Building an Exit Strategy for Massive Business Growth with Richard Walsh

Welcome to the podcast that’s dedicated to helping business owners to prepare for exit so you can maximise value and then exit on your own terms. This is the Exit Insights podcast presented by Succession. Plus, I’m Darryl Bates-Brownsword, and today I’m joined by Richard Walsh. Welcome, and thanks for joining me today, Richard.

Thank you, Darryl. Appreciate being here, man. It’s going to be great.

That’s great. Now, the reason I’ve asked you to join me on the show is because you’ve got a story, which I really liked. And when we had a bit of a pre chat, even then, a couple of surprises came out that I’ve gone, oh, that’s interesting.

So without wanting to steal your thunder right up front, Richard, you’ve built and sold three businesses. Is that correct or is that just the ones you’ve told me about so far?

Well, no, that’s kind of correct. I’ve built three, sold two.

Okay.

The first one I didn’t get to sell. And that’s part of the reason we’re here, right?

Yeah. And. And that. That is because you didn’t sell the first one. It’s not that you didn’t sell the last one and you’re still in it.

Right? Right. Well, it’s. No, no, no, that’s not correct. The first one couldn’t sell because of what happened. And I’ll get into the whole story. The next two were. The next two were able to go. Now I’m in a fourth, so I’m actually in a fourth business now.

Right. So we’re just teasing the audience there a bit. So why don’t. Why don’t we get into it? Well, how long ago are we talking here? This. This first business. Would that be?

34 years ago when I started? 1990, yeah.

And did you start this business from scratch? Why don’t you just set the scene for us? I normally set the scene, and then I’ll get rolled. I’ll try and hold myself back because there’s so many questions I want to dig into here.

Okay, so here’s a quick timeline. So, 1987, I exited the Marine Corps. Okay. Didn’t get any money for that. Okay. So I exited Marine Corps and then started working. Got a job like you have to do, and I was swinging a pick, digging trench for $5 an hour. Very exciting, grueling job in Arizona, 100 degrees. That was great. And as I tell people, someone asked me to do a side job for them.

They needed some granite. Move to write granite, like three quarter in size. That’s what they did out there. Into the grass. It was only 35 tons.

And they said, can you take it from the front street to the backyard? Spread it. I said, I can do that. So I spent my, like, seriously, it was like, my last $85, and I bought a wheelbarrow and a shovel, and I showed up, and it was dumped on the street, and I started shoveling. It took me about 10 hours.

Got it done. But here’s the beauty, Darryl. They paid me $1,000 for that. It paid me $1,000 for the same thing. I’m doing $5 an hour.

Okay. And you’ve got good and fit and healthy at the same time.

Yes. Yes. And sweat and tan and all the good. Yes. Had the sweat going. Ladies. Drinking lemonade. Watch me do my work. I’m just kidding about that part. But. But I was

Eating, dreaming. Whatever. Yes, whatever.

Yes. We all gotta have a dream. I. Of course, you realise you get that and you look, and you’re like, okay, this is the direction I have to go. I need to work for myself.

I need to be able to set this. I will do this every day, all day, for $1,000 a day. You’re talking 1987, right? That’s really good money. So that’s what kind of launched the entrepreneurial journey.

So I started landscaping and doing whatever I could, and, you know, got my wheelbarrow, my shovel, and a broom. Oh, I moved up getting a broom, too, so I could sweep up when I got done. So that grew, and then I started getting into stones and water features, and I became a custom water feature builder for about the next 20 years. You know, internationally acclaimed. I became a steel sculptor, incorporated.

That my work, and I got all these accolades and awards and made a ton of money. And it was going really well for about 18 years. And then 0809 hit, and there’s the big financial collapse. And that hit me, too. People did not need a water feature in their backyard at that time.

They could wait, and they were right to hold on to their money. If you remember the time, it was November 5 of 2008. I lost a half a million dollars on that day and just kept going off the cliff from there. It just canceled, cancel, cancel. And I’m like, this. It’s over. It is over.

So, Richard, can you give us some scope? Like, by that stage, how big had the business been? Did you have employees?

Oh, yeah. I had a great crew. I had an office manager. We were I like to call myself the special forces of pond building, water feature building, because we were very lean, but we used equipment and we could do stuff. I can move 150 tons of stone boulders and place them in a day, which would take other companies 30 days. That’s the efficiency level I worked at. So it truly was breathtaking to watch how we were able to build the things that we built. And so, yeah, it was. Yes.

Yeah. And that’s what it’s all about, you know?

So it’s. And it was. And that was really cool. There’s a whole story inside that, too, but. But so Darryl really was killing it. I can make money on demand. Whatever I wanted. You know, it was like. It was like the proverbial ATM that I didn’t have to fill. You know, it just was. It was just doing no job big, and. And my margins kept going up and up because no one could do what I could do, you know, and I’m an artist, and I’m all this stuff.

You had a number of employees in the business. You had an office manager. So were there more than ten people? More than ten employees?

No. No, we had about six total.

Okay.

Plus me. Yeah.

So you plus six helpers. So it’s still in that lifestyle business phase of you and six helpers, and you’re right at the center of every single decision in the business, and nothing really happens without your say so.

Exactly. That was. And that’s when I. That’s being what I call trapped in the owner prison.

Yeah.

That’s where you’re, you know, you’ve got to open the door. You got to make things happen. You’re doing marketing, you’re doing sales, you’re doing invoicing, or. Or, like, I was doing time just telling my office manager what to do.

Yeah. It’s really smart enough.

Yeah. Very dependent on me instead of everybody else, or even today would be systems. Right. So that was a challenge. So, the whole thing there was with that zero eight nine collapse. And I tell people, because you have. I have the luxury of looking back, right. And, you know, I either Monday morning quarterback and all that, but really learned from those failures that I can’t even blame the economy. Like, I want to. I want to say it’s because it all collapsed and it ruined me, and it’s all the economy’s fault. But when I look back, I’m like, no, I didn’t do a lot of important things I should have done. Yeah. You know, and that’s what really took me down. That’s why I couldn’t weather that storm.

