Patch has acquired a unique set of skills through multiple acquisitions and business exits. His consulting clients range from Fortune 500 organizations to Veteran-owned start-ups.
He is a Marine Corp veteran and private security professional turned...
Ronald P. Skelton - Host -
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Ronald Skelton 0:06
Hello and welcome to the how to exit podcast where we introduce you to a world of small to medium business acquisitions and mergers. We interview business owners, industry leaders, authors, mentors and other influencers with the sole intent to share with you what it looks like to buy or sell a business. Let's get rolling
Hello, and welcome to the how to exit podcast today I'm here with Patch Baker. Patch is a serial entrepreneur, expert marketer, investor speaker and has acquired as a unique set of skills through multiple acquisitions and business exits. His consulting clients range from Fortune 500 organizations to veteran owned startups, patches, a Marine Corps veteran and private security professional who turned his business are turned businessman who has applied the honor ethics, discipline, rigor and determination required in his military life to fuel his success in business. Welcome patch. I'm glad to have you on here, man. I'm really excited to hear where we go with this thing today.
Patch Baker 1:10
Yeah, no, it's fun. I enjoy talking to you and hanging out with you. So I'm excited.
Ronald Skelton 1:15
Yeah, this is fun. Let's just start off with a little bit of orange origin story. And I always click the explicit so just be true on unbridled. Just be yourself, man. So how the hell did you go from active duty Marine Corps, you know, private security, you know, Iraq, I mean, just like just a different world. I know, I served that world of myself military intelligence on the Air Force side another story for another day. But how did you go from that space into like mergers and acquisitions and get to where you are now,
Patch Baker 1:47
really, I tripped and fell into it. I didn't, I didn't know I was going to do this. Interestingly enough, I was, I was doing contracting work after the military. And I ended up meeting somebody that was that basically said, Hey, man, I can make these videos, these really cool videos, but I don't know how to sell them. And I said, alright, well, I can sell them, you, you, you make them and we'll make a bunch of money well, ended up not going that way, in the long run. And some of that was just because you can make a really great video, but you put it on a page that gets no traffic in a Facebook to get some traffic and a YouTube that gets no traffic. And the first thing they say is, well, the videos suck, I'm not getting any sales. And that's, that's not actually true, nobody got a chance to see them. And so I kind of started videos, the only thing that I knew back then was that YouTube had videos. So went on YouTube and tried to start figuring out how to get these things ranking. And they did and, you know, next thing, you know, people were buying second, third and fourth videos. And that's kind of how it all started. And then over time, you know, we developed a marketing agency, and we started doing more than just videos. Because somebody said, you know, you can, you can put videos on Facebook now. And I was like, Wait, what's the Facebook? So I, you know, in the military, I didn't, I wasn't really allowed to have a social media or anything like that. So I was I was several years behind everybody else. But I got on there and and really started learning that part. And then just kind of over time, I realized that I didn't like the agency model, mainly because it doesn't matter how much you grow. Companies or or you know how much you returned to them. It's always like, what did you do for me this month? What those platforms mean? It's unfortunate to say, but I don't own Google and Facebook. So like, I don't have any control over that. And it was constantly like this client vendor relationship that I just absolutely hated. I didn't like anything about it. But we were being successful to the point that I was like, why don't we just do this for ourselves? Why don't we just, you know, why don't we just build our own stuff. And not for nothing, but building a concept from scratch and doing everything to get it started? is just, it's a lot of lag time. And so what I started doing was, I started acquiring equity and companies in order to grow them, but then I got to participate in the exit. Whereas when it was the client vendor relationship, we were driving people to exit but we didn't get so much as a steak dinner, and we lost the client. So it was like the better we did. We just worked ourselves out of a job and that was, that was just not a good thing. For me at it, I hated the idea that winning got you the adverse of what you want. Right. And so, as we started acquiring companies, and then as we started, you know, really partnering with companies, and, you know, having this, just expanding the team, it got really, really cool for me, and I kind of found my little, my little place in the world where I'm, I'm excited, and I remain excited, because it, we've gotten to somewhat of a scale not nearly as much as I want, but we've gotten to a scale that I think we can sustain and, and expand upon. And that frequency really brings on new projects that are at a faster level. And you know, you've got one heading to exit and you've got one just start now. And that just feels it's it's fun. It's, it's, uh, it's never boring. You know,
Ronald Skelton 5:59
we were talking before the show, and I think that your position, and correct me if I've done you're correct me if I'm wrong. You've done well over 100 transactions already business buying, selling, participating advising, like, the numbers above 100. Right.
