Rebuilding Systems Without Burning the House Down

Welcome back to another episode of Bought the Biz. Today, Christi and I are going to talk all about fixing broken systems. When you step in as the leader of your new company, there are going to be a lot of things on your plate and a lot of opportunities for things to change. How do you prioritize, think through what to change? How do you look at systems at a level of detail to give you that kind of data? And what were the big things that we went through? If you're a new operator jumping in and you want to learn how we made decisions that didn't break our business, you're going to want to listen in. Bought the Biz is a podcast for ETA entrepreneurs who've gone from searching for a business to actually running one. It tells the real story of what happens after the deal closes. The day-to-day operational, emotional, strategic, and leadership challenges that just don't show up in the highlight reels.

The show is story-driven and practical, sharing real experiences from operators along with clear, actionable takeaways you can use in your own business today.

I'm Garth Fossano.

I'm Christi Loucks. Welcome to Bought the Biz.

All right, in this episode today, we're diving all into fixing broken systems. You step in as a new leader of this small business, and some things are probably working exactly the way you want, but you're also going to find some things that just aren't. How quickly do you make these changes? What do you decide to change? And how does this fit in with your long-term plans versus the short-term needs? There are so many things to consider. We're going to talk through some of the choices, decisions, and things we thought about in our journey. So, uh, Christi, any, any opening thoughts on this one too? Is there anything that you immediately changed maybe, or, or knew immediately that you were going to change?

Just ripped it all out. Um, gosh, I think when— so the business that I acquired was a services business. And those services were entirely dependent on our tech stack. Uh, that included like databases, email sending infrastructure, dashboards and reporting tech, CRM, like just pretty robust, uh, I would say tech setup for a small business. And My first order of operations was to decide what is the urgent and— there's like a quadrant, do you know what I'm talking about? Urgent, necessary. Yeah, like you like plug things into a quadrant and now I'm totally butchering it. But basically it's like, what do you need to do now versus what can be done later but still needs to get done versus what's deprioritized. So I kind of went in and took a look at the full tech stack and tried to sort of rank where we needed to adjust things right away without breaking anything or completely overhauling the processes that we had in place versus what could be done later. So like immediate triage. Yeah.

And was that because there were like burning issues that maybe were hidden in the due diligence process or that was just sort of the course of that business that things continually needed to be updated and evolved?

Yeah, no burning issues that like weren't accurately represented in the diligence process. I think in the lead generation sales and marketing space, it's just constant, uh, change and tech evolves so quickly. What was really good one quarter is now not as good the second quarter. And so you just have to kind of keep up with the evolution of those platforms and those data sets and all of that. So I, when I came in, I immediately added more databases because we were doing a lot of like lead list pulling. We needed contact information, so we diversified a bit in terms of our data sets. Um, that was kind of step number one because I knew that wouldn't break anything if it was just going to be value-add and we could compare and contrast the data and be able to get rid of another one if we found that one was higher quality. So kind of low stakes in that sense. Um, the big one that I saw immediately that I knew needed to change in the long run was, uh, are you familiar with Zoho?

Yes.

Platform Zoho. Have you used it?

I have not used it, but I know what it is.

Okay. It's like, for anyone who hasn't, it's a little bit of a Frankenstein, kind of like a Salesforce where it's just a lot of different modules like patchworked together. And the modules do talk to each other, but it's a little bit clunky. Some are really good, some are not as good. Like, it's a little complicated. It has its own coding language. Like, you can't just go in there with HTML or, you know, CSS, like whatever. You have to use What was it called? I can't— Deluge. Deluge is what it was called.

Never heard of that one.

Yep, you don't know it. Nobody does. Um, and much of the business was built within those modules. And for a small business, I think for a while it was really good just because it was relatively low cost to have a lot of functionality, but there was just so much work and like time that went into managing all of the talking to each other and the coding that it was a little bit of a beast. So, I saw that and while I knew it was working in the moment, I was like, oh no, we can't continue here.

