EP. 109 | Conquering Business Growth Objectives with John St. Pierre

Today's show is sponsored by Money Insights and their investment optimizer strategy. In my book, I share how I use the same strategy starting over a decade ago to invest my money in two places at one time. This strategy has been used by the wealthiest for generations for estate planning, minimizing taxes, preserving wealth and increasing stability for their investments. Now you can do the same thing. In addition, you can build a plan to build an emergency fund, pay for college fund, a business plan for retirement plan, and ultimately optimize your total financial picture. To find out more information, check us out at the banking link at nextlevelincome. Com. On today's show, we have John St. Pierre. John is co host of the Entrepreneurs United podcast which I was fortunate enough to be on here recently. His passion and mission is to help entrepreneurs grow, gain access to capital and get liquidity for their businesses without selling their souls and losing control of their business. John is today going to share with you some of his secrets for how to make your business more profitable, gain more freedom, and ultimately have true freedom while being an entrepreneur.

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John, welcome to the show.

Great, thanks for having me, Chris.

Absolutely. We were talking about kicking off the summer here, John. I think, you know, a lot of people kind of slow down in terms of business. So I want to give some listeners here some ideas that can help them kind of get excited for the second half of the year as we go into it. But before we do that, I would love for you to share with the audience a little bit more about your background, John, your history specifically as an entrepreneur.

Yeah, absolutely. Well, I think Chris, you and I share a lot in common. We had you on the Entrepreneurs United podcast hearing a little bit about your story. So I may feel a little bit, because I know a little bit more about your story now. But similar to you grew up very entrepreneurial, always trying to do something, whether it be cut lawns or, you know, a fundraiser is to sell chocolate bars. I'd go to the sell the most chocolate bars. Right. And always wanted to do something entrepreneurial. I can remember the first venture I really did was in college buying pepper sprays because there was an incident on campus with a female bought some pepper sprays and went around all the dorms and sold pepper sprays to them to make sure they were well protected and smart. Started a small business that way.

Randy, did you ever get sprayed with pepper spray when you were trying to sell the pepper spray?

They wanted to test it on me, but it didn't work. But you know, just try to do everything to be an entrepreneur and learn how to run a business. And the biggest key that was very fortunate about Chris. I'm originally from Canada and although I was going to school in the US the only way for me to get a summer job in the U.S. i didn't really have a work visa, I had a student visa was to do an internship in my field of study, which I was studying accounting. And that wasn't really exciting to me as an entrepreneur to go work in a CPA's office for the summertime. Saw a poster in my dorm room to run my own painting company. And that was with college pro painters. And one of the loopholes is if you run your own business, you don't on payroll, therefore you don't need a work visa. So I was able to run my own painting company and hire all my college friends as painters and run a painting business as opposed to go work as an accounting internship. And that really taught. That was really like an MBA for me and how to run a business. Cause I was only not only in charge of marketing and estimating and sales, but I had to manage crews and I had to manage payroll and really learn the cash flow cycles and a whole bunch of other items. So I really kicked off in terms of the real entrepreneurial world but grew from there. Was with the franchising company for a couple years helping teach college students how to run their painting company, which was a good experience for me. It was with a dot com company that was venture funded, that raised a lot of money, but then went bust in the dot com boom. So that was a very rude awakening for me in terms of feeling like I had life figured out and entrepreneurialism figured out and then losing everything in the full swoop. And then I was always very entrepreneurial. Businesses from scratch and learning how to maximize success through a small business.

That's awesome. Yeah, I know. We talked about my background with Cutco in college and really I think it's something that really every college student should have the experience and the exposure to. It's so wonderful. And that's something we try to teach our kids, which we talked about as well. So when did you really punch through John and you know, launch your own business? What was that what was that, you know, that breakthrough point for you?