Patch Baker 6:14
Yeah. And, you know, not all that was, you know, my money and not all that, you know, I wasn't a majority shareholder and every single one of them and, you know, I had somebody I said that on another podcast, and somebody was like, well, that's not exactly well. Okay, look, man, I'm I participated in over 100. That's what
Ronald Skelton 6:35
I said you participated in. The reason I brought it up at all is I think you're uniquely positioned to cover some information here today that nobody else I've had on the show did, let's like, let's look at some of like, you've done a lot of deals you've been around a lot of people you're involved in, and I'll just say because I love the guy. Roland Frasier is epic, right? You're one of the top coaches there. You run masterminds and stuff, you're you eat, sleep and live this stuff? Yeah. So let's talk about like, you know, your stuff unique to that experience of doing the volume you've done? And how does it separate? I've got a lot of people in the show that have talked about, how do you look at what the big boys are doing the million dollar deals around that million, the billion dollar deals and the 100 million dollar deals? How do you put those systems and processes in the way they integrate down to the level of you know, mom and pop shops buying companies under $10 million. And we were talking about this before the show, it may not absolutely be the best thing to do to try to mirror their system, the process. Now a lot of their integrations fail, right?
Patch Baker 7:35
I think it's total BS. I mean, I'm being a little PC. But I really do think that a lot of those systems and processes that they're trying to emulate, are actually very antiquated. Most of the books on the subject that I've read, and I'm an audible kind of guy, so I I've listened to a lot of them, and I pick them apart. And that might sound really cocky. I mean, I don't know, these guys have done billion dollar deals, and kudos to them. I appreciate. You know, there's, there's a lot of people that have made a lot of things that made a lot of money that I don't necessarily like, but kudos to them for being an entrepreneur and figuring it out. But I think a lot of the books were written in, you know, the 60s 70s 80s 90s. And, unfortunately, they were working off of a system that is not that is no longer true. Right? They were doing mountains of paperwork on spreadsheets, and they were, you know, manually doing what, what would be considered an algorithm these days. And they were building these models like the Monte Carlo model, and, you know, there's a bunch of, of systems that they applied. And, yes, it worked. But what they don't tell you is, there's a bunch of shit that we have now that they didn't have, like the internet, right? Like, we can parse audiences now in a way that never could have could have happened before we can reuse past purchasers in a way that they couldn't do before. Unless they were doing like, postcards and mailers. And I'm not saying there's anything wrong with that. I'm just saying, you don't really know who's at that mailbox, right? They they know if they send out, you know, 100% of whatever number, they're going to get 5% participation in that that's okay. But here's the thing in my world, I am not trying to recreate the wheel in any form, but I'm trying to be efficient at being effective. And that is, you know, probably one of the things that made us kind of read Think how what acquisition targets were. And most of the guys that wrote those books, and like you said they were doing billion dollar transactions? Well, that's cool. But the amount of things that have to happen, in order to take an order to get an A billion dollar acquisition are so far above what a normal person is going to do. I mean, you think about it, some of those acquisitions actually had to get cleared through Congress, right, like some things, they had to do a whole new level, well, there's a bunch of acquisition courses out there now. And it's becoming a hot space. And it's, you know, Roland does a really, really good job at, you know, kind of breaking it down to the basics, which I really appreciate. I've, you know, I am an instructor for him. But I also have gone through his course a lot. And I've talked to him a lot. And Chris Diego, and some of the other guys over there. We've just talked a lot about the difference between a regular today acquisition. And the acquisitions that were happening when the books were written, are very, very, very different. It's not real data, because they weren't doing the things that they were supposed to be doing. And it's not their fault, maybe they were just good at delivering a service, or designing a product or developing a, a system that was completely different from the business that they actually own and operate. And so what everybody believes they're all going for these unicorns, right, things that pay on day one, things that have been profitable, you know, with high MRR monthly recurring revenue for 24, the last 24 months, you know, taxes are 100% noter. p&l is 100%. Perfect. And I know people that if if a p&l is inaccurate, for whatever reason, even if it's due to on,
