Mike Leannah - Grow Your Business Value NOW to Maximize your Future

Time is precious and so are our pets, so time with our pets is extra precious. That's why we started Dutch. Dutch provides 24/7 access to licensed vets with unlimited virtual visits and follow-ups for up to 5 pets. You can message a vet at any time and schedule a video visit the same day. Our vets can even prescribe medication for many ailments, and shipping is always free. With Dutch, you'll get more time with your pets and year-round peace of mind when it comes to their vet care. 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 442-22. 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 for their best tips, strategies, and precautions so you can be well planned. And now here's your host, the exit coach Bill Black. Hello everyone, thanks so much for joining me today. Always a pleasure to have you with me. And if you wanted to hear from an expert about succession and exit planning, you are in the right place. So grab a pen and a pad of paper, get ready to take some notes. My guest Mike Lianna has been in over 20 years as a C-suite executive position with various industries domestically, along with 4 years of international experience with the Fortune 100 company. OK, so he's got the big company experience, but as a Entrepreneur Mike organically grew his company from 2.7 million to 22 million in a four year period, realizing IBEDA growth from 400,000 to 3.1 million. That's a huge jump in revenue and profits. So we're going to hear about that now. Mike joined Cornerstone with the goal of helping business owner clients plan for the single most critically important financial event of their lives, the transition out of their business. Mike is a member of the BEI network of exit planning professionals, has earned the designation of a BEI certified exit Planner, or CEXP, and today we're going to talk about how and why you should grow your business value now to maximize your future. So Mike, welcome to the show. Thanks so much for joining me today. Well, thank you very much, Bill. I appreciate you having me on. It's always my pleasure, you know, great to talk to people who have actually been out there and done it. So I'm looking forward to talking to you about that. Tell us a little bit more about your background and your experience. Well, as you, as you stated, I've, I've been with the, with the major corporations, but then had the opportunity to uh uh purchase uh and I've been involved in with the major corporations and, and mergers and acquisitions, um, but had the opportunity to uh purchase a company, which I, which I did and what you talked about. And, and it, it allowed me to, to look at it and it's, and I started the business with the exit in mind. Which is, which is different than a, than a lot of entrepreneurs. But when I started the business, I said I had a 10 year plan and basically worked backwards to accomplish the goals that I, you know, that I set out to, to accomplish. Um, and since, since that business, I've been a CEO for a couple of different, uh, firms, uh, just recently before coming to, uh, Raleigh, North Carolina to uh work with entrepreneurs. I worked with a private equity firm and and the reason I'm doing what I'm doing is because I, I did acquisitions for that private equity firm and I looked at the perneurs and the, the hard work and the effort that they put into their businesses, but didn't know how to properly package them and prepare them to be acquired so that they could maximize, uh, you know, maximize their value. And so, that's the reason why I'm doing what I'm doing is, is to, is to help entrepreneurs really take a look at the business and help them grow it uh today, so that they can um maximize their value when they, when they do want to sell it. That's great, and it's very impressive that you grew your not only your revenues but your profits almost eightfold over that 4 year period. I'm sure our listeners would like to hear more about that, but I don't know that we have time today for all of that. Let's talk about what you're finding. What do owners and CEOs tell you that is the biggest issue that they're facing today? Well, as, as I talked to, to uh business owners and CEOs, um, their biggest issue is people. Uh, and getting the right people in the right, so getting the right people in the right seats on the bus to drive, you know, to drive the business. And as I, as I talked to them and, and as I looked at some data and whatnot, Gallup poll, uh, says that 70% Of of uh employees are disengaged employees. So what that means is that as you, if you have a million dollars in payroll, you're spending $700,000 on disengaged employees. And, and, and that's, that's overwhelming. I mean, that just, that blows a lot of CEOs and owners away, but in reality, that is really what's going on. 20% are totally disengaged, 50% are somewhat disengaged. But the, the, what I've been trying to work with them is to look at who that is, uh, and, and, and, and, and either turn them around or move them, uh, you know, onto a uh uh with another company. We do have a tool. I have on my team a behavioral analyst, a licensed behavioral analyst that has a system that works with the CEOs and, and with a 7-minute test, he can, he can tell you with a 95% accuracy, the people that are engaged and those that are disengaged, and he provides for that, for that, uh, CEO. The opportunity to say, OK, now what am I going to do with that data? And what I liked about it is that it's data-driven. It's not emotional. It's not what a feeling is, what a gut feeling is. It is data-driven because what they, what they measure is the natural behavioral traits of an individual versus the behavioral traits that that position or that, that position requires of them. And when they, when there's a, a A difference in those, uh, in those things, the employee becomes disengaged and you have a, a, a likelihood of that