Well, I had a, you know, I think. Chris, any and to your point on kids, first off? Yeah, absolutely. I think every kid in college should run their own business and learn really what that really takes. I'm a big proponent of that. But for myself personally, you know, had a lot of starts and stops. Right. So started that business or was part of the dot com area that built really big, really fast and lost everything again. I was 24 with all these stock options, thinking I had life figured out. And then I found myself riding in my car from Beaverton, Oregon back to Chicago, listening to Anthony Robbins. Personal power, trying to get myself motivated again. So really that up and that down. And then in 2003, post that time, started a couple of businesses then completely unrelated to each other, but started two businesses. And the net net of those, Chris, is they both grew, but you had to go through a recession. Okay, now you have to take two steps back and try and figure it out again. In 2008 and in 2012 was very difficult. And then so on and so forth. Both companies grew pretty fast, but I lost one again. Making some critical mistakes and failures that I think a lot of small businesses get caught in when they try and grow too fast. And so a lot of lessons in my life have been through failure, but then also taking those failures and say, okay, well I'm not going to do that again. And learning from those failures to try and maximize the benefits of really owning a small business.

Yeah, so a couple questions there. So that.combusiness, what was it? What did you guys focus on?

So yeah, the Internet business was pretty fascinating. It was called handymanonline.com and was Chris, if you needed your house painted or your kitchen redone, you'd go onto this website and say I need these contractors. And we would send you a pre screen contractors to give you estimates. But when that company went defunct because we were supposed to get another round of venture funding that never came, the assets of that company ended up getting sold to a company called ServiceMagic. ServiceMagic became HomeAdvisor.com HomeAdvisor.com is now Angie's.

Oh really?

The beginning of that company, the late 90s was handymanline.com.

I was going to say it sounds like Angie's List and there you go.

That's it. That's it. Now Angie's ended up buying HomeAdvisor or something like that. But yeah, that was the exact premise of that business before. Well, before Angie's was ever Created, but it was a little too early for its time. But it was also, I was trying to grow a little too fast in the dot com bubble.

Yeah, I mean, that's such an important lesson. I was just on another podcast. We were talking about business cycles and how the business cycles, the economic cycles, real estate cycles. And a lot of times we look back at recessions, John, and the big major players that come out of the recessions are the leaders in the next cycle. So, I mean, talking about Amazon and Facebook and the Fangs, right? Netflix, Google, they really punched through and survived in the recession. You mentioned you learned some big lessons during the Great Recession. What were some of those?

Wow, way too many to mention here. But I'll call out the big ones, right? One was perseverance as an entrepreneur and how critical that is. And certainly I ended up getting name as an entrepreneur way too often that I was too frugal or too cheap because I wouldn't spend on luxurious conference room tables or things like that. But when you get hit with an economic recession, it all comes down to cash flow. It all comes down to are you investing your money in the right spot? Do you have a luxurious office space or do you have a really good team that can persevere through the fires? And I can distinctly remember sleepless nights because we had a company go bankrupt that owed us a quarter million dollars and we weren't a big enough business to swallow that. So how am I going to make payroll on Friday? And I stopped paying myself and I started really getting in the war room every day trying to crunch through the business. That perseverance lesson of when you go through a tough time getting through it, right? As you know, the statistics of businesses that survive five years or 10 years, there's statistics around that that are pretty dim. A lot of it is really setting your business up financially to be able to persevere. And the point you made right there about recession is critical because if you're able to have a strong balance sheet going into a recession, and by the way, don't know when a recession's coming. So it's basically that means have a strong balance sheet at all times, right? And understanding what a balance sheet is to way too many business owners at the P and L, and they're looking at the P and L go, I'm profitable. But then they look at their net operating cash and they're like, oh, that doesn't look too pretty. So maintaining a strong balance sheet was a critical lesson because it's with a strong balance sheet that When a recession happens, you're able to invest in the right areas to come out of the recession as a leader in your marketplace. Like you just about. So that was a massive lesson that I learned that unfortunately I wasn't able to do that first time because I was, I was trying to survive. But I learned that lesson a couple times over in the future.

