E192: John Seiffer's Insights on Systemizing and Exiting Companies Without Selling

[00:00:00] Ronald Skelton: Hello and welcome to the How2Exit Podcast. Today I'm here with John Seiffer. He is a business coach and author, and he's got some great ideas for us today. I'm looking forward to this conversation. I'm looking forward to learning from you. Thank you for your time today, John.

[00:00:12] John Seiffer: Oh, my pleasure.

[00:00:13] Ronald Skelton: Cool. I always kind of joke around at the beginning and said, Hey man, you were born, then you ended up on a show about mergers and acquisitions, buying and selling companies and running them. How did you end up here? Give us your origin story.

[00:00:25] John Seiffer: It's been a while. The short answer is I'm totally unemployable. So I have had companies my whole life. I've never had a job. The weirdest one I had, we sold movie libraries to apartments and they used it as a marketing tool. And we basically shipped out, movies every 30 days to them.

So we were like Netflix before it was Netflix. But, after I started that company, when I lived in Texas, and two years later wanted to move back to the northeast where I'm from, didn't make sense to move the company, so I left. And I left the company in Texas and ran it long distance. This was in the 90s, and before the internet made that easy. So they would overnight me data tapes and stuff, and I had that company for 23 years.

And it's really where I learned how to coach other business owners and how to systemize a company because I wasn't there. I wasn't in the weeds to get everything done. And I talk about this idea of exiting your company without selling it. And because that's what I did. I had gotten it so systemized where I was working 10, 20 hours a month, maybe.

And I looked into selling it. And what I was told was I might be able to get three times EBITDA for it. And I thought, well, I'm not working that much. So in three years, I'll have the money and the company. So that's what I did. And I've actually, go ahead.

[00:01:45] Ronald Skelton: No, I was gonna say, that's, that's normal for a company. There's actually tiers, a lot of people don't know this, but if you can get your EBITDA above 2 million, you start getting the, the attention of private equity and strategic advisors and some industries it's only up in the 5 or 10 million and EBITDA. You can start getting attention, then you can get a 6 or 7X and then, there's another tier above that, above 10 million. You can get a, you know, 9, 10 to 12X.

But, uh, yeah, there's, it's, there's a multiples game here that has to be played and it's basically how much money do you produce.

[00:02:16] John Seiffer: Well, the other thing about those higher numbers is, if you're running a company at the, at those levels, you probably aren't involved in the day to day. But if you can pull yourself out of the day to day, even at a smaller company, you can get more for it. And the way I like to say it is, if you were to leave, the customer should not know that you left. 

You've got people replacing you in all the things that you did on a regular basis. And that became the work that I do with clients. After I moved away from my company, I got a call. Somebody said, you ought to look into this thing called coaching. You'd be great at it. And I said, what's that? It hadn't become a buzzword yet.

And I got into it. I got some training. I loved it. Started coaching other business owners. And was part of a group that founded the International Coach Federation. And so I've been coaching business owners since the late nineties. And what I help them do is systemize their companies so that they can get away from the day to day stuff.

That allows them to do either what they want outside the company or build the company in, in strategic ways. And like I said, when they sell it, it's worth more.

[00:03:22] Ronald Skelton: You know, you were saying that,if they're bigger, they're probably better efficient. Uh, that's not necessarily the case. I've only been after this now for about three and a half years, and I promise you, I've looked at, well over two, 300 companies. And when we get into the weeds of things very often, even at the two, $3 million EBITDA range, I don't think I've listened, looked at maybe four or five that are bigger. At that level, the CEO still wearing three or four hats. If you look at the org chart, it's one of the things I've got to have, but I don't ever tell the sellers I'm doing this, but I have, I break out an org chart and I start writing down who's doing what roles.

Or a lot of times they're overlap, but who's taking what functions. Who's doing HR? Who's doing payroll? And you'll find out that there's gaps missing right and you start filling out the missing gaps. I seen a company doing three and a half million dollars EBITDA and the wife, like not on the payroll, not getting paid anything, still does all the you know, still does payroll and some of the HR functions, right?

I was like, I had to tell the guys like look, and it wasn't my deal, it was somebody else's. I was helping him. It was like hey, you got to tell this owner that, that guy's wife isn't going to work for you for free, right? Like, like he works for you. So we have to, you have to make some adjustments here.

And, so I love this whole exit without selling a company. What does that look like? What's the process you would, you know, start, how do you start tackling that? What's the additional way to identify what needs to be done?

[00:04:41] John Seiffer: Yeah. So when, the way I look at it is, think about why a company hires somebody. They used to say that small business owners were the job creators. That's baloney. Nobody likes to hire somebody. It's the demand of the customers that's the job creators. And then we hire people because we have to produce enough.

And the reason you hire people is to produce something in your company. Some results. Usually, if you're using org chart thinking, you slot them into a role. Give them a job title. But you don't hire somebody because there's a title that's missing a person. You hire them to produce outputs. And so that's became the beginning of my book, this book called Output Thinking, which is a way to think about your people in terms of the outputs they're producing.

And you said a minute ago about the owner wearing so many hats. Well, those hats are the outputs that the company needs somebody to produce, but it doesn't have to be the owner. If they can figure out how to get rid of the intuition and the expertise and disperse that throughout the company so that other people can produce those outputs for them, and then they can step out of that.

[00:05:50] Ronald Skelton: You know, that, that org chart thinking is really rough on small business owners because we still kind of defaulted. I need an HR person. No, you need payroll done and you need any disputes handled. All right, you have two outputs you're looking for. And, unfortunately, it's throughout our society and small businesses, you get this is that's not my job.

Well, I'm not HR. Like yeah, but I asked you to do payroll. So in the small business world, it's a little, especially when you're under 10, 15 employees, like you're just, you're really small. Or even like this podcast, I have one assistant. I probably need another one. Sometimes we have two, uh, that helped me run and manage the thing.

I still wear the hat of the social media person. So there's an output I need and I keep looking like, I don't want to hand that to the person who's doing everything else right now because that's not her forte and I'm better at it. But, um, it needs to get done. So I love that output thinking.

So you would say like make a list of the things the company needs as outputs?

