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Nate Bennett with Robinson College of Business

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Nate-Bennett-Robinson-College-of-Business
Atlanta Business Radio
Nate Bennett with Robinson College of Business
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Nate-Bennett-Robinson-College-of-BusinessNate Bennett is a Professor and the EMBA Program Faculty Director at the J. Mack Robinson College of Business at Georgia State University. He joined the faculty at GSU in the summer of 2012.

From 2014 to 2019, Nate was an associate dean in the College. Previously, he served as the Catherine W. and Edwin A. Wahlen Professor of Management at Georgia Tech. From 1999 until 2010, he served as associate dean and then as senior associate dean. Previous to his time at Georgia Tech, he was a member of the faculty at Louisiana State University.

He has published in many widely read resources for managers, including the Harvard Business Review, Wall Street Journal, BusinessWeek.com, and Forbes.com. He is co-author of two business books, “Riding Shotgun: The Role of the COO” and “Your Career Game: How Game Theory Can Help You Achieve Your Professional Goals.” Both are books published by Stanford University Press. Additionally, his research is published in respected scholarly journals such as the Academy of Management Review, the Academy of Management Journal, Psychological Bulletin, and the Journal of Applied Psychology.

Dr. Bennett has nearly 30 years of experience designing and delivering high impact leadership development programs. Current and past clients include The Department of the Navy, Navigant Consulting, Schneider Electric, The Coca Cola Company, Cox Communications, Delta Air Lines, The Home Depot, McGladrey, GEICO, UnitedHealth Group, CHS Inc., Lockheed-Martin, GE, St. Jude Medical, McKesson, Regions Bank, Rollins, and NCR.

His current research interests involve power, leadership selection and development, top management team effectiveness, and leadership transitions.

Visit www.nate-bennett.com for more information and connect with him on LinkedIn. Nate can be also reached by email to nate@gsu.edu.

What You’ll Learn in This Episode

  • How has the pandemic changed career strategies?
  • What are the key steps to navigating your career during the pandemic?
  • How has the pandemic changed the investments companies should be making in leadership development?
  • How is Robinson College of Business helping its students and alumni survive in the current economic recession?

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Decision Vision Episode 71: What Decisions Do I Have to Make For My Business to Survive Covid-19? – An Interview with Zahir Ladhani, Velocity Strategic Consulting

by

Brady Ware
Decision Vision
Decision Vision Episode 71: What Decisions Do I Have to Make For My Business to Survive Covid-19? - An Interview with Zahir Ladhani, Velocity Strategic Consulting
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Decision Vision Episode 71: What Decisions Do I Have to Make For My Business to Survive Covid-19? – An Interview with Zahir Ladhani, Velocity Strategic Consulting

As the timing and shape of an economic recovery remains uncertain, many business owners are asking themselves what decisions they must make for their business to survive this Covid-19 environment. Host Mike Blake explores these issues with Zahir Ladhani, Velocity Strategic Consulting.  “Decision Vision” is presented by Brady Ware & Company.

Zahir Ladhani, Velocity Strategic Consulting

Zahir Ladhani

Zahir Ladhani is a seasoned executive with 30+ years of experience leading the growth of companies, products and teams. He played a crucial role on a senior executive team facilitating the $1.3 Billion sale of a company to a Fortune 50 Company. Additionally, he has overseen leadership teams in multiple publicly-traded organizations, in the capacity of President, Vice President of Sales, Vice President of Business Development, Marketing Director, and Director of Finance.

Zahir is a talented communicator and proven leader who understands corporate culture, the collaborative process, and how to assist organizations and their leadership teams optimize the balance between people, performance and profit.

Zahir Ladhani is currently the managing director of a business coaching firm, Velocity Strategic Consulting, and teaches Strategy at Kennesaw State University’s EMBA Program.

Michael Blake, Brady Ware & Company

Mike Blake, Host of the “Decision Vision” podcast series

Michael Blake is Host of the “Decision Vision” podcast series and a Director of Brady Ware & Company. Mike specializes in the valuation of intellectual property-driven firms, such as software firms, aerospace firms and professional services firms, most frequently in the capacity as a transaction advisor, helping clients obtain great outcomes from complex transaction opportunities. He is also a specialist in the appraisal of intellectual properties as stand-alone assets, such as software, trade secrets, and patents.

Mike has been a full-time business appraiser for 13 years with public accounting firms, boutique business appraisal firms, and an owner of his own firm. Prior to that, he spent 8 years in venture capital and investment banking, including transactions in the U.S., Israel, Russia, Ukraine, and Belarus.

Brady Ware & Company

Brady Ware & Company is a regional full-service accounting and advisory firm which helps businesses and entrepreneurs make visions a reality. Brady Ware services clients nationally from its offices in Alpharetta, GA; Columbus and Dayton, OH; and Richmond, IN. The firm is growth minded, committed to the regions in which they operate, and most importantly, they make significant investments in their people and service offerings to meet the changing financial needs of those they are privileged to serve. The firm is dedicated to providing results that make a difference for its clients.

Decision Vision Podcast Series

“Decision Vision” is a podcast covering topics and issues facing small business owners and connecting them with solutions from leading experts. This series is presented by Brady Ware & Company. If you are a decision maker for a small business, we’d love to hear from you. Contact us at decisionvision@bradyware.com and make sure to listen to every Thursday to the “Decision Vision” podcast.

Past episodes of “Decision Vision” can be found at decisionvisionpodcast.com. “Decision Vision” is produced and broadcast by the North Fulton studio of Business RadioX®.

Visit Brady Ware & Company on social media:

LinkedIn:  https://www.linkedin.com/company/brady-ware/

Facebook: https://www.facebook.com/bradywareCPAs/

Twitter: https://twitter.com/BradyWare

Instagram: https://www.instagram.com/bradywarecompany/

Show Transcript

Intro: [00:00:02] Welcome to Decision Vision, a podcast series focusing on critical business decisions. Brought to you by Brady Ware & Company. Brady Ware is a regional, full-service accounting and advisory firm that helps businesses and entrepreneurs make vision a reality.

Mike Blake: [00:00:21] And welcome to Decision Vision, a podcast giving you, the listener, clear vision to make great decisions. In each episode, we will discuss the process of decision making on a different topic from the business owner’s or executive’s perspective. We aren’t necessarily telling you what to do, but we can put you in a position to make an informed decision on your own and understand when you might need help along the way.

Mike Blake: [00:00:41] My name is Mike Blake, and I’m your host for today’s program. I’m a Director at Brady Ware & Company, a full-service accounting firm based in Dayton, Ohio, with offices in Dayton; Columbus, Ohio; Richmond, Indiana; and Alpharetta, Georgia. Brady Ware is sponsoring this podcast, which is being recorded in Atlanta per social distancing protocols. If you like this podcast, please subscribe on your favorite podcast aggregator, and please consider leaving a review of the podcast as well.

Mike Blake: [00:01:07] And so, today’s topic is another in our series of COVID survival topics. But this one is going to be a little bit different. And the question, really, is actually a number of questions all rolled up and mashed up into one. And so, the topic is, what are the decisions I have to make, so that my business survives COVID? And by now as we record this in early June and Happy Father’s Day in advance to everybody who is a father listening to this podcast, and as we record this, we are now, more or less, in something approximating recovery phase of this pandemic at a time, also, of tremendous social unrest and potentially change. We’re just in an environment now where there is no textbook, there is no wise man or woman to tell us exactly what to do based on experience. It’s all about kind of feeling our way through.

Mike Blake: [00:02:25] And so, whereas most of our topics do address a high-level strategic decision, the reality is that many businesses are not really in a strategic posture. As I was talking to our guest and our producer a little while ago as we were setting this thing up, and we talked about when you have a loaded gun pointed right to your head, your thought process at that point is not strategic. Your thought process at that point is not, “What is happening to my retirement plan and my 401(k)?” It’s, “How do I get out of this situation now? Get out of the building.” We’re going to figure everything else out at that point.

Mike Blake: [00:03:08] Now, I understand that’s a dramatic and it’s a graphic image, but I do think that there’s some truth and there is some relevance to that. But we are now, you know, after sort of huddling ourselves, at least certainly, I was, away from the pandemic to reaching a point where we are kind of have our hands wrapped around the bars and shaking them, being asked or asking to be let out of our mass house arrest, and now, all of a sudden, the doors open with differing speeds depending on what state you’re in. State, meaning geographic location.

Mike Blake: [00:03:58] And, you know, when that happens, I think to some extent, we’re sort of the dog that catches the car or what would happen if Wile E. Coyote actually captured the Road Runner? I’m not sure he’d know what to do with it. And so, now, this next phase is, okay, you know, what is this checklist? And you’ll read a lot of stuff that talk about, well, you know, let some of your employees continue to work from home and everybody’s going to walk around like they’ve got OCD and wash their hands all the time and creating distance between office and cubicles.

Mike Blake: [00:04:36] And that’s all well and good. It’s important. There’s plenty of information out there. There’s nothing that we’re going to do it. But then, you know, as a decision maker, you’re now going to be faced with many, many micro decisions if you are or even not so many micro decisions, but they’re all tactical decisions. And tactical decisions can take on equal or superior importance relative to a strategic decision.

Mike Blake: [00:05:07] And so, that’s a long preamble to saying that if this episode seems a little bit different, it is, and that’s by design. And the reason is because when you reopen your business and you expose yourself to the wide, weird world out there, it’s not about one decision anymore. It’s really about probably 92, at least. Well, we’re not going to go over 92 decisions, but we are going to go over probably about a dozen or so, and hopefully that this will be something that—or we hope is that, this will be something that you can you can take pieces from, and apply to your own situation as is, you know, what we try to do here are the Decision Vision podcast.

Mike Blake: [00:05:53] And helping us work through this is my friend, Zadhir Ladhani who is Managing Partner of Velocity Strategic Consulting. And Zadhir brings more than 30 years of, in the trenches, experience with software, the service companies, consumer companies, services and human capital companies, pharmaceutical companies, and management consulting. As you’ll hear, he’s a very talented communicator and he’s a proven leader whose drawn businesses and product lines and was a key member of an executive leadership team that led the sale of its company to a Fortune 100 acquirer.

Mike Blake: [00:06:34] Zadhir works with senior executives and leadership teams to scale up businesses by improving their discipline around people, strategy, execution, and accountability for sustainable growth. He has worked with numerous clients and using the complexity that growth often brings, allowing leaders to focus more time on building their businesses by leveraging transformative tools, processes, and principles. He holds a bachelor’s degree in mathematics and accounting from the University of Waterloo in Canada and a master of arts in international relations from the Fletcher School of Law and Diplomacy at Tufts University in Boston, Massachusetts. Zadhir, welcome to the program.

Zadhir Ladhani: [00:07:10] Thank you. Thanks, Mike.

Mike Blake: [00:07:12] So, I’m going to ask you the question that I have to ask or everybody has to ask, every guest ever who comes on any program in the world, which is, are we in a recovery now? If not, when do you think it’s going to happen? And are you on the V side recovery camp, or are you on the slow slogging recovery camp, or somewhere in between?

Zadhir Ladhani: [00:07:33] So, Mike, I appreciate the introduction, and I am on the slow recovery side. I’m not on the V recovery side and I actually don’t think we’re in the recovery phase yet. If you look through what we’ve gone through, and I look at this from a lens of three phases, we went through the lockdown phase where we were trying to flatten the curve. And some parts of the country never flattened the curve. We would continue to grow it. But we decided to get into the second phase, which is the recovery phase, as you called it, but I think I call it the fight phase, that we’re going to go fight this.

Zadhir Ladhani: [00:08:10] And then, when the vaccine or a therapeutic is available is when, potentially, the full final phase of this comes in. So, I think we’re in this middle phase, which I called the fight, where the infections and the number of people who interact with this disease will increase, decrease, increase, decrease. And we’re going to see spotty places in the country, spotty places around different states and different parts of the state in different phases.

Zadhir Ladhani: [00:08:45] So, they’re going to be brush fires we’re going to have to put up around the country. If you look at why I say that and why I think it’s a long U, until a vaccine is available, there is no surety of how we will fight this. There are so many unknowns about this COVID-19 that every other day, we’re hearing something new and we’re learning something new. And so, anything somebody is forecasting, it’s coming out to be different. And so, I would say, we plan for the worst, and then hope for a better one. And businesses work on that well. Look, people are saying there’s a vaccine coming up, right?

Zadhir Ladhani: [00:09:23] Normally, vaccines take 20 years, and now, we’ve got a prognosis that we’re going to have a vaccine by the end of this year. I really hope we do. And I know there were over 150 candidates in the work, and we’re taking every piece of red tape out, and we’re trying to shorten the cycle as much as possible, and we got the best scientists we’ve ever had around the world working on it. And globally, humanity has gained. But sometimes, things take time. And we hope we can get through this. But my view is it’s a long U with ups and downs as we go through it.

Mike Blake: [00:09:59] You know, I think your observation is very smart, that the fact of the matter is, we don’t understand everything there is about the coronavirus. And the knowledge is evolving. And, you know, it reminds me, I think coronavirus is sort of the eggs of the disease realm. What I mean by that is for years, I think it’s still going on, is that doctors are telling us eggs are terrible for us, but now, they have the right kind of cholesterol, so they’re great for us. But then, maybe that kind of cholesterol, it has a limit, so they’re bad for us again. And frankly, I don’t know. So, I just see the eggs now and I roll the dice, right? But I mean, COVID is kind of like that.

Zadhir Ladhani: [00:10:50] Yeah.

Mike Blake: [00:10:50] You know, there’s even some there’s even some real discussion as to whether or not, not just ideological, but medical as to, again, how necessary masks are.

Zadhir Ladhani: [00:11:04] Yeah.

Mike Blake: [00:11:04] And, you know, we just don’t know. And I’m not going to make a statement as to whether or not somebody should wear a mask or not, but the fact of the matter is that whichever position is out there, there’s plenty of information, and frankly, some good information that supports one way or the other, right?

Zadhir Ladhani: [00:11:22] Yeah.

Mike Blake: [00:11:22] So, I guess maybe I want to go right off the script here, and that is that maybe the first decision you have to make is, do I think it’s a V recovery or slow recovery, right? Because if I think it’s a V recovery, then the other things we’re going to talk about today may have a different answer or a different spin to them as opposed to if I think there’s going to be a two-year recovery, say, that, you know, the Fed thinks is out there. Is that fair too or am I making too much of it?

Zadhir Ladhani: [00:11:54] No, you’re not making too much of it, but my pushback would be, if you make a decision that it’s a V recovery, what are the decisions you’ll make in your business? And what if it’s a U recovery, what would happen to you? Plan that out and forecast. And then, do that if you work towards a U recovery, forecast out that, what if then it’s a V? Which one gives you the higher probability of survivability? And my supposition to you would be plan for a U, hope for a V, you have a better chance of success versus you plan and act on a V, And it becomes a U. You see where I’m going? And so-

Mike Blake: [00:12:35] I do. And then, to that end too, we’ll talk about this a bit later, we may very well have a W kind of recovery.

Zadhir Ladhani: [00:12:44] Yes. And if you look at the stock market in the day we’re recording this, the stock market was way up, and then yesterday, dropped. And this morning, it just started to go back up again. Like I think we’ve got to be cautious and not get carried away with the fad of people jumping up and down and most people starting to get out there and what you see in a very quick manner. Think of it a little bit of a longer term because of the unknowns. One of the biggest things of this is the unknowns that we have is the thing we need to keep in mind.

Mike Blake: [00:13:15] So, how to lie? And I am a business owner, I’m a shareholder in my company, so how do I assess my own company as to one that’s likely to recover as opposed to one maybe that isn’t likely to recover?

Zadhir Ladhani: [00:13:33] So, I think you’ve got to do the scenario planning around the U. And so, what I recommend to my clients is do a scenario planning that says you will have a 20%, a 50% or an 80% drop in revenue over the next year and a-year-and-a-half. And then, do your net income in a cash flow on those three scenarios. You put your expenses towards the 50 to 80 and run your business. And go forward with that planning phase, and that will give you as much opportunity to survive as possible.

Zadhir Ladhani: [00:14:15] The other thing you need to do is conserve cash as much as possible and reduce any frivolous expenses or even potentially some expenses that you just are nice to have versus need to have, and that will ensure. Now, the next key thing you need to do is what we’re seeing in COVID is a lot of trends that were happening pre-COVID have accelerated. And what you want to do is how do you evolve your business to get on those trends and make sure your business is essential in getting on those trends. And we can talk more, I’m sure, when you get to that level.

Mike Blake: [00:14:57] You know, that 80% drop in revenue, that’s a jarring number to me, right? I mean, I understand where you’re coming from, to me, that says an absolute catastrophic business scenario. I mean, realistically, how many businesses can survive an 80% drop in revenue for any period of time?

Zadhir Ladhani: [00:15:18] Depends on their cash reserves and depending on their things they have, right?

Mike Blake: [00:15:23] Okay.

Zadhir Ladhani: [00:15:23] So, I’m not suggesting that will happen, but would you rather do a premortem or a postmortem on your business? And so, we’re asking people to do a premortem which visualizes which it will be. So, therefore, before you get there, you can avoid that, right? If you know what will happen if you get to an 80%, then you start to think, what are some of the actions I do need to take today? And then, we start to talk about the customer. Who are our customers? How do we retain them? How do we become essential to them? How do we go after different other customers and go capture them? What is the evolution of our business we’re doing?

Zadhir Ladhani: [00:16:00] We have a client in Atlanta who has restaurants and they evolved from they were never a delivery, they were never a takeout service, and this is nothing new, but they figured out an interesting way of doing delivery and take out service because a lot of restaurants have done nothing shocking, but if they hadn’t been ahead of it, they could have been impacted by that thing. One—yeah.

Mike Blake: [00:16:25] So, we’ve talked about expense management and we talked about cash management. What are a couple of other specific things that businesses should be looking at to make sure that they’re in the survival group and not on the not survival group?

Zadhir Ladhani: [00:16:40] I think what you want to do is in your customers that you have today, you want to be close to your customers and understand what they are going through. And before they react to you, one, if you’re close to them, you will know where they’re going. So, because you’re starting to predict how your business is going to impact and you figure out how you become essential to them. As soon as you start to get hints and ideas that you may not be kept on, you need to start to see what businesses you need to evolve to. I’ve got a client who was in a particular business and they figured out there was an adjacent business that they could evolve to. They were never in that, but due to COVID, it was a revenue stream, and it was bringing in cash, and they added that onto it, and move that on. And it became a great revenue stream for them.

Mike Blake: [00:17:33] You know, that essential nature, I think, is a really important point. And a former guest on this program, Rod Burkert, has been preaching to people in my profession, business appraisal, to figure out how do they turn themselves from a vitamin into medicine, right? That nice to have, should have versus something that makes pain go away that is truly essential.

Zadhir Ladhani: [00:18:01] Right.

Mike Blake: [00:18:01] And, you know, candidly, that can be very painful thinking because what if what if you sort of look at your business in the cold-heart light of day, you’re just not medicine, right? Your business model has been built on selling vitamins, right? You’re GNC, for example, right? You cannot convert to a drugstore overnight. You are in the vitamin business, and that’s where you’re going to stay. And so, maybe one of the decision points then is not only, even before you get to, how do I make myself medicine, but is that even realistic, right? And maybe that gets to the premortem, the 80% drop in revenue.

Zadhir Ladhani: [00:18:46] Right.

Mike Blake: [00:18:47] I’ve yet to scale my business to a—you know, the world will still need vitamins. They still want some vitamins and vitamins don’t go away.

Zadhir Ladhani: [00:18:54] Right.

Mike Blake: [00:18:54] But clearly now, they’re taking a backseat to the medicine, I guess.

Zadhir Ladhani: [00:18:59] Exactly. And what you do also is look at the trends COVID is causing, do know that every time we’ve had a major event in the world, be it The Depression, be it the oil crisis in the ’70s, be it the 2008, we’ve never reverted back and there’s a new norm that happens. And what is the new norm that would happen post this? And we’re starting to see some trends of this. And can you evolve or pivot? I’m trying to resist using the word pivot, but can you pivot towards that addition to your business and move away from some of these businesses? Like I would say, look, if you’re a retailer, if you don’t have an e-commerce strategy or a digitization strategy, you’d better be thinking about this, right?

Zadhir Ladhani: [00:19:47] Because the demise of retail has been, and I’m not saying it’s going to go away, but I think it’s been precipitated. In every business, be it a doctor, or an accountant, or a lawyer should have and need strategy because whatever we’ve done in the last eight weeks or something, we’ve moved to telehealth in the fastest way possible when there was so much resistance from the hospitals and the doctors. And now, overnight, we’re speaking to our doctors and doing telehealth or teleappointments. Now, we’re going to be used to it as consumers. Now, my doctor better have that service available because I may not want to go and wait in the waiting room. I can get it done through my laptop.

Mike Blake: [00:20:25] And speaking of retail, you know, I got to tell you, I love the curbside service. You know, this microphone that I have now, that John, our producer, begged me to get because the other one made me sound so lousy, you know, I barely slowed my car down, and they just chucked the thing in the back, I lowered the window, and like in a football passing drill, they just sort of chucked it through, right?

Mike Blake: [00:20:53] I mean, that was great. I love that. I mean, even if we kill coronavirus tomorrow, I hope they don’t get rid of that because, you know, saving the time of even having to park, and get out of the car, walk in, yeah, I get it, I can walk in, I get it, I feel like I want to be treated like Cleopatra, and they sort of lift me up on one of those thrones that the servants carry around town and stuff, but I love that, right?

Mike Blake: [00:21:23] Frankly, I’d pay a premium for that. As somebody said, you know, if I bought us a 50-dollar item, we got to pay two more dollars to have the thing put in your car for you, yeah, I’m in. So, you’re right. I mean, I think there are some emerging business models and we’re not even close to being there yet. I cannot imagine what’s going to happen in education. You know, schools are not opening. And when they do, a lot of the students aren’t going back unless there’s no other choice, I think.

Zadhir Ladhani: [00:21:54] No, I hear you. I ask who is sending us information, saying, what will you do with your child? And my response back would be, you tell me what safety precautions you’re taking to make that decisions accordingly.

Mike Blake: [00:22:06] Yeah. So, you know, a fascinating thing has happened. A lot of this, I think, is now going away, but it could come back if we go into a W-shaped recovery, which I think there’s a good chance it will happen. I don’t think it’s drop dead, but I think there’s a good chance. How did businesses survive just not being able to operate for three months? And what lessons do you think businesses are taking from that so that if we do go into a second trough, that they can survive that second halt?

Zadhir Ladhani: [00:22:48] I think in the first instance, a lot of businesses were caught by thinking it’s going to be a short-term close. And I think the government acted very, very quickly in all the incentives and money that came through, and the speed that it came through helped the companies. I think businesses are learning to conserve their cash now even more than they were before. And even consumers are learning that. What we’re hearing in some reports that consumers are really not spending as much money as we were. Our bank account seems a little bit inflated because we’ve been sitting at home.

Zadhir Ladhani: [00:23:23] And so, we seem to have some extra dollars in our bank balances. And businesses are that. I think businesses have learned to conserve cash. Some businesses moved a little slow in cutting expenses. Now, I think they’re being cautious in increasing them back. So, I think businesses are learning from this and will not revert back to the old days. I’ve heard companies and CEOs tell me, I’m not bringing my travel budget back to the norm it was. I’m not bringing my people back yet to the offices, right? And so, I’m going to keep my nonessential expenses down.

Zadhir Ladhani: [00:23:58] Now, you go to how long can they survive? I think that’s a predicament on the business and in the amount of money. We’ve got rent abatement going on. That leaves in July. We’ve got many things that are issues about to drop in July, August, September, and we’ll have to watch what happens to those businesses then, and how effectively they work. We’ve seen very large chains send letters to their landlords, and saying, we need rent abatements and we need you to work with us, right?

Zadhir Ladhani: [00:24:31] One of the largest chains out there in the world has sent that letter and they’re asking for those for a long period of time, not just until now. And I think businesses need to do that. The other aspect is I love using this, is the old military strategist, Colonel John Boyd used the OODA, meaning is O-O-D-A, right? You observe what’s the situation around you, orient yourself, and then decide, and then act quickly. And when you act, you start observing again. You orient, decide, and act.

Zadhir Ladhani: [00:25:07] And it’s similar to Jim Collins’ view around, and I hate to use this, but Jim Collins, he wrote, before you act, throw some bullets before you fire your cannons. Meaning, find your target with a few bullets. And I would ask businesses as they’re evolving and trying to survive this, you need to evolve. You can’t just stand still. And as you evolve, you want to test and fail fast, to learn fast, and keep testing, and be a testing organization because this is an evolution, and we’re going to have to evolve. You can’t stay the same and you can’t stay stagnant.

Mike Blake: [00:25:42] You know, I need to ask another question. This is not one that we’ve really talked about. But I know you can catch up with a fastball here. And again, our producer, John, is going to love this question, and that is, how do you navigate pricing in this environment? And what I mean by that, you know, a friend of mine who also happens to be my dentist was talking to me about what it’s going to take to reopen his practice and start filling cavities, drilling, and doing whatever it is a dentist do, right?

Mike Blake: [00:26:24] You cannot deliver those services for the same price today that you could 90 days ago, right? My wife just went to the dentist, and then face shields and two masks on at the same time. And I’m sure they were also sterilizing the thing, like they’re using some sort of disinfectant like those old sorts of pump-operated DDT and insecticide things they used to have in the old-time cartoons, right? But at the same time, there are other businesses that are desperate—actually, let me go back.

Mike Blake: [00:27:03] You know, restaurants. You know, I ventured into a restaurant last week for some takeout and, you know, half the tables are gone. You know, so now, they’ve got half of their serving capacity, but they’ve got the exact same overhead they had 90 days ago, right? The way the math works is that their prices must go up, you would think, right? Maybe not. So, on the same token, you know, if you’re an attorney right now and a lot of some legal services are considered medicine, others are considered vitamins, right?

Mike Blake: [00:27:39] Maybe you considered lowering your prices for a minute because you just want to get work in the door, right? And I can’t even imagine what airlines must be doing. Their pricing mechanisms have been so Byzantine anyway, what they’re doing now has got to be some form of calculus. And I’m talking too long, but I’m thinking about this question kind of real time, I mean, how do you think about pricing in this kind of environment? And do you agree, that’s a really critical micro decision or decision that a business has to make as they reopen here?

Zadhir Ladhani: [00:28:14] It’s a very, very, very important decision. And I would first want to take something off the table when you talk about pricing. Most companies have very good core values of their business. And some of them call for integrity. Some of them call for, we’ll take care of our customers. Some of them call for, we do what’s right, et cetera, et cetera. So, number one thing I want to take off the table is this is not the time to price cap, right? And then, if you’re a leader who’s thinking, I’m going to take advantage of this, look, this is a time for your values to be in action. We, as human beings, are naturally good people, live those values, and be good human beings. So, take that part out of the question.

Mike Blake: [00:29:00] So, you’re saying, I should cancel that hundred-dollar for Lysol can auction off of eBay?

Zadhir Ladhani: [00:29:05] Absolutely.

Mike Blake: [00:29:05] Okay. I’ll do that as soon as we’re done.

Zadhir Ladhani: [00:29:09] Yeah. And so, next one I would come is at any time, how do you develop your price? You develop your costs, you look at your competitor, and you look at your market dynamics, right? And what the market’s willing to bear. However, if you just do it like the old way, and yes, you bring your costs in trying to make it, you need to decide in this world, will the consumer come? And is a competitor going to figure out a different way? As you rightly said, will a competitor figure out a very cheap way?

Zadhir Ladhani: [00:29:41] And this is the time for businesses to be disrupted. And especially if you’re an accountant or a lawyer, there’s an e-business. I’m sure there’s an e-business out there that’s about to disrupt all the accountants and lawyers out there and other service providers. And so, you increase your prices. You’ve got to figure out your strategy, how you manage the costs. If we go down to the dentist line, you’ve got to look at how you cut your other overheads and stuff, because sometimes, people may just say, I want to not do my cleaning in six months, I’m going to delay for 12 months, right?

Zadhir Ladhani: [00:30:13] And then, go down that way unless it’s hurting and I need really my filling done and it’s killing me, it becomes essential. Then, if you gouge me, you know I’m not coming back, right? I’m going to find somebody else because that trust will be broken forever. So, it’s a very dicey situation. And this may not be the time to increase your margins. It may be the time for your survivability to continue the revenue while not losing money, yet, not increasing the margin business is where I would be today.

Mike Blake: [00:30:45] So, when we talk about pricing, and we’re touching upon this now, this is a good segue to the next question, which is, you know, we’ve talked about expense management, let’s talk a little bit about the sales side. And I want to talk about observing what your competitors are doing. And one of the things that really interests me about this period of times, is I’m trained as an economist, and economists have a favorite term called revealed preferences, which means that people say whatever they want, but if you want to find out what people actually care about, look at how they act and look at how they spend their money, right? And the fascinating thing about this time from an economist’s perspective is the revealed preferences and people’s tolerance for risk, right? At the end of the day, you know, I think the decision of whether you wear a mask or not, I think, boils down to a revealed preference of risk, right?

Zadhir Ladhani: [00:31:56] Yeah.

Mike Blake: [00:31:56] And so, why does this relate to competitors? Because, you know, talking about pricing and talking about how you become more efficient, I think there’s another lever to that, which is, what if my competitors are comfortable taking more risk than I am, right? Maybe the restaurant down the street is going to cram people maybe six inches closer and get a couple more tables or they’re going to—I don’t know the business wound up, but I think you get my point, is that out of out of desperation or they think they’re being clever, but they’re not or that, you know, they just simply have a higher risk tolerance.

Mike Blake: [00:32:40] You know, competitors are going to do things. Some competitors will do things that other businesses wouldn’t necessarily feel comfortable with. But then, they’re going to have to make the decision, do I mimic the risk profile of my competitor because I don’t know or do I use that as an opportunity to differentiate myself somehow? And how do I do that in a way that is, you know, civil and appropriate?

Zadhir Ladhani: [00:33:12] So, I would answer it with a nuanced way, is one, it depends on the market you’re in and the risk tolerance of your consumer. And you let your consumer’s risk tolerance also help you make that decision because if you’re in a risk-tolerance level where the consumer is looking for the safety at the highest level, then you want to be careful, because then, you won’t get those. But if you’re in a market where the consumer is willing, now, do you go there and take that risk tolerance because of your competitor?

Zadhir Ladhani: [00:33:43] I would say also depends on what you’re looking for. Is it a short-term gain or a long-term gain? And I go back to your values. And as an organization’s values that, would you be willing—when big companies develop their core values, one of the questions I ask them is, are you willing to take a financial hit to live your core values? Then, only are you sure about your core values. Otherwise, they’re just words, right?

Mike Blake: [00:34:10] That’s revealed preferences right there.

Zadhir Ladhani: [00:34:12] There you go, right? And this is the time that that core value is being tested. If it is your core values to go with that risk tolerance, yes, go, but if you stated to your employees that this is how we’ll behave and this is who we are, and all of a sudden, at a time of crisis, you evolve, you think your employees are going to believe you as life goes on, right? And trust is broken. So, I would think be living true to who you are and don’t change is a very key thing. Now, do you evolve with the market? Absolutely. But you’ve got to decide on that mechanism in that.

Mike Blake: [00:34:51] So, we touched on this a little bit, but I want to come back and hit it explicitly, is that, let’s assume that this is, in fact, going to be some sort of W-shaped recovery. In fact, there is a possibility that COVID is just with us for a long time. There’s no guarantee that we’ll find a silver-bullet vaccine. It could be partially effective, like the flu. It could be completely effective against the or it could be something entirely different, right? How do you think a typical business or how are you advising your clients to prepare for a world that may very well be sort of on again, off again, on again, off again?

Zadhir Ladhani: [00:35:38] So, we’re continuing—you know, I initially said the postmortem, that idea, we’re continuing to do that. So, in the past, before COVID, we would develop a three-year strategy, and then develop a quarterly annual plan and the quarterly plan, and reassess it every quarter. Now, we’re actually going in and assessing our strategy every month because things are changing so fast. And sometimes, we do it more often or because there’s a necessity to do that and there’s a crisis coming.

Zadhir Ladhani: [00:36:08] So, we recommend to our clients have a monthly review of your strategy, monthly review of your forecasts, not just your profit and loss, but then, take it to a cash flow level. And actually, weekly or biweekly, let’s look at our cash levels. And we continue to evolve that. We don’t get exuberant when sales go up or revenues come up as this V, or W, or a squiggly line continues, we stay cautious. And you can see people start to say, okay, we’re back. Let’s bring these things back. And we always become the naysayers to the organization, said, let’s put the, what if we’re going to go down?

Zadhir Ladhani: [00:36:49] Until you see a major long-term trend, let’s keep to this level and continue to evolve because do know, we’re not going back. It will be a different world that we’re living in and it will continue. And especially, Mike, as you said, if this is going to be a long-term fight level, we’re going to be a whole different type of people in how we live. You know, it’s acceptable for me and you to meet and talk with masks on now, which, you know, eight weeks ago, we would have never done that, you know. We would have sat-

Mike Blake: [00:37:20] They wouldn’t let you into most places of business with a mask.

Zadhir Ladhani: [00:37:24] True.

Mike Blake: [00:37:24] I mean, can you imagine going into a bank right now? Right? I mean, really, 90 days ago, right? Now, it’s expected to go in with a mask, right? But if you do that 90 days ago, you would have been stopped at the door.

Zadhir Ladhani: [00:37:39] Exactly.

Mike Blake: [00:37:40] So, it would be interesting to see if there’s some sort of facial recognition technology that somehow accounts for masking.

Zadhir Ladhani: [00:37:49] Yeah.

Mike Blake: [00:37:49] So, we’ve talked mostly tactical, but I do want to draw back a little bit and get into a little bit of a strategic discussion.

Zadhir Ladhani: [00:37:58] Yeah.

Mike Blake: [00:37:58] And that is, you know, it could be tempting, I think, should be tempting to use the current environment as an opportunity to expand, right? Money is as close to free as it’s ever going to get. The government, by hook or by crook, and I’m not going to comment on what I think the soundness of the policy is, but the fact of the matter is that they’re knocking us over the head and stuffing our pockets full of cash, right?

Mike Blake: [00:38:33] They want us to have cash. And it would be tempting then to sort of take that cash or go after free or very close to free money and borrow maybe with the goal of expanding or maybe renewing your technology or production capabilities. What do you think about that? Is that a temptation that a lot of companies should give into or do you think most companies are going to resist that?

Zadhir Ladhani: [00:39:02] My gut says no. It’s counter-intuitive.

Mike Blake: [00:39:05] No, they’re going to resist it?

Zadhir Ladhani: [00:39:07] I’m telling my companies, don’t do CapEx right now. This is not the time to invest money in your business. Meaning, don’t take on more debt. Conserve cash, conserve your expenses. I may be an anomaly, but this is like no other time we’ve seen in recent history of businesses. The thing it is, we just don’t know what’s going to happen. You know, normal certain crisis, the short-term is known, the long-term is not known.

Zadhir Ladhani: [00:39:37] In this crisis, the short-term is not known, right? And so, it’s such anomaly time that, what will you do with that CapEx? So now, let me then nuance it for you. If your CapEx is for normal expansion, and you do your normal IRR, and all that, I would say no. If your CapEx is going to reduce your short-term expenses, which I know there’s a couple of business out there that are reinstalling their telephone systems from the copper wire telephone systems and their monthly system costs are much lower, now, that’s a different discussion, right?

Zadhir Ladhani: [00:40:13] So, it’s a nuanced answer. I had a very good friend last night called me, and said, I want to upgrade my software in my retail business. And we went through this analysis with him, actually. And the end decision was, yes, because now, this new software was enabling him to go do delivery, which his old system was not. And his staff was having to do manual work to do delivery. That cost benefit made sense. So, it really depends. It’s not the cheap money, it’s what the efficiency, and the new business opportunity you’re able to do, and the revenue increase you’re expecting from it, then it’s a big difference. Yeah?

Zadhir Ladhani: [00:40:50] So, it’s not, money is cheap, let’s invest because we have it. I would be very, very resistant. I’ll give you an answer, when COVID started, I had a luxury car. I actually took it back on the beginning of March just before the lock down happened. And as a personal business, I said, do I need to conserve cash? I had my cash reserves, but I felt that I need to even conserve more in case this is longer than I’m anticipating, right? And so, even a small business like myself, I kind of drank my own Kool-Aid.

Mike Blake: [00:41:23] Now, let me come back to you. One of the things that I think is going to increase that temptation is the capital equipment sellers, for the most part, computers are different. But I think just out in that machine or because they just need to get inventory out the door are going to make me coming back and saying, hey, look, we’re going to offer you a once-in-a-lifetime 40% discount or I’ll let you finance the thing over 19-and-a-half years. You know, you’re going to see some pricing, and I’ll bet you, when you return that car, they probably tried to entice you to keep it with some special financing one-time deal, right?

Zadhir Ladhani: [00:42:07] Right.

Mike Blake: [00:42:07] So, is there any point at which you might be talked into the CapEx of that commitment because that price is so attractive, and you think two years from now, you are going to have to make that expenditure anyway, so why not take advantage of it now?

Zadhir Ladhani: [00:42:27] If it’s for the same business I’m doing, I would resist it again. If you’re adding more services and opportunity of business that I don’t do now and it helps me add to the trends that I’m seeing and it gives me a new revenue opportunity, then I’m looking at it. But I would be very resistant on, if it’s the same business, it’s just a good deal right now. I’m very, very cautious and maybe I’m too conservative in that way, but I’m still very cautious on the short-term.

Mike Blake: [00:42:58] So, we don’t have much more time, unfortunately, but there’s a lot more we could talk about. But a question I want to work in here is about talent. And given what you said, I think I can anticipate your answer, but I don’t want to assume, you know, I’m guessing that probably goes the same for hiring talent, too. I’ll give you an example. A resumé was sent to me by a friend of mine for an individual in my industry that’s looking for a job, has fantastic qualifications.

Mike Blake: [00:43:33] You know, that person probably would not be available, but for this recession that’s going on. And it would be very tempting to try to hire somebody opportunistically, but the business case would be very thin, would be a very speculative hire. So, I don’t think that we’re going to proceed with that. But, you know, what do you think about that? Because I think a lot of companies are going to see opportunistic hiring opportunities where they may feel like they’re getting access to talent they would not ordinarily have. Do you think about that the same way as you think Cap Ex as well or is there a different thought process that goes on there?