Beyond that, yeah, I think it's so important and it's something that we can use in our own personal lives, whether we're talking about real estate or investments or investing. As a business owner, if you have the cash stores when there is a recession, you can get deep discounts on whether it's buying a competitor or buying a piece of real estate or whatever it might be. So, John, past 20 years here, you've learned a lot of lessons. What do you do today? What is your business focus on?

Yeah, so I have a passion now, Chris, and my passion is working with entrepreneurs and executives, coaching primarily. Right. And making sure that they don't make the same mistakes I made, but also learn from some of the successes on how to successfully grow a company, how to get to capital without selling your soul and losing equity in your company. But also the main piece which I think is critical is how do you get liquidity out of your business? If you're a small business, you have a lifestyle business and you're growing it, how do you ultimately get cash out of your business? Because you need to have a strong balance sheet. If you take money out of your business all the time, your balance sheet's not going to be so strong, get liquidity in your business. So. And all those are very important, Chris, as you know, because I'm a big proponent of next level income. Your show and what you talk about, which is diversifying your interest in other areas, whether it be real estate or other areas to invest in. But I find that a lot of small businesses are stuck. They're in this growth paradigm running their lifestyle business and they're not really sure what to do because if they hire more people, they're going to make less money. But if they don't hire more people, they're not going to grow. And if they don't grow, they can't extract money out of their balance sheet to invest in other areas. So they're really not able to make life changing money through their business. They earn themselves a job, they break out of that so they can go diversify their interests in other areas is a key component that I help entrepreneurs with.

No, I love it and I love how we were talking before the show and you say, hey, I help entrepreneurs make, keep, and ultimately grow their businesses with money. How does your formula work then?

Yeah, well, I think first off is make sure you don't lose your business. That's a great first step and I think that's really important. Right. So if you're talking to individuals who are looking to, they have a job somewhere at a company and they're looking to earn additional income by making, keeping and growing their income through the strategies that you talk about. Chris, that's an area that I subscribe to your channel to understand how I should do that more. Where I've developed learning and expertise, failures and successes is small business entrepreneurs and how they can unlock this entrepreneurial dilemma. They find themselves in. 96% of businesses are lifestyle businesses. They have a nice business.

96, 96%, 96%.

Only 4% ever break out to create real strong equity and growth in their companies. So these businesses are kind of stuck. Vicious loop. One also can relate it to maybe the growth paradox or the messy middle. There's a lot of different acronyms or books that we read over time talk about you try and grow, but growth brings more people, brings more salaries, brings more problems, brings more HR issues. And then you kind of get yourself in this vicious loop that you can't really get out of. Sometimes your company grows, but your income doesn't. Different areas like that. So what I try and do is work with entrepreneurs on their businesses and try and work with them to make sure that they don't give up or lose equity. They don't try and go raise money unnecessarily like I did and lose control of their company and be the first one fired out of their own business, things like that. So that's really where the core messages and I have a few different strategies I work with them on that we could talk about. The key essence of it is how can entrepreneurs grow their businesses, get access to capital, and then ultimately get good liquidity for their business so they can invest in other areas?

No, I love that. Is there a specific size business that you like? It's really a sweet spot for you, like 1, 5, 10, 100 employees?

Yeah. So I think I work with actually all three of those combinations. I think the sweet spot is really when they're at not at the infancy, startup phase of their business, but when they're in their business maybe 10 plus years, they're making good income, they're paying themselves very well, but they're having a hard time unblocking so maybe they're stuck in a sub $10 million category and they're trying to get to 20, but that's daunting. They need systems, they need people, they need cash, they need, they maybe they think they need to go get an investor that so they go sell equity in their business to go do that. You know, things like that. So, so to me it's really at that area where they're trying to break through to be a growth business from a lifestyle business. And not everybody needs to do that. But a lot of people want to grow from a lifestyle to a growth business, but a lot of times they can get really hurt in that area.

