00:48 Hey, welcome back to the show today. I'm so excited. Cause we're talking about something that normally doesn't get talked about by founders. Scott, I'm just going to leave it, leave them in suspense. Who are you and what do you do? 

01:00 Yeah, for sure. I mean, who I am, I guess I'm a Canadian snowboard guy, but I'm an entrepreneur. Let's say that's like the background. Uh, what, what I do now is I run an M& A practice and we help people sell their businesses. Uh, but what that really looks like is transitioning privately held shares and converting them into cash.And if you aren't, don't, don't worry. Uh, revenue wise, that kind of looks like 3 million to 50 million in revenue. 

01:38 And that, that is an awesome target for this audience because that is a lot of our listener base are those people who are, who are in that, um, I call it a, uh, Post launch kind of, how do I move forward type position in their business? Right? That, that three to the 50 million is kind of that fun range.

01:56 It's a good range. And it's like, you can really drive value in that range. And for those that are listening, they're in that space, you, you likely have a sellable asset with a couple of tweaks and it's kind of your 10 person team to kind of 50 people from a team perspective. Like those are the, those are the people that we work with all day and that the companies that I love.  

02:14 That's awesome. It's awesome. So, so are these in any particular niche that you focus in, or is this kind of, uh, all across the board? If you've, if you're operating at that level, we want to talk to you. I want to help you figure out what your options are. How does it look? 

02:28 Yeah, we, that's a good question because a lot of people say agnostic, like there, it doesn't really matter. We are a little honed in who we work with. Well, and it really is driven by the market. To a certain extent. And so we meet with like on any given week, I'm meeting with five, six private equity companies. We're asking, what are you buying? Like, what are you guys looking for? Industries you're rolling up and that directs who we're going to be going and doing business with from a direct outreach perspective. Uh, that being said, anybody who has a business that's doing that size range, we can certainly move the needle for them from a value perspective. 

03:03 Awesome. So, so that's an interesting perspective because I think a lot of audience has never really been involved in, uh, liquidation of a business and they're just thinking, Oh, that's 50 years out or that's 30 years out. I don't have to think about it now, but the reality is you should be thinking about it from the start and, and you're talking about, uh, going PE firm, who are you looking to acquire? And what is your growth strategy and who can we find for you? Yep. Okay. What should the, what should the founder be looking for? Like, what, what makes them a good buy?  

03:37 Yeah, I think like everyone talks about, can you think of the end in mind for sure, and to a certain extent, but part of my back is I've had 11 companies and I've, I've founded all of them. So it isn't, I, I, well, that's not entirely true because one I bought, but for a very small amount of money, it was pretty much a startup. So I have one company, but most of the stuff I've just started from scratch, which is the vast entrepreneurs just, you know, grind it out and start it on their own. At first, like three years, I wouldn't really worry too much about thinking about that in their mind. Cause you're just trying to figure out that product mix and like really get things rocking. Uh, but after that, You really should be thinking about, am I building, building this company so it can sell? And if you are thinking of building this for, you know, a private equity firm to buy or someone external to buy at the day, it just makes a better asset and people have definitely heard that, but I just wanted to kind of lay that ground there that it's not right out of the gate, it's soon after being out of the gates and then the big pieces of that and what someone's going to look at initially when they look to your business to acquire it is the number one is how owner dependent it is. And I called right. Every day, a step away. It's like, as we're going down our entrepreneurial journey, it's, you know, how can I delegate, how can I automate, how can I eliminate, and how can I get that stuff off my plate to really just kind of move yourself up the org chart. I highly recommend to people it's, it is a cool exercise and I did it in the business I'm running right now about three years ago where I just sat down and said, okay, what does the org chart in this company look like in 10 years? And then I'm trying to move myself up this org chart to the point where I'm CEO and then owner and owner founder that isn't in the business day to day that doing that alone will probably in itself. Really get you to the point where you have a sellable asset. Uh, and then from there, the buyers out there just looking for, okay, what's the, what's the risk in this asset? That's all they're looking at risk. It's really interesting. Like could building businesses in the beginning when I was doing that, I was always thinking about, you know, how do I just get more revenue and get more cash to myself? Because you're, you're kind of looking at it as like, how do I make my life better? Like, how do I get the cottage, get the snowmobile, like this kind of stuff. And my business is the vehicle right there. But when you think about it from the perspective of like, I actually want to build share value in this thing. It'll, it changes to thinking about risk and we can dive more into that, but that's really what it changes to when you're thinking about creating share value in your company. 

