Ep 64 | Is Your Business Leaking Profit?

Welcome to the Exit Engine Podcast, episode 64. Welcome to the Exit Engine Podcast, where founders, owners, and entrepreneurs come to unlock the secrets of building, growing, and ultimately exiting their businesses on their own terms. I'm your host, Joe Stapleton, founder of ExitEngine and Exeo Advisors. With me, as always, is my partner in crime and in exits, Mr. John Kniff. John, how are you, buddy?

I'm doing well, Joe. And you?

Awesome. Thanks, man. So every week, John and I sit down with business leaders, advisors, and visionaries to talk about what it really takes to design an exit that aligns with your goals, your values, and your life after business. Whether you're 5 years from selling or still wondering if you ever will, this podcast is your roadmap. for making your business more valuable, more sellable, and more aligned with the freedom you're chasing. Today, uh, we are very excited, John, today because we're going to talk about, uh, about a piece of all this that we, we've touched on all the time, but we're going to dive deep, okay? We're going to dive deep into process and, and procedure, okay? And the oper— the ability to— your operational Your operational efficiencies.

I love it.

I love it. And to do that, we're gonna talk to a good friend of ours, Diane Campbell. Diane is the founder of Productivity Pros. She runs her company with a clear mission, to turn operational friction into smooth, scalable systems. She helps small business owners organize operations, build efficient delegation systems, and implement best practices inspired by global enterprise but tailored for businesses that want to grow without burning out. If you've ever felt trapped in messy workflows, found delegation to be more stress than relief, or worried that your systems won't scale as you grow, then this episode is for you. Diane will share how she helps businesses reduce wasted time, clean up processes, prepare for growth and potentially exit, and make the behind-the-scenes work count when it matters the most. Diane Campbell, thank you so much for joining us on the Exit Engine Podcast.

I'm so happy to be here. Thank you for having me.

Awesome. It's so great to see you, Diane. Let's go back to your, to your beginning. Give us a little bit of a background on you. How did you, how did you get here?

So I've had a long career in global Fortune 50. And one thing I have learned in all those years of that career, operations is the silent growth lever. And I started my company in order to bring some of the best practices from global companies to small business. I have managed and advised small business when I was working for those large companies as part of, you know, larger strategic initiatives. And I developed a a passion and a love for small business and the grit and the courage that it takes to start a business and grow it from, you know, nothing to millions of dollars. It's a, it's a rewarding journey, but it's not one for the faint of heart. And I am really enjoying helping business owners to make sure that their operations Scale with their growth.

In your experience, what are the most common operational issues? Right. We talk a lot on this podcast about operations and about documentation, about process. And we talk a lot about marketable— what I call marketable inefficiencies. Right. Those things that you haven't necessarily fixed, right, that aren't necessarily done, that you can actually discuss with the potential buyer to say, hey, look, here's something that would potentially grow your business right away. But when you see, what are the, what are the common things you see, the common operational issues that you see?

Yeah, so, you know, growth does not equal profit. And when the operations are not scaling with the growth, you get profit leaks. So signs that a business owner has outgrown their early hustle include things like Onboarding becoming inconsistent, support tickets piling up, deadlines slipping, critical tasks lacking clear ownership, and the owner continually pulled back into the field or, you know, helping answer questions over and over again, so unable to focus on further growth. Now, these are not signs of failure. These are signals that the business has outgrown its original setup. It's really common in the beginning to have, you know, early-stage business run on informal knowledge, verbal handoffs, memory. I've seen, I've seen documentation live in an email, and you know, it's basically just what's in someone's head. And when you're just starting out, That's okay. But as you grow, growth demands repeatability, and repeatability is best documented as workflows. And what happens is a lot of company owners start their company with a core skill that they, you know, they provide their customer or their client, and Usually operations is not high up on that list of something that they're really good at. They may know that it's important, but, you know, very few people who have that passion to start a company are really into SOPs. And, you know, standard operating procedures have sort of a bad rap. They suffer from kind of brand identity—

Right.

No one really, no one really gets excited about SOPs. And I am on a mission to make people fall in love with a well-written SOP because of what it can do to the bottom line.

Right.

Yeah. And, you know, I have, I share that passion, Diane, with SOPs. I had to write a set of SOPs for one of my last companies. And I, you know, writing one is one thing, but getting them implemented and getting them used is another. Do you have, you know, do you have a strategy or best practices for instilling what might be a very clear and concise set of SOPs sort of into the culture and getting people to buy into it? Because in my experience, that's the challenge, not writing them right, is implementing them and getting them used at the company.

Yeah, and, you know, actually that's a really good question and something I get asked a lot. And, you know, the answer or the best practice is pretty simple. Um, one, absolutely make sure that the workflow, um, the documentation is placed in a, in a, in a location where the employees or the contractors can find it easily. So, you know, if you, if you put it in a 150-page, you know, Word document on some shared drive that people, you know, can't really get to easily, and even if they do get to it, looking at 150 pages is just a turn-off. So, Right. you know, make, make them short and digestible, you know, 10-minute video clips if that's Applicable to the process, or something that is small and easily, you know, accessed and read. Use charts, use color, right? Just really kind of help, help to invite somebody in to access it.

