Jonathan Goldhill - What Does it Take to Scale a Growing Company? (D1218)

Hi everyone, it's Bill Black, the exit coach from the Exit Coach Radio show. You know, one of the biggest questions I get on the show is what exactly goes into a business exit plan and when should I start creating mine? Well, I always tell people that the best time to start was 5 years ago, but the next best time is now because you never know when you might need it. So we put together a free report that describes what an exit plan is and what you should know. You can get it free by texting exit plan with no spaces to 44222. That's exit plan to 44222. Again, text exit plan to 44222. 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. 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. Well, hello everyone. Thanks so much for joining me today. I appreciate that. We have great guests here talking about all kinds of tips, ideas and precautions for you, the busy business owner, and today I'm thrilled to announce our guest is Jonathan Goldhill from the Gold Hill Group in Oak Park, California, and Jonathan is involved in the field of exit planning. He's a business and executive coach. He serves as entrepreneur. A leaders, entrepreneurial leaders, I should say, of growing companies, and today our topic is going to be what does it take to scale a growing company. Jonathan, welcome. Thanks for joining us. Thanks, Bill, for having me. It's my pleasure. Uh, one of the things we like to do, Jonathan, before we dig into the, the meat of the matter, which I'm fascinated to talk to you about, is, uh, tell us a little bit about you and your background and the Gold Hill Group. Well, great. So let me start with a little bit of uh an exit story and uh. So my background is my father passed away at the young age of 35 when I was 2 years old, so staying active, yeah, very tough. And so, but staying active, Bill, eating healthy and being fit has always been my number one driver in life because I figured if I didn't stick around the planet long enough, then I'm certainly not going to make any difference in the world and not going to be able to be a father to my own children. And I'm an offspring of a family business, so my family, meaning my great grandfather, grandfather's, and his brothers and sons had a very successful family business making men's suits and sports coats based in New York City. It was so successful that it bought Botany 500, a well-known brand name, out of bankruptcy in 1973 and produced that brand until 1986. And then when the garment industry took a downturn in the second half of last century, they ceased all manufacturing operations in the US, and I think, Bill, this is another example of a family business that didn't survive past the 3rd generation. But for me its legacy is what ultimately fueled my passion for my interest in helping privately held entrepreneurial and family owned and run businesses. And so after trying to build an art and clothing business in 1986 in Venice and And having some success, I realized I needed to go back to school. So I went back to business school and I went to USC and got my MBA in entrepreneurship with a focus on management consulting. And then when I came out, I was a believer that small businesses needed the most help and that I could make a real difference there. So I spent the next 10 years building a local small business development center into the region's most successful business and economic development firm. And during these quarterly planning sessions we formulated a vision for building a nationally recognized firm and lo and behold it took 25 years, but they ultimately grew to 100 million in assets with offices across the US and I think of that when I think of that story, I think it just goes to show that overnight success stories like Apple computers and many other companies, they take 25 years in the making. So But anyway, enough about that. I left that 18 years ago to go out on my own as a business consultant and then a business coach and have been coaching entrepreneurs, executives, small business owners, and leaders of teams ever since. And so that really great background story. Yeah, it's fantastic and, you know, oftentimes out of adversity comes come wonderful outcomes, and I'm happy that you were able to Um, overcome that losing your dad so young and and build, build from that. Um, you know, you talked about that scaling and that 25 year overnight success. How does that start? I know there are a lot of business owners out there that would think, boy, I'd love to scale up, but it just seems like I just can't see it. Does it start with coaching and vision? Well, I think vision, as I'm sure many of other guests here have talked about, is probably the number one thing that propels people forward vision and passion, right? So I mean, it starts with some kind of an idea. Michael Gerber talked about the entrepreneurial seizure that a lot of small business owners have, but I think some, some people coming out of schools and watching. Um, companies that are, you know, catapulting to become unicorn valuation type companies are seeing that really having a plan. They can raise some money and they can climb a mountain with other people and, and I think coaching then comes in a little bit later down the road once they've gotten. To some level of success. So for instance, I don't really take on clients that aren't already at a million dollars in annual revenue or turnover because they just, they haven't hit enough of a wall. They aren't stuck enough. And so I like them to come to me when they're sufficiently frustrated or stuck or unhappy and they're saying like, wow, I had a vision that I was going to have all this freedom. And fun and it's warped into a little bit of a nightmare and I'm, uh, you know, I'm working really hard and I'm having, I'm having challenges and something I'm doing needs to be done differently and I, I don't know what it is. Yeah, and you mentioned the Michael Gerber Eyth books and listeners, if you haven't read them, they're excellent if you're a small business owner. But what Michael Gerber says is a couple of things that I recall off the top of my head. One of them is that most business businesses are started by technicians or others that want freedom of The perceived freedom of owning a business, and the second thing is