That’s a tough pill to swallow, isn’t it?

Yeah. But I don’t have a big ego anymore. So, yeah, it got beaten out of me for sure. So I, you know, it was such an adjustment, an incredible adjustment to make because I lost everything. I mean, the home. I had six children, four years and younger, my wife. And now we don’t have a home.

I don’t have a business that we have to. You talking about starting over? I owned everything, but I was lucky at that time to get $0.30 on the dollar for everything, you know? So you’re not making any money selling your stuff. And I’d worked all those years, and it was just like, well, what do you do now?

You know? And that was the problem. And what I realized was, in my business, my business became who I was, okay? So my identity was my business. So if I didn’t have, you know, a Rick rock shirt on or a hat or something, you didn’t know who I was, right?

Every car, every vehicle, every truck was wrapped, it was all, you know, and it just was. It became my identity where it became the most important thing in my life, like, achieving that business, doing well, getting accolades, money, all that stuff. And I really had to come to the epiphany one morning in zero nine that my children, I come home, they, whatever, they drop everything, run and attack me. I leave or stop in the middle of the day, and I’d be leaving in my truck and one of my kids chasing me down the driveway, crying because I’m leaving. And you look at that in the rearview mirror, and you’re thinking, man, what am I doing?

These kids don’t care where we live, what I drive, how much money I make. They just want to be with me. They just wanted that attention, which I wasn’t able to give them because I was like 15, 16 hours a day. So with that, that’s why I’m like, I can’t do this anymore. Because what’s going to happen to my children is I’m going to ruin them. I’m going to ruin them when a ruin their lives because they’re not going to have good relationships, their marriages are going to fail, because everything’s going to be chasing that business dream because that’s all they’ve seen. Not even teaching them, but, like, watching me do this, watch that drive.

By, what you’re doing.

Yeah, more. More is caught than taught, as the saying goes. And that is definitely true. So with the new business, I’m like, okay, first, figure out what I did wrong, right in the first one, because it was just shut down, right. So there’s no exit. There’s no sell anything. Just, I mean, literally $0.30 on the dollar for stuff.

So we could just continue, get a new place. And we had to relocate states and everything else. And. And that was good, but it really was. Now, well, what do I do I want, because I can’t. I know I can’t work for someone. I am unemployable at this time. You know, you. You work for yourself for 20 years. You just. I mean, I. Well, there’s one caveat. I could be a great employee. The best you’ve ever had. I am the greatest employee you’d ever want till about month twelve. And then I got to run your company. Okay. And that’s just how I operate. So I’m really good. So I got to know my. You know, so I’m like, I just have to do something new. Yeah. So we all know, right? All the. All the entrepreneurs know.

It’s my way. Just move over. I’ll take care of this. But, yeah, yeah. So I really had. Yes. You’re doing it wrong. Not like that. Like this. Okay.

That’s what we say. So that was really the thing. So I really had to examine and kind of connect the dots on what I did wrong. It’s like, I’m not big on failure. I don’t like to lose. I mean, get. I’m a champion boxer. I’m a marine, I’m a black belt. All this stuff, right? And I like to win.

I mean, I’m a competitive guy. But failure is your greatest teacher. And when you feel really big, okay, not only is it a teacher, but it’s a. It tests you. It really tests your. You know, that. That fortitude, what you have are you really. Are you really. Was this just too easy? And you just did it because you could just keep making money and you didn’t really have to do what I’ll call the work, which is all that other stuff in business that no one talks about, you know, that actually makes the business run and survive.

Or are you really going to do this again and make this work? And that’s what I did. So I really. I put the numbers together, I looked at things. They said, okay, you’re still gonna be gun shy, because I just went from millions to nothing.

Okay. And that’s kind of hard. But I said, well, I’ll just start small. I’ll do something small, something I enjoy, because I was gonna do that. I was gonna retry the water features. I wasn’t gonna weld. I sold everything. I’m very much the all or nothing guy, much to the dismay of my wife. She doesn’t, she doesn’t think that was a great move, and she’s probably right. But that’s how I operate. I’ll never weld again. I’m never going to build a future. You know, I just. I’m kind of a goof that way. But that’s how I operate.

So I’ve mastered it. So I want to start as small as I opened a gym. So I said, I’m going to do bootcamp style training. I’m a great trainer. I love to train people and work out and all that stuff. So I did that. But with the idea in mind, I’m not going to be there all day. I’m going to set. How can I do this? So we learned to do 30 minutes training sessions, bring people in. I got trainers to work for me. So now I just built a business and I started to create, do all the things I didn’t do in the other business and begin to scale that, you know? So that was like getting into business number two, and it was more testing the waters. Go ahead.

So, Richard, how did you learn? You just mentioned there, I did all the things that I didn’t do in the other business. How did you know what they were if yeah?

Because here’s why I do. Because they land on my desk and I just put them off to the left and let them see.

Oh, right. That obviously.

I know what, I know what they were.

All the things you were ignoring.

Yes, I can be. I’m blatantly ignorant. Okay. I mean, just sometimes it’s just so that’s what it was. I mean, I knew what it was. You know what it is. I mean, yeah, there’s things you don’t know and we want to learn, but really, when you’re coming along and you’re getting a warning or you’re getting this and someone’s not handling that, or you’re too proud to give it to someone else to do because you think you’re supposed to do it, which is one of the dumb things to think. To think you’re supposed to do everything in a business, that’s your first big mistake.

But it’s a massive mistake, isn’t it? But it comes from a place of wanting to create a really good business, doesn’t it? Entrepreneurs want to deliver the best experience. They want to deliver the best product. They want to do marketing really well. They want to make sure any piece of communication that leaves their office is top shelf. They want to make sure. Everything they touch, they want it to be done to their standard and they’re the only one who can deliver to their standard. So as far as the dumbbell, I guess.

