Vince Mastrovito - Get serious about your systems

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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. Well, hey everyone, welcome. Thanks so much for joining me today. It's always a pleasure to have you with me. Well, it's a new year and we're, you know, this is the time of year when a lot of business owners say this is the time of year I really want to get started on my future. I want to get started on my future planning. You may have had some great holidays discussions with your family about how you want to, you know, change things up a little bit. So this is the time to do it. So who better to talk with than my first guest, who's a frequent guest on the show, Vincent Mastrovito, family business architect and certified disc coach with Promes Partners Inc. And today we're going to talk about why systems and processes help to build value in your company. Vince, welcome. Thanks so much for joining me today. Bill, happy New Year, and uh thanks for having me on the show again. I really appreciate uh being here with you and your listeners. So thanks again. Same here, Vince. Happy New Year to you. I understand things are off the hook right now. Is this, this is a, you know, it's, it's not unusual for people to enjoy the holidays and then say I'm going to get, I'm going to get to it this year. I'm going to do something important with my to plan for my future. And so from what I understand, that's what you're experiencing this year is it seemed like more than ever is, you know, we're we're in a new decade and Supposedly a huge decade for this type of planning. Yeah, I would agree. I mean, I certainly, I think, uh, to get, uh, as a business owner, I think it's always important to get the year started off correctly. And uh for those who are really trying to not only plan for the future, but to increase value and efficiencies inside of their business, even if they're a number of years away from their actual trans transition dates. Um, it's always good to kind of get things moving along because it, uh, allows you to take smaller steps over a longer period of time instead of just trying to take a huge bite out of the apple when you get down to the 11th hour. Yeah, I hear that a lot from from business owners that say, you know, after they get into it, I didn't realize that there were so many things that took so much time to do in this process, and I'm really glad I got the process started because, you know, a couple of years down the road they have a much better outlook on what the future's going to look like, hopefully a lot more optimism about that and Ideally a much more valuable business because they started looking at the business from an outsider's eyes, from, you know, what what makes the business more valuable, and today we're going to talk about that processes and systems. So, so let's get into that, Vince, before we do, before we do, let's give our listeners who may not have heard you one of the, you know, a dozen or more times you've been on the show. Tell them a little bit more about you and what you do with Promedas Partners. OK, well, I'm the CEO of uh and founder of, excuse me, of uh Promeda Partners, uh, as you mentioned, a family business architect, and what we do is we go into privately held businesses and really, first of all, help them understand kind of what, uh, what is the state of the current business that they own, uh, from a value perspective and from efficiencies and non-efficiencies and what opportunities. Uh, should they be really looking at, and then just kind of helping them walk through, uh, in a structured process to be able to, um, increase those opportunities that would inevitably increase the value and efficiencies of their business, so that it's easier for them to transition out, uh, when they get closer to that date. Perfect. OK, thank you so much. So, you know, Michael Gerber, the author of the Eyth books, many of, many of you have read the Eyth books. If you haven't, maybe you should pick one up. There are several of them out there that might fit your situation perfectly. He once said, and I'm paraphrasing, but he said something to the effect that a business is a series of processes and systems, and the people, the managers. Run those processes and systems and there you have it. That's a business. So let's talk about why systems and processes help to build value. Vince, let's start at the shallow end. What is a business process? It's really, Bill, it's really just a process as a series of tasks that are completed uh within the business to accomplish your goal. Um, and a business process, therefore, really is a process that is focused on achieving a goal for the business. Um, so if you take a look for one. Example would be Subway, right? Very simple. We all go in. We probably all had a Subway sandwich from time to time. You start at one end, you go to the next. They're asking for your bread with time of sub 6 or 12 inch, and it's just one thing after the other. That is a process to get you from the beginning to the end of the line, um, and so the process. And it's always the same, it's always the same. Right. Other than the sub it is always the same, that is correct. Yep, they're gonna do the same thing every single time in any subway in the entire world. That is exactly what they're going to do. McDonald's is going to do the same thing in any McDonald's across its footprints. Um, and so all businesses should have processes for every single thing that they do. In