that he says is that you should never start a business unless you have the intent of someday selling that business. Would you, would you validate that, those two points? It's, it's so true. And yes, he talks about the That um a lot of small business owners are 80% technician and, and 20% sort of visionary leader, entrepreneur, and manager, and he's, he's so right. Um, I, I really like what John Warlow, author of, um, Built to sell and the and the automatic customer, he's come up with these concepts based on his research of two types of entrepreneurs. One, he calls a mountain climber, the other he calls a freedom fighter. And I think that that really describes the freedom fighter. Those are people who they're not really looking to build this business and then get into another business. This is going to be maybe their one and only show. So I think there's a whole breed of entrepreneurs out there and they're kind of in the minority, but they take in outside investors and they're building this company, but they're already thinking about the next company that they want to build, and they're a whole different breed, Bill. Great, great point. And the Freedom fighter is the person who's just looking for a replacement job. They, they want their own, but, but they have some. Perceptions that are often misperceptions and that's what you're talking about. My question is, in your experience, can a freedom fighter become a mountain climber, somebody who wants to scale their business and grow it? And if so, what steps do they, you know, what, what are the first steps that they have to take to, to move from, from one to the other? So I don't think they moved from one to another. I think they have one personality type or another, and I think John talks about that again in his research. But I think my family, they were freedom fighters. They were, they were not mountain climbers. They were just looking to build something for their family, and it, and it extended and extended beyond that and beyond that. I mean, it was a very large company. Um, so, but they didn't take in outside investors. They were not looking to build it to sell it. They were looking to build it to create jobs for, you know, all the immigrants that were in their family, and I think that's a really common theme. So I think you can see some very large businesses today that are at that freedom fighter mindset. So I don't think they necessarily switch from one to the other. I think they're just they're different and they're motivated, it's more of their motivations and why they're doing what they're doing. So it's a good point. Um, the one thing I guess they both have in common is someday there will, there will be an an ownership transition, whether by sale or transfer or merger or whatever. Um, so what can business owners do to start thinking about getting their business ready for that event? So I think first of all they have to make sure that they are that the people in the leadership roles are reproducible, right? So if they have an owner dependent business versus what we call a systems dependent business, that can be really problematic to take the business to the next level and to be able to sell it. So it really has to get beyond their leadership, and I think this is where coaching oftentimes comes in is because as companies grow, they get stuck with maybe the same people and they're outgrowing their people or those people are being outgrown in the position that they're now in, you know, having to manage maybe more people. And then the leaders themselves outgrow their or hit a ceiling where they aren't able to grow beyond their own leadership abilities. And this is where I think coaches have made their money is by being able to provide people sort of a bridge or a ladder out of that to this this next level and breaking through what, you know, what sometimes is called that ceiling of of complexity and so. That's, I think that's the answer to your question. Yeah, yeah, good point. And so when, when business owners bring in a coach, a lot of times they say, well, you know, nobody knows my business like I do. What's the point of bringing in a coach? But pro golfers know how to hit the golf ball pretty darn well, and they have coaches. So can you talk a little bit more about, you know, why would somebody hire a coach and what kind of results can they expect from that? Yeah, so I always tell my clients, Look, you guys are going to know your business much better than I'm ever going to know your business, right? But I understand business and I understand principles that are going to help you to scale your business. And so, Um, don't expect me to become an expert in your business, but I have proven processes that are going to help you to drive your business to the next level. And specifically, I mean, the types of things that I tell them to expect is, look, I don't, I, I, I'm going to promise, but I can't guarantee that we're going to increase your cash flow by 2 times. And by the time we're finished working together. that you're going to achieve 3 times the industry average profitability over those in your industry, and that you should get a 3 to 1 return also on the invested dollars with me, so a 3 to 1 return on your coaching investment. So I can promise those, but I can't guarantee, but I will guarantee that they're going to grow personally and professionally and that they're probably their lives are going to improve at not only at work but also at home and They're going to attract better people into their company and their life and they're going to have a more valuable and more sellable business so that they can exit with more money and ensure a, you know, either a proper retirement or a bigger legacy. So that that all sounds great and especially the fact that they will get a return on their investments. Sometimes we talked to business owners that have made that have heard about a concept or a strategy, gone to, let's say, an attorney to implement that strategy, and then $10,000 later realized they don't want that strategy. That's all that's all they go down rabbit holes and And does coaching help prevent that? And also, second part of that is when should they approach someone to start coaching if they're say they're they're planning on exiting down the road, when is the right time to bring somebody in? OK, so a couple