Zadhir Ladhani: [00:44:16] This one is slightly different.

Mike Blake: [00:44:18] Okay.

Zadhir Ladhani: [00:44:18] When you’re doing your 80% and 50% scenario planning, one of the aspects I missed saying was your own talent. Identify your own key A players. And once you identify them, let them know you know they’re your A players. Even though they don’t have a place to go today, but the better the player, the more love they need. Give him the love, show them the love because they’re the ones who are going to come up with good ideas for you. So, that’s point one. Now, in your rest of your organization, if you have B, C players, and there’s A player talent available, I would swap it.

Mike Blake: [00:45:02] Okay. So, instead of adding, you’d upgrade.

Zadhir Ladhani: [00:45:05] I would upgrade. And I would say this is the time companies can upgrade because there’s going to be amazing A players available unfortunately for them. But as more and more companies have difficulty, as I think our fourth quarter is going to see many, many companies. And so, A players will be available, I would say upgrade. And when I say upgrade, I say your B, C players, when you swap them, do it with the most dignity and let them move on with dignity, living your core values. That’s also very important. But this is the time to upgrade. Absolutely.

Mike Blake: [00:45:42] Zadhir, this has been a great conversation. We’ve covered some really good nuggets and really specific nuggets too. It’s something I’m trying to do a better job of as I do the interviews of this podcast. I’ll bet you, listeners are writing down a lot of questions. How can people contact you for more information or if there’s a question we did not cover they’d like your insight on?

Zadhir Ladhani: [00:46:06] Sure. So, they can call me on my cellphone. And my contact number is 610-453-8461. Identify that they’ve heard, you’re in my podcast, and go from there, or look me up on LinkedIn, or email me, and we’ll put that on the podcast. Catch up and they can email me. And if they reference that they heard this and from our podcast, we’ll go from there. Happy to do that.

Mike Blake: [00:46:31] Well, why don’t you give us your email because somebody may not go to the show notes necessarily if they’re driving in their car, jogging, then they want to just hear it.

Zadhir Ladhani: [00:46:38] Sure. It’s zladhani, so Z-L-A-D-H-A-N-I, @velocitystrategicconsulting.com.

Mike Blake: [00:46:46] Very good. Well, that’s going to wrap it up for today’s program. I’d like to thank Zadhir Ladhani of the Velocity Strategic Consulting so much for joining us and sharing his expertise with us today. We’ll be exploring a new topic each week, so please tune in so that when you’re facing the next executive decision, you have clear vision when making it. If you enjoy this podcast, please consider leaving a review with your favorite podcast aggregator. That helps people find us so that we can help them. Once again, this is Mike Blake, our sponsor is Brady Ware & Company, and this has been the Decision Vision podcast.

 

 

Decision Vision Episode 63: Should I Buy a Business? – An Interview with Ray Padron, Brightworth

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should I buy a business
Decision Vision
Decision Vision Episode 63: Should I Buy a Business? - An Interview with Ray Padron, Brightworth
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should I buy a business
Mike Blake, Host of “Decision Vision,” and Ray Padron, Brightworth

Decision Vision Episode 63:  Should I Buy a Business? – An Interview with Ray Padron, Brightworth

Why buy a business? How do I manage the process of buying a business? How do I prevent an acquisition from destroying the culture of my existing business? Ray Padron speaks from his experience as CEO of Brightworth, an acquisitive private wealth management firm. The host of “Decision Vision” is Mike Blake and the series is presented by Brady Ware & Company.

Ray Padron, Brightworth

Brightworth is a boutique private wealth management firm that empowers its clients to focus on what matters most. They do that by helping their clients build, preserve and to make an impact with their wealth.

Their advisers have deep expertise across the financial disciplines with certifications that include the CFA,CPA, CFP and CIMA, JD and CFTA. The major client focus of Brightworth includes the dental industry nationwide, corporate professionals and executives, business exit transition services, and retiring well.

should I buy a business
Ray Padron, Brightworth

Ray is Brightworth’s Chief Executive Officer, leading strategic and management operations across the firm. In addition, as a Wealth Advisor, he provides comprehensive financial and investment advice to help clients achieve their financial goals and dreams. His experience working with senior executives and business owners and their complex transition and succession strategies helps him guide both Brightworth’s and his clients’ success.

Ray began his financial career with what is now PricewaterhouseCoopers, later working for the Marriott Corporation and then serving as Vice President of Accounting Operations and Financial Reporting for Finalco Group, Inc. In 1986, Ray became a Principal and Senior Vice President of Finance for Capital Associates, Inc., a regional venture capital firm that provided both capital and funding services for portfolio companies.

In 1988, Ray created ARC Financial Services, a financial planning firm that focused on the unique needs of business owners. He later merged that firm with Ron Blue Trust, a national wealth advisory firm, starting their Washington, D.C. and Baltimore, Md. branches and eventually becoming the Vice President of Practice Areas and Chief Financial Officer at the national headquarters in Atlanta.

Ray is a Certified Public Accountant and CERTIFIED FINANCIAL PLANNER™ practitioner. He has completed the Investment Management Consultants Association’s Investment Analyst Program at the Wharton School of Business at the University of Pennsylvania and is a Certified Investment Management AnalystSM. In addition, he is an Accredited Estate Planner®, a Chartered Life Underwriter and a Chartered Financial Consultant. Ray has been named several times in Atlanta Magazine‘s list of Five Star Wealth Managers*.

Ray is currently on the Board of Directors for the Georgia Chamber of Commerce as well as Junior Achievement of Georgia, the Executive Committee of the Buckhead Coalition, and is past President of CEO Netweavers, a community of CEOs and trusted advisors committed to helping and improving the Atlanta business community. He is also a founding board member of Matchbook Learning, a national non-profit K-12 school management organization focused on a unique blended, competency-based model of learning for struggling schools.

He is an active member of Business Executives for National Security (BENS), a non-profit organization focused on bringing the private sector together with our government partners to apply best business practice solutions to its most difficult national security challenges. In addition, Ray is a past member of the board of directors of the Financial Planning Association of Georgia, and a past chairman and board member of an international faith-based ministry.

Over the years Ray has been a frequent speaker to executives on retirement planning. He has also spoken on operational excellence within the financial planning and wealth management industry.

Ray and his wife, Sharon, have four grown children and ten grandchildren. His hobbies include international travel, golfing with friends, reading and exercise.

For more information, you can visit the Brightworth website or email Ray directly.

Michael Blake, Brady Ware & Company

Mike Blake, Host of “Decision Vision”

Michael Blake is Host of the “Decision Vision” podcast series and a Director of Brady Ware & Company. Mike specializes in the valuation of intellectual property-driven firms, such as software firms, aerospace firms and professional services firms, most frequently in the capacity as a transaction advisor, helping clients obtain great outcomes from complex transaction opportunities. He is also a specialist in the appraisal of intellectual properties as stand-alone assets, such as software, trade secrets, and patents.

Mike has been a full-time business appraiser for 13 years with public accounting firms, boutique business appraisal firms, and an owner of his own firm. Prior to that, he spent 8 years in venture capital and investment banking, including transactions in the U.S., Israel, Russia, Ukraine, and Belarus.

Brady Ware & Company

Brady Ware & Company is a regional full-service accounting and advisory firm which helps businesses and entrepreneurs make visions a reality. Brady Ware services clients nationally from its offices in Alpharetta, GA; Columbus and Dayton, OH; and Richmond, IN. The firm is growth minded, committed to the regions in which they operate, and most importantly, they make significant investments in their people and service offerings to meet the changing financial needs of those they are privileged to serve. The firm is dedicated to providing results that make a difference for its clients.

Decision Vision Podcast Series

should I buy a business“Decision Vision” is a podcast covering topics and issues facing small business owners and connecting them with solutions from leading experts. This series is presented by Brady Ware & Company. If you are a decision maker for a small business, we’d love to hear from you. Contact us at decisionvision@bradyware.com and make sure to listen to every Thursday to the “Decision Vision” podcast. Past episodes of “Decision Vision” can be found here. “Decision Vision” is produced and broadcast by the North Fulton studio of Business RadioX®.

Visit Brady Ware & Company on social media:

LinkedIn:  https://www.linkedin.com/company/brady-ware/

Facebook: https://www.facebook.com/bradywareCPAs/

Twitter: https://twitter.com/BradyWare

Instagram: https://www.instagram.com/bradywarecompany/

Show Transcript

Intro: [00:00:02] Welcome to Decision Vision, a podcast series focusing on critical business decisions. Brought to you by Brady Ware & Company. Brady Ware is a regional, full-service accounting and advisory that helps businesses and entrepreneurs make visions a reality.

Mike Blake: [00:00:20] And welcome to Decision Vision, a podcast giving you, the listener, clear vision to make great decisions. In each episode, we discuss the process of decision making on a different topic from the business owner’s or executive’s perspective. We aren’t necessarily telling you what to do, but we can put you in a position to make an informed decision on your own and understand when you might need help along the way.

Mike Blake: [00:00:39] My name is Mike Blake, and I’m your host for today’s program. I also touch my face, at least, 35 times a day. I’m a Director at Brady Ware & Company, a full-service accounting firm based in Dayton, Ohio, with offices in Dayton; Columbus, Ohio; and Richmond, Indiana; and Alpharetta, Georgia, which is where we recording today. Brady Ware is sponsoring this podcast. If you like this podcast, please subscribe on your favorite podcast aggregator, and please consider leaving a review of the podcast as well.

Mike Blake: [00:01:07] So, we’re talking about a subject that I’m a big fan of. And I’m a big fan of it because I think it’s extremely important, and nobody talks about it. And that is whether you should buy a business. And I say nobody talks about it because I’m in the transactional world, and I do my fair share of M&A, thankfully. And one thing that I’ve noticed is that there are plenty of seminars around that will talk about how you should sell your business and why. And there’s some that will even talk to you about succession planning, how do you transition at your business to a succeeding generation?

Mike Blake: [00:01:54] And I think those two subjects get covered a lot, quite frankly, because I think that’s where the most money is made. There’s a lot of money to be made, certainly, anytime a business sells, or brokerage fees, or legal fees, or accounting fees are, I don’t know, after deal dinner fees. There’s a lot of money on the move that occurs and is set in motion because a business is going to be sold. And that’s usually initiated by the seller. Not always, but usually. And to a lesser extent, that is true for businesses that are in succession. There’s a whole industry now around succession planning. There are organizations that offer some form of accreditation or some source of letters after your name because you’re a really awesome succession planner.

Mike Blake: [00:02:41] But buying a business, it’s really crickets. And even to the point where it’s actually hard to find an investment bank that wants to take on what we call buy side transaction. They don’t want to work for buyers because the perception is that buyers have less of a motivation to buy a business than a seller has to sell a business. And therefore, if you’re working on contingency, it’s a less reliable source of income. But buying a business, I would argue, is just as hard, if not harder than selling a business because the burden of information is on the buyer and it’s going to be in the asset that you buy.

Mike Blake: [00:02:41] So, Warren Buffett is famous for saying that “Price is what you pay. Value is what you get.” And if you do things right, you hope that value is, at least, equal to or maybe greater than the price. But the seller walks away with money, and they know what money is worth. But the buyer, they may not understand exactly what they’ve bought for a year or two or more after they’ve bought the business. And so, this is a rich topic for discussion. This can be one of these things. I may ask our guest to come back for a second part because I can just see right now that we’re going to cover a lot of ground and leave ground uncovered.

Mike Blake: [00:04:11] So, with that having been said, I would like to introduce you to my friend Ray Padron, who is Chief Executive Officer of Brightworth, a boutique private wealth management firm headquartered in Atlanta. Founded in 1997, they empower their clients to focus on what matters most. They do that by helping their clients build, preserve and make an impact on their wealth. Today, Brightworth has over 1400 individuals and families across the US, whom they helped build, preserve and be generous with their wealth, which is currently, according to their website, about $4 billion under management, letting them spend more time on the things that truly matter to them.

Mike Blake: [00:04:48] From the beginning, Brightworth built their firm to align their interests with those their clients that they’re always on the same side of the table with those they serve. A critical way in which they accomplish this is by being fee-only, selling no proprietary products and refusing to let compensation influence the guidance Brightworth provides to its clients. That’s important. Fee-based advisors are hard to find. Fee-based advisors who are good are very hard to find. That is not a usual model. So, pay attention to that.

Mike Blake: [00:05:16] They’re a team of over 50 professionals in Atlanta and Charlotte who are dedicated to providing independent and objective advice, taking care of their clients in the same manner they would want their own parents taken care of provide. By providing outstanding depth of expertise, the uniquely personal approach, they continue to create lasting relationships with clients to help build their financial future with confidence. Ray Padron, thank you for coming on the program.

Ray Padron: [00:05:40] Mike, it is a pleasure to be here. I’m glad you and I are getting to spend time together.

Mike Blake: [00:05:45] So, you’re now CEO and grand poobah of Brightworth. I know you’re a co-founder, but have you always been the CEO?

Ray Padron: [00:05:54] No. Actually, I took over the CEO position in 2014.

Mike Blake: [00:05:59] And in that time, how many acquisitions have you led Brightworth either through or maybe better yet into?

Ray Padron: [00:06:06] Sure. We actually have done three. And it was a very fortuitous. We had a chance to do a very small transaction first, which helped us sort of learn the ropes of integrating an individual practice into our firm. Then, the next transaction, which was probably within 12-18 months of that, it was sort of a team that was rolling out of another firm, they wanted to leave, and we brought them into our firm. A little more complicated. There was a lot more client work to do, paperwork, more conversations with the exiting that was taking place, et cetera. And then, there was a very large transaction we did, which doubled the size of the firm in 2017.

Mike Blake: [00:06:49] So, I’d like to talk about that one because it was clearly so material and so important. Why did you want to make that big an acquisition? Were you nervous about making that big an acquisition?

Ray Padron: [00:07:02] Right. Two questions. Yes, we were nervous, but the big reason for doing the acquisition was we decided we needed to actually have a a non-organic growth strategy. We’re in an industry, the wealth management industry is not actually that old, particularly the fee-only practice. So, when you look at what’s happening in our industry, there is issues around succession planning. We have literally hundreds, if not thousands of firms that are struggling with their own succession plans. All the first-generation owners who’ve created this business now were in what we would call a succession trap. They can’t sell their practice or their businesses to the next generation. It’s too late. It’s worth too much. And what’s happening is there’s this huge amount of consolidation that’s actually taking place because they have to do something.

Ray Padron: [00:07:54] At the same time, we’ve got private equity firms that are in large banks like Goldman Sachs that are buying up RIAs because they’re seeing changes in their own industry. So, there’s a lot taking place because the industry’s matured to the place it is. So, our choices are stick with organic growth or to do things that put us in the better position for the future. The future of this industry, there’ll be a handful of national firms. There’ll also be maybe 5 to 10 regional firms. And our decision six years ago was we want to be a regional firm. Let’s work towards that. And then, we can go from there. So, from a strategic standpoint, we needed to to do something and we needed to learn our way there. So, that’s pretty much the motivation for why we wanted to do an organic growth.

Mike Blake: [00:08:45] So, I like that distinction. That’s important kind of vocabulary point, organic growth versus inorganic. For our listeners who may not necessarily know that, organic growth simply means growth that you drive on your own by either expanding revenue from existing clients or adding new clients to your portfolio.

Ray Padron: [00:09:02] Exactly.

Mike Blake: [00:09:03] Right? So, I infer something. I wanna clarify. I wanna make sure I’m not assuming, but I infer from what you just said that you had a concern that if you did not acquire to become larger, you are at risk of potentially being acquired and maybe not under the best circumstances that you would like.

Ray Padron: [00:09:26] Sure. That’s exactly right. We actually had made the decision to work on our own succession plan 13 years ago. I was only 50 years old at the time. I was the oldest partner. So, we started our transition and our strategy for our own internal succession plan well in advance. We’re now at a point where the next generation, and we’re almost into third generation owners, own more of the firm than the original founders do. In fact, two of the founders are already gone. And the other two, myself included, will probably be gone in the next five to seven years. So, we’ve taken care of our part. Now, the question is, what do we want to become? And with all the consolidation taking place, it really is we wanted to be the masters of our own destiny. We’ve sold all our own succession plan. We should be able to survive all the changes that are taking place in the industry.

Mike Blake: [00:10:18] So, this big acquisition that you did in 2017, it’s hard to imagine. It’s three years ago now. How long did that take?

Ray Padron: [00:10:27] Longer than I anticipated. There was a really interesting process. We actually had met several years before that. They were interested in their own succession plan, wanted to meet with us to understand how we had done ours, and approached one private equity firm, in particular, to help them do that. After, I think, working with them for 18 months realized there wasn’t enough time, and they came back to us and said, “Would you be interested? We really like you. Why not consolidate the two firms?” And that was a great opportunity for us.

Mike Blake: [00:11:04] So, you said that the acquisition took longer than than expected. What knock-on effects did that have on other aspects of your business or maybe the acquisition itself? How did that change the tenor?

Ray Padron: [00:11:19] Sure. And I didn’t really s answer the last question well in a sense of why did it take so long. But there are a couple of things that had to take place. You have this whole LOI, which is our first time we actually did something as formal as sending out an LOI. You start doing some due diligence, and you realize, “You know what? The way we structured the LOI, some of the provisions really did need to change.” And one of those was there was a follow-on transaction that we felt was really important. There were two parts to the transaction. There was the investment, the registered investment advisor. And then, there was a planning firm. And there was issues with the planning firm. We realized we needed more than just a — what would you call it? An option. We needed an actual drop-dead date where we would actually be able to do something.

Ray Padron: [00:12:09] So, anyways, that process required us to sort of renegotiate from the LOI a different transaction. And that really is the reason why it stretched out. The cascading consequences of that are both positive in a sense for us and negative. The negatives, as I’m sure everybody can imagine, the longer you take, it’s like a death march. The more time people have to think of things, they want answers that I’m trying to explain to them, we’re going to answer those things on the other side of the transaction. So, where there are blanks in in people’s minds, they filled it with usually negative things. So, it’s this constant grind of trying to solve things and ghosts, I call it, that they think exist that just aren’t there. So, those are the negative things. The positive things where the firm actually grew during all that time, the firm we were buying. So, our initial upfront cost relative to the revenue we’re buying ended up becoming much lower.

Mike Blake: [00:13:10] Now, that’s interesting. And that speaks to the fact that on the sell side, they ran their process well because the more frequent outcome you see as that the firm stagnates or even declines in the sale process because selling a firm, and as I think you discover, buying a firm becomes a full-time job in and of itself. And so, frequently, the very asset you’re targeting can be neglected. If it’s not run well, if it hasn’t scaled well, it’s not as valuable an asset at the end of the process as it was when you started, but you encountered the reverse phenomenon.

Ray Padron: [00:13:42] Yeah. Good point.

Mike Blake: [00:13:43] And that must have given you, then, a lot of confidence. You found the right partner. You are doing the right thing.

Ray Padron: [00:13:48] Yeah, they’re a very focused business. They’re focused on the dental industry. So, they were able to continue to—what’s the word? Kind of run their flywheel. And they have this great marketing engine, which is one of the things that absolutely attracted us to the acquisition. And that marketing engine just kept working.

Mike Blake: [00:14:08] So, actually, I want to I want to touch on that ’cause something you led off with and now are coming back to, I think, is a very important instructive point, which is you didn’t buy a business for the hell of it. You bought a business because you had a specific objective that you wanted to meet with buying one or more businesses, right?

Ray Padron: [00:14:30] Correct.

Mike Blake: [00:14:30] And presumably then, you are prepared and perhaps did walk away from potential targets that we’re not going to help you meet that objective.

Ray Padron: [00:14:38] Correct.

Mike Blake: [00:14:38] Right? So, a there’s a deliberate process. And I think that’s important because— actually, what I’m going to back out, I’m assuming some of that may not be true. Do you, on occasion, receive unsolicited offers? Some firms or brokers say, “Hey, this this thing’s available. Would you like to buy it?”

Ray Padron: [00:14:54] Absolutely.

Mike Blake: [00:14:55] And most the time you say?

Ray Padron: [00:14:57] No.

Mike Blake: [00:14:57] Why?

Ray Padron: [00:14:58] Well, there’s some very specific things that we’re looking for. One is we love the idea of there being a succession trap because, usually, that means we can get this at a decent price. But there has got to be a whole host of things that have to be behind that to make it work. You got to have talent. There’s got to be a set of hungry next generation people who’ve been waiting for something to happen, so they can take over this business. I can’t just ask somebody from Atlanta to move up to Charlotte to run the firm.

Ray Padron: [00:15:31] So, we were looking for several things. One is a strategic location. If I get an offer to buy a firm in some small town in Alabama, I’m not interested in that. So, Charlotte was a strategic location. You’re looking for a strategic talent –  the credible talent and group of next-generation people that were ready to take over the business. And then, I’m trying to think of what the third thing was. Oh, a strategic market. So, our Atlanta business is very focused on corporate executives and professionals, as well as with business owners. Having a business up in Charlotte that’s entirely focused on the dental industry nationwide was a really cool and very unusual. You, usually, don’t see that in our industry.

Mike Blake: [00:16:13] And we had another guest on, Rod Burkert, who talked about the need to specialize. This is not really in our script, but I sort of have to ask you, do you feel that specialization has been a benefit?

Ray Padron: [00:16:24] Absolutely. People want to work with people who know their business and the phase of life that they’re in.

Mike Blake: [00:16:32] Yeah. And I think clients appreciate not having to educate their advisors-.

Ray Padron: [00:16:39] Absolutely.

Mike Blake: [00:16:39] … about their business. And being a generalist, it’s hard to sort of defend to a client that says, “Hey, should I get somebody that’s done one of these before or not?” No, you don’t need someone who’s done one of these before. Your business is any old business.

Ray Padron: [00:16:58] Right, exactly.

Mike Blake: [00:16:58] I’ve never been able to really figure how to carry that conversation and not sound dumb doing it. If there’s a way, please send something into info@decisionvision.com, whatever the hell our email is. Help me figure out how to do that.

Ray Padron: [00:17:11] Really.

Mike Blake: [00:17:14] So, this opportunity came about because you had some kind of relationship, and there was sort of a slow-burn conversation. Let’s just sort of dip your toe in, and I think sort of gradually weighed in. Is that fair?

Ray Padron: [00:17:25] Yeah, that’s fair statement.

Mike Blake: [00:17:27] So, at some point, you then flipped the switch from conversation to real negotiation discussion. You touched on this before, but I want to really dive into this. What was your due diligence process like?

Ray Padron: [00:17:40] So, the due diligence process actually went incredibly well. There are several reasons. The individuals we were dealing with, some of them actually were attorneys. And so, they had a really good understanding of some of the things we were going to be asking for. We also had a private equity firm, our financing arm, if I may, that was helping us do the acquisition, had done literally dozens and dozens of these in this space. So, we really knew exactly sort of what to ask for, and how to build out the data room, and et cetera. So, that process actually went really well and smoothly. We have a full-time compliance officer who knows exactly, again, what we need to be doing and looking for. So, it was a pretty smooth process. It didn’t take very long.

Mike Blake: [00:18:27] How long did it take? Do you recall?

Ray Padron: [00:18:29] It’s about 30 to 45 days.

Mike Blake: [00:18:31] Okay. That’s a well-run due diligence process, which I’m sure your buyer— I’m sorry, your seller appreciated.

Ray Padron: [00:18:37] Yeah, it was.

Mike Blake: [00:18:38] Because a seller, when I advise sellers, I tell them to be prepared for a 90-day, sometimes even 120-day due diligence. And that gets them to the death march things you talk about.

Ray Padron: [00:18:48] Exactly.

Mike Blake: [00:18:48] Everybody’s happy and cheerful for the first two weeks of questions. And then, after that, it’s, “Oh, God. I got to do this again,” right?

Ray Padron: [00:18:55] Yeah, yeah.

Mike Blake: [00:18:56] I can’t imagine what it’s like by day 100. You just want to chuck everything and say, “You know what, I’m just gonna sell this to the government.”

Ray Padron: [00:19:03] It’s funny, and I mentioned it earlier, there were these two parts – the getting the RIA part in the due diligence done. Really, we had that done all in 90 days, including the purchase agreement. It was renegotiating the aspect of the LOI that required the acquisition of the other part that took us another 12 months. It was that, which where we had the death march.

Mike Blake: [00:19:26] Now, what’s interesting in the due diligence too is that in your world, you’re a highly regulated industry.

Ray Padron: [00:19:26] Very, very very.

Mike Blake: [00:19:36] And one in which potential liability and, frankly, disaster is lurking around every corner. And as you said, you have a compliance officer, all RAs either have an internal or outsource compliance officer. You pretty much have to, I think.

Ray Padron: [00:19:51] Absolutely.

Mike Blake: [00:19:55] How afraid were you, concerned were you about finding that or maybe not finding that gremlin under the rug that, all of a sudden, now, it becomes your responsibility? How big a concern is that in your industry?

Ray Padron: [00:20:13] It’s a big concern. Obviously, there’s two things that you do. Well, or maybe three things that you’re doing that kind of help mitigate a lot of that. Obviously, we did an asset purchase. We weren’t buying the stock of the company. So, there’s sort of step one.

Mike Blake: [00:20:28] So, that gives you some level of protection.

Ray Padron: [00:20:30] They actually have compliance files, which they have to have. And if they’ve been recently audited, they’re probably very up to date. So, that gives you another layer of comfort. You’re going to do an audit of their CRM. Well-run firms got every client conversation or every issue sitting in CRM. So, you’re going to do a set of tests through their CRM for, particularly, their larger clients where there might be larger financial exposure. In this case, the firm that we purchased did have one issue with a client. It was disclosed to us right upfront. It wasn’t a big deal. Clients get upset sometimes.

Ray Padron: [00:21:08] And then, the last thing is the clients are required to sign a consent on the transaction. So, we can’t just buy a firm and then the clients go, “Wait a minute” all of a sudden, “Who’s Brightworth?” So, there’s this whole communication process. And the clients actually consent to the transaction. So, there’s another set of affirmations that there’s no problems lurking out there or if they are, they’re going to make a decision not to come.

Mike Blake: [00:21:32] So, that’s interesting. I think I kind of knew that but hadn’t really internalized it. Is a client consent such that they consent to be transitioned over or could a client potentially even hold a transaction?

Ray Padron: [00:21:46] They can’t hold a transaction, but what they can do is isolate what issues are. And effectively, then, they would not sort of consent to moving over, and they can no longer be a client.

Mike Blake: [00:21:57] They can opt out basically.

Ray Padron: [00:21:58] And then, it changes the math of the transaction.

Mike Blake: [00:22:01] Now, I wonder, the way you kind of work through this due diligence process and compliance, I guess I wonder if in a way it’s easier because you can kind of look up with FINRA what kind of actions have been taken, if any sensors, anything like that, that’s gonna be a matter of public record.

Ray Padron: [00:22:18] Exactly. And that’s not just at the firm level but also at each advisor level.

Mike Blake: [00:22:23] Okay.

Ray Padron: [00:22:23] Right. If there’s an action against a specific advisor that maybe they even hired after that issue came up, it’s all gonna be out in the disclosure systems that we check.

Mike Blake: [00:22:34] So, that’s a luxury relative to a lot of other industries-

Ray Padron: [00:22:38] Absolutely.

Mike Blake: [00:22:39] … that the skeletons, they can’t be in a closet or it’s a very easy closet to open.

Ray Padron: [00:22:44] Exactly.

Mike Blake: [00:22:47] So, you’re working through a due diligence process. At what point does your conversation talk turned to pricing terms?

Ray Padron: [00:22:56] Most of the pricing terms were worked out upfront and were in the LOI. We structured it that way. We are basically saying, “We’re going to purchase your revenue at X. And we’ve built out an earn out of whatever, over a five-year period.” And so, most of the pricing was already determined.

Mike Blake: [00:23:14] And how difficult was that? Was there a lot of back and forth? Or did you and the seller find that you had kind of a similar mindset?

Ray Padron: [00:23:22] In this case, it was very similar mindset.

Mike Blake: [00:23:25] In other cases. were there not? Are there cases where you found that a show stopper?

Ray Padron: [00:23:30] No. In the other ones, it was less of an issue because there was much smaller transactions and the multiples were just one time; where this was an earn-out calculation. So, it gets a little bit more complicated. And when you have market volatility like we do today, yesterday anyways, it becomes a much more complex conversation.

Mike Blake: [00:23:51] So, did you do this transaction yourself or did you have a team of advisors helping you with us?

Ray Padron: [00:23:57] Great question. Probably one of my— I call it both a strength and a fault was this one transaction, in particular, I did most of the work from a Brightworth perspective. Now, the good news is I had a private equity firm that specializes in this. So, they were a big part of helping keep things on track, make sure our thinking was clear, and moving the transaction forward.

Mike Blake: [00:24:23] You said you had a private equity firm. In what way? What? How are they involved? Were they a client that’s just sort of helped you along the way or professional contact?

Ray Padron: [00:24:30] No. They’re actually an investor in the transaction. So, it’s a-

Mike Blake: [00:24:33] Oh, I see. Okay.

Ray Padron: [00:24:34] Yeah. They’re just partly a Brightworth private equity purchase of the business.

Mike Blake: [00:24:39] Got it. Okay. So, I didn’t know that out of the transaction. So, it sounds like, I would think initially, my first reaction would be having another seat at the table would make the transaction more complicated, but it sounds like in your case, it also made it easier.

Ray Padron: [00:25:01] Yeah, it absolutely did make it more complicated. Quick funny story. My wife and I have a place in Florida condo. One day where I was working, negotiating with and against the private equity firm on pricing, I was working on the transaction itself, negotiating compensation. I don’t think I got off the phone over a 10-hour period, and I’d walked over five miles just inside my home working through those kinds of issues. So, yeah, it can get really complicated.

Mike Blake: [00:25:36] Now, a lot of people talked about the importance of culture. I’ve known you long enough to know, you are a big culture guy.

Ray Padron: [00:25:44] I am.

Mike Blake: [00:25:44] This is not something that’s just a Harvard Business Review article that you read. This is something that is critical to you. It’s part of who you are and what’s made you successful.

Ray Padron: [00:25:54] Thank you.

Mike Blake: [00:25:54] You are acquiring a large firm. How did you explore culture and get comfortable that an acquisition of that magnitude wasn’t going to blow up what you’d spent the prior 20 years building?

Ray Padron: [00:26:09] Yeah, great question. And probably the biggest concern that you have with your own team when you’re proposing this to your own management committee and your partners, in this case, it was really kind of an interesting process. Step one, and I do this as I’m looking at firms that are out there that I would call targets, they’re what I’d call stealth targets. I’m not using their name. Nobody else in the firm knows. But I actually go to their website, and I’ll sit there and look at the bios of what I would call the next-gen leaders or the senior team that we would probably be buying out. And in this case, when I looked at their website, it was, “Wow! I could take that that bio and that person, lift it out, I could set it right in the Brightworth, and you would know the difference. They’d look and feel just like a Brightworth advisor.” That’s not culture, but it is a big step. You see the things that they’ve done. You see what their hobbies are. You see what’s important to them, their certifications, et cetera. They were definitely felt like Brightworth.

Ray Padron: [00:26:09] The next thing is you’ve got to talk about how they make decisions. How do they govern themselves? That’ll tell you a lot about the leadership. Is it a top-down kind of thing? Is it consensus building? And then, the other part is you actually go in there and you show them, “Here’s how we run our firm. Here’s what we expect from ourselves as human beings working together to get things done for our clients. We want to look as healthy on the inside as we look to our clients on the outside.” And the other thing is you spend time with them. We encourage to do assessments if we can get them to do there. Step one is I share mine, “Here’s my assessments. I want you to see what my profile looks like.” The fact I’m a take charge person and I tend to be a bit spontaneous, et cetera. Those are the things I want them to know about. So, I open the firm up to them. And at the same time, hopefully, allow them to be and feel more open to us. And we kind of learn our way there.

Mike Blake: [00:28:15] I’m glad you say that one. When my firm was acquired by Brady Ware two and a half years ago, I volunteered my profiles because I wanted them to know what they are getting into, and I wanted them to self-select out. And my profile basically says that I am a raving lunatic that is always pushing the edge of stuff, that is a creative type, that doesn’t follow rules, that doesn’t pay attention to administrative detail and doesn’t acknowledge that they’re even important. And basically says that you’re retaining an anarchist.

Ray Padron: [00:28:51] Right.

Mike Blake: [00:28:52] Right? And I thought it was important that they sort of understood what they’re getting into. That when I told them that, I wasn’t just being self-deprecating. I have empirical data that demonstrates that’s the kind of person that I am, so that they understood what they kind of getting into.

Ray Padron: [00:29:10] Sure.

Mike Blake: [00:29:10] And I think that’s why our relationship has, although it’s had some bumps, I’ve only threatened to burn the building down twice, it’s had its bumps along the way, I think it survived because we also realized a culture is going to be a threat. And even as one person who was a loud mouth going into 160-person firm can be just as disruptive to culture if you don’t play it correctly-

Ray Padron: [00:29:38] Absolutely.

Mike Blake: [00:29:38] … as a large acquisition.

Ray Padron: [00:29:40] Yeah. If you think about it, you really are. The closer you can get the authenticity or in transparency is the sooner you can get to a win/win. They don’t want to buy trouble, and you don’t want to inherit trouble. And the best thing you can do is lay it out there, and just be clear on what life forward is going to be like.

Mike Blake: [00:29:59] And you don’t want to walk into trouble either.

Ray Padron: [00:30:01] Exactly. The other thing, and I did mention this, that you should look for, and that is turnover. Go back through the last five years and see how much turnover did the firm actually have.

Mike Blake: [00:30:12] And you’re an industry that has some turnover.

Ray Padron: [00:30:14] It really does. In large part because the way these businesses have been built, they tend to be very siloed. Everything’s concentrated at the top. And you have all these young advisors coming up through the ranks who are looking for opportunity. If you don’t bring that to them, which includes ownership, something we solved at Brightworth a long time ago, they get frustrated and leave. And we earn in talent race in our business.

Mike Blake: [00:30:37] Yeah. So, you’re the chief executive officer, but I don’t think you’re a dictator. You didn’t come in wearing a sash or a big hat and frilly shoulder pads or anything like that. So, how did you get your other partners on board? How involved were they? And how did you manage the— I don’t want to say politics. That’s not the right word. But how do you manage the relationship and communication, so that they would be inclined to be a constructive force in the transaction?

Ray Padron: [00:31:11] Sure. Great question. And there’s sort of several parts to this one too. There’s the management committee and the partners. And then, there’s the entire Brightworth team sitting in in Atlanta. So, one of the things we already had was what were our critical success factors in our mergers and acquisitions strategy that we were looking for? Check the boxes, strategic location, strategic talent, a focus in a niche market. Check, check, check. So, all of the basic things were covered.

Ray Padron: [00:31:43] The other part to this is that you have to realize that there’s sort of a— I call it there’s two kinds of people. At Brightworth, I saw two kinds of people. There’s always the wow group, which is, “Wow, this could be amazing and great.” They see the check next to the critical success factors. And then, there’s the other group, which is, “How in the world are we going to pull this off?” And you really have to take your time with the hows because they’re going to have a billion questions sitting in their head about, “How is that going to work from a compliance? How is that going to work from an investment standpoint? How are you going to integrate all this?” There’s all these millions of questions. And I’m an influencer. I am a very positive person. And at the same time, I have to be patient. You’ve got to bring them along. You’ve got to give them the time to process these things. And partly, you’ve also got to say, “Well, you’ve got to have a little bit of faith here.”

Ray Padron: [00:32:39] I had a great question at a staff meeting when I announced that we were pursuing this large acquisition. A gentleman in the group, he was one of our planners, said, “What makes us think we can pull this off? Like, what makes you think we can actually do this?” And the fact of the matter is I didn’t know we could do this. I can’t prove to them that we can do this. But I looked around the room, I said, “Look, we’re one of the few firms who’ve invested a lot in our next-generation leaders. They’ve done an amazing job over the last 10 years of moving from where they were to where we are now. We’re at the right place in our maturing as a company to go find out. I don’t know if we’re riding a 5-speed bike, a 10-speed bike, or an 18-speed bike. But the only way we’re gonna find out is to attack the hill, and let’s go see.” And that really won a lot of people over.

Mike Blake: [00:33:30] Interesting that you bring up, and not just bring up but that you involved your employees. I think that’s an unusual step to take. I think when most executives pursue a material transaction, buy or sell side, they try to keep that a very closed discussion with a very tight inner circle, I think, primarily, because they’re afraid of causing fear and uncertainty.

Ray Padron: [00:33:58] Sure.

Mike Blake: [00:33:58] Right? Although, I think that tends to backfire. We’re kind of seeing now with the coronavirus thing, the more that you try to cover up, all that does, it makes people’s imaginations become more active.

Ray Padron: [00:34:12] Yep.

Mike Blake: [00:34:12] Right? So, it hurts in the long run. But also, what you did is that you made yourself subject to scrutiny. You  put yourself in a position of a public forum where one of of your planners said, “Basically, what makes you so great? Who do you think you are that we can pull off this really successful thing?” and gave you the opportunity to put you in the position of being vulnerable and saying, “Well, I don’t know. But here’s what my faith is based on.”

Ray Padron: [00:34:41] Yeah, exactly.

Mike Blake: [00:34:43] But not all leaders appreciate being questioned right by the “rank and file” of the organization.

Ray Padron: [00:34:50] Sure. Just from a personal philosophical standpoint, I have found that the benefits of having the open conversation and the challenge outweigh the other way, which is don’t tell them anything. And we actually used to have that culture of telling these people very little. I want to have the questions in advance on a card. And that’s just not my style.

Mike Blake: [00:35:18] Well, I think you get buy-in. We just recorded a podcast with another individual talking about CPA firm relationships, and what he said was that the most disruptive thing to a CPA relationship is a surprise, a material surprise. Very few things are more surprising than an e-mail at 8:30 in the morning on a Monday saying, “Hey, we just acquired a firm equal our size in Charlotte. More to come.”

Ray Padron: [00:35:46] Right. Yeah, exactly.

Mike Blake: [00:35:48] Is that really helping you retain people? And B-.

Ray Padron: [00:35:52] No.