[00:06:45] John Seiffer: Yes. And those outputs typically fall into the same what I call buckets because that's a little more loose than departments or teams. But, they're the same buckets in every company. They have to make something that people want to buy. That's production. They have to find those people and sell to them.

That's sales. And then there's a bunch of support buckets, the money, the people, which is the hiring, the managing and all that stuff. The money, tracking the money, paying the bills, getting the analysis, there's information, making sure that the information is available to whoever needs it. And then there's a checklist of things I call CAFE.

It stands for Compliance, Administration, Facilities and etc. Which are things that, if you don't pay attention to them, you may be fine for a while, but then at some point they'll bite you in the butt. And then the seventh bucket is growth. It's how do you, what are the plans, what's your strategy and all that kind of stuff.

Well, if you think about the outputs in those buckets, that's Independent of who's doing them. When you start a company, if you're very small, you may be doing them all. I'm mostly retired, but I don't play golf or have a boat. So I keep working with entrepreneurs. I'm not building a company at this stage in my life.

I've done that. I still have to, somebody has got to clean the room. I don't hire a janitor for it, but, you know, um, but as you get bigger, you either outsource that or contract out or do it yourself. So the key going back to your original question about how to exit, is to figure out who's filling all those buckets. And then figure out how each one can be filled without you. And generally the owners keep the strategy, the higher level stuff and sometimes they keep a couple of finance pieces. Like they may be doing the bank reconciliation or approving some of the invoices and things just so there's no fraud involved. But those are easily transferred when you sell and the customers don't even know about it and care about. So that makes the company more valuable.

[00:08:38] Ronald Skelton: I get that. What I, one of the things I look for, as far as systems and processes is how well they document it. And when somebody says, they do payroll, I say, okay. When you're sick or you're out, who does payroll, right? Like, who's your backup? And with that, yeah, that's what wakes up people and realize it's not documented.

It happens all the time. If you don't show up for a week. What that wasn't, that's one of my favorite questions to ask a business owner. If you don't show, if something happens to you, you don't show up for three weeks. What does not get done? What just doesn't happen? Right.

And then I asked, when I get the chance to talk to other managers or other employees, same thing. If you're gone for three weeks, what doesn't get done? What stacks up on your desk, right?

[00:09:17] John Seiffer: Yeah, and it's important to document that stuff for two reasons. One is, so that you can train new people but also so you can monitor the people who are doing it. There's a lot of things in a company you don't do every day. And maybe you do them quarterly or something. And if you forget how to do them because you're not doing it every day, you need a place to go back and look, I talk about that in the Output Thinking book because those outputs are best produced by systems and those systems have to be documented.

Those are typically called SOPs, Standard Operating Procedures. And there's so many tools now that you can use to document those that there's really three kinds of SOPs that get documented. One I call the recipe. Which is just like in a cookbook. Take so much of this and put it in this and have the temperature this. Those are easily documented.

It's usually done with data or a computer setup or a machine. You can document those with a video. Just have the person doing it, record what they're doing and talk about, here's why I'm doing this, I'm moving this over here, etc. Those are very easy. The second kind of documentation is a dance. So when you're doing selling, you can't tell somebody exactly what to do at every step there.

You're dealing with people, but you can dance. And then you document after you have a conversation, here's what I'd like you to know to have gotten out of that conversation and here's how you record it. Let's say if it's a sales conversation, how do you put it in the CRM? And you can very easily document the output of what that conversation should be. And then the third type is a creation. It's where you don't really know what the output is going to look like. You can't document that. There's certainly no recipe for it, but you can document the constraints. So here's two examples. One is a graphic artist. You, you want them to do a logo for you.

Well, you say it has to be these colors. It has to be this mood. These are the file formats I want. Those are the constraints. And within that they can create. It also happens in service companies like CPAs. A CPA will create a tax strategy for you. Now that part is creation. It's very creative. A lawyer will create a way to attack a legal problem.

The filling out the tax forms, that's a recipe. And then you can go back to how does your software do that. But you have to have those things documented so that you as the owner aren't tied down to it on a day to day basis.

[00:11:45] Ronald Skelton: I love that you have those three different ones. I'm one of these logical guys and I haven't written programs in a long time, but I see the recipe version and then I see the if then version, right? If this happens, do that. If this happens, do that. You know, when this happens, do this, right?

And I've written a lot of standard operating procedures in my life just because I came from a tech background running big data centers. So managing big outages and stuff like that, like we had, you know, at five minutes, do, you call these guys. You've got five minutes to fix it on your own.

If it goes over five minutes, call these guys. Right. And at 15 minutes, do this. And at 25 minutes, you have to wake me up. If it's revenue impacting, you have to wake me up in 10 minutes. 

If then, you know, that logical of, if this happens, so it's the same thing in that sales dance when you were talking about, I don't know where I would start. Cause I'm logical where I would start on writing a step by step how to do a sales transaction. Cause it's, I do a lot of sales. I do a lot of negotiations, but it's very organic.

[00:12:39] John Seiffer: Well, in a, in a small company, the same person does the entire sales process. They figure out who the customer is. They do the marketing, they do the outreach, they put together the proposal, they close the deal. As companies scale, you break that system into subsystems. And each one, the output of each one becomes the input to the next. 

And you can document what those outputs should be if you want to break them out. So you can say, look, here's what, here's how we define a qualified lead. And typically your marketing, systems produce qualified leads. And then they hand those over to the salespeople who close the deals. But if the output isn't defined properly, then you'll waste a lot of your salespeople's times on leads that aren't qualified or they aren't the right thing. So that's where you start with the sales processes, defining the output, and then talking about it from there.

[00:13:32] Ronald Skelton: Yeah. I'm a very, I think they call it type A personality where you just give me the high level and get out of my way. I'll get it done. And what I find is when I hire and do stuff. Not everybody can operate like that because I love what you said about defining the output. That's what I would love. I'd rather just say, here's what I'm looking for.

And here's the parameters I want it. And go do it, figure it out and bring it to me. Right. And then I'll tweak, I'll go, we may go back for two or three iterations, right? Like, Hey, no, I need this just a little bit that. I know I didn't say that, but you know, then you get it right. A lot of people don't do well with that.