on educated p&l designers, right, like, you got somebody that's just trying to do it, because they saw it on a website, and they mess it up. And I know people that will walk away from the deal, because the owners being dishonest. No, they just, they gave it their best shot, and they don't know what they're doing. So they messed it up. So they don't have the money to go out and imbibe, you know, to get really great consultants or really great salespeople, they just don't have the, let's call it ammunition, they don't have the ammunition to keep upping the how fast they get to the market, or how much they can grow their company, doesn't mean that they're not great. I think that's where the real power of the small businesses, the people that can take the first steps to get something up and running, and sell it to people beyond just their, you know, local friends and family and, and just address the market, take enough steps to get there. But then be able to get experts to come in and start scaling it. Because you can scale that to exit way faster, that I can go out and just start new businesses. And I basically it's like a bolt on. It's like I take my team and my stuff and I bolted on to those companies and all sudden it's like, instead of them there, they've got a shiny outside looks like a Ferrari, right. It's it maybe a deliberative Ferrari, maybe it looks like a, like a high end, Honda, but it's still on Pinto. You know, frame, it's different, then a lot of the bigger VC firms that they're just doing, they don't call them this, but they're just rolling up a bunch of liking contracts, not for the purpose of exiting them. But for the purpose of exiting the conglomerate by selling it to a bigger VC. And that to me is not it's it's not the spirit in which I operate. I'm trying to do it at the individual level. And do I want everyone No, I don't, but neither do those big conglomerates either. So that's kind of where I where I kind of start my thinking on
Ronald Skelton 14:55
it. And I think, you know, last year I think alone I spoke to Well over 200 businesses through one of those roll ups, right? Yeah. And I love origin stories. So it always comes up at least one of the first couple calls is like, how did you start this? More often than not, will you refer to yourself as an accidental entrepreneur, you kind of stumbled into it. Almost everyone, these are all marketing agencies that I talked to other businesses outside of that too. More often than not business owners didn't sit down one day, go to business school, get an MBA, create a business plan and start a business. More often than not, they basically seen a wrong in the world they could do, right, you know, a product, they can improve an idea they'd like to try out, or they were just really good at something, somebody asked him to do it. And then next thing I know, another guy did, and another guy did. And they, they, they stumbled into it, and to ask those people that have perfectly squeaky clean, you know, you know, Audible books, I get you mad, I get where a lot of people are overstepping really good ideas, really good businesses. For the lack of you know, they're told that the p&l should look this way. And if it's not, they're probably hiding something. So
Patch Baker 16:09
yeah. And I think it also goes to the fact that when they are trying to raise money, they go to people on social media, who don't know what they're talking about. And they try to emulate that thing, right. I was talking to a person the other day. And they were like, you know, I went to this mastermind, and I really feel like an impostor. Because I don't have a purpose. I don't have a, I don't have a story. Now this person is 24 years old. And I'm like, you don't need a purpose. You don't need, you know, everybody wants these mission vision values. And, look, it's okay to be a young person and be like, I want to make money. And that's okay. Right? This particular person, they make a plastic based product, it's, it's a, it's not really a consumable, but it is something that somebody's gonna buy for about a year, and then they're going to need another one. And the crazy thing is that these people are making this person feel like they are not serving the market or feel like they're not doing something properly or not real. That is not true. And, you know, I'm not a young buck anymore. And I don't know, my vision from day to day, right? Um, I'm kind of a visionary. So mine changes is to learn new stuff. And as I do new things, and as I get more experience, but I think that, you know, sometimes we get held back by people that love us the most in weird ways. And that's unfortunate, because most of the time, they're leading them in the wrong direction, because they're regurgitating something else that they heard from somebody else that didn't know what they were talking about. And it's, I'm not going to put it in the category of fake news. But I think genuinely, people are trying to be helpful, but they don't even know what they don't know, in many respects. So what you're left with is, you're left with a business owner, that is up and coming, let's say they've had some market penetration, they're going to people that are giving a lot of advice, that is just pushing them in the wrong direction. Like, if you're going to go out and raise money, you need to have a really good p&l, you need to have good really good pro forma you have you need to have really good mission vision values you need to and although that stuff is cool, I would rather somebody come to me and say, You know what, I need help. I don't know what I'm doing. I tripped and fell into this business. It took off, I'm at the spot where I'm really good at delivering the product or service, everything beyond that I just kind of suck at because there are so many people that if they just said that would find the right people very quickly.
Ronald Skelton 19:30
If somebody just comes to the right investor says you know what, I make a hell of a widget. The rest of it, I make a hell of a widget the best widget to do x there is and I don't know the rest of it. Ya know,
Patch Baker 19:42
Charlie Munger just said it famously. He said, if if you ever read the word EBITA just substitute that for some bullshit somebody filled in on his paper. Right.
