EP 18 | Smart Scaling Techniques for Growth and Exit Preparation

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[upbeat music] In the world of business, not all deals are what they seem. Fortunes rise, empires crumble, all with the stroke of a pen. Mergers, acquisitions, hostile takeovers.
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Welcome to Mergers She Wrote, where we examine strategies and stories behind the biggest deals in business. Because in M&A, the real risks are the ones you don't take.
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Welcome back to another episode of Mergers She Wrote. I'm Paloma Goggins, your host and the owner of Nocturnal Legal.
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Today's guest is an expert in operations, and she's going to tell you how you can systematize your business. Welcome, Olenka Cullinan. Thank you. Thank you for being on.
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So Olenka is an accomplished COO with 15-plus years of experience. She's been named Top 100 Women to Watch and Phoenix 40 Under 40. I love her bio.
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And today we are gonna talk all about her consultant business, and you're gonna tell us more about how you help people get in there, work as a chief operationals officer, and really just get their business running better.
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So thank you so much for being on. I'm gonna hop right into the questions. Love it.
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So let's start with your mission, and correct me if my range is wrong here, but you work with women running businesses between 500,000 and 10 million in revenue. Is that right? That is absolutely true. Okay, perfect.
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What are the most common scaling challenges that you see at that stage? Well, I, I wanna share a little bit more on that, and thanks for having me. Yes. I love it, and I love the name of the podcast. Thank you.
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[laughs] So appropriate. I love it. Uh, yeah, so one of the things with my mission too is, the reason I'm so passionate about that is there are only 2% of women that break into a million-dollar mark.
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And for me, scaling, right, comes with one thing that I've seen so many women go through, which a lot of them burn out. A lot more women businesses suffer from burnout than failure.
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And because of it, I think one of the things that I focus on with scaling women apr- in my way is balance, right?
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I truly say that we take them from burnout to balance, and the best way and the fastest way to get there is operations. Because women are, we love our aesthetics, we love everything pretty.
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[laughs] We love, you know, naming things, creating gorgeous spaces, creating our aesthetics and our branding, but sometimes we forget that the most important part of your business is that unsexy backend, no puns intended- [laughs]...
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that nobody looks, wants to look at. So that, that's what I focus on. I truly want women to take that piece and create freedom for themselves as they're scaling. I love that.
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And so when women come to you, what, I think, what are, like, the key issues that you're seeing? Obviously, lack of systems probably is the key one. Yeah.
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But are there other components of that lack of systems and operations that you're seeing most, more frequently? Definitely lack of time, right? We say yes to everything, and then that pretty much eats away our own time.
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Definitely lack, uh, not lack maybe, but, like, the way women are hiring. Often we hire to relieve pressure rather than hiring for operational excellence and allowing people to become champions.
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And then I would say the nurture in women often kills everything because they're also excellent micromanagers.
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[laughs] And even though we're, they're running a million-dollar companies, they often operate, uh, and scale as a solopreneur at 300K.
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Well, and I think that is such an important point to bring up, is that micromanaging component, because I think it's so easy, and I, I even myself am guilty of this, where I will rework something that's an internal process of mine-
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Mm-hmm... for an effort to be perfection. And we all know perfection is not something that's ever attainable, right? And at some point you just got to launch. You just gotta launch that system.
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You gotta launch that process. For people who are struggling with that micromanagement, that perfectionism, you know, obviously working with you helps them through that process.
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But, you know, are there ways that someone, you know, can sort of trick their brain to be like, "Oh, shoot, I'm doing it again.
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I'm wasting my time sort of doiling, uh, toiling over this, like, one specific issue, and I should just move forward"? Yeah, definitely. And I mean, it's normal human quality, right?
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And especially for women because we're nurturing and loving kind of traditionally, and a lot of us do care, right? Like, we care so much, and we want... Like, how many times h- you've heard women say, "This is my baby"?
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Okay, this is not your baby, first of all. [laughs] Let's just give each other permission to know that part.
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But also, I would say it's giving yourself grace, but also knowing that you have to delegate and kind of making the choice, right?
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Making the choice, first of all, I tell w- women all the time, this is my official permission for everybody listening. Yes, they will never be as good as you.
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Nobody on your team or whoever you hire will never be as good as you. So my invitation is always, can they perform at 80% of your 100? Because your 100 in reality is 150.
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[laughs] And so they will never be able to attain that level most of the time.
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So the goal is, you know, I say, yes, it's B in a common, you know, grade knowledge, but 80% in business, that means they're actually excelling.
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And so whenever you hire people or working on task or getting ready to launch, are we at about 80% capacity, at abo- uh, 80% rate, at 80% value?
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And if you are there, let it go and kind of accept that and make the choice that anything at 80% goes.
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I like that because inherently hiring is such a difficult- Next step for people, delegation is inherently the hardest step. You don't even have to hire somebody to, to potentially delegate, right? Right.
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Um, and so this idea that you've got to be okay with people not being a copycat of you, because I- Mm...
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I feel like there's so much expectation there in many businesses that when you hire, that person is going to be able to fill your shoes completely. And you're so right, they're never going to fill the shoes. [laughs] No.
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And I always say hire B players, because you can turn them into A players. Don't hire C players, because a lot of times, again, it was the previous point I brought up, people hire for relieving pressure- Mm...
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because we're in such deadlock, we need somebody, let's just throw some money out and bring someone in. And we forget that it's almost impossible to take a C player and build them into a B player.
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It takes a lot longer, versus taking a solid B player and, you know, bringing them up to A level.
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When we talk A, B, and C player- [laughs] For someone who is new to hiring or is, has maybe just struggled with hiring the right people, are there ways for those people to know whether they're a B or a C? Absolutely.
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It also depends, obviously, right, like I always say, hire s- for skill set, but also watch the culture. If it's your first hire, it may not be a big deal, because they're basically catering to you.