A lot of my, like, especially a lot of times when I hire like virtual assistants and stuff from, they want logical step by step steps. And I was like, you know, I don't care how you get there kind of, here's what I'm looking for. And they've got to look at you like, Oh my God, what do you want me to do? 

[00:14:16] John Seiffer: But the thing is people who can figure that out on their own, they tend to be hard to find, and particularly if you need industry experience. And so if you can define that stuff for them, it's much easier. There's a great quote from a guy who was the chairman of the Lean Enterprise Academy. Lean manufacturing came out of the Toyota production system.

And he says, brilliant process management is our strategy. We get brilliant results from average people managing brilliant processes. And we notice that our competitors often get average or worse results from brilliant people with broken processes. And the processes that he's talking about, they're the same thing as the systems and the SOPs and all that stuff.

[00:14:57] Ronald Skelton: Yeah that's why, uh, once you figure out how to do something right, really well, I like to document it and like, cause that's one of my problems I have is I prefer, personally, I don't want to do the same thing twice ever. 

[00:15:09] John Seiffer: You and me both.

[00:15:10] Ronald Skelton: As tough as a business owner to actually say that out loud.

[00:15:13] John Seiffer: Like I don't, I will. And I have, and I have to. But, I joke around a lot and said, I would outsource brushing my teeth so I can get somebody to show up at the right time each time, two or three times a day, I need them there. I just can't get, the wife refuses and I can't, you know, the kids think it's silly. So, Well, see, if you get to where you can take your teeth out of your mouth, then it's easier to do.

[00:15:29] Ronald Skelton: I'm getting close. I wear partials because I have a car wreck I was in. 

[00:15:33] John Seiffer: But here's the thing with entrepreneurs, they tend to be very intuitive and very quick and very smart. I liken it to grandma in the kitchen without a recipe. She makes great food. But you can't scale a restaurant that way. You have to get those recipes out. And one of the things I tell people to do is, as they're doing something, try to think of why they're doing it and what steps they're doing it.

And every time they hit a place where they use judgment, that may be a different subset of a sub process. And so where you have to, you look up all these things, you write down this thing and then you go, then you decide, well, okay, that's a judgment. Now, that may be the input to the next process. And you can outsource some of the other stuff or delegate some of the other stuff before the judgment piece.

[00:16:25] Ronald Skelton: Yeah, I like the cooking thing. I'm the, I like to cook and it's like done by taste most of the time, right? And then later in life, I developed a,I can't eat anything that has gluten in it. It makes me viciously, like viciously ill for days. 

And, uh, but yeah, it's really hard not to, I cook by taste. So it's hard not to just taste things as I go. I get that. It's the same way, I guess, you know, sales, I think sales, going back to the sales thing, I think sales, like, is that a lot. There's something inside and negotiations in the same way. You and I are sitting in a room and trying to solve something, and inside the negotiations, I, all I'm really trying to do is figure out where you're trying to get and if I can help you get there, right?

That makes sense to me. So like, where is this person trying to get? What are you trying to accomplish? Does that make sense to me at all? Can I help them get there? And I don't know what the formula, other than saying it out like, out loud like that, you know, when somebody asked me to train them in negotiations, I just say, ask more questions.

[00:17:17] John Seiffer: Yeah. And so there's, you can come up if you thought about your process of doing that, for you because you're good at it, you could come up with a list of questions for them to try. And the output of that stage of the negotiation would be, Oh, I know what they're trying to get. That's one piece. And that's an output.

I actually know this. The next step is how can I help them get that? Now we're into, here's what I can offer. Here's what we can make a deal. That's the second subsystem of that process. Now, if you're a small company, you can do that all yourself and you can do it all very intuitively. It's when you want to scale or when you want to pull yourself out of it that you need to document what those systems are and what they look like.

[00:18:03] Ronald Skelton: One of the things I want to make sure people get is, this is still all inside of buying and selling companies. If we do, if a business owner does what you're explaining here, and they prepare their company, prepare to exit their company without exiting. Now they've got a marketable company to sell when they're ready to sell because that's what we're all looking for. Every one of us out there all those acquisition entrepreneurs, ETA. 

Very few of us are turnaround experts and very few of us, other than call it a college MBA is winning their first job it's called ETA, entrepreneurship through acquisition. They're wanting to do some work that, I mean, they're straight out of college and want to prove their merit. Most of the acquisition entrepreneurs I know, we're looking for well oiled machines we can add to a professional, anybody running a hold co.

We're looking for well oiled machines to add to our portfolio, that produce long term wealth for both the employees in the company and, our family interest, right?

[00:18:58] John Seiffer: Yeah.

[00:19:00] Ronald Skelton: You don't get there without these systems and processes without being able to exit without selling, because that's what we're doing.

As soon as we get in, we're trying to make sure that we exit ourselves out of, you know.

[00:19:09] John Seiffer: You want to do, so, every business owner I've talked to once, three things, they want more money. They want time off from the business actually. And they want work that they love. And if you can systemize the other stuff, then you can get that. If you are, if you're selling your company, then the more systematic it is, the less systems that you're involved in, or the higher level of systems you're involved in, the more valuable it is.

The flip side of that is if you're buying a company, you might want to look for a company that doesn't have good systems in certain areas where you know you can improve them. And as I said before about those seven buckets that are the same in all companies, the systems within some of those buckets are almost identical.

Accounts payable, accounts receivable, some parts of sales and marketing are very replicable. The product or the service that you create that tends to be very different from company, from industry to industry in any case. So you might want to make sure that the production systems of something you're buying are in place because the seller is going to leave and you have to have people that know what they're doing. But if you're good at putting in accounting systems or planning systems or other hiring systems, for example, then you can buy a company cheaper because it's not systemized. And then you can add those systems and add a lot of value.

[00:20:34] Ronald Skelton: Yeah, I get that. Yeah. There's a lot of people out there that's what they're looking forward to. Like that's the ETA crowd, the entrepreneurship through acquisition. There, and a lot of those guys are flipping businesses, meaning in the ETA world, they're, they've done what's called the search fund.

So they've raised money through, uh, their college, Alma Mater or we're going to call it their, uh, they actually, a lot of these high MBAs. A lot of, they originated out of the Ivys.