Ronald Skelton 19:58
I use that word a lot. So
Patch Baker 19:59
yeah, It's so true. I mean, look, we're, there's a certain game that gets played and acquisitions. And the same way, it's the same game that gets played when you sell a car, or you sell a house, right? The buyer is trying to get the most for the least. And the seller is trying to get the most for the least. Right? So it's like, if we can just start there and say, Look, we're both playing, let's say, you and I are going to acquire a company together. And or let's say, I'm trying to acquire your company. And we're gonna have this discussion, and you're gonna say things like, Well, I've been doing this for seven years. Well, here's the problem, I don't care what you did for seven years, because you've been doing it wrong for seven years. So that is of no value to me, just because you've been doing it a long time, I do appreciate the time, and the energy and the Miss birthdays and the late evenings and the weekends. And like, I appreciate that. I'm not that, but that's what got us the conversation. It does not also build value in your company. What I'm telling you is, I appreciate what you built to this point. But what you built to this point, is just a widget that you have not gotten to market in a way that makes it sexy for me. So I'm going to help you do that. I'm asking you to continue making that widget. But I'm not interested in the last seven years. And, you know, people do not understand that. The length of time, unless you're talking about 150 year old business, the length of time does not matter. And if we want to break this down. For the listeners, if you think about this, if you had a company that seven years old, in the first two years, it grew to a million dollars in total revenue in the year. And then year two through seven, it did a million dollars, or there abouts for six consecutive years. Is there any more value in year seven than there was in year two? And the answer is there's actually less value. Because the value that was being created between year one and year two created growth at a scale at scale to a million bucks. If you got in on that year two, you're like, look, this thing has been going on since the day I started until now it's still on an upward trajectory. That is a much different conversation, then I got from year one to year two at a million bucks. And then a flatline for the next six years. It's less valuable. So don't make that a key part of your pitch. Because there's no value there, you're actually detracting value.
Ronald Skelton 22:55
You know, in the side of this, the other side of the distracting value is that, you know, it's, there's that story that goes well, I've already done it. I've always done it this way. This is like, especially in the good over 10 years. We've been doing this for 10 years this way, like Yeah, okay, that's great. Yeah. And it's not working anymore, right.
Patch Baker 23:13
And you're not getting the result that you want your company, they've
Ronald Skelton 23:17
been doing the same thing for 63 years or whatever. They've been in business for 63 years. I was like, Yeah, you're still like, you don't have a decent website, you're still pre internet right? Now, it was a manufacturing type, or a concrete type of thing. But just because you've always done something a certain way, there's two things that rubbed me wrong, that I've done this X number of years this way, this is the way it works. Not necessarily true, right? Yeah, I'm not saying it's wrong. I'm just saying it's not necessarily true anymore. And the second is, is people trying to sell you on Coulda, Woulda, Shoulda, you know, which means that, like, if you do this, you're going to triple your revenue. And I want a piece of that, you know, they they're thinking that, you know, they're this close to landing that billion dollar client and that's gonna make your business worth more you should pay some equity towards that this closeness. And so I'm not interested I could have what, uh,
Patch Baker 24:04
you know, what's really funny is they say that, you know, lots of people get out, get out of business or trying to sell their business because of burnout. Or they leave industry because of burnout. The truth of it is, is that burnout only happens when you're not getting the result from the perceived input. So like, for example, if you're working 80 hours a week, and you're not getting the result, you're perceived. A situation is I'm working really, really hard twice the normal amount of a 40 hour work week, and it's not working. That does not mean that you are actually doing the effective things to grow the company. So that's the only time that burnout happens. I've never seen somebody that is just straight skyrocketing that's like, oh, man, I'm so burnout. It, nobody does that. And you have to be real with yourself too, if you're getting burned out it legit is because you continue to do the wrong things expecting a different result. Here's another fun, fascinating fact that I think, is kind of key to how we approach deals that is very different than a lot of the books will tell you. A lot of the books will say things like niche down. But I think that is a really terrible idea these days. And there's a couple of reasons for that. One is a lot of the niching down stuff happened after World War Two. And the reason why it happened was because they were taking a lot of military members that were coming back from the war that had a skill, that newly acquired skill that they learned while they were in the military. And then the goal was to set up these businesses, grab all those people, and put them directly into something that correlated to what they did, while they were in the military. And the whole idea behind that was you do very little, you have to do very little training, they already understand the concept of the widget that you're making. So here's another thing, when when the gurus are saying niche down, the reason that they say that and the reason they keep saying it, even though it's not really real anymore, is because it's a good way to get somebody to take forward action in a focused area. So it sounds good. If I can say, you know, really niche down on the customer avatar, do you need to know a customer avatar? Sure. But do you know how many companies that I've walked into, and I say, Hey, who's your customer avatar and they're like, it's this person? Exactly. And then we end up doing split tests. And it's all different area where we get the most press, right the most, when I say press I mean the most growth. And so there's these like, miss understood areas of of the market, there's these, these areas that people will say, that's going to fail, there's no way that's gonna work. And then lo and behold, it does, right. Today. unlike ever before in history, we can take that same thing that says dentist, we can copy paste, we can change the word from dentist, the chiropractor, we can do that again. And we can make sure that the people that saw the dentist one never see the chiropractor one. And then below see the chiropractor never see the dentist one. And now it's like, okay, we're playing in a whole different world that does not follow the the normal acquisition models for new customers. It does not follow the normal acquisition model for companies. It does not follow the standard of what mergers have become. And yes, there are still mergers, you know, AT and T and sprint, they merge. That's a merger. That's a real thing. But the name mergers and acquisitions is because it used to be only massive companies did this. And the merger part was the most important not the acquisition part, it typically went like this, two big companies merged together and acquired all the competition in the area. That's why they call it mergers and acquisitions. But now there is a whole new breed of entrepreneur that is going out. And the acquisitions part is the biggest part. So it should be acquisitions and mergers. Because what are acquisitions and bolt ons, however, you want to consider that where you're acquiring companies, you're merging or are bolting on assets that they don't have that become a core functional part of that company, that also the systems and processes go to the next person that acquires that company, and they have a system and a process and a structure that they continue to follow. And the company should continue to grow even after its acquired
in in numerous ways, not just one way not just customer acquisition, but it should also be their product group their services offered there. I mean, it should be a bunch of things.