Yeah, no, that makes sense. And you know, when you talk about unlocking no capital, you're a small business owner, I mean, how can you do that without selling stock? How is that possible?

Yeah, well, I think a lot of people sometimes misunderstand when I say unlock capital that there isn't capital already in your business. A lot of times when we talk about capital, we think about going to raise money from an outside person to put money in my business, Chris, the amount of time I've done this, so this is a failure on me as well that my first thought process is well, I need to go get some investors because I need some more cash, I need some more capital when my working capital is out of Jack.

Right.

My AR and my APs aren't fine tuned. Maybe I'm overspending. Maybe I have a few people on my payroll that have just been around for a while. So I don't have the heart to make a change when there's that good book. What got you here won't get you there. Maybe I'm not frugal enough, my spending. Maybe I'm even paying myself a little bit too much money. You talk about something a lot which is try and save 50% of everything you make. And one way to do that is to earn more. But one way to do that is to be a little wiser in how you're growing your business. I mean, way too many companies that look to go raise capital aren't even making 15 points to the bottom line of their own business. They're overinflated, they're spending too much money in their company, they're not consuming enough, sorry, they're not managing their working capital properly. But then they feel they need to go get some outside money to grow and so what? I work with a lot of companies. How do you fine tune your business, which is really a big step and this is your financial systems, your processes, your controls to make sure that before you go get money from somebody else, let's make sure we extract all the money that's in your balance sheet right now. And how do we maximize that? Build a strong balance sheet strength. So maybe you just need a bank loan to go do what you're going to go do. Because I think the number one key is retain your equity. Equity is one thing you give away. You can never get back. Very seldomly get back.

That's a great point. Yeah. Watch your overhead, right? Make sure your overhead is reasonable. Make sure you're keeping as much money as possible. What are some of your favorite growth strategies in small businesses, John?

Yeah, well, I guess to just touch on that, just one last second plays into it, is you can't invest as an individual if you don't have money to invest. And that's why you say save 50% of everything you make. Well, as a small business, how can you invest for growth if you don't have cash? Cash is king and queen. So part of being able to grow is have the cash to be able to do so. And so what happens with a lot of businesses, they can't invest in marketing, so they invest in marketing their US Money, or they can't do this or that. They don't hire top sales reps because if they hire that top sales rep, they're gonna have to pay them over six figures. They can't afford to pay someone over six figures. So they get in this situation where because of their lack of financial excellence and how tight they run their operation, they can't reinvest in their product. Once you do have that, though, the opportunity to invest in the proper marketing, digital marketing strategies, especially right now, right. To stay focused in what you do. This is another growth strategy. We talk a lot about it. You know, way too many entrepreneurs, this guy included, shiny object syndrome. I'm going to go this way, I'm going to go that way. I only sell this widget. I'm going to start making the widget because I might as well manufacture it if I'm going to sell it. And then you start going all down this rabbit hole of being way too broadly focused as opposed to very narrowly focusing on what you do and how you can be the best in your space. The riches are in the niches, right? So we focus, we focus on the marketing, we focus on the sales and the operational excellence to come along with it. But at the end of the day, what are we trying to grow? We're Trying to grow the net income and value of that company. And where I got caught way too many times, Chris was growing for the sake of growing. Yeah, we're 10 million and now we're 50 million. We're not making any more money than we were 10 million. Why do we just do that?

Yeah, you got to know where you're going and why. And I think that's so important, especially coming from the corporate world. You get caught up in the quarterly earnings. What's your growth number? And it's really a vicious cycle when you look at it and you say, well, what are we doing on the sales side of things? What happens is you grow, increase your business 50%, 100% and they cut your territory. They say, great job, we're going to cut your territory in half. And I think the experience that a lot of high level sales reps have, John, is very similar to entrepreneurs where they feel trapped. You know, they grow, they've done a phenomenal job. But as you were talking about earlier, entrepreneurs have basically created a job for themselves and they're just working, working, working. How do you work with entrepreneurs to help them really create true freedom in their lives and sometimes probably freedom from their businesses that they've become so intertwined with.