You know what's really interesting is we had Salesforce and when I came in, I was like, wow, I've never seen a Salesforce configuration like this before. And I wanted to change it and ultimately never really did. And I, that one is one that I took some time on. I was like, wow, there is actually a really good reason why this looks the way it does. And it is not like anything I've ever seen. And it is like, I brought in a couple of consultants to do a little like review of it. And they're like, this is insane. You have to change this, this, and this. And I reviewed that with some of our more tenured teammates here. And they were like, if you change that, everything is not going to work as well as it does today. Like, this is why it works. And so that was very interesting for me.

And you never changed it?

And we did not change that. We are changing it now. Yeah, we're in the process of changing it now, but we didn't change it in that sort of first stage of the company.

Yeah, I mean, I think that's wise though. Like, even if it looks a little scary and crazy and you think to yourself, this is not a best practice, I know that, right? There's so much that's like piecemealed together. In— I mean, in a lot of companies, but I think small business especially, that you have to kind of figure out which gear turns another gear before you start ripping everything out.

Exactly. So how did you know that that would be a safe one, and did you actually rip it out?

I didn't, I didn't rip it out. Um, now with the businesses that I'm running today, I have taken an entirely different approach, and this is what I would have done with Zoho, but I am really starting from no platform and just saying, what can we automate and build from a, I don't know, a neutral standpoint where I'm not bound by the limitations of any sort of platform? I've got an engineer automation person that's working on this. What he has built in 4 weeks is phenomenal. And it is better than any dashboard or data repository that Zoho would've ever been able to do. So like I never got there with the Zoho platform itself and like the processes we were running, but that was, I mean, hindsight 2020, like that was a really good approach for me to take was like, let's just strip this down and build from the ground up and see what happens.

Yep.

I don't know. That was my—

needs to tackle their CRM within the first 3 years of owning a new business because hopefully you have a CRM, but hopefully you don't need to do major changes to it as, as both of us did as sort of like a service provider.

We had 2 CRMs.

Oh, that's, that's even more confusing.

Yeah, we had one for our own sales cycle. And our own prospects. And then we had one to manage all of the prospects that we were reaching out to on behalf of our clients. But even within that one CRM, we had, I don't know, 30 clients to manage. So it was, I mean, it was set up like as best as possible when I kind of inherited it, but it was still just My eyes went cross-eyed every time I went in there.

Yeah, I think I know what you mean. Yeah, we have, we have over a million households in ours from doing sort of that service that you just described, like selling on behalf of our customers. So yeah, we have a lot of households in that database across the United States, which is pretty wild. Yeah.

Yeah. But one thing you said actually that I think is worth chatting about is you know, your team came to you and said, you're going to destroy this if you start changing fields and like processes. And I think that that's a really important factor is like people are familiar with existing processes and they know how it's all connected. So there's a like team morale component, even though it's just tech or it's just a platform that you have to consider.