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But if you're a team, you know, four, six, 10, 12, that's where culture does play an important part. So I usually say A player's somebody who has 80% skill set of what you're looking for.
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You know, 60% we're now more like at a, you know, solid B that we have to ramp up. And then anything below 50, you don't want those people, just because again, it's time, right?
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Training takes time, as you and I both know. It's probably the most expensive- [laughs]... operational resource, is humans. And also, you know, to your point, like do it slow. You don't have to bring...
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Like, don't wait till you are your own bottleneck to bring someone in, but also don't, you know, rush so much that you now are having, you know, a team of four and you've never really worked with one person.
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I, I think that's really sound advice, because I can't tell you how many times I've s- I've spoken with clients and they, they like to throw money at the problem, and then they get into, okay, well now they've got, like you said, hire three people all at once.
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Maybe they're not first-time hires, right? But just adding a bulk of people to the team, and then to your point, training is a full-time position for most part, right?
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So you either have to have the bandwidth to train three people all at once, or have people in place to train those three people for you, which most people I feel like aren't in a good position to have that either.
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[laughs] Yeah. Definitely not. Well, and again, right, you are basically invest in time upfront.
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People forget that hiring is where you invest time upfront, and then it will com- obviously it will be an amazing process later when you do train them up. But yeah, I would say yes, start slow always.
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You know, as they say, hire slow, fire fast. And I would say train slow too, because it's, it's solid, and once you get them there, it's gonna be really, really helpful in the long run.
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But at the first few, you know, weeks, months, however complicated the training is, you as a founder are gonna take a big bulk of it, for sure. 100%. No, for sure. So you focus on creating systems for scalability.
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What s- what's one system or process that once in place tends to immediately change how an owner operates? I am gonna say one that's probably super unusual and most people don't take too seriously. It's time. Okay.
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I, I say it because, you know, it's basically, I call it CEO time architecture.
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And I am really adamant with my clients about that, because where you are spending your time as a founder is gonna become either the bottleneck in your business or the biggest growth catalyst to your business.
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Because there are areas, and you know, I call it vital few, for all of your team, for yourself.
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If you don't know what your vital few are and where you're spending your time, if you're spending 80% of your time in the wrong places, that's stalling the growth for your business.
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And people unfortunately take time very lackadaisical. You know, we have founders who run multimillion dollar company who say yes to wrong things all the time. They spend their days what I call firefighting.
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That means, you know, they're always in reactive, never in proactive. They are putting out fires. They are making things happen. They are checking in, you know, dialing in- [laughs]... touching base.
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And then before we do all those things, there is no time to actually be in your CEO position, in your position that allows the company to grow.
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You are the only person as a founder, no matter how big or small your company is, who can make big moves, right? Your VAs can't do it. Your second in command can't do it most of the time.
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And so for me, creating that time a- architecture either frees up your schedule to make massive growth, or it's gonna be the biggest bottleneck in your company. I like that, and I also feel like
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as a, as someone who, like you, runs a business and is exceptionally busy, if someone is wanting to, to implement more time into their schedule, what are things that you recommend that someone can do?
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Because I think a lot of times most of us look at our calendar, our schedule, and even if we block off time, it's so easy to get off track or, like you said, start fire, you know, fighting fires or- Getting, you know, waist deep in your inbox and all of a sudden you look up and half your afternoon is gone.
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Yeah. So what, I mean, what are some easy, like, low-hanging fruit kind of tactics for making time or creating that CEO day that you're talking about? Yeah, for sure.
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Like, one thing I highly recommend testing for everybody, I call it the green marker game. It's super easy. You basically every Friday look at your calendar and see...
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Like, highlight in green all the money-making activities you are doing- Mm-hmm... for your position, right? It doesn't always mean that you're client-facing if you have a team, a sales team.
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But what are you doing as a CEO, as a, you know, leader, and where you spending your time?
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Because a lot of times I see, even with my clients, when they highlight everything in green and they're like, "I spend 10% of my time in green. What am I doing?" [laughs] Right?
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Like, a lot of times it's the biggest wake-up call because we don't realize even where our time goes. So that's one thing. Another thing, I would definitely create some blocks in your schedule.
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And what I'm saying, like, if you're not working on block schedule, I'm a big proponent of that because it makes you, it confronts you of your time.
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If you're writing things in your calendar when you know you don't have time to write it, that means you- [laughs]... a- out of time, and you have to be candid and honest about it.
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And a lot of us say yes to things when we don't even have time to do them, and then we're burned out and resentful, right?
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So create blocks where it allows you to kinda, like, take analysis of where you're spending time on, depending what your north style is at that moment, right? Are you growing?
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Then you should be spending most of your time on growth. Are you kind of in a solid, you know, position now where you are dominating the market? Then how can we create better processes?
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If we're in the hiring stage, then what are we... you know, where can we hire, who, w- who, why, you know, we hiring? So I would say create blocks that allow you to spend time on the CEO time, and don't give it up.
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Because a lot of times the leaders are their worst business owners. They're, like, their own worst bosses- [laughs]... because they take their own time off the calendar so easily.
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So don't take your time off the calendar. I love that. I think it's such an e- a slippery slope for so many founders, right? I put... I mean, I'm even guilty of that.
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I'll put, I'll, like, reserve time on my calendar to take, like, an afternoon walk around just to get up from my desk and it's the first thing that gets written over, or I'm...
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you know, look up the walk time, that was, like, half hour is just gone. I've done emails through the whole process. [laughs] Yes. Super, super candid moment.
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I was literally, like, yelling at myself metaphorically this morning because I allowed my calendar to get out of control in the last two days. [laughs] And I'm like, "This is crazy. I teach this." Like, what?
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[laughs] And I'm very quick to notice, so I'll be the first one to, like, self-confront, as I call it. [laughs] But yeah, it's definitely a slippery slope. Had to put yourself on a PIP. [laughs] That's right.