many cases, it can separate them from their competition. It can create cost efficient and, and cost-saving um expenses when you do have it, because you have something that people can follow and understand that. You put someone at that process and you can get them up to speed very quickly to run it. Very good. And so, you know, picture this business owners, a buyer walks into one business and asks the owner, um, do you have a process manual? Standard operating procedures are sometimes called, and the owner says, Nope, it's all right here tapping his forehead. don't, right? It happens a lot, Vince. It's, it's, we see it a lot where owners, it's all up here. My key employees all know what they have to do, but it's really not written down anywhere step by step. Boy, that's problematic, especially as the baby boomers age, right? So that that's a, that's a big problem. In scenario two, the buyer walks in and says the same question Where's your standard operating procedures? And you produce a, I don't know, a binder or software or something, and you plunk it down. On the desk and say here's our here's our kind of our franchise manual like you talked about Subway and McDonald's come to buyers of those franchises with a very valuable asset. That's that franchise book, the how to how to run things the Subway way. So in your experience, Vince, when you walk in and ask that question, do do owners typically have that readily available? No, no. Some will have some processes, uh, that are written down kind of vaguely. Uh, some have gone through to write down a few more, but then there's this phase two of, uh, a written process, and that is the actual implementation and follow through by everybody uh within the company to follow that process the way that it was written out. Um, and so the, the challenge always, uh, as you said earlier, Bill, is Most business owners have all the processes between the, between their ears, like it's intellectual capital or intelligence upstairs. Once we uh extract it from there and get it in writing bullet points and things of that nature. This isn't really writing a book, it can be bullet points with some sub uh definitions if you need a little bit of an explanation. But you have to make sure that people are following them, and that really is a huge challenge for a lot of business owners of just trying to get people to implement the systems and processes that they really need. And then in return, that in most cases is really slowing down the production of either the service or the product that they're trying to get out the door, and they have a lot more room for air and higher cost as they go through that process. Yeah, and another, another scenario that we both run into, I'm sure quite a bit as we walk in and the owner says, well, you know, Marge over there, she runs the office, she's been doing it for 20 years. Boy, if anything happened to Marge, we'd be in a world of trouble, and Marge may or may not have created. A backup plan for if she's sick or you know out of the office for a couple weeks. But if you want to talk to a business and understand the importance of processes and systems, find somebody whose key person has either walked away or is unable to work for a period of time, and they'll tell you, boy, I sure wish we knew where or how to do X, Y, or Z. So, how do you get now here's a problem with that, Vince, is that a lot of times those employees keep the information in their head for a very good reason, right? Mhm. Well, they do because they want job security, job security, right, right, but, but technically, and, and the argument's been made many times that that's really the company's intellectual property. They learned it on. Right, yeah, and I think the message for the business owner really should be is creating, creating a more team environment of sharing this information back and forth. So it goes along with, you know, trusting within your leadership team and whatnot and, and I think some of the experiences that we've had is to really kinda get the owner started or the company started is to go into one department. And we look at the department head there and and if there is a few other people below that, we're gonna, we're gonna whiteboard out or flip chart out some of the top areas of things that we need to cover on these processes we let them write the processes out for us to sketch it out. The final approval still has to come from the owner and the rest of the people. Here's why we do it that way. We want to do it that way because we want buy-in from the employees. If, if I'm the owner or you're the owner of the company bill, and all of a sudden you're writing all of these uh processes out, OK, you have to do it this way, boom, boom, boom, boom, boom, they're gonna look at it and they might say, well, you're missing all of this and this and this and this, you know, and, and so if you get them to write it out because they're the ones that are implementing it every single day. Now you have their buy-in, and you can talk through that, make sure that it is going to fit what you're trying to accomplish for your company, and then there's no reason why they can't follow because they wrote it. Love it. So yeah, they probably do it a lot better than it used to be done, right? They, they've perfected it. Absolutely they're they're smart, intelligent people, so, so use their, use their intelligence and let them, let them help you. So let's, let's talk about the, you know, the question of how do you position it so, you