CEO To Rainmaker
CEO To Rainmaker
Episode # 81 Empowering CEOs for Post-COVID Success
Discover the secrets to thriving as a small business CEO in a rapidly changing world. Drawing on my extensive experience as a commercial banker, I return to the podcasting scene with fresh insights aimed at supporting business leaders navigating annual sales between one and fifteen million dollars. With a focus on strategic growth and value creation, I emphasize the underappreciated power of personal connections over our reliance on digital communication. Dive into a compelling success story where a client's financing strategy was transformed by leveraging commercial finance companies instead of traditional factors.
As we explore the post-COVID business landscape, I tackle the common fears of growth and borrowing head-on, advocating for strategic planning as a solution to inflation and rising costs. Building a capable management team is crucial, and I stress the importance of seeing your business as an investment that can thrive independently of its founder. Prepare for a future where your enterprise operates smoothly on its own terms. Plus, don't miss out on next month's episode featuring an inspiring CEO guest who will share their journey from concept to long-term success, offering actionable insights into effective business execution.
so, uh, good morning it. Uh, today is monday, december the second, and this is gene valdez, your host for the podcast cdo to rainmaker. I took some time off for health reasons. I'm fine now and in my absence I noticed there's just a whole slew of podcasts out there. I mean, the industry is just inundated and I started three years ago and seems like everybody and his mother has a podcast show. It must be un-American.
Speaker 1:So, confidentially, I struggle with myself from the standpoint of, well, what can I do to fill a niche that isn't already being filled? Is there a target market out there that would be interested in what I and my guests have to say? And I'm going to have confidence that I will figure it out, and if not, then my ratings will be down and I'll no longer have a podcast. But essentially it's the original target market. I'd like to assist, mentor and advise, through the mechanism of a podcast, the CEOs of small businesses, which is usually determined in size of annual sales, which could be anywhere from one to about 15 million privately owned. That is my target market and that encompasses a huge chunk of the economy. I don't know how many of my competitors are targeting that, but I am one of those. I've started and formed three separate businesses. In a past life I was a commercial banker, so I was exposed to thousands and thousands of companies and their CEOs in terms of what works and what doesn't work, and I'm just announcing that I'm back and I hope to make it interesting with either guests or compelling stories or anyone that can help the small business owner gain an edge and stay in business. Because, as I have alluded to many, many times, the mortality rate for small business owners in that 1 to 15 annual sales is severely high. Some, more close to 70%, of all businesses that start today will not be in business, and I believe maybe I'm naive that the cause of that is the lack of skill development of the CEOs in question.
Speaker 1:And no question are we inundated with all forms of online services, white papers, just public information on how to do this and how to do that and how to do that. Yeah, that works, but the greatest teacher is experience. We. You try something and if it doesn't work, you chalk that up to memory and you forge ahead with another idea, and if that doesn't work, you just keep plugging along Along the way, using technology but not abusing technology from the standpoint that the ultimate success of a business owner is through connections with their customers and be aware of their competitors in person for customers and prospects. And you can follow that up with technology.
Speaker 1:But, based on my experience, we've moved too far in the sales concept, relying strictly on social media email text. There isn't a lot of face-to-face, what I call chemical reaction, and if you don't feel comfortable doing that or you say that's per se or that's only dinosaurs do that, you are wrong. I don't know if I speak for the entire small business community, but I prefer to talk to a business owner when I call the office rather than getting slews of texts and emails. I want to talk to the decision maker what can you do for me, what are my benefits, who are your competitors, et cetera, et cetera, et cetera. And again, you can always follow up your sales and marketing campaign using technology. But don't forget, the magic is in the connections. I don't think that's ever going to change, even with A1, all the other developments that we have. So that's my theory and again, as I said, if I'm wrong and I'm a dinosaur, I won't be on the air anymore.
Speaker 1:I just concluded a successful financing strategy with a CEO who, historically, was financing his business with a factor and the factor, by definition, it was charging exorbitant rates. And while he wasn't bankable because there was some deterioration in a lot of the parts of his business, he did have a fundamentally strong business. He just had poor financing. He had a poor financing strategy six-figure line of credit with an industry called commercial finance, who are different than banks. They don't take deposits, but they make loans, so they're not defined as banks, they're defined as commercial finance companies. They are less expensive and less cumbersome than a factor. So it's a two-step process to get him toward a bankable relationship, where he ultimately needs to be. But now that he has a six-figure line of credit, he doesn't have to worry about do I have the capital to take this PEO? He does have the capital. Eo, he does have the capital and, rather than selling his invoice to a factor, he just pledges his receivables as collateral for a line of credit. He has enough receivables to do that. So this is going to kickstart his growth prospects in 2025, balance the cash flow.