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That's right. You're like, "Okay, Olenka, we need to do better." [laughs] Let's, let's have a talk. [laughs] Oh, that's too funny.
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Um, when a founder says that they want to scale, what are the first signs to you that maybe they might actually not be ready to scale yet? Yeah.
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I definitely say look at your profit margins and, you know, to scale you need usually funding of sorts, right? Like, what are we scaling and in which way?
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And so do you have financial support, and financials in general, right?
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Like I always say, when we scale, I want to have clean financials and I want to have a clear understanding where we're going, because it's so easy to say yes and then we're, like, scrambling and struggling.
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Because a lot of times, as you know, and I'm sure you've seen it with what you do, uh, bad scale can destroy companies or definitely stall them quite a bit, so you have to be cautious with that.
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And the other piece also is how willing are you to delegate?
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Because I don't care, like, I have so many founders and I've met so many founders who say, "I want to scale," and then they are the ones who are basically doing one step forward, two step back- Mm...
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because they will release the reign a little bit and then micromanage everyone to death. So we definitely- [laughs]...
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want to be ready and understanding that what takes you to get to that first million is not gonna be the same to get you to the 10 million, because here you still can, like, struggle, scramble by, and cl- crawl your way as a solopreneur.
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For most part, maybe having a team of VAs to that first million, but by the time you're growing million to five to 10, you definitely will have to have a team.
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No, that makes sense, and I, I was gonna say, kind of tangential to that point, I think a lot of people will hear the advice of, like, delegate or hire.
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But to your point, you have to look at the financials first before you pull the trigger on that, because even if you are the bottleneck right now but your financials don't allow you the freedom to operate safely with employees, you might have just taken on a bunch of employees that you're going to struggle to afford.
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And to your point, one step forward, two steps back, all of a sudden you're in crisis mode trying to bring in more revenue to cover the nut, essentially, and that's not a position you wanna be in either. Never, yeah.
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And that creates, I feel like, again, so much stress for some companies that it basically then they start almost, like, scaling back by default, which is also- Yeah... not a good place. Yeah. Agreed.
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I, and I was gonna say, some of the conversations that I've had with clients where we sit down and we're talking about a, a future exit, right? Not any time soon, but just it's on the horizon.
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They're, they're growing, they're successful, they know they have value in their business.
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And, you know, we'll talk about, okay, well, if you wanna continue to grow for the next five years for an even bigger exit, in order to scale you have to, to your point, make the time.
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You have to have not just the CEO time, but you have to have either the team in place to be able to implement the systems and follow through with them.
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Because no different than working with them on legal documents, like, I come in and I'm like, "You guys haven't had an operating agreement drafted since the 1990s, and you don't even have the same people owning the business anymore."
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And, you know, we could g- run down this laundry list of things that are just good hygiene for the business.
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But when it comes time, they still have to work with me in order for me to draft the document, and if they don't carve out the time to do that, I'm left, you know, to essentially put in a bunch of blanks in a document and say, "Hey, when you wanna make the time, let's chat and we'll complete this document," and then sometimes it never gets completed.
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Yeah. So to your point, if they don't have the ability to devote... time and resources to the actual effort of scaling and systemizing their business- Yeah... what's it for? Yeah.
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[laughs] I'm a big fan, yes, strategic and intentional, right? [laughs] Are the two words we definitely wanna plug in there. Yes. And I, I'm sure you see that- [laughs]... a lot. Um, what is...
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Let's, let's talk about exit readiness. Mm-hmm. So how early should a business start thinking about an exit strategy?
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And I, and I wanna take this time, too, to talk a little bit about your personal experience with exiting. Yeah, for sure.
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I say, you know, I tell businesses you should start building an exit or think about it at least, uh, when you're profitable, right? So again, it's that conversation of time and money combined is the best time.
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And I don't think there is necessary too early, as long as you're profitable and you are there, because buyers want predictability, as you know.
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Buyers want a business that's not heavy on CEO founder, because they want to know that if that person were to exit, they can still continue. They want clean financials. They want clean SOPs.
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They want some kind of operational system that's very easy to follow. So the more predictability you create in your business, which if you take the exit out of the picture, is really just a sign of good business.
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[laughs] And if you run your business with intention, with care, with that, you know, system and operational pieces that need to be in place, I per se don't have early, too early.
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I've always knew, so that's speaking to my own exit.
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I've always known that, you know, the Rising Tycoons company that I was running and I ended up selling IP to Discovery Ed, I didn't know how it was gonna be, but I always ran it with an idea that we will get to the time where it's not a legacy company, right?
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It was a great company. It was something I love doing. I mean, we put over, what, almost 10,000 kids through the program in four years, 1,500 educators, launched it in three countries. It was like startup on steroids.
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[laughs] But from day one, I knew that I wanted to run it in a system, in a place, in the way that it was presented, where we could take a piece or all of the company and create that freedom, whether it's exit, whether it's making it a nonprofit, whether it's bringing someone else to run it.
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So I always looked at options early on, as soon as we started making profit. And by the way, I wanna make a very distinct difference: profit, not revenue.
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[laughs] Because there are plenty of companies out there that can show you significant revenue with very little profit. So we definitely wanna focus on profits in that case. Excellent point.
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[laughs] I feel like, uh, for anyone who doom scrolls out there and sees the people who publish their revenue, it's such a misguided, uh [laughs]- [laughs]...
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revenue metric because at the end of the day, you're right, it's, it's not always indicative of how successful the business is. But it looks on paper like they're crushing it. Mm-hmm. So- Yeah...
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some misconceptions out there. And also, I think it, it gives the false idea that it's so easy to just go out there and m- you know, build a million-dollar business, right? In three days. [laughs] Yeah.
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And then you can have all the Instagram reel moments and yachts and cars- [laughs]... and all the things you can imagine.