Hey, I'm Jo Stapleton from the Exit Engine Podcast. Building a business is hard enough, right? Planning your exit shouldn't feel like another lonely, confusing project you have to figure out on your own. That's why we created ExitEngine. ExitEngine isn't just a software tool, it's an entire ecosystem designed to help founders engineer a successful exit. You'll get access to self-assessments, growth roadmaps, and a peer community where you can learn from other founders who've been in your shoes. You'll also find the guidance and expert resources you need to build a business that's actually worth buying and to do it without burning out. Imagine having the clarity to know what your business is worth, exactly where to focus to improve it, and the confidence to exit on your own terms, whether that's next year or a decade from now. You don't have to do this alone. You don't have to build a business alone. Join us and let's build your exit strategy together. Visit myexitengine.com to get started. That's myexitengine.com.

That's it. Um, also, it doesn't hurt to incent the, the staff, whether they're contractors or they're employees. Give them rewards. And this shouldn't just be in the beginning. So, you know, if, if somebody accesses STEPS and they you know, end up escalating appropriately because they followed, you know, a set of steps, there should— there needs to be some sort of a reward for that. And I'm, I'm not talking a large reward. It could just be recognition.

Yeah.

Thank you for doing that, Sandy. You know, we really appreciate it, or something like that. And, you know, I think incentives motivate behavior, even whatever positive incentive makes sense for your business.

I want to go, I want to go back to this kind of state, and I've got this picture in my mind. I think it's very important for our audience to hear this, this notion, because I think many of them are at this point, right? You brought up the point about the fact where you get to a point where you start to kind of outgrow your initial hustle, right? And I love that phrase because I think that we, we see this a lot, um, that there is a, that there's this, this grind culture that is particularly common, right, amongst the entrepreneur bros. Right, that this, that there's a, there's a, there's a kind of a movement out there, hopefully, that is winding down, but is, but has been, I think, detrimental in some ways to basically to, to a lot of entrepreneurs in terms of their, the, the, the ability for them to be able to, to recognize that hustle is important. Doing the thing, showing up to the thing every day is important. But there is a point— your point is there is a point at which hustle is not enough, right?

Mm-hmm.

And in fact, hustle potentially starts to become detrimental.

Mm-hmm.

Not used in the right way. Talk a little bit about— again, bring us back to this point at which we are— we have been doing this for maybe a couple of years. The business has grown to a point, right? We've started to maybe take on some employees. We're past the single owner, you know, kind of situation, probably. We are now in a place where, okay, I've got employees. I probably maybe even have office space, right? What are the things at this point that I'm— in order for me to get to the next level? John's favorite expression is, what got you here won't get you there.

Yeah.

Right? Marshall Goldsmith. But talk us through what you see in, you know, in these kind of— in these situations, and what is the best way for people to move forward?

Okay, so, you know, um, I like to say let's go for, um, hidden profit. So just like you've said, Jo, owners and their team and their staff have worked really hard to bring in the revenue, but where's the profit?

Mm-hmm.

So a lot of times because of operational issues, Profit is leaking out from that hard-earned revenue. And so where does profit hide? It hides in inefficient workflows, duplicated effort, mistakes. None of these things show up on a profit and loss statement, but they're still real. And the solution is to make the work visible. So documentation, you know, not only fixes problems, it reveals them. And one of the things that documenting your workflows does is uncovers profit leaks.

Mm-hmm.

So it reduces mistakes and reworks. It frees up the owner to focus on growth. It accelerates onboarding. It really eliminates wasted tool— time, excuse me, and increases efficiency. And so How does a company maybe attack this problem, or where do they start? What's the first thing they can do to see if they can get a handle on it? And so I say, start small, pick one area, an area that's critical. Maybe it's customer experience in your business. Maybe it's money movement, you know, process for paying and managing expenses, whatever. Maybe it's, you know, team tasks. Who does what and how do they know it's done right? Maybe it's crisis recovery. So if you were out, could somebody step in and know what to do? Whatever area it is in your company, pick one, start small, and then write down the steps. So there are useful tools in a DIY sort of scenario. Loom videos will—

Yep.

you know, help, help the staff to sort of document what they do. Lucidchart is a great way to kind of make, make a visual workflow of those steps. And then optimize. So how do you optimize a process? It's not hard, but it's very important to ask the right questions about your process. So once documented, An existing process should go through a gauntlet of questions such as, is this particular step in the process still necessary?

Right.

Is it still accurate? Can it be simplified, standardized, automated, or delegated? Is there a tool that could make this process faster or more reliable? Where are the bottlenecks, the delays, and the points of confusion in this process? So keep what works, Streamline what doesn't. Replace guesswork with clear guidance. And you'll get a repeatable system that will scale with you.

That's right.

Do you recommend, Diane, someone owning each process? Like, right, so in that scenario that you just walked through, is it necessary for, like, Sally or Dana or Paul to own that process and to own the sort of the continuous improvement So it's, it's very helpful, although we would never mention a person's name in a process or, or anything that's written down.

So titles only to make sure that they continue to scale with the business. But yes, definitely people should be responsible and accountable for the processes that they do. And one helpful tip is to have a process for who's responsible for what. Is if, if Sarah is going to write down what she does in a particular process, it's then really great to have Sarah give her instructions to Joe, her coworker who does something different, and see if he can get the same result following that process that she does. And that's a great way to make sure you haven't left out any steps.

Well, because, because Sarah probably, and in my experience, Because we've done that, is Sarah probably or very likely does something that does— is not written down. And then when she gives it to Joe, Joe gets to the, you know, the nice jelly bean and is like, wait a second, like, there's no— there's no container for me to put this 10th jelly bean in. What's going on, Sarah?

She's like, oh yeah, I forgot I didn't do it, you know.

And jelly beans, a terrible example, but you get my point.

Quite true.