Yeah. As far as they’re concerned, they’re the only ones who can deliver it right now. Right. There’s so many people that do it so much better than you ever will.

And once you learn and start looking, that’s, that’s what becomes blatantly obvious.

Exactly. And that’s what you want to look for. So the, one of the key takeaways on that, that 1st 20 years of mine was, wait a minute, there are people who do this stuff now. People will say, well, I don’t have money. I’m starting a business. I mean, you started with a wheelbarrow on the shovel and $85. Yeah.

So, but of course you’re not going to have that. So that first two years you’re going to work incredibly hard. And I have not figured out a way not to do that. Okay. So you getting into a business, I mean, buckle up, it’s a ride. It’s going to be bumpy. You’re going to get some scars, but you need to. But the problem is all of a sudden now it’s the ten year mark and you’ve repeated the first two years five times.

Yeah.

That’s why you’re on the hamster wheel and that’s why you can’t scale, you know, because you’re still doing everything you haven’t.

Okay, I’ll take the two years. I’m going to build. I’m going to generate a certain income. But let’s talk, hey, let’s talk exit strategy. So we go to the end, right?

And I create an exit. What am I going to do with this new business or a business, right. I go to the end, figure out, okay, if I want to do this for five years or ten years or whatever the number is, then I want to say, okay, I’d like to exit with this much. I like to sell my business for whatever the number. Million, 5 million, 50 million, whatever it might be, okay.

And I want to walk away. And at the same time I want to build a passive income to replace my active business income. So what does all that look like? So if I reverse engineer that, if I start at the end, I can plan when to bring people on, right. I can drive the business.

This could be my filter for how I make decisions and understand there’s a plan, which in my second business that worked for me, Darryl, because it made me slow down okay. I am a hard charger. Yeah. You can’t. You cannot do things fast enough for me. Okay.

And most entrepreneurs are built with that, that framework. I see. They want to go, go, go. They’re making a, they’ve got a thousand ideas a day and, you know, and 200 of them are okay, but they want to implement all. A thousand. They want to get everything done every day. And that’s their pace.

Yes. And, you know, as I said, everybody disappointed me because they couldn’t do it as fast as I wanted to done. But a horrible, it’s just, it’s horrible to be there. So you have to train yourself not to be that way.

Sure. And risk profile as well. Like, entrepreneurs just don’t seem to see risk.

Right. Well, because it’s just the necessary evil. It’s just what it is, you know, it’s just part of existence.

So it’ll be all right.

We just plow through. Yeah, it’s. I’ll just make more money. That’s what, that was my, that was my mantra. I’ll just make more money. I just thought I could just keep making more money, you know? But eventually the house of Cards falls. Money in the world doesn’t matter. So it’s, it’s kind of challenging, but it really is that we have this little saying, I use automate, delegate and eliminate. That’s like the new, let’s.

Let’s take this path. I want to automate whatever I can in the business. I want to delegate everything else to the proper people, not just tell someone to do something and hope they get it right, actually have it laid out for them. Delegate that, then eliminate. Of course, that’s redundancies, inefficiencies, but most importantly, it’s eliminate you.

Eliminate you from all this day to day stuff. Put you on just your 5%, the 5% of the business. Only you can do that visionary work, that growth strategies, right? Looking for new markets, bringing in the big fish, that kind of stuff. That’s, that’s what you do as the owner.

So it’s when we talk about slowing things down, utilising the exit strategy you put in place, all of a sudden you have a timeline. The problem I found, Darryl, was when you are the entrepreneur you are, you can, and I used to love this term, too, ignorance on fire. You can be ignorant on fire, man, and you can get things done. You can go places, right? A lot of stuff’s going to get burned up in the process, but you’re going to get where you want to go. Right? So ignorance on fire was a lot of fun, you know, because that’s like an excuse to just be crazy and go and get things done. But I extinguish that, to use the fire term, right? I put that on. I said when I, when I reverse engineer my exit strategy and I build it exactly how I want it, I follow these steps because I understand there’s a timeline.

So when I get to 1.3, am I there? It’s very measurable, right? Just like any good business, any system, they all want to be measurable. You want to be trackable, because that’s how you see how you’re doing. So it caused you to really slow down.

Now, of course, I had been bitten really bad, right? I’ve been hit hard for the first 20, so it gave me a little extra incentive to pay attention, but it really made a difference. It really, it really put balance back into my life so I could focus on a few other things as well.

So can we get a little more granular, Richard, like you said, I want to delegate. I want to automate, I want to eliminate what sort of things we’re talking about here. At this stage, you’re owning a gym. It’s easy to say, hey, look, I want to automate my workflow processes. And we can see today, with a lot of apps and online tools that can create tasks and create workflows that delegate. Delegate, from what I’ve seen, is one of those things where, I guess a lot of entrepreneurs get bitten. And we’ve had the conversation on the podcast with a number of people, and they talk about, well, I didn’t really delegate.

What I did is abdicate, and I just sort of gave the task. And then to someone who was supposedly well trained, how did you handle that? How did you delegate and maintain control of the process at the same time?

So here’s what you have to do. I’ll give you the exact steps, and you do this. Your life is going to be so awesome. Okay, so before you delegate, okay, you have a position, right? So you’re going to delegate a position. I don’t care if it’s office manager, admin, assistant, site foreman, whatever it’s going to be. You’re going to take that position and you’re going to create its job functions.

Yep.

All the what’s, what it is, what they do, what they do, and every, it could be seven things, it could be 70. Okay, whatever that is. And doesn’t mean every day, but you know what I mean. Here’s all the stuff you’re responsible for.

You create granular on what you want them to be accountable for. Here’s the standard. I want you to perform it. If you keep performing it to that standard, I won’t interfere.

Exactly. You want to give them a lane to operate in.

Yeah, Lane.