05:59 Right. That's a really interesting proposition because to your point, I think every founder that I talked to, uh, for the most part. Is always thinking about, okay, I have sacrificed so much crap for this business. I just want to get some stuff out of it. And, and there, there, it's a, it's a righteously selfish cause, I think to some degree, but, but to that end though, how do you make it, how do you, how do you. Less than the risk. I mean, when you, when you talk about, uh, mitigating risk and, and making it a more sure proposition for someone to want to invest in, what kinds of things are you talking about? Because I think a lot of, a lot of, uh, entrepreneurs are risk takers. They, they enjoy the risk. What kind of things are you talking about? 

06:43 Yeah, I'm happy to wrap on this. So there's kind of risk like external to your business and then risk internal. And maybe it can be helpful just talking about the external first, and then we'll talk about actually risking your own asset, but as entrepreneurs, and I'm speaking, like I am an entrepreneur through and through, like I'm risk all day. And my, and my poor wife just has to be. Dragged through it, you know, 

07:04  I feel you. 

07:05 It's likeYes, it's brutal. And for those of you that obviously that are listening this, and that's your DNA, you get it right, the right reducing risk as you go through your entrepreneurial journey is taking cash outta your business and moving it to less risky assets like at the end of the day, that helps along the road. And it's something that I haven't done well enough, I've done okay in my life. This business right now, I'm starting to do a little bit better. I'm saying, okay, we're shifting cash from the operating company up to the whole company and putting into insurance vehicles and taking it and putting into real estate, because these are less risky assets because your business is the riskiest asset that produces the highest returns. It's really easy for us as entrepreneurs. Just to get into that mindset where it's like, okay, I made a dollar right back into the machine. Cause I'm going to get the highest return right back into the machine. And we're all really going to do that. And we're all really guilty of like the shiny object syndrome and like can invest in the stuff that maybe not might not provide that return.So I don't know what you're talking about. That could be helpful just from like, yeah, it helps stabilize your life a little bit too, you know, like really take a bit along the road for your company and move into those less risky assets, uh, then risk inside your business. That just looks, it's from, to create it so the buyer wants to purchase it. That the easiest thing about that is if I'm a buyer, I'm looking at an asset, whether it's anything like real estate or business investment, I'm trying to predict what's the future cash flow stream out of this business. That's all they're trying to do. And they're trying to get the ball out and say, all right, without the founder. Because when you sell a business, eventually you're moving out of it. Like maybe you're in it for three years or four years. You have some kind of agreement or whatever, but long term the buyer's looking at the, the risk of that asset without you in it. So they're kind of pulling you out and saying, okay, with entrepreneur gone, what's the probability of past cashflow that's on your P and L's becoming future cashflow stream. And so they're looking at all those details in the business that are going to directly impact that future cashflow stream. So, you know, Who are your, who are you selling to? Like who are your customers, right? Who has the relationship with those customers with inside the business? How are those customers purchasing from you? So is it recurring revenue or is it, you know, I've got to go and sell a new customer every single time, or these customers repeat, like the cycle is that they're buying every three years or something like that. So they're looking at the cashflow and like, what's the risk. From the revenue perspective, and then, okay, now I've got risk below my revenue line item into my cogs. Right? It's like, how am I supplying the company? Is there risk there? Is it, you know, we were selling a business or we were involved. We, we were, I was all involved in the buy side and they built, uh, children's playgrounds and there's a very lucrative industry actually, but they only had one supplier for the playgrounds, and they had no contract with that supplier, and they had no territory with that supplier. So they had in their cogs line item on their p and l. Like you, you've got no security there. So that supplier could say, Hey, listen, we found another contractor who's better. And you've got a 7 million company that gets a road to zero overnight. So that's what the buyers are looking at. And then as you go down your P and L kind of step by step by step, it's like, where are the risk elements in here? Like, are we paying more labor than we should be like all of that? And that's what your buyers are looking at because they're really trying to predict. You know, what's the future cash flow and anything that pops up with ugly head that's risk related like, Oh, we got no contracts. Our employees aren't going to go on term contracts. It's like we don't have the right incentive program in place to 

10:25 all of that is risky. 

