← Becker Private Equity & Business Podcast
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This is Scott Becker with a special episode of the Becker Business and Becker Private Equity Podcast. Today's discussion is 20 key business and leadership concepts. We're going to talk through all 20 of these. We're going to try and do it in 30 minutes. And let me give you a couple disclosures. First, this is really for CEOs, founders and leaders and also those trying to build serious careers. So it could be for a pretty broad variety, but really for CEOs, founders, entrepreneurs. Second is we're doing this in preparation for a few speeches we have coming up around Building Great Businesses. Our latest book in USA Today bestseller. So in that regard, I would love to hear people's feedback on whether you like or hate this speech, whether you think I need improvement on it. Would very much love your feedback. The text number 773-766-5322 or always feel free to email me at s beckerkerstrategygroup.com thank you so much. So we're going to talk through 20 different concepts and and we'll go from there. First, the first concept is there are five phases of a business and this is intended to give great credit to people that get to stage three, four and five. The first phase of a business is someone has an idea. And there's an old adage, we've heard it a million times. Ideas are like everybody's got one, or opinions are like everybody's got one. And excuse the language, but it's very true. Everybody's got an idea that itself is meaningless. And we talk a lot about business, about execution and times of no, no ideas and really being able to execute. But the first idea, the first phase of business is someone has an idea for a product or service or something they want to sell to the market. The second phase of a business is someone's actually taken that idea or product and they've made it into an actual product or deliverable something that they could sell. It could be software, it could be a conference, it could be legal Services. It could be anything, it could be a toy, it could be anything. But you actually go from idea, it's an actual product or service that's ready to sell. That's the second phase in just getting to the second phase takes you out of the world of probably 90% of the people that ideas and never got the product or service. So this is the second phase. The third phase brings you down to the top 1 to 5%. The third phase is you actually have revenues, you actually have somebody that wants to buy the product or service that you're selling. So you moved past idea, past product or service, to revenues actually buying what you're selling. And that's the next great evolution because there's reality in the market and the only real dollars are money spent by real people to buy your product or service. It can't be a friend doing you a favor, it can't be something else. It's got to be a real customer buying a product or service. The four stage of a business, again a much smaller percentage get to here is that you're actually making profits, that you're making money. This means you're pricing your product at a level that you can make it profitable, and ideally profitable enough that you can hire and build, build and expand and have the type of team that you want to have. Finally, the fifth stage in the evolution of, of a business, the phases of a business is that you've got scale. You've got something. We scale certain things much easier to scale than others. I always marvel at people in sort of the private equity business, the, the money management business, where you could have a small number of people managing a huge amount of assets and money and then deploy it, but you don't need millions of people to do it. But can you scale the business? Is there some scalability that's not linear to the amount of people you have to add to the business? Many businesses are, many businesses are not. So again, the five phases of a business, the second thing we talk about often and again this real discussion is for founders, CEOs, entrepreneurs, is the evolution of the founder or entrepreneur. Most entrepreneurs start off as one man or woman wrecking crews, meaning they sort of do everything like the old adage about the cook, the bottle washer, etc. You're doing everything, then they move to the higher people and those people might not be better than them, but they have the founder entrepreneur to leverage themselves. The third phase of a founder is when a business really works and you've hired people that are much better than yourself. To phone all the department spots in the business. There's a great book on this. The one thing by Gary Keller where he talks about how he really grew was when he spent all his time putting the right people in place and growing the business. The nose building can accelerate the business without the founder being the limiting step, of course. Jim Collins and Good to great talks about this a great deal as well. The third concept I'll talk about which follows closely from concept two is in all of my experiences, you ultimately really need a great couple leaders, great or a great couple customers to start to really accelerate that sort of reference customers and a few great leaders start to the next level. When you get beyond the founder or the entrepreneur, even a great CEO. The worst CEO is the one man, one woman, great CEO. The great CEOs have built multiple other leaders that can move the business with or without them. So we look at that as the next concept, the next stage. The fourth concept is the great business leaders that I've worked with really know their own business. They track what works, they double down what works. Whether it's great people, great product, great service lines, great customers. You're putting a disproportionate amount of your time into your great people, your great product lines, your great customers. It's the 8020 rule constantly applied to putting your time and energy into great service lines, great customers, great people. The fifth concept we'll talk about is every company ultimately needs a bunch of really elite players, 80 plus players leading the company. But you can't lose sight of that. The vast majority of people in most businesses that make successful businesses are what I think of as A minus, B plus people, 90% people. And I've come to the conclusion that you better love your 90% people. The worst thing I see in business is a manager or leader or entrepreneur beating up on their sort of people that are great but not perfect and beating up on them around that 3 to 5% that's not being done. Great. I think this is horrendous management and I want my people really focusing on what the 90 percenters do well and loving your 90 percenters. Okay, so those are our first five business rules. The five phases of a business that wish of