[00:20:58] John Seiffer: Yeah, and sometimes they have an investor funding them for a while and things like that.

[00:21:02] Ronald Skelton: Oh yeah. I was gonna say the search fund is usually, it is not self, not self-funded. They actually have a pool of people. And they've gotta get in and get out within, sometimes five as as long as 10 years because those investors need to see a return.

They need to, we, you know, basically have liquidity. So, um, that's what they're looking for. That's the exact world that they operated in is like, Hey, you need to get in, make improvements, grow, scale, maybe acquire other companies. Push that number up and then sell for more than they got it for so everybody gets a profit.

[00:21:34] John Seiffer: Yeah, and that's if you can buy a company where it's not very systemized and you can implement those systems, then it makes it easier to scale, grow, and get a better exit on the other end.

[00:21:46] Ronald Skelton: The risk you run buying something is not very systemized is the guy that has the system, just it's very likely just left, right? It's all, it's all in their head, right? So that's the risk you run is like, it's okay, it's okay, if there's not systems and processes around stuff that people are still doing on a day to day process, cause you can extract that from current employees and hopefully they won't leave. There's usually, I mean, it's not uncommon to have high turnover, after a change. After a, a

[00:22:13] John Seiffer: After an acquisition.

[00:22:14] Ronald Skelton: After an acquisition. One of the main reasons it causes that honestly is the new acquirer gets too antsy and starts trying to change things right away. The safest thing a business owner, a business acquirer could do is literally just observe for 60, 90 to 180 days. Just,

[00:22:29] John Seiffer: Yeah, if it's, it's working, you know.

[00:22:32] Ronald Skelton: It's working. Yeah.

[00:22:33] John Seiffer: And during the due diligence, one thing you can do is ask the seller, tell me how a sale gets made. All the way from somebody who's never heard of this company, but is our target market. How do they find out about us? What do they do? What do we do? And if that all sounds like it depends on individual relationships and those relationships are with the seller, they're going to leave.

So you have to figure out another way. If on the other hand, they're done by systematic things that they can be measurable and trained, et cetera, now you've got a systematic company.

[00:23:06] Ronald Skelton: What's your preferred method to go through all this? You have them document in word docs? You have them shoot a bunch of videos? What's your preferred, or is it a combination of all of it or?

[00:23:17] John Seiffer: Yes. When I first did this for my company, Word docs was all there was. And the platform that you put it on has to be easy to search. I think you should keep it all in one place because if you start breaking it up, all the finance stuff goes over here, and the production stuff goes over here. There's a lot of systems that overlap and somebody won't know where to find it.

Just put it in one thing that they can search. Notion is currently the, a good one. So as we're talking in early 2024, but those platforms come and go. It just needs to be searchable, easy to edit, et cetera. But video is very important and very simple to make. It doesn't have to be high production quality by any means.

If you're doing something on a screen, there's screen recording videos. If you're doing something in, in something physical, you can do it with your phone. And then, then now there are softwares that can take those things and transcribe the documentation from them. So now you have a searchable document and you also have the videos that show you visually.

So I'd say do it that way. Have the person who does the work, record it, and then have somebody else try to follow what they did. And usually the first time they do it, it's there's pieces missing. So you have somebody go through that that's not familiar with it. They fix it up and usually that's good enough. Then you just put it where somebody can find it.

[00:24:39] Ronald Skelton: Yeah, I do that all the time with loom. I use loom as a tool. It sets up my,

[00:24:43] John Seiffer: Yeah. Loom is one of the good ones.

[00:24:45] Ronald Skelton: And, for the virtual assistants and stuff that are overseas, I'll like, when I need them to do something, I'll just pull it up. I'll do it once show, you know, shoot a four or five minute video and send it over. It's like, here's what I need you to do.

And it's way easier than writing it or even like pulling them up on a zoom call and trying to explain it to them. Like it's, you know, it's just easier to say, okay, here, here's how I did what I just did. I want you to repeat this and I don't care if you do it exactly this way, but here's how I got it done. So they can see it done once. Right.

[00:25:12] John Seiffer: Yeah. I have, I just had a client who's looking to acquire companies in a certain niche, industry niche. And he had, he could find about 50 companies, but he didn't have their phone numbers or anything. So he figured out how he would go about doing the research. He recorded that, found somebody on, I think it was Upwork or Fiverr, one of those, and he came back and now he's got 250 companies with phone numbers and the owner's name. And he didn't have to do it.

[00:25:41] Ronald Skelton: Yeah. I do that a lot too. I bring a lot of, part time working like, Hey, here's the, especially like I said, I don't like doing anything repetitive. If there's something I need to do and it's repetitive, I'll record it or something or bring it in and, you know. When I had my real estate investment firm, we had interns all the time. People that wanted to learn real estate investing, like, okay, you get to learn their first part first, this is data correlation.

So I need to pull all your list from this source, this source, and this source, and then you got to mix them all together. And I would just show them one time, in person. I'd have them sit over my shoulder, but same thing, all these remote now. It would be easier if I did just shot a video because they would come back and ask questions and I, you know, if I had a shot the video, I did just like watch the video.

[00:26:19] John Seiffer: Go watch the video again. Exactly. Exactly. And that's sometimes a hard thing for business owners because they're used to getting all the questions, and they complain about, I'm always getting interrupted and stuff. Well, just record the video and tell people not to ask you. Oh, well, now I got to be the hard guy, the tough guy.

And that's sometimes harder to do, but once you break that cycle, it's terrific.

[00:26:42] Ronald Skelton: That there's actually, there's some self discovery I did when I was running companies. One of the things I learned was I like, I love solving problems. There's, I think there's only, and I've said this many times in the show, I think there's probably only two or 3 percent of the population that are really good at solving problems.

You're natural born, born problem solvers. You know, these guys are, like me that we play puzzles for fun, like, like right now I'm hooked on this game where it's a crossword with a crossword puzzle without any hints. It's just a bunch of scrambled letters.

Only two or three percent of the population is like that. But I honestly think that, what happened for me anyway, what I found is a lot of the companies I created, I love solving the problems. We'd have very complex companies and then we're, you know, I would solve a problem. My guys could go and do that task.