Yeah. I think, um, I think they were right and they were wrong, uh, in both ways. Like, I think that for the stage that the business was at, it was during that period, it was the right move to listen to them and to not make those changes. But at some point, you do have to decide, like, what the long-term vision is. And that's the transformation we're going through right now as we're, you know, getting rid of that CRM and building our own effectively. Um, and you know, yeah, that is disruptive for people who have been used to that process, but ultimately that this is the pathway that fits in with that long-term vision too. So, yeah, there's, but I think maybe the lesson is to socialize it and check in a little bit before you make a change that is going to have a big impact in your operations. What about, uh, I can think of a couple changes that, you know, when I first stepped in that I was thinking about was org structure. Reporting and some of the processes in the company. Um, and I think I've talked about this one a couple times, so I don't want to spend a ton of time on it, but the org structure was incredibly flat. Pretty much everyone was in COGS. No one was in sort of like SG&A, and trying to carve out more defined roles for people was something I wanted to tackle. Uh, I would say in sort of like probably the first 6 months, I started probably a little bit too soon around day 45. I think I would probably wait maybe day 90 for folks. Um, if you don't know that story, listen to some of the other episodes we've published. Um, I think reporting was really important to me. Just the way our business operated was, you know, we had long-term contracts with our clients, so we had revenue coming in every month from those, but it was variable, and so we didn't really know how much, and there was no forward-looking visibility into that. Sort of, I think that the prior owner was just like, it is what it is, you know, I don't have a PG, it doesn't really matter. Um, but to me that mattered a lot more. And so I built a bunch of reporting to give me a, you know, further outlook into how the business was performing so that I could align staffing and payroll and all that kind of stuff with the incoming revenue. And then processes, uh, this one probably was more of a medium term, but, you know, I knew a couple things that I wanted to change. So around the third month, uh, after I joined was, um, when we would do a typical hiring class, and I thought that the prior hiring process was crazy. It was incredibly manual, super onerous, and I was like, this is insane, we can automate this. And I gotta say, the manual process was way better. Really?

How so?

The, um, the, the, the manual process was like, hey, you know, call people, remind them that they've got this interview at this time, that they need to be at a computer, not on their phone. Give them some tips about etiquette before they do their final round with Garth or something like that. And we moved to a more like workflow-driven system. And it automated all of those steps and like people didn't show up, people weren't prepared, people were on a cell phone, not on a, you know, and so like, I think for the, the, you know, group we were targeting, that other process did work pretty well. And so that was one of those moments where I was like, oh, that's interesting.

You know, shouldn't have touched that.

Shouldn't have touched that. I, we, we now have a, an HR professional who knows how to build those things better as well. And. he does a fantastic job with that. So I think it also might've been a little bit me, um, and, and not just that, that process, but, you know, I would sort of encourage people to think through like the way things, things have evolved that way for a reason. And there could be good reasons and there could be bad reasons. And, you know, your corporate training may not give you all the information you need to make the right decision for that moment.

To what extent do you feel you came in with your own bias about, let's call it, best practices or how things should run?

Uh, yeah, um, wow, that is a great question. Thinking back, you know, I had some pretty deep experience in call center telephony, CRMs— that had been the world I had been in for quite some time— and account management, customer service, all those types of things. And as I got in here, I Really quickly thought, wow, a couple of these things are totally crazy. I cannot believe that it works this way. I can't believe it works this way. I can't believe it also works this well in this way. Um, and I really did want to change a couple of those things, but I did sit back and waited. Um, and they would have been really difficult to change, I think. And to just make it more specific is like for some of our, for our customer segment, all of the emails go into this one email. They get their leads in there, they ask us questions in there, their customers email us in there, and it's like one email inbox, or it was. And we have, you know, at least 2 to 3 people, maybe up to 5, in that inbox every day of the week, 7 days a week, working this sort of like triaging this list of stuff to do. Um, obviously there are automations triggering off of that as well. But I was like, this is crazy. Like, there's a ticketing system for a reason. Like, this isn't rocket science. But, um, it was just because of some of the other structural technology configurations that was the best way to do it at that time. Um, and we've definitely changed that now, but it stayed that way for probably about 2 years. And that is something you've— I would have never seen in my sort of corporate career.

Yeah, yeah. I asked the question because I think— I know I'm a bit guilty of it, and I think it's just an easy trap to fall into. But a lot of us that are acquiring these businesses, like, we've got MBAs from fancy schools and we've been in the working world and we have these preconceived ideas of what good looks like. And then you step into a small business and you're like, ugh, this is what you've been doing? Like, this is horrible. But But to your point, like you were surprised at how well it worked in the way it was set up. Yep. And there's something to be said for that. Yeah.

But I do think like, I mean, this is the cha— I mean, this is the hard part is, you know, it could work so much better too.

Totally.