a founder. You need a few absolutely great leaders and then you could accelerate. Know your business really well and love your 90 percenters. Let me go to the next five concepts. The next five concepts are as follows. One, we say it's our sixth concept overall. Don't listen to the naysayers. Any business I've Ever built. I think any business that almost anybody's ever built. You, you'll take Elon Musk, who built SpaceX and, and the, the, the Tesla. Many people. I told him, you can't build an electric car company, you can't build a rocket company. He did so in me building a healthcare media business which pales in comparison to what Elon built. Many people told me, you can't do that. It's too competitive, there's too many other great players in it. And really anything you do, you're gonna have people that are naysayers. Don't listen to the naysayers. You have to learn to ignore the naysayers. The next concept, number 7 overall is what we call the Greekist rule, which is named after a great colleague that used to work with me, Len Greekus, a terrific young man at the time. He worked with me, he was the one great person that worked with me. And then he ultimately quit and left to go do something else. And the real lesson is whatever business you're building, you probably have to build a team so you're not overly reliant on one great person. And Lynn was outstanding and I was, it was horrible when he left. And we'll talk later about what we call the stomachache rule. But, but he was just great. And, and when people leave today, this is concept number 17 in this talk, we often think about how bad is the stomachache I'm getting from that person leaving? If the stomach's not very bad, they weren't very important. If the stomach ache is bad, it means they were a critical part of the team you're building and working with. But that's the Greekest role. I hope he doesn't take offense, it's meant as a comp. But he was so great. But then when he left, I didn't know what to do. The eighth rule, the Gordon Rule, you have to pay people what they're worth or more. And this came out of hiring a friend's daughter, a good friend, a great daughter. And, and she came to work for us and she was great at the time. She was desperately looking for a job and he had no job. So we paid her what at that time felt like the right price for a young journalist was decade or more ago. 30,000 to start with. This was not enough for her to move out of her parents house and really move on. And thus we coined the Gordon Rule. Even if somebody desperately needs a job, you better pay them at least what they're worth or more because you want to be able to keep them after they get started. So that's that concept. The ninth concept today is don't ever rely on your friend's advice as to something, a good idea or a good business. When people look to start a business, they will often survey 10 of their friends and 10 of their friends. Most people are confident verse and will tell you a good idea, good idea, that's a great idea. All I can tell you is that is completely meaningless. As are the naysayers. The naysayers are meaningless too. What really counts as will a customer buy your product or service or not? If they will, you got a business. If all your friends love it but they don't buy your product, you don't have a business. So don't ask your friends if it's a good idea or business. You know, you might have some, obviously some good confidence that you really talked about this stuff. But I would really not double down on asking the friends and family if good idea or business. You better talk to real customers and get out early and commercialize early. The tenth concept we'll talk about is if you're going to build something and this will tie into our 11th concept or 12th concept is you better be obsessed with building it for a longer period of time. We always use the phrase you got to dig 10 ditches before they start digging themselves. I think that's really true until you start seeing the momentum so you start seeing it really go. That's the same concept here is you better be obsessed with building it and really paying attention for a long period of time. And you can't just be at it for 10, 10 years or 10,000 hours, whatever. The rule is, you have to be paying attention as to what works and what doesn't work. Knock on 100 doors and none of them buy your product. You're probably going to make some adjustment or try and figure out where else to go with it. But you got to keep at it till you figure those things out. So it does take a long time and you got to be obsessed with building a business. Our 11th concept is a corollary that and I'll just go through concept 6 to 10 again, don't listen to the naysayers. You can't be over reliant on one great person. Although I find myself periodically, of course, net spot the Gordon rule. You better people pay people with worth even if they think they can take the job for less than that. Ninth, don't ask your friends if a good idea or a good business idea, don't do it 10 you better be obsessed with building something over a long period of time and being paying really close attention to it. The 11th concept comes out of a Ben Stein reading I'd done 100 years ago. There used to be a TV show called When Ben Stein's Money. Ben Stein was actually a brilliant person, wrote several books. One of his ideas that stuck with me is that if you want to build a great career or a great business, there's a 10 year rule. You probably got to stick with it for X amount of times. Ten years was was the year frame he used to really build a great business or build a career and be obsessed with the after. I think there's a lot of truth that I don't know the exact number, but you have to be making progress along the way too. You can't just put, be putting in the hours for 10 years and see no progress. That's no good either. The 12th concept, and we've talked about this a little bit before, the best entrepreneurs and leaders and CEOs that I know really know their business really well. Best customers, best people, best service lines and more. And then to go back to something we said early on in this talk, they're constantly doubling down on those best people, best customers, best lines and more. You know, really adhering to that 8020 rule. The 13th concept is we think always in terms of people and building companies in a thrive thrive culture. So the thing that I am most proud of in building businesses is that many of the people that I hired that grew up with me now have surpassed me in terms of what they make each year at the firm, how important they are at the firm. One of the people that joined me at Beckers Healthcare is now the CEO and president and does fabulously well. But it's this concept, building a thrive thrive culture. I'd worked 100 years ago for a boss where we used to say that $1 for him was more important than $100 for me. And that's not a good way to go. You really want to be in a spot where you're trying to build thrive thrive cultures where you're thriving and the people around you are thriving as well. And that there's an intersect between what they have to do, what the business needs, but they're thriving. Not just the leaders thriving, not just the CEOs thriving. But, but you're really building what we call a thrive thrive culture. 