Podcast Episode 18 with Transcription – Rem Oculee

Rem Oculee:

Welcome to the Exit Mindset Podcast. I’m Rem Oculee. 15 years ago, when I was trying to sell one of my companies, I couldn’t get what I thought was the right price for it. I realized I had things set up the wrong way, even though the company was profitable. So, I spent years researching and studying exit strategies to improve my company’s valuation. I discovered that the same process that improves valuation would improve business profitability and give me more free time. I’m here to show you what I have learned. You see, the best way to grow your business is to look at it from the perspective of someone who’s going to buy your company. Once you start thinking that way, magic happens, and you start seeing things you could not see before. But that’s not all, I also discovered the three principles that you must know to command a better price for your company. The three principles are first, the product, second, the infrastructure, and third, the conversation you have with the consumer. Once you master these three principles, you will be on your way to increasing your profits, your company valuation, and get more work-life balance. So, listen in and learn how you can do that. I will teach you through this podcast, lessons from the trenches, and we will have a dialogue with some of the greatest minds on the planet.

Do you sometimes think, “Gee, I don’t have the resources that I need to do something I need to do. That something could be a larger goal or objective.” Well, let’s break it down a little bit. I’m going to give you some ideas from the trenches, some solutions that you can apply right away, and that’s what this podcast is all about. Is just to give you those kinds of information that is very tangible, very executable, very easy to use. So, let’s break it down. The one thing you need when you’re dealing with a project is one thing called resources. And resources come in two forms, human and financial. You need both of those to be able to execute a project. So, it comes to financial resources that means you, and I know, money. It comes to human resources, it’s really simple, it’s people. In many, many cases, we are trying to tackle a project and I’ve, over the years, tried to do some of those.

And sometimes I look at a project and I go, “My God, this is too big. It requires so many, so much resources, this cannot be done.” But I find that if I step back a little bit and think about it and break it down, I find that the elements of the project can be achieved with a lot less than I thought it was initially. There’s a reason for that. There’s a tendency in humans to think that everything we need to do must be done by a massive army and a team. Why is that? Because imaginations runs it wild. So, we’re going to think, “I need X amount of people and X amount of dollars. I need this person to do this, this, that. And then I need to hire a so-and-so company and so-and-so and so, so much, so many jobs can go into it.” But I find that if you break it down, sometimes you are able to manage those resources in a better way, by being a little bit more creative.

And sometimes by breaking down the process into multiple parts, you can accomplish at least one of them, in anticipation of fulfilling the other one later on. So, that’s the other thing that I find that people have a problem with, is that understanding that a project does not necessarily have to be completed, one shot. If that project is really not needed to be fulfilled right there and then. We, as humans, tend to want to complete things. Want them now. We’re very shortsighted, and you as a businessperson, somebody running a company, you can’t fall for that temptation. You must understand that sometimes it’s better to go ahead and finish a project. Say over six months, part by part, maybe separated by a month in each interval. Versus the project being done in three weeks. I can’t tell you how many times I’ve seen people not do the project, which took three weeks. “Oh, we don’t have the time.”

Well, did you try to break it down? “No.” How long has it been since the three-week project has been sitting on the shelf? “Well, it’s been three years.” Well, wouldn’t it make sense, had you just broken it down to again, maybe six parts? You would do it in six months, and you would have been done two and a half years ago because you did part by part. By using your resources as they are now, in a smart way. Remember, using your resources intelligently doesn’t mean just finding resources at a lower cost or finding the best optimized level of usage. It also means being able to use them at intervals to accomplish a bigger project at a later date, maybe on delay. And if you accept that, you’re going to find a lot of your projects going to move. Just take a few objectives you have and decide which one is the one you want to priority…

And you’ve been holding on. And you’ve been holding on it because you simply don’t want to allocate the human and financial resources to it. And I ask you to break it down in a certain increments of time, even if you don’t do it up to a year, and just set up milestones for each part within, say a month. And within that month, finish a small part, go to the next one, go to the next one. I’ll assure you; you think you’ll finish it earlier or you’ll finish on time, and you would’ve been done if you finished it later than the year. You’re still ahead of the game because you’ve probably done it then in two to three years in or you would have forgot about it completely. I find a lot of projects in my companies move because of that, because we do that sometimes. In certain situations, you got to find the right resources that may not instill the costs…

Where you you think it would. Look, there is something called retail, and nothing wrong with that. That exists, and you could, you should be able to use it. But sometimes if you take the process and break it down, you’re gonna find different people who do it at a more cost-effective way for you, then if you just did it through somebody else. I literally have done projects that I took, that costs substantial amount of money, and for some reason or other, we have to stop the project. And when I took the project and broke it down, I found was a fraction of the cost of that particular vendor. I found that the cost was significantly less by breaking the parts and assigning them somewhere else, to different people. So, also think about that. It’s one of the principles I use, is to break the parts in a job or a project and trying to figure out who can do it at a more reasonable cost.

Remember, it’s not about getting things for less or cheaper, or this and that for no reason, just too good just to save money. In business, we all know you got to spend money. So, if your thought of doing business is to save as much money as possible, it’s a good thought. But it’s not an accurate thought, it’s not a good way to go. You got to think of being reasonable in your spending. You got to spend to be able to achieve. I’ve rarely seen companies that advanced without spending. And you always hear from somebody, some crazy idea that is, “Well, all I do is spend very little and get so much.” It happens once in a while, that’s like the lottery. Somebody can spend very little on something, gets so much leverage and massive amount of revenues from it. But typically it’s a constant game of spending money.

