The Owner Bottleneck: How Getting Out of the Way Can Double Your Shop’s Value, Ep #50

[0:00] Use those four buckets. What do I love? What do I hate? What am I good at? What am I not? Put them on. I mean, we’ve all seen those little graphs, right? Like, so the stuff up here that you’re good at and you love, hold on to it. The stuff that you’re not very good at and you hate, just start getting rid of it. And just work your way through that matrix. Solid. I think that’s a great way to start. Welcome to Buy the Numbers. Each week, we’ll explore the numbers that drive your business, from accounting and finance to operations and the exciting realm of mergers and acquisitions. Whether you’re a seasoned veteran or just starting out, our discussions will equip you with the insights and strategies you need to rein in the power of data to elevate your manufacturing company. Let’s crunch some numbers. Phil, welcome back to Buy the Numbers. Thanks for having me. You’re, uh, you’re becoming a regular. We might have to name you co-host. That might be dangerous. The, uh, for the people that maybe haven’t heard you, why don’t you, uh, give everybody a brief background on who you are. Yep. So I am a principal here at CLA. I work in our all-source accounting team, and we provide services to small business from an accounting perspective. And listeners, you may be wondering, it’s like, gosh, we hear Phil and John and all them a lot.

[1:27] And the reality is the CLA just has a lot of services for those of us out there, like in my shoes, you know, trying to run a machine shop and, you know, so they just have a lot of subject matter experts. So Phil, you brought one along with you today. Want to introduce Heather real quick and let her give us a little background. Yeah. So obviously today we brought along Heather, uh, Perps, who is a part of our deal services. But I’ll, I’ll, I’ll hand it over to Heather is she’ll be able to better explain herself and, you know, her skillset. So Heather. Welcome Heather. Hi, Phil, you got my last name, right? That’s really great. Yes. So Heather Perps, I lead the owner transition advisory team at CLA, which is really designed to support owners of privately held businesses in all things related to getting them ready for a transition. I’ve been there for about four years. Before that I worked for a management consulting firm, did a lot of strategic planning, leadership work, transition work. Before that I had my own consulting gig for a short period of time. Before that I owned an IT services firm that I grew for about eight years and sold, and before that I was in the psychotherapy world, so kind of an odd trajectory, but here I am now.

[2:44] Well, and you know, when you talk about, like we just were talking about before we hit record, I mean, uh, you know, when you look at the beginning of your career, you know, on, on the psychotherapy side of things and then throughout that, it’s a part of owner transition that we don’t really talk about, but so much of it is mental. You know, it’s the most difficult and emotional thing a lot of business owners ever go through is getting rid of, you know, it’s not getting rid of their company, but selling their company and it’s tied to their identity and their, I mean, everything they did maybe through a 20, 30, 40 year career. Yeah. So I think it’s interesting that you have that, like as a foundational part of your experience through where you are today, that’s an incredibly valuable. So listeners, as if you’re wondering what we’re talking about today, we’re going to, we’re kind of talking about that ownership mindset and the bottlenecks that we as owners often become, um, in our own businesses, and then maybe a little bit how that ties to the value of your business. So on the last episode or two episodes ago, I can’t remember where this falls in the schedule, but we would have been talking about how to create more value in your business if you’re preparing to exit, one of the biggest things you can do is not be a bottleneck in that business, right? So we wanted to talk a little bit about that today and, and CLA brought Heather to the table here to do that.

[4:04] So Heather, as you work with, you know, your clients through this, I mean, like what are those bottlenecks that you even see that maybe owners have that they don’t even realize and then, you know, kind of how do you help them work through that? Yeah, I think, you know, I mean, there’s, you know, we have operational bottlenecks and then we have more of these like identity bottlenecks. And we think of operational bottlenecks. It’s like, I don’t have the right team in place. I don’t have, you know, there’s a process that isn’t working. The structure isn’t in place. And I think a lot of times when we think about bottlenecks, we go there or like, I just don’t know, I can’t delegate. I can’t delegate for one reason or another, right? Like that’s the big thing that we hear and those are all legitimate. But I think often underneath that, or in addition to that, there are these identity bottlenecks where, which are really more about, I as the business owner, I have my value tied up in this business that comes with a set of kind of predefined beliefs on how I should be operating, what I should be doing. And those become contributors to the bar, they become the bottlenecks, right? So, I mean, I think about this, you know, it’s funny, you know, we, touched on that I had a business many years ago and I did that early in my career and I certainly was the bottleneck in a lot of ways because I was so, you know, my identity was so tied up in, into that business and my beliefs around how it should be operating, the standards that I was setting, all of those things, which really did of course tie into the eventual value that I was able to get to from the business too, so.