Yeah, no, but it's a great— it's a great point. And guys, this is so easy. I mean, just think about this, okay? I want to put this in context for a second. You are at a point, right, where you don't even know potentially as a business, okay, where you are leaking.

Mm-hmm.

Okay, and so this operational kind of audit, okay, that Diane's kind of talking about, right, is something that can happen over time. You can start small, you can start one procedure, one process at a time, but understand that what you're doing here is uncovering, right, the issues, right? What you're seeing is It is if I write this down and I put this together, and again, and I have Sarah write her process, and I have, you know, and Bob writes his process, and right, and everybody does, and then we're exchanging processes and trying to see, can I actually walk through this stuff, right? Where are the holes? Where are the gaps? Where's the misunderstanding, right? This is a great exercise in being able to find, being able to find these leaky, you know, leaky, right, these leaks in profit. Right. And again, think about the processes that you have internally because it's not just one process.

Right, exactly.

You have a process around sales, you have this process around marketing, you might have a process that then encapsulates marketing and sales. You have, you've got, right, you've got the process of, like you said, moving money. You have the process of client service and client delivery. You may have a, if you've got a manufacturing business, think about the processes you have in place there, right?

And well, Yeah, and the difference between, like, you know, what I think was very important with what Diane mentioned is, it's like, you don't want to name people, right? There's a reason we talk about people, process, and product, right? And an example is, in IT, you never want, like, all the password resets to go to Dan or go to Sarah. You want them to go to IT support at—

Right.

So that you can put people into that role, but then realize that if you don't want emails to go to— for password resets to go to someone who left the company. And like, when I heard— when I remember, I remember hearing that from one of our IT people at my old company, I was like, man, something I never would have thought of. My brain just— my brain didn't work that way. And I'm so glad that we thought about that. Like, oh yeah, it's people into roles. And then so, so, A, when he— when that person leaves, you can, you can get all those, those emails. And B, it's, it's for scaling purposes. You might have another IT director at some point soon. Hopefully you do.

Mm-hmm.

I think, I think what's, again, what's, what's, you know, amazing by its simplicity here, right, is the ability to say, this is the— I will find— if I've got someone's name in here, Okay, then chances in terms of a process, right, and that person goes away, right, obviously I need to make sure that that process continues. I need to make sure that that process is right, doesn't have any holes in it and things like that. And the idea of putting someone's name behind it might be, again, might work for now, might work for the next couple of years, but it's certainly not a process that a buyer wants to see when they're looking through your procedure stuff.

Right.

Right. And look and go, who's Diane and why? You know, and, oh yeah, Diane left 4 years ago.

Yeah, exactly.

Where do you get pushback a lot, Diane? Like, what's— when you're dealing with small businesses, right? Because small businesses can be, you know, the person can be the chief cook and bottle washer and doing everything. Where's the typical, like, Diane, that's not going to work here? Because I can imagine you hear that a lot. Or at what point do you get that to say, like, look, like, We don't— we can't do that here, or we don't, we don't want to do that.

Well, so the pushback really comes from, how much time is this going to take from me and from my staff? We're very busy as it is. Yeah, I know it's important that this, you know, stuff has to get documented, but, you know, we're just— we're already running full out. And so, you know, the, the answer to that is either You know, invest in an outside resource such as myself or, you know, another consultant, or carve out time a little bit at a time on a daily basis to start work on this. So it's even a little bit of work every day is better than nothing. So if you can task yourself as a business owner. and maybe start with one other employee in, as I said, one of those critical areas that really impacts your bottom line. And maybe for 30 minutes in the morning, you know, before they do anything else, you know, start, you know, start the process of documentation if you just want to do it in-house. I think I want to just encourage everyone to step into that from Sort of a gentle 30-minute kind of incremental way. And you'll, in a month, you'll be amazed at how much gets done.

Yep. What a great way to attack it. And again, very, very simple, right? One step at a time, you know, baby steps, right? It doesn't have to be a big, a giant thing that everybody's involved in, you know, all day long, right?

Right.

And in fact, and also, you know, I think that one of the, one of the things that, you know, getting into a habit with this stuff, right, to examine these processes on a regular basis.

Right. Yes, absolutely. Some need to be examined quarterly depending on, you know, the nature of the business, and some are just fine annually.

Right. Yeah, like, like we added, you know, back to another company of mine, we have an onboarding process that I, that we, for onboarding employees and contractors. And it was like all on paper. And it was crazy because we were onboarding a ton of people every week, every month, frankly. And we used a tool and the tool was wonderful, but the tool was poorly configured when we first implemented it. Hands up, it was our fault. But like, but how do you integrate, like, what's the best practice for integrating technology into process? Because technology isn't process and process isn't technology. So if you can talk a little bit about using technology to enhance or implement a process would be helpful.

Sure. Yep, absolutely. And this is something most recently I get asked a lot, you know, what about the role of AI and how can AI help me in this? And I say, if you have an existing process, then, um, you know, I think it's absolutely best to have the people who are responsible for those processes do the documentation. If it's a brand new process, something you've never done before, maybe you have a new product or a new service, or, you know, you're, you're changing something, AI is very helpful in trying to give you a baseline to go from. So, you know, plug in the goals that you want of that process and a little context about, you know, what the product or service is and have AI spit out, you know, a list of commonly followed processes for this kind of environment. And then of course, take nothing at face value from AI and edit it to your particular company and situation.

That's great. Yeah, that's great.

There are a lot of productivity, a lot of tools out there, right, that claim to be productivity tools, right? There are, I mean, there's everything from, you know, obviously the software that we use every day has some kind of productivity stuff built into it, right? There's AI built into everything now on some level somewhere, right? What do you find are the most common and kind of, you know, tools that people can use in, you know, this kind of stuff?