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But yeah, and especially for you, I'm sure when you are doing, whether it's merger, whether it's, you know, exit, you can see that profit is what drives it, right?
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The EBITDA, the, all the things that actually show how successful a business really is. Yes. Well, and I was gonna say too, a, a key factor,
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you talked about having, you know, a very CEO-centric business being problematic, you know, key, key man, key woman syndrome, right? Where you pull the founder out, and all of a sudden, the business ceases to be.
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That's a huge factor in a lot of small businesses, especially in the Valley here. Um, but also, I, I see a lot people not realizing that, you know, the financials, like you were saying, the financials are so critical.
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But a lot of times people will, will look at the variation or the, the density of clients, and there are so many businesses that I've seen personally that either struggle to find a buyer because buyers are very nervous to buy a business where there's two major players that are providing all the revenue, and if you lose those two, the bulk of the revenue is gone, right?
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Um, but also just this idea that, you know, maybe there is no business if that one big client is gone.
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You see that a ton with, uh, government contracting or local, local government contracting, especially in the Valley here.
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You know, you might have street sweeper company, and they've got the city of, you know, Mesa or Chandler or whatever, and that is their main client- Mm... and they're crushing it.
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But, you know, that, if that city pulls out and gets a- another bid- Absolutely... what happens then? [laughs] Right.
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And I literally had this conversation a couple days ago with another client who's in accounting, and the conversation was exactly that. I said, "I don't need you go find more clients to prove a point.
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I want you to find more clients so if you ever were to s- sell," which there is some conversation and thought in that direction, "you actually can prove that it's not luck, right?" Mm. You didn't just get lucky.
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You actually show a business model that's running with multiple various entities, so it's such a good point. So let's go back to your exit a little bit before I go- Yeah... to my next question. Sure.
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Um, as someone who has built, scaled, and exited a business, you know, for anyone who is bu-... somewhere along that process, right? Um, because, you know, people don't realize you've gotta start somewhere.
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You're, you could be growing and still have that exit opportunity in the future, and then you could also be kind of at the tail end where you, you know you have value and you're thinking about exiting imminently.
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What are some things that you learned from that process that would be helpful for someone listening to learn about and potentially apply to their business as well? Yeah.
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For su- such a good question, and honestly, all the things you probably [laughs] don't want to learn are so key.
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Like, obviously knowing your financials, and truly I don't need you to be an accountant and no one needs you to know all the, you know, specialty and all the products and everything, but you absolutely need to know main numbers in your business.
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Are you profitable? What takes you to get profitable? How much you need to scale? What are you trying to scale on, right? Like, what's your goal?
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And I always say to me, that piece with financials, I mean, you're basically buying your freedom in whichever way, like you said, whether it's exit, whether it's merger, whether it's just you bringing to run...
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someone else to run it, it... You have to create that freedom. So know your financials. Definitely have very, very standard operating procedures. Very, very standard.
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[laughs] The easier you can make them and w- more palatable they can be for other people to come in and run, the easier and more attractive it's gonna be for any buyers. This is what actually...
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And it was interesting, right?
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Because when my exit happened, it was a complete accident, but because I think internally, and I grew up with a mother who was a CEO, who basically thrive on operations, who taught me from day one that I don't care how pretty it is and aesthetic it is and brand, and we love all those pieces, but if you don't know your operations, if you don't understand the core, you're never gonna be able to scale.
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And I think she drilled that into me so much- [laughs]... that everything we built was built on SOPs. Everything was built on a very clear, like, standard operational procedures. I had key players in place.
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I've always hired people.
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My al- Like, I would say one strength that I do have even now, I've always brought people who could run it without me, meaning it doesn't mean that I'm not still a key player, it doesn't mean I'm not a key woman and I don't bring my ideas, but they, in terms of operations specifically, like, it just happened in my personal life, I, you know, I'm gonna share something personal.
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My mom passed away recently. I'm sorry to hear that. Thank you. And but because of it, I was able to completely walk away for two weeks, not worry about it. All my clients were taken care of. Everything was running.
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They were doing in some places probably a better job than me, candidly.
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But it's again, and I, I'm sharing this personal f- you know, story here because I think so many people underestimate the value of how much freedom you can create in your business if your operations are in place, your SOPs are written properly, and anyone can step in to run them, and then also you know your financials.
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I, I think that is incredibly powerful because nobody realizes quite how much freedom they want or potentially deserve in their business until something happens in your personal life where you do need that time.
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And I think, you know, unfortunately, a lot of times, those events are the most painful events in your life, but they also are a reality check about, you know, is your business... 'Cause I, I...
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It's wonderful to hear that you were able to do that, and you, I mean, obviously, you know, a, a woman of your word, right? [laughs] This is stuff that you teach, and you're like, you know, executing it on- Yeah...
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your own personal level, too. Yeah. But I think so many business owners are on the opposite end of that spectrum where
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something happens or they have to take time away or they get injured or something and, and it, and their business ceases to exist without them. Um, and, and I...
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It's a reality check for a lot of those business owners to then realize, "Okay, shoot. I need to go back to the drawing board because this, this isn't sustainable and I can't take any type of pause away." Right.
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Regardless of vacation, right? Right. The, the important stuff. Um- It's unexpected important stuff, right? Yes. That's, as I say it, we don't predict that.
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But honestly, I'm not gonna lie, I was very proud [laughs] of myself. I'm like, "Well, I'm making some-" Yes, you should be. "I'm definitely doing her proud," you know? That was, yeah, definitely- Yeah... a reminder.
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[laughs] Yeah. No, for sure. If it, like, just the best way to honor her memory- Yeah... is like, "Mom, I'm- I'm taking time away- Yeah. [laughs]... and not having to worry about it." Exactly. Absolutely.
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What, what's a real-world story, no names needed obviously- Oh, absolutely. [laughs]... of a business owner who went from chaos and burnout to running a scalable, sellable business, and what shifted for her?