[5:40] Manufacturers, what is your biggest headache? Is it measuring improving profitability, gaining efficiencies with AI and automation, maybe tightening up your cybersecurity, maybe getting your business ready to sell? At CLA, their goal is to know you and help you with challenges like these and more. Every day, CLA helps manufacturers tap into millions in revenue and cost savings, like one manufacturer that boosted capacity and revenues by 15 to 20%. Visit claconnect.com to hear real success stories and learn how you can grow your top and bottom line. You know, I think as business owners, we hear all the gurus, we hear all the coaches, you know, and, and I mean, I know I’ve said it a hundred times that, you know, as owners, we should be working on the business, not in the business, right? That’s the, that’s, that’s the norm that you hear, but I also know a lot of owners, they, and I’ve asked this question myself is what the hell does that mean? Like, I mean, I’m showing up every day and I’m working my butt off. Am I working on or in the business? And it can vary. I think is what I’ve, I mean, sometimes, sometimes working on the business is working in the business. Other times it’s not, you know, it’s stepping away and, and working on the bigger picture while hopefully everybody’s handling the day to day. So like in that framework, because again, I think it’s just common that we’ve heard. Do you have any input or thoughts on, on, on versus in and like where that bottleneck breaks in there? I mean, I think, so I’ll start by saying like that the behaviors that we’re talking about that become problematic are, you know, more often than not, the great attributes in some, in some situations in the right context, these are the same behaviors that helped.

[7:34] This business owner grow the business become, you know, scale the business up to where it’s at. Like I’m going to get it done no matter what the cost I’m going to put in the time to do it. You know, if they’re not going to do it, I’m going to do it myself, pulling myself up from by the bootstraps, all of that, right, those are really admirable and fabulous skills. And, and without those skills, it’s unlikely that they would have been able to achieve that level of success. And as the company grows, those are the same behaviors that over time really hold a business owner in place, doing the day to day, as opposed to stepping out and, and looking, you know, bigger picture and broader and kind of stepping out of these patterns that keep them stuck. So, yeah, I think these are like, these are not bad traits to have. These are not bad beliefs, belief patterns to have necessarily. It’s only when, you know, like all things in life, eventually we, you know, a lot of times we grow out of them, right. Or like we, you know, we move on, we need to change course in some form or fashion, and it’s the same way when it comes to, you know, leading and growing your business. There’s a point where the behaviors that you were doing just aren’t effective anymore. So it is no longer effective for you to be making all the decisions, you know, managing, managing all of the big decisions, being out on the floor as much as, you know, you previously were, whatever it is, handling all the design by yourself, right. So those are some of the things that I see.

[9:00] Like they’re, they’re very, you know, these folks are really highly invested with good reason into what they’re doing. It comes down to, you know, being able to acknowledge when you’ve outgrown that and you need to, you know, choose a different path. Yeah. Yeah. Bill? As Heather’s talking about like the on versus in and identifying the two, I think for the owners that I sit with is the business is their identity. So it becomes one uniform. It’s undefined as to what she’s in versus which is on, because it’s all viewed as the same. And I also think, right, the challenges and the complexity of personalities and when you’re hiring people is nobody will ever do it how you do it ever. Right. And that piece I think is from dependent on the owner is getting over that hurdle of accepting somebody’s mistakes that might come up won’t be exactly how you would have performed the mistake. Right. Because the successes are always overlooked compared to missteps or things that happen. Yeah. I think, I mean, I know like my own growth in this, on this subject, I mean, I think as an owner, you have to, I think you have to accept the fact that no one’s ever going to care as much as you care. Right.

[10:21] I mean, it’s just, it’s virtually impossible. Right. Doesn’t mean they won’t care enough. Right. They just, they can’t care as much as you care. And it, and you’re, you’re absolutely right. It’s so tied to your, who you are. Right. I mean, if I’m at a backyard barbecue next weekend and I’m meeting new people and they, you know, the first question I’m going to generally get is, Oh, what do you do? Right. Well, I own some manufacturing companies. Oh, what do you mean? Right. It’s, it’s who I am. So that I, I agree. That is incredibly difficult when it’s tied so heavily to your identity. I think there’s also things that as the owner, like you can’t delegate, right? Like, I don’t think I can delegate my culture. I can’t delegate my vision. You know, there’s, there’s things like that, that I need to own. And, and those are working on the business. Outside of that, I mean, really, I can hire everything probably better than me. I feel like I can do everything well, but I, in almost every instance, I can hire somebody that can do it better. I’m going to push back just a little bit on the culture piece specifically, because, you know, I think when we’re telling business owners, you need to, you know, stop working in the business. You need to start working on the business, right? You know, it kind of adds another layer of responsibility because now I’m supposed to be, you know, implementing these systems, you know, putting the structure in place. I don’t even have time to do, you know, what I’m doing currently, right? Like I’m putting out too many fires. How am I going to start working on the business? And I think there is, there are some culture shifts that can be done that, or there’s some things that can be done that the owner can, that, that, that actually become part of the culture, I should say.

[12:07] That shifts that burden off of the owner. So for example, if you are, you know, rather than trying to implement all of the changes yourself and design the systems or whatever, if you start really focusing on instilling a culture of continuous improvement and you’re training your team to be thinking that way, then that becomes an aspect of the culture. They start spearheading that, that relieves the pressure on the owner from having to solve all the problems. So in some ways, you know, I hear your point. I agree with you. Like, but also there is a point where the owner should not necessarily be the sole driver of the culture. Yeah. So we actually don’t disagree with that at all, but, but that, but setting the vision for that culture. Yes. Agreed. Right. Not necessarily pulling it off. Yeah. I have seen situations where the leadership team has been pulled together to really kind of define the culture and drive the culture moving forward. But always the owner is a key, key part of that. Right. Yeah. Yeah. Yeah. I mean, I, I have to tell my team what type of, what type of company I want. Right. And then trust them to build that. Yeah. And, you know, I, I think, I think most people are probably familiar with like the servant leadership model.