Speaker 1:And you're saying well, gene, I don't have that kind of background. I can't figure that out for myself. True, many of you are inundated with loan brokers, online merchants that will loan you money tomorrow. 24-hour turnaround time, hefty prepayment penalties you got to know. I am not suggesting that you have to be a CFO. I am suggesting that you need to know some of the fundamentals and when it gets really sticky, you bring in a specialist. Just like you would be in social media If you want to get your name out there, you want to increase your branding. You got to know a little bit about what that means, but ultimately, you're going to bring in an expert to help you accomplish that goal. Help you accomplish that goal.
Speaker 1:So let's talk about what I hear all the time. Do I need a business plan? I don't have time to write a 25-page business plan with charts and I don't know how to do it, but you do need something in writing. It can be a couple of pages, but it is a synopsis of how you are going to attempt to gain business in the small market. Attempt to gain business in the small market. It's the who, what, when, where, why. Who do you want to sell to? What is your service or product? Is it affordable? Who's your competition? Can you consistently meet that demand?
Speaker 1:And one of the fundamental things about business owners, one of the key linchpins on why they fail is that they fail to adapt to a changing environment. So just because something worked in your strategy in 2024, it doesn't mean that you can use the same strategy in 2025 and be effective or successful. Things are changing in the political arena, in the health industry, your competition is changing, your customer preferences are changing, there's new laws. You must analyze that information and, if you believe so, tweak your business model, business plan if you will, to accommodate needs in a changing market. Most companies they are very slow about that and they get passed by and they end up being in a in the business small business cemetery because they couldn't adjust.
Speaker 1:Pre-covid, you didn't have a lot of merchants delivering food to your door. It's become almost the norm now. So, with the emergence of AI and other information sources, there is no planning, goal setting, leadership, accounting, finance, sales, marketing and you say, hey, gee, whoa, whoa, whoa, whoa. Hold on here. I can't do all that. You don't have to. You just need to know how all of these parts fit your business and if something's going haywire, you know where it's coming from and you fix it.
Speaker 1:Now some of my clients are afraid to grow, don't want to borrow money. I'm not saying you have to borrow money. I'm saying, if you have a business model, though, and you want to stay current, you do have to grow a little bit just to keep up with inflation. Right now we have inflation under control, but still you may have rising costs in your labor materials, et cetera, et cetera. So, unless you want to go backwards, you have to grow a little bit every year, and that requires strategic analysis of what's going on.
Speaker 1:You know, I have interacted with thousands of CEOs, entrepreneurs, small businesses privately owned, and I'm amazed how some of them are absolutely brilliant. They get it of them, are absolutely brilliant, they get it. And then I am exposed to those that you know. Without being mean or anything, I say to myself I don't think this person's going to make it. And then there are those that I meet where I know they're not going to meet the next day and it is their own fault.
Speaker 1:You've got to get smarter. If you're flying the plane, you've got to be a better pilot. Little you can afford to bring on some key talent, whether on a contractual basis, part-time basis or a full-time basis, so that you can build yourself a management team, because it's very lonely, making all the critical decisions by yourself. But if you don't, you will not succeed. If you don't succeed, you're going to ruin your credit. You're going to cause havoc in your family. There's a lot of pressure on you, I get it. I get it, but it's not insurmountable. It can be done. You just have to have the willingness and the determination to get better. As a CEO, you can have the world's greatest business, greatest business model, greatest business plan, great people, great product. But if you're a bad CEO, nothing's going to happen. Nothing will happen.
Speaker 1:So you owe it to yourself to be all that you can be, to be all that you can be, and I want you to look at your business your business that you own today as an investment. So let's say that you weren't investing in your business and you had a stockpile of money and you were going to invest in the stock market or bonds or real estate investments. You always want to return on your investment, correct? Well, you're spending an inordinate amount of time and energy on your investment. It just happens to be a business and you need to get a proper return on your investment, based on how many hours and money you've put into your company and your rainy day or, excuse me, not rainy day. Your payday will be at the time, your stage of your life, where you decide I don't want to want to do this anymore. I've had overtures of people that want to buy me out. I want to spend more time with my family, I want to travel. I don't want to do this anymore.
Speaker 1:Well, the pundits call that an exit strategy. If you want to get a top dollar for your investment, you get a high return over your investment, just like you would if you were investing in the stock market or any other security. How do you do that? How do you maximize the value of your business so that, when you do sell it, you can live a life of plenty of money, plenty of time? You literally have to work on the value of your business every year. It needs to increase in value every year, and so you should think of yourself as okay, I have this business. I don't know when I'm going to sell, but I owe it to myself that when I do sell, I have the very best business possible that will be attractive to other would-buy buyers, so I can fetch the highest price possible and get a return on my life's investment of time and money into this company, of my life's investment of time and money into this company.
Speaker 1:If you don't do that, all you're going to end up doing is you're losing the job that you had at your company, and your business in and of itself has no value. It's just a job for you, but you want to create value so that someone could take. It's almost the concept of franchising. Someone could take your recipe, use it and make money, and it's taken you a long time to create all the processes to do that. But the more efficient and the more repeatable those processes are and if they duplicate themselves, you will get top dollar. There's not very many businesses where I can say that, and here is another thing that I suggest as we're embarking on 2025.
