives. That's your marketing
your s are your checklistpeople, right? They would like
to look through checklists.That's operations minded people.
(10:53):
Step one, step two, step three.Step one, a little b, step 1b, I
mean, they have this mindsetthat goes through this
checklist, and then your Cs areoften the very analytics there's
typically your CEO, I'm sorry,CFOs, your chief compliance
officers, your attorneys, theones who want to fuss over a
penny, where did that Penny comefrom? For me, as a D person, I
was like, I don't get a fly onflip. It's one penny. But for
(11:16):
them, it matters greatly, right?I also say attorneys love to
fuss over commas and exclamationpoints. It matters to them. So
why? Why these personalitiesmatter from a business owners
perspective, is, again, we wantto build a business where it can
operate without us. So if I'mlooking at the business and I
have a strong, dominant leaderon my team who is a D, A D, i
(11:37):
that means they're dominant andthey're fun loving, there's
going to be conflict betweenthat leader and the SC
personality, because thedominant person, they're not in
the weeds. The s personality isdown there building a checklist,
and the C personality is goingsuper deep into the weeds. When
the business, what we often willsee is most handedly, is your
(11:58):
marketing and sales people,because their eye personalities
are not in the weeds. They'renot super detailed. They're fun.
They can just say things andthey want everybody else to
deliver on them. Oftentimes,they'll have a great amount of
conflict between your the Cpersonalities, those extreme
detail persons. If you'rebuilding a team that's
transferable, that's the key,Scott, you want a team that a
(12:21):
buyer will adopt, and they'llthey'll bring into the comp
their their presence, and thecompany will operate without you
in the center of that merry goround. If you're building a team
that is transferable, then thosepersonalities have to be
weighted, using my little sillyexample of Bubba, they have to
be weighted to where you don'thave one personality so much
(12:41):
heavier than everybody else onthe merry go round that the
merry go round can't operate. Sofrom an owner's perspective,
just simply looking and saying,hey, you know, we're having some
struggling in our operationsdepartment, where they're
closing some deals, the salesteam's closing deals. But now
here we are in operations, andwe're just not delivering. We're
running lethargically. We're notliving on time. We're having a
lot of QC issues. There is adisconnect between the sales
(13:04):
department and the operationsdepartment. I would almost
guarantee you that it's apersonality misalignment in the
organization.
Scott Ritzheimer (13:12):
Yeah, it's so true, and there's so many things
that this start, starts to setinto order for us, but one of
them is just the recognitionthat you know, your idea of it
being transferable is up to thispoint, the team you've built
around you has always beenaround you. It's been the team
that you need to do your jobright and to do their jobs. And
(13:35):
this is really the first timethat we started thinking about
building a team that's going tobe here after us, and you need a
balance of all of these, andsometimes that means filling the
void that you're going to leavebehind, which is something a lot
of folks don't quite recognize.And what they end up doing is
pulling their their sales opsperson, right? Or, I'm sorry,
(13:56):
sales marketing person, who's ani, and putting them in a DC, and
the whole thing really starts tostruggle. So I love that
overlay. It's again, it's inthere in the book, and just adds
so much clarity and color towhat would otherwise be a really
rote process of trying to getall the pieces in place. It's
(14:17):
really a human thing.
Justin Goodbread (14:19):
Whenever you're a founder, or whenever
you're scaling a business toreplace you from being in the
center of the merry go round,what I would often recommend
this is how we coach ourclients, is find the person
opposite of you first. Mostfounders are going to be
dominant type of personalities.Why? Because you had to have the
grit and tenacity in order tocharge hell with a water pistol,
(14:39):
against all odds, against everybusiness plan out there and say,
No, I believe we can do this. Somore than likely you're a high
D, you may be a DI, a DC, one ofthose personalities, like I'm a
high D with a C, which is why Ilove building businesses,
setting up teams, and gettingmyself out of the way and let
them work. So that's mypersonality. So if I'm going to
hire somebody, I'm going to hirean S personality, somebody. I
(15:00):
can take those things off myplate that I don't care to know.