[13:26] Right. And if you’re not, it’s, I mean, essentially where like my job is to make sure my team all, they have everything they need to do their job. Right. So I’ve set a vision, I’ve set a culture. And, and my job now is to clear their hurdles for them and give them the tools and the resources they need to build my vision and my culture and so forth. And, and that works all the way through the organization. I think that transition in my brain helped me a lot towards like not being the bottleneck. Right. It was like, I know what I want. I’ve got a team that can execute. I just need to give them the tools and the resources to do it. Yeah. That allowed me now, like, I feel like the, the problems I’m solving today are their problems. I’m, I’m just clearing the hurdles they can’t clear without me. Whether that’s money, whether that’s, I mean, it could be money. It could be, you know, that, that, that vision, whatever that, whatever might pile into that, that they’re executing, right. And, and I’m, I’m just helping them execute their ideas to achieve my vision. Yeah, absolutely. What helped you be able to do that? To kind of step back and say, okay, I’m going to really shift into this role of allowing them, allowing them to steer. Yeah. I, you know, trust and knowing they care, right? I mean, again, kind of back to Phil’s point, you know, I, I, I know they don’t care as much as I care, but they care enough, right, to execute.

[14:56] They may do it differently than, like just accepting that they’re going to do it differently than I’m going to do it. Yeah. Coaching where it’s, so I, like I tell my team, if you need to make a decision that you need, you need my input and I’m not available, I will never complain about the decision you ended up making. If I disagree with it, I’ll tell you how I would have decided, made that decision differently. Right. But in, but in the heat of the moment and you need to make a decision and I’m not available for whatever reason, and you make the, in my mind, the wrong decision. You’re not going to be like in trouble. Right. For making the wrong decision. It was my fault. I wasn’t available. So make the decision that you feel is best. And then if it’s wrong, I’ll walk you through my decision making, how and why I would have got to a different answer. Yeah. Right. And I think, you know, once, once I knew I had a team around me that I could trust to make the right, you know, a good decision, I shouldn’t say right decision, a good decision most of the time. And it came from a good place and it matched with our values. It matched with our vision. It matched with our culture. It became a whole lot easier, right? To just trust that they’re going to, they’re going to make the best decision they can with the information they have that matches up with where, what I’m trying to do. Yeah.

[16:20] And I, I would guess that some of that trust was built watching them fumble at a small scale level, right. And then seeing how they recovered from that and like, and that and seeing, you know, watching their intentions play out and seeing that as opposed to, you know, what we see with some owners that really have kind of this controller mindset where there’s not even, there’s two reasons why I think people don’t let their team fail sometimes, which we know isn’t, is one of the best ways to learn, right. Is to like actually get in there, mess it up. It either works or it doesn’t. If it works great, you know how to do it next time. If it doesn’t work great, you know how to not do it next time. Right. But I think either, and I see this one a lot in family businesses where you’ve got maybe a successor coming in and you’re trying to, you know, set them up for success and, or you’re not in this case, which is where, you know, owners may be so protective of the employee or the relative or whatever, that they don’t allow them to stumble, they don’t allow them to make those mistakes. So that can be very problematic. And I’ve seen that a lot, or I think where the owner has their, they’ve infused integrity and quality. Yeah. So if, if somebody messes something up in my organization, my team, whatever, and there’s a failure that is a direct reflection on me and butts up against my sense of integrity, and I’m not okay with that.

[17:57] So I don’t allow folks to make mistakes. So it sounds to me like that, like you, you’re not doing that. You’ve, you’ve, you know, you’ve not, you don’t have that issue. You’ve allowed them to fumble at times. That’s built your trust in them, their trust in you. And you’re recognizing that one of your primary jobs at this point is not necessarily giving them the answers, but allowing them to figure it out and kind of coaching them along the way as, as they go. You know, I’ll give you the simplest example. I think people can learn a lot from this. When I first bought Hill coming up on nine years ago, I was frankly, in a lot of ways, I was appalled at like our email communication with customers. It was, it was not good. It wasn’t professional. It wasn’t thorough. You know, someone might ask on this, you know, the status of a job we’ll say. And, and our response might be, oh, it’ll be done next week. That like, that’s it. Right. And it was due this week or last week or something. There was no explanation of like why we were behind. There was no, you know, like next week is not a date to me. Right. Like when next week? Is that Monday or Friday? It could be a huge difference.

[19:12] They might have a production line down cause we haven’t delivered parts. Right. They need to know it’s going to be here Tuesday. I’m seeing this trend of our responses. I’m like, this is not at all like my vision, my culture of how we respond to our customers. Right. So for a period of time, the people that had that interaction at that level, it’s like, you have to send me all emails first and then we’ll work on those together. And then you can send it. I didn’t, I didn’t want to send it. Right. I wanted to, I wanted to maintain that relationship. So yeah, there was probably a six month period there where we coached through like my expectation of how we respond to our clients with questions like that or vendors or whatever. And then, you know, surely, you know, I mean, at first it was everybody. And then a couple of people were doing a pretty good job pretty quick. And a couple of people, it took a little bit longer. But you know, I’d say probably within three or four months, I don’t need to be on all those emails anymore. Right. Like I don’t, I don’t need to see them. I don’t want to see them escalate if the answer isn’t enough. Right. Like, I mean, CC me if we need to, but, but I don’t have to see all of it anymore. And as, as I’ve bought, you know, five, six more shops in that same time period, I find like that’s a, that’s something I’m repeating every time, every time we buy a shop, there’s, there’s some lack of, and I’m using the email example, but there’s something that doesn’t match up with, with our values and our culture. That’s like, okay, include me. I’m going to coach, I’m going to help.