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Yeah, it's actually a reason I launched my business, believe it or not. This company that I start first, uh, was built because of this. So the story of my best friend.
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She allows me to share it pretty much publicly, but, uh- That's a good best friend. [laughs] She is a good best friend.
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Uh, but yeah, the day she brought her company to a million dollars in revenue, I showed up at her office, and she was at her desk bawling her eyes out and said, "I hate everything."
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And I came with champagne and flowers- [laughs]... [laughs] thinking we're gonna celebrate that. And I watched her build it from ground up, you know?
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Uh, and so that's was the reason when I said, "Okay, this is something." There's... And I've seen a few of those episodes before, right? But this was definitely resonating.
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We were fr- We've been friends for 20 years, so it hit home.
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And I thought, "Okay, there has to be, there's some kind of disconnect in all this solopreneur founders who are running so hard for that revenue goal that they forget that there is freedom goal in between that.
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There is time goal that's underlying here." And so because of her, and actually she has been my client now for about seven years, uh, you know, people who are closest to you are gonna take the longest.
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That is a true story. Uh, but because of that, you know, she was able to streamline her operations completely. She actually... We... It's, it's pretty interesting.
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She's an attorney, and so we were able to bring her practice from seven attorneys to two and not lose the revenue because we've built the support staff around them- That's incredible... uh, quite a bit.
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And so yeah, and watching her grow in her revenue, but now, like, she actually takes time off. She's planning to go to Portugal next summer for two months.
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You know, just watching her live the lifestyle now that she wanted to create is what makes me exceptionally, obviously, proud of her, but also really excited for me because I'm watching these things unfold.
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Like, re- you know, the pieces that we're putting together in the puzzle, like, actually unfold in real life, and that's honestly why I love running what, you know, running my business and doing what I do is because when the light bulb goes on in this business owners, it's, it's pretty extraordinary to watch them.
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Absolutely. Yeah. Okay. So- I think, uh, as a, as a listener, my one question would've been, okay, you took a larger group of people- Yes... and you reduced it to a smaller group of people.
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And I think for most individuals, setting aside that it's a, it's a law practice, right? I mean, most people are in, there's a, there's service industry- Yeah... and then there's product industry, right?
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But, like, if you're in service industry, the thought of taking your team and reducing it, it sounds unimaginable. Yes.
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And h- you know, what was, like, the key factor in being able to reduce, you know, the human part kind of equation to it- Right... that made that workable?
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Uh, it's really evaluating your team in terms of the level of, um, you know, service they deliver, meaning if they're high level, more expensive level of service, we want to have obviously fewer of those people, because they're really expensive for the business.
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And then, but also then seeing, how do we create enough support for them? Are there tasks and abilities and processes that we can outsource to someone else? And it doesn't mean that she doesn't have high-level staff.
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It's just attorneys her highest level, right? Which means we brought a lot more skilled paralegals. So some of the cost of her staff increased at different levels. Hmm. We just, we decreased the highest level.
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We increased some of the middle level. And I can also tell you it would be the same. I do this audit with all of my clients. I look at, one, the cost of your team and what are they doing and where they are underutilized.
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I was with a business owner this morning who told me his second [laughs] and third in command had about 25% capacity, which was crazy to me, which means they're underutilized by 30%, but yet we keep hiring- Hmm...
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lower level management and keep throwing money on a problem when we have options sitting right here in front of us, right?
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So I'm very cautious with that, so I always audit the team cost in terms of, like, cost to value ratio, and then I also would s- invite you, and that's for all business owners out there, audit your customer to value ratio.
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Because a lot of you take clients that you know for a fact you should've let go a long time ago- [laughs]...
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but you have that fear of letting go with everybody, and therefore, they're draining the life out of you, but they're not bringing that much value to the company.
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If a business owner was going to take a hard look at their client base or patient base, whatever it is for that business, and
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try and scale back the individuals who are sucking the life out of the business or [laughs] just aren't the right people, what, what are some tools that someone can just utilize just to get going on this process? Yeah.
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Because I feel like, like you said, a lot of business owners are fearful of letting go, but they're also fearful of letting revenue walk out the door, right? Mm-hmm.
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And so a lot of times people say yes to projects or to customers that maybe aren't the right fit, but it makes more dollars come in through the door.
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And so, like, what are some questions maybe that they can just ask themselves in this process? Yeah. Couple things.
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One, again, right, like when we're looking at the low revenue level clients, and potentially sometimes it's in product businesses too, right?
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Not all your products are bringing the revenue that you need, and you keep pouring into them into the inventory. So you have to do that same type of audit there too.
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But with service-based business especially, I would say look at your l- basically evaluate all your clients, look at the value ratio to the cost ratio, look at the time that you are giving them.
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And maybe if you're not even ready to let go of some of the lower level clients, at least start seeing, can we delegate them? Can I give them to my junior team member?
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Because the goal is really to free up your time, right? Or the upper level team, manager team that you have, you know. So start looking first at, like, if we were to let go, how much revenue would we lose?
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We, we don't have to cut everything, right? We can do it very, very slowly.
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[laughs] There is also ways where I found it with my clients where we would start offloading low-level revenue clients to someone else in return of exchange of some kind of kickback, of some kind of, you know, r- uh, royalty, whatever you wanna call it.
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So there are ways. I would say do it slowly, evaluate the numbers first.
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Figure out if there is a way, offload it, create some kind of royalty deal or percentage deal, and then can we do it, give it to the, uh, you know, lower level cl- uh, lower level team members.
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But also start seeing, could I bring one large client to substitute five small clients, which is usually the case. And then how can I find that one and start, you know- Hmm...
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kind of creating at the top so then we can slowly let go of the bottom. I like that. No, and I think this kind of, this next question kinda ties into this, this process of culling, right?
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Of going in and reevaluating your staff, your customers, maybe your product line. Um, in your experience, what's the biggest mindset block that prevents founders from building a business that can run without them?