I don't want to know the step bystep process on how we're going
to deliver this is what I wantto accomplish as the founder of
the company. I want to go inthis direction figure it out. So
I have to have a dynamic for me,as dynamic as I am on my high D,
I have to have an off the chartss, personality. So my chief
operating officer has got to bea stud. They have to be so if I
(15:22):
go my stud opposite first. NowI've got some balance. Well, my
other two quadrants on my merrygo round. They may not have to
have the same dynamicpersonality, but they have to be
balanced. Where the handoffbecomes is whenever I want to
replace myself with a presidentor a new CEO or a new visionary,
(15:45):
that is tough, and here's why.Title of the book is, your
baby's ugly. It's not byaccident. My dad used to say
growing up, he would say, Son,you never tell a woman their
baby's ugly, but if you do, youbetter run her duck, because
they're coming after you. Throwsomething after you. They gotta
chase you down, but you don't,because it's my baby, the same
pride that we have, like wewould look at our kids, and that
pride swells up within us. Itconverts to a hubris, pride real
(16:08):
quick with us, founders that noone can do this as good as me,
and that's just not true. And soas we build the systems out,
there comes a point and where wecoach our clients to do is say,
Go away for six months. Andwhenever I say that, if you're
listening to me and your heartjust fell, it means you're not
ready for this. Okay, so you canbuild yourself to the point, but
go away for six months. Let'sexpose the problems in a six
(16:29):
month time period, if you'vedone great leadership and great
systems, and the company is notgoing to flounder because of
lack of leadership if you builtthe structure properly, but
after six months, you're goingto need a dynamic president, are
gonna need a somebody within thekey position where I like to
lean into is finding somebodylike me. Now, here's the
conflict. Opposites attract,similarities often repel. So the
(16:54):
problem is that I often seewithin myself and with other
founders, is when we go toreplace ourselves, we start
micromanaging our replacements.Austin Powers used to have the
stupid video. They have mini meon there, right? We're literally
finding the Mini Me, not in acomical sense, but you're
finding somebody who can replaceyou. And when you do that, we
end up seeing all the things wedon't like about ourselves in
that person, and we micromanageand that, I gotta tell you,
(17:17):
Scott, I've seen that cost infounders eight figures before,
just not able to least control.
Scott Ritzheimer (17:22):
Absolutely, absolutely. Justin, I think we
could talk for about seven morehours, but I wanna be conscious
of both your time and ouraudience's time here. So before
I let you go, I've got one morequestion for you, and that is
this, what would you say is thebiggest secret that you wish
wasn't a secret at all for thosefounders that are listening,
that are in this place rightnow, what's that one thing you
wish that they knew?
Justin Goodbread (17:43):
So we have a podcast called the DECA
millionaire way. A new book iscoming out. It's gonna be
talking about the DECAmillionaire way. And the biggest
secret that should not be asecret is the sheer amount of
money that you're going to needto have freedom. So I want you
to think about it this way rightnow, you may be made paying
yourself, let's say, a quartermillion dollars. That seems to
be a number that seems to be anumber that founders want to get
to pay yourself. 20,000 a month,take home, pay more than likely,
(18:06):
in your company. You're alsoperhaps paying your significant
other. You're perhaps buying acar, cell phone, computers,
trips, whatever else goingthrough the company that your
tax advisor has allowed you,when you start adding up all the
benefits of your company interms of compensation for
yourself. It is not uncommon tosee founders who are been to
Finney economically at $400,000a year, or $500,000 a year, or
(18:26):
$600,000 a year. So I want youto think about this when you
when you're building a company,and more than likely 80% of your
net worth is wrapped up in thiscompany, and the only way that
you're going to gain truefreedom is to turn this highly
illiquid asset into a liquidasset. Because even if you build
(18:48):
it to where you have the goldengoose and you're out on the
beach one day, your still mindsgonna be back there wondering,
What if so, the only way you'regonna have true mental freedom
is to turn it from an illiquidasset to a liquid asset, which
means that the amount of moneyyou're gonna need to say in your
life is far greater than youever imagined. So let's per
venture, say that you sold yourcompany for $10 million by the
time you pay Uncle Sam, by thetime you pay the broker, by the
(19:09):
time you pay the attorneys, theCPAs, the advisors, the broker,
whoever else involved, it's notuncommon to lose 1015, 20, 30%
of the value. So let's say it's10 million. And let's just do
some simple math, and let's saythat you lose 40% because you
live in a high tax state and youdidn't do the planning right.
You have $6 million 6 milliontimes 5% is only 300 grand. The
reality, the secret to what I'mthe answer to your question,
(19:31):
Scott, is this, you need to aimfor a valuation of 10 million
plus in today's value if you'reeven the least bit successful.
And what got you to the pointwhere you're at today is not the
same pathway that you're gonnahave to take to shift it from
your current valuation to a DECAmillionaire valuation. It's a
whole different amount ofthinking. And that single thing
(19:54):
that I wanna shout from themountaintop and wave the Yellow
Flag, the caution flag outthere, is to say, friends, you.
Don't wait. Start buildingtoday. Start building your
journey today. Figure out whatthat exit needs to be. Let's
backwards in calculating thatdata points and build that
journey and then charge hellwith a water pistol. Believe you
can do it and make it happen.
Scott Ritzheimer (20:12):
Yeah. So good, so good. Justin. Just fantastic,
fantastic information, both inthe book and here on the
podcast, clearly an expert inwhat you do. I really appreciate
your time and attention cominghere and spending with us today,
and for those of you who arewatching and listening, you know
that your time means the worldto us. I hope you got as much
out of this episode as I know Idid, and I cannot wait to see
(20:35):
you all next time, take care.
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