Sure, sure, sure. Scribe is something that has been— some has had a degree of popularity, and that's an app that you invest in, and once deployed in your environment, your employees can kind of turn it on and have Scribe kind of follow what the process is and document it for you. That, that has, that is, has some success depending on what kind of company it is. I, I, oh, I, I like Lucidchart. You can use Excel, you can use another Microsoft product, Visio, and these are workflow mapping applications, and those are very helpful to start a process. So before you start typing step 1, you can actually visualize it in these applications. And then after that, after you've got the, the boxes and an arrow and another box and an arrow and then a different, you know, a different shape box to mean, oh, this is a decision point, um, and then, you know, A, B, or C choices, the seeing it visually first, um, is very helpful. It's not enough. It— you still do need to have step step-by-step process documenting the workflow, but seeing it visually sometimes can be a great way to start, and there are wonderful tools for that. And Loom is one of several different video applications where the employee can just simply talk their way through something that they're doing, both verbally, and Loom will record what's going on on the screen as well. And that provides not only sort of a video overview of how to do it, but makes it then easy to back it up with a written list of instructions that the person just saw on the video.

Right.

And it's interesting that, like, you know, you know, your business and your consulting work, I can imagine, is, is very different than other consultants in the sense of, like, we deal with all sorts of consultants, like fractional CFOs and accountants. and people and marketing, right? To a degree, marketing comes up with a plan and they— and you implement it. And I guess that's, that's sort of similar. But like accounting and finance, it's like, no, you hire an accountant to do your accounting for you, whereas in your work, you're bringing the people and, and you're bringing the tools that they need to use in order to document whatever sort of crazy process they have for doing their business. Now, once it's documented, right? Sorry, sorry for the long question, but Once something's documented, then your real sort of benefit, I would, you know, you're going in there and you're saying like, okay, we have 19 steps to this process. Are all 19 steps, you know, needed still and optimized? So talk about that process a little bit. Once everything's documented, it makes it much easier to optimize those processes, correct?

Exactly. Very true. You've really hit on it because just because You know, the way you do something now and you've written it down doesn't mean that you might still be leaking profit.

Right.

If it's an unoptimized process and you haven't looked at it to see how you can improve it, then all you've done is document some inefficiencies. Now, now the inefficiencies are documented. That doesn't help you, right?

But the next step is like, that's that. The gold is the next step, right? It's like, oh wait, It reminds me of that Office Space one, and I can't remember exactly what he's doing, but he's like, I walk the plans down to the engineers. And, you know, something along those lines. It's like, right, you have 19 steps, you could probably do this in 6. And, and that's what you do is, you know, you go through and you say, is it necessary to go to, to Melvin now? Or, you know, that type of thing.

So.

And, and sometimes, you know, I've seen people spend time on a weekly basis crafting reports from data. And when we've looked into it, not one single person has ever read that report. So, right.

Oh, that's, yeah, right. The man-hours going— we had a, again, we had a, we had a report one time that literally took, no joke, Diane, it took like 12 hours. I shouldn't say 12 hours. It took 8 hours of work between like 6 o'clock at night, between 6 o'clock at night and 7:30 in the morning when the report had to be delivered to the CEO. And the CEO had no idea. He had no idea that it took 3.5 people to do that report for him. And we use this tool called Automation Anywhere, not to give an ad for it, but it was a wonderful tool to document things. It sounds like Lucidchart. It visually documents what you're doing on the screen and then gives you a step list afterwards.

It's fascinating is that the— I imagine that what happens, and we've seen this happen when we do, you know, our our initial audit process and assessment at Subway too, is this, is that, is that you're— 2 things we see happen. So tell me if you see this. The first is that we get, the first thing we get back is, you know, when we're showing them something, especially when we're showing them how much stuff is leaking out the bottom, is to say, you know, the first response is, oh my God, right? But then the second response is, after some time has gone by, it's kind of like, there's also this, like, I don't know if I really believe it.

Yeah.

There's like a, there's a, I think there's something, something that goes on about, and we saw this happen in our, with our another partner of ours, Strategex, with their 80/20 thing, where they're looking at customer concentration and profitability, you know, across product lines and things like that, is that, you know, they ultimately almost always show that there's like, there's a product line or an entire customer that is not profitable for you.

Mm-hmm.

What you need to do is probably get rid of this customer. And at that point at which the, the owner who's had this customer for years goes, I don't know if I can do that, right? And even, even when we can show and document that this will change fundamentally, that this will change their profitability, change the amount of money they're making, They still resist. Have you seen this happen?

I have. And, you know, my perspective on that is change is hard for everybody, every single person. It's a, it's human nature to resist change. It's outside of our comfort zone, and it's, it's difficult. And oftentimes change leads to a situation where you now can't see how how it's going to look, how it's going to affect you, right? So you're a little bit blind when you enter into a changed process or make a decision that results in a big change. And so for me, you know, starting small and going with the parts of processes or an organization that has least resistance is a good way to start introducing differences that will result in more profit or a positive change. And that sets up a team or an environment for further work. So, you know, there are always going to be those one or two rocks, you know, that just are too hard to move.

Yeah.

And, you know, so you take what you can with the other 10, you know, areas. And, you know, just keep kind of gently pushing on the ones that are, that are going to be harder. But, you know, just because, you know, one customer just can't be cut loose, or in this, in this area over here, it's just too hard to do anything, you know, it doesn't mean that there aren't plenty of other areas to focus on for improvement. Right.