Mike Blake: [00:35:52] And [B], have people be more comfortable with the transaction than if you’ve kind of at least said some information along the line?

Ray Padron: [00:35:59] Exactly. Exactly.

Mike Blake: [00:36:02] So, you made this acquisition in ’17. You’ve had a few years to step back. How has it change your firm?

Ray Padron: [00:36:09] Okay We have not stepped back. That’s the funny part.

Mike Blake: [00:36:12] Okay.

Ray Padron: [00:36:12] All the work starts. You get that signature, you cut a check, and now you’ve got a lot of work to do. And we went from, like I said, with effectively, what were we? We were about 25 people. They were 16. We’re now 80 people. It was a big giant step for our firm. So, we had an awful lot of infrastructure we needed to build out while we were integrating. So, at the time that we did the acquisition, I was effectively CEO, CFO and COO. Well, that couldn’t last very long. So, over the last two years, we’ve spent time building out the infrastructure. We now have a chief operating officer, a chief financial officer, people officer. I’m trying to think what else, but we’ve built in the matrix management between the two offices, so that it’s really clear where all the planners actually report to. And it’s taken an awful lot of time and effort.

Ray Padron: [00:37:13] We’ve answered all the questions that I tried to push off until the other side of that the transaction, and that’s worked out really well. We follow through with our promise, which was we told them, “Look, we realized you’re the same size as us pretty much.” We had more infrastructure built out than they did, but we told them, “We will figure this out together.” I’m sure that was a Jimmy Carter ‘Please trust me” kind of a comment but we follow through. We said, “Look, okay, let’s go sit down. Let’s start talking about CRM. Let’s talk about our trading software. Let’s talk about where trading should take place.” And we’ve worked through all those things together.

Ray Padron: [00:37:51] Now, that’s going to be a lot harder on the next one because we’ve made a lot of decisions about how we’re going to organize ourselves, et cetera. So, the next one won’t be as— what’s the word? Together, if I may. It’s going to be-.

Mike Blake: [00:38:03] Quite as collaborative.

Ray Padron: [00:38:06] Thank you. We’ll be quite as collaborative. It’s got to be more our way than the highway or whatever, but we’ll still take the best. Like if we find another firm that’s of substantial size, and they’re doing something we really like, I think the pain of change now is going to be way better than just trying to force people into a system that’s not as good. So, we’ll make changes. It just won’t be as many changes as we’ve done this time.

Mike Blake: [00:38:34] So, you sound like you’re happy with the results of the acquisition.

Ray Padron: [00:38:37] Yeah. Great team. I love our partners. I can’t tell you how many times they’ve come up to me and said, “Man, we are so glad that we’re part of Brightworth now.” And from that standpoint, people’s standpoint, I could not ask for a better decision. Their firm, if I may, their part has grown by leaps and bounds. And so, everything’s working out. But it’s, again, really hard work. There are periods of time where they probably feel like, “We’re starting to feel like the stepchild,” and it means I’m not spending enough time up there or we’re not putting the right resources there. And we’re working through how to do all of that.

Ray Padron: [00:38:37] Our decision making around hiring, for example, is a little bit more driven around real calculations of what capacity is across the organization. Theirs was a little more by the— I’m not going to use the word seat of the pants, but hey, we’re feeling really busy. I think we need to hire somebody. So, now, we’re bringing structure around all that. They’re not used to that. And we’re learning a lot of things from them. So, it’s been a lot of, I would say, really a win/win from that standpoint.

Mike Blake: [00:39:43] Are you finding that your offices still have slightly different cultures? And maybe that’s a good thing.

Ray Padron: [00:39:49] Sure. And part of that is their service model is a little different. It needs to be. We’re very, obviously, Atlanta-centric. We, obviously, have clients all over the country. Those larger clients, we go fly to. And the Atlanta clients, they just kind of drive to the office. Well, their space, the dentists are all over the country. They actually have the dentists fly into Charlotte. So, the dentist will come in, come to the building. It’s almost like a Mayo Clinic structure. They’ll meet with the attorney. They meet with the transition’s person, the TPA, the CPA, and they meet with us. So, there are some cultural differences but we really are merging the cultures, and that’s working really well. We have very defined sort of terms and accountability around our culture. So, there are a lot of things and behaviors we don’t tolerate, and we’d make sure we jump on those. So, we’re seeing it really come together.

Mike Blake: [00:40:43] I don’t know if this is either here or there but I feel compelled to add in. Microphone’s turned on, so I’m just going to say it. But we were the result of the acquisition of Brady Ware and several firms, including two in the Atlanta area that became the Atlanta office. And our Atlanta office does have a different culture, I think, than the rest of the firm. And I think that’s a good thing. It’s a good thing for me because I do believe that our office is a little bit more entrepreneurial. We do feel like we’re kind of the rebels a little bit, and we’re not afraid to kind of do skunkworks kind of stuff and put things in place that we know are going to hurt the rest of the firm, but we just don’t feel like we got to wait for everybody to catch up to realize how brilliant we are and that we’re right. And we think that if we set a good enough example, the rest of firm will come along.

Ray Padron: [00:41:35] Sure.

Mike Blake: [00:41:36] Personally, our headquarters are in Dayton, Ohio. I don’t know that I would thrive in our headquarter office because it is the central office. It is the core of the firm. They are accountants. There’s nothing wrong with accountants. I worked for an accounting firm but it’s much more of a by-the-numbers kind of place.

Ray Padron: [00:42:00] Sure.

Mike Blake: [00:42:00] And so, personally speaking, having another location of the firm that is willing to be a little bit different where I can be a better fit, for me, has been a huge benefit. And I actually think it benefits our firm.

Ray Padron: [00:42:15] Sure. And I think that’s a really good thing. And I would think every organization, and this is even true around operational issues, which is what are things that have to be absolute, and what are the things where we have some flexibility around? And part of that is also culture and how people operate. But there are also some boundaries where things are just plain not acceptable. And we think those boundaries are really also important to enforce and make sure that there are no exceptions, particularly at the partner level. If we let the partners live in the exception area, the staff will never follow. So, they have to see that at the partner level. And we’ve actually had issues around that, and we’ve dealt with them. And that really speaks volumes to the team.

Mike Blake: [00:43:03] So, you’ve been through a couple of these. And thank you again so much for spending all this time with us and sharing your experience. If someone listening is thinking about buying a company, if we can distill down to a couple of pieces of advice, couple of bullet points, can you do that? Or are there a couple of pieces of advice you’d just give blanket thinking about buying a business, what do you need to think about?

Ray Padron: [00:43:26] Couple of things. One is we talked about it, it’s the death march. So, it’s almost like preparing for a marathon. You have to mentally say, “Okay. I may get this done in six months, but it also may take a really long time.” And just prepare yourself, which also means linked to neglect. So, you have to prepare. Also, know your team. Who are you going to draw into the process and when? And sort of understand how they’re built, right. Are they a wild type of a person or are they going to be a how type of a person? Knowing that it’s good to have those people were always asking how because they’re the ones you’re going to help you with the due diligence and really ask a lot of good questions. So, know your team, expect a long march.

Ray Padron: [00:44:07] One of the things that really was hard for me was realizing that everything matters to somebody. And I have to realize that, “Even though it may not matter to me, like, yeah, that’s just not an important deal point. Why are we bothering with that?” it matters to somebody in the firm. So, you have to take the time to address it and address it well. So, in a sense, details matter. Everything matters.

Ray Padron: [00:44:31] Know your boundaries. I work a couple of times where I got hooked on some policy that they had that they wanted to keep, and it was an absolute no for Brightworth. But when I really looked at it, it was just not a big deal. And I let it bother me. And I was really ready to just say the heck with it and walk away when the PE firm or our attorney would step in and go, “Ray, it’s just not that big a deal. It’s just small potatoes. We’re talking billions of dollars of assets to manage. Who cares whether you’re going to charge your parents or not for the services you’re doing,” that kind of stuff.

Mike Blake: [00:45:08] You want to charge a $5 million fine for a 50 cent crime.

Ray Padron: [00:45:10] Yeah, right. And then, the other thing is when you’re doing the LOI, again, it was my first time, there’s just an awful lot of cascading consequences of anything that’s in there and you need to think ahead. Like what are the cascading consequences of putting this specific thing in your LOI? I found myself having to cover a lot of areas that I didn’t think about because you’re sort of sold that the LOI is just this general document, you want to put too much detail in it, but sometimes you do. You really want to think ahead. Those are my suggestions.

Mike Blake: [00:45:47] I’m going to use that quote. I may even make it my quote of the day that I do on LinkedIn, “Everything matters to somebody.” That-.

Ray Padron: [00:45:53] Really do.

Mike Blake: [00:45:53] That is profound and insightful.

Ray Padron: [00:45:56] Thank you.

Mike Blake: [00:45:56] At least, to me, it is. I think, to other people, it will be as well. If somebody wants to ask a question about how to buy a business, as somebody who has been through the wars before, can they contact you?

Ray Padron: [00:46:05] Absolutely.

Mike Blake: [00:46:06] How do they do that?

Ray Padron: [00:46:07] Well, there’s always the website. My my email address is ray.padron@brightworth.com. And you can always call our phone number, which is 404-760-9000.

Mike Blake: [00:46:20] That’s going to wrap it up for today’s program. I’d like to thank Ray Padron so much for chair for joining us and sharing his expertise with us today. We’ll be exploring a new topic each week, so please tune so that when you’re faced with your next executive decision, you have clear vision when making it. If you enjoy this podcast, please consider leaving a review with your favorite podcast aggregator. It helps people find us, so that we can help them. Once again, this is Mike Blake. Our sponsor’s Brady Ware & company. And I’ve just touched my face three more times. And this has been the Decision Vision Podcast.

Decision Vision Episode 62: Should We Sell the Family Business? – An Interview with Gaia Marchisio, Cox Family Enterprise Center at Kennesaw State University

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sell the family business
Decision Vision
Decision Vision Episode 62: Should We Sell the Family Business? - An Interview with Gaia Marchisio, Cox Family Enterprise Center at Kennesaw State University
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sell the family business
Mike Blake and Dr. Gaia Marchisio

Decision Vision Episode 62: Should We Sell the Family Business? – An Interview with Dr. Gaia Marchisio, Cox Family Enterprise Center at Kennesaw State University

How do you recognize when it’s the best decision to sell the family business? Can a dysfunctional family operate a functional and successful business? Dr. Gaia Marchiso of the Cox Family Enterprise Center at Kennesaw State University joins the show to answer these questions and much more. The host of “Decision Vision” is Mike Blake and the series is presented by Brady Ware & Company.

Dr. Gaia Marchisio, Cox Family Enterprise Center at Kennesaw State University

The family enterprise field shares a common experience:  navigating the space where family relationships and professional demands coexist. Family members, non-family executives, external advisors and students all traverse this unique sphere, mutually working through the complexity in pursuit of success.

The mission of the Cox Family Enterprise Center (CFEC) is to act as an intellectual and practical hub for this community. With specialized programming, events and services tailored to the needs of each segment of our community, we focus on creating growth opportunities that empower individuals and organizations. We are proud to be a gathering place of learning, facilitating new skills, richer capacities, and sustainable relationships.

sell the family business
Dr. Gaia Marchisio

Dr. Gaia Marchisio is the Executive Director of the Cox Family Enterprise Center at Kennesaw State University. As a tenured Associate Professor of Management at Kennesaw State University’s Coles College of Business Gaia developed several curricula for family business classes, and teaches undergraduate and MBA courses on family business, management and behavioral sciences, and consulting services. She has been a visiting faculty under numerous Family Business Centers in Latin America, Asia, Europe, and New Zealand.

Gaia’s academic experience allows her to be rigorous and up-to-date in dealing with family business topics. She has been participating in research projects with international partners from Academic and Professional environments (including McKinsey & Company and the Italian Stock Exchange); and has strong global experience in collaborating with financial institutions and associations working with family firms, such as International Finance Corporation (IFC – World Bank Group), Inter-America Investment Corporation (IIC – Member of the IDB Group), Credit Suisse, UBS, and Australia and New Zealand (ANZ) Banking Group, to name few. In particular, Gaia has experience working with financial institutions, both consulting with them on family business related topics, and training their clients and/or associates.

In 2013/14, Gaia spent her sabbatical leave, during which she served as the Chief Learning Officer for FBN Academy, an initiative by the Family Business Network in Asia. Gaia is an active international speaker and family business advisor. She regularly presents and/or advises families on various topics in family business management around the world, including facilitating some of the owners meetings. These families are from around the world including Europe, North and Latin America, the Caribbean, Asia, Australia and New Zealand. Gaia brings a unique combination of knowledge and experience from the fields of management and entrepreneurship to her work with family businesses, combined with a growing expertise in family dynamics and communication.

Gaia was raised as a 4th generation successor in her family’s business. This experience helped her understand the emotional challenges and responsibilities of being a young member of an entrepreneurial family. After finishing her BBA, she joined the SDA Bocconi School of Management where she served as Assistant Director of the full-time MBA Program; as Coordinator of the first Chair in Strategic Management in Family Business; and as a Coordinator of Entrepreneurship Entrepreneurs’ Research Center. Gaia earned her Doctorate in Business Administration in Family Business. She moved to Atlanta, Georgia, USA in 2006.

For more information on the research and services offered by the Cox Family Enterprise Center, you can visit their website or email directly.

Michael Blake, Brady Ware & Company

Mike Blake, Host of “Decision Vision”

Michael Blake is Host of the “Decision Vision” podcast series and a Director of Brady Ware & Company. Mike specializes in the valuation of intellectual property-driven firms, such as software firms, aerospace firms and professional services firms, most frequently in the capacity as a transaction advisor, helping clients obtain great outcomes from complex transaction opportunities. He is also a specialist in the appraisal of intellectual properties as stand-alone assets, such as software, trade secrets, and patents.

Mike has been a full-time business appraiser for 13 years with public accounting firms, boutique business appraisal firms, and an owner of his own firm. Prior to that, he spent 8 years in venture capital and investment banking, including transactions in the U.S., Israel, Russia, Ukraine, and Belarus.

Brady Ware & Company

Brady Ware & Company is a regional full-service accounting and advisory firm which helps businesses and entrepreneurs make visions a reality. Brady Ware services clients nationally from its offices in Alpharetta, GA; Columbus and Dayton, OH; and Richmond, IN. The firm is growth minded, committed to the regions in which they operate, and most importantly, they make significant investments in their people and service offerings to meet the changing financial needs of those they are privileged to serve. The firm is dedicated to providing results that make a difference for its clients.

Decision Vision Podcast Series

sell the family business“Decision Vision” is a podcast covering topics and issues facing small business owners and connecting them with solutions from leading experts. This series is presented by Brady Ware & Company. If you are a decision maker for a small business, we’d love to hear from you. Contact us at decisionvision@bradyware.com and make sure to listen to every Thursday to the “Decision Vision” podcast. Past episodes of “Decision Vision” can be found here. “Decision Vision” is produced and broadcast by the North Fulton studio of Business RadioX®.

Visit Brady Ware & Company on social media:

LinkedIn:  https://www.linkedin.com/company/brady-ware/

Facebook: https://www.facebook.com/bradywareCPAs/

Twitter: https://twitter.com/BradyWare

Instagram: https://www.instagram.com/bradywarecompany/

Show Transcript

Intro: [00:00:01] Welcome to Decision Vision, a podcast series focusing on critical business decisions, brought to you by Brady Ware & Company. Brady Ware is a regional, full-service accounting and advisory firm that helps businesses and entrepreneurs make visions a reality.

Mike Blake: [00:00:20] And welcome to Decision Vision, a podcast giving you, the listener, clear vision to make great decisions. In each episode, we discuss the process of decision making on a different topic from the business owner’s or executive’s perspective. We aren’t necessarily telling you what to do, but we can put you in a position to make an informed decision on your own and understand when you might need help along the way.

Mike Blake: [00:00:39] My name is Mike Blake, and I’m your host for today’s program. I’m a director at Brady Ware & Company, a full-service accounting firm based in Dayton, Ohio, with offices in Dayton; Columbus, Ohio; Richmond, Indiana; and Alpharetta, Georgia, which is where we are recording today. Brady Ware is sponsoring this podcast. If you like this podcast, please subscribe to your favorite podcast aggregator, and please consider leaving a review of the podcast as well.

Mike Blake: [00:01:03] So, today we’re going to talk about whether you should sell the family business. And this is something that I’ve had a chance to get up close and personal with. As it happened the last couple of years, I’ve been asked to help some pretty high net worth families with the third comma and helped them with something that’s called a family charter, which is basically the constitution of how a family decides it’s going to govern itself, usually over multiple generations.

Mike Blake: [00:01:34] And over that time, I’ve had an opportunity to study family businesses in a way that I really had not before. Those of you who have listened to this podcast before know that I’m more of a tech guy. And tech companies, generally speaking, measure themselves in years or even months, but not generations. Family businesses, on the other hand, very much can measure themselves in generations. And there are family businesses that go back centuries. The Rothschilds investment banking empire can date itself to the early 18th century and Bavaria. The Kikkoman Soy Sauce company is actually a Japanese family business. Actually, an amalgamation of eight families in Japan that date back in to the 17th century. Many of the bit of the great a time museums, in fact, are legacies of the Milanese merchant bankers that date back to the Renaissance.

Mike Blake: [00:02:38] And so, we can see that some family imprints actually last for half a millennia or longer. And so, I’ve become very interested in family businesses because they offer a dynamic that you don’t see anywhere else. So, over the course of the last couple of years, I’ve managed to become, I’m not going to say expert but, at least, reasonably well read. And as is the habit with our podcast, when I know that I’m not an expert, I bring in somebody who is.

Mike Blake: [00:03:09] And so, joining us today is my new friend, Dr. Gaia Marchisio, CEO, who is Executive Director of the Cox Family Enterprise Center at Kennesaw State University, which is a university that’s about 25 miles north and west of downtown Atlanta, maybe 30 miles for those of you who are not from the Atlanta area, where she is also an Associate Professor of Management. She holds a doctorate from the University of di Pavia in Italy. I hope I’m pronouncing that correctly. And her research interests include family businesses, business strategy and business communication.

Mike Blake: [00:03:42] Some of her publications include Game Theory and Family Business Succession, Narcissism in Organizational Context – I’ve got to read that one – The OOIDA Loop: A New Strategic Management Approach for Family Business; From Burning Out to Being On Fire: A Conceptual Model of Burnout in the Family Business. Corporate Venturing in Family Business – it’s a topic that’s near and dear to my heart – The Effects on the Family and Its Members. And she’s also the author of several chapters in other books as as well. And on the the list of hits goes on and on and on.

Mike Blake: [00:04:16] The Cox Family Enterprise Center is the oldest of its kind in the world, founded in 1987, holistically supporting business families by creating comprehensive education tailored to their needs. And by the way, again, for those of you who are not in the Atlanta area, the Cox family themselves are a family business. They are on – Guy will correct me – but either the second or third generation. They are telecommunications and internet data magnates, media magnates here in the Atlanta area.

Mike Blake: [00:04:48] For those working within family enterprises, the Cox Family Enterprise Center offers programs designed to foster greater strength and services intended to create degenerates synergy in both family and business contexts. For those working as advisors to business families, the Cox Family Enterprise Center has designed education to deepen their perspectives and equips them with the necessary skills for working in their field. Both getting these efforts, they engage in industry-shaping research and undergraduate and graduate educations for the Coles College of Business at Kennesaw State University. At the core of these efforts perpetually remains their commitment to education as a crucial tool for enhancing the wealth and success of the entire community. Professor Marchisio, thanks for coming in today.

Dr. Gaia Marchisio: [00:05:29] Thank you for having me.

Mike Blake: [00:05:31] So, let’s start because it may not necessarily be obvious, what makes a business a family business? At what point does a business evolve from just sort of being something or somebody started up, and then we classify it as a family business?

Dr. Gaia Marchisio: [00:05:46] Sure. I can give you the traditional description. And then, I would like to add some of the more recent thoughts that I think we have to think about. So, typically, we have an entrepreneur, as you mentioned, that start the business. And at some point, he or she can have the family joining in the ownership structure. And that’s number one. Now, there is some debate around whether should the family have the majority to be classified as a family business. Typically, we say that they need to have enough control to have decision making power on strategic decisions. Then, there is another component. Do they need to have the family working in the company of not to be a family business? And that’s another layer. And do they need to have the intention to pass the company to the next generation?

Dr. Gaia Marchisio: [00:06:38] One thing I think it’s very important to really define whether family is a family business or not is that, do they have the mindset? Do they think as a we as a family or are they do everything they can with the tools they have from their ownership perspective to maintain their control in one person? Because that would still be an entrepreneurial family with just a little bit larger pool of owners, as opposed to start thinking as we, as a family, as a multitude of people that as owners have to make the key important decisions.

Mike Blake: [00:07:14] And is there a particular point that kind of prompts that conversion from being a family that happens to own a business to then being a family business? Is there a typical point at which that is restart? Does each family get there differently?

Dr. Gaia Marchisio: [00:07:30] I think a little bit of both.

Mike Blake: [00:07:30] Got it.

Dr. Gaia Marchisio: [00:07:33] So, some is the life event. They may bring them there. So, it can be a challenge and an opportunity at the same time. And other families become more intentional in doing so. So, they are mindful they want that to happen. And so, they start working to get ready to be able to make those decisions together, because that’s the biggest difference is how the whole decision making process in the ownership or in the daily operation change when it’s not more one person making the whole decision, but you have to share and create alignment around the key most important.

Mike Blake: [00:08:09] Now, what what are things that make family businesses different from, I guess, a non-family business, if you will?

Dr. Gaia Marchisio: [00:08:18] Several. The most well known probably is what you mentioned before, these orientation to longevity to think about across generations. They call it patient capital. I think for what I see through both research and practice, there are other factors that we have to take into consideration. One has to do with the goal setting of their company. Typically, there is a way to think about the business of the business is business. And so, having a heavy goal around making money, which is great, don’t get me wrong, and creating a different perspective, which is money becomes a tool instead of the end goal. And they allow for a variety of other reasons why to be in business. From just being with you … not just. From being with my family, creating more job opportunities, have any impact on the community, create some good. So, it can be really different from every family, but it has a lot of to do with, why are we in business, and what’s the purpose of what we do?

Mike Blake: [00:09:22] I think that patient capital point is extremely important. One of the things I’ve learned as I’ve had to give myself a crash course on family businesses, I think one of the things that makes them unusual, and we’ll talk about, extraordinarily successful is the fact they are patient capital.

Dr. Gaia Marchisio: [00:09:41] Yeah.

Mike Blake: [00:09:41] Right? So many businesses, even private ones, measure themselves by the monthly P&L, the quarterly P&L, even the annual P&L. And in some cases that’s appropriate. But on the other hand, it leads to a short-term thinking that leaves longer term opportunities on the table, I think. And when you are thinking in terms of multi-generational investing, where the time horizon is almost taken off the table, it kind of opens different opportunities, doesn’t it?

Dr. Gaia Marchisio: [00:10:12] Right, absolutely. And I want to stress these. We’re not saying that orientation to the short term shouldn’t be there. So, it’s a short and long term. The difference I think is that in non-family business, the short is the everything; while I think that family has a capacity to absorb some sacrifice in the short to invest and to have other consideration, like what kind of quality do … Is profit at any cost? What does it cost not only for the company, but for the shareholders, but also for the employees? How does that change the relationship with them? How does it change the quality of what we give to the clients?

Dr. Gaia Marchisio: [00:10:54] You mentioned some companies who went through generations. Some of them had to make very difficult decisions around quantity of their product that if they weren’t at the quality that they wanted to, they decide to withdraw them from the market, absorb a huge loss, but maintaining that long-term relationship and trust with the clients, which is a very important piece to be able to stay in business for so long. So, I think that shift a little bit the whole idea around corporate social responsibility, that often  is a mistakenly taken as a giving away some money to reduce stocks, and having a true deep understanding of all the different stakeholders, and how can I create long-term relationship which each of them, so that I can survive over time and thrive, not just survive.

Mike Blake: [00:11:51] So, what led to your interests in family businesses? Why have you devoted your life to researching this phenomenon?

Dr. Gaia Marchisio: [00:12:03] I was once. I was raised as a next gen. I had no idea there was a whole community of people like us. I saw … I’m dating myself. That was over 30 years ago when the whole thing kind of hit me. I was in college. I saw that there were professors who were talking about things were happening in my family without knowing my family. They were describing me and all of us in a way that nobody else we’re able to capture. And when my family came to the decision of closing the business, at that point, I realized that what if we had the help that we needed at the time? And because it didn’t work for me. I thought, well, maybe we can learn some of the pain and the mistakes that have been made. How about turning that in a great opportunity to help other families?

Dr. Gaia Marchisio: [00:12:54] And then, I was very fortunate to have a great mentor back then, my professor, who is a leading authority in the field in Europe. And from there, I started intentionally learning more and making sure that my story was important enough to inspire the motivation but not condition the way I was looking at other families. So, to not have a lens that pre-determined a way of looking at these companies.

Mike Blake: [00:13:22] So, what are you researching now that is interesting? And why do you think that research is important?

Dr. Gaia Marchisio: [00:13:30] So, all my life I devoted my research mainly to next generation with the idea of it’s important to understand before getting to the business. And then, I realized that, really, what’s the biggest challenge and the biggest opportunity is once you’re entering the company; and hence, the topic you’re mentioning about entrepreneurship and how can you be an entrepreneur in an already existing company? What’s the effect? We talk about burnout. What’s the effect on the emotional attachment?

Dr. Gaia Marchisio: [00:14:01] More recently, I realized that family enterprises exists in a bigger ecosystem. And there is a huge overlook at the advisors that serve families. I commend what you said before that you have started reading and putting yourself in a place of as a learner of family. Not just because we work with client, that makes us experts. And what I realized before in the last five years is there is a huge need and huge opportunities in that community to create more awareness around what is that you need to learn before being able to work with this client.

Dr. Gaia Marchisio: [00:14:44] And so, the research with my team at Kennesaw we are putting together, it’s a survey and it’s aimed to better understand how advisor – being attorneys, being accountants, financial planners, so everyone that lives in this space, which is very much needed, where are they? What are their way of working with families? And there is not enough understanding of what is an effective way of working with clients that is not just anecdotal. And I don’t think we can dare to try without some reasonable support from research. As always, it has to be the relevance that comes from practice, but the rigor that come from research.

Mike Blake: [00:15:31] So, we’re talking about facts and talking about research. One of the things that I’ve learned that surprised me is that data, now, seems pretty consistent and pretty clearly indicate that family-owned businesses not only generate higher returns than their non-family counterparts but, also, at lower risk. Have you seen similar data? And if so, what do you think are the reasons for that?

Dr. Gaia Marchisio: [00:15:59] Well, I’ve seen the similar data. I have to be careful, I’m pausing because I want to be mindful and not reduce what I’ve seen, what’s my experience, which is long, but it’s not the whole thing. So, I don’t want to jump on something. What could be the-

Mike Blake: [00:16:23] The problem is it’s hard, right, because it’s hard enough to observe even how family businesses perform.

Dr. Gaia Marchisio: [00:16:28] Right.

Mike Blake: [00:16:29] But then, collecting the data to really run the analytics to find out why.

Dr. Gaia Marchisio: [00:16:33] Exactly.

Mike Blake: [00:16:34] It’s difficult to do it from a fact-based perspective.

Dr. Gaia Marchisio: [00:16:37] Absolutely. So, that’s why I was pausing because before expressing an opinion on something that is so important. It was because I have kind of a skewed perspective because when they come to me is because they are in trouble. Because I’m in the line of business of helping those families to get to be the one performing better. So, I think that the biggest shift, that’s what I feel comfortable saying, the big shift is when they become intentional. So, when they they realize that there is some work that needs to be done. And the fact that their family doesn’t prevent them from … so, yes, you know each other, but it’s a profound shift in to thinking, what is that we need to do, not just in reaction to opportunities that comes, which is a great way of growing above all in the first stages of a company, but at some point, what are the things that we need to do in the family, in the ownership, and in the business setting.

Mike Blake: [00:17:36] So, I would speculate. I’m not an academic. But if I were to undertake an academic study, one hypothesis I would explore would be this long-term time horizon because there’s there’s been a lot of data. And Warren Buffett’s a big proponent of this, that long-term sort of buy and hold over time as a return maximizing strategy, especially on a risk adjusted basis, I think families are very good at that. You touched upon something that I wonder if this is the case as well, and that’ll be a hypothesis I’ll explore is family businesses have a mission beyond making money? They realize they have to make money to sustain themselves, but I’m a huge fan of Simon Sinek. Simon, if you’re listening, come on the podcast. We’s love to have you on.

Dr. Gaia Marchisio: [00:17:36] I adore him. I adore him.

Mike Blake: [00:18:29] So, I just finished his book, The Infinite Game. And there’s no better example in the real world of the infinite game than the multi-generational family business.

Dr. Gaia Marchisio: [00:18:39] Absolutely.

Mike Blake: [00:18:39] So, the hypothesis I would explore would be is the fact that family businesses play that infinite game, a driver behind their their outsized success relative to their peer group.

Dr. Gaia Marchisio: [00:18:52] Absolutely. I was looking forward to that book. I think it’s a very important kind of approach. And this is what I actually suggest families in my daily work with them. And in fact, I think, that it’s one of the key success factors. Those might create a mindset that are about continuous learning and continuous improvement. And reducing the competition and the confronting themselves with others. They’re all internally. I think that internal competition is really not ideal within families, but it’s more about how can we keep getting better with that perspective of the long-term impacting more stakeholders.

Mike Blake: [00:19:35] And an area of research or an area of study that I think overlaps, but it’s not entirely the same thing, are hundred-year business phenomena. Some businesses do last a hundred years, but they change ownership. Others, of course, may stay within the family. And I suspect there’s a lot of overlap there. And one of the things you talked about, that how does a business last a hundred years in any form? They must be in a learning mode. And they must be willing, at some point, to disrupt themselves because technology taste must change over a century period or longer, right? How does how does Ford remain relevant a hundred years later?

Dr. Gaia Marchisio: [00:20:22] And then, I think that we didn’t do a good job as as academics and advisors for a long time, because the whole field … And I get that it’s part of the evolution and it’s a learning process for the field itself, but the whole point is around successions. As if that’s the only moment in time where family needs to look at themselves and their businesses. While I always make the example, what is that you own anything from a car to a dishwasher that leaves longer than a year that you don’t put maintenance, that you don’t want intentional work?

Dr. Gaia Marchisio: [00:20:59] Even on the relationship, right? So, the only thing we know is that everything constantly change. And the huge mistake is to look at these every 20-30 years when succession happens because imagine what has even happened in these last two days in this world and how that has been completely disruptive. So, now, without thinking such an extreme example, but individuals in the family keep changing. Family has great event to minor event that keep changing perspective needs, desire. The company keeps changing.

Dr. Gaia Marchisio: [00:21:33] So, it’s crazy not to keep an eye on. And not just monitor but becoming, again, intentional around what are the things that we want to change, and keeping the communication open. Because people always ask me about communication in family business. It’s not just the quality of the communication, that’s a whole chapter in itself, but it’s also the quantity. How often do we have communication? And do we even finish our communication? Do we finish the conversation that we start?

Dr. Gaia Marchisio: [00:22:06] My colleague, Marj Blum, she’s a psychologist, and we work together with the rest of the team. she is huge on this point around making sure that we finish the communication because we start so many topics, but we never end up. And so, we have the illusion of communication. And when you have to keep changing, that’s one of the most important tool that we have.

Mike Blake: [00:22:30] So, one of the things forces that is always there that’s going to press for a family business to end is a desire for liquidity. The name of the game now – I think, really more so now than a generation ago – is every company must be built to sell. And you’re not really successful until a private equity firm buys you, your IPO, or something happens, and you have a big pile of cash that you can then distribute to your family members. And I think that does, sometimes, drive both the desire for the family business. I think it, also, is harmful to the family fortune. Liquidity is not always the best thing in the world for everybody. If a family business is feeling the pressure to become more liquid, are there alternatives they can consider other than simply selling out in order to satisfy whatever the cash needs or wants of the family are, so they can have the cash, but keep the engine that generates the cash as well?

Dr. Gaia Marchisio: [00:23:34] I’m a huge fan of why people do what they do or they don’t do what they don’t do, which is another reason why I like Simon Sinek so much. And so, I think that what’s very important for each family to consider is why to sell the company, but also why to keep the company because I think they’re related but they’re different. And so many times I see struggle in the family or struggle in the business, but I want to focus on the struggle in the family, and how many times family think, “If we didn’t have the business, this wouldn’t be the case.” And they’re are strongly invited or recommended to sell the company thinking that, “If I don’t have a company anymore, I won’t have those issues.” And rest assured that they sell the company, and there are different levels of engagement in that decisions. And people can look back and be very frustrated because they probably gave away something that they loved.

Dr. Gaia Marchisio: [00:24:35] And so, thinking why things are a struggle, where do they originate, and what’s the right decision to fix the root cause of the trouble, not the symptoms? Because being unease in the relationship, it’s normal. It’s not necessarily symptoms that something is wrong, but it’s more of the fact that it’s difficult to stay in relationship, and live together, work together, making and sharing decisions. It requires work. And so, why to sell? What are the real reason? And on the other hand, give the family, and above all, the next generation a purpose to keep that company because it’s a different thing. And it has to be a higher reason because of the work that is required prior to that.

Mike Blake: [00:25:24] So, one of the challenges I think many family businesses face, if they’re going to keep the family businesses, who’s the next person who’s going to run it? And sometimes, I know the Mars family, for example, they are notorious or they’re famous for the fact that, basically, cradle to grave, they groom you to run that business. You work in there as a toddler, which is interesting for a candy business. But  in other cases, things don’t work out where there’s necessarily an obvious successor, right? You may not have children. You may have children, but they’re not business people. Can a family hang onto a business or maintain control of a business in that scenario? And if so, how do they go about it?

Dr. Gaia Marchisio: [00:26:07] So, choosing to not run the business, I think, is one of the toughest. And I remember years ago, I was in China, I was giving a lecture there, and there was a 20-year-old boy who start crying as I was picking. And I immediately thought, “Oh, my gosh. Did I say anything wrong?” So, end of the class. I went there, I talked to him, and he explained to me that those tears were of joy. And I was like, “What do you mean?” And he said, “Well, all my life, I was raised with the expectation I was supposed to be the next one. And as much as I loved my family and the business, I don’t see myself being there. And so, hearing that you don’t cease to be a family business if you don’t operate the business is a huge relief. And now, we have to talk about that.”

Dr. Gaia Marchisio: [00:26:55] So, for sure, it’s not a simple decision. It’s almost a make or buy kind of decisions. What competence can you find on the market? And it opens a conversation around, what kind of person do you want? What kind of governance mechanism between the owners and the management you want to have? How to navigate boundaries? You want to make sure that the person don’t miss the importance of the culture and the values that the family want to have. So, it requires a lot of coordination, but it will also open two great opportunities for growth.

Dr. Gaia Marchisio: [00:27:33] And here’s the other thing. We, historically, are used to think about the family business as one family, one business. And I think that some of the shift that has been happening is to think about entrepreneurs … enterprising families, sorry, where it could be that you can generate an abundance of opportunities if you use your human capital, intellectual capital as a family to start even more than a company, and then to choose to have someone who helps to run. And that creates an opportunity to scale without losing who you are.

Mike Blake: [00:28:10] And sometimes, family businesses evolve into multi-family businesses, right?

Dr. Gaia Marchisio: [00:28:13] Absolutely.

Mike Blake: [00:28:13] I think La Roche, the Swedish … I’m sorry, Swiss pharmaceutical company, I can;t remember now. There’s another family name that’s associated with it but, over time, they became intertwined with a second family that provided new blood and expertise. So, they can evolve that way. And then, there are the Mercks that have been around in Germany since the early 19th Century. And their family weaves in and out of direct management. They have a separate board. So, there are models around there. Even if you think there’s no way the family can do that, you can still hang onto it.

Dr. Gaia Marchisio: [00:28:46] Yes. And they are way more common than we think about. Now, of course, it’s really complex to have one family running one business. And so, for sure, finding the right partners. As every partnership, you need to have trust and you have to have a similar values because if you have these two conditions, some that you create, some that you need since the beginning. And again, it’s the evolution. It’s managing how they both grow. And it’s more complexity, for sure, but I do believe strongly that this can be a great opportunity for growth.

Mike Blake: [00:29:28] Now, we know, and you hinted at this, that families sometimes are highly functional and some families are not as highly functional. And in America, we have this holiday called Thanksgiving where we devote one day to making sure that families are as dysfunctional as we can possibly make them. Can a dysfunctional family have a functional family business?

Dr. Gaia Marchisio: [00:29:53] So, sometimes, I think that we use the term dysfunction easily. And I think that it’s important to have people that are experts in that field to use that appropriately. I think that what often is described as dysfunctional is more a family who has to learn how to navigate through some of the dynamics that are very normal given the age and the stage , both of the individual and the family combined. If you think about that, one thing that everyone has is a family. Nobody teaches us about that. Nobody teaches how a family function. Nobody teach us what is normal. We have classes of how to run a business. We don’t have a minute spent to learn how to run interaction. We expect that because we are family, we know each other. And probably, the last time you had a conversation with your children is before they left for college and think how much they changed. And we all grow.

Dr. Gaia Marchisio: [00:29:53] And so, first point is not everything that looks dysfunctional is actually dysfunctional. And second point is when it’s really becoming dysfunctional because, unfortunately, there are those situations that are extremely painful – and so, have a huge respect for that – again, it’s a matter of choice.  Do I want to put the work there to make that better? What can I do to protect the business? Because their system, their open system, there are spillovers when bad things happen in the family that end up being in the company as well. It depends to the extent. So, I think that it’s important to create mechanisms that can prevent and protect the company.

Dr. Gaia Marchisio: [00:31:44] Is that for sure 100% proof? Probably at the cost of some individual expenses  both emotionally and physically. So, it is possible. I have in mind a few examples. Would I strongly recommend to not take care of your family dynamics because in any case, you can have a profitable business? Again, it’s what you want for your life. And I think that the other big mistake that has been shared is that it’s okay to separate family and business because to be professional, you need to pretend the family is not there. That’s a huge lie. We can’t pretend that the family is not there. We can’t pretend that emotions are not there. We don’t have to act emotionally and reactively in the business setting, but we have to respect and work with what we have in the family.

