Alex Freytag - Are You Running Your Business, or is Your Business Running You? (F1518)

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Welcome to the Exit Coach Radio show, the show for baby boomer business owners who are looking for cutting edge information as they plan their 3 to 10 year business succession and exit. Every week we interview top professional advisors for their best tips, strategies, and precautions so you can be well planned. And don't miss our one minute exit coach tip of the day on Exitcoachradio.com. And now. Here's your host, the exit coach Bill Black. Thanks very much for joining us. Welcome to the show. My next guest is Alex Freitag from ProfitWorks, and Alex is in the business of helping business owners get what they want out of their business. And today he's going to discuss the topic. Are you running your business or is your business running you? It's something we hear a lot, so I'm very interested to talk with Alex. Alex, welcome to the show. Thanks very much for joining us today. Thank you, Bill. Pleasure to be here. Real pleasure to have you on. Um, tell us a little bit about ProfitWorks. I love the name of the business. Um, how did you get started and, and, uh, how do you go about helping business owners? Thank you. I, yeah, I started Profit Works in 1996, so just celebrated 19 years in business, which is so much fun, quite an accomplishment for us, and I started it around the concept of trying to help employees understand how profit works in the business. We found most employees have this erroneous belief that profit is about 50% of sales, and so we developed a training program to help them understand the true. The true picture of profit that it's down closer to single digits and help them understand how they affect that profit and how they benefit from it when it increases, and that led us to where we are today, which is working with leadership teams initially to build accountability. And build discipline, build a muscle for time management, which I'd like to talk about today. And in doing so, when the leadership teams are completely aligned and on the same page, at that point, it makes more sense to begin to engage the employees in sharing that vision, helping them understand how they impact and will benefit from driving that vision. And my background is in psychology. And I have a couple of experiences in different size companies. One of the publicly traded pharmaceutical distributor and the manufacturing of chocolate was a separate company. It was a turnaround situation and a third experience in consumer product marketing, but overall this is what I found to be my passion. It's a lot of fun helping these leadership teams. And some big needs in the marketplace. Very fascinating background. Thank you very much for that. You know, you talked about helping employees understand the true picture of profit. A lot of business owners would love to do that, but because the employees look at the owner if you're, we're doing all the work, you're getting all the profit, and it's just not true. We both know that the owner's taking all the risk, but also you talked about the the muscle for the time management. Man, we have a lot to talk about, not much time. We better get going here. So, so Alex, tell me a little bit about there's something called EOS. What is EOS and what does it do for a business owner? Let's start there. Great, great question. So EOS stands for the Entrepreneurial Operating System, and it's a way of running a business that helps the leadership team do basically 3 things, and we call that vision, fraction, and healthy. So vision is from the standpoint of getting the leadership team 100% on the same page with where they're going with the organization, where they want to go with the organization, and how they're going to get there. It's sort of strategic planning in its simplest form. Traction is creating the accountabilities and the disciplines in the organization to help that leadership team achieve the vision that they've set for themselves, and we always say vision without traction is hallucination. We've got to have that muscle in there, you know, we've got to have that discipline in there and, and so there's a lot of great tools in EOS that I'd love to share with you, but I'll at least point people in the right direction, how to how to learn about those tools. Healthy is the third piece, and healthy means creating a healthy functional, cohesive leadership team. In most cases, though I'm sure this is your experience, leadership teams are not healthy and they're not functional. There's a lot of politics. There's gamesmanship. There's a lot of ego. And we're working with leadership teams to help them smooth that out and become a really open and honest, vulnerable team, vulnerability-based trust. So there's a lot of really great stuff in the system and we help the leadership teams become really strong in creating. These tools in the organization. I like it because it's simple and it really it's each one of those is a mouthful, the vision of the company and really what what's got to happen and then the traction and how it's how it's going to happen and then that healthy leadership, most a lot of leadership teams. Work they don't work together very well. They're not like a basketball team. They're like a bunch of golfers, you know, they're not, they're they're doing their own thing and they're competing against each other when they should be passing the ball and moving towards the goal and I, and I, so I really like what you have to say there. That's great. I agree. Now why, why would a business owner, uh, want to implement an EOS as opposed to what they might be doing now? Well, we find You have really two types of business owners, and this is probably your experience too from speaking with so many of these business owners, the one type of business owner knows what they want. You know, I mentioned, you mentioned at the very beginning, I help people get what they want out of their business. Well, in order to get what you want, you have to know what you want, and there are plenty of business owners that I've met that really know what they want, and they are getting that. And they're they're on that beach or they've made some, you know, big event happen in their organization. Maybe it's succession planning related to passing the business to their next generation or to a group of inside managers, whatever it is they've started to really get what they want out of the business, and those folks are just