Love it. Thank you for asking that question. That plays right exactly into where I'd like to take this next conversation is you said they need to have a plan. The biggest thing that I do when I work with entrepreneurs to get kicked off right off the bat is we create a three, five year strategic plan. It's a one page document. Nothing that I created. Rockefeller Habits has it, the Growth Institute has it. It's a one pager of what are you doing and why. Yeah, why are you running this business? Well, I want to create financial freedom for me and my family. And you know, okay, well then what's your five year plan? And going back to that freedom question is a very important point. Right. The reason why someone starts this entrepreneurial dream, this entrepreneurial venture is not so they can work 80 to 100 hours a week, not be able to go on vacation, not see their kids, not make more money than a real job would have gotten them. That doesn't help them at all. So how do they actually get to that freedom? One of the biggest things that I try and work with as entrepreneurs is how do you become the chairman of your own business? You're working in business, not on your business. Become the chairman of your company. Who's going to be the CEO in three to five years of this business, where are they and how are we developing the team? You that is so bought into your enterprise that they're going to be here for a long time. The culture's great. They're energized. You, you know, more and more as we go through in today's world, demographics of today's world, millennials and the generations after them, they want to be a part of something. They want to feel like they're growing with the company. So how do you grow your business with your team without necessarily selling equity or giving away equity unnecessarily, but giving them some sort of value of ownership in it financially as well? But put yourself in a position, Chris, where imagine three to five years from now, you do what you need to do, you make the hard decisions, you save a lot of money, you make your balance sheet really robust and strong, you grow your company, you get to 15 points plus of margin, but now you replace yourself and you have someone else be the CEO of your company and you can be the chairman, coaching them. So you can diversify your interests and other investment opportunities and or now have a business where you're not working 80 to 100 hours a week. That's growing with the formula you put in place. That's the magic sauce. How to get there is very difficult. That's how you do it.

No, I love it. And you know, I love real estate. Obviously, John, it's, it's one of the top two ways that the ultra rich grow their fortunes. But the number one way is through business, through growing a business. And I love, I love how you're helping entrepreneurs do that. If, if people are listening, they want to learn more about how to work with you, John, you know some of the secrets and you know some of the details about what you do. What's the best way to get in touch with you?

Yeah, absolutely. So, as we mentioned earlier, I co host with my good friend Rich Hoffman, the Entrepreneurs United podcast, which we had you on and certainly would recommend your episode for people to come listen to As a. But EntrepreneursUnited Us is our website and certainly you can reach out to us there and really, again, love working with entrepreneurs. It's our path to our why is we want to help entrepreneurs really conquer their growth objectives for themselves of what they want to be able to achieve. And hopefully they'll be able to generate that next level income with you as well in other areas.

Absolutely. Well, listen, we're a huge proponent of coaching on the show. You need a plan, you need the resources, and you ultimately need accountability. If you're a small business owner, if you're even a large business owner and you're looking for somebody to help you not only grow your business but create liquidity so you can ultimately create that freedom for yourself. Reach out to John and his company.

Thanks Chris.

Absolutely John. Thanks for being on the show and sharing all this information with our audience today. Hey Chris, here again. I hope you found this episode valuable. Now I have one more thing to gift you. We have a page for my coaching clients where you can get a free copy of my book as well as much more from previous guests on the show. Just check out nextlevelincome.com coaching to get a free copy of my book, audiobook and much more. I'll send you a copy of my book and cover all the shipping costs as a thank you for listening to the podcast. Also please like share and take just 90 seconds to give us a rating on Apple Podcasts.