Mike Blake: [00:32:42] So, are there particular tools and techniques that that you’ve observed that are successful in helping them manage that dynamic?

Dr. Gaia Marchisio: [00:32:51] Yes, I think that talking about that is number one, right?

Mike Blake: [00:32:56] Yeah.

Dr. Gaia Marchisio: [00:32:56] And I put that as the number one because my biggest fear around tools is that we are culture-oriented to a solution, which is great. We don’t want to drag up problems. But I don’t think that we spend enough time understanding what is it that we’re really trying to solve. And because there are a bunch of tools in the market ready to be used and promise an easy fix, I don’t believe in easy fix above all when it comes to family and when it comes to family and businesses together.

Dr. Gaia Marchisio: [00:33:27] So, yes, can you put in place governance? Governance is excellent tool. Different kind of governance, different way of implementing. But expecting that governance is the panacea for everything happening is very wrong. Trusts are great tools. But again, it’s a tool. Applying a trust to every family to protect it, it cannot be the right thing. It’s like the difference between a screwdriver and a pot. Can you cook with a screwdriver? No. Is a screwdriver a great tool? Yes. It depends on what you need. So, I urge advisors, as well as families, to be very mindful. Not one tool fits every situation, which is unfortunately way more the case that I see happening.

Mike Blake: [00:34:15] Well, that’s the reason for your family enterprise center, right, is you explore those things and each family is going to probably need a different set of tools and even at different times, I’m guessing.

Dr. Gaia Marchisio: [00:34:26] Absolutely. I think that what family needs is to be empowered to learn and understand what they need. They will always need advisors. That’s the beauty of that interdependent relationship. But I think that what’s very important is to teach these families what they need and how to problem solve together, how to identify the challenge that they have, so that they can be more intentional and proactive in choosing it. Because at the end of the day, advisors, we are they are, even the longer relationship, but at some point, we leave and they have to stay and live with the consequences of the choices that they make.

Dr. Gaia Marchisio: [00:35:03] So, the biggest favor if you are a family business owner listening is to really invest in understanding enough to be able to have a more educated conversation. It is scary to me when I have family, and I can tell you how many that they have trusts and documents in place that they signed because they blindly trust their advisor, which is great trust in someone. But I heard people say, “That the document so complicated. It must be good, so I signed it.” And it’s not just once that has happened. And it comes from people that I know that are very business savvy. So, it’s never allowing the … I mean, it’s understanding that you don’t have to give up on understanding, and growing, and improving your capacity as as a family and as owners.

Mike Blake: [00:36:00] So, I’m going to ask you right now the toughest question of the interview.

Dr. Gaia Marchisio: [00:36:04] All right.

Mike Blake: [00:36:05] And that question is, I know you’re a big fan of family businesses, as am I, but not every family business is gonna work out, right? In your case, you said – I did not know this – that you come from a family business that ultimately was sold. How do you recognize where you’ve got problems that are so deep that it really is the best thing to sell the business and kind of get a clean slate or it’s just not going to be recoverable?

Dr. Gaia Marchisio: [00:36:45] I don’t want to answer that question.

Mike Blake: [00:36:47] I didn’t think you would.

Dr. Gaia Marchisio: [00:36:47] No, no, no, no. But let me let me say why and how. So, I’m a a huge, passionate person of medical doctors in that field. And I think that we can learn so much from there. I think it’s a big issue around boundaries. What’s our job as someone who helps families there? And what I’m going with this is I do believe that it’s mainly an educated choice for the people in the situation. I’ve seen families who chose to stay in incredibly difficult situations, and they had their own reasons. So, I think that it’s about respecting that it’s our responsibility and our job to help them think about what’s recoverable and what’s not.

Dr. Gaia Marchisio: [00:37:42] What I know is that the more people wait to raise difficult conversations, which I’m not saying go home now and talk about the elephant in the room that has been there for 30 years in your family, but if things are-.

Mike Blake: [00:37:56] That’s what’s Thanksgiving’s for.

Dr. Gaia Marchisio: [00:37:57] Exactly, exactly. And even without wanting that just to happen. But my point is the fact that we don’t talk about difficult things, it doesn’t make them go away. Just make them grow even stronger. So, those families that I saw that they came to the conclusion that it’s better to go separate ways, there is a way to get there where exiting the company doesn’t mean exiting the family. There is a way to even get there, which is actually a great decision for the good of the family and the good of the business. So, I think that as much as the family can provide value to the business and the business can provide value – and I’m not just talking about financial value – it’s worth trying. Where that threshold is, it’s all about the family.

Dr. Gaia Marchisio: [00:38:44] That’s why I was talking about boundaries. I’ve seen so much biases on behalf of advisors that really push for people to leave and to go away because of their own choices or preferences. I think that our job is, really, to help families think through why it’s worth to keep it. why is that worth to give you the way and to think at the same time, which is the most difficult thing because we live in a culture where it’s either or. Is that the family or the business more important? I’m a huge believer that both has to be important for the individual, and the family, and the business. And in that tiny word ‘and,’ that lies all the complexity of how can you manage three systems to be able to coexist in the long term?

Mike Blake: [00:39:42] Aside from Cox, because I know there’s a special interest in relationship there, what is an example of a family business that is successful? Who’s really doing it well that you can talk about?

Dr. Gaia Marchisio: [00:39:56] I’m always resistant to give names. I think those families that are great at learning, and keep learning and learning from their mistakes, that they see every situation, and keep trying, and put a lot of work, and they don’t allow for a difficult moment to become their life’s work. Become a learning family. And when I talk about becoming a learning family, I’m not saying that everyone needs to go in and sign up for an educational class. That’s a piece of that. But a learning family is the infinite game we’re talking before. It’s this idea of how can I … okay, so last week, and I quote this woman, the company is CI², they were one of the honorees. We have a yearly honoration, which is as the word says, honoring and celebrating companies.

Dr. Gaia Marchisio: [00:40:52] And one of the six finalists, we had is Mrs. Andrella. And she’s the founder of CI². They manage an incredible number of controlled-towering airports in the US and the Caribbean. And her mantra is she wakes up every morning, and her pray is, “Let be today better than yesterday.”So, I commend and I love her intention as an individual, as a businesswoman, and as a business owner to wake up with intention of, how can I make today better than yesterday? I think that if a family is able to do something like that, even the mistake that we all make to have become something totally different and an opportunity for growth.

Mike Blake: [00:41:46] We are out of and and past time, but we could easily make this a three-part series or longer but unfortunately, can’t. If somebody is looking at a family business and is thinking about these issues, how can they contact you to learn more?

Dr. Gaia Marchisio: [00:42:02] So, we have our website. And otherwise, we have a relatively easy e-mail address. Am I allowed to plug it?

Mike Blake: [00:42:11] Yes, please. Yeah.

Dr. Gaia Marchisio: [00:42:12] Okay. It’s cfec@kennesaw.edu. cfec@kennesaw.edu. And we are happy to have a conversation with whomever wants to learn more. And I really want to thank you for being one of those people that really are into learning and getting better. It is refreshing to meet people like you, and it’s very meaningful. So, thank you.

Mike Blake: [00:42:37] Well, when you get to know me, you won’t think so highly of me. But that’s going to wrap it up for today’s program. I’d like to thank Dr. Gaia Marchisio so much for joining us and sharing her expertise with us today.

Mike Blake: [00:42:47] We’ll be exploring a new topic each week. So, please tune in, so that when you’re faced with your next executive decision, you have clearer vision when making it. If you enjoy this podcast, please consider leaving your review with your favorite podcast aggregator. It helps people find us, so that we can help them. Once again, this is Mike Blake. Our sponsor is Brady Ware & Company. And this has been the Decision Vision Podcast.

Decision Vision Episode 61, “How Do I Manage My Business Real Estate in a COVID-19 World?” – An Interview with Brooks Morris and Andy Roberts, Cresa Atlanta

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Cresa Atlanta
Decision Vision
Decision Vision Episode 61, "How Do I Manage My Business Real Estate in a COVID-19 World?" - An Interview with Brooks Morris and Andy Roberts, Cresa Atlanta
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Cresa Atlanta
Clockwise from Upper Left: Brooks Morris, Andy Roberts, and Mike Blake

Decision Vision Episode 61, “How Do I Manage My Business Real Estate in a COVID-19 World?” – An Interview with Brooks Morris and Andy Roberts, Cresa Atlanta

The COVID-19 economic crisis has injected a new dynamic between commercial real estate landlords and their business clients, as questions around rent abatement are coming up. Brooks Morris and Andy Roberts of Cresa Atlanta join “Decision Vision” to discuss this issue and much more. “Decision Vision” is brought to you by Brady Ware & Company.

Brooks Morris, Senior Vice President, Cresa Atlanta

Cresa Atlanta
Brooks Morris, Cresa Atlanta

Brooks Morris, Senior Vice President of Cresa Atlanta, has over 16 years of executive experience. Prior to starting his real estate career, Brooks was with Enterprise Holdings, a $17 billion global transportation company. Brooks is known for recruiting, developing, leading and motivating teams to achieve targeted customer service, sales, operational growth, and profit goals. Brooks was rapidly promoted 4 times to executive positions in different markets with responsibilities overseeing multiple businesses and brands.

Joining Cresa in 2015, Brooks has a mission to deploy his years of experience through client advisement. His unique perspective from multiple angles of real estate transactions allow him to take a holistic approach while consulting on each of his clients needs. His proven results assure the focus will always be to use real estate as a platform to support employee engagement, customer satisfaction, brand recognition, growth, and profitability.

Brooks’ multiple years of experience as a Vice President and Officer at Enterprise Holdings include executing market analysis, site selection, lease negotiations, contract negotiations, P&L management, sales, budgeting, cost control, strategy, project management, and lease administration.

Andy Roberts, Senior Vice President, Cresa Atlanta

Cresa Atlanta
Andy Roberts, Cresa Atlanta

Andy Roberts began his career in commercial real estate at Wells Real Estate Funds by raising capital for various REIT portfolios that are now traded on the NYSE. During his tenure at Wells, Andy developed a passion for counseling clients on the dynamics of investing in commercial real estate.

Following his tenure with REITs, Andy joined Cresa in the summer of 2014 to help clients navigate their real estate decisions in a market where a growing percentage of properties are institutionally owned. Andy enjoys educating clients on the manner their real estate decisions impact not only their financial bottom line but their culture and labor force dynamics as well.

Cresa Atlanta

Cresa is the world’s largest tenant-only commercial real estate firm. In representing tenants exclusively—no landlords or developers—Cresa provides unbiased, conflict-free advice. Its integrated services cover every aspect of a real estate assignment, including strategic planning, employee demographics, workplace strategy, site selection, incentives negotiation, market research, transaction management, project financing, project management, portfolio management, and relocation services. Cresa offers clients customized solutions worldwide through more than 60 global offices.

To find out more on Cresa Atlanta, go to their website.

Michael Blake, Brady Ware & Company

Michael Blake is Host of the “Decision Vision” podcast series and a Director of Brady Ware & Company. Mike specializes in the valuation of intellectual property-driven firms, such as software firms, aerospace firms and professional services firms, most frequently in the capacity as a transaction advisor, helping clients obtain great outcomes from complex transaction opportunities. He is also a specialist in the appraisal of intellectual properties as stand-alone assets, such as software, trade secrets, and patents.

Mike has been a full-time business appraiser for 13 years with public accounting firms, boutique business appraisal firms, and an owner of his own firm. Prior to that, he spent 8 years in venture capital and investment banking, including transactions in the U.S., Israel, Russia, Ukraine, and Belarus.

Brady Ware & Company

Brady Ware & Company is a regional full-service accounting and advisory firm which helps businesses and entrepreneurs make visions a reality. Brady Ware services clients nationally from its offices in Alpharetta, GA; Columbus and Dayton, OH; and Richmond, IN. The firm is growth minded, committed to the regions in which they operate, and most importantly, they make significant investments in their people and service offerings to meet the changing financial needs of those they are privileged to serve. The firm is dedicated to providing results that make a difference for its clients.

Decision Vision Podcast Series

“Decision Vision” is a podcast covering topics and issues facing small business owners and connecting them with solutions from leading experts. This series is presented by Brady Ware & Company. If you are a decision maker for a small business, we’d love to hear from you. Contact us at decisionvision@bradyware.com and make sure to listen to every Thursday to the “Decision Vision” podcast. Past episodes of “Decision Vision” can be found here. “Decision Vision” is produced and broadcast by the North Fulton studio of Business RadioX®.

Visit Brady Ware & Company on social media:

LinkedIn:  https://www.linkedin.com/company/brady-ware/

Facebook: https://www.facebook.com/bradywareCPAs/

Twitter: https://twitter.com/BradyWare

Instagram: https://www.instagram.com/bradywarecompany/

Show Transcript

Intro: [00:00:06] Welcome to Decision Vision, a podcast series focusing on critical business decisions. Brought to you by Brady Ware & Company. Brady Ware is a regional, full-service accounting and advisory firm that helps businesses and entrepreneurs make visions a reality.

Mike Blake: [00:00:26] Welcome to Decision Vision, a podcast giving you, the listener, clear vision to make great decisions. In each episode, we discuss the process of decision making on a different topic from the business owners’ or executives’ perspective. We aren’t necessarily telling you what to do, but we can put you in a position to make an informed decision on your own and understand when you might need help along the way.

Mike Blake: [00:00:44] My name is Mike Blake, and I’m your host for today’s program. I’m a Director at Brady Ware & Company, a full-service accounting firm based in Dayton, Ohio, with offices in Dayton; Columbus, Ohio; Richmond, Indiana; and Alpharetta, Georgia. Brady Ware is sponsoring this podcast, which is being recorded in Atlanta per social distancing protocols. If you like this podcast, please subscribe on your favorite podcast aggregator and please consider leaving a review of the podcast.

Mike Blake: [00:01:11] This is the fourth in a subseries of topics regarding how to address the coronavirus crisis. And as everybody knows by now, we are faced with an unprecedented environment in our economy. And as one of our guests quipped before we started the show, basically, the way that he is helping save the world is by watching Netflix, but I will not out him and reveal what the nature of the show is. He can choose to out himself if he wants to, but I’m not going to do it for him.

Mike Blake: [00:01:48] But that is sort of the world that we’re living in, right? The best way we can help people is to do as little as we possibly can. And as a result of that, we are seeing an unprecedented rebalancing of the economy. We have whole industries such as restaurants that are shutting down en masse. We have other industries that are now booming and considered vital industries such as anything supply chain, grocery stores, drugstores, Amazon.com, and so forth. And we’re even now seeing companies that are stopping the businesses in which they’re normally engaged, so they can manufacture other things. Heinz is supposedly gearing up to manufacture these N95 virus protection masks. And Tesla and Ford are gearing up in partnership with General Electric to produce ventilators. We just haven’t seen anything like this before, certainly not since World War II. And even then, it’s sort of a thing tacked on.

Mike Blake: [00:03:09] So, if you’re like me and most other people who are thrashing around for some kind of guidance on how to address the issues that are now facing all of our businesses, frankly, whether we own the business, we’re an executive, or even an employee trying to help keep the lights on. And today, we’re going to talk about managing real estate assets and obligations in a shutdown world. And real estate is kind of funny. It’s one of those things that you don’t appreciate, I think, until it’s gone, in spite of the fact that we have a president who sort of made his claim to fame initially in real estate. But real estate, no pun intended, is a real issue. It’s no longer being used, and have been under some pressure anyway, particularly on the retail side, but it’s no longer being used.

Mike Blake: [00:04:11] In some cases, it’s being repurposed. We’re seeing hotels in Manhattan that are being commandeered now to serve effectively as field hospitals. That is perhaps an extreme case, but I think that’s going to come to other cities, including Atlanta. And real estate that has been—office areas that have been previously bustling with activity and have been a home away from home, frankly, for millions of employees are now shut down, locked down, basically ghost towns. And this provides a whole unique set of problems, and challenges, and maybe some opportunities too that we need to understand how to address, because just because we’re not working there, that doesn’t mean the real estate and the obligations that go with it suddenly disappear. Those have not shut them.

Mike Blake: [00:05:12] And joining us to help us understand this question are my longtime friends, Brooks Morris and Andy Roberts of Cresa. Now, you may remember, we had another person from Cresa on Jason Jones, who you used to fly navigation and ordinance and A6 intruders. It’s a fly off aircraft carriers. And he came on to help us understand the benefits of hiring veterans. But now, we’re bringing in a couple of people on from Cresa to actually talk about real estate. And Cresa is an international commercial real estate firm headquartered in Washington, DC. And they represent tenants and provide real estate services, including corporate service, strategic planning, transaction management, project management, facilities management, workforce and location planning, portfolio and lease administration, capital markets, supply chain management, sustainability, and sublease, and distribution. Formed in 1993, Cressa now has more than 60 offices and 900 employees.

Mike Blake: [00:06:14] Brooks Morris is a Senior Vice President of Cresa Atlanta with over 20 years of executive experience. Prior to starting his real estate career, Brooks is with Enterprise Holdings, a $17 billion global transportation company. Brooks is known for recruiting, developing, leading and motivating teams to achieve targeted customer service, sales, operational growth and profit goals. He was rapidly promoted four times to executive positions in different markets with responsibilities overseeing multiple businesses and brands.

Mike Blake: [00:06:45] Joining Cresa in 2015 – well, its that long already – and Brooks has a mission to deploy his years of experience to client advisement. His unique perspective from multiple angles of real estate transactions allows him to take a holistic approach while consulting on each of his clients’ needs. His proven results assure focus will always be to use real estate as a platform to support recruiting and retaining talent, brand enhancement, growth and profitability.

Mike Blake: [00:07:14] Brooks grew up in Los Angeles and played baseball for and graduated from the University of California Santa Barbara. I did not know that. He loves spending time with family, reading, golf, sports, water skiing and working in the yard. He and I have to talk about that. I hate working in the yards. Maybe we can make a trade. He and his wife and two children live in the Buckhead neighborhood of Atlanta.

Mike Blake: [00:07:37] Andy Roberts began his commercial real estate career by raising capital for various real estate investment trust portfolios that are now traded on the New York Stock Exchange. Through this experience, Andy developed a passion for consulting clients in the various dynamics of real estate. Andy joined Cresa in mid 2014 to help clients navigate their real estate decisions in a market where a growing percentage of properties are institutionally owned. Andy enjoys educating clients on the idea that their real estate decisions impact not only the financial bottom line but one’s cultural and labor dynamics as well. Andy and his wife, Jill, live in Atlanta with their four young children, where they enjoy spending time together with family and friends. And God knows, they’re getting ample opportunity to do that. Brooks and Andy, thank you so much for joining us on the program.

Brooks Morris: [00:08:25] Thank you, Mike.

Andy Roberts: [00:08:25] Thank you for having us.

Brooks Morris: [00:08:25] Good to be here.

Mike Blake: [00:08:28] So, to I want to start with something that is tangential to the topic, but I think it’s important for people to understand exactly what you do and how you do it because that will help people understand the nature of your informed perspective when we’re talking about today. And that is, what is exactly a tenant representative? It’s not a household name like a fireman, or a doctor, or a lawyer. So, maybe you can explain to our audience what a tenant representative does.

Andy Roberts: [00:09:03] Sure. So, we at Cresa and just in general, a tenant representative exclusively represents tenants. And let me back up. You have a number of commercial real estate firms. Majority of the commercial real estate firms receive a majority of the revenue from landlord representation. A tenant representative focuses on representing tenants, i.e. occupiers or companies. In general, that’s how tenant representative is defined. Now, what’s unique about Cresa, what we do is we exclusively represent tenants, i.e. occupiers. So, we are not representing any landlords, i.e. rich institutional owners. And we do that to remove all conflicts of interest, so that we are completely free to focus on the needs of our clients, the occupiers. We’re free to think beyond space and negotiate as hard as is required on behalf of our clients. So, in general, that’s what a tenant representative does. And that’s what’s unique about Cresa in that we are the largest global firm that exclusively represents tenants or as we define it, occupiers.

Brooks Morris: [00:10:20] And that’s well said. That’s well said by Andy. I’ll add one thing to that to simplify. It’s like in the residential market, you have someone selling a house, and you have a seller’s agent and a buyer’s agent. And we are the buyer’s agent in the commercial space, whether you’re buying real estate or leasing real estate.

Mike Blake: [00:10:49] And on the leasing side, I don’t know this about the buying side, so you can educate me, but at least on the leasing side, even though you’re the buyer’s agent, you make your fee from the seller or the lessor. Correct?

Brooks Morris: [00:11:03] That is correct. Just like in residential commercial real estate, it’s set up in a way that the landlords pay their broker a portion of the fee and the tenant’s broker a portion of the fee.

Mike Blake: [00:11:19] So, let’s wind the clock back to happier or more predictable times. Let’s go back to, say, February 1st. What was the commercial real estate market in Atlanta like at that point?

Brooks Morris: [00:11:36] First of all, February 1st feels like a year or two ago.

Mike Blake: [00:11:41] I know. It does.

Brooks Morris: [00:11:43] Right? It was a landlord’s market. The development around the US and very much so in Atlanta of new office space was accelerating, lots of projects, and it was a very healthy market. Tenant incentives had been reducing. Large blocks of space were competitively being pursued by multiple tenants. In some cases, for one or two large blocks of space. So, very much a landlord’s market and very much a situation where tenant had to be not just thoughtful and advance with strategy, but ready to execute when they found the right property because properties and spaces were moving quickly.

Andy Roberts: [00:12:45] And the great analysis I’d add to that was, I think, February 1st and during this pre-COVID season, we’re seeing, unlike any time before, certainly for a number of decades, labor influencing commercial real estate more than ever in the sense that the focus was on the investments need to be made to maintain a workforce and recruit a desirable workforce because we were continuing to enjoy such a long economic bull run, and if that investment was made via real estate, so be it. And you had that as well on the construction costs. Labor was so tight that the cost of construction was one of the main drivers of an increasingly more expensive market; thus, a landlord market.

Brooks Morris: [00:13:45] I’ll give one statistic. Piedmont Center in Buckhead is a group of about 15 building. And in 2016, the rental rate on those buildings was about $18 a square foot. And fast forward to February 1st of 2020, those buildings are quoting, in some cases, just over $30 dollars per square foot.

Mike Blake: [00:14:12] Wow. And I know that space too, and the space as as far as it goes. But also, I’ve never been lost in any parking lot or complex more frequently than I’ve been lost in that complex. I mean, I’ve probably inadvertently parked about three quarters of a mile away from where my meeting is supposed to be. And-.

Brooks Morris: [00:14:35] You are not alone.

Mike Blake: [00:14:37] Yeah. I’m glad to hear that because I feel like a horse’s ass, but that’s meaningful when it’s an August Atlanta day, and you’re wearing a suit and tie, and then you show to the meeting. I basically look like LeBron James at the foul line with fourth quarter of a game, just sweat pouring down my face. But even, if they’re able to raise rents that much that quickly, that shows you a pretty hot market for sure.

Mike Blake: [00:15:17] And now the commercial real estate market, I guess, sort of the question is, is there a commercial real estate market? Have you guys pretty much frozen in place now? Is there anything going on right now? What is the market or the industry look like today?

Andy Roberts: [00:15:41] To be perfectly candid, I think we’re still in the fog of war, if you will. I think there’s going to be some clarity that obviously comes with time. But just the initial impression is — I mean, just from personally, clients and deals that were already in motion that were pretty close to getting done, those have continued to move forward. New deals and most of the clients that I’m personally working with, and it seems to be the case for a number of colleagues, are saying, “Hey, let’s just put this on pause.” So, that’s one dynamic.

Andy Roberts: [00:16:21] The second dynamic is you have, obviously, across the board, companies trying to figure out, holding on to every dollar cost cutting initiatives, reaching out to their landlord, saying, “Hey, what can we do? Can we abate rent for three months? Four months?” At the same time, you have those very same landlords having the same conversation with their lenders. And it’s all across the board. I mean, candidly, very large household institutions, there’s been one that everyone would recognize that has come out and said, “Hey, three months abated. No questions asked. We want to work with you,” to another household, prominent lender that has just said, “We’re not budging. We’re not giving any grace, any mercy, period.” And so, obviously, those landlords are in a tight spot. They’ve got to turn around. They don’t want to say the same thing to their tenants, but they don’t know if they can afford not to. And so, it’s really interesting. You don’t have a consensus other than those conversations are being had, a lot of probably wait and see, but it’s really interesting because the responses are all over the map.

Brooks Morris: [00:17:40] Yeah. I say, to Andy’s point, Andy said it very well, There’s three buckets. There’s the bucket of industries. We all know retail, some transportation, hospitality, event companies that are just getting clobbered. And you’ve got the middle bucket of a lot of professional services firms and some other industries that are feeling it, but there’s a cut in revenue, but they’re doing okay. They’re just having to be diligent about making some cuts here and there within their business. And then, there’s another bucket. And a lot of this falls into the industrial space category of businesses that are actually doing as well or better.

Brooks Morris: [00:18:25] And so, depending upon who you’re working with is going to drive what you need to do in the real estate market right now for those different groups. And to Andy’s point, a lot of what I was already working on that was close to being done, if there’s any sort of certainty in their business and an expiration coming off of their lease, we are moving forward and taking action. Anything that was an expansion, because everybody has gone remote for this period of time, most of those projects have been put on pause, and it’s a wait and see. And as soon as we have more clarity, then we’ll decide on what to do moving forward.

Mike Blake: [00:19:07] It occurs to me that there’s a signaling dynamic going on here, a signaling process. When a bank or a landlord tells their borrower or their tenants respectively what they’re prepared to do in terms of flexibility, and forgiveness, and forbearance I think tells you a lot about how they think this movie ends, right? I think that if they take a soft line, they’re telling you that this movie doesn’t necessarily have a very happy ending. It may be okay, but what they’re really telling you is that we want to keep you in place. We don’t think there’s necessarily another awesome bar or another awesome tenant that’s walking around the corner. So, we’re going to go with the devil we know. We’re gonna hang on to what we have and ride it out. And if we take a haircut, we take a haircut. But we’d rather get 80 cents on the dollar than zero.

Mike Blake: [00:20:12] Whereas, I think the hard liners are basically saying, you know what, at some point, whether it’s Memorial Day, whether it’s 4th of July, Labor Day, gotta help us on that one. But there’s going to be a reboot, basically, and somebody pushes a big red button somewhere that throws a lever that’s supposed to restart the economy. And they think there’s a basically a rubber band effect, that everything’s going to go back to normal. And if you default, and if you have to default, then we’re happy to take your property because we think they’ll be a ready market, or we’re happy to declare you in default because we think that there going to be six tenants waiting around the corner. I think that’s an interesting signaling effect that economists and economics geeks like me want to maybe look at to understand what the market sentiment is going forward.

Andy Roberts: [00:21:11] That’s a great point, Bill.

Brooks Morris: [00:21:13] Yeah, it’s a great point. I think—go ahead.

Mike Blake: [00:21:16] No. You said it was a great point. I want to hear more about my great point.

Brooks Morris: [00:21:20] Well, the signal, you’re correct. It does send a signal. But, also, anytime there is change that happens or there’s challenge in a challenging environment we’re all navigating through, sometimes, it also sends the signal on with the philosophical approach of a business owner or ownership group. And sometimes, that has nothing to do with the economy moving forward and their feelings on that but just how they approach business. And are they looking at a tenant as a long-term partner and somebody that they want to share success with, or are they looking at it in a transactional way? And we’re learning right now who are the partners and who are transactional.

Mike Blake: [00:22:10] Yeah, I think that’s a great point. And you really do find out who your friends are in crisis. And maybe there’s a psychological element to it as well. I think this whole coronavirus crisis scenario in which we find ourselves has put us into a collective state of grief. And the first stage is denial. And just as I think there have been many people who’ve been in denial that I think that number is rapidly diminishing, but you can see they’re the ones going out to spring break, and they’re still getting together in large groups, and I guess coughing on each other just to see what’ll happen. But there’s probably some of that. There’s probably some of that psychology in the business market too where it’s a scenario that can go so sideways and so horrifically that I think some people and businesses psychologically just go to a place of denial because they’re just not emotionally ready to embrace the potential reality.

Brooks Morris: [00:23:24] Agreed.

Andy Roberts: [00:23:25] To your point, Michael, on an economic point, I think Brooks did it really well and made some great points. And I think what’s so unique about this scenario is it’s going to be interesting to see how the legislation plays out because historically, when it comes to real estate as a broad brush, legislation is first seen in the residential arena for. And I think probably because politicians score more points that way. For example, a number of states have already come out and said, “Hey, there can be no foreclosures on any residential homes for X number of weeks or months.”

Andy Roberts: [00:24:11] The commercial real estate arena, the legislation, if it happens, happens much further down the road. It’s going to be interesting to see if that legislation does take place in a commercial arena. So, for example,if you have tenants defaulting, to what degree can the landlords—what retribution do they have. And if they’re prevented legislatively from doing so, and I think what may drive that in this arena is, historically, defaults have been from financial reasons. So, for example, ’08-’09, there was too much debt involved and irresponsible underwriting of the debt. No one in who’s alive today has seen this type of scenario where the driver is a medical health dynamic where sadly, tragically, a thousand Americans are dying a day.

Andy Roberts: [00:25:12] And so, there’s this kind of this social element overlying this that I think is so unique where it’s not your typical debt problem. It’s just kind of a war with an invisible enemy that it’s almost like for someone to come out and foreclose, there’s kind of the level of evilness to it that I think there’s this social pervasiveness that’s unprecedented. And it’s going to be really interesting to see how it plays out. I think that could drive greater legislation in the commercial arena. For example, not allowing landlords to penalize a tenant for defaulting. Well, time will tell, but that’ll be interesting ’cause usually that legislation stops in the residential arena.

Mike Blake: [00:26:04] So, a lot of offices are empty. Ours is largely empty, although a few people are coming in, but a fraction, most of us are are working from home. If you’ve got an office that is basically empty, empty assets are scary.I remember when I was a kid, and this probably explains a lot about me, when there is an abandoned house or a house in our neighborhood that had construction that was paused for a while, we would go into that house, and we would find pieces of wood, and hack them at each other. And we’d find pieces of copper tubing and whack each other with them, basically. And it’s illustrative of what can happen if you have real estate that is not sort of being looked after. And if I’ve got an office that is now basically empty, is there something that I need to be doing as a tenant to be looking after my real estate or my space even though I don’t own it, it’s still important. It’s still an asset. Is there something I need to be doing to look after it or take care of it during this down period?

Brooks Morris: [00:27:21] It depends on the position of the real estate. So, if you’re an owner, you’re going to be looking at this differently. If you’re a tenant of a full-service office, you’re really not going to need to do anything per se because the landlord, through the full-service structure of the building or the lease contract, is gonna be responsible for everything. And I would say if there’s anything that is that you’re responsible for be within those four walls, maybe it phones, internet that you probably have already moved to remote and cloud. There may be some opportunities to make sure that your expense is being allocated appropriately.

Brooks Morris: [00:28:18] If you’re in an industrial user, and you’re on a triple net lease, and you are leasing a building that you’re the only tenant in, there lies some opportunity and operating expenses that you’re responsible for as a tenant that you can take a look at and, say, go dark in a building, basically turn certain things off so you’re not paying for them while you’re not using them. Those would be the only things that you would be really looking at doing while you’re not using their real estate, and it really pertains to industrial spaces. But those particular businesses right now, most of them are in business and, in some cases, thriving.

Mike Blake: [00:29:00] Yeah.

Andy Roberts: [00:29:00] Brooks makes a great point. I think it would be interesting or it’s worthy to note, let’s say, for example, an office building, a classy office building, there’s multiple tenants – and Brooks is right – it’s on the landlord’s onus to run that building. And so, I think every tenant in their lease is going to have typically passthrough of operating expenses and the increase in operating expenses they’re going to be responsible for paying in the next calendar year. And so I do think it’s responsible for tenants currently being communication with their landlord on what are they doing to mitigate expenses while the buildings are vacant, so the tenants can be able to enjoy those savings.

Andy Roberts: [00:29:47] And then, also, keep in touch on what are the potential increase expenses that are around the corner. So, likely there’s going to be new janitorial dynamics. There’s also, likely, when America gets back to work, if you will, you’re hearing a lot of sentiment towards kind of not everyone just goes back on Monday. It’s kind of you’re phasing in and almost to the point where you have longer hours, certain departments working in the morning, certain departments working in the evening. And you have kind of maybe an overlap of one or two just to help respect social distancing as we start phasing back in.

Andy Roberts: [00:30:30] So, then you get into an office building, the HVAC act, for example. I mean, you know, hopefully this is happening late spring and summer. Well, HVAC expenses are at their highest at that point. And typically, a building will say, “Okay, we’re going to be running back from, say, 8:00 to 6:00.” Well, now, if you’re running it from 7:00 to 8:00 or 9:00 at night, you’re going to have higher expenses. So, tenants need to be aware of how are those expenses gonna be passed on to them, and what’s going to be their cap that they have in their lease on what the expense increase will be next year. So, I do think there’s currently some planning that can take place on the tenants’ behalf that’ll serve that well.

Mike Blake: [00:31:14] Let me jump on that.

Brooks Morris: [00:31:14] Mike.

Mike Blake: [00:31:15]  Go ahead.

Brooks Morris: [00:31:16] Mike, one thing I just thought of, I should have already mentioned as it pertains to your question and what you can do while you’re not in your space right now, as it pertains to any metropolitan building that charges for parking, in most cases, right now, because you’re not using that parking, you can negotiate with your landlord to not pay for that parking potentially. We’ve done that within ours. So, that’s something, for sure, to look at.

Mike Blake: [00:31:43] Okay. Yeah, that’s good advice. That’s an actionable thing people can, if they haven’t done already, they can do right away. So, we touched upon this a little bit, but I want to make sure to address this explicitly. There’s a provision in the CARES Act, and as you mentioned, several states as well that are basically freezing home real estate obligations, but that’s not really impacting the commercial sector, right? Unless you’ve negotiated something, if you’re a business tenant, you still have to pay your rent, right?

Brooks Morris: [00:32:18] Correct.

Andy Roberts: [00:32:20] Correct. What is interesting is a number of landlords, when tenants have requested to defer rent for a number of, say, three months to please the common average, a number of landlords are saying, “Hey, noted your request. Let’s pursue these avenues with the CARES Act and let’s circle back end of April. Then, say, mid-May.” And understandably so, they’d like to see these tenants be able to receive the provisions through the CARES Act, so that, obviously, the landlords don’t have to further rent, which is understandable. But that to your point, that’s a common conversation taking place in the industry.

Mike Blake: [00:33:02] So, the unfortunate reality is that not every business is going to come back from this, but the lease obligation may still remain. So, if in fact your business is not going to survive this, but the only thing that may survive is your lease obligation, what are your options to try to get out from under or mitigate that obligation?

Brooks Morris: [00:33:34] Well, the first thing you want to do is pull out your lease, get with your commercial real estate advisor, whether that’s us or someone else, and your attorney, and make sure you understand every single component of that lease and what your options are pertaining to that contract. Usually, there’s going to be a sublease provision that allows you to sublease as an option. So, you want to understand what that looks like and what that exit might realistically look like. In some cases, some companies have negotiated termination options. So, that could be that could be an option. There could be an option to restructure your lease. Maybe there’s an option to downsize and use certain-.

Brooks Morris: [00:34:22] And communication is key here. You want to engage with your landlord after you understand what your options are. You want to know what the landlord’s position is because they may have different things happening within their building with their existing tenants. And as business comes back, depending upon how well that building’s doing, they may want that space back or need that space depending on the size. And that’s a low percentage opportunity, but it’s one that should be explored. Andy, any other thoughts that I’m missing?

Andy Roberts: [00:34:53] No, those are all great points. You’re nailing it. And, certainly, typically, a lease will spell out a termination, if you have a termination clause and/or if it’s essentially what those costs would be. I think for a tenant to be fully aware what the landlord’s costs to structure this lease, and largely the build out, what have you, to understand how the landlord is going to be viewing this financially will be advantageous for a tenant. It may be you’re having to come out of pocket for a termination agreement or clause, but just knowing eyes wide up on what that number will be, will be helpful.

Brooks Morris: [00:35:37] And my advice, the biggest thing is just to be proactive, not wait around to get with your advisors, to build a strategy quickly that you can execute quickly if that’s the direction things are going because there will be other subleases coming to the market and you want to be in front of it.

Mike Blake: [00:35:56] We’re talking with Andy Roberts and Brooks Morris of Cresa about managing your real estate obligations and assets in a pandemic world. I want to interject here. I’ve interrupted them a couple of times inadvertently, and I apologize for that. One of the challenges of doing this remotely and not in the studios, you don’t normally have the visual cues where I can tell accurately if people are done talking or not. So, I’m not on speed or anything like that. This is sort of me learning about how to conduct interviews, also, in a coronavirus world.

Mike Blake: [00:36:35] But getting back to this, I want to touch now then on something that you said because I want to drill down a little bit. And that is the reaction or the posture of the landlord does vary from landlord to landlord. And that may be driven, ultimately, by how their bank is treating this. But generally, are you finding more often than not that landlords do want to work with their tenants in some way to accommodate them? Or do you find that, still, right now, they’re more likely to take a hard line? Or is it, in fact, 50/50 as far as you’re seeing?

Andy Roberts: [00:37:15] Yeah, future-.

Brooks Morris: [00:37:16] I don’t want-.

Andy Roberts: [00:37:16] Go ahead. Go ahead, Brooks.

Brooks Morris: [00:37:18] I wouldn’t say it’s 50. It’s hard to say right now because I would say the majority are taking the approach that we want to help. There is a percentage, which is a smaller percentage, that’s basically saying yes, and taking action immediately, and saying we will help, get us this information, and we’re gonna go ahead and accommodate your requests. The larger percentage is we want to help, but we can’t. We want to make sure you really need the help. So, these are the things we need to see from you and let us process this. And I say there’s another there’s a small percentage that are taking the hard line. So, I think the lion’s share wants to help. It’s just they are taking a very thoughtful approach on what requirements need to be met in order for them to actually execute on giving that help.

Andy Roberts: [00:38:15] Yeah, I think Brooks is absolutely right. I think your question, Michael, the answer is yes, and that landlords genuinely want to help. I’m yet to encounter any landlord that’s kind of this evil villain laughing that they don’t want to help. I think, from their perspective, to be to be empathetic to their world, they’re internally discussing, okay, we have this tenant that’s been a great tenant. They’re asking for a rent deferment. We generally want to help them. And so, then, (A), what are our lenders willing to do? And (B), depending on how they’re structured financially, it’s commonly a question of, okay, well, what will the implications be to our investors?

