As your business scales, you will not always know what employees are doing. Peter Lohmann tweeted about stages of scaling a property management business, you will eventually not recognize new clients or properties. You want to get to that point for your venture. Think of the “ideal” business to purchase; the owners are hand-off and operators are in place.
But to get there takes a lot of work. Something to be aware of while building your own business or doing due diligence is the work done behind the scenes. I like to call this invisible work. Invisible work gets the job done and you may not notice it is even happening.
For example, you’ve hired a great bookkeeper to do payroll and keep things accounted for. She is experienced and, after onboarding, proposes a new project to improve the current system. Payroll gets paid, employees love working with her, and no discrepancies happen. After several years, she moves on to another company. You or a new hire think you’ve got payroll down, but after weeks or even a quarter things come up that aren’t documented.
The above example might be too simple, but hopefully the point is clear. You and your managers will have employees who do not document when situations come up, small steps in something they think is clear, or didn’t think was large enough to document. It is on you to push for more documentation, shadow and learn. Documentation and standardization makes it easier to hire, replace and scale. New hires and ideas are fantastic when implemented, document them. My time at Hadrian has only made that more clear.
Over the past several years, I had been a reader and dreamer of the financial world. I aspired to be on the finance side, making the high level decisions where to allocate capital and generate great returns for shareholders. But as I dove more into SMBtwit, podcasts and my own family’s plumbing business, my vision changed for my future from allocator to operator. Through conversations with various people in the SMB community that I respect, being an operator at heart fits me.
Some resources and people that have helped others and I:
- Majority Search Resource Library, Tim Ludwig and Justin Burris
- Ignore the Headlines podcast by Stephen Olmon – he has pushed me to be better and dream
- SMB Ops Show with Joshua Schultz – his Twitter is also a goldmine for documentation
- Rich Jordan and his team at Strongpoint
- Reg Zeller
- Think Like an Owner
- SMBash and HoldCoConf – these two un-conferences are fantastic
This list is not all encompassing. Expect to see a more comprehensive, updating library of resources to make you and your business better.
Thanks to Everest Brady for his help, writing, and research in assembling this week’s newsletter.
While the title and image look tacky, Jay Vasantharajah at Atlasview Equity wrote about pulling levers in your business for extra cash. He then dove into several examples of how to use that extra cash on your balance sheet.
My favorite line from this post about high pressure management is, “…I’m done with that launch-mode. We are entering scale mode now and the unlock here is changing POV, getting help, and documenting processes.” If you aren’t subscribed to Little Engine Ventures (LEV) monthly blog, you can here.
This Week on Think Like an Owner
Our guest on this episode is Nevin Raj, Co-Founder and COO of Grata. Grata is a fascinating data software business that takes in all available public information about private companies, such as their website, LinkedIn, funding data, PPP data, and so much more. It then uses that data to create the most accurate profile of that company in their industry, headcount, business model, revenue range, and more.
Nevin and Alex talk about the categories of data businesses and where he sees data businesses evolving into, how to accurately estimate the revenue of private companies and how the best investors do it today, and how to build a data software business.
This episode Q&A featured Hood & Strong, Jerry Zhou answers the question, “Is a quality of earnings a valuation of the business?”Hood & Strong isa CPA firm with a long history of working with search funds and private equity firms on diligence, assurance, tax services, and more. To learn more about how Hood & Strong can help your search, acquisition, and beyond, please email one of their partners Jerry Zhou at [email protected].
Our guest on this episode is Jamie Shah. Jamie worked in investment banking and Google before returning to her family’s business, Chem-Impex International, which manufactures materials for life sciences companies, as VP of Operations.
Today, she is the managing director at the company and a professor at Chicago Booth, where she teaches a course on family business. The discussion focuses on lessons to be learned from family businesses, which are more trusted and stable and generate higher returns. Alex and Jamie talk about what success looks like in failing businesses, the balance of paradoxes, and how to apply principles that make family businesses successful to all companies.
In lieu of a sponsored Q&A session, and in keeping with the episode’s topic of families in business, we wanted to highlight a charity Alex and Michelle (his wife) volunteer at in Omaha, Nebraska called Heartland Hope Mission. They host one of the largest food pantries in Nebraska and currently, due to inflation, the number of families seeking help is up 45% this year. These families are in desperate need of assistance through the holiday season. Heartland Hope Mission has an “Adopt-A-Family” program which allows donors to purchase gifts for children, newly born to 17 years old. You can learn more information in the podcast, it is at the beginning of the episode, or at Heartland Hope Mission’s website. Instead of directing you towards a company, we hope you will look at HHM and consider helping a family. Thank you so much.
In case you missed our email last week:
We are very excited to share that starting this past week Think Like An Owner will now be publishing episodes twice per week. This change coincides with our decision to close the Operators Handbook and move those topic-specific conversations to the podcast for Thursday morning episodes. You can expect these episodes to focus on topics like sales, culture, hiring, debt, capital allocation, leadership, board meetings, and dozens of other topics.
This is an addition we have wanted to make for a long time, and we finally feel like the podcast is ready to go to this next level towards our endless pursuit of better in small business.
The second episode also means we have more availability to partner with great companies serving operators and investors through podcast sponsorships. If you’re interested, please send Alex an email at [email protected] or connect with him on Twitter or our website alexbridgeman.com. We would love to chat.
This Week in SMB Twitter
Think Like an Owner is sponsored by:
Live Oak Bank – Live Oak Bank is a seasoned SMB lender providing SBA and conventional financing for search funds, independent sponsors, private equity firms, and individuals looking to acquire lower middle market companies. If you are in the process of acquiring a company or thinking about starting a search, contact Lisa Forrest or Heather Endresen directly to start a conversation or go to www.liveoakbank.com/think.
Hood & Strong, LLP – Hood & Strong is a CPA firm with a long history of working with search funds and private equity firms on diligence, assurance, tax services, and more. To learn more about how Hood & Strong can help your search, acquisition, and beyond, please email one of their partners Jerry Zhou at [email protected].
Oberle Risk Strategies– Oberle is the leading specialty insurance brokerage catering to search funds and the broader ETA community, providing complimentary due diligence assessments of the target company’s commercial insurance and Employee benefits programs. If you are under LOI, please reach out to learn more about how Oberle can help with insurance due diligence at oberle-risk.com. Or reach out to the CEO, August Felker, directly at [email protected].
Oakbourne Advisors– Oakbourne is an independent retirement plan consulting firm that helps small companies design and implement great retirement plans for their teams. Whether you already have a 401(k) in place or are looking to start one for your team, please reach out to learn more about how Oakbourne can set your people up for success in retirement at oakbourne.com/think.
More Staffing – More Staffing is a recruiting firm to help find the most talented and experienced professionals in the Philippines to level-up your business. To learn more about More Staffing, check out their website at morenow.co and get in touch to see how they can help level-up your business with a great team.