Cause they've, I've shown them how to do it. But as soon as something changed, they come back to me and go, Hey, that's not how I tied the shoe last time. What's, you know, this is different and can you show me how to tie the shoe? And it was like, it got really frustrating because it doesn't scale. Right. And,and it

[00:27:42] John Seiffer: The people that you're, the people you're talking about, that one to two percent, they tend to think like engineers. And this is one of the things that I mentioned in the Output Thinking book is that every system that produces outputs has four parts. There's a trigger, something that starts it.

There's the input, which is the stuff you work on. There's the transformation, which is how you take the input and turn it into. And the fourth part, which is the output. And if you can separate those pieces, the documentation we were talking about is usually in the transformation stage. This is how you do it.

But if you know what the trigger is, and you know what the input is, that's your prep for knowing even if you can start to do it. Sometimes the trigger is a day, like payroll is a system that gets triggered by every other Thursday or whatever it is in your company. Others are triggered by an event. So a customer places an order.

Well, that triggers a whole fulfillment system. Or sometimes it's a condition. Inventory has reached a certain level and that triggers a reorder system. So that's the first part. Then there's the input. What do you need to work on? How do you transform it? And what's the output?

[00:28:53] Ronald Skelton: Yeah. The, um, one of the things I like to play with these days, and it's only been the last 18 months or so, maybe two years by now, is AI. Have you messed with any of the AI tools yet?

[00:29:03] John Seiffer: I played with them a little bit. My, my son and I were making, having it make different, uh, songs in the style of different rappers and things like that. But it hallucinates too much for me right now trust it. 

[00:29:17] Ronald Skelton: It's getting better. It's getting way better, right? In the beginning I thought it was doing really well, and then I realized one day I was press for time. And one of my guests hadn't, um, filled out the bio. So I, they just basically, I knew it was on my calendar, but I had nothing to go off. So I had nothing to research.

So I, I Googled them. I realized they had written a book. So I, you know, I reached into side of back then it was ChatgPT was the main one. So I reached into ChatGPT and I said, tell me everything about this person in the book they wrote. And it gave me a bunch of stuff. And luckily we did that little chat like you and I did before the hand.

I said, Hey, you didn't submit your notes. So I kind of used ChatGPT. And he goes, you did what? And I was like, yeah, he goes, no, it's all wrong about me. There's another guy in Australia that read it, wrote a similar book. Right. And it's totally wrong. I didn't like say like, it had all these case studies.

Like, yeah, he did this case study in this state. I was ready and it was totally wrong. It was Adam Coffey, by the way. He's been on the show a couple of times. He's a private equity guy, but it was totally wrong about him. So I basically had the very first interview I just, like we spent four or five minutes.

Okay, give me some bullet points or something. And uh, so I can know what to ask you.

[00:30:23] John Seiffer: If you can check it like you just did, then it can put the stuff in a really good format usually.

[00:30:29] Ronald Skelton: It's pretty good. Now it still elucidates some and you just have to double check. It's like asking a, you know, it's like asking my 13 year old how to do something. If he doesn't know, he might make it up. You gotta really watch it, but it's really good at you know, right now you can train it.

So I fed it a bunch of mergers and acquisitions PDFs that I have collected over time. And I use my own, and I built a, I don't really call it a chat bot or whatever you call it. It's a,they have a name for it, but I probably it's called, but the, uh, I built a little bot or something inside of this thing.

Now I use that and it references that as it's education and it's pretty accurate. The cool thing is, is, um, I like to give it like your standard operating procedures. I like to say, okay, and you can upload full files. And I say, I can upload a full standard, operating procedure, or in our case, like the transcript for this and for these shows and say, what are the key takeaways?

It is really good. 

[00:31:21] John Seiffer: Yeah, if you can have it only work on your own data that you know is clean, then it's much better than if you just send it out there to the wild internet.

[00:31:29] Ronald Skelton: So I'm curious on, I haven't tried it yet, but I maybe even still have some old standard operating procedures. I think that would be a fun play inside of AI is like, here's a SOP. Here's a standard operating procedure. How can I improve upon it? Just feed it to AI and say, what would you do differently? What would be improvements upon this? 

[00:31:45] John Seiffer: Or you could ask it for the four parts. What's the trigger? What's the inputs that's required? What's the transformation look like? And what's the output?

[00:31:52] Ronald Skelton: That's another thing about AI, the more structure you give it, what you're looking for, like you just did, the better the output. The better the input, the better the output every single time. And even like, even if you tell it, you got to role play with a little bit, you got to tell it what its position is.

Like you're, you're a systems engineer specialized in this, this, and this. And if you tell it what its role is, it gets rid of a lot of the ancillary data from anything else. It can, it kind of focuses in on that, right? It's incredible. The, uh, like I said, the better the input, the better the output. But I would, I would like to see the standard operating procedures and stuff like that. 

What would, what was the before and after? Could it really make improvements upon, you've been in business for, you know, let's just be nice, so 25, 30 years. Uh, I've been in business for say 20, 20 years or more. I'm being overly nice here. For me, for at least on my behalf. 

I'm intrigued with where this is all going. You know, if I did something and find an operating procedure that I've done, after 15 years of experience or something old would have put it in there. Can AI that's been around for 2 years improve upon something that somebody has done for 15 years?

[00:32:58] John Seiffer: That would be an interesting experiment. Yeah.

[00:33:01] Ronald Skelton: Yeah. So, where do we go with this as a business, not just AI, but, um, you know, as businesses are kind of moving forward, what do you see in the next few years as far as, um,the processes that you put people to? Is this going to change, you know, like the technology that's out there is going to really change what you do? Or as a coach or?

[00:33:23] John Seiffer: Well, the technology changes, but the ultimate reasons for doing using the technology don't. Peter Drucker said back in the seventies that the purpose of a business is to create a customer. And a customer, somebody that pays you for something they value, that's never going to change. How you find those customers changes, how you produce that value changes, the costs associated with all those functions that definitely changes. I'm terrible at predicting the future.