Okay. You’re also going to build the how to do it. Yeah. Everyone gets the what. That’s okay. But you have to do it the how, the Richard way, not the John way or the Sally way. It’s the Richard way. So I’m going to teach you how to do the what. And then I built training for that as well as part of the automation. So once you’ve done that, if you hire someone who’s, let’s call him a job site foreman, okay, you hire him. They know how to run a job site, but they don’t know the way you do it. Right. They don’t know the intricacies.

So now you’ve built that out. You can take someone with competency, you can drop them in lane and they can run. And here’s the final piece to that. You also have to give them the authority to do that. It’s just not a job.

They have to have a level of authority because they’re either instructing other people, they’re in charge of something. So they have to know that they matter in what they do. And if they are above other people. Right. That authority has to be established again, because they’re able to perform their job to the best.

So you have high accountability. They can’t say, I didn’t know. You never told me. Right. So that, that alone is how you’re really going to perfect delegation.

The problem is most people don’t want to do that work before they hand it off. So again, if you can come back to your, to that exit strategy, the whole plan and the timing and who’s coming on, you build those positions out, then you advertise. Okay. So what we do is we have a job description, right? So here’s basically a job site format and blah, blah, blah. Great. I guess I do have a first filter. We go through like a five minute phone call and stuff like that. A little bit on the online, then the initial interview. Now we introduce the job functions.

Here’s what specifically you’re going to do on the job. I don’t put all that on an ad because that just freaks people out. Then they start saying, well, you better be paying me $150,000 for this because they don’t get the timing on these job functions. Right. I think you’re doing every day so, so that that’s a real key to helping you design and lay out your process, which, again, slows you down a little bit. But you end up bringing really high quality people to your team because they really. What they’re doing..

Sometimes you got to slow down to speed up. You build, it’s like whenever you’re building a house and you’ve worked in this area, but, you know, you notice when you’re digging the foundations and you’re not making any progress when you look at the site, because you look at the architectural plans of the house you’re going to build, and it takes forever to dig the foundations and put all the plumbing in and, you know, the underground electrics and all of the steel work for the foundations. And then you got to wrap it all up in plastic and it’s taken forever and you still haven’t even poured the concrete yet. Then you pour the concrete and finally, and, oh, you’ve still, you’ve still got this pad and it’s nothing like a house.

And then all of a sudden the walls start going up and it starts taking shape really quickly. It’s a similar sort of thing, isn’t it? You’ve got to lay the foundations for the role and what you expect of people when they’re working for you and say, here’s how I’m going to assess you and here’s how I’m going to hold your account. Now, you’re not on your own. What you’re saying is, I’m going to give you, I’m going to document it so there’s no confusion because I get, I can tell you once, but you don’t want to keep coming back to me as you’re learning it, because you don’t want to pester me or what have you, but so you’re going to document all of that and take them through it.

You’re then going to train them and then you’re going to have your measuring systems in place to know that when you say, here’s how to do it, that you’ve got confidence that it is actually happening that way. Is that what you’re describing there, Richard?

Exactly. Exactly. And a big part of that, he said the training. So that’s also part of automation. So again, depending on the position, there’s going to be videos. Let’s take an admin position. So you’ve got someone who’s got an invoice to receivables, payables, all the other undesirable stuff no entrepreneur ever wants to do. But what will we do is we have them actually help you create this system.

So if you have someone with some skills and they’re in it, use loom. Right. Screen recordings. So you literally. Okay, but what I tell them is go keep the videos to 1 minute max.

You got a simple name of what exactly you’re doing and you’re following the mouse clicks while that person is talking. Okay, we’re going to click here, up here on the right. Click, click, click. They never have to come ask you how to do it. They go to the video bank.

They look for the exact name for the one thing they’re not searching through a five minute video to find exactly what they need. See, that’s training, that’s automation. And you do that once, that’s good for like ten years. Then you teach them how to tweak it. If a new task comes up, they just do another recording.

Slide it into the video bank. Right. That’s how you’re going to create the ability to scale. And when we talk about exits now you’re automating and systemising a business that someone else can walk into own, but not have to rebuild. It will run on its own.

Right. We have those people in place that can now do that. They can do that work without having again walk in your office, knock on your door, go talk to, go talk to Jim over here. How do you do that again? They have their own place to go for that training. You can do that for every position in the company.

Totally. And since we’re on the, on the topic, one of the things that I’ve found that’s really, really helpful with that documentation is an AI tool called Scribe how. And that’s sort of like loom on steroids. It just tracks every, as you go through the system or showing that the process and it just documents it for you. So you get the video and the documentation in one. It’s a really helpful little tool.

I’m 100% with you. We’re doing that with my coaching program. I record coaching calls and this AI tools like create a program. They like get all the highlights and it’s like in minutes the stuff is done. What would take me a week to go through that and rebuild a module or program? So yeah, there’s tools out there now, Darryl, that are, it’s mind boggling from what I did 1990 or didn’t do. You know, you’re not going to make stuff that you have to embrace those tools. I guess that’s the big thing.

You need to embrace those. Figure it out. It seems uncomfortable at first, but holy cow, are they amazing. Yeah, you just got to remember to use them is my experience. Okay, so we’ve built the business and we’re in the gym and we’ve gone.

Okay, so now I’m going to delegate. I’m going to get really clear on what I’m asking people to do. I’m documenting it. I’m not just documenting it. The what level of detail. I’m documenting at the how level of detail as well. So perhaps really quite procedural. As well as systems and workflows. I’m using automation and latest technology as much as possible to help make life easier. And whenever there’s duplicate tasks, we may as well create a process around it.

I’m creating training, or when I say a, I, it’s the royal I, isn’t it? It means you. So you’re creating the training for. Here’s how to do each of these hows. And you’ve got some videos and again, real process stuff. I imagine you’ve got some sort of online storage platform that makes it really easy to find all of this stuff. You’ve done that for, I imagine, every role in the business. So you, by the sounds of it, you’ve designed the role first and then appointed someone to do the role. So it’s really the Richard way of doing things. I’m guessing when you’ve employing people to follow a role in a systemised process, you don’t need the most expensive creative thinkers out there.