14th concept, and it goes back to knowing your best people is know your ride or die people. In every business you're going to have Some people that are so, so important. And it doesn't mean you can never lose them. You never want to lose them, but you better know who they are and you better treat them like that. It's almost like Michael Jordan with the Chicago Bulls. Jerry Reinstall, for a very long period of time knew that Michael was his ride or die person and couldn't live without him. Jerry Kraus, the gm at some point had a falling out with Michael, which was so stupid. But you have to know who is your ride or die people. Every business has them. Every business has ride or die customers. And you have to do everything you can to keep those people thriving side by side with you or, or, or, or above you. The 15th concept is, there's this concept on Twitter. Many people are entrepreneurs, but also holding a day job. There's this concept on Twitter that you see constantly about burning the boats that you have to go out in on what you're doing. And we're not a believer in this concept. We're a believer, yes. When you see that you can actually make it and make a living at it, you got to go out in. But at the meantime, you protect yourself and your family by maintaining your job, day job. As you figure this out, yes, at some point there's probably time to burn the boats and but it's not until you've got some economic security or some confidence that you can really make whatever you're doing work. So those are our next five concepts. The ten year rule. Know your business really well, build a thrive, thrive culture, know your ride or die people, and finally burn the boats is generally a horrible idea. The last five concepts we'll talk about today, and I love some of these, is that if you're building a business, you're going to get punched in the face. And this is a, a famous adage by somebody, but I saw it in every business I've ever built at the law firm. When I started building a practice in a serious way, you know, people started to get sideways with me. Why are you spending so much time building a practice versus just taking care of our clients? There was a time when I was, you know, building the media business and another media outlet that we're competing with, just take shots at me. There was another time building the law practice where none of the great law firm used to say, oh, Scott's good at this, but he's not really good at that. And it was the way of taking shots at me. And you have to view all those things that if you're getting punched in the face by people, it's a sign that you're making progress and actually count and that they care about what you're doing and that you're having an impact, potentially negative to their business and their opportunities. So we view that stomachache rule is really a sign that you're making progress. The next concept we talked about, and we talked about it earlier, is the stomachache rule. And we used to judge the stomachache I got or how bad it was to lose a customer or an employee or teammate based on how bad a stomachache I got. And over the years, as we built a more sustainable business, less fragile business, having a new competitive entrant, losing a key person, losing a customer had less of an impact and drove less of a stomachache than it used to. But, but we do remember over the years this concept of getting a stomachache when different things were going on. The 18th idea we'll talk about today and the third of these, this five is that at the end of the day we have this concept in any business I run with or run or am involved with that there are periods of time where it's no new ideas. Periods of time and again, in this world that we're in, where every idea is a good idea, it's almost like ayso, it's saying this seems like blasphemy to people. But at the end of the day, there are periods of time where it's so critical you're executing on what you're doing versus launching something new or testing other ideas. It's also important for people to know, yes, we want your ideas, but yes, we want you also executing your job. And there are times when executing the job is far more important than anything else. The next as well, talk about which probably resonates with lots of CEOs, founders and entrepreneurs, is that for some prolonged period of time, and it goes a little bit with this 10 year rule and obsession, there are going to be no guys nights out, no girls nights out for some prolonged period of time. I grew up in a different generation where at least, you know, trying to build the business, build practice, it wasn't those things anyways. It was really about taking care of the children, the family, and taking care of ultimately the businesses. We were growing, but for some period of time you have to commit to, you know, it doesn't mean never, but that you're really focused on building the business, building whatever you're building as a CEO, an entrepreneur or a founder, whatever it is. Finally, the last concept is one of the things I hate hearing your business is this constantly, you know, stated culture eats strategy for breakfast. And the reality is I've seen too many companies with really nice cultures that are really unsuccessful. And so I would say it's culture, drive and strategy. It's not one of the other. Again, but this is about as unpopular as a no, no ideas concept. But the reality is in business, it's culture, it's strategy, it's people, it's drive, it's a lot of things. It's not just one of the or the other. And people can say, well, what I meant by culture is it's really nice, plus we work really hard, plus we're really profitable. Yeah, yeah. That's not just cultures. But my perspective is it's not one or the other. It's not culture or strategy. It's both, quite frankly, and a lot of leadership to make things really go. In any event, those are 20 of our favorite business and leadership concepts. We hope you enjoy this as much as I enjoy these discussions. I'd love your feedback. Of course. 773-766-5322. And again, thank you to our producer Chanel Bunger who's with us today and has to listen to me endless amounts of time. I feel bad for her. Chanel, thank you so much for being with us and producing today and thank you to our listeners. Again, I'd love your feedback. Thank you very much for joining us.
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