employee, uh, leaving the company at, at some point in time. Now in this day and age of COVID, and a lot of people have laid off some of their staff, of course, and this sounds like it might be very beneficial as they hire people back on to to find the right person for the seat in the first place. Is that true to say? Yeah, I mean, Bill, you're, you're, I mean, you are right on that's exactly what, what, uh, what, what they need to do as they, as they bring people back or as they, as they bring on people is looking at the, you know, making sure that, that, that there are natural behavioral traits, because if you're, if you're working and it's, and it's your natural way of behaving, guess what, you're going to be more productive, you're going to be more satisfied. You're going to have less stress, uh, at the job, therefore, less stress at home, and it impacts the, the, uh, you know, the productivity and the, and the profitability of the company. Typically, if you can get people's people to engage in their business, that business is going to produce 20% to 21% more profit than one that doesn't, doesn't measure it, doesn't even think about it, and doesn't or doesn't know about it. Yeah, I've heard of this often in the past that that it's always a good idea to try to get your people engaged, you know, you say 70% are disengaged, and I've heard that figure before. What is a hoped? I mean, you're, it seems like you're always going to have some percentage like the Pareto principle, right, where it's 80/20, 80/20 this, and 80/20 that. Is there a hoped for percentage and what's the impact of that? That percentage you just mentioned, 21% increase if you can get a certain number of people in the right seats on the bus. Right. I mean, the, the impact is, is, is substantial because what you're, what you're doing is if you are, uh, if you're not in the right seat on the bus, your productivity level is gonna, you know, you're not going to operate at 100% efficiency. You're gonna operate at 50, 60% efficiency. And what this does, it's, it, it tests it, tests people so that, so that the, the CEO can put that person in the, in the right seat, and the way they can get a 100% capacity or, or or efficiency rather than just a, a, you know, half, half efficiency. And that, just by doing that, you're getting, you're getting the right people, they're going to be more satisfied. They're gonna be, you know, engaged in the business, they're they're, they're gonna want to do well. And I, I think it just, it, it just, it, it makes sense as, as people bring people back to, to, you know, it's a seven-minute test. And, and, you know, I was, I was hesitant when I, when I first heard about it, but, uh, so I took the test and I'm telling you, it nailed, it nailed me right on. I mean, it was exactly my, my behavioral traits and, and I was just shocked and surprised. Yeah, over the years it's funny, I've done several of those tests and they've all kind of, you know, nailed me, you know, as far as so it's, you wonder, or is it kind of like a horoscope? Do they just, they just get you right out of the gate? But there's a lot of science behind these tests and they were, I think early on they were developed and used by the military to make sure that they had the right people, you know. on on the ship, if you will, in the right places. Let's let's let's move off of that for a second. One question would be if, if you have done everything you can to create satisfied. employees, you still have another problem, and that is other people are trying to pick off your best employees. Do you all work with companies to help them also retain those key employees? I mean, it seems like if they're happy they're going to stay, but, but there's always that compensation element. There's always a compensation element, and one of the things that we do work with the CEOs and the owners is what, what incentive programs do you, do you have in place? How do you retain your, your top talent? Um, and, and, and you're right, you can, you can do, you know, you can do all the great programs and people feel great, but you still, you got to take actions and steps to, um, you know, to keep, to keep the right people on board, uh, through the different programs, through the different incentive programs, state bonuses, uh, you know, just incentive programs that, that, that. Keep that employee uh totally engaged and focused in align with the goals and objectives of the owner. Yeah, and that's a whole specialized field as well today because, you know, way back when you could say, hey, if you stay with the company to age 65 you'll get a gold watch and a pension plan and of course things have changed a lot. The younger workers don't want to think about age 65. That's really old. They want to think about, well, what if I stay for 3 years or 5 years? So things have changed in that area a lot and it's Very important for owners to get in tune with that. So everything you're saying about the people or the biggest issue that they face lines up with what you're saying. What's the business owner's largest obstacle in building enterprise value these days? You built a company 4 times over in a 4 year period. What do that's hard to do. How do, how do owners Uh, do that. Well, I, I think the biggest, the biggest thing that the owners have to do is to realize that you have to build a team. Uh, it's not about you, it's about the team, because as you transition a business, it's not about the owner. It's about the transferable value that you have in that business. Now, what does that, what does that mean? The transferable value is the management team. Uh, it's the processes that you have in place. Now, that's difficult for an entrepreneur who's, who's a visionary entrepreneur who's involved in the business in the day to day, on a day to day basis, to say, you know what, I'm gonna step away. And, and, and, you know what, I had the same issue. I said, you