You get people who are quite happy to follow a system and go, okay, well, here’s how Richard wants it done. I can do that. I’ve got these guide rails that show me how to do things. Happy days. If I show up and do that every day and when the system gets tired, I can go back to Richard and go, this doesn’t seem to be working so well anymore.

We seem to have outgrown it or the platform’s not working anymore. I can come back to you. Is that how you had it working?

That’s exactly how it is. And here’s the great thing about that, Darryl. So you get these people, and if you’ve been in business and had people work for you to find that person that likes to just do what they do is a godsend. Absolutely. What are we thinking about? They’re going to want to do their own business. They’re going to take over that most people are not going to.

You can just calm down because we’re a rare breed. Okay, so most people want to do their job and they want to be accountable, and they just want to do it.

Well, that’s a really important point, Richard, because I talk to a lot of business owners, as you do, and one of the complaints I get is, why can’t I just get good help? Why can’t I find good people? Why can’t I get people who think like I do?

Well, the people who are thinking like you do are all running their own business. Like you want to get people who don’t think like you do. You get people and you show them, you systemize, and you can show them what to do and give them some guide rails. And if. Yeah. And that gives them enough scope for what a lot of people are really looking for, as you suggest.

Yeah. They don’t want. People don’t want mystery. They don’t want. They can read to have mystery in a book. They don’t want to come to work and have every day be a mystery. Am I going to get yelled at? Do I, did I do this right? Am I supposed to do this, too? Should I help? Should I help John over here? He seems to be struggling. Am I allowed to do that? What does all that look like?

And if you haven’t laid that out for him, if they’re not, and there’s a whole other thing, we’ll talk about vision and strategic vision, how we drive the company. But that’s such a critical aspect. But it’s, again, it’s the hard work in the beginning, like you were saying, it’s building the foundation, because then the good people will be drawn to your business and you’ll increase retention in a. By massive scale.

Yeah.

People will enjoy it. They’re not gonna look for another job and sell you out for $0.50 an hour, you know, because their

Goal posts. Aren’t changing every day.

It’s consistent, it’s predictable, it’s reliable. They know exactly what they’re gonna get. So it allows them to manage their life and their job and their role a whole lot easier.

Okay, so we’re still in business, too.

Yes.

Yep. And you? After, I guess, repeating this procedure, this process with all of the roles, how big did the business get? What happened next?

So the gym I scaled up. I had four trainers working for me. We were doing about six classes a day. We had 200 members, which is great because they’re paying you $200 a month. So it’s a pretty good little number, right? Simple. It’s 3000 sqft. It’s basically an empty building. It’s very unique. I did all bodyweight training. It was very interesting. So really good. I’m like, okay, I’m going to hit like the five year mark and I’m going to be out because I didn’t want to do it forever.

So I did that. So I scaled and I was able to sell that, right? Because I was going into, because I wanted, because what I found was, again, this is that entrepreneurial itch thing. I’m like, okay, I’m doing well. Like, it’s good for some people.

I’m like, I’m not. It’s not enough. Either I have to franchise it, right, and start to duplicate this and go down that road, or I got to do something else where I make larger sums of money. I was very spoiled in my first business. I go in, I work three days and I make 20, $30,000. Okay, I work a week, I make $50,000. Okay, now I’m making $200 a month per person, right? Yeah, there’s 200 of them and all that stuff. And then you have that. So it, like I said, that’s not, there’s nothing wrong with that. It’s a very good goal to have. But I’m like, hmm, I need to do somewhere I can get some larger lump sums.

So the only way to scale it is to keep getting more trainers. So again, you, you’re really ultimately limited by time. Again, people, human time.

But one thing you face, one thing you did quite clever is you’ve gone, it’s all bodyweight, Jim, so you’re not having to buy expensive equipment.

I had eight pull up bars, some suspension trainers and some sandbags and mats, like, and I am crushing it. I mean, I have workouts. I have years worth of workouts every day. I mean, just, it’s 35 minutes workouts. No showers. No, just a bath workout. Go home. It was a great model. It was phenomenal model.I loved it. It was good.

Okay, so we’ve scaled it up and you’re going, okay, I’m doing about forty k a month, but I need to scale it further. And what am I doing and how do I take it further and either I franchise it or open up more sites. And what were your thoughts around that?

The multiple sites first, even though you can systemise and do that to me, I’m like, I just wasn’t, I wasn’t loving it. Okay, so it’s like, okay, I can go do another one. But then, now, now it’s territory, right? Well, where’s the next place and then the next place? And then at this level, there’s only, there’s only a certain depth of pool you’re gonna pull from where people are gonna pay dollar 200 a month to be in your gym. Right. So that’s another consideration is your demographics and everything else. Am I going to have to go 45 miles away and open another one? Now there’s a management issue when it’s privately held right now, getting someone else in there. So it is all doable for those who want to. But I was at the point where I don’t want to do that. So it’s there and someone else can take this and run with it, but I’m going to move on. So that’s kind of where I was at.

Okay. So is that the point you decided to exit?

Yes.

And what process did you follow? How did you take it from there?

So the first thing was, well, do I get a business broker? Do I get evaluation? Let’s, let’s take this through. So I brought in some experts and they told me, okay, you can get this, you can get your three times EBITDA, get this and this, and the usual stuff that you hear. I’m like, okay, should I find someone who’s really into like the gym thing? Okay, so because there’s two ways you can go. Right, Joe, you can go get me a business owner.

Yeah.

Who understands this is straight up business they’re going. Or get a guy who loves to work out is a trainer, wants to start his own business, will take more risk because he’s unaware. I mean that in a loving way.

Yes.