And the ability, the ability, even after the fact, to say, hey, look, you know, we, Here are all the different ways in which we improved our processes. Yeah, as you're sitting in front of a buyer, this is the one area we, we just couldn't get to, but we have a plan for it. Yeah, know what needs to be done. So here, right, have this. Look what you're going to do to your profitability the second you get the company.

Great.

Right.

What are the surprising things?

I'm just gonna say, sorry, just documenting. So even documenting the things that aren't fixed. And knowing that they're not fixed and having those documented is also important later on. So even if you don't get to it, it's just a matter of being able to have those, understand, try to get everything documented at least. You may not be able to fix everything, but at least you'll know what you aren't fixing.

Right, exactly.

Yeah.

What are the most surprising things you've, like, you know, after you've gone into a company or you've gone in and you've helped them with their either process documentation or optimization, You know, because I can imagine that you have some interesting sort of insights after the fact. What are some of the most— what are some of those stories that you have or things you've learned along the way that either you learned or the company learned about either their people, product, or process when you're doing these things?

Well, it's always very surprising for owners to realize that they are paying their staff to do something that nobody needs or reads. So, yeah, we touched on that a little bit before.

Right.

Second, I think it's, it's kind of shocking for an owner to realize that 5 different problems that they're aware of, that, you know, could easily be profit leaks are all related. So, you know, a lot of profit leaks look completely unrelated and some look random. And it's the owner, of course, it's very difficult for them to step back and see the macro view or the 10,000-foot view because they're in it.

Right.

And so when problems hit them, it's, it's hard to have that perspective. And so So to them, everything looks siloed and isolated and needs their own fix. But in actuality, almost all profit leaks are actually a result of common issues that can be solved by documentation, making them visible.

Like customer churn, like I can imagine, like for companies we deal with, like customer churn is a big problem. And it's, you know, a lot of times in my experience with customer churn is like the handoff between silos didn't happen in a timely fashion, right? So the person gets their account, they get their training, and whatever the process happens to be, someone was out of the office for 4 days and the customer was expecting something to happen. So to your point about, about all these things like, oh, someone could just say, oh, that customer was a jerk, or they think it's a one-off problem. when in reality, hold on a second, you know, you know, you have a— you've had— we've had an issue, and maybe they don't even hear that the training person, they got back to them. So yeah, your point about all these things being related is a good one.

Yeah, absolutely. I have—

Oh, sorry. Go ahead, Diane.

I have sort of a case study, a little mini one that kind of illustrates that point. If If now's a good time for that.

Yeah, absolutely.

Yeah.

Yeah.

Okay. Although this can be sort of translated to any kind of business, I'll just go with a small general contractor that we worked with recently who was growing fast but stretched thin. So, it was a smart owner, a solid 5-crew residential contractor. Specializing in like mid-range, you know, custom home additions and kitchen remodels, things like that. They had a good reputation, but like a lot of growing businesses, their systems hadn't kept pace with their their workload, and jobs were getting done, but how they were getting done differed. So the owner. You know, just said, all I know is there seems to be increasing cases of random billing issues, and accounting says it's not their fault. We know that. Sometimes job reports are inaccurate. Job costing that I'm doing, he said, you know, is— I'm always playing catch-up with it. I'm seeing unexpected increases in job expenses. And my project manager says he doesn't seem to ever feel like he has full visibility. And finally, and this is a quote, I'm just so tired of having to jump in and fix things. And he said, you know, we don't have major issues. It's not wholesale breakdowns at all, but we just keep having these random mistakes that slow everything down. And when we came in, we recognized that all those things he said are profit leaks. And once we started, you know, looking into it, it came out that increasing cases of random billing issues were a result of some change orders that were verbal or sent by text instead.

Right on.

And occasionally labor time wasn't entered until the close of the project. And, um, you know, if job reports are inaccurate and, um, you know, the owner's always playing catch-up with the numbers, um, trying to make it all come out, well, then we found that, you know, some labor hours weren't logged in the same way consistently by different crews, and that a few change orders by, by the client were never logged at all, and yet the work was done.

It's, yeah, it's so interesting that, that, that, that the change orders and that the multiple crews, right? It's the point of everyone probably— everyone, no one wants this to happen, right? No, no, no, not none of the crews want this to happen. Maybe they don't want to add in overtime, okay? And they want to— no one wants to have it as a surprise. But it's interesting that it happens in change management, right? Change orders and multiple crews doing things the way they thought probably was the best way to do it.

Yeah, right, exactly. The project manager thinking that he doesn't have full visibility, and he doesn't because—

Yeah, right.

For example, you know, one crew, you know, keeps forgetting to log and label scrap materials in this particular instance, you know, properly. And so that led to waste that was invisible.

Right.

So, you know, what, what we did was map the full project lifecycle from bid to closeout. And once we saw exactly where the disconnects were, we wrote a series of SOPs that connected everything into a system. And it's important to have strategic SOPs that are part of a system because systems scale, and that's what is going to grow with company. So in a matter of, uh, I think 5 or 6 weeks, um, the owner was spending 30% less time in the field. Um, the change order revenue went up 18% profit.

Because you're actually just tracking it.

Job costing got more accurate. Exactly. Um, and the margins improved overall 12% because of the labor tracking and logging. So the result of all of those positive changes were the crews, some of them, not all of them, some of the crews became interchangeable without affecting quality. And that is the gold standard in this particular case for a general contractor, right?

I can tell you that from firsthand experience, yes.