10:26 It's all of it. Like all of it. Right there. 

10:28 Yeah. 

10:29 Risk in business is just as littered with it. And when you lose the founder, some of that, you know, really starts to show up a little bit more. So that's why they, that's just a way of thinking about it.

10:39 captainscouncil.com

12:18  I love it. Now that's super intriguing because I think a lot of us don't really think of those as risks. We just think that's just a natural part of a building. But to your point, when you can stabilize yourself by a getting some good contracts in place with your employees. They like that. You should like that too. Uh, secondly, uh, shoring up multiple sources for your, for your product. I mean, suppliers can come and go and carriers can come and go. There's so many different parts and pieces that can shift when you've got two or three, maybe that's the smarter route or just having one that's a little more stable, good, good, good points here. And then obviously the top of the list there. That you brought up first and it's the second time you brought it up. So I want to, I want to dive into this a little bit is  placement of yourself within the business and org charting. This is one of my favorite exercises. I, I think it's, um, I think it stems from my love of the e myth where, you know, he talks about building that org chart from the very start and you're just trying to figure out, okay. I like to make pies, but do I need to be the one going out and buying the apples or should I be the one making the pies or should I, what do I, should I be doing?  And that is such a fun exercise for most founders because they've never quite done that. Could you, could you just walk us through what that means to you and, and what does that look like as a potential, you know, when you're prospecting businesses and you look at the way they're set up. What are some red flags and what are some things that you look at and you're like, dude, that that's what I want. That's what I want to get right there. 

13:48 Yeah, for sure. Um, okay. So I'm, I love the org chart by the way. I don't know why I just like, and I think you can put more information into it than the average org chart has.So I might kind of wrap that up. The big piece is just like who sits at the top, you know, and like how here, here it is, right? So I take my company right now. And so my current company has 10, 10 employees and we've got 35 advisors, right? So that's kind of the site right now. Those, those 10 people that are in the business, I actually function this business to function. It needs another like six roles. And so where are those six roles get serviced by me. And that's so classic  for the businesses at that, you know, 500K to the 1 million EBITDA range. It's just like absolute classic. So you make the work chart and you make those boxes and you, you, you put your name in them. Like this is, and I say to my team all the time, like my goal within the next couple of years is just to have one box. I just want to be the CEO box. Yeah. The CEO. That's me. Then you get the  COO. And then we start to have underneath that the rest of the organization. But if you go through that, you'll notice like, okay, darn it. And by the way, like when you're doing a startup, which is, you know, for rewind the tape four and a half years ago, it was just me here. Like that was it. Every single box in the org chart, which man, do your organization move so slow at that point? It's brutal. Cause you just have to do it. 

15:14 But I bet that you built it anyway, though. You probably had the org chart with your name all over the place, right? 

15:17 100%! It's like, there it was like my department, sales department, ops, like, and then you're like finance and all the rest of it. It's like, here I am. And so you're really just trying to remove yourself from boxes. And like, thinking more broadly, the org chart,  and for those that haven't dug into disc or PSI, you are these persons. Like in our org chart, when I build it out, like this box. In the future, we'll have someone that has this personality profile and I'm doing it now, but it's not my personality profile. It kind of sucks. I like hate the work. It's like, I don't want to be doing the accounting thing. It's a completely totally not a controller, uh, but I'm in it doing it. So when I'm looking to remove, it's like, I know who's going to go into that from a personality profiling perspective. And it just really helps with hiring as well. 