Ronald Skelton 29:43
So in the in the big mergers and acquisitions world, a billion dollar companies they acquire for strategic purchases also. But when you're when you're referring to bolt on that's something that's done at all levels. And I think it's something that's a little over overseen, you know, I've talked to business so owners left and right. And one of the conversations is like they're
Patch Baker 30:03
overseeing you mean overlooked? Oh, sorry. Yeah, overlooked. Yeah.
Ronald Skelton 30:07
So the, you know, I'm talking to business owners on a regular basis, and I called Reach, I don't just go to biz by selling those kinds of crappy websites that are listed by brokers, I reached out to things I'm interested in and have fun conversations with business owners and say, hey, where you want to be. And a lot of them don't see the possibility of growing the revenue, like a concrete company growing the revenue because they buy the rebar distributor like either they're buying this ton of rebar from them, that guy's 80 years old, he's gonna sell it to somebody, he's probably consider buying those guys and making them strategic asset to your, to your company, you run it, you let it run on its own, they give you a discount, you know, they sell it to you, right? And then you help them grow, you put your systems process, they don't see that both are they? I don't think that the normal business owner, the the mom and pop, you know, there's millions of millions of these guys out there have been trained in what does it look like to grow through acquisition, other than I buy one of my competitors, and I do the exact same thing I do for their customers. Right? This bolt on thing that you and I talk about this taught in all these courses that, you know, the Roland Fraser's epic, and all these other different things that are out there, that bolt on, you know, mentality that, okay, this may not be exactly the same product, I'm not selling my widget to their customers. If I acquire them, it boosts my revenue gives me another, you know, asset to to grow with, and, you know, cut my expenses. I really believe that's overseeing, I think it's a lacking in in the normal mindset of these, you know, I call accidental entrepreneurs, they know how to create a widget, they created a widget to started to sell, and now their stock. Or likely, I think when I hear burnout, you were talking about burnout earlier, I see them as Okay, they've taken it as far as they think they can take it and that's what's burning them out, they're putting in more hours thinking if I do the more of the same thing I've always done, then I'll break through this, whatever this obstacle is this mental block or whatever, you know, there's there's something blocking them. And that's how they interpret it like, Hey, I don't, I don't think you can grow any further. I've done everything I can do.
Unknown Speaker 32:14
So I got another mental mind Twister for you. Okay. Most people want to acquire companies that they know about. Right? However, I think that is one of the silliest things you can do in many ways. And it's, you have to open your brain to hear what I'm about to say,
Ronald Skelton 32:38
I'm on my edge of the seat here. What do you got?