know, again people might be suspicious. How do you, how do you document this process like you said, you can always start with an outline and a whiteboard and get them to do it, but how do you combat that that concern that they might have about, well, are you doing this so that you can fire me or what's what's going on here? Yeah, when we have the, um, when we have the conversations we're having the team meetings in the light of that we're always trying to build value and efficiencies and that the only way that we can do that is to make sure that everybody is not only a clear understanding of what they need to do for their job description, but the process within each department. And how are you going to cross-train between different positions, even within departments, and even if you have to cross departments. And so, that is really how we are explaining it to the business owners and their, uh, staff, that this is not only a tool to make sure that everybody knows exactly what to do if they're out sick, but it's really a tool to help them learn how to cross-train and bring somebody in. And they could read through processes and probably get up to speed by 80 or 90% just by reading, reading what the process is in front of them. You know, and you give them a couple of examples, and off they go. We haven't really had much pushback at all, uh, with the fear of losing their position, because we are also, we're, yeah, because we are also incorporating the importance of them as leaders in their team, and we are just trying to fine-tune what that is. If you take, uh, any, any organization or professional sports team, they all have processes in the way that they do things. These are, we are going to do it this way. It is not there to eliminate people. It is there to make them more efficient and to make the company more cost efficient as we go through it. And really, it's a benefit for them cause there's gonna be less stresses because there's no confusion. You know, they're not going to be coming in every day, pulling their hair up and say, well, what do I really do next, or this isn't working, or that's there, or I thought we did it this way, or I thought we did it that way. There's a clear-cut way with its variations if there if there needs to be, to get this project or this or this task completed. That's really, really good input, you know, and I think, I think you can easily coach it too by saying something like, look, none of us are getting any younger here. None of us are getting any younger. And here's the point. It doesn't take much to look around and find a business situation in your area where something's gone horribly wrong because somebody got sick. Sick or or passed away, you know, you can say, hey, we just, we want to become a sustainable business. We're positioning for the next generation of owners, you know, the next 50 years, if you will, of this business, and we can't do it without your help because you've perfected how we do this. So yeah, there's some great, that's some great advice about how to How to make that happen and, and you know, another question for you is uh is how does this help the business and its value. Well, if you think about it from a, from a perspective of really just the, the smoothness of taking, um, like, let's just take any business at all that you are bringing in a new client, and you have to do what we would call onboard a new client. If you have a process that is going to onboard that client and you know if there are 15 steps that need to be taken from the thank you email or excuse me, the welcome email to everything else that has to be done until that client is fully on board with you as a customer. And you understand that entire process that that's gonna resonate with your customer, and it's going to show them that you are very organized, you're structured, you're professional, and that you are efficient. And sometimes, as clients have said to me, first impressions are the best impressions and the most important, because if you kind of mess it up initially, And they always kind of have that in the back of their head as to, you know, what else might go wrong. So the performance within your company is therefore going to becoming even greater. And if we think about this and building value, you have now very efficient people in each department, however many departments you have in your business, that are running in cross-communication as they go through these processes. That is really enhancing your human capital within your business. And the human capital factor bill, as we know, is a very important piece in creating value within your business. So you have less turnover, less stress. Less sick days, happier people coming to work, and the list goes on and on. So, uh, it's, it's kind of an endless benefit that you have for the business, and it allows the owner or owners, if there happens to be more than one, to really focus more on the vision of the business, and not really getting in the trenches every day and trying to remove them from the day to day duties and focusing on where they really need to be. Love it. Yeah, that makes the customer experience is huge and if it's consistent because they're following the same process of going back to your subway, imagine if they start at the at the other, you know, you walk in one day and they're starting at the other end of the counter, you know, you're just like, what's going on here? Why isn't this a consistent experience? I don't know who made my sandwich at the last Subway or