16:01 And there's a chance that there's probably a good chance that you already know how you want that position to be run. And you know how to do it, but you don't like to do it, right? 

16:08 Yeah. And then it doesn't get done because you don't like to do it. It's like, that's what really, I think that's what really grinds things. Like I, I meet with a lot of entrepreneurs every single week. It's like, we do these free valuations, we let coach all the rest of it. Like, and the. A lot of the times when you're meeting with someone who's kind of that sub million, sub 2 million in revenue, which by the way, I've had a lot of companies there. So it's like no way judgment, but they're just, they're, they're stuck there because they're in all those boxes of the org chart. So it's like half your day gets filled up with 20 to 18 an hour tasks instead of your CEO or your sales function, which is going to like totally, he's 500 an hour, two and 15 hour, that kind of thing. 

16:48 Totally. Yeah. No, I, I, I call that, I call that growth readiness and, and I, I've, I've made a whole play on this. I made a whole assessment on this. Scott, you're going to let, I should have you take it. It's the funniest thing because. You know, there's, there's all the boxes. There's all the, there's all the roles that you need to take on within a company to see it get through that, that 2 million, 3 million threshold. Like there's a whole shift that has to happen there. And most of the time it does get sucked there because the founder is so, is so founder dependent. And, and until you can find that, hey, yeah, I can do my accounting and I can do all this stuff, but I really suck at it. And it. You know, when I look at what a P and L it makes me sick inside, you shouldn't be doing that. Then, you know, I'm like, you've got to, that's the first thing you need to hire out. And when you recognize the things that you can do, but don't like, that's the moment where you start to see incredible growth because guess what? There's somebody else that loves doing that thing. And there's somebody else that loves doing that thing. And they're not always that expensive to hire. 

17:49 That's right. Yeah. And they're ha and they're happy to do the work. And it's,  it's, there's, there's fear there. Like there's a bit of a leap, right? And like, so I would say the first three companies that I ran, even though I had a lot of people in them and the second one I had a 25 and like, that's a decent amount of staff, but I'd never mentally made the leap to actually properly, they did work, but I wasn't properly getting them, you know? And so it wasn't really freeing up my time, which is the main reason why. We should be hiring people anyway. It's like, okay, you're hiring this function. They love that function. You hate it. Put them in there and boom. What do I get back? Time, time to invest in like higher value tasks. And when, when it happens, it's like, Oh my  gosh, it probably took me six companies to figure it out, which is brutal, but I'm a full learner.

18:36 Well, and, and, and listen, you're not alone there. And, and I'm, I'm actually, uh, thinking as you speaking about my current organization thinking, okay, why did I opt in to take over that task from somebody when. They were perfectly happy doing that. They were doing it as good as I wanted them to. So I took it back, but, but I'm already thinking, okay, I'm going to have a conversation tomorrow morning with that person and say, look, you know what? I don't like the way you do this, but this is how I want it done. Can you do this? And if you can't, I got to find someone else. 

19:05 And like, I'm telling you, it's freeing and it's in the beginning. I think part of the reason why I had a difficult time doing it is because I knew I hated the work and I just felt bad about 

19:15 Exactly!

19:16 bad about telling this person to do this. I know it sucks. It's horrible. And then you, you do it and you give it to them. I sat down and doing review with one of my team members and I'm like, what do you like for your job? What do you like hate about your job? How can we make things better? Like this whole chat, right? And right. He's like, I love the data. I love doing this work. I'm like, Oh my gosh. Like that is heavy. 

19:44 That is so funny. 

19:45 I'm learning real time. It's like, you actually love what I hated and like, you're getting joy from it. And like what better person to do it than someone who enjoys it. So, yeah.