[20:51] And then once you’re, once I know that we’re handling that in that regard, then I’m hands off, like I’m out. And it seems to work well. Yeah, absolutely. I would say we’ve usually transitioned in the right direction on that stuff. Sometimes I have to step back in, but again, I don’t want to be the bottleneck. Right. Cause if I had to send all those emails, I’m now the bottleneck, right? If all those requests come to me, I have to gather all the answers and I have to send out all those emails every day. Now customers are waiting on me to do that. Right. Hey folks, listen up. You know, that manufacturing buyers don’t ask simple questions. They’re asking about product compatibility, materials, specs, lead times, application fit, and they want answers before they even talk to sales. That’s where Navoo comes in. Navoo adds AI chat to your website, trained on your own content. So visitors can get reliable, accurate answers in real time. It helps buyers find the right product, understand the right application, and take the next step without forcing your team to answer the same questions over and over. And setup is simple. Navoo works with your existing website.

[22:16] It connects with tools like HubSpot, Salesforce, and Slack, and gives you visibility into what visitors are actually asking. See what your website has to say at navoo.co slash makingchips. That’s navoo.co slash makingchips. So I have an opinion on this. I want to get Phil, your opinion and Heather, yours as well. Is there a size of company you think this starts to become a bigger issue? Oh, I don’t think I’ll, I’ll answer first, Mike. Um, my, my thoughts. So I think for a business that is purely looking at it from, if they look at their business as assets only in a, in an organization that is viewing themselves as strictly just the physical, tangible assets they have on their floor. Is that owner, like the, the integration of the owner to the business is going to look different when they go to look at a sale, because anybody who’s acquiring that business, they’re not acquiring the culture, they’re not acquiring the employees at that point. They’re acquiring tangible machines. Right. Where I think you definitely start to see this evolution, I think, is when you start looking at it as a, from a business perspective of your selling customer lists, your relationships that you’ve built as an organization culture, when it, when you’re really defining the business as a, as a business that has value beyond just the assets themselves, in my mind, that’s really where, you know, this context starts to take shape and you run into the owner bottlenecks, those pieces.

[24:07] Yeah. Yeah. I think that’s well said. Yeah. Heather, you have an opinion on that? I mean, I’m just looking at it purely from, well, not purely, but I’m looking at more from the person, personal side, personality side, even behavior side. And I have seen owners pushing almost out of the middle market that are still struggling with like being mired down in the day to day, and then I’ve seen like little, and somehow they’ve been able to grow, right, at some level. Sure. And I think that depends on where maybe they’re getting, where maybe the bottleneck is, and I can touch on that. But I’ve also seen like, you know, really small operations that just have not been able to grow and scale because they’ve, the owner has been so locked in to every aspect of the business. So I don’t know that I could put a, I think it’s across the board, all business sizes, you know, it’s just, it’s chronic. Well, I would, you know, so like I said, I have an opinion and I’ll, I’ll, I’ll share it briefly, the, so this, the, the industry of like precision machining, which is what most of this audience is in, I, rough, rough statistically, it’s like there’s 18, 19,000, like precision machine shop, job shops in the United States, that the average size is, I’m going to get some of this wrong, but, but somewhere around like 10 machines, 12 employees, 2 million in sales. To me, that is the size that clearly the owner has become the bottleneck.

[25:40] I talk to shops all the time. I’m constantly looking to acquire shops. And that common theme somewhere between one and a half and two and a half million dollars in revenue, 10 employees, 10, 12, 15 employees, something like that. When you really dig in, you do your due diligence on, you know, is this a shop I want to acquire? Is this, you know, or, or if they’re asking, like, I can’t figure out how to get to that next level. It’s often, in my opinion, that it’s that the owner owns the whole thing, right? They, they do the sales, they do the quoting, they’re scheduling the floor, they’re making sure invoices went out, like they’re handling everything. Themself, they might be programming the machines. They might be out there helping set up the machines. Um, and you know, if, if you’ve got all of that on your plate, you are going to fail. I mean, not fail. You can have a plenty successful business at that size and be just fine, but you’re going to affect the value and the sustainability of your business when it’s time for a transition, right? Because now if I’m the buyer, I’m looking at that and going, okay, well, I have to do all those steps now, right? Versus I can just buy this and it’s ready to run. And so, I mean, that’s, that’s my opinion on it. So like specifically in this industry, I think if, you know, if you’re sitting there stuck in a one and a half to two and a half million a year in revenue, you might be the bottleneck.