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Uh, fear, not faith. You know, a lot of them run on fear of that, exactly to your point, if I let go of this, I will never get another higher level client. I will not get a bigger revenue stream. So that's one.
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It's really working on, what do I need to do, and how do I need to show up, and what identity I have to take on to actually go and find more bigger clients, clients that are gonna be life-changing for me, uh, and for the company obviously.
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So that's one thing. But also, the other big mindset block I would say is, "I do everything best," the I got it mentality. Mm-hmm. Especially with women, I'm like, "You don't got nothing, okay?"
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[laughs] "Let's start there." Uh, and nobody's trying to pry anything out of your hands. We're just trying to figure out, like, what, where, what's the biggest time suck right now, essentially, right?
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Where's the bottleneck? Is it at the client level? Is that at operational level? Is that at time level? So let's release that first. And as we start doing that, usually it's a trickle-down effect.
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But again, what I am inviting everyone to do, when you go into this, like, fear state, remind yourself, you built this. You have the most power. You have the ultimate control. You could literally stop everything.
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You can start offloading clients, and they say, "Ha ha, just kidding. I want everybody back," right? So you have the power technically to change things on a dime at any point.
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So you don't need to be so afraid that if you say yes or no to one thing, it somehow is gonna, the whole business [laughs] is gonna go- [laughs]... you know, crash and burn. It's not the case.
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So slow and steady, I would say. Well, and I like what you had to say, which is, like, you built this business-... typically from the ground up.
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[laughs] So if you have any concerns about your ability to make a change that maybe you didn't end up liking, and then changing it back the other direction, I don't see why you wouldn't have the faith that you could do that.
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[laughs] Okay. Uh, have faith in yourself since you've done this the, uh- Okay... before. Yes. You've done it before. Yeah. Um, but I also like this idea of, you know, leading from fear.
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I was reading this book, um, from Brené Brown- Mm-hmm... about how, you know, people struggle to ask for help, but a specific, like women specifically struggle asking for help.
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And this idea that, you know, I, I feel like we're all a little bit guilty of this at some point or another, where y- you have someone in your business and you're like, "It'll be faster if I just do it."
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And the reality is, if you say that enough, you're not utilizing the people who you've onboarded to help alleviate the pressures of you doing everything in your business.
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And so, like you said, taking the time to train someone to do that task, which you currently only know how to do quickly and accurately, will pay off dividends in the end.
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But you have to take that time and invest it in order for it to work. And at the end of the day, you have to know when you need to ask for help, which for most people is probably now. [laughs] Yes.
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You, you should ask for help now. [laughs] Yeah. And I honestly, like, especially when I work with women clients, uh, I say, "I want you to use words, I need help."
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[laughs] Because women are also masters at writing these elaborate emails or text messages or having a phone conversation. They'll use every version of it except for, like a direct, "I need help with..."
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And so I actually require my clients to start using it in their vocabulary, where they specifically use the words, "I need help with..." Because I also look at it as selfish.
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I say if you're not allowing people around you, people on your team, people who are your vendors, partners, whichever way you're going, to ever show up for you, you're basically robbing them of the ability, of their innate ability- Mm...
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where they want to show up in the heroic moment. And then they never get to do that. So to me, it's also a very selfish way to look at it. And I know it's a mind shift for a lot of people- Yeah...
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but I would also start thinking of it from that perspective too. I like that. You've seen behind the curtain of many businesses. What's, besides financials, 'cause we've talked about that- Yeah...
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what's one underrated metric or habri- habit that successful founders consistently prioritize? Uh, SOPs for sure, yeah. Because a lot of times I think hiring and just growing a team fails because people don't...
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They're like, "I have it in my head." Fabulous. You know, Joe here, who is coming in next week, is not gonna have any idea. [laughs] And not gonna be able to text you, call you at all random times of the day.
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So especially with technology the way we have now, with, with AI coming in, you have so many ways to make your SOP super, super easy.
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And I tell people all the time, I want you to do a Loom video, use the AI, download that script. This is your SOP, right? You don't even have to write anything anymore.
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Just literally sit at your desk, drink a coffee- [laughs]... talk through a piece of whatever process they are doing in your company, and let them implement that.
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And I always invite founders, this is a very cool trick, and if you haven't done it yourself, highly recommend.
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Whenever you implement SOPs, I want you to take that SOP, whoever wrote that, it ob- obviously doesn't need to be you, it could be somebody on your team, and run it.
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Actually use the SOP to execute the process, because you're gonna see all the holes, all the shortcuts that don't need, don't need to be there always. [laughs] Uh, but yeah, I would say not given enough priority to SOPs.
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I think they need to come as early as possible. Uh, even when you work by yourself, you should have de- uh, you should have basically systems, templates, SOPs very, very early on, even if you're a solopreneur.
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Well, and to your point, if you do eventually bring someone on, having those SOPs in place from the get-go, even when you're all by yourself, makes bringing those people on so seamless and easy.
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There's no additional work for training or onboarding potentially if you already have a library of SOPs. Yes.
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Um, I, the one thing that I feel like, you know, too, when you're keeping track and updated on your SOPs, because inevitably your business is evolving.
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And I see this with my clients where I'm like, "Where you were last year compared to this year," I mean especially I have a client who continues to acquire two to three businesses every year. Mm-hmm.
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His business is changing drastically year over year. And so for him, any SOPs that he's implementing across one business that's going to impact all of them, I mean, he's got to carve out the time.
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Otherwise, next year he'll be a business of 10 businesses. [laughs] And it will all be so disjointed. And so, you know, I think that it's critical to, it's, it's a never-ending, it's an evergreen process. Yeah.
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It's not just a one and done. [laughs] No, no, no, no. Just like strategy, right? It's not a one year, New Year's resolution thing. We, we always- [laughs]... look and tweak, for sure.