They say, you know, prediction is really hard, especially about the future. And so, but I do know technology is going to change. Sometimes it's better. Sometimes it's a little bit worse for a while till you get used to it. Sometimes it makes you work the way it wants to, and you have to decide if that's worth the trade off.

But yeah, it's always improving. Like I said, my first documentation when I, for my company, was I just put something in a big Word file. And you know, now there wasn't any cloud, there wasn't any way to break things up, but there wasn't any way to put videos easily into it. That's all changed now.

But the basic process, you're trying to make something somebody wants to buy, find those people and sell to them, that's going to be the same.

[00:34:30] Ronald Skelton: Yeah. What is a common, I'm just looking at the notes with you here. What are some of the common things that when you first work with somebody, what are some of the common things that, you see most business owners doing that are kind of the, what's the low hanging fruit, I guess is the word I'm looking for.

The fastest, fastest areas they can make improvement. What's the low hanging fruit that most business owners can tackle to make improvements?

[00:34:52] John Seiffer: Well, the biggest one is that they're too much is depending on them because they are intuitive and quick and they can't, they don't feel like they can trust somebody else to do it. Like email is a big one. And the reason, the reason email seems to be a problem is people think of it as one thing. Oh, I got a hundred emails.

But, if you break those 100 emails out, there are probably 6 or 8, maybe 10 different categories of emails. Well, now we can separate those. Okay, all the ones that fall into this category have a certain output. And I respond to them in a certain way within a certain time frame. Now we can train somebody else how to do that.

And maybe out of those 6 or 8 categories, you, there's only one that you have to handle. But you can train somebody else to do it if you think about it as subsystems and sub outputs. So that's really where we start. And then I look at those seven buckets and say, which of these buckets is causing you the biggest problem?

Which is causing you the most headache? Do you have the capacity to grow in each of these? And you've got to make sure that they're balanced. Because if you grow your capacity to sell, but not your capacity to produce, then you're selling stuff you can't make. Or the other. You don't want to make something you can't sell. So it's keeping those things in balance. So that's where I look is, which are the outputs that are depending on you. Which are the ones that are working well for somebody else or not well for somebody else when that's where we go.

[00:36:19] Ronald Skelton: It's interesting 'cause I'm a natural born empath. I walk into a room, I can feel the energy in it and I hate even using that word 'cause they've butchered it in the last four or five years and made it more touchy and feeling than it really is. But, I think my first inclination to ask a business owner is like, what part of your job, I think I would, if I were sitting in your shoes, I think the first thing I'd say, what do you love doing? What do you hate doing? Right?

[00:36:40] John Seiffer: Well, they always tell me what they hate doing. Cause that's why they hire me. So that's easy.

[00:36:43] Ronald Skelton: You already know that. Okay, kind of that's all right. I was wondering like that has to come up because a lot of people call you because like look I'm burning out here, you know. I just want to do sales and I want all this other stuff to go away. And I get that, you know, like I said I've talked to a couple hundred probably two or three hundred more or more business owners and you ask them why you're selling. Like oh i'm you know, it's either they're retiring A lot of times there's a lot like a life issue. Divorce, cancer, you know medical something. Something drastic's happening. Or they're totally burned out or that, I guess there's a fourth or fifth one I think i'd named four but there's another one and that's I got this other idea.

It's already taken off, It's making more money. I gotta go focus on it. They

[00:37:18] John Seiffer: And then, and they want the time. They want time away from that business. So then the question is, is the best way to get that time and obviously the money you need for your new idea. Is it to sell or is it to exit without selling? And you may have to build your company a little bigger to afford to exit without selling. But then it can be more, much more lucrative in some cases. 

[00:37:39] Ronald Skelton: Yeah. I'm actually working on a project right now where I want to help business owners. It's a larger project. I've got marketing going on as we speak. Larger project, probably between the 10 to 50 million dollar, uh, acquisition and as far as valuation and acquisition price. Has to have real estate involved because it's part of how I'm funding the whole thing using that as collateral as an asset.

But the end goal is, is to be, you know, help the owner do something they may not have the time, energy, or knowledge on how to do. And that's to have it running on its own and have the employees own a piece of it. So, I'm contractually gonna obligate myself to turn it into an ESOP. An employee, uh, style employee operated company within, within a set timeframe.

Based on where the employees currently are. So that might be two years on the road, three years on the road or five years on the road. Personally for financial reasons, I kind of want it to be five years down the road cause there's these huge tax advantages to holding some of these companies. You can, you can walk away without, if you know what you're doing, you can walk away without any capital gains. Uh, if you hold for five years.

[00:38:38] John Seiffer: If you keep it for five, for five years. Yeah.

[00:38:39] Ronald Skelton: Five years in one day. Yeah. So, uh, that said, 

[00:38:43] John Seiffer: Well, the ESOP is a great thing. I was actually on, I live in Pittsburgh and I was actually on a citywide task force for, um, for employee owned businesses. And we were trying, we're still going on. We're trying to promote how this is done and, how much, how easy it is because when you actually do an ESOP, what people often don't know, first of all, you don't have to sell your entire company.

You can sell a portion of it. And secondly, the portion that you sell, that portion of profits is not taxed. And so the way it works is you get a loan to buy, to pay the owner off, and then the tax savings pays back the loan. So it's a really interesting process. And there's all kinds of statistics that when employees become an owner, they get more efficient, they get more productive, they get more profitable, et cetera.

[00:39:35] Ronald Skelton: There's a process though that I don't think it is, just his personal opinion. And a lot of business owners think the same way cause I've talked to a bunch of them. Not every employee is ready to be, have that ownership mindset. There's a little bit of training. 

[00:39:49] John Seiffer: There's a lot of, there is some training. Yeah. But usually when they realize, Oh, there's, they've got a retirement plan now that's part of that. They're willing to do that training and they're willing to step up.

[00:39:58] Ronald Skelton: Have you, have you read the book The Great Game of Business or worked with those guys at all?