And you're, you're in this, you know, for us, we're operating 7 days a week. So just to like make a change, there is no downtime. So there like, you can't like take things down and turn them back on. And there isn't the right sort of like strategic planning from the other side to sort of coordinate those kinds of changes. And so that's really, really hard as a small business without, you know, spending $2 million on like a Deloitte project, which still might go off the rails.

Yeah, exactly. One thing I just thought of that we— that I did keep the same operationally that I think was just a really good decision. So when I came in, the business was running on EOS, which is Entrepreneurial Operating System, um, for those who don't know. And, uh, I kept that going because I thought it was just a really good discipline and it was good structure. Everyone was used to it. We, you know, I took a few liberties on the operating system itself and kind of tweaked things that I thought made a little bit more sense for where we were, the team we had, that kind of stuff. But overall, I kept it 90% intact, and I was really glad that I did that.

I mean, that was on my list of things to do at some point, and then we did the sort of the business transformation into a technology company, brought in an executive team, and so did not do that ultimately. Probably would still benefit us now, but um, they prioritize bringing in people that already know OKRs and things like that. Yeah, and tracking. But I did try it with my team, like, goaling, tracking. We did get into a quarterly goal process and things like that. Um, it did help a little bit, but it wasn't the full Traction EOS model.

Yeah, I like it. I mean, I think if you, if you need an operating, like, discipline and Truthfully, you don't want to think that hard about it. It's a good, like, system to just drop in and you can get implementers or people who have done it and they can kind of help you set it up and then they just sort of check in. So I mean, I really liked it. Yeah, I think I would recommend it.

If I had done it, I'm sure I would recommend it.

If I had gotten there.

I think that's actually a really interesting question though. Like, what things did you think Like, what did you not change as well that maybe surprised you?

Oh, I, I, I've talked about this a little bit. I think maybe on two episodes ago, I didn't move fast enough to change certain things that needed to be changed because I didn't know enough about, uh, we'll say like the industry or the technology to know to change it faster. So to get a little bit more specific, um, cold email. So sending, you know, outbound email on behalf of clients is a big black box. There's spam filters. There's a lot of factors that go into whether or not your email to a stranger lands in their inbox or lands in the spam folder. Microsoft and Google, main email service providers, like to clamp down on these anti-spam efforts and squeeze the industry to weed out all the really bad senders. So what that means is like, all of a sudden, the system that you had in place to skirt the spam folder no longer works. But to diagnose that, it's really difficult because it's, there's a lot of unknowns. I needed to change some of our sending email sending platforms and some of our deliverability infrastructure way before I did. We were only using Microsoft inboxes for all of our outbound. I should've diversified that. I should've had Google and Microsoft inboxes. I should've done research on the backend technicality of these sending platforms to say, who has private IP pools? Whose warmup pools are best quality? I should've done all that sooner, or I wouldn't have hit the challenges that I did hit.

You know, it's, it's funny that you mentioned that because we had a client group that changed. We were running an email newsletter on behalf of our clients. So every month we were sending out this monthly newsletter on behalf of our clients that their franchisor would write, and it was going out to about like 80,000 to 100,000 people a month, which is an amazing distribution to have of like warm leads who were interested, prior customers, keeping them in the loop. And they changed our email domain that we were sending that from. And I don't know as much as you know about this, but it basically— and then they stopped producing. They're like, how can we— this is too many. They said something like that, how, like, we're sending it to too many people. So they stopped producing it or something. And They just lost all this communication with their customer. First, the deliverability went down, and then there was no news. It was just like crazy decision-making. I could not believe it. Um, and they never understood exactly what you just said, all the importance of these, like, warming up these domains and things like that. So I think that's a huge, huge one. Very similar— this is like maybe too much of a tech dive, but I think it's so related to our business. And on the sales and marketing side, it's so important for any ETA entrepreneur or any business. But so many of our clients in my transition, and as they became more aware of it, like, they really wanted to make sure that the processes were not changing at all. They're like, we really want it all to be the same. And like, you know, I've, I've found it, it's really hard to balance that desire with actually what's best in class. And I think that that's, uh, one of the hard things for some of these operators to realize is that in sales and marketing, you have to be continually evolving. And if you don't, you know, you're, you're going to be in hot water. And we can completely see that today with clients that have not evolved their go-to-market motion, like their offers, their pricing, their packaging, their websites, their landing pages, their lead forms, all that kind of stuff, are getting completely smoked by best-in-class folks that have the data and can continually evolve those. So that was actually a really interesting thing that I was trying to balance because I was trying to encourage more change in our business model for that, but was really some of our core client base didn't want change. And that I think was sort of unfortunate for them.