of questions in that. So the first one is, so if they've gone to a lawyer for a strategy, then they're probably looking for a legal strategy that would be like going to a finance person and developing a strategy merely from that. And I think where coaches come in is coaches are really in the value creation business, so we're not only looking at their strategy and taking them through some, you know, proven processes to help them define their strategy, but we're also looking at their people, their finances, their execution ability. So I think Looking at a broader set, so we're a little bit more multidisciplinary than a lawyer or an accountant who's being brought in, and I think that they should be coming to a coach when they've hit a point where they're sufficiently frustrated in their business that they can't really maybe achieve what they want and they know they want to get to the next level. So that's, that's kind of a pretty typical situation or or they're scared that they're going to miss out on an opportunity and they just don't know what they need to do, but they know they need to do something different. So those are so pretty telltale signs like fear, frustration, or unhappiness with some aspect of the business. Great points. And so, you know, as, as I think I hear you saying, you know, this process of exit planning and coaching and all of this is going to take you through all of the disciplines of financial, legal, accounting, tax planning, uh, operational type of of uh strategies and. Not to say that you're not going to use your professionals when it's time to implement those strategies, but somebody, it's kind of like the blueprint for a building, isn't it? Somebody needs to come up with the blueprint before all the contractors show up and tell them when to show up and what kind of work they're going to be doing, and you don't expect the electrician to be to be plumbing the pipes. Yeah, and I think you need to build a team of advisers, so the business coach isn't the one be, you know, be all and end all person. I think we're just on the value creation side. I think the accountant and the attorney plays a vital role because, well, one, they're involved in the distribution of value and A make making sure that the owners can maintain as much of the value, so you know they're dealing with tax issues and there's all kinds of strategies around that. And so I think that they need to build what I call the four horsemen. They need to have a wealth manager, a lawyer, an accountant, and a coach that are involved not only in value creation, protecting and distributing that value, but also then compounding it. So that's, that's my advice to anyone. And now Jonathan, we've got a couple of minutes left and I wanted to get to your book which is called How Some Companies Make It and Why the Rest Don't. Tell us a little bit about that, about the book, what's it all about and who should read it. Yeah, so this book is the full title of it is Scaling Up, followed by what you said, and it's by Vern Harnish and the team at Gazelles International, of which I'm a part of, and it has proven tools for business, specifically, if you want to build an industry dominating business, I mean this is the, the book, and if you want to scale up and if you're a company, let's say doing My, my typical companies are grossing $5 million to $50 million plus in revenues with usually 15 to 200 team members. But if you're looking to scale up your company and if you're a learner because our our community and our the book is filled with lots of other references to other books, then this is a great book that I would highly recommend. It's been on the shelves since 2012. It's in another round of printing. And I make all of my clients read it before we go into the first off-site meeting. And, and then for those of the uh who are not familiar with the book at all, you know, of course you can pick it up on Amazon, but you can grab a chapter, the second chapter of that book right off of my website, along with some of the other free tools that we make available for scaling up your business, so. I highly recommend that people check it out. And uh and I can second that that is very, very valuable information. Most business owners definitely should, should read that. Uh and how do they get to your website? What's the URL address for that? So it's the Goldhill Group.com, so www.the Goldhillgroup.com. And And if they want to reach me directly, they can reach me through the website or they can email me at johnjo at the Goldhillgroup.com. Well, John, you did a great job by explaining things to our listeners that they really need to hear about. Do you have any last minute tips or ideas or precautions for our listeners? Yeah, I think, you know, look, Bill, I think what you're doing is tremendous, and this is all about growth and about learning. And so my tip to people is be growth oriented, not just goal oriented, right, because if you're growth oriented, you'll also be goal oriented, but if you're goal oriented, you won't necessarily be growth oriented. So learn, you know, read as many books as you can, become knowledgeable, create a thirst for that, foster that within your company. And of course I would be remiss in saying, you know, download the Rockefeller habits from our website and learn how to start putting those in place because those are 40 best practices that all successful companies should incorporate into their business, and those are called the Rockefeller habits. And that is tremendous information that, uh, you know, why wouldn't you read something called the Rockefeller Habits, right? That's great information and the wisdom seeps through. Jonathan, you've really helped our listeners to understand a lot more about what they should be thinking about to grow and scale their business, which makes them attractive and valuable to a buyer down the road. And that's really what we hope you will grab onto, listeners, and get in touch. Go to the Goldhillgroup.com. John, thanks so much for joining. It's really been a pleasure, and I'm sure we'll have you back on again soon to go further down the path of this type of planning, but I really appreciate you coming on today, and I look forward to our next conversation. Thanks, Bill, and to the listeners, keep scaling up. Thank you for listening to Exit Coach Radio.