[00:40:02] John Seiffer: Yeah. Jack

[00:40:03] Ronald Skelton: Absolutely, absolutely a fan of those guys and that's who I'm gonna use in this project. Like, look, I'm gonna, I'm gonna acquire the business. I'm gonna bring those because they have a coaching program where they

[00:40:13] John Seiffer: Oh, do they

[00:40:13] Ronald Skelton: Yeah, they have a, they'll bring in the executives. It's not expensive. It's not cheap. I think it's in the tens of thousands for a group of four or five. Like send the executive team through it. The model of teaching them the basics of the financials, the basics of how their job impacts the financials, and getting them to take ownership, I think is a key co, cornerstone to be becoming an ESOP. To become an employee owned, and run company, you know?

They've done 60 or 60 plus acquisitions. So the guys that wrote the book. They've acquired so many companies of their own. And a lot of them are turnarounds.

[00:40:46] John Seiffer: Well, they had to because as they grew their employees, they needed a career path for him. And so they had to buy other companies for him. But there's two stories I love from that book about what you were talking about the financial education. One is, I think it was the truck drivers at one point figured out.

If we can do in 59 minutes, what it used to take us an hour, here's how much we'll save. And here's how much value we'll add to the company and to our retirement, etc. That's one story, but just from that education. The other story is there was a part that they were trying to reproduce and their goal was to always be the lowest cost, not the lowest price sell, but the lowest cost provider.

And they, he gave it to a couple of a team of people and said, can you take this apart and figure out how we can make it, you know, buy it cheaper or fix it cheaper or make it cheaper, whatever it was. And it turned out they got so good at it that they were able to sell it at a lower price point to a whole new market that they could never sell to before. Because they were had that mindset.

[00:41:49] Ronald Skelton: It's, it's brilliant what you can do in a collective, collective process. I don't think in the business world, if you can get everybody bought into and have ownership into an idea, there's very few problems that can't be solved with, you know, with, uh, with six, six to eight really intelligent people in the room, if they're duly motivated. And a lot of times duly motivated isn't, you're getting $25 an hour to sit in this room and solve this problem.

That's not that, that's not duly motivated. But it, Hey, you're an owner of this company or you get, there's a, there's a profit sharing program. Even if you're not in ESOP,you get to share in the reward of solving the problem, now they've got some skin in the game. And it's, if you can keep it organized and moving forward, sometimes he's, I've been, I've worked for the government for a while.

[00:42:35] John Seiffer: Sometimes the meetings are a little bit of chaos, but if you can keep it organized and moving forward, it's impressive what employees will solve. And that motivation, you know money is obviously a part of it, but it's not everything. There's a great book by Dan Pink called Drive, about motivating people and he said the three things that motivate most people are autonomy, Mastery and purpose. So autonomy is giving them the license to figure out how to do stuff on their own.

And if you know the outputs that you're expecting, that can be the bounds within that. As long as you produce this output, Hey, go for it. However you want, that gives them autonomy. And then, mastery is getting better at your craft and purpose is a reason to that's bigger than yourself. And usually not every reason, every company is like, we're going to solve all these big world problems, but our purpose is always to help customers and that's bigger than us.

[00:43:27] Ronald Skelton: So I want to run some, you're, you're a business coach. I'm a business owner. I've managed most of my businesses by just a shoe, very few short questions. And anybody that's worked for me over a long period of time knows exactly what I'm about to say. But I'm going to run these questions by, and then I'm going to say, Hey, what would you do to improve it?

Cause I'm always looking to improve. So at the end of every business meeting, or at the end of every, like the agenda for almost every meeting that we have in any of my businesses are, we always start with wins. So what are we doing well?What are we, what can we do better, right? Where can we improve upon this, either this topic or this problem or whatever, but what can we do better?

And what are we totally missing? Right? And then about once a quarter or every so often, like, we have one that the fourth question comes in is like, what are we doing that we probably shouldn't be doing anymore, right? Yeah, there's always something you're doing, like, okay, this isn't working, we're still doing it, but why are we doing it?

I've simplified my entire management process to that. What are we doing really well? What's working for us? Cool, let's do more of that. What can we improve upon? A lot of times what are we missing is like our competitors doing this and we don't have it or we're missing. 

Hey, this, this feature is missing from our product, but what's missing. Right. And then like, you know, like I said, once a quarter, I always like to go, what are we doing that we probably should just, what's a waste of our time? 

[00:44:40] John Seiffer: Yeah, I love those. I particularly like the first and the last question because the we often forget about wins. As CEOs, we're so into looking for problems and solving problems. And, we often forget to celebrate what, what are we doing well? And not everybody in our company thinks like us.

And so they want to be celebrated and they want to know that. And then the last one about what should we stop doing? It's real easy to just get into a routine of doing stuff cause we've always done it. And,I think it was Shopify or one of those companies, where they said, okay, we're canceling every repetitive meeting. Every meeting that you have on the agenda.

That's more than once. Don't, don't do it anymore. And then build back the ones that you need to do. But, yeah, a lot of stuff like that happens.

[00:45:27] Ronald Skelton: I love Elon Musk, in his business, if you show up to a meeting and you feel that you're not contributing, you're supposed to get up and walk out. Like if you don't know why you're in there and you don't have a contribution to make to the meeting, he expects you to get up and leave the meeting. You're wasting his money and his time.

[00:45:42] John Seiffer: It was a, I think it was a guy named Sempler that started doing that in South America. You know, yeah, it's a, I mean, if you can't keep, if people aren't in the right meetings, meetings can be a superpower when they're done right and they're hell when they're done wrong. And usually people don't put the time and effort into doing them right.

[00:46:00] Ronald Skelton: I don't want to step over the, you said that, you know, people like to be celebrated. I'm a marketing guy by previous trade, my master's degree, my MBA is in marketing. The reason I, one of the main reasons I asked what are we doing well, because I need to promote that more. Right. Right. 

So in my mind, what are we doing well, is also not only like giving them a little bit of celebration, but a lot of times you're doing stuff well, you don't realize you're doing really well. And that needs to filter into the market and it needs to filter into telling customers. Reminding customers we're best in class at. 

And, sometimes you don't,you don't realize, I'm five foot 10 and way overweight right now. In my mind, when I close my eyes, I still look like my 180 something, weight fighting weight. Over time, over 52 years of my life, it wasn't sudden. Same way inside of business. Things change gradually and you may not see it.