You have to think about how hard it is when you don't have to have Larry on every project, or when you don't have to have Larry or Bob on supervising every crew, and it can be every— you know, that's the goal.

It gives you, it gives you so much more flexibility, okay? Especially because what you have is you have people not showing up for work, you've got stuff, you've got a lot of churn in employees and stuff like that too in that business. And so again, you might have one crew chief, but underneath that crew chief That, that's a rotating door of, of different people, right? And so being able to have that process documented but also easy to train, right?

Yeah, right.

Because, because here's the thing, you are in that business in particular, you, you will see a lot of churn. And so you need to be able to get someone in who's going to be able to understand this and do the job and whatever as, right, you know, quickly and efficiently, right?

Without—

so I imagine that was a huge part of what they had to do.

Right, exactly. Yep.

And let me ask you a question about your business, Diane. So what are the processes you use in your business to ensure that each customer's, each customer solution, each customer problem are sort of treated not the same, but in a similar fashion? So if you can go through that a little bit, would be helpful.

Well, you know, when, when a client hires my company, we offer bespoke consulting. So We don't throw templates at them, you know, that are the same for everybody.

No.

So, um, we, we do absolute custom work for every single client. Um, and, you know, we, we have, you know, some automation tools that we use so that, you know, they're not, they're not paying us, you know, to, to do manual things that take more time. Um, but we don't In what we deliver are things that are very custom to each particular client. So on, on our website, we have certain, you know, plans they can choose from, although we do, you know, custom projects too.

Sure.

But within those plans are listed not only the deliverables and how much it will cost, but how much time the client is expected to give to that process so that they can plan for that.

Yeah, I, I, that was a poorly worded question by me, so forgive me. But, but I guess the, the process that you're going through, right, the, the example of the construction company is, I can imagine it's a lot of intake at the, at the front, right, is I'm having this problem that, that, that the contractor provided, and then you're, you're diagnosing and you're documenting their process almost for them or with them. Along the way to, to highlight and illuminate the problems that are sort of coming through in the process, right? Or coming through the—

yeah.

Yes, they— that's called knowledge extraction, that process. And it's generally conducted with a series of interviews, or it depends on— certainly with a general contractor, interviews are key. If it's an office situation, sometimes we'll just have the staff, you know, do some Loom videos and we'll take those and make sure that they're documented and have visual workflows. So how we extract the knowledge depends on the customer and their environment and the kind of company it is.

Cool. If a client or a business wants to do this, kind of take this on themselves, okay, do you recommend that they, again, that internally— now again, who do you have in charge of operations is the first question I'd ask, Right. Who is responsible for the processes and procedures and stuff that go on inside the thing? And again, you might be early on, you may not have a COO yet, certainly, but you may have somebody who's— right. And it might— again, and very often, I'm sure that you're finding it's actually the founder or the, you know, right, or the owner themselves who—

Right.

Right. Especially early on. Yeah. The— do you ever— do you recommend that that, that if there is somebody on the team that you can put in charge of the process of documenting, documenting this thing?

Well, unless you are an expert and, you know, very trained and knowledgeable in operations, I would say from a DIY perspective, it's probably still best to have the person who's responsible for the outcome Document the process it takes to get there. So, you know, if it's— and certainly that, that goes for the CEO too, or the owner, the founder of the company. What, what they do is, is important to document. And all the people that he or she has hired, they, they are the best people to document what they do. And then maybe test that by, you know, swapping it with other coworkers. But to have one person be in charge of what everybody does and documenting, you know, what other people do is not the best idea.

Right. I got it. I think that from the, from the, certainly from the founder's standpoint, you were just mentioning about them documenting their own processes and that stuff. And part of that exercise, especially from an exit planning standpoint, should also be the recognition of where they are too involved.

Yeah. Well, hopefully documentation will reveal that. So when, when what they're doing today is documented, and then the optimization questions are asked and put against those processes, I think a lot of, a lot comes to light.

Right. And in your experience, that, that, that is that, is that, are those aha moments for founders?

It, it is, it is. But a lot of times, in the case of a founder, What, what the process uncovers is the need to delegate.

Mm-hmm.

And, you know, most founders have trouble with that for one reason or another. A lot of them just feel like they can't take their hands off the, you know, the running of their, their baby, their child, you know, this, this company that they've started. And I, I encourage that if they— if, if I'm brought in, I really try to have a heart-to-heart with them and encourage them to— that letting go empowers their staff to be more autonomous. And that is a growth lever that has to be in place.

It's so funny you say that, because that's exactly— we've counseled people in a similar way. There's, well, there's 2 ways. You can either hold on to the process or you can grow. It's your choice.

Right. That's true.

And every founder that we've talked to and mentioned that, they've said, You know, I think I'll grow.

I think I'll grow.

Yeah.

The other reason delegation is hard, though, is, and, and I've heard this a lot from founders, oh, it doesn't work. I've tried it before, and it was an epic fail. And then when I start probing about how they delegated, and was the person they delegated a task to set up for success? Was it, was it documented? What part did the founder play? Did he just turn it over and say, now it's your responsibility, or were there checkpoints? You know, so once we started talking about the structure of the delegation, I think it became clear that maybe if we—

And the process behind the delegation, right?

Which is the whole thing.

So it's like, I can't delegate a process that isn't a process, right?

People self-sabotage too. It's so weird that you mentioned that. It's like, We've had situations where oddly that the founder doesn't want it to work. And that sounds crazy when we say that, but it's true. Your point is they don't even tell the person what they're delegating to them and they don't let them know all the steps or they don't even know all the steps that they do. And then when they, to your point, when they give that off to the new person, it's bound to fail because they don't know what the goal is. They don't know what all the steps are. So it's Yeah.