You don’t know. I’ll been there. Right. And do that. So I’m like, well, I’ll entertain both. Let’s see what we can get. Right. So I end up going with a trainer, okay. Someone who wanted to take over the, you know, buy the business, who had resources to pay that, and I’m going that way. So we had the skills and everything else to take it on. And that was really the way it went.

But it’s still really that small. And I don’t mean this in a negative way, but it’s a lifestyle business where it required the involvement of the owner at an operational level.

Exactly, exactly. So looking at that, and that’s an important distinction.

Right. Because there, just as you mentioned, there’s all these different levels, right. That businesses move at and operate at. So it’s all the real thing is that’s what I set it to do right from the beginning. I’m going to make it this way. My minimal involvement, but still pretty involved.

Yeah.

Right. Like I’m still kind of I’m really steering the ship, you know, on a daily basis. So.And again, there’s nothing wrong with, if you understand that’s the exact direction. The problem is people don’t understand the direction, then they are completely deflated when the time comes selling, they’re not getting what they. Because everyone thinks they’re worth a lot more than they are.

Richard, how did you find that the business valuations came about? How did people value it? Did they see any intangible assets? Did they see it just as a cash flow business and just a simple multiple of cash flow or profits?

The method that I took was because I know the industry so well, was I like the. I wanted. I didn’t, it wasn’t just going to be numbers because someone, you have to be into it, right? Because you can do numbers, but really you’re working with people. It’s a service business.

Yeah. So someone had to like the product.

Exactly. Exactly. They’re okay if they get. And here was, I’ll tell you, one of my hang ups, I train very hard. I am a nut job, right? If you’re not, like, dying when you’re working out, that you’re not working out.

Okay. I mean, I don’t recommend everyone do that, but that’s how I, that’s who I am. And the people who wouldn’t, I was, like, disgusted in them. Okay? But you know what I, you know, they didn’t take into account, you know, their money’s green, too.

Their money spends exactly the same as the other people. And if they want to. And I realised I had to go with, like, a professional sports analogy. I said, you know, you see those stadiums filled with 50 and 100,000 people watching 20 people work out. They’re not working out at all, but they’re paying a whole lot of money to watch them work out.

So why can’t people come to the gym and just pay money to be around? People want to work out hard, so we’ll have. So I made these little elite groups inside, and you could be there, and you’re doing five pushups and doing 50. But who can cares, okay? Because they’re, you know, you’re there.

So there’s a different mindset there. But back to the person who has to be. You have to be wanting to help people. You want to see results, right? You want to help people get healthier and stronger and fitter and all that stuff.

So I try to really tailor, tailor the sale to that if they, because that’s how it’s going to succeed. And again, it’s not my job if the new owner succeeds or not. But I still feel this responsibility because I created this thing and I want.

Yeah, well, you, the business becomes more valuable the more you de risk their success.

And that’s what it’s about. Right?

Yeah. Okay. Yeah. So someone came in, started looking at it. You looked at different markets and going, okay, I’ve got two different types of customer here. You know, someone could be looking at it purely from a business perspective, but you went down the route of, well, I really need, it is still a lifestyle business with a few helpers. So I really need someone that, for this to be a success, someone really needs to be in the business and in the thick of it on a day to day basis. And they probably need to be a bit of a nutcase, I think, to use your words.

Yes. But then you started to go, well, hang on, they need to be in the business, but how they run it is up to them. I can give them all the IP, all the process, the methodologies that I’ve built and trained the people, and I can make it as turnkey as possible, but at the end of the day, I can set it up. They’ve got to continue running it the way it was to get the leverage out of the brand or the reputation in the marketplace.

Yeah. Because it’s very, at that level when you’re charging people that kind of money for a monthly membership. Because remember, the fitness model is built on 80-20, 80% of all members never use the place. Yeah. Wow, that’s the, that’s the fitness model. Okay.

Because you could never fit them in the parking lot if everybody came. Right. There’d be nowhere to park. No, he couldn’t. There’d be lines at machines. Right. So I think Bailey’s figured that out decades ago. But so think about that. So in this situation, it was relationship. It was, I built four man teams inside and they’re working out together and it was built in the community and all that kind and stuff.

So someone really had to embrace that and continue that. And you have to make those touches, you know, all the time. You have to teach your people to make those touches because again, they’re paying a high dollar and, yeah, it’s 35 minutes, but it’s five days a week and they’re there every day and they’re committed to this. So they are showing up every day. Yeah.

So it sounds like people are buying your methodology. You’ve got a methodology, a way for delivering fitness, shall we say. And people buying into that methodology and when they’re buying the methodology, they’ll pay a premium price. Price. If they’re just paying for a workout, then they’ll go, well, I’m not paying $200 a month. Right? Yeah, that’s the, I just want to work out. I’ll go down to the cheapest street corner gym with all the machines and not go to that one instead.

Exactly. Pay $10 a month, lose $10 a month instead of 200.

Okay, so you’ve got some methodology and IP there that the person bought a. How long ago was this, Richard?

I got out of that in 2015, 2016? Yeah.

Okay. And so nearly ten years ago, eight or nine years ago now. So when you, from the time it took you to decide to exit there to the time a deal was agreed and you were gone, how long did that take?

It was just under six months.

So six months because. And why were you able to, what do you think it was around the business that you’re able to do that so quickly?

I had a reputation.

Yeah.

It’s just, you know, so that was a big draw. So a good network I could tap into and an opportunity for someone to really take something and scale it or keep it and just work there and be the best right there or whatever. So I think there was a bit of fortune, if you will, you know, to make that happen.

I’m not saying it’s going to happen for everybody, but I had a nice model. I had a really attractive model. Anyone who had been in the business saw the beauty of what I had created. Like, again, even as a lifestyle, you’re like, I don’t have to do anything. I don’t have to train anybody. I can just, I can just pump people up, bring them in the door. I can focus on marketing. I can do that kind of stuff. So that, I think that was one of the attractive components that made it a little easier to sell.