And so, and that includes the wins. Sometimes you just get really good, over time and you're so acclimated to trying to fix the little problems on the day to day of it. You don't realize you, you just became the world's best at that. So what are we doing well as a self realization of What you know, what are we doing that's way better than most of the people out there? What are we doing that we should be telling people, you know. What should we be screaming from the roofs, rooftops that people, that'll attract more people to us? Um

[00:47:10] John Seiffer: And a lot of those wins are internal, obviously with what you're doing. But it's a great exercise to call up customers and say, what do you like about us? How is your life different because you started using our products or our services? Tell me about that and that feeds into the marketing piece because now you have stories you can tell and things like that.

[00:47:29] Ronald Skelton: I did the exact same four questions with them. Every customer, right? What are we doing really well? What do you like about us? What can we do better? What do you need that we're not doing, right? How can we improve it? And then the other one, is there anything that's related to what we're doing?

Do you have to buy extra parts? Do you actually have to do something, on top of what we do? What are we missing? Like if you had X, Y, and Z, you wouldn't have to use a second vendor, you could just use us. Like, you know, I still, and even on a customer every once in a while, I go, is there anything we should we're doing right now we should probably just stop?

It bugs the snot out of you? I don't know if I've oversimplified life in that realm, but, it seems to

[00:47:58] John Seiffer: Well, if you can take, that's a very I like the simplicity of it. If you, if people can then take that and turn it into something, they will change their behavior and produce different outputs.

[00:48:09] Ronald Skelton: Yeah, absolutely. All it does is elicit responses. It's your action against those responses that make improvements, right? You can have the same conversation over again. I'm very keen to, uh, we go through a whole quarter and we've met every two weeks or so. And the things we need to improve upon have been the same.

Those are documented, and I start looking at that and going, why have we been saying that this needs to be improved upon for, 14 weeks straight? There's a problem here, right? Who's working on this? It's kind of one of those, um, it's like, I guess it, that's kind of my standard operating procedure, I guess you would say. It's one of my systems is, you know.

[00:48:42] John Seiffer: Yeah,

[00:48:43] Ronald Skelton: I manage to do things, for companies that are 1800 miles away, 2000 miles away. And they know that, they, people prepare. Like if they know they're gonna have a call with me that day, they have the answer to those four questions. They know 99% chance I'm gonna ask the first three. What are we doing well, what can we approve? What are we missing? 

And occasionally I'm gonna slip in. What are you doing that you probably shouldn't be? What are you, what are you doing that's wasting time? Right? Or money or energy. A lot of times, a lot of people, times things, people are doing stuff that's not wasting time or money, but it's wasting energy.

They're doing stuff. It's not making a positive impact on the company and they think it's supposed to get done. Sometimes it's stuff, it could be as stuff as little as look, yeah, the attorney charges $250 an hour, but why are you doing, why are you doing contract reviews? You'll send it to the attorney. That frustrates you. You're not qualified to do it, right?

[00:49:29] John Seiffer: Right. And the attorney can do it in an hour and it takes you six.

[00:49:32] Ronald Skelton: Six hours. Yeah Because you hate doing it, you dread it. You spend four hours worrying about doing it. You do six hours doing it when you know, you just cost me four hundred dollars and it's gonna cost him a hundred two hundred fifty dollars because he's gonna look at it in an hour and go nothing, nothing in the law has changed.

Nothing's changed. I don't need to do with anything with this, right? You're spending, you know, $1, 000 trying to save 250. And it happens in not just law and just even in like the sales process. You're the CEO. You got a, you got a VP of sales. It's been doing sales better than you.

He closed more business than you. Why are you stressed out about the sales process? Well, just tell him, tell him to take care of that, right? Like,

[00:50:06] John Seiffer: Yeah. Well, there's a thing I mentioned in the Output Thinking book, which is called everybody plays at the top of their game. Don't do stuff that somebody else is qualified to do. And you do the things that only you are qualified to do.

[00:50:20] Ronald Skelton: Yeah. Sometimes that's tougher than it.

[00:50:24] John Seiffer: Everything's easier said than done, otherwise everybody would be doing it.

[00:50:27] Ronald Skelton: Yeah, some of that's ego. Some of it's just frustration. Like I just need this done. I'll do it myself, right? I tend to have the the mentality to lead follower get the hell out of my way. That said well, how do people get that book? What's the best way for them to get a copy of it?

[00:50:40] John Seiffer: It's called Output Thinking. They can find it on Amazon, under Output Thinking, or they can go to outputthinking. com. See a table of contents and some other things about the book, and there's of course a link to buy it there. It's paperback and Kindle.

[00:50:53] Ronald Skelton: Yeah. Somebody wants to get ready to exit without exiting. And they want to make their company more valuable because it's well run. How do they reach out to you? What's the best way you want somebody to initialize a contact with you?

[00:51:04] John Seiffer: My website is ceobootcamp. com. They can email John at ceobootcamp. com. I post on Twitter a lot under the handle at BetterCEO and, um, they can find me there. And then there's a, on my website, there's a link to getting a free coaching call if somebody wants to know if coaching is for them and if I have time to work with them.

We'll do that first.

[00:51:27] Ronald Skelton: And before we go too far, what's your ideal customer? What's the size of the company? You got a sweet spot you love to work with or industries you love to work with?

[00:51:36] John Seiffer: Not so much industries. I've worked in all kinds of industries. The sweet spot is between 10 and a hundred employees. Somebody who's frustrated. Either they have a problem that they can't figure out how to solve, or they see potential in their company that they can't figure out how to realize. And usually it's because they're very intuitive.

They're very quick. They're not systematic. And we put those systems in place and the problem goes away.

[00:52:01] Ronald Skelton: Well, awesome. Well, John, thank you for being here today. Yeah, I learned a lot. We had fun. I'm going to, um, look through some of the systems operating procedures I have for some of my guys and make sure they're up to date. And, um, kind of, uh, I'll listen to this, the show again.

That's one of the reasons I do this. I love meeting guys like you that have got this figured out. Taking the knowledge I get from it and seeing how I can improve upon things I'm doing. So thank you for being here and sharing your knowledge.

[00:52:26] John Seiffer: Thanks for having me.

[00:52:27] Ronald Skelton: We'll call that a show. Hang out for just a second.