Patch Baker 32:42
In that, if you're in the dry cleaning industry, you acquire a company in the dry cleaning industry, and then you put the same exact systems that haven't grown your company on that company. Whereas if you didn't know anything about dry cleaning, and I partner with that person, and I'll say, you know, why can't we do this? And they're like, I don't know, I never really thought about that before. It's because I gotta clean brain, I don't know, I'm not trapped in the day to day of their business. I'll tell you something else that consultants all over the world don't want me to say out loud. But it is a truism. The thing that makes most I mean, and we're gonna use the baseline that the consultant actually knows what they're talking about, right? They're not just BS people there, they actually know. The thing that makes them so strong, is the fact that they don't care how long you spent to build this website. They don't they didn't spend the nights and weekends, they don't care about the
about the people in the organization's same way. And not to say that they don't care about humanity. I'm just saying they're entrepreneurs everywhere, that still have people on staff that are nothing but a debt center for the company. Whereas the consultant can be like, Person Number A or person letter A did X amount of sales, person B did not nearly as many, but has been there three times as long. You need to get rid of Person B Oh, well, that's my cousin. Well, I don't care that that's your cousin. I care that your sales staff is not equally operating using the same exact system. Now there are certain fundamentals of business that you have to understand. But when you understand them, they apply to every single business. I don't care what the business is. The company needs to generate income. They have to do that through sales. They typically have more sales when they have educated sales staff and they have a good marketing system. That is good. Just the way it is. Now, if you fundamentally understand those things from a base level, you can apply that to a bank, to a concrete company, to a food company, to a widget company to a CPA firm to a PR company, like, you can apply that to every company. The crazy thing is, is that there's industries that I'm going into that I don't know anything about it. Like, let me give you an example. Like, I don't know, like a print company, I don't know how to print a shirt, I don't care, I know that shirts have to be made to a certain level of, of expertise, in order to generate this amount of dollars coming in, which equals this amount of profit for the company. I don't need to know how to make shirts, I don't need to know how to make knives, I don't need to know how to do CPA services, I don't need to, I don't need to know that. I need the person that does that to stay in the company. And let me go do all the things that they don't know how to do. Let them continue to be the expert in their field. Let me do all the things that I'm you know, keep us both in our power zone. And I think again, that that idea that if you niche down, if you do one thing and you do a really well, that you will be successful. And quite honestly, it's small brain thinking. And you're you're not giving yourself enough credit. In many respects, there's this weird thinking that in order for you to be successful in business, you need to understand every aspect of business. And that simply is not true. And that counts for me too. I don't know everything about how my businesses operate. And here's the cool thing. I don't care. I truly don't, if something is going wrong, I have systems and processes and people that will go, hey, you need to come over here and look at this. We're 2% down. And we've tried these three things, and it's not working. What do you got? And I go mess around in that business until we figure that thing out? Am I gonna have the right answer every single time on the first try? Nope. Do I even care if I'm 100%? Accurate every single time? Nope, I don't. Here's the thing that really changed the way that I look at things. It's it is, you talked about this in the very beginning, and we haven't spoken on it. But what I learned in the military, I do really apply to business. And I've had a lot of people, you know, try to take, you know, they try to take this out of context. But hear me out on this. The military is I'm talking about the US military. But the US military has a mission that cannot fail. And it's built and designed on a system and a process that is designed to transition out every single member of every single unit every three years, either through attrition because they get at, you know, you have bootcamp and then, you know, soI or MCT and the Marine Corps, and then you have school. So it takes you about a year to get to what we call the fleet. And your first duty station, typically is three years. Now you're either going to get out or you're going to stay in but one way or another, you're leaving that duty station. What other company in the world could train could change out 100% of their personnel at a location every three years and still operate at 100%?
Ronald Skelton 38:47
Wherever they are makes somebody's leaving and somebody new is coming in every single week. Almost every couple of days. Somebody's leaving and somebody new is coming in. Yeah, absolutely.
Patch Baker 38:57
So it's it's crazy when that when they have such a high responsibility of mission completion, that the only way that they can actually make that work is because every single person is trained the exact same way on every single thing. We say the same things we do the same cadences. We do like even, you know, we had what we call duties, right? And duties are just things that you say that get everybody thinking the same way all the time. And you have to memorize these things just like locate close with and destroy the enemy by use a firearm maneuver. Well that's war fighting, right? But every single marine can say that back to you. And that's by design. It's by design that every single person knows the same exact steps to get the same exact end result. Every single time, well, if you start applying that to business, what you really quickly find out is that most people that are in business for any length of time, they are doing the things through memory instead of through a process. And then they say things like, well, nobody can do it in the business as good as I can, or I can't find good help, or no, what you really need to be saying is, you need to take a close look at yourself, and say, I'm not being a good leader. I am not developing a system and a process that other people can follow to get the same result that I get when I do it. And that building of the process is hard. And it's tedious. And it is a lot of trial and error. But the way that you do this is, you know, you can use a PowerPoint for this, I use draw io, which is free service. I've got no, no affiliation with them. But I use this all the time. It's a Google, you can get through