19:50 Scott, you, you are speaking my language and, and as a multiple founder myself, you know, multiple time founder, it, it's like, you always forget that people want to do those things that you don't like. And every time you go to build a new business, it's like, Doug. Doug was the one that loved doing that thing. You know what I mean? And it's like, I gotta get another Doug. And so you start to look for those things and, and to be honest, oftentimes you find that that same person that helped you in a previous company is just as happy to come and join you now. And I'm, I'm actually embracing that right now. I've got an old friend who worked with me 10 years ago. And I love the way he operated.  I'm trying to find a role for him right now and what I'm building. And I think it's awesome. So this is,  as I tell my wife, this podcast is therapy. And for those listening, if this is therapy for you, let us know in the comments, because this is founder to founder always brings up these types of topics. And I just love how it makes me feel. I hope it makes our audience feel good too. But Scott, as you start to develop the org chart and you start to develop, um, you know, One of the things that I, I see rookies and I'm actually experiencing this with a client right now. Um, I've helped them look at their org chart and they, they first put up positions. And not roles. When you talk to us about how you see a role versus a position or a title and, and how do you differentiate that? 

21:13 Yeah, for sure. Like I can just speak maybe how I built mine out because it's maybe a bit different than the average. So what I did just to think through the process is I actually thought you think about the customer journey. It's like, all right, how is the customer flowing through this business and how are they going to be attached to these each point? Right. So, I used to start with marketing. Now I don't start with marketing. I start with data. It's like, cause that just seems  interesting.  Wiser at this point. It's like, okay, data, like who are we actually going to be selling to? I, because marketing is broad. It's like, I'm going to throw something out there. Here's real life. In 2021, I ran an event called the Exit Plan Summit. We had like 300 entrepreneurs out at it, business owners. And I had the top speakers, blah, blah, blah. It took me six months to put this thing together. I got zero business out of it.I got great personal growth, like all the rest is great contacts. So it wasn't like not worth doing,  but not any business. Well, why? Because it was just a broad spray. It was like, you own a business. It's like, it's like, come to this event. Right. That's like traditional marketing. And now it's like it's a data. It's like, okay, data, because now we can do this. It's like, who exactly is our customer? Because I want them to get in front of them. So that's the first piece of the York chart. It's like, who's on the data team, which then flow to the marketing team, because now we need to. So those people need to know get in front of those people in front of them somehow. So it's like, okay, then the marketing team, like, what are the marketing things we're doing? And like, who are doing them in the org chart? Then it goes to sales. It's like, all right, the marketing people aren't going to be the salespeople. So now we need to tell to them, right. It goes to that. And after that. Now we do product delivery. And so I basically have my org chart built out that way. It's like, here's the team that does data. Here's it. And they all report up right to their reflective managers. And then the all happens and then off to the side, because it's not part of the partner, the client journey. It's like your finance, your HR, like recruitment, like this kind of stuff, right? That every company needs  IT, uh, because, but that, that's where it sits on the side of the org chart. And then, then you have your traditional org chart kind of flows up to the people that they're reporting to and that kind of thing. But I thought about it that way. And then you lay on top of what I already talked about. I love that. The personality types inside the org chart, each one of those boxes, like what personalities are going to thrive there. 

23:26 For sure. 

23:27 Yeah. 

23:28 And so do you hire by a disc, uh, uh, results? I mean, I mean,  once you've done enough of those, you kind of know. So when you meet someone, which, which letter they are, but like, how do you do that? 

23:39 Yeah. So our hiring process is, you know, put, put the application of whatever, like do the postings and whatnot. And then, and then we do an initial preliminary interview with somebody that isn't me. It's someone on my team that we're going to be working with. And then from there they go and do, we use PSIU. It's a put together by a guy named Lex Cisney. And so it's very much, it's like DISC, but it's an organizational focus. It's like, what's your, how are you going to work in the organization? So it's a little bit more refined for like hiring. And then from there, they'll do a meeting with me at that point. And whoever in the department is, you know, going to work. And so we do that. I'll just walk through the other steps because I might as well, because I'm here. And then Arsenal will hire them. They'll come in, but it's very much temp. It's like, okay, you're here for, we test them out with some, actually test them before you bring them in with a task. This saved us with a guy that was going to move from the UK. Did the PSAU, did the meeting with me. I'm like, yeah, perfect. Like this guy's going to rock, be a rock star. Then we tested them out with just one task. We're like, Hey, we're going to give you one task that is going to be part of your role. We gave the one task and they're like, I don't know if I, I'm, it's like, Oh, so the second you saw work, you got,  It was like, perfect. So now we do that. We give them a task that's reflective of their job. And then after that, bring them in, they're here for two weeks, a month, kind of on just like attempt to see if they work with the team and they liked it, like the company. And then they're in the, into the fold. So,