Andy Roberts: [00:39:03] And so, a lot of times they’re kind of stuck between a rock and a hard place. You don’t want to have a very difficult conversation with either. And I think the answer in this unique health pandemic is everyone to be transparent as best you can. And I think the reality is both sides are going to have to essentially kind of receive a burden, part of the cost for us as a society to get this behind us and move on. And I think there’s a sentiment of goodwill that’ll carry that to some degree. And yet, whether it’s the investors carrying a bit of a cost, I mean, it’s not like a landlord’s quick to say no. If they do say no to a tenant because they they don’t want to say no to a new investor. For example, they don’t want to tell them that, hey, with this unprecedented economy, your dividends about to go down, and you primarily invest in our fund because of the dividend dynamic.

Andy Roberts: [00:40:06] So, they are in a tough position. And yet I think both sides, to get through this efficiently, are just gonna have to recognize and transparently have the conversation. There’s a cost to care and agree we can kind of split that amiably and move forward.

Brooks Morris: [00:40:22] And in an effort to give a tenant, who may be listening, or business owner and executive who may be listening to this, an actionable item or set expectations, to Andy’s point, these landlords either have a lender to pay themselves, and they’re not getting forgiveness for this at this point in time, or they have investors they’re paying. And so, the tenant needs to understand, they’re asking for help. And so, in order for that to work, it’s got to work for both parties. And if the landlord’s gonna help, and you really need it, there are ways in which you can structure that help where the landlord can get something maybe towards the end of the lease that’s beneficial to them, but it allows the tenant to receive relief today. So, the tenant needs to understand what they have to offer that would benefit the landlord, which makes the landlord still a lot better about giving them the relief.

Andy Roberts: [00:41:25] Yeah, Brooks makes a great point. And we’re typically seeing that take place one of two ways. One being, hey, defer three months of rent now, and you can add it on the end of the term that I’m obligated to, lease-wise, or three months of deferment now, and then that delta that you deferred amortizing that over the remaining term. Those are typically one of the two paths that we’re seeing landlords are open to having.

Mike Blake: [00:41:53] So, let’s look at another scenario, a somewhat happier scenario. Maybe when you return to work, there’s going to be a company to which to return to work, but maybe you decide that your office needs are going to be different. You decide for us, for example, in our Alpharetta office, we’ve seen a marked increase in productivity with remote working vs. being in the office. I don’t know if we’re exceptional or not, right? But other firms may decide that, for whatever reason, they kind of like this remote working kind of scenario, but they’re going to keep their office, they may have or there may be other reasons to keep it. What are other options to generate value from their leased space if they’re not necessarily going to have a full office of employees anymore, but they still want to get value out of the space that they’re already paying for it and have invested in? How much do you redeploy that space to be value added?

Brooks Morris: [00:43:06] I think it’s case by case, Mike. I mean, it really depends upon what type of business is it. Do they have clients that come into that space? Do they not have clients come into that space? Their business is gonna dictate how they can best redeploy that space. Before I get into that a little bit, I would say that it is going to be a very interesting time moving forward. I think what’s happening with this forced remote work situation is it’s really heightening the awareness of the types of jobs that are okay to do remote and the types of jobs that are not okay to do remote or shouldn’t be remote. And so, I think you’re going to see that sort of become a big topic before you understand how are you going to redeploy your space.

Brooks Morris: [00:44:13] I can also see the conversation’s accelerating around, well, if this is a job that needs to be in the office, we maybe would be okay with four days a week in the office and one day remote, and creating some more flexibility around, what does it look like? What does a work week look like for different types of positions? So, I think that’s the first thing that companies are going to need to get their hands around because you have to understand that first before you start the space program around how to use that space.

Brooks Morris: [00:44:49] But then, if you get into redeploying space and once you understand those things, you’re going to start looking at, okay, so what are the areas of our office space that could be used for hoteling and not having a desk specifically for a person or an office specifically for a person? But it starts to be shared, which is something that’s been happening. I could see that accelerating a bit, but I could also see where we’re realizing how much we like to be around people. We love connectivity. Energy is created from when you’re around people. Ideas come from serendipity that happens in water cooler discussions.

Brooks Morris: [00:45:32] And Starbucks wouldn’t have been doing so well with people that worked remote if they just stayed at home or worked by themselves. Starbucks is full of people that are remote workers because they like to be around other people. So, I think you can see office space being redeployed that replicates, to a degree, restaurant in coffee shop environments that draw their people in to that environment to work and have the energy of being around people.

Mike Blake: [00:46:02] That’s really-

Andy Roberts: [00:46:06] Yeah, I completely agree.

Mike Blake: [00:46:06] Sorry, go ahead.

Andy Roberts: [00:46:07] Well, I think Brooks makes a lot of great points. And this will continue to affirm and accelerate a trend we’ve already been witnessing in the sense that office setting and a work setting transitioning from an industrial economy to an idea-driven economy. I mean, even 10 years ago, even 5 years ago, teh degree is still pre-COVID, the degree to which the number of businesses still kind of operated with this mentality of, “Well, this is my desk. It’s just where I go stress it.” I mean, that that really kind of originated out of an industrial revolution mindset, which was you had to be there for the specific function. And yet, as we’ve obviously moved to an idea-driven economy, that no longer makes sense.

Andy Roberts: [00:47:03] And so, it doesn’t mean, obviously, it would go away with office space, what have you. It just looks dramatically different. The same sense, an idea-driven economy looks different from an industrial-driven economy. The office space will reflect it. And I think some of the things we do certainly know is, one, flexibility will continue to rise. And two, I do think you’ve had some of this degree in some place, but think about, for example, the health care industry and the financial services industry, if you’re in either of those, a main theme is going to be working with your attorney to really get buttoned up on remote security in the sense of FCC regulations and HIPAA regulations. And you’ve had a lot of that discussion from within your office, and to some degree some laptop protocol, what have you. But knowing that a flexible, remote workforce that’s not going away, some of this is going to be certainly higher post-COVID than was pre, that’s just going to continue to put more focus on what does that look like on those specific industries that are highly regulated.

Mike Blake: [00:48:13] You touched upon something I want to jump on just a little bit; although we’re running out of time, unfortunately, but it bears discussion. And that is that the bulk of what I see being written right now is that we’re never going back to the old way of doing things. People are going to work remotely a lot more. And I’m not entirely sure that’s true. I mean, I’ve been working from home for the bulk of the last 10 years or so. But I think I’m a little bit of an outlier. I’ve joked before, my wife’s biggest fear about me is not that I’m going to cheat on her but that I’m going to try to get accepted into the Mars mission as long as they start accepting overweight, middle-aged man because I’m going to jump at the opportunity isolated for 24 months. But for somebody like she who is an extrovert, it’s really tough.

Mike Blake: [00:49:12] And I think there is going to be a a demand, a pent-up demand for that socialization. And Brooks, that idea of sort of having a virtual coffee shop within the office, I actually took a note. Maybe that,  in some way, will actually redeploy our space. Can we replicate the Starbucks kind of environment if people just sort of need to change the environment to feel more productive, more creative, more free? I think it’s going to unleash some creativity in terms of how better to use space to promote that socialization.

Brooks Morris: [00:49:51] Yeah, Mike. And it was already happening. So, in the technology industry, anybody that’s been competing for developers, these companies have had to find creative ways already to attract not only through pay but just through culture and what is the office space? Is it a fun office space to come to? And I’m not talking about ping pong tables but this coffee shop/restaurant idea and having diner booth in the break room, great views with bars looking out over the city where you can sit and work, this has been happening. And I see this accelerating for that reason. And it’s really what employees have shown that they want.

Brooks Morris: [00:49:51] I’ll say I know we’re running out of time here, but I was talking to John Ray a little bit about this before the call, but I’ve got a quote from Steve Jobs because I was reading Walter Isaacson. I’m in the middle of his book on the biography of Steve Jobs. And we all know he’s not only a founder of the respected brand Apple but also Pixar. And he was avid about their office space and including at Pixar. And he is not only a denizen of the digital world, but he knew all too well the isolated potential of technology and he was a big believer of face-to-face meetings. And he said there’s a temptation in our networked age to think that an idea can be developed by email or iChat. He says that’s crazy. Creativity comes from spontaneous meetings and from random discussions. And I think there’s a lot of truth in that. I just think there’s a balance that has to be found between flexibility and how technology can allow us to be remote and flexible. But, also, when and how often should we be face-to-face and  what do those environments look like now moving forward?

Andy Roberts: [00:52:10] That’s a great point.

Mike Blake: [00:52:12] So, one last question I want to touch upon is the return-to-work scenario. I believe, and you can tell me if I’m wrong, of course, but I believe that how we—and you touched upon it actually, but how we work is going to change, and I think there’s going to be some negotiations between tenants and landlords, and how to accommodate that. For example, even professional services moved to shift work, basically, right? And is the climate control now going to be kept on and who pays for that? I think that one janitorial visit per day is not going to cut it, right? You’re going to need to sterilize the office, I think, multiple times a day. I’m certainly advocating that for our firm. And other kind of logistical issues. Employee access, do you have to put toilet paper in safe, which sounds absurd, but it’s not, right? Is  it worth thinking now about what the return-to-work scenario looks like? And are these things that you ought to be talking to your landlord about now about what that looks like, so you can agree in terms of, basically, who’s responsible for what and how?

Brooks Morris: [00:53:42] Yeah, I think before-

Andy Roberts: [00:53:42] Absolutely.

Brooks Morris: [00:53:42] Yeah. Before you have that conversation with your landlord, with your advisors and your executive team, and asking questions among all your employees, you want to understand what is your need at the company first. What your plan to address this? Because you don’t want to go get out in front of this with the landlord before you know what you’re really asking for and why because you wanted to support your long-term business needs and short-term with addressing and making sure that you’re getting the janitorial services that you need.

Brooks Morris: [00:54:18] Once you establish what the need is, then you go engage in a proactive conversation with your landlord to address those things. But I think, depending upon how long this lasts, there is an opportunity to be in a better position as a tenant with more leverage in the cycle that we may be entering into. So, this could be an opportunity for tenants to, eventually, not right away, certainly if you have a lease expiration coming up, to restructure leases. Well, there’s gonna be a lot more subleases on the market, which is going to be competitive with the direct lease options for landlords. So, I think that there’s going to be an opportunity to push some of the responsibility for additional expenses onto the landlord and have more incentives that the landlords are offering.

Andy Roberts: [00:55:19] Those are great points. And I think one noteworthy point to consider for those working primarily in an office setting who are leading a company, it’s very possible that landlords, for a season of time as we start to get back, may have kind of revised density requirements that the tenants are going to want to be aware of. And again, it’s not that landlords are looking to be difficult. We just don’t know what conversations they’re having with lenders. And primarily, that’s probably their insurance brokers in the sense of to mitigate any outbreak, it’s very possible you don’t want to kind of have an internal planning session come up with a plan and then find out it’s not compatible with what the landlord will allow. I don’t think it’s gonna last forever, but I could very well see a scenario where, hey, the ban is lifted and set in for the next 30 days, or 45, or 60 days. There’s kind of a revised density issue that landlords are asking/mandating their tenants adhere to.

Brooks Morris: [00:56:24] Yeah, I think Andy brings up a great point. Historically, square footage of use per person has been 300 square feet or higher. And over the last several years, that’s gotten down sub-200. So, you could see where there’s not as many people that need to be in the office, but they still need almost as many square feet because it’s been mandated that it’s not allowed to be that dense anymore, and you have to have more square feet per person. I could see that potentially happening.

Mike Blake: [00:57:01] Yes, certainly places like California, New York, you may very well see them. I hadn’t thought of that. I think it’s a great observation. Guys, this has been great. We’re already over time, and I want to be as I try to be uber respectful of your time. If people have other questions that we weren’t able to cover today, how can people contact you?

Andy Roberts: [00:57:23] Sure. Obviously, if you go online and Google Cresa, this is Andy Roberts and Brooks Morris. We’re both in the Atlanta office. Obviously, our website is a great resource to learn about our firm. And then, you can specifically visit the Atlanta link, as well as Brooks has a personalized bio page. I, myself, have  a personalized bio page on LinkedIn. Please feel free. We’ve got a lot of great thought leadership resources on our website. That’s probably the easiest direct place to go to. Again, www.cresa.com. And happy to be a resource specifically and/or just kind of general questions. We’re always looking to receive feedback from the frontlines, if you will. So, welcome those conversations.

Mike Blake: [00:58:17] Well, that’s going to wrap it up for today’s program. I’d like to thank Brooks Morris and Andy Roberts of Cresa so much for joining us and sharing their expertise with us. We’ll be exploring a new topic each week. So, please tune in, so that when you’re facing your next executive decision, you have clear vision when making it. If you enjoy this podcast. please consider leaving a review with your favorite podcast aggregator. That helps people find us, so that we can help them. Once again, this is Mike Blake. Our sponsor is Brady Ware & Company. And this has been the Decision Vision Podcast.

Decision Vision Episode 60, “How Can My Business Survive the Covid-19 Crisis?” – An Interview with Tommy Marsh, Brady Ware

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Survive the Covid-19 Crisis
Decision Vision
Decision Vision Episode 60, "How Can My Business Survive the Covid-19 Crisis?" – An Interview with Tommy Marsh, Brady Ware
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Survive the Covid-19 Crisis
Tommy Marsh, Brady Ware & Company

Decision Vision Episode 60, “How Can My Business Survive the Covid-19 Crisis?” – An Interview with Tommy Marsh, Brady Ware & Company

Many business owners right now are asking “how can my business survive the Covid-19 crisis?” In this episode of “Decision Vision,” veteran CPA Tommy Marsh addresses the various SBA relief programs of the CARES Act, how they help business, and much more. The host of “Decision Vision” is Mike Blake, and this series is presented by Brady Ware & Company.

Tommy Marsh, Brady Ware & Company

Tommy Marsh has more than 25 years’ experience in public accounting. Prior to joining the Brady Ware family, he was a tax partner with Marsh & McConnell for 21 years.

Tommy’s responsibilities include general business consulting, strategic planning and tax and audit services. He also specializes in Federal and State income tax laws and regulations as they relate to closely held corporations and partnerships, as well as personal and financial, income and estate planning. He has significant experience in obtaining IRS ruling requests, approval for changes in tax accounting methods, and tax issues relating to problems that arise in connection with complex business transactions.

Tommy is a member of the Greater North Fulton Chamber of Commerce, the American Institute of Certified Public Accountants, as well as the Georgia Society of CPAs.

To get in touch with Tommy, you can email him or call him directly at 678-350-9503.

Michael Blake, Brady Ware & Company

Michael Blake is Host of the “Decision Vision” podcast series and a Director of Brady Ware & Company. Mike specializes in the valuation of intellectual property-driven firms, such as software firms, aerospace firms and professional services firms, most frequently in the capacity as a transaction advisor, helping clients obtain great outcomes from complex transaction opportunities. He is also a specialist in the appraisal of intellectual properties as stand-alone assets, such as software, trade secrets, and patents.

Mike has been a full-time business appraiser for 13 years with public accounting firms, boutique business appraisal firms, and an owner of his own firm. Prior to that, he spent 8 years in venture capital and investment banking, including transactions in the U.S., Israel, Russia, Ukraine, and Belarus.

Brady Ware & Company

Brady Ware & Company is a regional full-service accounting and advisory firm which helps businesses and entrepreneurs make visions a reality. Brady Ware services clients nationally from its offices in Alpharetta, GA; Columbus and Dayton, OH; and Richmond, IN. The firm is growth minded, committed to the regions in which they operate, and most importantly, they make significant investments in their people and service offerings to meet the changing financial needs of those they are privileged to serve. The firm is dedicated to providing results that make a difference for its clients.

Decision Vision Podcast Series

“Decision Vision” is a podcast covering topics and issues facing small business owners and connecting them with solutions from leading experts. This series is presented by Brady Ware & Company. If you are a decision maker for a small business, we’d love to hear from you. Contact us at decisionvision@bradyware.com and make sure to listen to every Thursday to the “Decision Vision” podcast. Past episodes of “Decision Vision” can be found here. “Decision Vision” is produced and broadcast by the North Fulton studio of Business RadioX®.

Visit Brady Ware & Company on social media:

LinkedIn:  https://www.linkedin.com/company/brady-ware/

Facebook: https://www.facebook.com/bradywareCPAs/

Twitter: https://twitter.com/BradyWare

Instagram: https://www.instagram.com/bradywarecompany/

Show Transcript

Intro: [00:00:05] Welcome to Decision Vision, a podcast series focusing on critical business decisions. Brought to you by Brady Ware & Company. Brady Ware is a regional, full-service accounting advisory firm that helps businesses and entrepreneurs make vision a reality.

Mike Blake: [00:00:25] And welcome to Decision Vision, a podcast giving you, the listener, clear vision to make great decisions. In each episode, we discuss the process of decision making on a different topic from the business owners’ or executives’ prospective. We aren’t necessarily telling you what to do, but we can put you in a position to make an informed decision on your own and understand when you might need help along the way.

Mike Blake: [00:00:45] My name is Mike Blake, and I’m your host for today’s program. I’m a Director at Brady Ware $ Company, a full-service accounting firm based in Dayton, Ohio, with offices in Dayton; Columbus, Ohio; Richmond, Indiana; and Alpharetta, Georgia. Brady Ware is sponsoring this podcast, which is being recorded in Atlanta per social distancing protocols. If you like this podcast, please subscribe and your favorite podcast aggregator and please consider leaving our view of the podcast as well.

Mike Blake: [00:01:12] This is the fifth of a subseries of topics regarding how to address the coronavirus crisis. And specifically, we’re discussing managing and leading companies in a shutdown shelter-in-place world. And we’ve gone pretty granular for the first four topics, ranging from data security, to managing remote teams, to being an effective remote worker. And by the time this is published, we may or may not have also published addressing your real estate obligations in a shutdown world.

Mike Blake: [00:01:51] But I want to sort of draw back a little bit and look at this from a 30,000-foot perspective because in addition to managing the very granular aspects of managing a company through a crisis, there is also the broad discussion of just how do you run a company in this environment and how do you lead. And let’s kind of put our cards on the table right now. We are collectively living inside of a horror movie, with the exception of we don’t have the don’t-open-that-door kind of thing. But we’re living in an unprecedented environment. And unless you’ve had – I don’t know – bomb diffusing training or something like that, none of us have specific training in how to handle a scenario like this.

Mike Blake: [00:02:53] And I think the best teacher for this kind of thing, quite candidly, is experience because, again, I don’t think there’s a course that Harvard is offering that is the Coronavirus and You: How to Manage your Company in a World That’s Being Afflicted with a Pandemic. And I think there are just sort of broad questions and conversations that as leaders, as decision makers, we would like to have, we’re trying to have, and maybe we have something in our region, in our network, or our ecosystem that can have that with us; maybe we don’t.

Mike Blake: [00:03:33] And what I want to do with the show is I want to make available too, quite candidly, one of the wisest business people I know and one of the guys you want to be in a foxhole with. And full disclosure, he is technically my boss. So, as a listener, you can decide if I’m sucking up to him or not, but if you’ve known me for more than five minutes, you know I’m not a suck-up guy. But I’ve taken an instant liking to Tommy Marsh ever since I joined the firm almost two and a half years ago. And in the short period of time, he’s become something of a mentor that I wish I’d had much earlier in my career and rarely did have. He just got a common sense to him and a way of cutting through the bullshit, but a way of addressing it with a level of humanity and compassion that you don’t see all that often, including in the accounting industry. And I think you’ll enjoy the next 45 minutes we’re going to spend with him as much as I’ve enjoyed being able to learn from him over the last two years.

Mike Blake: [00:04:45] Tommy has more than 25 years of experience in public accounting and is the managing director of our Alpharetta, Georgia office. Prior to joining the Brady Ware family, he was a tax partner with a firm called Marsh McConnell for 21 years, which, of course, that’s his name. He was co-owner and he was running that, running and owning that firm. Tommy is an involved in general business consulting, strategic planning and tax audit services. He specializes in federal and state income tax laws and regulations. They relate to closely held corporations and partnerships, as well as personal financial income and estate planning, does all this accounting stuff, yada, yada, yada. He’s a member of the Greater North Fulton Chamber of Commerce, AICPA, and the Georgia Society of CPAs.

Mike Blake: [00:05:32] But most importantly, what he does on a daily basis, I think he would tell you himself, he doesn’t do all that much raw accounting stuff anymore. He’s the guy that clients come to when they just got problems, and they’ve got major issues with their company that are potentially company or career-threatening, and they come to him for advice. And that’s the kind of guy that you want involved, that you want to ask these kinds of questions because every business, I don’t care even if you’re making N95 masks and you’re making ventilators, this environment, if you don’t navigate correctly, is an existential threat to us all. And so, great advice is it’s never been more important. And I’m so delighted I could convince Tommy to take some time off the tennis court and join us today. Tommy, welcome to the program.

Tommy Marsh: [00:06:33] Mike, thank you so much. I learned a couple of things about myself in that introduction, and it’s much appreciated. I will leave my ring on your desk because we got to have six feet apart, but I will leave it on your desk in order for you to pay the proper homage. But in all seriousness, Mike, thank you for the introduction, and I’m proud to be your partner. So, job well done.

Mike Blake: [00:07:01] So, Tom, let’s get into some background. When we say that you’re with Marsh & McConnell for 21 years. Were you the owner or and owner of that firm for all 21 years?

Tommy Marsh: [00:07:13] Yes, I’ve been in public accounting for about 38 years. And you sort of sharpen your teeth on the early years, I was with a regional farm. And then, once, I was traveling a lot. And when I started having children, I wanted to be in Atlanta versus being on a plane traveling and consulting. But I hooked up with a guy named Bob Humberstone, and myself, and Margaret McConnell, bought him out eventually. And therefore, I became an owner at about, probably, I don’t know, 20 some odd year, maybe 25 some odd years ago. So, I wasn’t a partner/of Marsh & McConnell for the 20 plus years you’ve indicated.

Mike Blake: [00:08:02] And in your career, how many financial crises have you had to weather, either as a business owner or as an executive that has to make these tough decisions?

Tommy Marsh: [00:08:14] Well, obviously, the two that come to mind, and I’m going to throw you a third one, but basically in 2008, that was the “Great Recession days” that that we all experienced. It was pretty much in the real estate world, but it also impacted banking, and financing, and a lot of industries across the board. That was a tough, tough time for a lot of people, a lot of businesses. So, that was probably the major one. The second one is what we’re experiencing today. I have never seen something like this before. So, this has got to be one of the major financial issues that are facing us today.

Tommy Marsh: [00:09:05] Now, being a CPA for a small practice and in the Marsh & McConnell years, I believe the other financial crisis that we had is with clients. When a client of yours loses a key employee, or they lose a bank funding, or they lose a line on a distributorship, I believe that I’ve had crises along the way. Nothing of magnitude as the 2008 or 2020 crisis that we’re going through today, but I can’t even tell you how many I’ve experienced of that on the front lines with clients.

Mike Blake: [00:09:48] Is this the worst crisis you think you’ve experienced in your career?

Tommy Marsh: [00:09:56] Absolutely. And I think when you talk about the 2008 Great Recession, it’s now behind us. It’s in the rearview mirror. When you talk about the 2020 coronavirus pandemic, we’re still living it. As you said, when we first started talking this morning is that we’re living it, we’re in the middle of it. And my experience has been that I believe that the unknown, most of the time, is worse than the known. And so, we’re still in the unknown part of this, whether it’s a health issue that you’re worried about, a loved one, or your children, or your spouse, or what have you from a health issue, but you’re also in a situation to where from a business owner, what’s going to happen? And so, that’s why I think for right now, it is absolutely terrifying on some stages.

Tommy Marsh: [00:10:55] However, we all know that the unknown is worse than the known. So, hopefully, in the next — and I’m not trying to put a deadline on this, but at the same token, we need to get back to work. Is that 30 days? Is that forty five? Is that 60 or 90? Only time will tell. So, yes, this is absolutely the worst situation I’ve seen in my career.

Mike Blake: [00:11:24] In the past, let’s go back to the ’08-’09 Great Recession, you and I were both advising clients back then. What advice have you given to clients in the past from financial stocks that came to you and said, “Tommy, what’s going to happen? The economy is obviously going to take a massive turn for the worse.” And they’re saying, “What do I do? What do I have to be doing?” What piece of advice that you find yourself most commonly giving out?

Tommy Marsh: [00:11:56] Well, obviously, advice is pretty much client-specific. You may have one client that really has not been impacted. So, our advice to them is, hey, it’s the general discussion and the general consulting that we do on a daily basis. Other clients typically have specific advice, but the over ending advice that I give clients is it is going to be okay. I may not know 100% what it looks like, but I believe with my experience and as much as I’ve been through the last 38 years in my industry, it’s all going to be okay. It may not look like it was prior to this, but at the end of the day, it’s all going to be okay. If we can hang in there long enough, and be healthy, and survive all of this, which I believe we will, we’ll come out the other side, and it’s all going to be okay.

Tommy Marsh: [00:12:59] Way back in my career. I would get nervous, I guess is the word, that if a client got in trouble or one of my largest clients declared bankruptcy, as a business owner, you become nervous, and what’s going to happen next, and am I going to survive and feed my family, and what have you? The reality is at the end of the day, it’s the human spirit that’s going to overcome, and we’re going to come out the other side better. Maybe a little bit different, but we’re going to come out the other side. I’m always betting on me, and you, and the clients, and the human spirit to get through this. And I believe it’s all going to be okay. So, that’s probably the 30,000-foot specific advice is it’s all going to be okay.

Mike Blake: [00:13:54] So, I know you, as I have, have fielded calls and have taken meetings with with clients about this. What are the most common worries that they’re expressing to you right now?

Mike Blake: [00:14:10] Well, it depends on the industry. So, one of the first, about the middle of March when this really was starting to shape up to where the economy was going to get shut down for whatever reason, it really depends upon what industry that you’re at. One of my trade show vendors called up and said, “When will this be over?” And I said, “Well, I’m not sure.” But if you know anything about the trade show industry, they didn’t postpone their trade shows, they canceled them. So, his worry was, “When will it get back to normalcy?” And he thinks it’s going to be in the fall. So, all the planning that we have done is for the fall.

Tommy Marsh: [00:15:01] A charity event client of mine suffered the same type of situation to where, overnight, all of his charity events that he supports were canceled. And right now, they’re pushing to have them in the fall again. So, his biggest concern and his biggest worry was, “I have assembled the best team that I’ve ever put together. How can I keep them all together? How can I keep my my great team together?”

Tommy Marsh: [00:15:33] A project company called me up, and he manufactures large displays for whether it’s a large construction client here in town or what have you. His revenue went from $7 million down to zero. “How am I gonna pay for the rent? How can I keep my my team together? How am I going to survive this and pay for my bills?” So, at the end of the day, even the hair salon that we represent, she called me up and said, “Hey, I closed the shop, sent everybody home. Will unemployment benefits be enough to take care of my team that I’ve had for the last 10 or 15 years?”

Tommy Marsh: [00:16:23] All four of those examples happened within about two and a half days of each other in the middle of March because they saw what was coming, and they were looking at what was gonna happen economically. So, at that point, most of them were just really, really, really worried, not only about their business but really about the people that work with the small business owner that they care about. So, really, it’s specific of what industry that you’re in, but you can give a sampling and a taste of what people are worried about going forward. So, those are some true-to-life examples. Obviously, I could give you probably 10 more. But then we went from 45 minutes to about an hour and fifteen, and I’m not sure we want to do that.

Mike Blake: [00:17:13] So, we, along with the rest of our industry, is scrambling to understand how the recently passed CARES/Payroll Protection Program Act is going to operate. And I think we’re starting to get a handle on it. But the interpretations are still a work in progress. But at the end of the day, I know a lot of, in particular, small businesses are looking at that as a potential savior. In your mind, how helpful do you think that is going to be for small businesses? And are you telling people to, “Yeah, this is going to be great, and it is a true lifeline,” or are you telling them that, “Maybe you should manage your expectations? This is great, but it’s not going to solve the whole thing”? Where do you kind of come down on that?

Tommy Marsh: [00:18:13] Well, that is a great question. So, a couple of comments on the frontend are, is that from about the middle of March and even to the end of March, we kept hearing about the SBA programs, and the CARES Act, and the TPP loans, and what have you. The way I see the world is that there’s really two groups of the CARES Act that is available or you could use it to your benefit.

Tommy Marsh: [00:18:45] The first part of it is your typical, what they call as the EIDL loan. It stands for economic injury disaster loan. And that is an SBA program that you go online and you apply for, which is truly a disaster loan to be able to borrow money from the federal government in order to keep your business open. You have to use the money for overhead, but that’s okay, right? In other words, if we have a good business, and we’re going to come out the other side, this is a great, great means for businesses to borrow money. And this disaster loan is no different than when a tornado hits a small town, they need relief, or a flood, they need relief, or a drought. You’re trying to loan moneys to businesses in order to survive. So, from that first part of this CARES Act, I think that’s very, very, very powerful and very, very good for the government to provide that. So, I highly recommend that. We have a lot of our clients applying for it. And hopefully, we’ll hear success stories of them funding it, and we’re starting to get that right now, is that we’re hearing clients are getting to receive the money.

Mike Blake: [00:20:13] Yeah. Go ahead.

Tommy Marsh: [00:20:16] Go ahead, Mike.

Mike Blake: [00:20:16] I was just going to say I’ve also started to see things trickling through our own internal communications and elsewhere that the money is actually starting to flow. So, in spite of the fact that I think the banks are taken a little bit by surprise that they’re going to be the frontend of processing this, and they’re scrambling to develop intake procedures and capacity. It looks like they’re actually starting to rise to the occasion fairly quickly.

Tommy Marsh: [00:20:43] And they have. And what’s interesting is up until about, again, three days to a week ago, the CPAs, not only myself but other CPAs around the country, are on the frontlines of answering questions that they really don’t know the answers to yet. So, I know it’s frustrating to some clients, but we can only do the best we can with the information that we have.

Tommy Marsh: [00:21:08] However, the other side of it is, of the CARES Act, is really it’s a separate, for lack of a better word, a bucket. And the other bucket, there’s really three things going on in this proverbial bucket that I’ve described. And basically the CARES Act, I believe, and this is my personal opinion, is trying to provide relief to people to survive two and a half months. And the reason I say that is if you break it down further, then the two and a half months, you’ll hear about the stimulus checks that individuals are getting 1200 bucks if your income is under $75,000. If you’re married jointly, you’re getting 2400 bucks. I’m not saying that everybody’s going to survive two and a half months on that kind of money, but from the stimulus side of the government, they are providing these stimulus checks, I believe, to individuals to try to weather the storm for a period of time.

Tommy Marsh: [00:22:15] The second thing that they’re doing is, is that they are maintaining in the CARES ACT, is that an employer that keeps their payroll in place, there are great credits available to them against future payroll taxes, which benefits people to keep their payroll and their team in place. So, that is a great opportunity. See your accountant to help you calculate those credits.

Tommy Marsh: [00:22:45] And then, the last would be the infamous PPP loan, which is the Paycheck Protection Program Loan. And that’s the one that’s getting the most press because if you maintain your payroll for two and a half or two months, you can borrow up to two and a half times your average monthly payroll. But if you can survive the two months of paying your regular payroll, I believe it’s in hopes that the economy gets started again and things get back to normal. So, when you look at the CARES Act, a lot of it is, “Hey, let’s see if we can survive the next two and a half months,” which we will, which we will, but that’s a that’s a high-level summary of the CARES Act in order for businesses to consider to keep going for two and a half months.

Mike Blake: [00:23:42] I agree with that. The math I did was that this is a $2.5 trillion rescue package, and the non-government piece of our national GDP is about $16 trillion of GDP, right? And so, when you work through the math, that does turn out to be 10 weeks or so of GDP in effect that the government is now replacing, right? Give or take what’s being produced by elsewhere in the economy. So, I think you’re right.

Tommy Marsh: [00:24:16] That’s very well put and that’s a great point, I believe, that whatever they’re trying to do and, again, what we’re hearing success stories that clients are now beginning to get some money, but if you think about it, there’s two things going on. What can the government do to help the citizens and small business out to get to the next event to where we’re back outside and we’re not on shelter-in-place type of things, which is under Georgia and what have you? So, that’s the first part of it. The second part of it is that, all of a sudden, we’re going to have this trillion dollar debt, but in my opinion, today, we’re just trying to make it two and a half months, right? I mean-

Mike Blake: [00:25:05] We are.

Tommy Marsh: [00:25:05] Yeah, exactly. So, I believe that the stimulus package and the CARES is really just trying to get businesses and people to, “Let’s figure this out. Let’s give us two and a half months of survival.”

Mike Blake: [00:25:20] So, tax return deadlines have been pushed back. I think it’s to July, I should know this more, but I’m not an accountant. How many full do you think that is for most business owners? Do you think that that’s appreciated – just to take one thing off their plates, they can focus on what’s right in front of them?

Tommy Marsh: [00:25:37] Well, Mike, to be very blunt with you. I think it’s the greatest law ever invented because I’m a public accountant CPA. So, I think it’s very meaningful if you want to know the truth of the matter. Now, on a serious note, it did give us a break because what was interesting was as we all know historically how important the April 15th deadline is, you have all the cartoon characters of the accountant in the white shirt with the 10 key, and the green hat on, and the visor on, and cranking out the numbers, and all that’s true.

Tommy Marsh: [00:26:14] So, what was little disturbing on the front end was we kept hearing about these SBA loans and big breaks given to other businesses, but they really didn’t take their foot off the gas pedal until later on to where they passed it to where CPA firms could defer the filing or actually taxpayers with CPAs are part of helping them prepare their taxes until July 15th. So, you and I know, Mike, because we sent our staff home, right?

Mike Blake: [00:26:47] Yeah

Tommy Marsh: [00:26:47] On a Monday, we sent everybody home to work from home because we didn’t want anybody getting sick or trying not to get them sick. But it was a great, great relief to get the filing deadline. And they’ve just recently come out with more rules to state that a lot of the filings that are normally done between now and July 15th have pretty much all been extended. So, from that aspect from a CPA firm, it was huge.

Tommy Marsh: [00:27:17] Now, from a general business type of client, really, it helps them if they owe tax, right? So, in other words, if you owe tax and you’re trying to survive the next two and a half months, they’re probably not going to make their tax payments anyway because they’re trying to keep the doors open and keep their employees in place. At that moment, it is a huge benefit for the government not to charge the typical 1% interest rate from April 15th until July 15th. They have waived that. So, from that aspect, if you are owing money, that is a great, great benefit and very meaningful to those people who just picked up the interest carry on that.

Tommy Marsh: [00:28:08] If you have a refund, obviously, the group that have refunds are still pressuring the CPAs to get the returns done. And Brady Ware is continuing to do that. We’re still in full production in order to continuously serve the clients that we have. It’s just being done a little bit differently since everybody’s at home. But yeah, in order to get refunds, you should have to file. And we are in the process of doing that. So, from a huge meaning, I think the SBA loans and the CARES package was probably more meaningful than just the “July 15th” filing date. If you want to know the truth of the matter, well, that’s my opinion. That’s totally my opinion.

Mike Blake: [00:28:58] And I’ll say for an aside here, as a shameless plug, but as a semi-outsider because I’m not in the accounting side, my busy season is fourth quarter, not second quarter or first quarter. We’ve done a fantastic job, in spite of this disruption, getting through the workflow that we’ve had to get through. And my impression is that not only has our productivity not dropped, I think it’s actually improved. I don’t know if that sort of industry wide, but that’s my perception.

Tommy Marsh: [00:29:38] Well, and that’s great of you to say because your taxes in his fourth quarter of what you do. But at the same token, I’ve got to give it to our team here. Our leadership here, the managers and the offices, the the staff, the professionalism exhibited by our team has been second to none. And I’m sure CPA firms around the country feel the same way. But right now, our team is still taking phone calls, and e-mails, and production, and reviewing, and I’ll probably at least a handful of tax returns this afternoon and keep the ship going in the right direction. But I got to give it to our team, Mike. We have a great group of of team members here that carry the buckets of water uphill. So, I don’t get credit for that. The managers that put it in place get credit for it.

Mike Blake: [00:30:38] They’ve responded very well. And again, as a clause outside because I’m not doing that stuff, it’s been impressive. So, let’s touch upon this. What have you had to change? I mean, you’re still responsible for our office of 36 people. I know you want us to be safe. I know you want us to be engaged. We also still have a job to do. We still have the public trust to serve. We still have clients that got to get stuff done, especially ones that that have refunds, because they really need those refunds. How are you adapting to changing to this new this new reality?

Tommy Marsh: [00:31:27] Well, you know me pretty well, Mike. And you can tell I’m smiling when I say this, but when we sent our team—let me back up further than that. Even prior to sending our team to work from home, you were on the front lines of this, we were in the process of saying, “Hey, team members, with the Atlanta traffic, why don’t you work one day from home, and just stay in touch, and we’ll see how it works,” right? I mean, for an accounting firm or for me, that was a big change, right, because I’m old school, and let’s get in here, and let’s get your hours done, and the chargability, and all the things that go with that.

Tommy Marsh: [00:32:09] So, for me, personally, I believe sending everybody home has changed, I’m not going to say a lot. Maybe it changes the way I look at it because our team, given the chance to be professionals without being in the office professionally, they have risen to the occasion. So, from that aspect, when we sent everybody home that Monday, I got up on Tuesday, Mike, and the sky hadn’t fallen. I went to my car, the sky was still up in the sky. I couldn’t believe it. I figured we’d be all over the parking lot. But no, the sky did not fall with us sending everybody home.

Tommy Marsh: [00:32:51] Now, that’s a little tongue in cheek because as you know, Brady Ware takes great pride with our IT, and you can log in anywhere, and the things that we do. We were already ahead of the curve of that, in my opinion. But just from a from a leadership viewpoint, obviously, it’s been harder. As you know, if you’re here on a Friday, sometimes – and again, this is rumor – you may have a fireball Friday walking around. So, what’s happened? Rumor has it there may be some virtual happy hours. So, from a leadership viewpoint, what’s happening is, I believe, everyone is incredibly professional. I also believe from a leadership viewpoint that people, our team misses the social interaction of our office. And people are coming in. I’m actually at the office today. Don’t tell Governor Kemp. But I guess I’m essential, though. So, I guess I’m good there.