And the context too, right? So, yes, how does what I'm doing here affect the rest of the business?

Right.

Because, and that's where we get into, and obviously there's a significant growth lever that you're going to pull eventually too, which is to actually bring someone in who's in charge of operations. Right. Eventually you're going to get to that level. You're going to have to get to that level because again, there's going to be so many processes. And so many things that go on as you grow, as you scale, you're adding more marketing, you're adding more sales, you're adding more customers, you're adding more production in the background, whatever you're doing, right? And so it's harder and harder to be able to be the person who stays on, on top of this stuff, right? And at some point you need to get to a point at which, which documentation and process procedure is a standard procedure itself.

Exactly.

Well said. Yeah, and it's so funny that, like, you don't want that, you know, along that, to take that point to the next step, Jo, is you don't want the director of operations to own all the processes, right? As Diane mentioned, it's like, it's important for those individual business unit or department heads, if you will, to own the process. The operation, the director of operations can help with those documentations and make sure that they're done on a quarterly or annual basis, but you don't want one person owning all those processes because, A, they're not gonna be an expert in all those things. And B, it's just, it's best to have the person who's incented to have it make it work better to be responsible for those processes.

Right.

No, that makes a lot of sense. And I, but I do think, again, it becomes a matter of saying you need to have somebody whose job it is to, right, to be in charge of making process better for the company. Absolutely. And again, so like you said, the way you go about it, totally get it. It's— but, but you— but that this will be something that is going to be required of you. It's not going to be an option.

Right.

So if you want to sell the company and you want— right, you need the whole— you write that being able to have a director of operations or COO or whatever that, that operations person is will be critical in you being able— in, in not only in your evaluation but in your salability.

Yeah.

Right? Because, because the, the, the, you need to make, make sure what, what a new buyer wants to see, right, is that none of you have— you've done— you've, you've figured out these processes, you've documented these processes, you're ongoing way you are monitoring these processes and optimizing them all the time and changing them or whatever, seeing this stuff. But then also there will be new ones. There will be, there will be stuff that has to— that we continuously have to, have to be done when the company is sold. And so Having someone in that position whose job it is, right, is to, you know, to oversee that operational stability and improvement.

And Diane, what's some of the— something, you know, people are going to listen to this podcast soon, and I guess they'll just listen to it now. What can they do right after this, they listen to this at their company, right? They've listened to it, they're jazzed about improving their process. What can they do as an actionable next step right now?

Well, actually, I think it's a good idea for them to take a process diagnostic. So I have one on my website. It's free. You don't even have to give your email for it. You just need the link, which I can give you. And it's yourproductivitypros.com. And on there is, right, right up on the menu is a button that you can click to take the free process diagnostic. I don't see it. I'm not watching you over your shoulder. It's a downloadable PDF that you then save locally on your own hard drive and you take it privately. I will never see how you fill it out. I meant it to be a tool. for business owners to use privately and anonymously. There are 24 statements on there. They can rate their own company operations and how they see what's going on and then plot the answers on a grid that lets them know where they are. Is, you know, are they, are they running a pretty tight ship or all the way to it's red flag time, you need to do something fast. So—

And that And that was yourproductivitypros.com.

Correct.

Awesome. We'll have that. Well, that would be also in the show notes and all that stuff too. So we'll make sure that that gets in there for sure. Diane, this is incredibly helpful stuff. I want to, I want to go back, circle back. Just, we have a few, a few minutes left, but I want to, I want to circle back and talk a little bit about, again, more kind of exit readiness and kind of long-term value. Okay. What operational system features do you think buyers and investors are going to be kind of looking at in your experience?

So sales, right? Number one, how does the company get customers and how do they keep them? So those 2 questions can be really key, and documenting the answers to those 2 questions is very powerful. If, if I have a packaged plan for exit, it's called Exit Systems, where we document the entire company and optimize the systems and answer those 2 questions. And I offer a free, you know, buyer walkthrough optionally if they want.

Okay.

But, but if they're doing it themselves, definitely focus first on, on systems and processes and departments that touch on those 2 questions. And then second, of course, financial. So once the revenue comes in, how is it handled? Expenses, you know, kind of a 360 on the finance side. And there's always customer service, which does answer that— how are customers kept, right? So how— document how it is from a 360-degree that customer care is delivered.

Right. What about, you know, the distance from exit, right? Like a lot of the times it comes up, right, where we're like, we're talking with people and they're like, I'm not even thinking about that. I'm not, you know, I'm not there yet. We're not there. And of course, our response to that is that that's fine. But, you know, you should obviously keep an eye on this because it is something that obviously will affect it and it tends to sneak up on people. Right.

You know, so that's a really good point. So I think that exit planning should be part of the strategy of any company from day one. And that doesn't necessarily mean that the owner thinks they're going to sell their company. Maybe they will, but certainly there might be a chance to transition that company to another family member, to, you know, a child that is, you know, still in grade school now, but, you know, when they're an adult, maybe the owner has in mind that it stays in the family. What— whatever happens to the company, there is a finite amount of time that the owner will be able to work in that company.

Right.

You know, right? And so some, some kind of succession planning, whether sales or, or something else, needs to be in the planning from day one, all the time.

Right.

Well, yeah, and the way that we think about it is, you know, it's like insurance, right? When you have— no one ever— I mean, people in Florida plan differently, but no one ever thinks the hurricane's coming, right? So, and when a hurricane's obviously an adverse event, buying your company is a good event, but you should still prepare for those good events. In the same way you should prepare for bad events. And, and to your point, documenting those processes from the beginning and having a system for doing that all the time is just like preparing for an adverse event. So.

