(0:00) You can scale with confidence. You can build a business that's not just busy, (0:04) but valuable. You just need the right foundation. This podcast, Strategy, Scale, Exit, is about the (0:11) lessons I've learned while building coltivar.com and helping grow and turn around million and (0:16) billion dollar companies. My goal is to help you grow profitably, scale with intention, (0:21) and build a business that's actually worth buying. Please share and enjoy.

(0:26) Welcome back to the podcast. Now, if you've been a subscriber for a while, (0:30) you probably noticed something different. Yep, the name. We're now called Strategy, (0:34) Scale, Exit. If you're brand new here, welcome. I'm so glad you found the show.

(0:39) Be sure to hit subscribe so you don't miss any important updates. We're about to go deep on (0:43) the stuff that actually moves the needle in your business. But before we do that, (0:47) here's a quick backstory.

I'm a man of faith and I'm obsessed with trying to align my will (0:52) with God's. Now, I'll be real though, I'm not that great at it, but it's what I strive for. (0:59) And over time, I've come to believe that business is the best vehicle I have at my disposal to be (1:05) an agent for good in the world.

That's why I started Coltivar. Our purpose is simple, (1:10) to elevate people through better business. And as I've sat with that more seriously, (1:15) personally and professionally, I've noticed a clear theme, especially as I look back on (1:19) clients we've helped succeed the most.

The ones who win aren't just trying to grow in a vague (1:26) sense. They want to scale intentionally, not just bigger, but to build a business that either, (1:32) A, runs without them or B, is valuable enough to sell on their terms. (1:38) And that's when the light bulb went off.

So yes, I'm still going to talk about strategy, (1:42) finance and value creation because I love that stuff. But now the show is going to be (1:47) laser focused on one thing, helping founders and CEOs grow profitably and build businesses (1:53) worth buying. This podcast is where I'll share the systems, stories and lessons that have helped us (2:00) to do that over and over again with real companies, just like yours.

So let's go ahead and dive into (2:05) this new chapter. All right. Let's start with a tough question.

Why is growth making everything (2:12) harder, not easier? Have you ever felt that way? Like you're doing all the things, more sales, (2:18) bigger clients, more team members, but instead of feeling more in control, you're feeling buried. (2:24) You're stretched thin. Profit is not what you thought it would be.

Cash is tight. Your team (2:29) keeps asking for direction. And you're thinking, this isn't what I signed up for.

And it's (2:36) interesting because I was working with a company a while back and we started to chart out their KPIs (2:41) and one of the KPIs that we're looking at was EBITDA earnings before interest taxes, (2:45) depreciation and amortization. Just a nerdy way of saying profit. And what was fascinating as (2:51) we're looking at the data is that the company was pretty profitable for a while.

And then the founder (2:57) wanted to pour on the gasoline. They wanted to scale their business. They just wanted to grow (3:02) the top line. So he hired a bunch of employees and he thought that these employees would come (3:06) in with their expertise, build out the systems and voila, the company would scale. But guess what? (3:12) That didn't happen. Instead EBITDA tanked.

Their overhead expanded and they were so inefficient. (3:20) And then ultimately they had to scale back and turn around the business to fix their trajectory. (3:25) So I don't want that to happen to you. So you may be feeling, okay, like I said, (3:29) this isn't what I signed up for. And here's why you probably feel that way. (3:33) Number one, growth doesn't fix problems.

It magnifies them. I talk about this all the time (3:38) with strategy. If you have a constraint in your business, something that's holding you back from (3:43) achieving your full potential and you grow, guess what? You just scale your constraint.

In other (3:48) words, you just grow your problems. And that's what makes this the biggest lie in business. (3:54) Revenue solves everything.

That is not true. Nope. It doesn't.

In fact, revenue with no systems is a (4:01) recipe for chaos. Let me give you a real example. I worked with a company that went from 6 million (4:06) to 14 million in revenue in under 18 months.