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For someone who is a founder that's stuck in a lower revenue bracket, you know, maybe that $1 million bracket, or maybe- Mm...
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even a sub $1 million bracket, and they're like, "I just wanna get past the 1 million," or, "I wanna get above to a higher number, 2 million," whatever it is, right? Yeah. We always want more. Um, and they feel stuck.
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Working too hard for too little freedom. Obviously, through this conversation we know that SOPs are critical, mindset is critical, having staff is critical.
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You know, but what are, what's something else that, you know, a piece of advice that you could give for someone that's trying to break through to that next threshold? Yeah. Well, I'm gonna offend them first- [laughs]...
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and then I'm gonna give the solution. So I always say that the issue is not the market, it's not the audience, it's not whatever product issues you're having, it's you. Right?
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So I would say first you have to take a really hard look in the mirror and say, "Where am I working on?" Like, "Where am I spending 80% of my time?" To then see how we can free up that time to create the revenue.
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Because most of the time at that level it's still either just them or them with very few team members. So, like, the resources are still limited, right? So it's not like they can say, "Let me throw some money at X."
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So they have to be very cautious about where their resources are going. And so my invitation would be to see where can the most revenue in the next six months, a year, you know, a year and a half come from.
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I would say usually I'd stick with it, like, three to six months, really that first jump. Where can we bring the most revenue? Who can be responsible for that?
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And what needs to happen in my schedule, like, literally this week, for me to free up the time? Because what I see usually with founders like that, they get so caught up in that, like, stress- Mm...
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of, it's almost, like, stress, less resentment, "I'm working so hard and nothing is happening."
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But 90% of the time, Paloma, and I hate to say that, but it's, I've seen it, like, over and over and over, 90% of the time they're working on the wrong things because they're literally running the same track.
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So my invitation first would be breathe, walk away. [laughs] Sit with yourself. Really take a hard look in the mirror. Take a pause. [laughs] Take a pause.
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Give yourself a lot of grace to, again, remind yourself, "I've built this. Like, I can change this at any point." But then also decide where's this jump coming from, and get, like, granular.
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Get granular to the dollar, that if we brought, I don't know, 10 clients at this revenue level, we could have additional, I don't know, quarter million come in in six months. What does it look like?
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How granular do I have to get? But most importantly, how can I get time to monitor that? Because most of the time they have to be responsible- Mm... for creating that level of a jump, and they have to find time to do it.
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Well, and I was gonna say, too, I feel like it's, it's always this misconception, and I do think social media plays a role in this.
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[laughs] And unfortunately, I'm sure you see it a lot of times with the people you work with, but I see it, too. People come to me and they're like, "I wanna buy this business on 100% seller financing."
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And I'm like, "That doesn't exist. I would love to have that be a thing for you, but it doesn't exist."
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[laughs] And, you know, especially with the higher interest rates over the last, you know, nine months, I feel like people are really like, "I'm gonna buy this business on, on really just a promissory note."
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And I'm like, "It's, that's not happening." Um, but you know, alongside that, there's this misconception I think with a lot of clients about how do we, how do we run
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in a way that builds and scales us to a point where we can successfully exit? And they're, like you said, they're kind of running in place.
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They're stuck in their bubble, not being able to visualize or see the big picture. And I think I've, you know, this idea, going back to what you said earlier about doing an audit of your time.
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Um, and there's software out there, uh, that you can do that for you.
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So if you don't have the time to audit your time, [laughs] you can buy a software that will help audit your time that you spend clicking around on your computer to determine what you've done [laughs] throughout the day.
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Uh, I downloaded that once, and it was an eye-opener. I'm like, just clicking around in my inbox for hours at a time. [laughs] Um, but you know, I think there are ways...
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Like, I think people make excuses, and I, I wonder sometimes, you know, how to get through to those clients that, you know, they want and desperately need the help to get them to that next level, whether that's selling or scaling or even just leveling up in a way that their business is more organized.
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Are there ways that you have learned to talk with your clients to give them, not like the kick that they need, but essentially, like, the reality check- Yeah...
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of, like, If you don't do this, we can't, we can't achieve the goal that you want"? And I always say the same line, "Numbers don't lie."
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So I always invite them for whatever trip we're going on, [laughs] whether it's- [laughs]... auditing the time, auditing the clients, auditing the team, I always show numbers.
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We just, I break down, I create a pretty simple metric that I take time to create, and I walk them through. And I honestly, most of the time it's not even about the kick. I don't even say anything.
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[laughs] I just say, "I wanna show you," right? Like, it's like show and tell. [laughs] I'm just gonna show you this is where we're spending time currently. This is where we're spending money currently.
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This is where we are having client, you know, issues currently. And if I m- 99.8% of the time, if I walk them through numbers without even adding my own commentary, they go, "Whoa, this is crazy."
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[laughs] You know, it's like they're day one in the business. [laughs] Welcome to your business. Uh, and so, but I think it's partially because a lot of times it's plain old fear again, right?
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Like, a lot of times we are so scared to look that we would rather almost, like- Mm. I can't tell you how many women I meet who never look at their financials because they're like, "I don't wanna know.
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My accountant knows." Well, the accountant could die tomorrow. [laughs] No offense, right? [laughs] And we can't just rely on that. So, again, we just want basics.
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Like, if you know top level numbers, at least you have a pretty good idea.
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That's where wake-up calls come in most of the time, and usually all my conversations would start, "Let's just look at numbers, and then you tell me where you think we need to go next."
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And most of the time, like I said, it's their day one wake-up call, and they're really, really open. They may be still scared, and that's where I usually remind them that, you know, I'm here.
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I'm gonna handhold you for the process, or your support system is gonna be there. They're not gonna, you know, just disappear on you.
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Your team's not gonna walk out because we're gonna show them where we have holes right now. So yeah, it's just having that conversation. I like that.
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I, I like the idea of you don't even need to have the tough conversation. You just need to show them where the, the sort of hurdles lie or the, the roadblocks per se.