it through your Google account. But basically, what it does is it's just like step one, step two, step three. And then what I would do is I would say, Hey, can you look at this and tell me what you think it says. And if you say, this is what it says, and that's not anywhere close to what I want, I don't tell you what I want it to say, I go back and change that thing. And then I say, hey, what do you think this says? And when you say, I think it says this, and you say exactly, now you go on to the next step, right? When people do that, and Thomas Edison said, If you don't understand it well enough to explain it to a sixth grader, you don't understand it well enough yourself. And that's the problem. Most business owners do not understand it well enough themselves, they've got some other core skill that they are not giving credit to, if you can, if you can break that down into words on a piece of paper, not through explanation. But if you put it on a piece of paper, what you find out is, you have to learn more about what you're doing to get the result that you're getting. And that is where I've been really really
I don't know, it's I've changed a lot of companies and the way they operate, because when I tell them to write it down on a piece of paper, and they can't, and then I have to go on this, like fishing, exploration and investigative work to figure out what they're doing and how they're doing it. And then I'm saying, not only do you need to be able to explain it to me, but you got to be able to write it down on a piece of paper, they start getting really clear on what they're saying how they're saying how they're positioning, how they're creating a problem for a person that they might not know might not know that they even have, and then their product or their services, the solution to that thing. But there are a bunch of other ways to do that, too. It's not just that, because that's the easy one. There, there's a whole bunch of more complex ways that you can explain to somebody, Hey, I love what you've done this far. But let's try this for a couple of days and see how it works. And what you find is they start, you're you're it's kind of like Inception, marketing, right, you're planting this idea, and then you're letting it be their plan. But what happens is they get this buy in, they get this understanding that maybe there are a couple of ways to skin a cat, maybe there are a couple of different unique vantage points that that I haven't looked at the company from. And the fastest way to understand your business is to fire yourself from as many jobs as possible. Because if you can do that, you get to take on the role of the consultant for your own company, you're out of the day to day you're not seeing you're not getting burned out you're not getting stuck in the the semantic arguments that are happening about we should do this or we should do that. What's happening is you're looking at the outcome. And then you're trying to go back and adjust the system to get the results. And that's where you get on a whole new level of business and it's how you kind of open your brain to bringing on those other bolt on features that we were talking about earlier. That genuinely throw, you know, it's not even gasoline it's like you thrown jet fuel on the little smoldering thing that you have that's got some potential to be a fire but probably not gonna be a raging fire until you start getting into this mentality.
Ronald Skelton 45:02
When I was in the military, one of the things I did for military, I did military intelligence for the Air Force. And they would bring new computer systems. And it was my job to figure them out and create a process and document the steps that needed to use that system to do our job. And I took that document and I handed it you know, this is military intelligence to be in our room, you had to have a fairly decent score, you had to be able to pass the test really well. One of the things I think it really helps you to do is when you do go to exit, now you've got, you know, systems processes, repeatable, you know, you're delving in this world, it's not necessarily perfect and selling it off to people kind of expect a little more perfection, and exactly a premium for that.
Patch Baker 45:44
So yeah, they do when you have systems and processes for every single thing. I mean, everything from like, who your vendor is, when do you reorder, you know, reorder points and cogs for every single thing, and you can go down all the way to the penny, of how profit is made in the company, there are really good ways to do this. Most people don't have the skills, and be quite honest with you, my CPA has taught me so much about, but I don't have, you know, the $300, at the end of the year, CPA, I've got the, you know, more expensive than that, per month, a CPA. And, you know, he has taught me things about spreadsheets that I never thought I wanted to know. But when you start seeing a spreadsheet that has 100 tabs on it, because we're calculating every single product, every single marketing dollar every single shipping dollar every single ancillary thing like electricity in the building, the ink that we use on the printer, how do we how do we save two cents by not printing this thing out, but doing a laser sticker, and you start really understanding the aspects of your business down to the penny, and you start shaving off, you know, four cents on every package that goes out the door, but you're doing 100,000 packages a month, that's a lot of money. Like that is a lot of money, especially when we're going to do that across 3000 things in a manufacturing facility. And I say this to everybody, even if you have a legacy company. And what I mean by legacy is you want to pass it down to your kids, your grandkids, you want it to be around forever and ever remember, if you're not designing it so that it can be sold. And you don't have the systems and processes so that the next owner could replace your entire staff and still have a productive day on day one of their ownership, you do not have it. But if you do have it, your company is worth 1020 30 times sometimes what it would be without it. And people don't understand the value of it. But when you start tapping into it, and you start seeing the numbers on paper, wait, the same amount of work that we did before, even on a crippled system is now 10% more profitable, because we just did call savings measures by putting in a system and a process. Wait, what? Wait, if we restructure the company and get it out by being an LLC, all of a sudden we can save 30% on taxes? What? Wait, we can we can, you know, there's there's all kinds of things like that we can renegotiate our shipping cost and save 20% weight, we can renegotiate our manufacturing costs and save 10% Well, dude, like very quickly, you're at 60% increased profit margin, that company that you did in that you revamped in the last 90 days is worth 10 times what it was 90 days ago. Right? People just don't spend any time on it because they don't know the value.