[27:10] If you can’t figure out how to break out of that. Yeah. I have seen though, where there’s operationally they’re, they’re doing well, they’re scaling, they have had, they have been able to have a lot of growth, but the bottleneck becomes is on the growth side, right? The owner is in this situation, like the owner was like holding all of the client relationships. So as long as they could manage those relationships and keep feeding the funnel, things were fine, but it’s still a bottleneck because at some point they just are not going to be able to manage all that. And of course, if they sell, there goes, you know, your source of revenue. There goes the relationship. Right. Yeah. Right. Yeah. I’ve, I know I’ve tried, I feel a lot better today than I did a couple of years ago, but, you know, for the longest time I owned those customer relationships and, you know, today I don’t, I’ve been able to successfully hand off those relationships. Now, one thing that’s been important to me is my customers know if, if they see me on the email, like it’s escalated at a point that I need to be involved, I’m there for them, right? And my team actually hates it. I think when I get included, because they know I’m going to be the customer advocate, right? Like I’m going to come at this from the customer’s standpoint and say, yeah, this is ridiculous. Why’d we do this? Why’d we do that? Why’d we not do something? But the day-to-day relationship has been handed off. You know, when we think about that again, from a, from a bottleneck and from a value bottleneck, right? If someone’s coming in to look at, to buy me and I’m the only one leaving, those relationships are intact, right? The piece of that valuation multiple doesn’t get discounted for the fact that, well, Mike’s not going to be there anymore.

[28:52] So, so what’s this company worth anymore? Are the customers going to stay when Mike leaves? Ideally, right? Now there’s a, the flip side of that risk at absolute, I mean, there’s an owner out there that just heard me say that and go, yeah, but what about when my guy that works for me leaves and he takes that relationship with him? Sure. There’s that risk too. That opens up a whole nother conversation about retaining employees and, you know, all those types of things, but okay. So if someone’s listening to this and they’re going, okay, well, I’m the bottleneck, how do you clear it? Well, I think, you know, starting by figuring out why you’re the bottleneck, a little self-reflection can go a long way here, bring, just bringing some awareness to it. So are you the bottleneck because you are really invested in being the hero and you like to come in and save the day and, you know, solve the problem? Or are you the bottleneck because like we were talking about earlier, you are, you don’t want to see other folks fail. You don’t, you know, you want to, you’re kind of protecting everybody and you want, and you’re focused on that. Or are you the bottleneck because you’re so invested in your craft that the idea of somebody else getting there and doing that, designing that, you know, structuring that, whatever, engineering that is a bit of a threat. Or are you the bottleneck because, you know, like we were talking about earlier, this is more of an integrity thing, right? Like to fail is like, I’m not, I’m not holding the standard that I, that I have for myself. So getting a sense of what it is that, you know, at the core of all of this is really causing the problem is, is kind of step one, because that allows you to just look at things with a fresh eye.

[30:30] And then I think it’s really about shifting from this idea of being the operator to being the architect, really that comes down to mindset shifts primarily. So starting to think about, okay, how can I stop solving the day-to-day problems? And how can I start designing those systems? That comes back, you know, consistently to how do I build leaders within the company underneath me, and maybe you’re not at a point where you, you know, can be hiring like a, you know, multiple folks underneath you. You don’t have to, this is like, how am I teaching them to have the right mindset to answer their own problems, that sort of thing. And so I think one of the best things that we can do when we’re starting to make this shift is just starting to ask questions as opposed to direct our team, right? So my old, I have a mentor and he, he’s a funny guy and he was like really adamant about teaching me the difference between a manager, leader, and coach. And he would literally like take one hat off of his head and put another one on to like illustrate. It’s kind of funny, you know, but I think as we get to the point where we’re trying to excavate ourselves out of bottleneck status, let’s say, we really have to focus on, you know, to your point, we have to have trust in our team and we build trust in our team by seeing them make good decisions.

[31:56] Seeing them think it through. So shifting our mindset as the owners to be teaching them how to think as opposed to telling them what to do is big. So that’s a great, a great point. Yeah. A simple thing to do is to start asking questions. So when they come to you, you know, with all of these issues, challenges, whatever, rather than jumping in to solve it, you pause and you say, okay, well, what would you do in this situation? And they’re going to bumble through it and then you guide them. And that, that teaches you to pause and step back. That teaches them to start making the decisions and think about it. Them to start, you know, kind of bringing solutions to the table. And then I think the big thing that we aren’t really talking about, but ultimately is kind of the elephant in the room, I guess, which is, you know, all of this stuff that we’re talking about is tactics. In reality, what the owners need to do is uncouple their value as a person from the business. So beginning to build an identity outside of that, of the organization. And, you know, a lot of times, you know, when owners get to me, they’re usually three to five years out from a transition. And sometimes I will, you know, I always ask, you know, what’s most important to you as you go through this yada yada. And then, you know, what are you going to do when you leave here that is going to give you meaning and purpose, because it’s not going to be the business anymore, at least not in this context.