ecstatic. They're in a good place. There's another type of business owner though that's frustrated, and these business owners. You know, there's a couple of different frustrations that could be happening. One is that they feel like the business is running them, and we talked about this right at the beginning of this segment, but are you running your business or is your business running you? It's this feeling of a lack of control, and you have this to do list. You have the best intentions. You get in there in the morning and you know by right at the outset the phone's ringing and the employees are coming in your office and the monkeys on the desk and Just leaving all these next steps to you and you can't get anything done and you feel like you're just kind of treading water in the business and it's very frustrating for business owners to feel like they don't have control over the business. The second one I see often is really the profitability, just the lack of profit, and that's frustrating because like you said, you take all this risk, you do all these things, you're providing all these jobs and opportunities, and you're just not making the kind of money that you envision making. A people is always a frustration. It's not just employees, but it could be customers or partners, vendors, all kinds of people issues where people just don't do what they say they're going to do or they just let you down. Hitting the ceiling is a very common frustration, and that's this concept. It's a very natural phenomenon, but this concept of a business just feels like it's stuck. They were growing and they just hit some kind of a ceiling. They can't figure out or put their finger on why they're not growing as much as they as they were before. And very frustrating for business owner and the last frustration I see is related to you're just trying everything. You have the audiobooks, you listen to Pat Lencioni, you listen to Jim Collins. You listen to Michael Gerber, you listen to all these great thought leaders, Gino Wickman, and you, you, you absorb all this stuff. You ask your leadership team to read these books or listen to these books, and you just can't figure out what. It is, it's going to get you unstuck and grow that business. So those frustrations cause a business owner to look at EOS as an option. It's a system, it's a way of operating an entrepreneurial organization. You're, you're, you're really um. Coming up with a very clear message to our listeners, uh, that you know, you, you might have no operating system, you might have a broken operating system dysfunctional. You have something going on in your business that may not be working because you haven't adopted something that is like this entrepreneurial, uh, and, and simple and easy to communicate, it sounds like to me. So that's fantastic, um. And and you've given us a little bit of a high level of it, but give us a, can you give us more of a high level of the EOS and how it works. I'm happy to. The system itself is made up of 6 components, and if you picture a wheel, the components are these sort of pieces of a pie, if you will, so 6 pieces. So there's vision piece which is which is getting everybody 100% on the same page with where you want to go. I find. You find a leadership team oftentimes one person's rowing in this direction and somebody else is kind of rowing over here. You know, we had leaders in the same room where they say, what do you want to be in 10 years? And then one owner says, we want to be $75 million. Another owner says, I think we want to be more like $50 million. And so we need to get alignment there. We need to get clarity. We need everybody rowing in the same direction. So vision is one of the most critical pieces. Second piece is people, and you know, people, as I mentioned earlier, is a common issue. We can't achieve our vision if we don't have the right people. And so we got to have people who share our core values. Core values are part of what we discussed within the vision component. A third component is data, and we need to cut through all the opinions and the and the anecdotal and the egos and get good hard solid data. And when we can run the business where we have clarity and alignment on vision, we're very strong in the people component. We have the right people and they're all in the right seats, and we have access to good, hard, solid data, we have a very honest and open, transparent organization. And any barriers to success really stand out, and we call those simply issues, and a leadership team's ability to achieve their vision is directly related to their ability to solve issues. So issues is the fourth component. And there's some tools and methodologies and disciplines for helping leadership teams process and solve issues in a very functional, honest way. The fifth component is process, which is probably the most overlooked component of any business because it's a lot of minutiae, but it's this idea of getting a lot of consistency inside the business from how you do marketing to how you do HR to how you do sales and so forth, and get those documented at a very high entrepreneurial level. Do the 20% of the stuff that's going to get you 80% of the way there. And the final piece is traction, and traction brings together a lot of the other pieces, but it's the disciplines are 90 day priorities and weekly Level 10 meetings. So I mentioned time management earlier on. EOS is about getting strong in all these components, these 6 components, using the disciplines within each. Components and creating a time management system that helps you gain more control of the business, gain more traction, and ultimately increase the value of the business for these, for these baby boomers that have all these businesses, you know, this exit bubble, there's a lot going to be a lot more people selling than buying businesses and so they need to to stand out and differentiate. Yeah, it's really it's time to, you know, it's, it's kind of like you think about. People that want to run a race, they want to run a 10k, but they haven't run a 10k in a long time. They've got to start training now and getting that muscle built up and this, and they need a disciplined process and system to do that. And it sounds to me like with the with the six components of vision, people, data issues. Process and traction, you really have a great track to run on with this. I love this. This is great stuff. So the time management and the muscle, how, how do people get started on this and how much, I mean, people are busy, how