Mike Blake: [00:33:54] You are essential, Tommy.

Tommy Marsh: [00:33:56] Thank you, Mike. I appreciate that. And so, what’s happening is, I think, people are coming, and they’re missing the social aspect of it, but you still got to run a business, you still got to look at the timesheets, you still got to look at production, you still got to return emails. And we’re still doing the 101 stuff, and the blocking, and tackling that we we need to do in order to take care of our clients.

Mike Blake: [00:34:21] And you’re right about that social interaction. Out of the Atlanta office, at least, we’re doing a virtual happy hour on Friday. And last Friday, half the office participated, which was remarkable. All we were doing was staring at people on the screen. Even one guy who is on vacation dialed in. I mean, I I think we need to get him counseling, but the gesture was nice. You’re right. I mean, it does show that the team has some resilience because they do miss each other. And you do have people like me on one end of the spectrum that will wander into the office once every two weeks or so just to remind people that I need a paycheck. But then, you have other people that really like to be in the office and get a good vibe from there.

Mike Blake: [00:35:11] And this segue nicely to my next question. Maybe one of the lessons, one of the good things that’s going to come out of this is we realize the sky doesn’t fall. We realize that we have hired well. We’ve always thought we hired well. We always thought we hired people that we could trust to be adults. But now, it’s been combat tested and it’s been proven victorious. And one of the things we’ve learned is that we can do this and we don’t need to focus on butts and seats anymore so much as productivity, which can maybe unleash some other good downstream effects down the road.

Tommy Marsh: [00:35:50] I totally agree. I think Brady where can look in the mirror a little bit because as I advise my clients, “Hey, why don’t you use this time to look at your business and to look at what changes you need to make, so when you come out the other side, what did we learn from it? What decisions needed to be taking place to get us to the other side? As well as once we get to the other side, then  what kind of culture and firm can you improve upon in order to be a better firm?” And that’s what I’ve been telling most clients or all clients, “Hey, look in the mirror and look at your business to see what needs to happen.”

Mike Blake: [00:36:36] And that segues, I think, into maybe the most important question I have in this interview. One of my previous interviews with a gentleman out in Silicon Valley named Shane Metcalf, and he runs basically an employee engagement software firm out there in Silicon Valley. And the thing that struck me from that interview – we just published that by the way – was he immediately looked at or turned the conversation to, how are we going to be better after all of this? And true Silicon Valley perspective, it was, “Yeah, yeah, yeah, okay. We got the virus thing going on. It’s going to do its thing. It’s going to visit tragedy among people and families. And we’re doing the best we can. But from a business perspective, it’s also creating disruption, which also means that it creates opportunity.” Very Silicon Valley way of thinking, which I have now blatantly stolen from him because I think it’s the right way to think about it.

Mike Blake: [00:37:47] And I think you think about these things the same way too, right? You’re saying we’re going to come out of this. We don’t know when. We don’t know exactly how. Although I think companies should be planning now for what that looks like, what the restart process is. How do you think companies are going to — you can make this Brady Ware specific if you would like or make it more general. How do you think companies are going to be better? Or maybe how do you think you’re going to be better professionally from all this?

Tommy Marsh: [00:38:19] Well, great question. I’m one of the best tax guys in the city because every answer, it depends, right? So, you can always answer it that way.

Mike Blake: [00:38:29] You’ll make a great economist.

Tommy Marsh: [00:38:30] Yes, exactly. So, to me, it’s a two-step process. And the first step is that like what clients are asking me today, “Hey, what about this?” and “Hey, what can I change?” and “Hey, Tommy, I need your help.” Well, the reality is I took a real estate course at college and it taught me three things, right? Location, location, location, right? We all know that old real estate joke.

Mike Blake: [00:38:59] Yeah.

Tommy Marsh: [00:38:59] Well, what’s happening today is in the coronavirus environment is really it’s cash flow, cash flow, cash flow because we need to figure out the cash flow to get us to the other side. And part of that cash flow analysis is, what moneys do I have coming in. Whether it’s from sales, or SBA loans, or fat claim, or whatever you’re going to do, that’s the first aspect of it is to say, “Hey, what money do I have coming in?

Tommy Marsh: [00:38:59] The second tier is  typically—and again, every business is a little bit different, but a lot of our clients, one of their largest expenses is, obviously, salaries. So, do you rank your owner as number one and everyone else down to number 20 or whatever? And the theory behind it is, hey, if my sales have gone down 30%, do I need to look at 30% of my salaries? That is a question mark, by the way. It’s not a rule out there.

Mike Blake: [00:40:09] Yeah.

Tommy Marsh: [00:40:09] But once you look at it in good times. Mike, what happens? You don’t really address the problem employee. You don’t really hold them accountable like you should hold them accountable because things are good, and why do I have to rock the boat to a degree? Well, when things aren’t good, it is forcing people, companies to look at their business and make those tough decisions. So, once you do that, and you have to say, “You know what, my business is down 30%, I’ve got to get rid of 30% of my workforce in order to survive,” right? We’re trying to get the cash flow to get the other side. Then, at that moment, it’s really easy to let the problem employee go or the team member who really isn’t carrying the water uphill because it’s survival.

Tommy Marsh: [00:41:02] And then, the last thing is that once you do that, you analyze your overhead. And that’s a little bit easier approach because it’s easier to to tell the specialty water person that we can no longer use their services in the break room because it’s not essential. But once you do all of this, and you get to the other side, I believe all businesses are going to be stronger, including Brady Ware. Maybe we have work anywhere policies, maybe we only meet on Mondays, or Tuesdays, or something because it’s been proven if Brady Ware so far that we have a great professional staff without having to repeat all of. that.

Tommy Marsh: [00:41:46] So, to answer your question, what it’s going to look like? I don’t know, Mike, but what it’s going to look like they’re still writing the book while we’re reading it. But I think we’re going to come out the other end a lot stronger in leadership and more trustworthy. Not that we weren’t before, but we’re going to be more professional and let our team grow and blossom where they can grow and blossom.

Mike Blake: [00:42:11] Tommy, this has been a great conversation. We could easily have it go another hour. But I know you got a lot to do, and you got ants in your pants anyway. But if we haven’t covered something that somebody else had a question about or maybe they’d want to follow up on something that we have covered, is it okay if they contact you? And if so, how best can they do that?

Tommy Marsh: [00:42:35] Two ways. The first is  my e-mail address, which is tmarsh@bradyware.com. So, tmarsha@bradyware.com or my direct line is 678-350-9503. Please call.

Mike Blake: [00:43:03] That’s going to wrap it up for today’s program. I would like to thank Tommy Marsh of Brady Ware so much for joining us and sharing his expertise with us today. We’ll be exploring a new topic each week or maybe even more frequently as we do these special episodes, but please to announce that when you’re faced with your next executive decision, you have clear vision when making it.

Mike Blake: [00:43:23] If you enjoy these podcasts, please consider leaving a review with your favorite podcast aggregator. That helps you will find us, so that we can help them. Once again, this is Mike Blake. Our sponsor is Brandy Ware & Company. And this has been the Decision Vision Podcast.

Atlanta Business Radio Special Edition: Michael Robertson with SSIC and Tom Mahaffey with the Sandy Springs Chamber

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Atlanta Business Radio
Atlanta Business Radio Special Edition: Michael Robertson with SSIC and Tom Mahaffey with the Sandy Springs Chamber
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ABR-Spec-Edition-SSIC-Group

Michael Robertson is the Executive Director at Sandy Springs Innovation Center (SSIC). His specialties include practical, actionable skills development, performance-driven cultures, building successful nonprofit organizations, strategies building successful businesses, people related coaching and mentoring and establishing educational programming around Innovation and Entrepreneurship.

Connect with Michael on LinkedIn and follow SSIC on Facebook and Twitter.

Thomas Mahaffey is currently a resident of Sandy Springs, GA. He earned his Bachelors of Science Degree in Finance from Georgia State University. After graduation, he joined the Hewlett-Packard Company, after eight years he was recruited by Citibank to lead the Commercial Loan team of the Southeast Region.

In June 2002 Tom was recruited by GMAC to lead the Sales Team in the Southeast Region for Aircraft and Corporate Financing.

In February 2004, Tom was recruited by Regions Bank, a Regional Bank, to lead the Marketing Team in Commercial Banking.

In March 2011, Tom was recruited to become CEO/President of the Sandy Springs/Perimeter Chamber of Commerce. He has been instrumental in rebranding the Chamber and driving economic development. With his guidance the Chamber is building a Center of Innovation and Technology.

Tom also serves on the Board of Trustees for the Riverwood International School, Board of Directors for BBVA/Compass Bank, Sandy Springs Hospitality and Tourism, and the Sandy Springs Economic Advisory Board.

Connect with Tom on LinkedIn and follow the Chamber on LinkedIn, Twitter and Facebook.

Decision Vision Episode 51: Should Married Couples Be in Business Together? – An Interview with Carol and Steve Docalavich, yourLTL

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yourLTL
Decision Vision
Decision Vision Episode 51: Should Married Couples Be in Business Together? - An Interview with Carol and Steve Docalavich, yourLTL
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Carol and Steve Docalavich, yourLTL

Decision Vision Episode 51:  Should Married Couples Be in Business Together? – An Interview with Carol and Steve Docalavich, yourLTL

On this special Valentine’s Day edition of “Decision Vision,” Carol and Steve Docalavich of yourLTL share their journey as a married couple in business together. It’s a great episode with lots of laughs and wisdom. The host of “Decision Vision” is Mike Blake and the show series is presented by Brady Ware & Company.

Carol and Steve Docalavich, yourLTL

yourLTL
Steve and Carol Docalavich

Carol and Steve Docalavich are Co-Founders of yourLTL.

yourLTL is a completely transparent freight intelligence solution, providing direct relationships with carriers supported by our expertise in rate negotiations and proprietary cloud-based transportation management solution (TMS). They provide the most advanced TMS available, to not only find and compare carrier rates for LTL shipments, but they also allow customer specific pricing for the freight needs of their clients, not just transactional rates. There is no contracts or extra fees. They guarantee Fairness & Accountability in Rates (F.A.I.R.). It’s straight forward and transparent!

Their scalable technology helps simplify the life-cycle of the shipping process allowing multiple departments to access the same shipment from the yourLTL platform regardless of the size of your business. Their simple-to-understand user interface make it easy to find, book, and track shipments in only a few clicks.

yourLTL is a certified woman-owned and controlled business.

For more information on yourLTL, you can find their website here.

yourLTL

Michael Blake, Brady Ware & Company

Mike Blake, Host of “Decision Vision”

Michael Blake is Host of the “Decision Vision” podcast series and a Director of Brady Ware & Company. Mike specializes in the valuation of intellectual property-driven firms, such as software firms, aerospace firms and professional services firms, most frequently in the capacity as a transaction advisor, helping clients obtain great outcomes from complex transaction opportunities. He is also a specialist in the appraisal of intellectual properties as stand-alone assets, such as software, trade secrets, and patents.

Mike has been a full-time business appraiser for 13 years with public accounting firms, boutique business appraisal firms, and an owner of his own firm. Prior to that, he spent 8 years in venture capital and investment banking, including transactions in the U.S., Israel, Russia, Ukraine, and Belarus.

Brady Ware & Company

Brady Ware & Company is a regional full-service accounting and advisory firm which helps businesses and entrepreneurs make visions a reality. Brady Ware services clients nationally from its offices in Alpharetta, GA; Columbus and Dayton, OH; and Richmond, IN. The firm is growth minded, committed to the regions in which they operate, and most importantly, they make significant investments in their people and service offerings to meet the changing financial needs of those they are privileged to serve. The firm is dedicated to providing results that make a difference for its clients.

Decision Vision Podcast Series

“Decision Vision” is a podcast covering topics and issues facing small business owners and connecting them with solutions from leading experts. This series is presented by Brady Ware & Company. If you are a decision maker for a small business, we’d love to hear from you. Contact us at decisionvision@bradyware.com and make sure to listen to every Thursday to the “Decision Vision” podcast. Past episodes of “Decision Vision” can be found here. “Decision Vision” is produced and broadcast by the North Fulton studio of Business RadioX®.

Visit Brady Ware & Company on social media:

LinkedIn:  https://www.linkedin.com/company/brady-ware/

Facebook: https://www.facebook.com/bradywareCPAs/

Twitter: https://twitter.com/BradyWare

Instagram: https://www.instagram.com/bradywarecompany/

Show Transcript

Intro: [00:00:01] Welcome to Decision Vision, a podcast series focusing on critical business decisions brought to you by Brady Ware & Company. Brady Ware is a regional full-service accounting and advisory firm that helps businesses and entrepreneurs make visions a reality.

Mike Blake: [00:00:20] And welcome to Decision Vision, a podcast giving you, the listener, a clear vision to make great decisions. In each episode, we discuss the process of decision making on a different topic from the business owners or executives’ perspective. We aren’t necessarily telling you what to do, but we can put you in a position to make an informed decision on your own and understand when you might need help along the way.

Mike Blake: [00:00:39] My name is Mike Blake and I’m your host for today’s program. I’m a director at Brady Ware & Company, a full-service accounting firm based in Dayton, Ohio, with offices in Dayton, Columbus, Ohio, Richmond, Indiana, and Alpharetta, Georgia, which is where we are recording today. Brady Ware is sponsoring this podcast. If you like this podcast, please subscribe on your favorite podcast aggregator and please consider leaving a review of the podcast, as well.

Mike Blake: [00:01:02] So, the topic that we’re going to do today, and if all goes well, this is going to be released right before or on Valentine’s Day, is couples that going to business together. And I find this an interesting topic. And as it happens, my wife actually came in earlier today to do another interview on selling over Amazon as a retail channel, where, you know, she’s very good at that and I know nothing. But, you know, early in our married life, every time that we tried to have our business lives intersect with one another, it was usually ending up with one of us doing an internet search for divorce attorney.

Mike Blake: [00:01:02] It did not work particularly well. And we both recognized that and we tried to stay away from that. Over time, it’s gotten a little bit better. She’s like, “Yeah, now, you can ask me about how the business is going if you want.” That’s about it. And you probably won’t have to sleep on the couch. And I’ll kind of be on the same way. You can ask me about the business if you want and I may or may not decide to sleep on the couch. So, I have admiration for people who are able to do that.

Mike Blake: [00:02:15] It doesn’t mean that I think our marriage is bad, we’re 20 years together and she hasn’t thrown me out yet. And every day I go home and the key works as a blessing for me. But I do think that I’ve noticed there are couples that have that capacity to work together. And I know that I’m not the only person that’s curious about that, especially in today’s world where, you know, the nature of jobs is different and people going into business for themselves, it’s really never been easier.

Mike Blake: [00:02:44] I think we’re seeing that, you know, more and more and more. But how do you manage the dynamic of a romantic relationship being intertwined with a business relationship? So, as I said, this is not something that I am, at all, an expert on, except that I know that for my personality type, we’re staying away from that. So, we’ve brought in people who can talk about that with us because they appear to have been doing it successfully. And if not, maybe there’ll be some radio drama instead.

Mike Blake: [00:03:13] So, either way, this is going to be a win for the listener. Joining us are Carol and Steve Docalavich, who are co-founders of yourLTL, LTL or less than truckload software platform that provides a visual dashboard of shipping cost allocations, load manifests, shipment tracking, and discrepancy alerts. yourLTL is cloud-based and is continuously enhanced to improve the customer experience dedicated to simplicity and return investment for your less than truckload shipping. They’re also co-founders of Vestra Logistics, a freight brokerage company.

Mike Blake: [00:03:47] And both firms are located just down the road here in Alpharetta. And they also do some real estate management and investing together. Carol, in particular, is a serial entrepreneur, having launched several businesses in coffee, tea import/export, franchise advisory, property management. And Steve comes from a background of having been an air traffic controller for 23 years. So, thank you for making sure I landed safely all those times.

Steve Docalavich: [00:04:12] You’re welcome, Mike.

Mike Blake: [00:04:13] Carol and Steve, thanks for coming on the program.

Carol Docalavich: [00:04:16] Yeah, thanks, Mike.

Mike Blake: [00:04:17] So, how long have you been married and how long you’ve been in business together?

Steve Docalavich: [00:04:23] Eight years on the 14th. Eight years on the 14th.

Mike Blake: [00:04:27] Of this month?

Steve Docalavich: [00:04:29] Yeah.

Carol Docalavich: [00:04:29] Yeah.

Mike Blake: [00:04:29] Well, congratulations. That’s great.

Carol Docalavich: [00:04:32] Yeah.

Mike Blake: [00:04:32] And so, I mean, which came first?

Carol Docalavich: [00:04:37] Match.

Steve Docalavich: [00:04:38] Yeah. So-

Carol Docalavich: [00:04:39] match.com.

Mike Blake: [00:04:40] No kidding?

Steve Docalavich: [00:04:40] Yeah. That’s because Tinder wasn’t around at the time.

Mike Blake: [00:04:45] Well, you know, timing is everything, right?

Steve Docalavich: [00:04:47] Yes, that’s right.

Mike Blake: [00:04:47] So, you found each other on Match. And at that point, did you start to realize that both of you kind of had an entrepreneurial bat that you needed to be, wanted to be in business for yourselves or-

Steve Docalavich: [00:05:00] No.

Mike Blake: [00:05:00] So, how did that evolve?

Steve Docalavich: [00:05:03] Not at all. She was already in business for herself. Actually, we had met. I was an air traffic controller in California and we didn’t meet, meet, but we met only through one of her businesses. I moved from California to Washington Center, which is in Northern Virginia. And when I moved, the FAA moved me and the movers broke or scratched every piece of furniture I had. And so, I called the moving company and I said, “Hey, what I do about this?” Said, “Don’t worry about it, we’re going to send over a van.” This guy, he’s magical. So, they sent over a van and it was called Furniture Medic. I didn’t know what that was. Well, he came in, an hour later, everything was perfect. I was like, “This is amazing.” I never forgot about it, because that was in 1996, I met her in 2012, and she is the founder of Furniture Medic.

Mike Blake: [00:05:55] Oh, no kidding?

Steve Docalavich: [00:05:56] Yeah.

Carol Docalavich: [00:05:57] Yeah.

Mike Blake: [00:05:57] So, how did you get to meet the owner then? I mean, were you such a pain in the ass-

Steve Docalavich: [00:06:02] No, no, no.

Mike Blake: [00:06:02] … that you basically said, “I want to speak to the owner, this is unacceptable.”

Steve Docalavich: [00:06:05] What I’m saying is I surreptitiously, I figuratively met her through her business.

Mike Blake: [00:06:11] Okay.

Steve Docalavich: [00:06:11] And then, in 2012, we actually were out on a date. So-

Carol Docalavich: [00:06:16] Now, we sold that business to—I’m trying to think which company that was with Landmark—but no, Service Master is who actually bought that business. And so, that was much before his time. So-

Steve Docalavich: [00:06:32] Yes, I was controlling airplanes, I was making sure you’re safe, Mike.

Carol Docalavich: [00:06:35] Yeah.

Mike Blake: [00:06:35] Thank you for that.

Steve Docalavich: [00:06:36] You’re welcome.

Carol Docalavich: [00:06:37] And a few businesses more a divorce. And then, we met on Match. You hate when I tell the story, but we actually met in June-

Mike Blake: [00:06:48] This is the internet.

Carol Docalavich: [00:06:49] … before we officially started dating in November. He sent a couple emails and apparently, I didn’t respond. So, I must not have been interested at the time. But now, we met in November just before Thanksgiving and we married six-and-a-half weeks later.

Steve Docalavich: [00:07:08] So, this is an example of how she has to win, Mike. So, she has to say, preemptively, that, “I ignored his e-mails before I acknowledged his e-mails.” So, that’s something.

Mike Blake: [00:07:20] But it certainly turned out all right. And a pretty quick turnaround, six-and-a-half weeks.

Carol Docalavich: [00:07:26] Yeah, six-and-a-half.

Mike Blake: [00:07:27] So, I guess as an entrepreneur, you’re just used to making important decisions fast.

Carol Docalavich: [00:07:30] That’s right. Absolutely.

Steve Docalavich: [00:07:32] And since I’m an air traffic controller, I just make bad decisions?

Mike Blake: [00:07:35] Well, if I’ve learned anything from pushing 10, you definitely to make decisions quickly, too, there, right? So-

Steve Docalavich: [00:07:41] Absolutely. Absolutely. And drink.

Carol Docalavich: [00:07:43] So, I was in the real estate business at the time just after the crash. And, you know, I’d been flipping homes and doing rental homes, about 30 or 40 a month at the time. And so, we got married and I said, “Look, you know, why don’t you join the company after you retire”, and, you know, that sort of thing. So, we kind of, you know, went down that path. And so, he started working with me when he could. You know, he’d not retired yet. So, he soft-stepped into it.

Steve Docalavich: [00:08:18] It just so happened, I lost my medical right around that time, so I had to retire. Either retired or got an office job, so I just said, “I’ll retire.” And then, I got an office job with her. So-

Mike Blake: [00:08:28] You lost your medical, meaning you lost your medical clearance to do that job?

Steve Docalavich: [00:08:31] Right. Right. Exactly.

Mike Blake: [00:08:31] Okay. I didn’t know that.

Steve Docalavich: [00:08:32] Yeah.

Mike Blake: [00:08:32] Okay.

Steve Docalavich: [00:08:32] That’s why I was only in there for 23 years instead of 30.

Mike Blake: [00:08:36] I figured you’re just burned out.

Steve Docalavich: [00:08:38] Yeah, I was burned at 15.

Mike Blake: [00:08:39] There’s got to be some burnout in that job.

Steve Docalavich: [00:08:40] I was burned out at 15. So-

Mike Blake: [00:08:43] And at that point, I mean, interestingly then, you didn’t have any hesitation about joining the business and basically being around involved with each other all the time, because not every married couple honestly wants or thrives doing that.

Steve Docalavich: [00:08:59] Well, I mean, it was new.

Mike Blake: [00:09:01] Yeah.

Steve Docalavich: [00:09:01] I didn’t know what that would be like. It seemed to me I want to spend all of the time with her, I could, so hey, why not? Let’s work together. And when we were doing this, there was a property management company in Atlanta that it was managing thousands of homes. They were doing it for one of these—I think it’s Blackstone.

Carol Docalavich: [00:09:26] No, they were doing it for—it was Key.

Steve Docalavich: [00:09:27] It was Key.

Carol Docalavich: [00:09:27] But they were at the time, and there’s still a lot of this around, but, you know, investment companies were selling properties to overseas investors. And so, they were managing these overseas investors and they got bought out, you’re right, by Blackstone.

Steve Docalavich: [00:09:43] Right.

Carol Docalavich: [00:09:44] So, all the ones that weren’t owned going to be owned by Blackstone, they said, you know, “Let’s go find other management.” So, we took over a chunk of about 300 houses at one time for this management.

Steve Docalavich: [00:10:00] And we didn’t even have a business at the time for managing that. We had to build one immediately to do it.

Carol Docalavich: [00:10:05] We did it in about two weeks.

Steve Docalavich: [00:10:07] Oh, my gosh. It was incredible. And I quit. I mean, that’s one of the businesses we did. And I said, “Look, I can’t. You and I can’t do this together”, because it was the most negative business I’ve ever seen.

Mike Blake: [00:10:20] Why? What about it is so negative?

Carol Docalavich: [00:10:23] Nobody’s happy. Owners aren’t happy. Renters aren’t happy.

Steve Docalavich: [00:10:26] Yeah. So, all the owners are international, right? So, everything that goes wrong, they’re mad about.

Mike Blake: [00:10:30] Yeah.

Steve Docalavich: [00:10:30] And the houses, you know, that these people were renting were, you know, they’d have problems and, you know, they were mad. So, it was—I think we built it to 500, 600 houses and sold it. I mean, she was already selling to all these international buyers anyway, so she had that relationship. So, we kind of sold that portion of the business and kept the houses.

Carol Docalavich: [00:10:53] Yeah, our houses.

Steve Docalavich: [00:10:54] Yeah, our houses.

Carol Docalavich: [00:10:54] Yeah, our houses.

Steve Docalavich: [00:10:55] Yeah.

Carol Docalavich: [00:10:55] And then, sold those off separately. Actually, the Blackstone was who bought our portfolio. So-

Steve Docalavich: [00:10:59] Thank you, Blackstone.

Carol Docalavich: [00:11:00] … he came back on board after that.

Steve Docalavich: [00:11:02] Yeah.

Carol Docalavich: [00:11:02] So, he retired for just a second.

Steve Docalavich: [00:11:04] Yeah. That was about it.

Mike Blake: [00:11:05] Like one of the Brett Favre retirements.

Steve Docalavich: [00:11:07] Yeah.

Carol Docalavich: [00:11:07] Yeah.

Steve Docalavich: [00:11:07] It was a month. And then, I went to the Eagles.

Mike Blake: [00:11:11] So, Steve, let me start with you then, because you’re transitioning from air traffic control, a government job, I guess, right? I think it’s all government-

Steve Docalavich: [00:11:21] It’s all government.

Mike Blake: [00:11:22] … jobs, right? And now, you’re going to be an entrepreneur in the real estate business.

Steve Docalavich: [00:11:28] Right.

Mike Blake: [00:11:28] Do you know anything about real estate? Were you any good at Monopoly, at least?

Steve Docalavich: [00:11:30] Define know anything. No.

Mike Blake: [00:11:33] Were you any good at Monopoly? Do you notice once they got the blue properties and-

Steve Docalavich: [00:11:36] Yeah, Park Place and Boardwalk.

Mike Blake: [00:11:37] Yeah.

Steve Docalavich: [00:11:37] Absolutely. It was easy. I mean, all you had to do was lean on her and she, you know, I went and got a cup of coffee for her every once in a while, and made some copies. And I came up, I’m an idea guy, Mike.

Mike Blake: [00:11:50] Okay. Yeah.

Steve Docalavich: [00:11:50] So, I get a lot of good ideas. I think today was an idea of mine. It was probably a mistake. But no, it’s easy when you get somebody who knows what they’re doing. So, she’s taught me a lot over the last eight years.

Mike Blake: [00:12:05] Now, how about you? You’ve got an independent streak to you, right?

Carol Docalavich: [00:12:10] Just a little.

Mike Blake: [00:12:11] Which is why you’ve been in business for yourself as long as I can kind of track your career, right?

Carol Docalavich: [00:12:17] Yeah.

Mike Blake: [00:12:17] And now, here comes this interloper-

Carol Docalavich: [00:12:18] Yeah.

Mike Blake: [00:12:18] … that’s going to come in and sort of share the wheel with you. Was that hard or is it scary maybe? Was there any concern about that or-

Carol Docalavich: [00:12:29] Yeah, I guess probably at first. You know, I figured if you can direct hundreds of airplanes at one time, you probably can handle pretty stressful situations with-

Mike Blake: [00:12:37] That’s fair.

Carol Docalavich: [00:12:39] You know? So, I figured the stress he could endure and the rest of it was just, you know, he’s a pretty intelligent guy. He likes to say, “I don’t know”, because then, that just gets you a lot to do and stuff, right? Like, you know, that’s your—

Mike Blake: [00:12:52] That’s my go-to, yeah.

Carol Docalavich: [00:12:52] … pat answer. Right. Exactly.

Mike Blake: [00:12:55] Yeah.

Carol Docalavich: [00:12:55] But no, he really caught on really quickly. And, you know, I used to say, “This is not a government job, you know, we like work really long hours and get paid for just a few of them.” So, unlike government, where, you know, they work 40 hours and step out. No, he was really game. And he does really good at letting me take the lead. He does really good with that.

Steve Docalavich: [00:13:20] Can I talk now?

Carol Docalavich: [00:13:21] Yeah, go.

Steve Docalavich: [00:13:21] Okay. So—

Mike Blake: [00:13:22] Speaking of which.

Steve Docalavich: [00:13:25] It’s called fake it until you make it, Mike, is what, you just look confident and stand in the corner. And then, she basically tells me what to do. But-

Carol Docalavich: [00:13:33] That’s so not true.

Steve Docalavich: [00:13:35] Well, I mean-

Carol Docalavich: [00:13:36] Not now.

Mike Blake: [00:13:38] Even to a certain extent, though, I mean, there was a learning process for you, right?

Steve Docalavich: [00:13:41] Oh, absolutely.

Mike Blake: [00:13:42] And not everybody can walk into that and be vulnerable and say, you know, “I don’t know. I don’t know what I’m doing.” And men have a harder time with that than women, I think.

Steve Docalavich: [00:13:52] I don’t have a problem with that. Actually, I’ve been doing that my whole career as an air traffic controller. But now, we would go out and we go look at houses and we purchase that, I go, you know, “I didn’t know what was good and what wasn’t good to buy.” So, it was an evolution there and it was fun. It wasn’t-

Carol Docalavich: [00:14:11] That business was really fun.

Steve Docalavich: [00:14:13] It was. It’s not technical, was not difficult, it’s simply, there’s a house, buy it, don’t buy it. Put somebody in it, flip it.

Carol Docalavich: [00:14:24] Yeah.

Steve Docalavich: [00:14:24] Yeah, that kind of thing. So, that was fun. I mean, what we’re doing now has been an absolute learning-

Carol Docalavich: [00:14:32] That’s been a learning curve for both of us, yeah.

Steve Docalavich: [00:14:33] Yeah, but it’s been fun.

Carol Docalavich: [00:14:35] Yeah.

Steve Docalavich: [00:14:36] It’s been fun, because it’s like it goes from one thing to another to another.

Carol Docalavich: [00:14:40] We’re never bored.

Steve Docalavich: [00:14:40] We’re never bored. We’re always together. And I talked about this with you last week, I think I said-

Carol Docalavich: [00:14:46] Before we knew about your questions.

Steve Docalavich: [00:14:49] Yeah. And I don’t even think about spending time other than playing golf.

Carol Docalavich: [00:14:55] Yeah.

Steve Docalavich: [00:14:55] I mean, I want her to play golf with me and she won’t, because she doesn’t want to embarrass herself.

Carol Docalavich: [00:14:58] I would not have time to learn.

Steve Docalavich: [00:14:59] Right. Well, exactly. But I mean, if she could go play golf with me, I’d love to take her playing golf. That’s what I think is, some people can do that, some people can’t. But, you know, she could be with me all the time as far as I’m concerned.

Mike Blake: [00:15:12] As an aside, I remember when my wife and I were in our 20s, she said, you know, “You really got to think about taking up golf, it would really help your career.” And I said, “Let’s watch a game of golf and see if you still think that”, right? And, you know, as you know, a game of golf is not like a game of darts, it’s not over in 20 minutes. It’s like, you know, a game of golf is an all-day event. And to be any good at it where it does help your career, because you’re shooting 298, that’s not going to help your career if every other ball is in the pond-

Carol Docalavich: [00:15:44] Sure.

Mike Blake: [00:15:44] … or hurt somebody. So, you know, “If you really want this, I’m out one day every weekend while it’s warm until I get sort of good.” She’s like, “Never mind, your career is just fine.”

Carol Docalavich: [00:15:59] Yeah, he does try to play just about every weekend. And so, we do have time apart then.

Mike Blake: [00:16:04] Yeah.

Carol Docalavich: [00:16:04] And, you know, I mean, we’re like most couples, we separate. You know, like I go read and he watches a foreign film or some, you know, documentary or-

Steve Docalavich: [00:16:12] We don’t sit in the same office anymore.

Carol Docalavich: [00:16:14] No, we don’t sit in the same. We did for a long time, though.

Steve Docalavich: [00:16:16] We did, yeah.

Carol Docalavich: [00:16:16] We sat in the same office.

Steve Docalavich: [00:16:18] And then, she let me have my own.

Carol Docalavich: [00:16:21] I didn’t have to listen to every conversation there.

Mike Blake: [00:16:26] Well, I’m curious, what was the dynamic that warranted you to have the same office? My wife and I share the same office at home, which means I’m normally out at Starbucks when she’s working. But what made you want to do that? And then, what changed that made you decide you didn’t want to do that anymore?

Steve Docalavich: [00:16:41] She’s on the phone constantly.

Mike Blake: [00:16:43] Yeah.

Carol Docalavich: [00:16:43] Yeah.

Steve Docalavich: [00:16:44] And I’m just getting up and leaving and finding another desk-

Mike Blake: [00:16:48] Right.

Steve Docalavich: [00:16:48] … with a computer and work from there. So, we had that.

Carol Docalavich: [00:16:51] That’s fair.

Steve Docalavich: [00:16:51] You know, she is never not on the phone and I’m never on the phone.

Carol Docalavich: [00:16:56] Yeah. Well, the first thing is when we started this business, you know, we just went into a space. We didn’t know what we needed yet. You know, we didn’t know what size. We didn’t know how many employees. We had no idea. And so, we just kind of rented a small space. And, you know, it was like, “Okay, we know we need accounting in one, you can lock that door”, you know, those sorts of things. “So, look, there’s one office left. Okay, we can put two desks in it, we can share it.”

Mike Blake: [00:17:22] Okay.

Carol Docalavich: [00:17:22] And I think was a good learning curve for you, too, to be able to hear a lot of that. And then, there are times that I have to kick him under the table, so there’s certain, you know-.

Steve Docalavich: [00:17:31] She’s done that twice already.

Carol Docalavich: [00:17:32] So, there’s certain conversations that I still have to say, you know, like there’s certain jokes or we’ll say, “No, he can’t go to that meeting.”

Steve Docalavich: [00:17:40] Okay. So-

Carol Docalavich: [00:17:41] Or, for sure-

Steve Docalavich: [00:17:41] … I don’t know.

Carol Docalavich: [00:17:43] No.

Steve Docalavich: [00:17:43] What?

Carol Docalavich: [00:17:43] You’re not going to tell that joke.

Steve Docalavich: [00:17:44] I’m not going to tell the joke, but I’ll give the—so anyway, no matter what, and this is strategic, so I don’t have to go to meetings, is there’s always a dead hooker joke-

Carol Docalavich: [00:17:55] Somewhere.

Steve Docalavich: [00:17:57] … somewhere in the meeting. And she’s like, “You can’t come.” “That’s okay. Great. That’s fine”, you know. But I’m not in sales. I’m not in sales, I’m more operational, I’m not marketing, I’m not into those things, I work with the people in the office more than I do people outside the office.

Mike Blake: [00:18:09] I don’t know how much mileage I can get by threatening to do a dead hooker joke.

Steve Docalavich: [00:18:12] It works.

Mike Blake: [00:18:13] I’m going to try that.

Carol Docalavich: [00:18:14] He actually almost went to jail over that, so there’s-

Mike Blake: [00:18:16] Really?

Carol Docalavich: [00:18:16] … real story there.

Steve Docalavich: [00:18:18] Yeah. Well, I was on the phone with an attorney a couple of months ago.

Carol Docalavich: [00:18:24] It’s true.

Steve Docalavich: [00:18:24] And he was talking about our terms and conditions and he was—

Carol Docalavich: [00:18:28] Really negotiating it.

Steve Docalavich: [00:18:30] Yeah. And he was talking about—I can’t remember what it was. So, I threw the dead hooker at him.

Mike Blake: [00:18:34] This is your attorney.

Steve Docalavich: [00:18:37] Right. I said, “Look, we don’t because-” No, it’s not my attorney. He was another company.

Carol Docalavich: [00:18:41] He was a client’s attorney.

Mike Blake: [00:18:43] The other side’s, okay.

Steve Docalavich: [00:18:43] That was doing our terms of conditions, they want to do business with us.

Mike Blake: [00:18:45] Okay.

Steve Docalavich: [00:18:45] But they had a problem with something in there saying, you know, the liability part. And I was like, “Look, it’s not like all these truckers have dead hookers in the back and they’re running in a busload of nuns. I said, we got that covered. We have insurance for that. You don’t have to worry about that.” And there was silence and our business partner, Chase, was jumping up and down, screaming silently at me, right?

Carol Docalavich: [00:19:07] So true.

Steve Docalavich: [00:19:07] Because he was mad. And then, the guy on the other end of the phone just started laughing.

Carol Docalavich: [00:19:11] It was one of those delayed like, you don’t know exactly what’s coming.

Mike Blake: [00:19:15] Right. Chirp, chirp, chirp.

Steve Docalavich: [00:19:15] I knew it was coming. I knew it was coming.

Carol Docalavich: [00:19:18] Yeah. So, there are-

Steve Docalavich: [00:19:18] I used to do it all the time.

Carol Docalavich: [00:19:20] … certain times he can’t get go to me.

Mike Blake: [00:19:23] So, I’ve observed two things about you guys, because, you know, we’re doing some things together a little bit. And one is that every time I’ve interacted with you as clients, you’re always together.

Carol Docalavich: [00:19:38] Yeah.

Mike Blake: [00:19:38] Which is interesting. Is that by design? Is that a business strategy or it’s because eight years later, you’re still newlyweds and you can’t get enough of each other? What is that?

Carol Docalavich: [00:19:49] I think it’s somewhat both. I mean, we even run errands together.

Steve Docalavich: [00:19:53] Yeah.

Carol Docalavich: [00:19:53] Yeah. And I think that’s why we married. So, to back up just a minute, when we got married, I mean, you know, when we said we were getting married, my family was like, “What the heck? Like you plan-” Everything’s a plan for me, like, you know, and they were like, “No, no. If you love him in a year, you know, we can, you know, hold off.” And, you know, I was like, “No, I know what I don’t want. And he’s none of those things.

Mike Blake: [00:20:18] Okay.

Carol Docalavich: [00:20:18] So I’m going to go for this.” You know, I was in my 40s, had been married 20-plus years the first time. So, you know, I was like, you know, “No, we’re going to do this.” But I think a lot of that has to do with we just enjoy each other’s company. Sometimes, he’ll go to work like this morning and it’s like, we didn’t do it today, but sometimes, he’ll leave and I won’t see him and we’ll end up in the same color, like we’re going to work and I’ll go, “Oh, my God. We both were blue. This is so stupid. How do we do this?” But yeah. I mean-

Mike Blake: [00:20:49] Oh, it means then there is an old name practice, right?

Carol Docalavich: [00:20:50] Yeah, exactly. I mean, we’re in sync sometimes just like that.

Steve Docalavich: [00:20:54] We look like old people-

Carol Docalavich: [00:20:56] Yeah, we do.