25:04 I love that.  Wow. That's actually, I'm so glad that you shared that with us because I think a lot of people wonder, how do I actually pull this off? And a lot of people will just kind of surface judge where it's like, Hey, I think that guy's a D or I think that, you know, is an S. Um,  and then you get your oddballs like me who, when I took the disc test, uh, I scored equally in three areas and almost nothing in the other. 

25:12 Yeah. 

25:13 And it was the most unusual. I learned that I'm just a chameleon of sorts. I can adapt to whatever I need to be based on who's in the room. But, um, you don't need that. You don't want that in certain roles. You want someone really strong and in certain categories to really embrace and love those roles and positions, you know,  I love this. I, I, I'm just, I, I'm, I'm a lot of reflection right now upon my own situation right now. And, and something that I'm working on right now with a client. And, um, I'm just thinking through how to implement and execute some of these things for those listening, please let us know, is this relevant to you, uh, Scott, I know that as you're looking at new businesses and new opportunities, how, when you see someone who's actually taking the time to do this, And they really know their organization. They know the personality types and all this kind of stuff. What does that do to you as someone who's prospecting?  

26:23 I want to hug them. Like that's like, seriously, there there's. You have no idea how many businesses we look at, but it's unfortunate, like a lot, right? We did this tool called the Value Acceleration Calculator and like we'll meet the entrepreneurs and kind of give them the value and like the three levers, which actually, before we end here, I'd love to talk to the three levers to like increase share value.

26:43 Yeah, please. 

26:45 Either way, we'll take them through that and I've done about 300 of these over the last About two years. So I've seen a lot of PNLs, a lot of companies, a lot of where they're at from a risk perspective and very few entrepreneurs. And I, you know, I, I wish more people to do it because it's about two years of a little bit of extra pain that gives you like so much more freedom on the other side.

But either way, it's, you don't come across a lot of businesses that have done the thinking. And not, not many entrepreneurs, you know, I get it too, like don't want to do it. Like in my early part of my career, I just finished up an MBA and I was all excited to like, kind of put some of this stuff to work and was working with the owner that they owned an auto body shop or, um,  oil change, like kind of repair place, like this kind of stuff, like just regular garage.And it had four bays. And I was, I did a whole value map on their business. I'm like, Oh, you need to do this and you need to do this and you do this and there'll be more sellable. Wrong audience. You know, it's like they just didn't want to do the work. It's like, whoops. 

27:47  I'm just like, dude, I send Ben out to the corner with a sign and that's how we do it, man.

27:48 Yeah, exactly. So I kind of learned like right audience and all the rest of this, but yeah, for those entrepreneurs that are, you know, willing to kind of. Do the extra level to build the systems, build the processes, really make it great, great  people and think through this stuff. It's such a rare gem that there are multiples, even regardless of the size of the business, there are multiples get a serious lift.I mean, multiple of the, what they'll go for. Right. And those companies is that you're, the difference is you're going from like a six. to a 12 multiple, which is daggering. Right. But that's, 

28:28 Holy crap! do you feel like it's that big of a lift to just have those right four pieces in place? 

28:31 It's all of it. It's all of it. It's like hermosa. 

28:33 I love it. 