Speaker 1:Do not become a slave of your business. You cannot make every single decision on your own, otherwise you will die in your executive chair, with no exit is to create, over time, a team of people that can take over the helm at the appropriate time. If you don't do that, then when you stop doing the business, the money stops, because the business has no value in and of itself. All you had was a high paying job and that's not going to cut it? Does that make sense? Podcast is a business. Advertising is a business. Manufacturing is a business. Retailing is a business. Retailing is a business and so much services and products are now moving toward online because it just makes economic sense. Many people have said rightfully so that the shopping center concept is a dinosaur. Now you can just go online is a dinosaur now you can just go online. So your job is to create a business that can be sustainable in whatever environment you find yourself in that year, and if you need to create new products and services, if you need to make key management changes, if you need to make changes in your pricing policy, you need to know all of that.
Speaker 1:The devil is in the detail. You can't rely on somebody else doing it for you as CEOs and I'm a CEO of three companies but I'm also a consumer and many times I go out to eat. Like most of us, I like to eat out and day after day after day after day after day, I see where management at the top is not focusing on details. I'm not going to name the restaurant chain, but I had breakfast one day and I ordered avocado toast because I want to be avant-garde. Everybody seems to be eating avocado toast. It's good for you.
Speaker 1:So I ordered avocado toast and how they serve it. They put a poached egg on it. The avocado that they took out that was on my sandwich came directly from the refrigerator and it was brutally cold. They layered on the poached egg, which was warm at the time that the chef finished it by the time I got to it. When it was delivered to my table, guess what? My egg was super, super cold. Now I don't know about you, I don't like eating cold eggs. I didn't want to pay the bill and I said to myself why did that happen?
Speaker 1:The devil is in the details the management should be aware of. Maybe we should serve this avocado at room temperature so that it doesn't drop the temperature of the poached egg, so that it's edible and satisfying. They don't do that and they didn't even offer to give me my money back. Guess what? I'm not going back and think of your customers. This way, you may get one shot at the big time and if you continue to deliver, they'll give you more shots. But the day that you drop the ball, ship the wrong stuff, don't meet a deadline, raise your prices unilaterally. They will drop you like a hot potato, because there is competition.
Speaker 1:So at the very top, as the executive, you have to make sure that you are aware of all the details. Let me give you another example. Have you ever called somebody in a business no-transcript? I love it when someone says hi, this is Bill Smith, I'm with Acme Company. You know we're here to serve people. How can we help you today as opposed to Bill here? I don't even know if I got the right company. Well, if you're the CEO, maybe you should have a plan in terms of how your employees answer the phone. It's the first reaction. So if you want to be a successful CEO and maybe you want to sell your business later on for a big payday you have to tune into both the minor details and the major details and never take your eye off the ball.
Speaker 1:And also bring some balance to your life. If you're lucky to have a family, enjoy your family time. If you're lucky to have a family, enjoy your family time. Do whatever you do. Have a hobby. You need to be infused with energy at the appropriate times. Take up meditation, take up stretching classes, yoga, workout. Maybe you're already doing this, maybe I'm preaching to the choir, but being a CEO can be a very sedentary lifestyle. Because you're sitting so much and when you're not feeling well you don't function well. Also be a role model for your employees. If you want your see, if you want your employees to perform in a certain fashion fashion, show them how to do it. If they do it successfully, pay them. If they don't do it successfully and they're not trainable and they're lazy, get rid of them.
Speaker 1:Don't just deal with the status quo. You know there's the younger generation has different interpretations of working these days. You need to read through it all. One of the most difficult professions in the United States is owning a successful small business. It ranks right up there with being a heart surgeon, being a president, being a fantastic doctor, being an anesthesiologist anything that requires a lot of training that you need licensing for. There is no license for a small business owner in terms of credentials.
Speaker 1:You go to the city clerk. You say I want to start a business. They'll say here's the fee. You fill it out, wham, bam and you're done. They don't grill you on it. Well, have you taken the requisite classes? Are you well prepared for this? Most people just plunge in and wing it, and if you're a good learner. I suspect that you can learn on the job, but your learning and your education will never stop, and this is the mission statement of cdo. To rainmaker um, I'll continue to have what I believe to be cutting-edge death.
Speaker 1:Uh, guests, um, I'll make inquiries and comments on what I think is happening today. Uh, some things are going to change all the time. Some things will stay the same. It's just a combination of all of that. So with that I'm going to conclude today's December episode of my podcast, and hopefully you will join me for my January kickoff. I haven't decided on my guest yet, but it will be a good one, and one of my main variables is choosing a CEO that comes close to the model that I've described and they can tell you for themselves what they learned, why they're doing it, because it's not so much their business what business they're in it's. How did they create the business? How did they execute the idea? How did they get from point A to point C, open the doors and sustain themselves? That in itself, they call it executive execution is very difficult. There's an old Chinese saying that states anybody can get into business. It's staying in business which is the hard part. So with that I'll talk to you and see you in January. Check your calendars. See you later.