[33:25] And sometimes there’s nothing. And, and that’s not, that’s not a, you know, a sign to panic, but that is a kind of, kind of flag on the field. Like, okay, let’s, let’s look at this here. What can I be doing to start building an identity beyond the business? So I’m not feeling like I need to be such a critical player, right? So I create, I start letting go and I create an opportunity for, to build this so that other people can, can take it from here. Yeah. And that’s, I mean, that is absolutely one that, you know, again, so I mean, I’ve spent an entire career, you know, before buying Hill, I, I helped on a couple hundred, you know, transactions closing. Um, since I bought Hill, I’ve, I’ve bought, you know, a handful of shops and still remain close with a lot of the sellers. And I think people way underestimate what you just said, right? There’s the, I’m going to sell my business. I’m going to be, I’m upset. I, you know, I reached, reached my retirement goals financially, but then they just get lost afterwards. Like, well, what am I going to do now? Like there’s, you know, in some cases, right. I mean, think about the worst case scenario. You, you know, you’ve spent your entire life in an industry and you know, a lot of people, you have a lot of connections, you have, you know, opportunities still just come to you because they still have your cell phone number or whatever. And, you know, you might have a non-compete with who you sold to and, you know, you can’t have some of those discussions, right? Because you’re now under a non-compete with, I mean, I’ve seen that type of scenario even play out where you’re still considered like an industry expert. So people are reaching out to you, but you could be in violation of even some of your transaction documents.

[35:09] It’s amazing how many people have never given that any thought, what that, you know, post business ownership looks like. I mean, I know I struggle with it too. I mean, I, I’m 53 now. I mean, I figure I’ve got, I mean, let’s call it 10 years, maybe 15, but I’m going to keep doing what I’m doing. And so it’s, it’s already entering my mind. Like what is, what does life look like in 12 years? You know, what point am I ready? What point? And then what the hell am I going to do? I mean, I’ve, I’ve built an entire life of like all, I mean, well, I’m absolutely a workaholic. I won’t try to hide that. What am I going to do? Like, you know, and I, I don’t know the answer. I’m starting to have more and more of a vision of it, but I don’t know. And I’d be lost if I woke up every morning and I didn’t know what I was doing. Yeah. So when I had my business years ago, granted, this was early in my career, but I was like, you know, my company was known very well in the community that I lived, everybody knew my face. You know, you walk into any restaurant, somebody’s going to know Heather. And it was very much a part of my identity. And then, you know, I sell the business and I, I shift gears.

[36:24] And so now I’m not necessarily local to that community, but I’m working with folks across the country. And, you know, very quickly that social equity in my hometown plummeted and people just forgot who the heck I was. Yeah, that was, you know, and I remember kind of going, whoa, wow. That that’s, you know, I’m, I’m feeling that a little bit. I noticed that that’s me having run that business for what? Eight, nine years. That’s a heck of a different experience than having run a business for 25, 30, 40 years. You know, and then you’ve got like huge teams of folks underneath you or whatever. And then now you’re, now you’ve gone from a somebody to what feels like a nobody. That’s big. And I do think people miss, you know, they don’t think about that. They’re very cued in on like, I’m going to go do all of the hobbies that I haven’t gotten a chance to do for the last 20 years. Like that’s going to fill me up. And when they get out there, they do that for about six months, nine months. And they’re like, wait a second. This is starting to feel not quite as fun as I thought. Right. So I do thank you for underscoring that. Cause I do. That’s the part that when people don’t have that sense of identity outside of the business, that’s my biggest fear. When I’m talking to them, what’s going to happen after they actually do this, after they’ve done the big thing, they’ve done it, they’ve been successful. Now what? Right.

[37:45] What am I, uh, my business partner retired three or four years ago from his career. He’s the reason I start to have a vision of what retirement might look like for me. Cause I think he’s doing it very well, or at least very well with like what my vision is, but like he’ll often say is like, like I can only play golf so much. And compared to a lot of people, he plays a lot. I mean, he’s got a, he has a two day, a week game, golf game that he plays. And I mean, that’s a lot of golf for a lot, for most people, but there’s still five more days in the week. And he’s got to fill his time. You know, in his case, he’s helping other people. Right. I mean, he’s like, say he’s my business partner. He’s got other business interests. Um, you know, but, but you have to have some, you do have to have some sort of definition of what that looks like. Because I, at least as I’m observing the world, I realized, okay, there’s got to be something more than like, oh, I really liked to golf. So I’m going to golf more. A lot of sellers I’ve worked with, oh, we’ve really wanted to travel most, you know, my spouse and I love traveling. So we’re going to travel more. And to your point, okay. And in six months to a year, you’ve traveled all those places you didn’t for 20, now, what are you going to do? Right. And it’s yeah. I mean, there’s, there’s a lot to unpack there because I think we all want purpose. Right.

[39:01] I mean, we, we all had purpose while we had our businesses and, and that’s the part, I guess, that has to continue. Like what’s that sustainable purpose that you have helping yourself, but you know, is it helping other people? Is it staying busy golfing or traveling or whatever, but again, you can only do so much of that. Hey, it’s Paul from making chips. If you’ve been burned by recruiters who don’t understand manufacturing, you are not alone. That’s exactly why we created hire MFG leaders. We’re not just recruiters. We’re current and former shop owners, and we know what it takes to lead in this industry. Whether you’re hiring your next operations leader, sales manager, or production supervisor, we’ll help you find someone who actually fits. Learn more at makingchips.com slash hire. As we start to kind of gear down the, if again, if I’m listening to this, I’m going, okay, I, I am the owner. I am the bottleneck. How do you recommend people start to like, let go of that? Cause that’s to me, that’s lots of times the hard part is like, so identify like, what can I let go of, what can I not and, and how to like functionally start doing that. Yeah. I think for folks that have children, you know, I think it’s a great metaphor analogy, I don’t always get this too confused, but thinking of it as getting this kid ready to launch, right? Same with your business. Like it is no longer my job to make sure that the kid is fed every day.