That's what I mean. But that's why being stepping into these businesses is so hard because you have to be a change management expert and an operations expert and you have to be up to speed on automations and AI and the IT world and like platform technology. There's just, there is a lot that you have to step into when we're even talking about systems and processes.

It's, I think that for someone doing this, they have to be an email deliverability expert. They have to know about spam calling, about E2P authenticate authorization, like all of this stuff that is so important. And then how do you create a consistent customer experience across what is usually a pretty clunky sales method? And I know so many small businesses use tools like, uh, HighLevel or GoHighLevel, at least on the home services side. That one's pretty popular, but the telephony in it is terrible. Uh, it's horrific. Like, the connections are bad with customers. It doesn't ring well. It's hard to pick up. I mean, it's like a mess. Yeah.

Yeah. I think one thing I wish I would've done differently, and this is sort of, this pertains a bit to my personality. I am like the visionary person in the room. Like I like to see the whole picture and like create something and make it come to life. I am not naturally going to just like, go 30,000 feet down into the weeds to understand something. Like, I just kind of want to know how it works and like, that's good. Um, I had to— I had a couple moments where I was like, this is hurting me. Like, my natural tendency is hurting me because I need to be able to go super deep, really fast, know all the nitty-gritty stuff, and then come back up to the high-level strategic visionary stuff. And that was wildly uncomfortable for me to do. Yep.

I think I'm probably like you too, and I was forced to do a couple deep dives. Some of mine were in merchant processing accounts for our business and how to get payments. And then Salesforce administration coding. I don't know if coding is the right word, but like pretty deep, heavy configuration and automations. Uh, I was pretty good at Zapier before. I'm probably like, you know, Olympic class level now. Uh, you might actually be better than me. I don't know if I should—

I don't think— I don't know, probably not.

There are definitely a couple deep— oh, and, um, uh, Five9 virtual contact center administrator skill set, I think I'm like an 11 out 10 on that. And there are probably not many people that can say that.

I don't even know what that means.

It's, it's this call center telephony platform and like creating routing rules and IVR and dialing and campaigns and lists and how you manage outbound dialing.

Gotcha. Yeah. And you, you have to know all of it.

Yep.

Yep. You have to dive in to be able to make the big decisions. That was what I found. I could not leave stones unturned and assume that everything was going to be fine.

Yep. I think that's a—

And I did on a couple of things. Like, that's not me saying, oh, I did it perfectly. I certainly did not go—

I have an approach for managing that kind of process. Like, how do you inspect so many things at a pretty deep level? And I think— and so I'm curious. I want to share this because I hope it'll help other people. Someone else taught me this. A while ago, and maybe you have an approach too, but I like to do is take sort of like a deep slice, like, and look through all the layers on one sort of record, file, lead, whatever that unit is for your business, and like look at it all the way across and do that a couple times instead of trying to like boil the ocean. But that is a way to help you manage this process and get a good feel for what's really going on. Is there an approach you had for this?

No, I had no approach.

Okay. What I do is I like, I like to look at a data report that's like, here's what happened this day, and it gives you like summary level metrics and you miss some really, really important details. So like, if a customer complained or a customer issue, then do one of these like total deep dives on that or their account or, yeah, you know, 50 leads from their account or something like that so you can really understand what's going on.