Steve Docalavich: [00:20:57] … with those. I remember seeing my grandparents in a picture one time, they’re both wear the same jacket with those barrel buttons.

Carol Docalavich: [00:21:03] No, we don’t do that.

Steve Docalavich: [00:21:04] No, I know, but I’m like, “How did they do that?” But I can see how it happens.

Carol Docalavich: [00:21:07] Yeah, I really can.

Mike Blake: [00:21:09] Now, the other thing I’ve noticed is you guys laugh a lot.

Carol Docalavich: [00:21:13] Yes. So-

Mike Blake: [00:21:13] And that’s not just an act, is it?

Carol Docalavich: [00:21:14] No. And that was probably, I would say, the first night that we had dinner together.

Steve Docalavich: [00:21:21] Whoa, whoa, whoa, where are you going with this?

Carol Docalavich: [00:21:22] Oh, stop it.

Mike Blake: [00:21:24] She said dinner.

Carol Docalavich: [00:21:25] First night we had dinner together-

Steve Docalavich: [00:21:27] Yeah.

Carol Docalavich: [00:21:28] … we laughed the entire—I mean, it was constant the whole two hours that we had dinner together.

Steve Docalavich: [00:21:35] I’m a funny guy.

Carol Docalavich: [00:21:36] That’s true.

Steve Docalavich: [00:21:37] Next question, Mike.

Carol Docalavich: [00:21:37] You won the lottery.

Mike Blake: [00:21:40] No. And I’m not trying to put anybody on the couch here, but that laughter, I think, is indicative of the kind of humor that you need to overcome the obstacle, right?

Carol Docalavich: [00:21:54] Yeah, absolutely.

Mike Blake: [00:21:54] Because not everything has gone exactly the way that you wanted it to in business, correct?

Carol Docalavich: [00:21:59] For sure, this last six years. But yeah. Yeah.

Mike Blake: [00:22:02] So talk about a crisis in business that you guys faced together.

Carol Docalavich: [00:22:09] Oh, God. Which one?

Mike Blake: [00:22:13] Well, you-

Carol Docalavich: [00:22:13] You want to pick a subject?

Steve Docalavich: [00:22:14] No.

Mike Blake: [00:22:15] I mean, the juicier, the better.

Carol Docalavich: [00:22:17] Yeah, I’m sure.

Mike Blake: [00:22:17] If there is a dead hooker involved, if you guys revisit that, go.

Steve Docalavich: [00:22:20] Well, Mike, I know I’ve told that joke to you in one of our meetings. I know for a fact-

Carol Docalavich: [00:22:24] Do not tell it.

Steve Docalavich: [00:22:25] I know, but I just know I told it to him and he’s acting like he’s so surprised, you never heard this before.

Carol Docalavich: [00:22:29] I’m sure you haven’t brought it up at Brady Ware.

Steve Docalavich: [00:22:30] Oh, my God. How many times have we had meetings?

Carol Docalavich: [00:22:34] Too many.

Mike Blake: [00:22:35] A lot.

Steve Docalavich: [00:22:36] We’ve had the same meeting 15 times, don’t tell me about it. I mean, because we come in there with same issue all the time.

Carol Docalavich: [00:22:42] Oh, God, so many crises. So, this has been the toughest business I’ve ever tried to learn to run.

Steve Docalavich: [00:22:49] Which one?

Carol Docalavich: [00:22:51] Being in transportation, period.

Mike Blake: [00:22:52] Okay.

Carol Docalavich: [00:22:53] You know, a lot of people that do this, they are brokers who worked for another broker who leave with a book of business. And pretty much even with my first husband, everything we did, we pretty much pioneered. They were, you know, new ideas or there wasn’t maybe just a couple of different companies doing it, but they were relatively pioneered industries. And so, this one, we were like, this one over here said, “Well, how hard could this be?” Yeah, famous last words.

Steve Docalavich: [00:23:21] I said that.

Carol Docalavich: [00:23:21] Yeah.

Mike Blake: [00:23:21] Right up there with, hold my beer, right?

Steve Docalavich: [00:23:23] Oh, yeah.

Carol Docalavich: [00:23:23] Yeah, exactly.

Steve Docalavich: [00:23:25] Absolutely.

Carol Docalavich: [00:23:25] So, I think, you know, very first load we moved on the truckload side was a $40,000 claim. You are not prepared for that. I mean, you have no idea. We had no idea what we were doing. And my mentor said, “Good god, girl, can’t you started A, B and C, did you have to jump all the way to S?” You know, I mean, we literally, immediately, our first official day of business. I mean, we kind of been doing it for like a month trying to build up to getting business. So, I mean, that was the first one. And that was a real crisis, because you don’t know if you’re on the hook for that. And we didn’t know, are we on the hook for the 40 grand or, you know-

Steve Docalavich: [00:24:01] I knew.

Carol Docalavich: [00:24:02] God. But you did. You stepped us through all that. You figured out-

Steve Docalavich: [00:24:09] It wasn’t very difficult. I mean, the-

Carol Docalavich: [00:24:10] At first.

Steve Docalavich: [00:24:10] … carriers, you know, they’re the primary behind that. And it turned out fine. But yeah, we’ve had plenty of times in these two businesses that something hits the fan or whatever and you just got to deal with it. It’s a lot easier. I mean, I lean on her a lot. And then, you know, I’m the strong, silent type, because I don’t have much smart to say. And, you know, she appreciates that. You know, “Wow, you just-”

Mike Blake: [00:24:39] That didn’t stop me.

Steve Docalavich: [00:24:41] No. Yeah, yeah, yeah. So, I mean, she’s like, “Wow, you’re just such a rock and I can count on you to be-“, you know. I’m like, “I’m not saying anything because I don’t know what to say.” But she’s great at handling that kind of stuff and she points in the right direction and, you know, we go that way. There are no bones about who is the brains in the family. And I don’t want to say short bus, but I’m on a bus going somewhere. But no, you know, going back to what we’re talking about here, I enjoy being around my wife. We’re best friends and I don’t think that that’s going to change anytime soon.

Carol Docalavich: [00:25:19] Yeah. And I mean, you know, anytime you start a business, I mean, you know, like at any time in whether you buy one, whether you started from scratch or, you know, whatever you do, you know, there’s small crises almost every day, right? So, we deal with a lot of that. But, you know, he plays that part really well. But, you know, he is the person I go to and say, “All right. Hear me out. What do you think?” You know, he calls them at 3:00 o’clock in the morning, like I’ll say, “Are you up?”

Steve Docalavich: [00:25:51] That’s exactly what it is.

Carol Docalavich: [00:25:51] I’ll say-

Steve Docalavich: [00:25:51] That’s exactly what it is.

Carol Docalavich: [00:25:54] “Go make the coffee.”

Mike Blake: [00:25:55] “Are you up?”

Carol Docalavich: [00:25:56] “Are you up? Go make the coffee.” And it’s usually somewhere between 2 and 3 o’clock in the morning. We’ve had lots of those. You know, as you talk yourself through this and what you’re going to do and directions and he’s an excellent sounding board. And I usually come away from those talks with feeling really confident about the decision we’re going make. So-

Mike Blake: [00:26:18] And I got to imagine that air traffic control, everything else just must sort of pale in comparison, right? It’s about working processes.

Steve Docalavich: [00:26:27] Yeah. But, you know, it’s something that—the thing about that is it’s not the same every day, but, you know, it’s proceduralized to a point and then, there’s weather and then, there’s bad rides and then, there’s 9/11, right? There’s something. But otherwise, 99% of the time, it’s pretty proceduralized. You got guys coming in from here, they’re going there. There’s a profile that you need to create in your mind to keep them away from these guys that are going here, landing there, right? So, basically, everybody who’s entering your airspace is separated before they get there, because you have a plan. Not so much in the business world. I mean, it changes every day. You can proceduralize anything you want, but you can’t stop the wind from blowing, right?

Mike Blake: [00:27:11] Yeah.

Steve Docalavich: [00:27:11] It just depends.

Carol Docalavich: [00:27:13] Especially transportation.

Steve Docalavich: [00:27:14] Yeah, especially transportation. It’s a-

Carol Docalavich: [00:27:15] I mean, it’s a combustible engine and a human being, you know. And I mean, we have little to-

Steve Docalavich: [00:27:22] Nothing could go wrong.

Carol Docalavich: [00:27:23] Yeah, nothing can go wrong. But, you know, I don’t know that there’s any one crisis that like jumps out. There’s just been, you know, you go left, you go right, you go left, you go right. You know, there isn’t really a day that I go home and go, “Oh, well, that was so smooth today.” And-

Steve Docalavich: [00:27:42] It’s all about the people you employ.

Carol Docalavich: [00:27:44] Yeah.

Steve Docalavich: [00:27:44] It really is in this business.

Carol Docalavich: [00:27:46] Yeah.

Steve Docalavich: [00:27:46] You know, people you don’t have to keep watching, right?

Mike Blake: [00:27:49] Yeah.

Steve Docalavich: [00:27:49] You can trust them, do your job.

Carol Docalavich: [00:27:51] And we do a pretty good job, I think, of bringing on solid people that support us.

Steve Docalavich: [00:27:56] Yeah.

Mike Blake: [00:27:58] So, let me switch gears here, has there ever been a point at which one of you has offered the other constructive criticism in the business area?

Carol Docalavich: [00:28:09] Oh, when we got here today.

Steve Docalavich: [00:28:11] Mike, that, no.

Mike Blake: [00:28:13] No?

Steve Docalavich: [00:28:13] The answer is no, I don’t, yes, she does.

Mike Blake: [00:28:16] Okay.

Steve Docalavich: [00:28:16] Yes, it’s not constructive, it’s destructive. No, I’m just kidding.

Mike Blake: [00:28:22] No. But that’s going to come up, especially because I imagine it’s gone initially from you, Carol, to Steve, because you were new to business generally and new to her businesses, where she’s a veteran, right? And there’s the kick under the table. But besides the kicking under the table, I imagine there’s a debriefing like, “You understand why I kicked you under the table”, right?

Carol Docalavich: [00:28:41] Oh, absolutely.

Steve Docalavich: [00:28:42] Well, I know before she does it that she’s going to do it. I’d block her. Now, she’ll call me into our office and shut the door. I mean, she’ll call me into her office and shut the door.

Carol Docalavich: [00:28:51] Oh, boy.

Steve Docalavich: [00:28:52] So, I’m just saying, what other couples do that? “Honey, I want you to come in my office. Shut the door.” What would your wife say to you if you did that to her? She goes, “Uh, no.”

Mike Blake: [00:29:03] Even on the end, you know, I should not say that.

Steve Docalavich: [00:29:06] Exactly. Exactly. I know you have a bleep button there. I was almost going to make you use it. But I do that. I understand that I don’t understand. You know, there are some things that I’m pretty good at and there’s some things that she’s really good at. And sometimes, she needs to talk to me about things that she’s good at.

Mike Blake: [00:29:27] And where do you think you complement each other most? What do you guys think the other one brings to the table that maybe you don’t bring to the table as well on your own?

Steve Docalavich: [00:29:39] She brings hard work, integrity, smarts, know-how, experience, and good cooking.

Carol Docalavich: [00:29:49] Not necessarily in that order.

Steve Docalavich: [00:29:50] Not necessarily in that order. Right. Not to mention the other stuff, right?

Carol Docalavich: [00:29:55] I think where he really complements me is first of all, I keep it light all the time. 99% of the time, he’s always in a good mood. I mean, I would say, you know, he’s rarely not laughing. He’s rarely not making a joke.

Steve Docalavich: [00:30:11] A joke, yeah.

Carol Docalavich: [00:30:11] And, you know, he’ll keep it where—you know, a lot of times I’ll spiral, you know. Entrepreneurs, you know.

Mike Blake: [00:30:18] It’s a very lonely place.

Carol Docalavich: [00:30:20] Yes, it is. We’re almost that, you know, that whole like cyclical, up and down.

Mike Blake: [00:30:25] Manic depressive, you know?

Carol Docalavich: [00:30:26] Yeah, I was trying not to say that word, but yeah, we are. And he’ll bring me out of those lows. That’s one of the things he where he really complements me. And he should’ve been a lawyer. He’s really excellent with understanding legal documents and-

Steve Docalavich: [00:30:42] I watch a lot of TV.

Carol Docalavich: [00:30:45] Play one on TV?

Steve Docalavich: [00:30:46] Yeah. And I watch a lot of TV.

Mike Blake: [00:30:46] Yeah. But I don’t remember William Shatner doing a lot of contract work on Boston Legal, so I’m not sure that you’ll love from there.

Steve Docalavich: [00:30:51] I’ve loved him on Boston Legal.

Mike Blake: [00:30:52] I do, too.

Steve Docalavich: [00:30:53] It’s awesome.

Mike Blake: [00:30:54] Full disclosure, I’m in the tank for William Shatner. I tell you, and I like Star Trek 5, but the reason I’m in the tank for William Shatner, he doesn’t run away from who he is, right?

Carol Docalavich: [00:31:05] Yeah.

Mike Blake: [00:31:05] I don’t think he ever expected, certainly, not the last 40 years, never expected to earn an Oscar or an Emmy or whatever it is they give, right? But all he does is just consistently gets work, right?

Steve Docalavich: [00:31:17] He is hilarious. You know, he went from being a tough guy, right? Earlier on because he has like the John, everyone was a tough guy.

Mike Blake: [00:31:23] Yeah.

Steve Docalavich: [00:31:23] And now, he’s just kind of an old soft guy with. you know, opinions.

Mike Blake: [00:31:28] Yeah.

Steve Docalavich: [00:31:28] And that they’re funny. I love it.

Carol Docalavich: [00:31:31] So, there’s really not a contractor he handles all the legal side, most of the attorneys. You know, not you guys. I don’t let him do the finance side.

Steve Docalavich: [00:31:42] No. Wait a minute. Before you screw this whole thing up, we have attorneys, okay? We use a lot.

Carol Docalavich: [00:31:46] We do.

Steve Docalavich: [00:31:46] We use attorneys. She just brings stuff to me for my opinion and then, I work with the attorneys. But-

Carol Docalavich: [00:31:51] I said handle that.

Steve Docalavich: [00:31:51] Yeah. But I mean, there are things that I enjoy about that part of the work that it makes sense to me. It’s fun.

Carol Docalavich: [00:31:58] And that’s a big relief for me.

Mike Blake: [00:32:00] So, let’s talk about that, because sounds like you do divide and conquer a little bit.

Carol Docalavich: [00:32:03] Yeah, we do.

Mike Blake: [00:32:04] What are some areas where you divide and conquer? Saying, you know, Carol, you’re going to take A, B and C on, you’re going to take Q, R, and S on.

Steve Docalavich: [00:32:12] She made me fire people.

Mike Blake: [00:32:14] You’re the hatchet man.

Steve Docalavich: [00:32:16] So, you know, I was an air traffic controller for so long. And I was in management. I was a supervisor and I was like, “God, I just wish that we could fire somebody.” Yeah, I think it’s the worst attitude. But, you know, when I was a controller, I had the worst attitude in the world. So, if I was my supervisor, I would want to fire me. So, I made this remark to her and she goes, “Fine. Well, you’re going to fire someone.” And I fired somebody. I’ve never felt so bad in my life.

Mike Blake: [00:32:38] Okay.

Steve Docalavich: [00:32:38] And now, if anybody needs to be fired, I don’t fire them. We give that to somebody else.

Mike Blake: [00:32:43] Really?

Steve Docalavich: [00:32:44] Yeah, I got what I asked for and it’s no fun.

Carol Docalavich: [00:32:46] No, it’s no fun.

Steve Docalavich: [00:32:47] It’s no fun.

Carol Docalavich: [00:32:49] No. Well, it’s not like that happens a lot, but-

Steve Docalavich: [00:32:52] No, no, no. I’m just saying, you made me fire people-

Carol Docalavich: [00:32:54] Well, you said you wanted to.

Steve Docalavich: [00:32:54] … just to show me what it felt like to fire people.

Carol Docalavich: [00:32:57] Yeah, like it’s-

Steve Docalavich: [00:32:57] It is not any fun.

Carol Docalavich: [00:32:58] No, you’re changing people’s lives.

Steve Docalavich: [00:32:59] Yeah, you are. Yeah.

Carol Docalavich: [00:33:00] So, I mean, you pretty much run anything that has to do with the truckload side.

Steve Docalavich: [00:33:06] Yeah.

Carol Docalavich: [00:33:08] So, he takes over especially all the operational side of that, not the sales side.

Steve Docalavich: [00:33:13] I’m the visionary, you’re LTL. I started all that.

Carol Docalavich: [00:33:15] Actually was your idea.

Steve Docalavich: [00:33:16] That’s right. It’s all my idea.

Carol Docalavich: [00:33:18] It goes back to you saying you don’t-

Steve Docalavich: [00:33:18] I just don’t know how to implement it. Like I said, I’m an idea guy.

Mike Blake: [00:33:21] Ok

Steve Docalavich: [00:33:21] ay. We’re going to the moon next week, building a rocket.

Carol Docalavich: [00:33:27] You know, his transparency, all, you know, the stuff we talked to you about. You know, the whole transparency truly being-.

Steve Docalavich: [00:33:32] If there are any shippers out there, we are the only transparent-

Carol Docalavich: [00:33:34] Broker.

Steve Docalavich: [00:33:36] … 3PL-

Carol Docalavich: [00:33:37] Yeah, 3PL.

Steve Docalavich: [00:33:37] … in the nation. So, there you go.

Carol Docalavich: [00:33:39] But yeah. And I think probably, I run the business, I do all the finance side, salespeople, you know, that sort of thing. And I think we know our roles. You know, we come in, it’s not like every day like he comes to me and says, “What do I do today?” He gets to work three hours before I do. So, yeah, I think now, it’s more or less, we just kind of know what we’re going to do.

Mike Blake: [00:34:07] Yeah.

Carol Docalavich: [00:34:07] I think at first, he really looked for direction, “What do you need me to do? What he needs me to do? What do you want me to take care of?” He doesn’t do that now. I mean, he acts like he, you know, comes to me for direction, he does not. He comes to me after he’s done it and I got to clean it up.

Mike Blake: [00:34:21] After eight years, you know what it’s going to be, right?

Carol Docalavich: [00:34:23] Yeah.

Mike Blake: [00:34:24] It’s unlikely you’re going to walk in and say, “You know what, I need you to kill somebody today. I need you to kill a man”, right? You’re not sort of expecting that kind of pivot, right?

Carol Docalavich: [00:34:34] No.

Mike Blake: [00:34:34] So, did anything surprise you about working together as co-founders, co-entrepreneurs, either on the positive or negative side?

Steve Docalavich: [00:34:43] She has less respect for air traffic controllers now, I think, is-

Carol Docalavich: [00:34:45] I would say that’s probably-

Mike Blake: [00:34:45] Right. She won’t be flying anymore?

Steve Docalavich: [00:34:48] We take the bus everywhere and rightly so.

Carol Docalavich: [00:34:51] Yeah. So, after I met him and I met a bunch of his friends, which I love, if you knew, you guys are listening, you know I love you.

Steve Docalavich: [00:34:57] They’re not listening to this one though.

Carol Docalavich: [00:34:59] But we left and I was like, “Holy crap, I don’t want to get on an airplane.”

Steve Docalavich: [00:35:07] I was down in Atlanta Center in Hampton and I would let her come to—and that’s the largest aircraft trove solely in the world, busiest, biggest, and all that stuff. I wouldn’t bring her there until after we were married. And she said, “Why?” And I said, “Because they’re all a bunch of jerks and they’re all going to make up stories and tell you, you know, I dated dudes and stuff and, you know, it’s just going to be a terrible experience and I want to be married to you before that happens.”

Mike Blake: [00:35:36] They’re going to talk to you about the time that you landed two 747s naked, basically.

Carol Docalavich: [00:35:40] Yeah, exactly.

Steve Docalavich: [00:35:40] Well, that happened.

Mike Blake: [00:35:42] Okay.

Steve Docalavich: [00:35:42] That’s true. Yeah.

Mike Blake: [00:35:42] How truth is stranger than fiction sometimes.

Steve Docalavich: [00:35:45] Yeah.

Carol Docalavich: [00:35:45] Yeah, true.

Steve Docalavich: [00:35:46] Yeah.

Carol Docalavich: [00:35:47] But yeah. So, I mean, I don’t know, really. You’re better at the storytelling than I am.

Steve Docalavich: [00:35:53] I don’t remember what you’re talking about, what was it?

Mike Blake: [00:35:55] No, it doesn’t matter.

Steve Docalavich: [00:35:55] What was the direction, yeah.

Mike Blake: [00:35:56] Doesn’t matter.

Steve Docalavich: [00:35:57] Yeah.

Carol Docalavich: [00:35:57] You always go off on a story about you.

Steve Docalavich: [00:35:58] Well, I almost went to a dead hooker joke, but-

Mike Blake: [00:36:04] So, everybody, you’re listening to the Dead Hooker podcast and we’re here with Carol and Steve.

Steve Docalavich: [00:36:09] That’s right. If you like, subscribe and thumbs up.

Mike Blake: [00:36:11] Yeah, at deadhooker.com.

Steve Docalavich: [00:36:13] That’s right. I got that, by the way.

Mike Blake: [00:36:15] Do you really?

Carol Docalavich: [00:36:15] Don’t.

Steve Docalavich: [00:36:15] No, it’s deadhooker.co, because somebody else has it.

Mike Blake: [00:36:17] So, you know, somebody is listening and they’re now typing, “I got to see if that domain is available.” I can only get deadhooker.biz.

Steve Docalavich: [00:36:23] That’s right.

Mike Blake: [00:36:24] Oh, man. That’s the lamest one.

Steve Docalavich: [00:36:27] Yeah.

Mike Blake: [00:36:27] Are there any mistakes you made early on that you need to learn from?

Carol Docalavich: [00:36:33] I mean, my list would be really long. You mean as a married couple or just-

Mike Blake: [00:36:36] Yeah, as a married couple in business. I mean, we don’t need to get into the personal stuff, but-

Carol Docalavich: [00:36:39] No, I meant like business-

Steve Docalavich: [00:36:39] Opening up the property management company to bring on those international buyers because we’re just selling to them. You know, that was probably—only because of the way that it happened. It was not a great transition. You know, we got 300 and something houses and we didn’t know who was in them. We didn’t know if they had agreements. We didn’t know where they were. I mean, the-

Carol Docalavich: [00:37:02] We didn’t know if they had mold.

Steve Docalavich: [00:37:03] … turnover, and a lot of them didn’t, some of the houses weren’t even there, was not orderly. It was painful, to say the least.

Carol Docalavich: [00:37:15] Very painful.

Steve Docalavich: [00:37:15] It took us six months to get our feet up under us. I mean, they just said, “Here you go.” And none of it was correct. There’d be different people in houses. We had squatters. I mean, it was horrible. That was one big thing. So, we should have just kept selling them stuff instead of trying to manage their stuff.

Carol Docalavich: [00:37:33] Yeah. I don’t know. As far as where it relates just to a married couple working together, I mean, the first year was tough.

Mike Blake: [00:37:40] Why?

Steve Docalavich: [00:37:41] Because my wife was alive, my ex-wife, I’m sorry. My ex-wife was alive and she had a telephone.

Carol Docalavich: [00:37:47] I’m talking about-

Steve Docalavich: [00:37:48] And she would call-

Carol Docalavich: [00:37:48] I’m not talking about that.

Steve Docalavich: [00:37:49] Okay. Never mind. Disregard that last.

Carol Docalavich: [00:37:52] I was talking about as a married couple working together, not personal stuff.

Steve Docalavich: [00:37:56] Okay. Sorry.

Carol Docalavich: [00:37:57] That’s not what he wants to know about.

Mike Blake: [00:37:57] Yeah, we’re not putting you on the couch.

Steve Docalavich: [00:37:58] Nobody’s listening to this. Go ahead.

Carol Docalavich: [00:38:01] Well, you know, he’s a big personality, as you might have noticed.

Steve Docalavich: [00:38:05] No, I’m not.

Carol Docalavich: [00:38:05] And I have a pretty big personality.

Mike Blake: [00:38:08] Yeah.

Carol Docalavich: [00:38:08] And he did not take direction very well the first year.

Steve Docalavich: [00:38:15] So, you’re saying I’ve learned?

Mike Blake: [00:38:16] So, at some point, did you ever say to him, “Is it that you can’t learn or that you won’t learn?”

Steve Docalavich: [00:38:23] That was that was outside just a few minutes ago, yeah.

Carol Docalavich: [00:38:26] Yeah, there was several of those conversations. It was like, “Look, you know, if you want to do this, you really got to take direction. And I know you don’t-” You know, I mean, his mother told me, “This one doesn’t mind. He doesn’t do well.” I said, “It’s not about minding.” I need him to just understand the process. And he would just, you know, go off on his own and make a decision and-

Mike Blake: [00:38:48] Right.

Carol Docalavich: [00:38:48] Remember the one renter?

Steve Docalavich: [00:38:50] I got a story after this. That’s where you beat me up. Go ahead. Go ahead. No. Have at it.

Carol Docalavich: [00:38:55] So, that was really it. He just really couldn’t take direction very well.

Mike Blake: [00:38:59] Okay.

Steve Docalavich: [00:38:59] Yeah. Yeah.

Carol Docalavich: [00:38:59] That took a while.

Mike Blake: [00:38:59] Okay.

Steve Docalavich: [00:39:00] Okay.

Carol Docalavich: [00:39:00] All right. Go ahead. What’s your story?

Steve Docalavich: [00:39:01] I don’t have one. I was just kidding.

Carol Docalavich: [00:39:02] Yeah, exactly.

Steve Docalavich: [00:39:02] It was a threat. It was a baseless threat.

Mike Blake: [00:39:05] Okay.

Carol Docalavich: [00:39:05] So, there is a quick renter story. So, when we first started, he was like, “Oh, I’m going to handle the renters, I think you’re a little hard, you know, a little harsh on them.” And I said, “Okay.” So, he, you know, calls her and she gives him the story, right? Like I-

Steve Docalavich: [00:39:20] Okay. First, that was a terrible setup for the story. So, the story is-.

Carol Docalavich: [00:39:24] See, that’s what he does, takes it.

Steve Docalavich: [00:39:25] Yeah. Yeah. So, the story is that, you know, we had not that many houses, but we had some renters that were a little bit late with their rent and we took over. So, I said, “Why do we have a management company? We’ll do it ourselves. We’ll manage.” So-

Carol Docalavich: [00:39:35] Yeah, “How hard can this be?”

Steve Docalavich: [00:39:36] Yeah. So, we were managing all her houses and this one lady, “Oh, well, my dog just died and everything, you know, everybody died.” And I said, “Honey, we can’t kick her out. Everything just died. I mean, her plants died, her dog. We can’t do that.” So, come to find out her dog was fine, her plants were fine, she just didn’t want to pay. And so, it just took a little longer to evict her than them, but I was just a soft touch.

Carol Docalavich: [00:40:01] Oh, God.

Steve Docalavich: [00:40:01] Because I didn’t think anybody ever lied.

Carol Docalavich: [00:40:03] Yeah.

Steve Docalavich: [00:40:04] Right?

Carol Docalavich: [00:40:04] Yeah. I’m not quite—and so-

Mike Blake: [00:40:06] Not in real estate.

Carol Docalavich: [00:40:08] No.

Steve Docalavich: [00:40:08] No. No, not renters.

Carol Docalavich: [00:40:10] But what was really funny is we were in the car, on the phone, going down to look at houses.

Steve Docalavich: [00:40:14] Yeah. I remember that, yeah.

Carol Docalavich: [00:40:15] Yeah. And I said-

Steve Docalavich: [00:40:16] I was almost crying at her story, I swear.

Carol Docalavich: [00:40:20] He was literally-

Steve Docalavich: [00:40:20] I said, “Honey, we can’t kick her out. All these things just died.”

Carol Docalavich: [00:40:24] And I said, “Honey, I want to show you something.” I said, “This is the second month her dad has died.” And he said, “Oh, my God.”

Steve Docalavich: [00:40:31] You need the bleep button again.

Carol Docalavich: [00:40:33] Like literally. He goes, “I just fell for that.” And I’m like, “Yeah, but-”

Steve Docalavich: [00:40:37] I’m such a sucker.

Carol Docalavich: [00:40:39] He was a sucker.

Steve Docalavich: [00:40:39] Yeah.

Carol Docalavich: [00:40:39] So, that was some of the stuff that was tough.

Mike Blake: [00:40:41] He’s a softy.

Carol Docalavich: [00:40:42] Yeah, he is.

Steve Docalavich: [00:40:42] Yeah, I am a big softy.

Carol Docalavich: [00:40:45] Yeah.

Steve Docalavich: [00:40:45] But we did evict the hell out of her.

Mike Blake: [00:40:48] Well, at least, there was a happy ending to the whole story.

Steve Docalavich: [00:40:50] Yes, there was a happy ending in this. Right. We kicked her out and her children.

Mike Blake: [00:40:53] Good.

Steve Docalavich: [00:40:54] And I think we killed her dog, I’m not sure. I’m just-

Carol Docalavich: [00:40:56] No, we didn’t. No.

Mike Blake: [00:40:56] One way or the other, something was dying.

Steve Docalavich: [00:40:59] No, I love dogs.

Carol Docalavich: [00:41:00] Yeah.

Steve Docalavich: [00:41:00] But her kids, they were out.

Carol Docalavich: [00:41:03] Yeah.

Steve Docalavich: [00:41:03] I love dogs.

Carol Docalavich: [00:41:03] But he’s good at taking direction now.

Steve Docalavich: [00:41:05] Yes, ma’am.

Mike Blake: [00:41:08] Guys, this has been a great interview. We’re running out of time. We needed to get you onto your weekend, but-

Steve Docalavich: [00:41:13] Mike, if you have to leave, we’ll continue. I don’t know, you know-

Mike Blake: [00:41:16] Oh, well, you know what-

Steve Docalavich: [00:41:17] Yeah.

Mike Blake: [00:41:17] … you ask me questions. Now, we do need to wrap it up and let you guys get back to your businesses and your lives and your weekend, but I can’t thank you enough for agreeing to come on. If somebody is kind of thinking about this, that they’re thinking of going into business as a married couple, I mean, it sounds like you guys are a great example of what to do, can they contact you guys for advice?

Carol Docalavich: [00:41:42] Yeah, absolutely.

Steve Docalavich: [00:41:42] They can call Carol. Her number is—it’s carol@-

Carol Docalavich: [00:41:49] Which one?

Steve Docalavich: [00:41:50] I don’t know. Which one?

Carol Docalavich: [00:41:50] Yeah, seriously, they can, I mean, use my carol@yourltl.com or the office number is 619—what is it? I always give my cell phone, because I’m always on the phone. 619-.

Steve Docalavich: [00:42:05] 678.

Carol Docalavich: [00:42:05] … 678-

Steve Docalavich: [00:42:07] Follow this, 678-619-4316 and then, follow the prompts to Carol.

Carol Docalavich: [00:42:13] There you go.

Mike Blake: [00:42:14] There you go.

Steve Docalavich: [00:42:14] Steve is not on there.

Mike Blake: [00:42:16] And you may have to put on a little prompt in your IVR for marriage counselling.

Steve Docalavich: [00:42:20] Yes.

Carol Docalavich: [00:42:20] Yeah, exactly.

Mike Blake: [00:42:20] Press 7.

Carol Docalavich: [00:42:21] Yeah, exactly.

Steve Docalavich: [00:42:23] Yeah.

Mike Blake: [00:42:23] That’s going to wrap it up for today’s program. I’d like to thank Carol and Steve so much for joining us and sharing their expertise with us. We’ll be exploring a new topic each week, so please tune in so that when you’re faced with your next executive decision, you have clear vision when making it. If you enjoy these podcasts, please consider leaving a review with your favorite podcast aggregator. It helps people find us so that we can help them. Once again, this is Mike Blake. Our sponsor is Brady Ware & Company. And this has been the Decision Vision podcast.

Decision Vision Episode 48: Should I Hire a Business Development Professional? – An Interview with Susan O’Dwyer, Aprio, and Ann McDonald, Morris Manning & Martin, LLP

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Should I Hire a Business Development Professional
Decision Vision
Decision Vision Episode 48: Should I Hire a Business Development Professional? - An Interview with Susan O'Dwyer, Aprio, and Ann McDonald, Morris Manning & Martin, LLP
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Should I Hire a Business Development Professional
Susan O’Dwyer and Ann McDonald

Decision Vision Episode 48: Should I Hire a Business Development Professional? – An Interview with Susan O’Dwyer, Aprio, and Ann McDonald, Morris Manning & Martin, LLP

What qualities should I look for in a business development professional? What makes a business development professional successful? The answers to these questions and much more come in this discussion with two accomplished business development professionals:  Susan O’Dwyer, Aprio, and Ann McDonald, Morris Manning & Martin, LLP. “Decision Vision” is hosted by Mike Blake and presented by Brady Ware & Company.

Susan O’Dwyer, Aprio

Susan O’Dwyer

Susan O’Dwyer is Director of Corporate Citizenship and Community Relations at Aprio. Susan’s specialty lies in the technology and venture capital industries, two industries that go together hand-in-hand. She is known throughout the Atlanta business community for her passion for connections, which resulted in Susan being recognized as one of the Top 50 women you need to know in Atlanta by the Atlanta Business Chronicle, as one of the 100 most influential people in the tech community and as a finalist for the 2012 Turknett Leadership Character Awards.

Some of her affiliations include the American-Israel Public Affairs Committee, Board Member of the Ron Clark Academy, and the Metro Atlanta Chamber of Commerce’s Technology Marketing Committee’s Venture Capital Program Chairperson. In addition, Susan and her son led efforts for relief for Tuscaloosa, Alabama, after their devastating tornadoes in 2011.

Since their founding in 1952, Aprio has grown to be the largest independent, full-service CPA-led professional services firm based in Atlanta, Georgia. Their over 450 partners and associates provide their best thinking and personal commitment to every client, demonstrating a passion for their work that fuels client success.

Aprio provides advisory, assurance, tax, cloud accounting and private client services across a variety of sectors, including insurance, manufacturing and distribution, non-profit, education, professional services, real estate, construction, retail, franchise, hospitality, technology, and biosciences.

You can find Susan on LinkedIn, and for more information on Aprio, go to their website.

Ann McDonald, Morris, Manning & Martin, LLP

Ann McDonald

Ann McDonald is a Director of Business Development of Corporate Technology and Healthcare IT at Morris, Manning & Martin, LLP. Prior to Morris Manning, Ann was been a regional sales director at INVeSHARE, a managing consultant for Gallup Organization, and vice president of marketing, e-commerce and various roles at Walsh Healthcare Solutions for over 10 years. Some of Ann’s affiliations’ activities include Chair of the Board of Directors of the Technology Executives Roundtable, member of the Board of Directors of the FinTech Society, the Technology Association of Georgia, member of the Board of Directors at the Southeastern Software Association of the Technology Association of Georgia, and past chair of the Southeast Medical Device Association Annual Conference.

Morris, Manning & Martin is an American law 200 law firm with national and international reach. They dedicate themselves to the constant pursuit of their clients’ success. To provide their clients with optimal value, they combined market-leading legal services with a total understanding of their needs to maximize effectiveness, efficiency, and opportunity. Morris Manning enjoys national prominence for its real estate, corporate litigation, technology, health care, intellectual property, energy and infrastructure capital markets, environmental, international trade, and insurance practices. Morris Manning has offices in Atlanta, Raleigh-Durham, Savannah, Columbus, GA, Washington, DC, and Beijing.

You can find Ann on LinkedIn, and for more information on Morris Manning, go to their website.

Michael Blake, Brady Ware & Company

Mike Blake, Host of “Decision Vision”

Michael Blake is Host of the “Decision Vision” podcast series and a Director of Brady Ware & Company. Mike specializes in the valuation of intellectual property-driven firms, such as software firms, aerospace firms and professional services firms, most frequently in the capacity as a transaction advisor, helping clients obtain great outcomes from complex transaction opportunities. He is also a specialist in the appraisal of intellectual properties as stand-alone assets, such as software, trade secrets, and patents.

Mike has been a full-time business appraiser for 13 years with public accounting firms, boutique business appraisal firms, and an owner of his own firm. Prior to that, he spent 8 years in venture capital and investment banking, including transactions in the U.S., Israel, Russia, Ukraine, and Belarus.

Brady Ware & Company

Brady Ware & Company is a regional full-service accounting and advisory firm which helps businesses and entrepreneurs make visions a reality. Brady Ware services clients nationally from its offices in Alpharetta, GA; Columbus and Dayton, OH; and Richmond, IN. The firm is growth minded, committed to the regions in which they operate, and most importantly, they make significant investments in their people and service offerings to meet the changing financial needs of those they are privileged to serve. The firm is dedicated to providing results that make a difference for its clients.

Decision Vision Podcast Series

should i hire a business development professional“Decision Vision” is a podcast covering topics and issues facing small business owners and connecting them with solutions from leading experts. This series is presented by Brady Ware & Company. If you are a decision maker for a small business, we’d love to hear from you. Contact us at decisionvision@bradyware.com and make sure to listen to every Thursday to the “Decision Vision” podcast. Past episodes of “Decision Vision” can be found here. “Decision Vision” is produced and broadcast by the North Fulton studio of Business RadioX®.

Visit Brady Ware & Company on social media:

LinkedIn:  https://www.linkedin.com/company/brady-ware/

Facebook: https://www.facebook.com/bradywareCPAs/

Twitter: https://twitter.com/BradyWare

Instagram: https://www.instagram.com/bradywarecompany/

Show Transcript

Intro: [00:00:01] Welcome to Decision Vision, a podcast series focusing on critical business decisions brought to you by Brady Ware & Company. Brady Ware is a regional full-service accounting and advisory firm that helps businesses and entrepreneurs make visions a reality.

Mike Blake: [00:00:20] And welcome to Decision Vision, a podcast giving you, the listener, clear vision to make great decisions. In each episode, we discuss the process of decision making on a different topic from the business owners or executives’ perspective. We aren’t necessarily telling you what to do, but we can put you in a position to make an informed decision on your own and understand when you might need help along the way.