the one before that, but I know it was a consistent experience and that that creates brand value. Um, so, so that's a huge element of it. Um, and then again, the other thing is when you have these systems and processes in place, it probably will come along with some kind of an indicator along the way of whether there are problems which, which I would call a dashboard type of a system, in other words, where the owner says, I can back off of like you said, I can be more of the visionary and look forward on the business, but if there is a problem, I'll spot it because a process or system isn't being solved and we can get it back on track pretty easily. Is that a fair statement? Yeah, and if you take that one step further, Bill, you're exactly correct. Now, you'll find out if you have the right people in the right seat, because if it continues to fail in the same spot, uh, and you have gone through all of the training that is needed, and you have really invested in this person to be able to do this particular job, um, it is going to be much easier for you to understand, OK, I've got the wrong person in the wrong seat and I need to replace them. Um, and so that would either come to the point of you just remove them from the company, or you put them in a different position, uh, but you certainly have to get someone else, um, in that spot to make sure that they can do that. So it makes it very easy and very clear for the owner or the supervisors to identify, uh, exactly how that is functioning and what is that deliverable when they come back, because you would want to have a dashboard to make sure that you're tracking everything that is going on. I think the one other thing that is um really important for any process and procedure that you have written inside your business is that you, you should also Take time throughout the course of the year. Pick a time of the year. It doesn't matter when that is, but pick pick one time of the year where you're going to review all of those procedures with those department supervisors or people in there to make sure no adjustments need to be made and then make them at once with that team. Um, because as we know, the way we do business in 2020 is significantly different than what we did business even in 2010, and especially in 1999 or 1995. And because technology and just the, the world itself moves so rapidly, it's just important to say, is business being done differently that we need to modify this process slightly. And maybe it's just in a quarterly meeting with your team to to say, where are we? Do these things need to be modified? Are there some adjustments, and let them give you their feedback as part of that delivery when you have that meeting. Yeah, yeah, the notion of a process audit, you know, makes a lot of sense to basically be able to look at everything and say, hey, let's go through this. Are these still the steps? Has anything changed? Has anything improved? Let's keep this up to date. Because there are a lot of situations where I've walked into business owners and said, Where's your processes and they're, oh man, it's that is a dusty binder on the shelf. It hasn't been pulled down. It hasn't been looked at. It's kind of like they're a lot of times they're estate planning. It's, it's or they buy sell agreement. It's somewhere. Um, but it's important to keep that up to date. Vince, always, always wonderful to talk to you, and I'm glad, glad you're staying busy. I'm sure your clients are getting a lot of value from your work. What's the best way for someone listening to this to get in touch with you and talk about some of these topics and working with you perhaps? Yeah, I think they have a really great website for people to get some education material so they could go to www.chromatis POETIS partners.com um or certainly they could uh give us a call at the office that would be 616-622-3070. That's probably the. The best two ways to to get a hold of us inside the website certainly they could email us, ask us questions. There's a chat box in there that they could ask questions, uh, if they just want to have someone feedback through the website, we certainly would be happy to have that conversation with them also. Well, and ladies and gentlemen, I know Vince is a very busy person. He has a lot of work going on right now. So if you're lucky enough to talk to him, give him a call and see if, see if you can get some a little bit of time with him. I'm sure you'll find it worth your while. Vince, thank you once again so much. I look forward to our conversations, and this one was no exception, a very important topic about processes and systems, and I wish you all the best for the year. Bill, thanks a lot. Thank you so much, really appreciate it have a great day. Thank you for listening to Exit Coach Radio. Men, if you're ready to reclaim your edge, listen up. I used to be held back by constant bathroom trips with multiple wake-ups during my sleep and looking for restrooms whenever I was out. Then I discovered better man. After just two months, I started experiencing fewer trips to the bathroom, less urge to go, and I even slept through some nights. I feel a noticeable boost in my overall well-being, even. Sexual stamina. It gives me the freedom and confidence to live life on my terms. Betterman is clinically tested and trusted by thousands of men over 25 years. Ready to take back control? Go to Bebetternow.com to order your supply today. That's Bebetternow.com. 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