know, I've got a, I've got a, I've got to trust, but verify, uh, the people that I put in the different positions, but I recognized as, as I was building the company. That I that I knew because I was on mergers and, and acquisitions. I knew, OK, here's what I was going to sell. I was going to sell a VP of ops, a business development VP, a VP of estimating and a CFO. That management team was who I was going to sell, along with the processes. That I had in place to maintain the business and to, you know, get the results of that, you know, that we had. So, but that's the biggest issue with, with, uh, for CEOs and owners, is you got to step back. You got to let the people do their job, um, you know, as, as a CEO when I was working for the private equity firm, I, I thought, I had a management team, and I told him, I said, guess what, guys, you're I'm not gonna do business the way I do business, and that's OK. Uh, if we're 85% there, we're, we're great, uh, because everybody has, is going to bring their, their experience and knowledge to the table, and it's not going to be the way that business owner would have done it himself. Um, but the fact is they've got, they got to look at that and say, you know what, that's OK. Um, and, and, and, and it goes down the organization in the same way. Uh, you know, I told the managers that the people that report to you will not do it the way you do it. And that's OK. And, and I think that getting that, that message out to the group is, you know what, we're all going towards the same, same goals and objectives, but, you know what, I've got to allow you to grow in your particular area, in your, in your way, and do it your way, which is going to be different than the way I would do it. As long as we're close and we're moving in the right direction, let it be. Great tips. Now I have a feeling when you grew your company organically and you said you started with the exit in mind that you had a short list of strategies that you needed to employ and it sounds like one of those was designing that org chart and figuring out who needs to be in these boxes, what are the characteristics of those people? Am I, am I hitting the nail on the head? Is that what you is that part of what you did and what other strategies did you employ? To, to grow your companies when you uh when you plan when you designed it out. Bill, you're, I mean, you're right on. That was a, that was a big strategy. The second, uh, one of the second strategies was that I had to look at the customer base and, and make sure, I mean, one of the things I was a structural concrete contractor. And what did I, what I wanted to do was to make sure that, and I worked for GCs, that no GC represented 10% of my revenue. So, uh, so my, my goal was to, you know, because that way, the risk of if, if, if one left, or if one, you know, something happened, and I, and I lost, I wasn't gonna lose, you know, a big, a big portion of my business. I was a small portion, I can make it up. And, and, and I think that was one of the key things was to uh expand my, my customer base so that I did not have to rely or or wasn't relying on a certain, uh, a certain customer bringing in 20, 25% of my business. Um, and, and, and initially, that was the way it was. I mean, when I bought it, you know, a, a customer was, was at 30%. And, uh, you know, I eventually added more GCs to the, to, to my customer base so that I could, I didn't dilute that, that individual. What I did was grow it through working with other, with which lowered his percentage by increasing the business with other, with other GCs. You made sure you had diversity in your your customers, your suppliers, and your employees, I would imagine too. Nobody, you know, how, how often, Mike, do we come across business owners who say my my key employee over there, don't bother her. She knows everything about the business. We don't want to upset her because if she walks out, then this business will fall apart. That's a very dangerous place to be, right? That is, that is a very dangerous place to be. And, and I always had the, you know, I always made sure that there was a succession plan for each of the roles, even as I developed people to become the VP of ops, I actually became a concrete finisher, eventually became my VP of Ops 5 years later. And, you know, but I also had other people that You know, if, if something happened, I, I had a, a plan to bring in, you know, bring in another person that could, you know, that could fill that role. So you, you have to be constantly aware of You know, it's because you don't want a, a major, you know, uh, uh, something like that, somebody leaving, having a major impact on your business. You, you don't want to, you want to minimize that risk as much as possible, and that's, that's a critical element to I was constantly, constantly be, you know, be aware of. And be prepared. Yeah, this is, this is a great conversation, Mike. I really like some of the points that you're bringing to light that Help business owners to grow their business and face some of these biggest issues. What would you say some of the characteristics of a company would be that will grow and prosper during and after this pandemic, this COVID-19 that's basically caught a lot of business owners by surprise, and now they're starting to realize, boy, there's going to be a new world order coming into place if it hasn't already. What do we need to do to thrive in this in this new normal? I, I think what, what has to happen is, is that the CEO has to look at the, at, at, at, at market opportunities. Uh, and, and what, what does that mean? Because in the concrete business, the, the concrete business that I bought was a residential concrete business. I, I, I moved it to commercial, because I, I was gonna compete with higher, um, With higher quality competitors, uh, good business people that new numbers and that new results. And then I moved it from commercial