That's right.

But it is important, by the way, you know, that most people— okay, first of all, everybody will exit their company.

Okay. Right.

Everybody. Somehow, some way, someday, everybody exits. Yeah. So There, what we tell people is, again, and there are 5 ways, right, that we always talk about that most people exit their companies, right? Death, disability, divorce, disagreement, and dissolution. Okay, those are the 5 most common exits, folks.

Right.

80%. Okay, so know that, you know, again, being able to understand that you will exit, right, that is not necessarily about selling my company tomorrow. What it is about is protecting your company today.

Right.

Right. So that if you do, if, if God forbid you, you were in a tragic accident on the way to work and can no longer run this company, what is the process? Right? What is the operational procedure for that?

Right.

Right. Because that is, again, not something you may want to think about. And again, if you're not around or whatever, or can't incapacitate or whatever, maybe you don't care. But I think that most people do. And the reality is, is that what happens to your company in that event? Who takes over? What's the succession plan? How does it stay alive? Because what we see is that, you know, when the owner dies, you got about, you got about an average of 9 months to keep that company afloat before it just goes away.

Right.

Okay. So the idea, what Diane is saying today, and I think this is a big, you know, the big takeaway here is that You are, you are everyone right now, okay, out there. Every single business as we see it right now is leaking profit somewhere. Every single one.

Yeah.

Okay, somewhere in your operational efficiencies, in your automated, in your processes, whether they're automated or human, right there somewhere along with what you do, there is profit leaking out the bottom somewhere. Okay, and, and that is true of everyone. It includes everybody. to take a look at these processes and procedures and understand what can I make better, what is good, what is working, what is not, and what can I make better, right? Because what that's going to do is going to make, A, your company more profitable and healthier today. It is also setting it up for future success. The numbers that we have about how much difference that having an operational procedure a standard op— a set of standard operating procedures in place when you are selling the company, okay, is probably adding somewhere— probably adding 1 to 2 points of multiple to your, to your valuation.

Very true.

Okay, so that if you are the same company that doesn't have these standards and does make the same money and makes the same stuff or whatever, right, and doesn't have the standard operating procedures in place or whatever, okay, compared to the— a company that does The company that does will get 1 to 2 more points higher on their valuation than the company that doesn't. Period. The end.

Yep.

Right. And you'll be setting yourself up and you'll be a much more healthier and sustainable company now anyway. Right. And you'll be bringing more money in your pocket. Your employees will make more money. Everything will be better. Right. So this is not— this is a business imperative for everyone. And it is, it is much of what the larger companies spend money doing, right, is trying to— because again, the larger you get, those little leaks of, of, of value, when you're the— when you're at the low, you know, when you're at a million-dollar company, right, they're small, right? But those get magnified when you're a $5 million company or a $10 million company.

Yep, very true.

Excellent. Well, Diane Campbell, so great to have you on, on this. Let everybody know where they can reach you.

So my website, yourproductivitypros.com, has full contact information and information about plans that we offer as well.

Awesome. That's great. Thank you so much, Diane Campbell. Thank you so much for being on the Exit Strategy Podcast. We really appreciate it. There's going to be— guys, there's going to be more with Diane coming down the pike. Okay, just so you know, we're so— What Diane does is so, is so, like I said, it's a business imperative, okay? That part of your job as a founder of a business, of an owner of the business, okay, is to try to make sure is obviously is growing not just top-line revenue, okay, but your profitability, right? And your profit. And everybody is somewhere is losing profit because of their systems and their operate and their operating procedures.

Yeah, and sorry to interrupt, Jo, but like the, the, you know, as we talk about all the time and everyone hates me when I say it, is people, process, and product. And trust me when I tell you, is every single company I've ever worked for, usually they have really, really good people, and most of the time they have really good product because they're selling it to customers. Where they fall down and where you have opportunity is process.

That's right.

And, and because documentation and things that are misaligned There's so much opportunity. So I encourage everybody to go to yourproductivitypros.com, get in touch with Diane, or at least take that diagnostic, right? Do both, but at least take the diagnostic that she mentioned, download that PDF and see where you fall. Because you trust me when I tell you, when you look at the processes in your company, there is room for improvement. But in order to get to improvement, you got to document it first.

Right.

Well, thank you, Diane. Thank you so much for being on the Exit Engine podcast. We really appreciate it.

Thank you for having me.

Guys, we're asking everybody, uh, who's listening to the podcast, and, uh, uh, it to, to, to, uh, we want it— we want you to know when we're going to launch this new community that we're talking— that we've been talking about. Um, we're going to be launching it at some point, probably in October. Uh, it's very possible that it's already out by the time you hear this, but no matter what, We want you to go to myexitengine.com, give us your email address. That's it. What are we gonna do with it? Nothing but tell you when you have opportunity to learn about the ExitEngine community that we're building and how you can get— how you can become a member of it. All right, simply that. That's all we're gonna do for it. Again, go to myexitengine.com. You can also follow John and I on LinkedIn at ExitEngine. You can follow me personally at Joe Stapleton on LinkedIn. John Kniff. You can email us directly, jo@myexitengine.com, or john@myexitengine.com. Ask us a question. We're always here. We answer the comments. Please like and subscribe wherever you are listening to this podcast, and we really appreciate it. John, thank you for being my partner. Really appreciate you. Diane, thank you so much for being, being our guest today.

Thank you for having me.