However, you got to protect your resources. That’s what it’s all about. And you have a responsibility to do that. And the way you do it is you spend the right amount of money from a resource perspective on the least costly resources outside your company. Because you don’t want to be in a situation where you’re overpaying for things that you shouldn’t be overpaying for. If you do that, you’re going to be able to increase your output, increase your leverage, and increase your revenues. And if you get used to that, you can build a very nice infrastructure in your company that is conducive. That gives you more freedom, gives you more profits. And also, it’s a thing that you trained your employees with, because your teams are looking for ways to get the job better at a more cost-effective way. And when they see that there is a way to do that, you’re going to find that they’re going to go and pursue more of those opportunities for you, and what that leads is their growth.

Because ultimately the more money you’re able to keep within the company, the more you’re going to be able to spend on initiatives. They’re going to create more growth for the people in the company and the company itself from a perspective of growing. So, let’s talk about a way or a strategy for you to achieve that optimal resource. The first thing you do is you set the objective. You make a decision that you’re going to do something. Essentially that’s called pulling the trigger on it. So, you pull the trigger on the objective. You say, “I am going to do this.” Then you worry about the ‘how’ afterwards. The ‘how’ comes in after you make the decision to do what you need to do. And it works this way. First, you’re going to get obstacles. Obstacles are the first element of achieving something, because there are very few things you’re going to do in a company that don’t involve obstacles.

And quite frankly, if it doesn’t involve obstacles, you’ve probably got to be worried a little bit, because that means too easy and something is wrong. Now, I’m not saying to you that you should look for obstacles. I’m just saying, if you’re doing something that is worthwhile and is going to get you somewhere and is going to take the company to a different level, most likely that’s obstacles. But don’t be deterred. So, start taking those obstacles and figure them out. Some of those obstacles of course, are going to run into the area of financial and human resources. So, most companies don’t have enough people to do everything that they want to do. And they always resort to getting somebody from the outside, sometimes outside vendors. And that’s where you got to make sure that your cost savings and the way you spend your money is appropriate.

And it’s not wasteful, because the money you spend wastefully, you cannot bring back. You know, that it’s better to spend it internally than externally. There’s another thing you gotta be cognizant of, is that you’re going to get a lot of vendors out there that are going to attempt to charge you enormous sums of money for things you can do, without spending that much on it. So, I’ve seen people take a simple output that they wanted for something. It could be graphical, it could be a creation of something, it could be a service. And they are asked enormous sums of money on, sometimes I see them pay enormous sums of money for it, just to get it. When that thing can be achieved with truly a fraction of what they were asked to pay. And in my experience over the years, I’ve found, there’s only two types of people that do that.

It’s either people that don’t know any better, they don’t know that they could get vendors that provide them with the services at a better cost. The only other people that I’ve seen do that is large companies, company executives in huge multi-billion-dollar corporations. You know, these kinds of companies that where money does not necessarily have as much accountability when it comes to spending as you, somebody who’s probably building a company. Whether from the ground up or whether it’s a level where it’s a medium size a company or, or even a large company, I mean, some large companies won’t put up with it. I’ve seen multi-billion-dollar corporations that would not spend money in the wrong way, no matter what. But I’ve seen some that do. Money is easy to just say, “Hey, let’s just throw it out there.” So, that’s one thing you need to realize is that lot of these things that are costly, sometimes they’re not necessarily that costly.

If you break it down and use vendors that will do that particular part for you, next they’ll do another part for you. And if you aggregate the work, you’re going to find it’s going to be a lot more cost-effective for yourself. One area you can take a lesson from is the area, it’s called lean manufacturing and lean manufacturing works this way. It used to be in the old days that people used to buy bulk and massive warehouses and bring, let’s say, car parts. And they store them, they store the wheels, they store the engines, they store the spark plugs. Massive amount of warehouses for each, and they go bring them from the warehouse and bring them to the factory floor. Well, at some point, Toyota said, “Let’s not do that. Why don’t we just go out and bring everything just in time?” So, basically the order is to bring the parts right at the point where they need it.

So, what do they do here? They essentially reduce their costs significantly by using a tweak, which is thinking about how they could use their vendors in a way that makes more sense. Previously, they had to order, make a big order for the vendor and the vendor will ship it to them and they store it in those warehouses, and that’s all costly. Whereas by changing their approach with a vendor, by asking them to ship only the amounts they need within a certain amount of time, they managed to create what’s called lean production. Making Toyota one of the biggest companies in the world, when it comes to car manufacturing. But whatever can be done, just streamline the cost in terms of resources, from a perspective of paying for services or spending on things that you’re going to spend on. Look at that and achieve a better business model that is looked at as being lean and efficient, which would reflect on your balance sheets and your PNLs.

So, to tie all this together is that the big point here is that your exit infrastructure relies heavily on your processes and the way you achieve your objectives as well. If the company is designed where human resource, your capital, is managed in an inappropriate way, in a way that is efficient and lean and productive. You’re going to have a better business model for yourself and has a higher valuation that you’re looking for. Remember, take action, because action is everything. Use it or lose it. I’ll see you on the next podcast. If you have any questions for me, feel free to email me at askrem@exitmindset.com.

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