That kind of growth should have been a celebration, (4:12) right? But here's what happened. Cash got tighter. Operations broke down.

Customer experience slipped (4:18) and went down the toilet. And the owner started questioning whether scaling was even worth it. (4:24) Why? Because they built volume on top of fragile infrastructure.

They scaled up the noise without (4:30) scaling up the clarity. And this happens all the time. And when this does happen, you don't get (4:37) freedom. You get stuck.

So let's talk about what actually builds a scalable business. Here's the (4:43) truth. You don't grow into success. You build into it.

And the way you build it, it comes down to (4:49) three things. First, systems. If your business needs you to function every day, it's not a business. (4:55) It's a job with a really cool logo. And in fact, this could be a major problem when you go to sell (5:01) your company. It's called key man risk. It's when your business relies on you as a key person to (5:07) run the company.

So when I'm talking to business owners, I just had this conversation last week (5:12) with some CEOs. I said, okay, imagine you go on vacation for six months and your employees cannot (5:19) contact you. They can't call you. They can't email you. They can't FaceTime you. They can't do (5:23) anything. No contact. What happens to your business?

And pretty much all of them said it (5:28) would collapse. And that's a problem that creates key man risk. And it's a giant haircut off the (5:34) valuation of your business.

So if you're thinking about selling in the next one, two, three, five (5:40) years, and you have key man risk, let's say your business is worth $10 million. A key man discount (5:48) could be 20 to 30%, depending on how extreme it is.

So imagine that you could be selling your (5:55) business for two to $3 million less, and they're going to be putting golden handcuffs on you, (6:00) locking you into the business. So after you sell it, then you're stuck there. (6:04) You still have to be an employee of the business and help out, right? But now you're not in control (6:09) and it's the worst situation ever.

So you don't want to find yourself in that position. So here's (6:15) the deal. Systems take your genius and make it repeatable. They let your team operate without (6:21) constantly asking for approval or instructions, because that can absolutely drown you.

I know (6:26) that happens to me all the time, and it can be extremely disruptive and even frustrating at (6:31) times. Systems help you to delegate outcomes, not just tasks.

So here's a dead giveaway. You (6:38) need systems. Number one, you answer the same questions every week.

Number two, your sales (6:44) process is different every single time. Most of the time, founders or CEOs, they're usually the best (6:50) salespeople in their company. So imagine trying to scale that if every time your sales process (6:55) is different, it doesn't really go well, right?

And third, you're the only one who knows how to (7:01) fix a mistake. That is not scalable. That's survival, right?

So if you want to build a scalable (7:06) system, that's the first thing you need to do. You need to fix your systems, right?

Number two (7:11) is financial discipline.

All right, if you've listened to my other stuff, you know I'm a big (7:15) finance guy, because I believe strategy plus finance drives tremendous value.

Now I'm not (7:21) talking about being a nerd, right? Being an accountant, wearing a green shade, doing debits (7:26) and credits in the back of your office. Instead, I'm talking about something else.

So here's the (7:30) deal. Look, this doesn't mean spreadsheets 24-7, but you can't build a valuable business if you're (7:36) flying blind financially.

You got to know three things. Number one, what's actually profitable? (7:42)

Number two, where are we bleeding cash?

And number three, what levers move the business forward? (7:49)

Too many founders focus only on the top line. They celebrate sales, but they ignore margin. (7:54) They confuse booked revenue with money in the bank.

That disconnect will kill cashflow. I'm (8:00) telling you, it'll kill morale and ultimately it will hurt your valuation.

We'll go deeper into this (8:06) in the next episode, because if you ever felt like we're making money, but I feel broke, you're going (8:13) to want to hear that one.

Okay, so that's number two, financial discipline.

Number three is in (8:19) order to build a scalable business, you have to have a clear strategy. So here's the deal.

Most (8:24) businesses aren't overworked because they're scaling. They're overworked because they're trying (8:29) to do too much. Clear strategy is about focus.