much time should they devote to uh adopting this type of a process, um, the, the EOS. Yeah, there's a very simple, you can imagine everything we do is around simplicity, you know, as you grow an organization, it naturally gets more complex and so anything we can do as leaders to simplify, simplify, simplify helps us move through that ceiling so we don't hit that barrier of feeling stuck. And so this the implementation process. Is building the foundational tools. There are basically 5 tools from the Vision traction organizer which helps you get everybody on the same page with the vision where you want to go and how you want to get there. There's the accountability chart which we do right at the beginning, and that looks like an org chart, but it's got accountabilities on it and we've got to build that first. What is the ideal structure for the organization in order to get it to the next level? The rocks are the 90 day priorities, and we got to get those set that are aligned with our one year plan. We have to get really good at our weekly meetings. We call them Level 10 meetings and we have very effective 90 minute meetings where you work on the business with your leadership team for 90 precious minutes a week. Setting up issues and knocking them down, solving issues forever, and then there's a scorecard. We've got to start sort that out. So at the early stages we want to get those tools developed and then get into a 90 day rhythm. We find that people just fall off track after about 90 days. We always want to come up for air every 90 days. And I'm an implementer. I'm one of 104 implementers around the world, but most of them are in the US, but many companies hire an implementer to help coach them to get strong in these six components of EOS. So we really, we take you out of the business for a day at a time and help you build these foundational tools and then help you come up for air every 90 days so you get strong in those 6 components. Terrific. That's fantastic stuff. It really makes a lot of sense. Everything you're saying is bite size, which business owners need. Simple to understand. I think one of the mantras out there today is don't make me think too hard about this process, you know, give me some things that I can understand and do, and everything you've said so far just makes a tremendous amount of sense, Alex. And so now you have a you have a book out and an ebook available. Tell us about those. Yes, there are actually there are 3 published books on Amazon. The first one, if you're at all interested in this, is Got to read Traction. Traction is by Gino Wickman. He's my coach, my mentor, and he's up in Detroit. Great guy. And developed the ideas that are in traction over a period of about 15 years and that really everything I've said so far is in that book and it's a great way to immerse yourself in EOS. His second book is called Get a Grip, and it's a fictional kind of fable of a company going through the implementation process. So if you like reading sort of a fun story. Read but really gets into EOS from a pure standpoint. Third book is called Rocket Fuel. It just came out in April, and that dives into the relationship between the visionary, usually a founding visionary of an organization and the integrator and the person who's really great at leading leading and managing and holding people accountable and diving into the accountability chart in great depth. We've got more books on the way over the next couple of years, which is a lot of fun. And then I have an ebook I wrote last year, and I'm gonna republish it, but it's available for for your audience, of course. It's called Achieve Your Vision, and it's available on our website which is profitworks LLC.com, and uh you just type in your name and email address and it just gets sent right to you. But that goes into this overview of the distinction between building credibility at the leadership team level through EOS and building trust within the organization through a process of employee engagement. Oh Yeah, those are great building blocks for our listeners and you know you're exactly why I started this show to help business owners out there to hear from someone in a very brief amount of time you've given us a tremendous, I mean, I got a page full of notes here, um, and it all, it all flowed beautifully. It all makes a lot of sense. Now, you're also a speaker and you speak at groups like Visage International and other business owner oriented groups. Is that correct? That's correct, yeah, I, I love doing public speaking. I have a background actually in improvisational comedy, so I try to pull some of that into my talks while giving a very solid business-based discussion or overview. Primarily of EOS, but I, I try to bring in a lot of my other experiences to that. I speak with Visage groups. I'm a Visage member as well, big fan of Visage. It's done a lot for me, but also a big fan of, of EO, YPO and other organizations that help leaders become their best. So again, if you're a group leader or you're responsible for finding an interesting speaker for a business owner group out there, uh Alex Freitag is your man with ProfitWorks. Alex, how do our listeners give us, tell us one more time how to best get in touch with you? Sure, a couple of ways. One is uh email address, um, and uh my email address is alex@profitworks LLC.com. And uh the second way would be my cell phone which would be 614-571-8826. Fantastic. Well, you've given us so much great information. I'd love to talk to you for another hour, but unfortunately we're going to have to move on right now. But I'd love to have you back again and talk more about some of these um specific areas in more detail. Maybe we can kind of build a library of these audio library with you. So join us again, will you? It's been fascinating having you. Thanks so much for joining us today. No, thank you very much. Have a great day. We're gonna take a short break. We'll be right back after this, so please stay with us. Hi everybody, this is Spike Riel with the Exit coach. Business owners, can you name the eight key value drivers that you and your manager should be focusing on to increase the value of your business? Introducing the Sellability score index. Visit our website and answer 25 questions about your business, and you will instantly receive your sellability score, showing you how well you stack up in the 8 value driver areas. It's a great management tool. It's absolutely free for our listeners. 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