Yeah, I mean, I think where I tried to do that, um, it at times got confusing and I got lost because I didn't know which pieces to look at, right? Like sometimes when you go into the details like that, there's so many that it becomes noise, not signal. And so you have to also, I think, define what are the signals that you need to look for. And that's where like your SOPs come in and like writing this down and creating like a process around it is so important. But I found that there were instances where, especially around the deliverability stuff, like there's just so many different data points to look at that at some point it becomes jumbled.

Yeah, that deliverability one is one where I was like, I'm pretty sure there's an issue here. There's nothing I can do about it because I don't control this domain and this is what I'm being told to do. And so I'm not going to deep dive on it, but I just know it's a problem and there's nothing I could do. Yeah. We've gone deep on tech here. Uh, what about, which, which is probably pretty unique to our businesses where the operations are sales and marketing and hopefully that's helpful for people, but you know, I mentioned a couple of things outside of that. Anything else that comes to mind? Comes to mind for you?

People processes would maybe be the only other thing to think through. Like, we've talked about OKRs a little bit and kind of operating, but I think people management is a big one. And I did— I used— I worked like 5 years in HR, so I have a fundamental working knowledge of kind of how some HR processes should go, like typical performance conversations, compensation conversations, which should usually not be in the same. I did roll out some new things there in terms of just that people management to say, okay, we're going to have goal setting, we're going to have a performance review on this regular cadence, and here's the template and you need to fill this out. There were some things like that that I took a page from my prior career and, and executed?

I think I'm trying to remember if I actually got performance management rolled out. It was an obvious gap relative to my prior career. I think I might have gotten it done for my direct reports eventually, but definitely not in the first 18 months, maybe not even the first 2 years.

Yeah, I found that people more or less liked the structure. Like, they like having at least a plan in place. And I also stepped into a situation where the prior owner was doing like a profit sharing bonus where I obviously like took on debt. There was no like— I didn't have that same pool to distribute from. So we had to like totally change a lot of the way we did bonuses and performance management and like development conversations and all of that. It just innately shifted a lot of the people management side of things.

Yep, that, uh, same story here. I think that we've talked about that one in another episode too, but definitely think through the implications of a profit sharing and the changes that that's going to cause into comp structures.

And people have questions.

Yes, lots of questions about that.

Yeah. Can you think of anything that we missed?

Uh, I think that, I think that that's a really good— that encapsulates a lot of this stuff. I think if you're still the searcher, I have one thing that I did that I messed up and caused changes for me to make, and I just want to give this as a tidbit to everybody. So we were billing through QuickBooks and taking payments through QuickBooks. And my entity was set up as a new name, a different name, my entity's name. And in QuickBooks, it was the sort of DBA name that I had acquired. But in the merchant processing account for QuickBooks, it never got updated. And I remember the seller telling me to check it, which was very nice of her. I remember checking it. For whatever reason, it didn't stick in that setting. And so we had a couple chargebacks. On, and then our processing account got dropped because we were using ACH. So I had to scramble to go find a new merchant processing. That's why I said I went pretty deep on this to collect payments, uh, for one pay period, because our accounting guy was like, the day before we were supposed to run all these automatic payments, he was like, the payment feature is completely gone from QuickBooks. And so I don't know if this really qualifies in there, but like making sure you have a good way to take payments and it's going to be consistent and you're not going to get hit with that kind of thing could be really important. And so I'd recommend picking a new business name that's very close to the DBA name that your customers would recognize. So that won't cause that problem for you.

Fun.

Yeah. Yeah. That was the cause of a lot of holiday work one year.

Yeah, that's a bummer.

Very shortly after the acquisition. Okay, you get through it.

Yes.

Awesome. This is great. Hopefully this helps folks. A deep dive on technology, but I think there's some, some good stuff in all of this for anyone.

For sure.