Mike Blake: [00:00:39] My name is Mike Blake and I’m your host for today’s program. I’m a director at Brady Ware & Company, a full-service accounting firm based in Dayton, Ohio, with offices in Dayton, Columbus, Ohio, Richmond, Indiana, and Alpharetta, Georgia, which is where we are recording today. Brady Ware is sponsoring this podcast. If you like this podcast, please subscribe on your favorite podcast aggregator and please consider leaving a review of the podcast as well.

Mike Blake: [00:01:02] So, today, we’re going to talk about hiring a dedicated business development professional. And I started to become interested in this topic a couple of years ago when I read a book called Built to Sell. And I forget who wrote it but if you Google it, you’ll find it. And if you’re interested in kind of the process of building a business that has value that can be sold and monetized, I highly recommend it as it is not a technical book.

Mike Blake: [00:01:29] In fact, it’s basically a book that sets up a hypothetical marketing services firm and walks through the conversations that take place to understand where value comes from and what it takes to build a business to sell it. And one of the things that struck me about one of the pieces of advice they give in that book is, does your company have the ability to sell when the owner themselves is not doing the selling?

Mike Blake: [00:01:57] And I think that’s a really smart point, because if the revenue is primarily dependent upon the owner, then when the owner sells and drops her keys off and they move to a condo in Costa Rica, then, you know, what value remains in the business? Perhaps some, but not a whole lot. And so, what I found myself doing as I appraise businesses myself and as I advise people on building their businesses and preparing to sell them is to think about very early, you know, how can you create systems and resources and processes and assets that generate revenue when you’re away, right?

Mike Blake: [00:02:38] And the litmus test, I often ask people and I’ll ask this in a management interview, you know, if you go away and you’re abroad and your cellphone breaks for six weeks, what happens to your business? And sometimes, yeah, the business is great. In other times as well, I probably don’t have a business when I come back. And that’s very telling. And typically, the reason that you don’t have a business when you come back is because you don’t have somebody that is a full-time salesperson.

Mike Blake: [00:03:06] So, to me, that’s a very important inflection point. Now, here’s the challenge and the other reason I think this is a very interesting topic, as I approach my 50th trip around the sun here, I’ve seen a lot of salespeople come and go in a number of roles, a number of places where I’ve been, where there’s been services, venture capital, technology, and so forth. And one conclusion I’ve drawn over the years is I think that the hardest role to hire for in any company is sales.

Mike Blake: [00:03:41] And the reason I think that is, you know, not only because I’ve seen a pretty high failure rate over the years, but because quite candidly, salespeople may not necessarily be successful selling what they’re supposed to sell, but they’re often very good at selling themselves. And so, as a business owner, how do you kind of cut through the veneer and the facade and find out not only can that person sell, are they willing to sell? It’s amazing.

Mike Blake: [00:04:13] If you read sales books, you’ll read about how salespeople themselves are reluctant to sell, right? It’s something called call reluctance and so forth. And that’s what they signed up for. But it’s still hard to get salespeople to do that. So, you know, step one is the side that you want to have a dedicated business development person. Second then is, how do you make an assessment as to whether or not that person can and is actually willing to do what is asked of them in that role?

Mike Blake: [00:04:40] And then, third and finally and I see this in professional services, how do you hire somebody and structure that role? So that if you’re not a practitioner, you can still have success in that role. And I being in the accounting industry, we’re certainly guilty of this. It’s tempting to fall into the trap of saying, well, you know, unless you can give technical advice on the spot, you can’t possibly sell. It has to be someone that’s a really good account lawyer, business appraiser, foundation repair specialist, whatever it is, but that’s not necessarily the case.

Mike Blake: [00:05:22] I’m not saying that’s easy. It’s hard, but there’s a big difference between hard and impossible. So, I hope with that preamble, I’ve convinced you that this is a rich topic. And if you’re a business owner and executive decision maker, I think you’re going to learn a lot today from the two guests that we have. So, without further ado, I’d like to introduce our guests. And these are two people that have been good friends of mine in the community for a very long time.

Mike Blake: [00:05:51] I consider them not only friends, but I consider them the mentors. And often, even if I don’t necessarily speak with them as often as I would like, I think of them a lot, especially when I have a decision that I have to make, I think. And I ask myself, you know, what would they do? If I were talking to them, what would they say? And I know them well enough that I know what they’re going to say. If I have to ask the question, I’ve already failed.

Mike Blake: [00:06:12] So, first up, in no particular order, then I just simply decide to write these bios in that order is my dear friend Susan O’Dwyer, who is a Director at Aprio, which of whom I’m an alumnus and they’re are friendly competitor of ours and is a Director of Corporate Citizenship and Community Relations. Aprio is a premier CPA-led professional services firm, where thriving associates serve thriving clients. And on a side note, I’ve always thought that re-branding is fantastic and very effective.

Mike Blake: [00:06:43] Their purpose is clear. They advise clients that they can achieve what’s next, whatever that may be. Since its founding in 1952, Aprio has grown to be the largest independent full-service CPA-led professional services firm based in Atlanta, Georgia. They have over 450 partners and associates that provide their best thinking and personal commitment to every client demonstrating a passion for their work that fuels their client’s success. Susan’s specialty lies in the technology and venture capital industries.

Mike Blake: [00:07:09] And she’s one of the founders of something called Shaking the Money Tree from PWC. And if you’ve ever read or relied upon that publication, that is at least, in part, her brainchild. So, thank her. She’s known throughout the Atlanta business community for her passion for connections, which resulted in Susan being recognized one of the top 50 women you need to know in Atlanta by the Atlanta Business Chronicle as one of the 100 most influential people in the tech community and as a finalist for the 2012 Turknett Leadership Character Awards.

Mike Blake: [00:07:41] As a director of corporate citizenship and community relations, Susan access the main point of coordination regarding civic and community activities throughout the firm. Her role is to maintain open communication with civic leaders and community partners, creating goodwill on behalf of Aprio. So, having read that, why is she here? Well, before she took that role, she was a director of business development I’m guessing for about seven or eight years or so-

Susan O’Dwyer: [00:08:03] Eleven….

Mike Blake: [00:08:04] … where frankly, she kicked butt. And then, she was later promoted into this particular role. But don’t let the kind face fool you, she understands her stuff. Some of her affiliations are the American-Israel Public Affairs Committee, the Ron Clark Academy, where she’s a board member and a big cheerleader for that organization, the Metro Atlanta Chamber of Commerce’s Technology Marketing Committee’s Venture Capital Program chairperson. And she and her son also led efforts for relief for Tuscaloosa, Alabama, after their devastating tornadoes in 2011. And I wish we had time because I would love to get her to talk about her Lady Gaga story, which I tell all the time and it just bust a gut. But maybe, we’ll have to have her back for a second podcast. So, Susan, thanks for coming on the program.

Susan O’Dwyer: [00:08:52] Thank you for having me, Mike. It’s a pleasure to be here.

Mike Blake: [00:08:55] And sitting to her left is my other dear friend, Ann McDonald, who is Director of Business Development of Corporate Technology and HealthcareIT at Morris, Manning & Martin, a role she has held for 13 years. Like Susan, Ann is one of the most respected people in the Atlanta technology community. Morris, Manning & Martin is an American law 200 law firm with national and international reach. They dedicate themselves to the constant pursuit of their clients’ success.

Mike Blake: [00:09:20] To provide their clients with optimal value, they combined market-leading legal services with a total understanding of their needs to maximize effectiveness, efficiency, and opportunity. Morris Manning enjoys national prominence for its real estate, corporate litigation, technology, health care, intellectual property, energy and infrastructure capital markets, environmental, international trade, and insurance practices. Basically, everything. Morris Manning has offices in and around Atlanta, Raleigh, Durham, Savannah and Washington, D.C. Man, I would love a chance to tour the Savannah office, I love that city.

Mike Blake: [00:09:51] Prior to the role at Morris Manning, Ann has been a regional sales director at INVeSHARE, a managing consultant for Gallup Organization and vice president of marketing, e-commerce and various roles at Walsh Healthcare Solutions for over 10 years. Some of Ann’s affiliations’ activities include chair of the Board of Directors of Technology Executives Roundtable, member of the Board of Directors of the FinTech Society, the Technology Association of Georgia, member of the Board of Directors at the Southeastern Software Association of the Technology Association of Georgia, and past chair of the Southeast Medical Device Association Annual Conference. Ann, thanks for coming on.

Ann McDonald: [00:10:26] Thank you.

Mike Blake: [00:10:27] So, you guys are pretty busy, so thank you for finding time to come on the program and come out here to be on it. Asking people to travel in Atlanta is in itself a big ask. So, Ann, let me start with you. I mean, we’ve done sort of the formal introductions, but how would you describe your role at Morris Manning? When you do your own elevator pitch, what do you say?

Ann McDonald: [00:10:49] Well, let’s look at, what do I get paid to do?

Mike Blake: [00:10:54] Okay.

Ann McDonald: [00:10:54] So, I can tell you my title, but really, I get paid to help bring in new clients. And that’s through lead generation. It’s meeting with referral sources, strategic partners, it’s being part of technology, the technology ecosystem and community to meet companies and refer those companies into our firm for legal services.

Mike Blake: [00:11:18] And Susan, how about you? And let’s talk more. I’d like to start with your current role and then, kind of go back to your prior role in terms of business development. How do you describe your current role at Aprio?

Susan O’Dwyer: [00:11:29] So, my current role is to identify nonprofits where we can make a difference through my colleagues’ financial background by serving on those boards. And as a result, further our reach, our footprint across the community and identify new opportunities where we might not have met those executives in their role as a CEO or CFO of whatever company it is, but instead, through a mutual-shared passion for whatever the cause of the nonprofit is, people have the opportunity to connect.

Mike Blake: [00:12:05] And before that, you were director of business development and you were the grand poobah of sales for-

Susan O’Dwyer: [00:12:13] Hardly.

Mike Blake: [00:12:13] … Aprio, formerly known as Habif, Arogeti & Wynne, talk about that role.

Susan O’Dwyer: [00:12:18] So, that role started because the firm realized that if they were going to grow the way they wanted to at the time that I joined the firm 12 years ago, I don’t think there were even 100 people there. And if the firm wanted to grow the way they wanted to, they’re going to need to cast a much wider net. So, I was recommended to the firm and joined to open doors that they had not even thought to knock on before. My Rolodex is very different than the Rolodex of the people that were already there. My job is not to supplant the partners, my job still is to supplement what they are working, who they were working with by identifying just like an additional client, prospects referral sources that can bring new business to the firm.

Mike Blake: [00:13:13] And to be clear, Susan, you’re not an accountant and you’re not a lawyer, correct?

Susan O’Dwyer: [00:13:18] That’s correct. CPA is just three letters in the alphabet to me. No, I’m not an accountant.

Mike Blake: [00:13:22] Yeah. And same here, right? I tell people, if I answer an accounting question, it’s instantly a malpractice. I don’t even do my own taxes. So, as non-practitioners, how do you think that impacted or impacts your ability to communicate the value of what you’re selling to the marketplace? Do you think that gives you a different perspective that is helpful? Do you think it holds you back in some way? What do you guys think? Ann, why don’t you start?

Ann McDonald: [00:13:53] Okay. Well, I have a background in business and I’ve, as you said, never worked for a law firm before. But when I talk to companies, I talk about their business with them, ask them questions about it, and find out what their needs are and then, refer them to the subject matter expert within our firm who can help their businesses grow through legal practices. Also, one of the things that I do is to help prevent the value-added services that we’re known for.

Ann McDonald: [00:14:30] So, I leverage my network of relationships to help that company grow as one of our clients. So, it could be introductions to sources of capital, it could be introductions to organizations where they will meet prospects, strategic partners of their own and then, also introduce them to potential clients who are also clients of ours. So, those are things that don’t have to do with providing legal services, but it’s a value add for our clients.

Mike Blake: [00:15:08] And Susan, how about yourself? Was not being a CPA, that gives you any kind of advantage in the market? And were there times where you felt like maybe it held you back in some way?

Susan O’Dwyer: [00:15:21] So, I was a journalism major. I never took a class in business in my life. But what I was taught was how to get the story out of a person so that we could tell it to our readers. Okay. So, I ask a lot of questions. I don’t talk a lot other than to ask questions. And as Ann suggested, that’s really just to identify what colleague would be the best source of answer for whatever it is their question is. In some ways, I think it’s been a benefit not being an accountant, because I don’t have a clue what the answer is. So, I can really focus on figuring out what their question is.

Susan O’Dwyer: [00:16:01] Sometimes, the client doesn’t exactly know, but by me rephrasing back to them what I hear them saying, sometimes, we’ve redirected what it was they thought they needed to something else. The other thing I would say is that I obviously can’t speak for lawyers, but for the accountants that I work with, sometimes, I think they can be very focused on what it is they know, but they’re not so comfortable with maybe what our other colleagues do. So, it’s being able to recognize opportunity for anybody in the firm as just opposed to what it is they specifically are able to do, which means we have a lot better shot of bringing them in as a client.

Mike Blake: [00:16:49] And that’s something. So, I want to follow-up on that. When you’re a practitioner and I am a practitioner, it is easy to fall into the trap that no matter what you see, it looks like something you do, right? There’s a saying that when you’re a hammer, everything looks like a nail, right? So, if I was an auditor and I’m talking to a potential client, then I’m thinking in terms of, how would an audit help this client, right?

Mike Blake: [00:17:15] Because that’s how I’m wired. Not that you’re a bad person, but that’s just sort of what your world view is, whereas the proper treatment of that conversation is to probe and maybe audit falls out of that, maybe tax falls out of that, maybe something entirely different falls out of that. And as more of a generalist, if I can use that for lack of a better term, that positions you and empowers you to, I guess, becoming more broadly curious.

Susan O’Dwyer: [00:17:42] The other thing I would say is that, well, it’s my job to help identify what the issue is and who the right subject matter expert is. I don’t have to know how to do what it is the subject matter experts do, I just have to listen for what are the trigger words for opportunity for every single line of service or business skill set that we have and then, be able to direct them to that. So, I can give you an example if you would like.

Mike Blake: [00:18:14] Yeah. Great. We love war stories.

Susan O’Dwyer: [00:18:15] Okay. So, I am sitting at a table for a dinner that has assigned seats at a nonprofit that I’ve been on the board of for 20-something years. And I sit next to a person who I have no idea how I miss this man, but in 20-something years, I’ve never, ever laid eyes on him. And I asked him about what he did and how long he’d been involved in the organization, so and so forth. And he tells me about his company. It’s a software company.

Susan O’Dwyer: [00:18:39] And almost as a throwaway line, the very last thing that he says to me after he’s described his company is, “We just invested $5 million in a new software that we’re going to be rolling out to our clients, which are national in the next couple of months.” And I said, “Oh, did you get the R&D tax credit?” He said, “I don’t know what that is.” And I said, “Well, the State will give you money back if your developers are in Georgia.

Susan O’Dwyer: [00:19:06] So, if you send the work to be done in another country or another state, they’re not going to pay, but if it’s here in Georgia-” He says, “Well, yeah. It’s here in Georgia”, and he named the town. And he said, “Tell me more.” And I said, “I have just told you everything I know about it. But tomorrow morning, I can have one of my colleagues, we have 25 people who specialize in this area help you. Here’s my number, call me at 8 o’clock.” Okay. I don’t ever have a problem finding a colleague who’s available for an opportunity-

Mike Blake: [00:19:37] Yeah. Sure.

Susan O’Dwyer: [00:19:37] Okay. That’s not a problem.

Mike Blake: [00:19:37] Yeah.

Susan O’Dwyer: [00:19:39] So, I didn’t have to know how to do the tax credit study, I just had to recognize the opportunity when he said we just invested $5 million.

Mike Blake: [00:19:49] Yeah.

Susan O’Dwyer: [00:19:49] So-

Mike Blake: [00:19:51] Okay. So, Ann, I want to ask you this question, Susan touched upon this about five minutes ago, but I’m curious and I’ve never asked kind of your origin story, how did you come to land at Morris Manning?

Ann McDonald: [00:20:04] Well, it’s interesting. I came to Atlanta in 2004. I worked for the Gallup Organization as a consultant and executive coach. And then, I was here for about a year working for Gallup, then was attracted to another startup in the FinTech area and worked there for about a year. And I work for John Yates and a friend of John’s who I also knew had heard that John was looking for someone who had sales background and was not an attorney, but understood the sales process. And so, he put us together and I interviewed with John and he was looking for someone. So, that’s how it happened.

Mike Blake: [00:20:56] And why did you feel, at that time, that that was a good role for you, that that was a platform where you could be successful?

Ann McDonald: [00:21:04] That’s interesting, because I don’t know that I could ever do that for another law firm. It was John. John Yates’ personality, is how dynamic he ran his sales processes. It was operated more like a real corporation rather than sort of a slow process. I was used to very fast, very successful operations. And it was the way he viewed the market. Also, the way they view their clients. This group is much more than a transactional law firm, they believe in relationships. And look at new clients or look at all the clients as, “How can I make your business grow? What can I do to help you in areas other than, ‘Well, just call us when you need a transaction of some means.'” So, that was a big difference and the reason I was attracted to working for an industry that was foreign to me.

Mike Blake: [00:22:20] So, an interesting thing that’s already emerging is you two likes to ask a lot of questions.

Ann McDonald: [00:22:27] Yes.

Mike Blake: [00:22:27] Right? And I think that’s an important point. It gets back to, how do you interview somebody for a role like this? We both know there are people out in the marketplace that sell by telling basically.

Ann McDonald: [00:22:40] Yes.

Mike Blake: [00:22:40] Right? And, you know, maybe the 1960s and ’70s, there’s some effectiveness to that, but I’m not sure that’s very successful-

Ann McDonald: [00:22:48] No.

Mike Blake: [00:22:50] … today. And I think that most people I observe who try to sell by telling, I think you get some people that bite on that, but I think that the success rate is a lot less. So, is it fair to say that if I’m looking to hire somebody like you, probing for somebody that likes to ask a lot of questions might be a good thing to look for? Is that fair?

Susan O’Dwyer: [00:23:11] Not only is it fair, but I think maybe another way to say it, Mike, is it’s far better to be someone who is interested and interesting. I don’t ever want to make it about me. I was going to make it about the other person. And so, I’m not the story. My colleagues are the story. But in order to get the story, I have to find out what it is that person really needs. And like I said before, sometimes, the prospect doesn’t even know exactly what it is they need or they think they know what they need. But by asking of questions, you find out that that’s maybe not exactly what the issue is.

Mike Blake: [00:23:50] And, you know, talk about that journalism background being helpful, right? I mean, journalism is the practice of asking questions often from people who don’t want to answer questions.

Susan O’Dwyer: [00:24:00] Well, I try not to be Mike Wallace.

Mike Blake: [00:24:01] Right.

Susan O’Dwyer: [00:24:04] But-

Mike Blake: [00:24:04] So, let me go back, too, because Ann said something that segues nicely into this. You know, you’re successful. I know how successful you were and have been at Aprio. And I’m curious, what about that platform, when you’re in that role, puts you in a position to be successful? And I ask that because if I’m a listener, I’m thinking, gee, I’d love somebody like Susan or Ann to come to my company, but it’s just not to hire, I think I’ve got to create an environment for them to be successful.

Susan O’Dwyer: [00:24:35] So, the way a public accounting firm works is that there are X number of partners that are all co-owners of the firm. And at Aprio, the way it works is there is a place for partners who, obviously, they’re all very good technically, but some of them are just more outgoing than others. So, it kind of became accepted practice that some of them were very, very good at rainmaking and others would probably rather eat a box of rocks than have to go out and talk to, you know, prospects.

Susan O’Dwyer: [00:25:11] So, because I just have never really been afraid of talking to people I don’t know, it doesn’t scare me, my role was to open doors where they hadn’t been before. We had a technology practice. They didn’t know before I came very many venture capitalists. Interestingly enough, venture capital was kind of maybe is not as strong today as private equity was, but 20-something years ago, that was the flip. And so, because of my prior role, I knew a lot of those people.

Susan O’Dwyer: [00:25:56] And it was just a question of trading on your name, honestly, to open doors for the new firm. And if you do what you say you’re going to do. Even if people know she’s a salesperson, but they don’t view me that way because they view me as, when I call them, I’m calling them with something for them, usually not asking for something. In this case, I was asking for a meeting to make an introduction and all that could come from it would be more business for both sides, right? So, it’s a win-win.

Mike Blake: [00:26:33] Yeah.

Susan O’Dwyer: [00:26:34] So, that’s what I did was I just opened doors. And I had had a 20-plus-year career at one big four firm before I came to Aprio and before that, a 10-year career at another big four firm. So, I’ve always been a words person in the number’s world.

Mike Blake: [00:26:52] So, in those firms that you worked in, was there anything they did or maybe could have done better to put you in a position to be more successful? And I’ve asked that question because I’d like to try to drill down to if one of our listeners decides that they want to go the route of hiring somebody like you or maybe it doesn’t matter, maybe I’m asking a question that I think I know the answer to and I actually don’t, does it matter? Or, is hiring the right person with the right approach, with the right Rolodex so important that maybe it’s just, get out of their way and let them do their thing?

Susan O’Dwyer: [00:27:31] So, to answer a couple questions or comments that you’ve made, the first is I made sure it was never about me. It’s always about helping others. And you alluded to the fact that there’s been a very high turnover rate among salespeople, typically. I think there are some people that want it to be about them. I didn’t know that there was an expression. I mean, this was 30-something years ago, which I don’t know that had been exactly coined yet or I hadn’t heard it called servant leadership.

Susan O’Dwyer: [00:28:03] It’s never about me, it’s always about taking care of other people, hopefully. And that’s where I get my satisfaction from. I don’t need to be the star. As a matter of fact, I don’t even want to be on stage. I’m way more happy to be behind the curtain pulling the levers and strings. So, that’s number one. Number two, I would say, is I think you have to be willing to let others be the star and too many salespeople, my observation why they’re not successful is that they want to be the star.

Susan O’Dwyer: [00:28:37] And that just isn’t helpful for either our colleagues who really are the stars, because as Ann referred to them as subject matter experts, they’re the ones who have the answers, not me. And then, the other thing is, really, it needs to be all about the client or prospect, not about the salesperson. So, just turn the I pronoun out of your vocabulary and just pretend it doesn’t exist. And that’s the way to think about it.

Mike Blake: [00:29:10] So, Ann, you’ve been in your role for a long time and I suspect but don’t know, you’ve probably seen others in that role, whether it’s in your firm where others sort of come and go. Why are you different? Why do you think you’re different? I’m not going to use the word special, because you’ll never let me get away with that.

Ann McDonald: [00:29:29] No.

Susan O’Dwyer: [00:29:29] But she’s wonderful.

Mike Blake: [00:29:29] But I think you’ll get away with different.

Ann McDonald: [00:29:30] No.

Susan O’Dwyer: [00:29:30] She is wonderful.

Ann McDonald: [00:29:32] Thank you.

Mike Blake: [00:29:32] But there is something different, right? You know, it’s, if you’re around, say, a year longer than everybody else, that’s a statistical anomaly. When it’s a lot longer than anybody else, clearly, there’s something structural there. And if you want to talk about yourself, that’s fine. Maybe just contrast with what others have done, where they have not been successful, what mistakes do you see other salespeople make?

Ann McDonald: [00:29:56] Well, I think Susan touched on it. I think it’s important as a business developer salesperson that you have the maturity to understand the sales process with a service organization. And the important person or people in the equation will be the company and the attorney who they had the relationship with or attorneys, multiple relationships. And for a sales person, you have to understand, as Susan said, you are not the key person. You are not the key personality. You are the go-between and the facilitator for the relationship.

Ann McDonald: [00:30:47] The company has to have the primary relationship with the attorney in our case. And because that’s who they will trust, who they are relying on to help them make very important decisions about the future of their company and their employees. And so, the business developer or salesperson has to understand that. It’s also a different role than I have had as a salesperson in the past. And I don’t close the relationship. I don’t close the win. I make the introduction to our attorney. And then, it’s a hand-off. And I can’t close the win.

Mike Blake: [00:31:40] Right.

Ann McDonald: [00:31:41] So, that takes another level, I think, of understanding and-

Susan O’Dwyer: [00:31:52] Acceptance.

Ann McDonald: [00:31:52] … actions. In that, I help coach the attorney. You know, it’s such a hard position to be the one who’s making the widget, the one who’s providing the service and then, also the salesperson. And you have those two distinct roles in companies, but you don’t as attorneys. So, I help coach the attorney. I mean, they’re working on deals. They’re creating the legal product. But then, they also need to nurture the relationships of prospects. And as I tell them, “Don’t dig the well when you’re thirsty. You need to be part of the sales process all along, even though you’re very busy with providing the services.” But I will coach attorneys and help them with closing the deal, getting the client in. But that primary relationship is with them.

Mike Blake: [00:32:54] So, one thing that falls out of both of what you said and another kind of talking point is I think a common thread is humility. And I’m sure it sounds intuitive to the two of you, but if you think about how we portray somebody who’s in sales in the media, right? Good thing about Glengarry Glen Ross, right? Always be closing hard-charging high-ego, right? And you sort of have to own everything.

Mike Blake: [00:33:27] But in my experience, I’m curious about if you agree, you know, in a lot of way, in a lot of respects, business development can kind of be like trying to swing a baseball bat to tighter your grip at the less while it works, right? The harder you try, in some respects, the less it works, right? So, is it fair to say that if I’m interviewing somebody for that role, another thing I would look for, besides curiosity and the ability and desire to ask questions, I guess is also, frankly, some humility to it.

Susan O’Dwyer: [00:33:59] It’s a funny line that you walk because you have to be confident enough that you can call on a CEO or a CFO and expect that that person is going to take your call because you have some prior relationship and respect with each other. But then, you also have to be willing to take a step back once that person has agreed to meet with you, that someone else is really the reason why they’re there. So, it is a little bit odd.

Susan O’Dwyer: [00:34:29] I think you’re also looking, for your listeners, for some ideas about what are things that are helpful when you are looking to hire a business development person. I would say the other thing is don’t look for someone who expects this to be a regular job, a 9:00 to 5:00 job, I mean. There are countless breakfasts and dinners that Ann and I have been at that require very, very long days. It’s almost like a school bus driver. You’re really busy in the morning, you’re really busy in the evening.

Susan O’Dwyer: [00:35:01] And then, your kind of in the middle of the day is when you’re doing all of your prep work for the next couple of meetings. But when you are going to these meetings, you’re not just walking in cold, you’re doing your homework ahead of time. What is the group about? Who can I expect to be there? Are there people that I am particularly looking for? How do I connect people who I meet there with resources that will be helpful for them? All of that is happening before or after meetings. But it is a lot of very long days and you have to find people who are willing to make those kinds of time commitments, I think.

Ann McDonald: [00:35:38] I also think there typically are two different kinds of salespeople, hunters and farmers. And I think this is a combination of those roles. You have to really be hungry and be a hunter, but you also have to be a farmer. In that, you’re nurturing relationships, you’re doing coaching. There are some additional characteristics besides just being the Glengarry Glen Ross. You know, dialing for dollars kind of-

Mike Blake: [00:36:13] Right. Coffees for closers.

Susan O’Dwyer: [00:36:15] Yes.

Mike Blake: [00:36:16] Yeah. And that balance is going to depend a lot, I think, on the nature of the industry that you’re-

Ann McDonald: [00:36:23] Yes.

Mike Blake: [00:36:23] Right? And professional services, a lot of farming because that person may or may not need that service to a particular point in time, right? For me, it can be a two-year sales cycle. Maybe accounting-less, because everybody needs to file a tax return or some someplace in the middle. On the other hand, if it’s somebody that does flood remediation, then that’s a very short-sale cycle, right?

Ann McDonald: [00:36:45] Yeah.

Mike Blake: [00:36:46] So, you sort of have to understand kind of where you fall on the continuum. I put one loaded question into the list, but you guys had a chance to see it, you didn’t tell me I couldn’t ask it, so I’m going to ask it, because I do think it’s relevant. The two of you happen to be women.

Ann McDonald: [00:37:03] I knew it wasn’t going to be question number eight.

Mike Blake: [00:37:04] The two of you happen to be women. Do you think that has impacted your ability to be successful in your respective roles, either in a positive or a negative way? I don’t want to go on me, too, but-

Susan O’Dwyer: [00:37:20] Since I’ve never been a man, I don’t know that I can answer that.

Mike Blake: [00:37:23] Okay.

Susan O’Dwyer: [00:37:24] But I can tell you that it became very clear when I was in my prior firm, working strictly with venture capitalists that when I would go to the National Venture Capital Association’s annual meeting, I was one of a handful of women in a room of a thousand people. And so, how are you going to stand out? And I chose to use bright colors. So, people who know me know that I never wear black or navy unless I’m going to a funeral.

Mike Blake: [00:38:00] That’s true. I’ve never seen you in either of those colors as long as I’ve known you. That’s right.

Ann McDonald: [00:38:03] Yeah.

Susan O’Dwyer: [00:38:04] And so, you have to do something to stand out in a crowd and be different, especially when there are competitors who do not have a business development person, but send their practitioners to the same events I’m at. How am I going to relate to people in a way that will be memorable when I personally can’t answer their questions, technical questions? And so, I’ve chosen to do it with being personal, asking about family, remembering things personally about that person.

Susan O’Dwyer: [00:38:40] Do I think a man would do that? I don’t think so. I’ve yet to meet one who ever remembers anything personal about other people. I mean, at a networking event, they just don’t or they don’t ask about it. And I think being a woman, it’s safer to ask those kinds of questions without feeling like maybe the person thinking, why is this person getting so personal? That it’s more accepted, I guess.

Mike Blake: [00:39:07] Yeah.

Susan O’Dwyer: [00:39:07] Ann, how about you?

Ann McDonald: [00:39:08] Oh, I really don’t think gender has much to do with it. I do think as far as salespeople go, I think women may have an edge for some of the reasons that Susan like said.

Mike Blake: [00:39:23] Well, especially in tech, right? I mean, there aren’t that many women in tech, period, yet.

Ann McDonald: [00:39:27] Oh, well, that’s true. But it’s interesting. And of course, we go to a lot of events and there are not a lot of women typically in the room. And I don’t notice it anymore.

Susan O’Dwyer: [00:39:39] I don’t either.

Ann McDonald: [00:39:40] It’s not even something that is a factor. But, you know, we are good about making connections and probing without seeming to be too direct and-

Mike Blake: [00:39:58] And maybe more natural empathy, too.

Ann McDonald: [00:39:59] And more natural empathy. I think that may be a factor.

Mike Blake: [00:40:03] So, another question I want to make sure we get through, we don’t have a ton of time left, but this is one I’ve got to make sure I ask, you know, Ann, you and I are talking a little bit about this before we came on, imagine that you’re going to hire your successor, what is an interview question you would make sure you want to ask your successor? What would they have to answer for you in a great way to say—you’ll tell John Yates, you know, “John, well, now, I’m ready to hang it up and I’m right to be on a beach in Tahiti. This is the person you got to hire because answered this question great.”

Ann McDonald: [00:40:42] Oh, Mike, that is a tough one. One question. How good are you at putting the client first, representing the client to the firm and then, representing the firm to the client? Instead of making this a personal quest, I mean, it has to be all about helping that company, that client grow and the depth of relationship. And I’d like to know about the experience that the interviewer or interviewee would have with those kinds of relationships. And then, the whole coaching factor of helping attorneys to be successful, because that’s a good part of what this job entails. And it’s providing tools for them, it’s providing answers, it’s providing coaching in a way that they can tolerate that’s nudges and not, “Here comes the wisdom.”

Mike Blake: [00:42:19] Yeah. And that’s really interesting because I’ve long thought of both of you as much as anything being air-traffic controllers, right?

Ann McDonald: [00:42:30] Yes.

Mike Blake: [00:42:32] Controlling connections and coordinations and stuff. And the way you described that role, I think, may be different than one of a lot of our listeners’ thought going in, because, you know, the notion of sales for many people when you think of it is a unidirectional process, right? I’ve got something, I’m going communicate to you, and you want to buy it. But the way you describe it is once you initiate that relationship, now, you’re representing the client back to the firm as well-

Ann McDonald: [00:43:04] Yes.

Mike Blake: [00:43:05] … and to make sure they’re treated well-

Ann McDonald: [00:43:06] Yes.

Mike Blake: [00:43:06] … and they’re treated appropriately and they get the right service. And even if I’m wrong, and I’m going to step out here, but I suspect this is true, even if sometimes, that may mean that you’re not the right firm to serve them-

Ann McDonald: [00:43:19] Yes.

Mike Blake: [00:43:19] … necessarily, right? You know, not all things to all people can’t be if you’re successful.

Ann McDonald: [00:43:23] That’s right.

Mike Blake: [00:43:23] And so, it’s very interesting. I think there’s a big learning point in there for that piece of advice and the way to ask that question. Susan, you have a bit of extra time to noodle on that. You’re interviewing the next director of business development for Aprio, what do you ask him?

Susan O’Dwyer: [00:43:42] Describe how when you were given a prospect’s name, a company or a nonprofit, not necessarily a person, and you don’t know a single person at that company, but you have to get in the door of the CEO, how would you do it? What are the steps you would take to open that door? And how long would it take you to get there?

Ann McDonald: [00:44:10] Oh, that’s good.

Mike Blake: [00:44:11] Now, that last part is loaded, I think, because the knee-jerk reaction may be, “Well, I could get in there in two weeks.”.

Susan O’Dwyer: [00:44:24] How would you do it?

Mike Blake: [00:44:25] Because you want to show that you’re quick and effective, right? And then, I can see on your face that SO face of skepticism like, “Uh-uh. In two weeks, man”, right? We’re talking months. You’re probably looking at months-

Susan O’Dwyer: [00:44:39] Well, what’s the right way?

Mike Blake: [00:44:39] … if you’re going to sound the way that you think that is appropriate and realistic, right?

Susan O’Dwyer: [00:44:43] Yeah.

Mike Blake: [00:44:44] Two weeks is boiler room territory.

Susan O’Dwyer: [00:44:46] Yeah. That’s just nonsense. And it’s not going to work. So, you’ve already identified yourself as a phony in my book.

Mike Blake: [00:44:54] So, two more questions and we’ve got to go and let you guys get back to your day jobs. How much has social media played a role in what you guys do? Are you guys social media people at all? I know the answer to this question to some extent, but our listeners don’t.

Susan O’Dwyer: [00:45:11] I’ll defer to Ann because for me, it’s irrelevant. So, I would just be in the office-

Mike Blake: [00:45:16] Well, but-

Susan O’Dwyer: [00:45:16] I mean, we have a marketing department that uses social media.

Mike Blake: [00:45:19] Right.

Susan O’Dwyer: [00:45:20] But I live on LinkedIn. And if that is considered social media-

Mike Blake: [00:45:26] Yeah, I think so.

Ann McDonald: [00:45:26] It is.

Susan O’Dwyer: [00:45:28] So, I live on that. But tweeting and posting stuff and all of that, I completely defer to the queen of it, which is Ann, because I don’t do any of that stuff. I use it to learn, but I don’t use it to push the company. Probably, I should, but I just don’t.

Mike Blake: [00:45:46] If I ever see a selfie of you on Instagram, I’m calling the police, because I know you’ve-

Susan O’Dwyer: [00:45:51] I’ve been kidnapped.

Mike Blake: [00:45:52] … clearly been kidnapped. And that is a cry for help. And somebody is going to be dropping $100,000 in a parking lot somewhere to get you back.

Ann McDonald: [00:46:01] There’s a newspaper next to her head just to show proof of life.

Susan O’Dwyer: [00:46:02] Yeah.

Mike Blake: [00:46:06] Exactly. Ann, how about you?

Ann McDonald: [00:46:07] Well, I use LinkedIn quite a bit.

Mike Blake: [00:46:09] Yeah.

Ann McDonald: [00:46:10] And for a lot of different things, do a lot of research on LinkedIn, I post articles that I find very interesting that I think will be of interest to the people I know. They’re usually business articles, really engaging ideas that I think will help companies grow based on my background. I post events for organizations that I belong to. I think that’s important in getting support for the things that I support. Of course, I’ll re-post all of the MMM items that I think people should know about. But I think it’s very valuable. I think that’s a great sort of lifeline that it helps bring life to what I’m trying to accomplish.

Mike Blake: [00:47:13] Yeah.

Ann McDonald: [00:47:13] It is a branding tool.

Mike Blake: [00:47:15] Yeah.

Ann McDonald: [00:47:17] And that lets people know me a little bit better, personally, because of the things that I say or post, especially the articles. I’ve had people approach me at events and say, “Oh, yeah, I recognize you. I’ve seen you on LinkedIn and I follow the articles that you post.” So, it’s been of some value that way.

Mike Blake: [00:47:38] Right. You get recognized.

Ann McDonald: [00:47:39] Yeah. Yes. And so, that’s a point of conversation then to get to know somebody, to get to know a company. So, you know, I give kudos to people and it’s a nice outlet. Now, when I post things on LinkedIn, I will then, sometimes, check the box for it to be posted on Twitter.

Mike Blake: [00:48:07] Yeah.

Ann McDonald: [00:48:08] And then, Facebook is purely social, really.

Mike Blake: [00:48:11] Yeah. Yeah. So, we are unfortunately out of time. I could easily lock the door and trap these ladies here for a couple more hours, but that would be unfair to them and also illegal, so we’re going to have to wrap up. There’s so much more we could talk about. But if somebody listening would like to contact you, they have questions about this process, can they do that?

Ann McDonald: [00:48:31] Absolutely.

Susan O’Dwyer: [00:48:31] Please.

Mike Blake: [00:48:32] And if so, Ann, how best to contact you?

Ann McDonald: [00:48:36] Email, amcdonald@mmmlaw.com.

Mike Blake: [00:48:43] Susan?

Susan O’Dwyer: [00:48:43] And I’m susan.o’dwyer, and yes, I do have an apostrophe in my email, it’s O-apostrophe-D-W-Y-E-R, @aprio, A-P-R-I-O, .com. And I would welcome your questions or any way I can help you.

Mike Blake: [00:48:59] That’s going to wrap it up for today’s program. I’d like to thank Ann McDonald and Susan O’Dwyer so much for joining us and sharing their expertise with us today. We’ll be exploring a new topic each week, so please tune in so that when you’re faced with your next executive decision, you have clear vision when making it. If you enjoy these podcasts, please consider leaving a review with your favorite podcast aggregator. It helps people find us so that we can help them. Once again, this is Mike Blake. Our sponsor is Brady Ware & Company. And this has been the Decision Vision podcast.

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