to tilt wall construction, which was a specialized, which even further minimized the competitors, uh, maximize the pro that's how I got, was able to get the profit, was just move the company um from A residential to commercial, to a tilt wall construction. And I think the CEOs, they have to look at, you know, what are the market opportunities and I, and, and are my people resistant to change? And I think if, if, if you are open to change, open to look at opportunities, open to expand. Um, you know, uh, where it's, where it makes sense, of course, you, you, you know, you do your, your, your investigation, you do your due diligence, and you, you know, you look at, OK, what is this gonna invest, you know, what's the best, what's the ROI? Uh, you do all of those things, but you look at that opportunity and say, you know what, what if we did this? And then what if we did, you know, what can we do with the current customer base that we have? How can we expand our services so that That customer that, you know, let's just say, you know, say a number, $1000 is now going to spend, you know, $1300 with us. And, and you look at those really minutiae items, but, but they're all impacted. I mean, uh, when I worked for the private equity firm as a fertilization company. And I looked at, you know, what was my revenue, my average revenue per customer, and my, my goal was to continually move that, move that up and, and by adding additional services, uh, you know, we, we promoted different things that um That helped get the revenue, uh, per customer up. And, and, you know, and of course, then, of course, going out and getting new customers, but, but looking, looking at, at both the opportunity to get new customers and to take the current customers that we have and increase the revenue, uh, on an annual basis for, for, you know, what they contribute to the, you know, to the top line. Yeah, yeah, it makes a tremendous amount of sense. So looking at market opportunities, be willing to be flexible and shift and making sure your people are also on board with that, and I guess that starts with maybe getting them involved early in the conversation is like, hey. We're all, we're all part of this. We're growth partners. We're not just employees here. Let's figure out how we can grow this business, you know, for our listeners, if you're, if you're up at night, if you're if you're getting up at night and with a concern or a worry, it's just called being a business owner, you know, business owners wake up a lot in the middle of the night and say, hey, I've really got to solve this problem or things aren't going to be easy tomorrow. If you'd like to have a one hour complimentary consultation to discuss what's keeping you up at night, you will want to be getting in touch with Mike Leanna. Mike, how do they best take advantage of that opportunity? Well, they, they can write me at, at my email address, which is Mike at launchgrowexit.com or call me on my number 239-872-1998. OK, and if you didn't get that the first time, I'll give it to you again, Mike at launchgrowexit.com, which by the way, that is the website to go to as well to look at all the tremendous resources there launchgrowexit.com or call Mike at 239-872. 1998 you'll be greeted pleasantly and you'll be you'll be allowed to talk about what's for up to an hour. That's a very generous offer and I'm sure a lot of people want to talk to someone who's done it, Mike, like you have grown your company, taken advantage of all the resources that are out there, and now within the group BEI that you work within, you help business owners to create a written plan that they can use with their adviser team. And implement a program of strategies so that they can get to wherever they want to get to, right, and their exit might be transferred to a son or daughter or key employee or all employees or sell to an outside buyer, but they need to start with that plan. And how long does that, how long, let me ask you this, how long in advance do you find owners should start that plan towards whatever their next transition or exit will be? I, I think they need to start anywhere from 3 to 10 years prior to a transaction, uh, because that gives us the ability to make good plans to, to where they can maximize their value and minimize their taxes. Um, you know, if we have the time, You can minimize your taxes if you don't have the time, if you want to do it in 6 months, guess what? It just now becomes a transaction. What we want to do is be able to help them plan, make a plan to where they can maximize their value, minimize their taxes, and then transfer, like you said, transfer to whoever they would like to transfer it to, be it, be it family, the management team, or to a third party. Um, you have all kinds of options. The, the closer you become, the less options you have, and also the less, uh, valuable, uh, or, or the less less chance of you getting the maximum value out of, out of what you put your whole life uh effort into. Excellent advice. Fun to talk with you, Mike, and I really appreciate you sharing your wisdom with our listeners and look forward to our next interview where we can get into how the heck you grew that company. You told us some of the steps, but it's an incredible story. I'm sure. Look forward to hearing it. And again, thanks so much for joining me today. Bill, thank you very much. I really appreciate it. Thanks a lot. Thank you for listening to Exit Coach Radio. Time is precious and so are our pets, so time with our pets is extra precious. That's why we started Dutch. Dutch provides 24/7 access to licensed vets with unlimited virtual visits and follow ups for up to 5 pets. You can message a vet at any time and schedule a video visit the same day. Our vets can even prescribe medication for many ailments, and shipping is always free. With Dutch, you'll get more time with your pets and year-round peace of mind when it comes to their vet care.