28:34 It's not a silver bullet. It's a million golden BBs, but it's all like little BBs, right? Like people look into these things and it's work that they don't have to do in the future that increases the probability of that cash being there in the future. So those that do it, right. Man, I see it because the P's look at it and they go, all right, like the P's and private equity firms, they look at it and go, we're willing to pay an extra turn in this or extra two turns because the work's been done and they're always going to try and grind down. But it gives you a negotiation power, right? So it's, yeah, it's, it's, it's, 

29:04 well, listen up,  I mean, listen up everybody, if you're not understanding what we're talking about, first of all, go understand what EBITDA is. Because secondly, research what a multiple is and when he's talking about going from a six multiple to a 12 Or somewhere in the middle, every single multiple means so much more revenue for you in the exit. And so they've got to understand these, these terms and the principles and, and Scott, the way you are describing, uh, to how to build that value is, is enormously helpful. Talk to us about this thing you've got. 

29:38 Okay. This assessment. Broad scope, 30,000 foot. So everyone can kind of understand like where I go next with this. Right? But even is not a difficult number to calculate. It's like easiest. It's like, all I'm doing is going to my bottom line on my income statement, like right at the bottom and going, okay, how much income did I make? And then I'm just adding back my amortization and any interest that I paid on longterm debt. For the most part, that's it. That's all you're doing, right? There's some other adjustments, blah, blah, blah, blah, blah. But like, that'll get you to your core number. Once you know your core number, when we're talking about multiples The best way to think about multiple is how many years am I going to get paid that I do not need to work? So the average business sells for a three multiple. So I'm gonna sell my business I basically got three years of my labor given to me today and I don't have to work for it And that's right. That's pretty damn good. Like we sold our product management company sold for a three I'm like that gave me three years of income that I could do the next thing and I just no cash. No, it's already there If you go from a three to a six to a 12, like I can sell my company today and there's 12 years of banked work. I just get today. It's like, great. I'm not going to work these years. I'm going to still keep working, just stack on top of that. So that's the difference that this can kind of make. And then just speaking to the tool, the tool is fine. Like anyone that wants to reach out, like all day, I'll like run you through it, but really it's fundamentally three levers. So there's three levers to increase your privately held share value. And there's only three. So this is it. Like, you're listening to this. It's like, great. I'm going to get the goods here. The first,

31:11 Get ready, get ready. 

31:12 The first one, everyone knows is like revenue. It's like, duh, I increased the size of my business by bringing more sales in. That's all the entrepreneurs were all driving for that. We're like, go, go, go, go, grow, grow, grow more revenue. But revenue is the weakest of all the levers, which is like sad. But that's the truth, right? The next letter.  Is your efficiency, which is how much you're drawing to the bottom line, which is like, what's, what's your actual EBITDA size of this company? So we have companies that we meet, they're doing 45 million in revenue. They're doing 1.5 million in EBITDA. So they're drawing 1.5 million to the bottom line. We've got businesses we meet that are doing 3 million of revenue and are driving 1.5 to the bottom line. That's why that second lever is almost more powerful. And the way you think about the second lever in like simple layman's terms, in the way that my brain thinks about it is. The dollar that comes into the top, how many pennies am I keeping at the bottom and every business is different. So you bring in a dollar, you keep seven cents. That's a 7% profit margin business that can be painful. We had an entrepreneur that the biggest business that was in, it was in a technology space, but either way, the biggest business, but they were driving three pennies to the bottom line, 3 percent profit margin. And when I told them every dollar you get three pennies. That's when it resonated. They're like, Holy crap. I got to make  three pennies. I'm like, yeah, yeah. You're keeping three pennies. That's your profit margin. So if you can bring your business to keeping 10, 10 pennies. is you're already breaking through the pack. Okay. Of the average 50 pennies, you're already in the 80th percentile 20 pennies. You're in the 90th percentile. So it's all about like how much that second lever is. What's my efficiency? How much am I driving to the bottom line? How, how big is my EBITDA? And that's not directly related to revenue. I'm telling you revenues are vanity as entrepreneurs. It's kind of what we tell when we're like chatting about the real numbers. How much profit I'm making. So that's number two is profit and happy to talk another time, like how to drive more of the bottom line. Then the third lever is what's the multiple I'm selling for. And that's the risk. It's like, how risky is this asset? The lower risk your asset is, the more, the higher multiple you're going to be able to generate in the marketplace. And so you take those three together, revenue. Now I'm drawing to the bottom line multiplied by my multiple, that's the machine that creates privately held share value. And if you can get all those things like ting ting ting, that's the lottery.  