So if you just cut out all the academic stuff, (8:35) right, because there's so many frameworks, people get all confused. And I just tell leaders, I'm like, (8:40) okay, if you want just a simple definition of strategy, it's just about focus. It's about knowing (8:47) what to say yes to and what to ignore.

A company I worked with recently had nine different revenue (8:53) streams, okay? Nine. And guess how many of them were actually profitable? Two. Once we cut the (8:59) noise and we focused on what actually worked, their profits tripled in less time with less stress.

(9:05) So I see that all the time. In fact, I was listening to this YouTube video the other day, (9:09) and this guy was going around interviewing people on the street. He was saying, okay, (9:13) are you successful? How much money have you made? And one guy's like, oh yeah, you know, (9:17) I've made millions. I run 35 businesses right now.

I'm like 35 businesses? That's crazy. (9:23) Now, maybe he has a big team, but I can tell from experience, okay, this is my best guess, (9:30) that the majority of those businesses aren't actually making money, okay? A few core businesses (9:36) are probably making a lot of the money and they're covering the mistakes and sins of the businesses (9:40) that aren't making a lot of money.

So entrepreneurship and success is not about (9:45) having all these businesses to run. It's about focusing on the core, optimizing that. And then (9:50) once you have that running and it's scaled and it has systems in place and you can step away, (9:56) then great, go start your next venture.

But too many entrepreneurs, they have this entrepreneurial (10:01) ADD and they just keep starting new, new, new, new, new, new. And that can create a lot of problems. (10:07) So strategy, the thing I love about it is it gives you freedom.

It's the filter that protects your (10:12) time, team, and energy. And the other day when I was running, I was thinking of this, (10:19) strategy, it's not about just predicting the future, okay? Because nobody could predict (10:23) the future. The value of strategy is it helps you to focus your priorities in the present.

(10:30) That's the key. Because when you have a strategy, you could focus on what matters the most right (10:35) now, here, here today, right? I hear that all the time from people, like my spouse and my kids are (10:40) like, be in the present, dad, be in the present. And so oftentimes we look so far out into the future (10:47) and that's great.

But then if you bring that back and you say, okay, strategy, yeah, (10:51) it helps me to think about the future and get excited about the future. But more importantly, (10:56) it helps me to focus on what to say yes to and no to right now in the present. So I could set (11:00) priorities that will allow the company to win. (11:05) Number one, don't chase growth, build value. You can scale with confidence. You can build a (11:11) business that's not just busy, but valuable. You just need the right foundation.

And that's what (11:17) this podcast is here for. In the next few episodes, I'm going to walk you through the exact (11:22) systems and shifts that create real scalability. Here's a sneak peek of what's coming.

You're (11:28) making money. So why is there no cash? So we'll talk about why profit and cash aren't the same (11:34) and how to plug the hidden leaks in your business. I'm also going to do an episode that talks about (11:39) scale with systems, not just headcount, how to grow without burning out and why hiring more (11:45) people isn't always the answer.

Remember that story I told you at the beginning where the (11:49) company is losing a ton of money as they try to scale. I'll help you to avoid that in your
(11:53) business. We'll also get into the five metrics every founder must know cold, like off the top (11:59) of their head.

And we're not talking about vanity metrics, just the numbers that actually drive
(12:04) value and growth. And then I'll also do an episode about, is your business actually sellable? (12:10) Because a business that's worth buying is also one worth keeping. And that's just the beginning.

(12:15) I have so much more content that is going to deliver value to you. So I'm excited for you to (12:20) keep tuning in and checking this out. All right.

That's what I have for today. If you want more (12:25) resources, or if you ever want to start a conversation, you can always connect at (12:30) coltivar.com. We have a ton of tools there, videos, and other things that will help you to (12:35) build a scalable and sellable business. All right.

I'll catch you in the next episode.
(12:41) Take care of yourself. Cheers.