[40:35] It is my job to make sure that the kid knows what to eat. Same with the business. It’s my job to like start teaching these folks to be able to manage this without me so that I can step back. And I think, you know, go going back to what I said before, thinking about how to build a culture of continuous improvement so that you can trust that the company is always going to be looking forward to how can we improve? How can we do things better? Beginning to ask, you know, questions and, you know, putting on that coach hat, you know, really stepping into that role as kind of the guide from the sidelines, you are now the coach, you are not in there running the plays, like being on the sideline, I think it’s very big. Continuing to work to, you know, to pull yourself out of letting your value come from the day-to-day actions is big. I feel like we covered a lot of this already. Maybe I can just step in now for a quick second, because I’ve had the luxury of being on some engagements that we hold through this process. And I think what has become very, very apparent is one, not every situation is identical. But with that, I will say just watching Heather go through her process of understanding the business and help honestly uncover all of the, I’m going to call them skeletons, because I think a lot of things as a business owner, you’re so encased in, you know, Mike, you said, I’m a workaholic, right? Like I think many owners, when they acquire a business, they’re going all in.

[42:05] You know, they’re taking a big old jump off into the deep end and that’s where they sit for perpetuity, right? And if they, hopefully as they evolve and grow as owners, as they start to swim to the shallow end, to allow others to come around them and continue on the business, and so, you know, watching Heather do what she has done many times over is start to uncover those skeletons. Like these are, these are my weaknesses and these are the things that I need to address in order to decouple myself from this business and really get the value out of it and then, you know, she takes it a step further into what’s next, you know, as we were just discussing, which is, you know, it’s, it’s just really, it’s intriguing when you actually sit down and start thinking through what does this look like next. Yeah. I, you know, I know, I mean, as an owner, like if I look at the practical steps that I’ve taken, you know, over the last almost nine years, you know, at first, I mean, again, I bought this business, right? So at first I had to learn what we were good at, what we weren’t good at. I didn’t, I had to play all those roles. And as, as I now look at, you know, again, call it 10, 12, 15 years out, you know, I start looking at, I think you need to look at what am I good at? What am I not good at? What do I enjoy and what do I not enjoy? Right? So start there.

[43:30] Like you could just build a little matrix. Here’s all the stuff I do and put it in one of those four categories, right? Like I like doing this stuff. I don’t like doing this stuff. I’m really good at this stuff and I’m terrible at this, but I have to do it anyway. So, you know, the, the, the stuff that you have to do, but you’re terrible at, you should start looking at delegating that, right? The stuff that you’re the best at and you enjoy, keep it. Like that’s like, keep that as long as you need to keep it. We were talking with a young founder on a Making Chips episode recently, and, you know, he was, I think he was maybe a two person shop, you know, growing, but, you know, he’s like three years in business, something like that, and he made the comment about, I guess I really need to get more involved in, I don’t remember something on the, more on the admin side of business, but he really likes being in the shop, right? It was sales and admin, I think. I was like, no, you really don’t have to. I mean, if, if, if where you’re, if where you find your daily pleasure in your job is like out on the floor doing things, you can hire the admin and the sales side of the business, right? Like you can stay in your lane of what you enjoy and hire the things that you don’t enjoy. In my case, you know, I’ve been able to now over seven, eight years, I’ve been able to push off the things that I’m not the best at and the things I don’t enjoy. To other people, the only thing I still maintain that has to do with the day-to-day operations of our business is on the financial side, like kind of finance and accounting. I enjoy it and I’m pretty darn good at it.

[45:06] So like I maintain that piece. Can someone do it better? Yeah, probably. Do I need them to? Not right now, right? Like I’m not the, I I’m not even a machinist, much less the best machinist in my shop, right? So I hire that weakness. If that was my strong suit and I didn’t know anything about finance and accounting, I would call CLA and say, Hey, can you guys handle all my finance and accounting? Cause I’m really good at like programming the jobs and I enjoy it. So I think if, I think a lot of owners, like they feel like they have to take it all on, but if they’ll just really boil it down to like those buckets that they love and that they’re the best at, they’re the only ones in the company that can do it. I mean, one, their own job satisfaction will go up immensely, right? Cause they’re doing what they enjoy every day. And they’ll hire people that are really good at the other stuff. Hire and or train, right? I mean, if, if you can’t hire like whatever, but you’ll delegate to somebody. I, you know, I don’t know anybody that got into business to become like an HR professional, right? I mean, like if you talk to a lot of employers, like HR is their biggest headache, hiring, firing, policy, whatever. You can hire that, right? I mean, like in our case, we don’t have it full time, but we have a PEO, right? That’s the one that bewilders me. Why, you know, that one’s such an easy one to outsource. Outsource it.