33:36 Love it.  Love it. Love it. And for those listening, honestly, uh, I I've looked at this spreadsheet. He's got it. He's got a really cool, uh, formulaic way of looking at this. And I think  For those of you who haven't talked to an efficiency expert, honestly, like you've got to, uh, you've got to, and sometimes you can find that in, in the, by means of just another founder who's, who's done this before and they're looking at you going. Why are you spending money on that? Why are you doing that? But, but outside of an advisory board, there are people that this is all they do. They go in and find better ways, quicker ways, less expensive ways to, to function your business. Scott  thoughts on that real quick. As we wrap up this interview. 

34:19 Yeah, like I'm happy to like talk briefly about that efficiency piece because it's the strongest lever by the way and yeah I think I was at a conference in Vancouver the business transition forum I spoke to The session I was running was ROI like where to put money to get the highest bang for your buck kind of thing  but anyway I talked about the efficiency piece and like people didn't really get it because when Most of us think what a fish you were like think about cutting It's like, all right, how can I cut and you can't really cut to get to a 20 percent 30 percent profit margin. Like it's right. Well, you cut, it may pick up one or two points, maybe three points of. Profit margin from a cutting perspective, but the real world, you're going to move that needle on the efficiency is one charging more at the top. Like that's the easiest way to like charge more for you. 

35:08 That is the easiest way.Yeah. 

35:09 Charge more. It's like, how do I charge more? It's like, well, add more value or perceive value or have a better sales product, whatever it is that you can, you know, and I love doing that, like figuring out ways to do that, but either way, just charge more and then the other way to find efficiency is. Really just through how well you leverage your, it's your operations and it's how well you are innovating. Sorry, searching for the word. It's really just about innovation. It's like, okay, if I can do this. With technology, AI is the buzzword, but if I can do this with AI agents, that's, that's the innovation piece. The innovation piece is what moves, like, we do a lot of work in the HVAC space because it's just like private equity wants and all the rest of this.  And so in the last  At least a hundred HVAC companies I've had to look at in the last two years. And it is all over the spectrum. Like it's all over the map. Guys are doing three percent profit margin. Guys are doing 25 percent profit margin. Exact same industry, exact same product, exact same service, like. Nuts. What else they're selling? Like, like Daikin heaters, you know, it's like identical, like they're, they're with,  you know, like even their suppliers are the same, but the difference between what each person's drawing to the bottom line is staggering.And it's all because some have innovated. Some innovated, some didn't, right? So when you think about that efficiency, that's, that's the best way to move the lever. 

36:34 I love it.  Love it. Yeah. And sometimes it's hard to see when you're in the thick of it and you think I can't do without that thing. And the reality is if you just did that thing a different way. Boom, all of a sudden you save 10 percent on that thing. So, so Scott, this is honestly, we could have done this for an hour or two. Um, I love these kinds of conversations and I love people like you who think the way I think, uh, I think, uh, anyway, this has been a really fun conversation. And I, I hope that those of you listening are learning from this, uh, the things that you should be thinking about to add value to your company. The things you should be thinking about as people are looking at your company as a possible acquisition And darn it if you haven't even thought about your business being acquired You need to start thinking about that right now today And think about who can you align yourself with to find those potential? Things that will make your business more efficient, more streamlined, pulling you out of the business. And once you learn those things, you now become a target of acquisition, which is what  I think most people should be thinking about every time they start a business. So Scott, thank you so much for taking the time to be here with us and our, and our people. And for our people listening, reach out to Scott, ask him questions. He is in the loop on what people are looking for and what they want out of their businesses. So. You may be the right fit for someone he's, he's connected with. He's looking for you. So Scott, 

37:55 Thanks Todd. 

37:56 Thank you. 

37:56 Thanks for having me on. Loved it. That was great. Yeah, we'll catch up again.  

37:59 All right. And for the rest of you, we'll catch you on the next episode. Thanks so much for beinghere.