Ronald Skelton 49:09
Well, we are at the top of the hour, man. This is an hour show or an hour, one minute, but I just I hate to cut you off. Because it's just a wealth of knowledge. Let's make sure everybody knows how to get a hold of you. It's in the show notes. But I'm going to put this up. You're gonna verify it for me there. Hopefully that'll I clicked on it show. There it goes. If I quit clicking it, it'll catch up with us. There you go. So that's your LinkedIn is that was there a different way? On the show notes I went ahead and included your, your patch baker.com and other other ways to get a hold of you that you have on your LinkedIn profile. But uh, man, I really appreciate having you here. I wish we you know, maybe we one of these days I should do a two hour show or something. We just get into these great conversations. I honestly think that there's a lot of value here for people today. I'd love to have you back sometime in the future. Maybe we can talk About some success stories and some more stories, right? Like, you know, everybody loves to hear about something that that one, but there's a lot of lessons to learn from something that didn't go so well. So maybe we look at that in the future. I do appreciate having to hear it before we go. If you can leave everybody with just like one or two key takeaways, what would that be?
Patch Baker 50:22
Well, I think just taking the next step is probably one of the hardest things. I had a person that worked for very large company that brought me in as a consultant. And they got their team together. And I said, Hey, look, tell me tell me how the system works. And for four hours, they told me how the system works. And for the next four hours, I tore apart everything that they had said. And it was pretty painful for a lot of people in the room. The cool thing is 30 days later, we had a follow up discussion. And the guy said to me, something that I thought was really cool. He said, Dude, we've done more in the last 30 days than we have in the last three years. And I said, this is the cool part about that. It had nothing to do with me, you guys, were just focused on something, and you actually started taking the next step forward. So you don't have to win every single thing, right? If we're talking about like the game of football, you don't have to get a touchdown on every single play, you just got to keep moving towards the end zone. So if you just take some steps to start doing start small, right, look at your calendar at the end of the week, and go back and edit this is tip number two, go back and edit every meeting that you have on your calendar, don't change what it says just before the title, put in the dollar amount that you earned during that call. And you will quickly see that you are spending a lot of time busy being busy instead of trying to be efficient and being effective. And so those two
Ronald Skelton 52:05
is you and I see a lot of things that I die, maybe it's because we both have military experience. But the funny thing I used to do in the corporate world, and it really tick people off is you know, I come into a new company. And you know, there's all these standard meetings, we'd have every frickin week, I would because I was a senior director level, I knew everybody that worked, or most of them worked for me, even the guys in the other department, I could get the info. I would run a run Italia, what the meeting costs. And I would send that invoice to all the managers like my, if I had other managers, you ask for your guy to be here. This is what it costs your department. That wasn't a bill, but it was kind of like an invoice rundown is like this, you know, some of these meetings, especially in bigger companies, you know, a two hour meeting could cost the company 3040 50 grand? Yeah. And it's crazy, you know, and, you know, you got 60 people in a room because they think that's what needs to be happening. And they're having an all hands that tell them something that could have went on on a frequent email. That adds up fast, right? Yeah. And to send the the executives the bill, every for every meeting I had, I had two assistants, their job was to take the attendance, we already kind of had a running number for every single meeting we had, we would send out an invoice. And just just to kind of show people, the meetings cut down, more emails went out. And I'm a big fan of just knowing, you know, knowing what you're getting done, as you know, what, what value was really inside of something. So I'll echo that sentiment. track what you're doing track what it's what it's adding value to or distracting you from. And it'll move forward. I thank you for having you on the show man. Look forward to to you know, we've we've crossed paths in many circles. So I look forward to seeing you around there. Yeah. And if you ever need anything from me, just reach out. I'm here. I'll do anything I can to help you move forward. All right. Thank you for hitting the show now. Thank you, everybody for being on the show. Hang out just Just a second. Hey, it's your host, Ronald Skelton. I want to thank you personally for watching the show today and invite you to call our new hotline 918-641-4150 That's 918-641-4150 Call us and tell us about our show, ask questions, suggested guests or even tell me about a business you have for sale and we'll reach back out to you again that number is 918-641-4150 call our hotline leave us some information. Thank you, the investors and entrepreneurs professional mastermind. The investors and entrepreneurs professional mastermind combines that additional peer to peer mastermind entities first in Napoleon Hills famous book Thinking grow rich with accountability partnering, where your peers help you ensure that you set goals take action and get results. If you want to scale blow past roadblocks and achieve success faster than you might think is possible. I suggest you take a visit over to tiepm.com That's T i II p m.com and check out the investors and entrepreneurs professional mastermind