[46:27] And same way with the finance and accounting. Again, in my case, that’s where I spent most of my career. So like, I like it. It’s natural to me. I don’t hire it out, but I could just as easily hire Phil to be my interim CFO and not worry about it ever again. Right. Right. Like he just handles it. And every month or quarter or whatever I engage with him, it’s done. Yeah. All those little functions that you didn’t get in business for. And in our industry, you know, I mean, most of the owners in our industry got into it because they’re really great machinists and they love it. So if, if that’s your, if that’s your thing, you love the shop floor side of this business, stay in that lane, right? Like start letting the other stuff go. That’s my just day-to-day practical piece of that is just what you’re the only one that can do, do it. If you hate it, find someone else who can do it better than you. I was kind of the only one doing sales for a long time. And then like, I don’t know, four or five months ago now, I finally hired a salesperson. She’s way better than I was. I mean, she’s killing it. You know what I mean? That was, that was just a piece. I’m like, well, for the time being, that’s me. Once we got to a size where I could hire that, I hired it. And again, she’s, she’s so much better at it than I am. And we can see the results.

[47:45] So like hand it off, like done. And if I were to disappear tomorrow, that will continue. Right. That would be my, that would be kind of my closing, just practical advice. Just use those four buckets. What do I love? What do I hate? What am I good at? What am I not? Put them on. I mean, we’ve all seen those little graphs, right? Like, so the stuff up here that you’re good at and you love, hold onto it. The stuff that you’re not very good at and you hate, just start getting rid of it. And just work your way through that matrix. I think that’s a great way to start. Any closing thoughts on any of this? We, we talked about a lot. There’s, there’s, there’s a lot to unpack there, but any closing bits of advice? Yeah. I think, I mean, for me, I think the biggest thing is any conversation that in any way ties to building value, having a good transition, getting out of the way. It always comes down to starting early. Like, don’t wait until you’re ready to sell. You’re burnt out. Like start now. It’s too late. Right. Start putting the processes in place that you need, building the team, and also really paying attention to what’s driving your behavior. I think that’s one that owners often overlook.

[49:02] Start early. Bill, you got any closing thoughts there? No, I mean, I agree with Heather. Honestly, a lot of the owners that we see is they call today and they’re like, I’m ready to sell tomorrow, and you know, there’s just a lot of work that has to be done. I know that’s easier said than done. You know, I think many people, they are very focused on what they’re, they’re doing in the case of, you know, many of the listeners as owners, you’re, you’re focused on it, but at the same time, you know, there is life after ownership, which requires time, effort, and planning. Well, I’ll, I’ll, I’ll recap a common theme across all these conversations and then we can wrap this up. But if you go back to how most of our businesses are valued, it’s going to be a multiple of EBITDA, seller discretionary earnings, whatever you want to call it. Everybody asks for three years of financials when they’re looking at your business. So if you’re inside a three-year window, there’s not much you can change, right? I mean, your earnings are what your earnings are, the businesses in the state it’s in. The multiple, in my opinion, is easier to affect than the earnings. Changing the multiple is the stuff we’re talking about today. If, if the whole business relies on me, in our industry, you’re going to get a two, two and a half, maybe three X earnings. If I’m irrelevant to the business, you could get a five, six, seven. So on the same earnings, without the owner being the bottleneck, you could double the value of your business overnight. Heather’s brought it up several times.

[50:23] We’ve brought it up on several episodes. I mean, these are things you need to be thinking out in that five to 10 year window, because you have time to change it before you have a three-year window that they’re going to actually look at. If you’re me and you’re 53 and you’re thinking this is 10, 12 years out, this is the time to start making the changes so that three to five years out, when you hand over those documents, you’re going to get maximum value for your life’s work. Very well said. Guys, thank you very much. Uh, let’s remind people how to get ahold of you. You’re both with CLA, which I think most of my listeners are very familiar with. Yeah. Heather, like, let’s start with you. What’s the easiest way to get in touch? If anybody has any follow-up questions or kind of maybe wants your help with something. Yeah. Reach out to me at CLA. So heather.parbst.com is the easiest way. 407-244-9385 is my direct line. There you go. Even better. Yeah. And Phil? Yeah. As I mean, as obviously email is always a possibility, but claconnect.com, um, there’s tons of content out there that we’re continuously sharing. LinkedIn is also a great Avenue posting regularly on a weekly basis. And then obviously we have a directory.

[51:38] So if there’s anybody you want to talk to at CLA, obviously go ahead and go on our website. You can find any of our email addresses and we’re happy to help if anybody needs it. Yeah. And I’ll add a few things there. If you can’t find them, any of those methods, holler at me and I will absolutely connect you directly with, with either or both folks. And then I got to put in a plug for, I mean, go follow CLA on, especially on LinkedIn. I know you guys are on some other channels too, but you’re constantly putting out, you know, great articles and, and blogs and worksheets and so forth that relate to all this stuff. And very seldom have I not seen one of those that I clicked on that I didn’t get some value from. So I would encourage everybody to, to, you know, follow Phil, follow Heather, follow CLA, you know, see that content they’re putting out. Cause it literally every time I’ve clicked on, I’m like, wow, that’s, that’s a really great, you know, perspective on that subject or, you know, whether it’s tax changes, common valuation type things like we’re talking about here, tariffs. I mean, that was huge last year, right? Like you guys put out tons of great content on tariffs, just good timely information that’s affecting all of us on a day-to-day basis. So go follow them and, you know, learn from, learn from what they’re putting out there because it will have an impact on your business.

[52:54] Heather, Phil, thank you for being on the show. I think this was good. It’s a good, timely, relevant topic. I think for a lot of people. Yeah. We’ll just catch you guys next time. Thanks Mike. Awesome. Thanks.