Okay, so I’m just looking at the time and how long we’ve been, we’ve been going here. So we’ve, we’ve exited first business. We exited, well, it exited us. It came to a grinding halt. You’ve applied the learnings to the second business. You’ve built that up, and you basically gone, I need to systemize and structure this so the business doesn’t depend on the owners.

We want to remove all owner dependents out of this business so that I can work on the business and keep creating and building lifestyle and keep the business running on a turnkey basis. So in two or three sentences, business. Number three,

Roofing construction business. So it’s a roofing, siding, exterior business. That was next.

So, okay. And you built that up and exited it. What did you apply in business number three that you learned from business number one and two, and to add value to it and make it easier to exit.

So what I did with that was first, building the business and taking a really customer centric approach to the business because that’s really lacking in the construction industry. Like, in communication. I knew all the things that were wrong. So I’m like, I’ll fix all that, too. And how you do business, I already know how to systemise.

So there’s an interruptive approach. You’ve gone, what’s missing in this industry, in the marketplace, in this industry. What’s missing that people are looking for or continually complaining about? Let me address that. Right. Okay.

And here’s a nutshell. How I did, how that’ll sum it up. So I did a reverse, like a reverse guarantee. So instead of saying, you know, we’ll always have satisfied customers, we’ll have the same old nonsense people say they’re going to do. I started with, we will never, we will never, we will never not communicate with you on a daily blah, blah, blah, will never do this. So I give all the pain points and I said, we will never do this.

So I’m telling them right from the website, like, you’re never going to experience, like, that was, that was part of my thinking. Right.

I like that. That’s good marketing. Highlight it, what you’re not going to do. Right, right.

So, so from there, I’m like, okay, let’s start putting that. Let’s, let’s automate the sales process. Okay, so we talk about automation. Like, I want a presentation. I want to, I want to, you know, a tablet iPad presentation that can be duplicatable, that I can get my people up to speed. Can I, can I take someone who’s never sold a roof? The only thing they know about roofing, this is on top of the house. I want to take that person. This is my goal. And in seven days, they’ll give up a roof sale presentation. And the people think they’ve been doing that for years. That was my goal. Piece kick, and I did it. Okay, so, like, okay, I built this and I built a training, I built videos for it. I built transcripts. They’ve got everything. They, they can watch it all day long. If they want. They can memorise it. We role play it, we record them. I get them. Like, I mean, obviously they can always get better, but that seven day mark. They’re out selling roofs. They’re selling 15 and $20,000 roofs. Okay. And they didn’t even know what, anything about them before that, right? We use technology. We do, you know, satellite measuring and all this kind of stuff. Simplify everything.

So it was a big automation aspect in that because the technology was really changing then, too. You could have drones now that can find every hail market label that put it all right into the cloud, give you a report. It’s like you never have to go on a roof because it’s the fourth most dangerous job in the country here in the in the states. Roofing.

Wow.

So. Oh, man. You just take a little header off that. Look out. You know, have you ever fallen off a roof? It’s not. Remember, it’s not the fall that kills you. It’s that abrupt stop at the bottom.

Stop at the end.

Yeah. So. So I really tried to automate all that stuff so we could go in with technology and really impressed people. Even got to the point, Darryl, where we found out through one of the big roofing companies, they did this national survey that 48% of all people who had a roof done never wanted someone to come out to their house. Like, you think that’s odd, right?

Like, they want to do the deal. Obviously, you have to come take their roof off. They don’t want you to come and give them a pitch and get up on their. So I’m like, well, we can do that. So the company created a thing called one click, and you could do the presentation via Zoom.

You do right over there, and you can sign all the contracts, and you can give them all your satellite imagery. You’ve got all this stuff that’s done. You walk them right through it, sign it, come out, verify, and then here we go. So, again, just really took advantage of technology so we could scale. I wanted to bring people on who can sell.

It’s a high commission business. Right? Rough sales and stuff. Usually it’s 100% commission, which can be brutal. So I kind of revolute. I reverend, uh, innovated that process because 100% commission is a terrible way to live. Okay? Is brutal on people. They saw it reform.

So. But I had. So I flipped that. I did a lot of changing in that to make that work, too, again, to attract quality salespeople. So go back to the other principle where I said we made the lane job functions, the hows, the what’s, the what, the how, the training. I created all that because other companies, they go. Will go sell. Just go start knocking on doors like, you gotta be kidding me. So those people don’t last. The average salesperson would sell, I think, $300,000 a year in total retail sales. Right?

And they’re making like 5 to 10% off of that as a commission. They’re making $30,000 a year. That’s the national average.

TOUGH. Hot cake.

Yeah. Our guys are seven figure guys. We sell a million plus a year. That’s our goal. We don’t. 300,000. You’re fired. You don’t work here. You’re not following the system. Right.

So we’ve created a system in a process. So that’s very attractive. Right? So the whole point of this is, as I came in to do that again, I’m not, I never tore our shingle off a roof. I didn’t do any of the work. So I went complete business. I don’t care. I’m not, I’m not going to work. I don’t want to be on a roof. You know, I get it.

I know what it is, but I don’t need to. So I really put it to the numbers tracking, training, all the measuring, everything else, and started to scale that way, closing deals. Okay. And that was, for me, Darryl, that was kind of the fun part, building all that, putting all that together and then beginning the scale and then we back to what a scale looked like. Know, same principle, you know, do you have one office?

What kind of territories can you work per office? And we had, we had to decide what we’re going to do with that. You know? Is this a duplicatable system? Absolutely.

You know, we’re going to take it that way. So that was, that was kind of the route we went with. That was, okay, let’s get this ready to scale. Let’s prepare it so that I can scale comfortably. That was the goal.

Right? Because a lot of people can scale. They grow and they grow quickly. And then what happens? They’re, they’re really, they really don’t have the systems, processes in place to handle that kind of wait as they move forward in other territory and everything else.