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I, I was thinking as you were explaining this about the last thing I had said about, you know, if you don't have the time to look at your own time, there's software to do that. Yeah.
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And I feel like as someone who has been operating her own business, and I know a lot of fellow female entrepreneurs feel the same way- There is so much software out there, it's endless. Mm-hmm.
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And it's so easy to just throw money at another software solution, and then just have a conglomerate of a bunch of random stuff that doesn't communicate. Yeah.
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And so for someone, like maybe they don't come to you and they're completely lost in their business- Mm... but they're, they're deep in quicksand, and they're like- Mm...
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"I need to figure out which way is, uh, uh, up-" Mm-hmm... at the end of the day. Mm-hmm. What, what do you tell those people? How do you work through that with them?
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Because, like I can imagine, you know, for some businesses who have decided to bootstrap it along the way, and there's so many options for software out there, you know, I even had to cull my own software, you know, last year where I realized I had just too many options- Yeah...
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that were not communicating. What do you, what do you do with those clients- Yeah... for starters?
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I literally tell them, you know, "I want you to take your financials and throw them in something with AI, like Chat- as simple as ChatGPT." And obviously don't put all the financials there.
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[laughs] It's still open AI, right? But take basics. Take basics and say, "These are my, these are my current hurdles," right? "I'm out of time and out of money" could be option one.
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"I'm out of time, I do have the money," or, "I have the money, and I have, you know, maybe I have the time, but not the money." So usually the variations are pretty simple, right?
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So if you just put that into one place, and then you say, "Okay, show me what is the f- like, if you were to prioritize the three things I need to work on next, show me what, what steps I should take."
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You don't need a lot of different software options to create something like that, right? You can, like I said, decide for yourself. Is it a time issue? Get a time software that's gonna pull you through.
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If it's a financials issue, figure out some kind of software that allows you to just break down the basic financials for you.
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If it's, you know, you have the money, show me my three top clients or my three top product channels, and how we can deploy them to build the next step. So pick the area.
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It's usually, like I said, it's really only three variations. No time, no money, no both. [laughs] I mean, if it's no both, it's a little bit harder. No both, it's harder. [laughs] Yeah,
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a little bit, a little bit harder. But again, then I always say, and by the way, this is my personal advice, I'm sure there are many other coaches that may disagree, or consultants.
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My advice is always if you're out of time and out of money, you free up time first, because it's faster, and we are going for further, faster module here. So how can I get you out of this?
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And at least if you free up some time, you can start looking for resources.
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Because sometimes money does take a little bit to kinda create whichever way it's going, whether it's financing, whether it's, you know, talking to potential clients or a channel partner or something like that.
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But if you free up some time, you can at least start creating space to think. No, I like, I like that the, the buckets, right? Yeah. The, the three buckets.
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And, uh, to your point, you know, I think anybody who's come kind of as far as they think that they can come, obviously, I think at the end of the day, the two pieces of advice that are critical, or at least three I probably would say, is like look at your finances and, and know them intimately, right?
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Yeah. Two, you know, if you don't have any systems or even anybody helping on your team, that's probably the two areas you could focus on right away.
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And don't underestimate the level of help you can get from speaking to someone like yourself, because I think a lot of people, back to this idea of like, "I can do it myself. I don't need help."
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I don't think people really realize, even in my field, they'll, they'll come to me and they'll think they'll b- the business is... You know, they've got the contracts on lock. Mm-hmm. Like they've- Yeah...
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they used them from, you know, the get-go. They had ChatGPT rewrite them, and I'm like, "Oh, gosh." [laughs] Like, "Not that again." [laughs] Yeah.
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And so, like, you know, we gotta have that moment of like, yeah, you know, experts are helpful because you don't know what you don't know, right? Exactly. Um, so you're filling the gaps. Right.
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Um, you know, I've, I think this has been super helpful. Thank you.
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In, in closing, I would love to know, you know, anything else that you would wanna tell someone who's listening, who's a business owner, who's thinking about scaling, and maybe any resources beyond reaching out and speaking with you.
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Yeah. No, for sure. Uh, definitely.
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Well, one thing I could say for sure, that I don't care how strong your brand is and how much revenue you bring in, again, if your operations are not in check, that freedom is gonna be very hard to create.
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And I've seen a lot of very successfully looking busines- businesses, like we said, the Instagrammable moments, but when you start digging, there is no freedom there. Mm. So for me, the biggest...
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The big- I always say the biggest flex for any business owner is how little their business depends on them. I like that. [laughs] So that would be one. [laughs] That would be one part in advice.
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And then, yeah, I would say if you're at all... Because we're talking, you know, on the exit podcast, really, like if you're at all... One of my favorite books is obviously The Art of Selling Your Business.
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So if you haven't read it, definitely read it. Uh, and then Build to Sell. It's the same author, I believe. Uh, they're both really great because, again, the earlier you start getting ready...
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And to me, when I look at exit, I look at it as creating freedom, whichever way it's gonna pan out.
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Whether it's you selling, you merging, you stepping away, you bringing someone else to run it, franchising it, licensing it. But selling essentially is an exit that allows to create freedom. I love that.
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And I think at the end of the day, you know, most business owners have the exit idea in their brain.
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Not everyone, but a lot of them have that exit idea in their brain, and I think operations are the key to, that unlocks that potential for exit in the future. That's right.
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Thank you so much, Alenka, for being a guest today. Yeah. Thanks for having me, Paloma. Of course. If you liked this episode, please like, share, and tune in for next week.
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[upbeat music] In the world of business, not all deals are what they seem. Fortunes rise, empires crumble, all with the stroke of a pen. Mergers, acquisitions, hostile takeovers.
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Welcome to Mergers She Wrote, where we examine strategies and stories behind the biggest deals in business. Because in M&A, the real risks are the ones you don't take.