So the common theme is leave nothing to chance, systemise everything, train people in it, create frameworks so they know what to do, they know what the expectations of them are. And the guide rails, you’ve shown them how to do everything. So if they follow the process, they’re going to do the job right. And then it’ll work for the business. And you’ve, you’ve done this over three businesses.

Every time you’ve got faster by the sounds of it. And you’ve got slicker and you’ve gone to more detail and you’ve, you’ve taken the systemisation and the automisation, the automation, rather upper level each time, if I’m, if I’m summarising correctly. So the, the roofing business, are you now out of that one?

Yes.

Okay. And how was that valued?

It was, it was really good. So here’s the, here’s how this works in that industry. Because the, initially, what people thought was, it’s always the next job. That industry is always the next job. They literally told, they put new roof on, say, we’ll see in 30 years, and said, don’t ever say that. Do you know what lifetime profitable value is? They have a roof and they have siding, they have windows and they have all kinds of other needs. They’re gonna live in this house for 20 or 30 years. They’re worth six figures to me, minimum.

Okay. Over their lifespan. So we, so I created, you know, nurture campaigns. Stay in front of them. First of mine, referral programs, all kinds of great stuff.

So it’s always about, if they buy for you once, they’ll buy from you again, if it’s a good experience. Right. So what I did, my thought process was, okay, let me develop lifetime profitable value LPV. And let me put that into the numbers. Let me quantify that. Here’s my ideal client profile. Right. Here it is. Here’s what they own. Two garage home, two homes, three kids, all the stuff, right? This kind of money. And they’re gonna, they love their home. They’re gonna do more things. So I started to quantify those numbers. Now when you have an email list of five years servicing 100, 150 accounts a year, maybe more than that, 200, 300, now you start to have that plus the ability to get new accounts.

Now you can evaluate that. So the lifetime profitable value as part of the valuation, because you have this, this customer list. Right.

Well, future revenue is more predictable, so you’re reducing the risk of ongoing revenue. So that all helps to increase the valuation.

Sweet. Yeah, exactly.  So, no, so that, that, that’s the process. So again, the part that I liked about that was really thinking of all that stuff and putting it together and understanding what it looks like. But then how do you put it together right and put it into a package, you know, that can be duplicatable. You know, that anyone could come in and do that. Because I wanted a person like me who maybe has never been on a roof. And I was looking for the business owner. Now yeah, right. I wanted someone to come in now and run it.

You’ve got foreman, you got installers, you got a. You got all that’s taken care of, using subcontractors, things like that. So I want someone to come in and run the business, you know, and not be the mister. I’m carrying bundles up the ladder. Show him a tough guy, you know what I mean? I want the guy who’s in the office talking to high level stuff, growing a business.

And that allows you to sit back and slot into that chairman style role and run the business via remote control. Exactly. Yeah, exactly.

So, Richard, you’ve done it three times. I’m guessing you’re just sitting back, resting on your laurels now, just living a two life.

Yes. Yes. Yes, I am. No, I’m not. I’m not that kind of person. You know, I’m all or nothing. I’m a nutcase. No, I am now coaching businesses. So my big movement, Darryl, is to help 10,000 business owners create freedom, profit and impact in their business.

The freedom, that systemisation, all that hands off so that freedom, they still have a business, but also to make profit. Right? We want to be profitable, like real net profit, real money. You get to keep a business. You can build and sell when you want or if you have to.

It’s something that’s actually of high value. And, of course, the impact is how you’re affecting your people, what you’re doing with your customers, how that whole journey looks. It’s far more rewarding for me because I want to get people out of the owner prison. I want to get them out of that. Being shackled to that job every day, having to turn that key open door, tell everyone what to do.

And the phone calls all the time at home, being pulled away from their families. And that’s my real mission now. That’s really what I’m focused on, and I’m loving it.

So, helping people do what you learned over three businesses.

Exactly. Take my 30 years and let’s do it in a couple for you.

And where are these people located that are ideally going to benefit from be one of these 10,000?

So my ideal customer profile for that is someone who owns their business. They have five to 50 employees. Five to 50 employees are doing about a million gross a year on there. And again, there’s no real limit on the ideal. A big niche of mine is the construction and trades industry. Service and trades businesses. That’s a focus probably between about one and $10 million gross annual. I deal to about 30 and we’ll scale them to about that point. That’s kind of our niche. That’s where we’re at, so.

Okay, beautiful. So, Richard, how do people, before we jump into that, we’ve talked about the systemising and the structures and the training and the delegation and the monitoring of business processes that you put in place if you were to pull it all together? What, what’s the key theme that you want people to walk away hearing from after listening to you today?

You got to focus on the end. Focusing on the end. Build that exit strategy. So if you didn’t do it before you started your business, which was the best time to build an exit strategy, do it right now. Yeah, build it because that it become the ultimate business filter for you. You won’t be distracted because you’re focusing, getting to the end. And I always tell them, too, if you get to the end, you’re having a really good time, you’re making great money and you don’t want to get out. You do get to move the goalpost.

Yeah.

And you can do it for five more years. So it’s a beautiful thing. So really focus on that to give you your freedom to really do what you want, when you want.

Beautiful. So we’ll put all your contact details in the show notes. But I think you also mentioned you got a book. Um, how do people access the book and what’s it called?

It’s called Escape the Owner Prison by Walsh. You can grab it on Amazon. Just look for it there. Um, and, oh, I, you know, I’d love to offer, Darrell, is if you want, if you go to sharpen spiritcoaching.com, which is my website, shoot me an email and mention you’re on Daryl’s program. You’re on Exit Insights, I will send you the audio version of this book for free. And yes, you get to listen to me speak for, like, two more hours.

I love it. Richard, that is brilliant. I’m so thrilled with what you’re doing and how you’re helping other business owners. And I really appreciate you sharing your exit insights with us today.

Well, I love being here. Thanks so much, Joe. I appreciate the opportunity.

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