Part 3 - The Hard Truth About Scaling A Business

Welcome to this edition of the Million Dollar Mastermind podcast. This is where we pick the brains of high achievers from all walks of life and get their hard earned real world insights on winning. I'm your host, Larry Wydell.

Let's talk about the timeline and launching something. How long did you, you talked about like for three years you were going, going morning, noon and night. And the good thing about that was time pretty much goes by pretty fast. But the bad thing is you're running to the ground. How did you, who was your first hire?

My sister in law.

Okay.

Yeah, she was a nurse and we actually hired a lot of family. So we had, we had family working in our organization. Some of our family still works there to this day. When you make those hires, you want to hire people that you trust and that you have confidence in and that'll do a good job. And so what she did was she, she helped Nicole, who was seeing patients at that time, be more efficient with her time. So that was our first hire.

Yeah. And so how did you staff up? How long did it take to get your first 10 people, five or 10 people in place? And how do you describe that process?

So we started July of 2015. We had our first contract in August of 2015. And then we started to just put, we started to put goals in place, like what did we want to accomplish in 2015, what did we want to accomplish in 2016 and 2017 and so forth. So like every year we would revisit those goals. We met our first hire in 2016, end of 2015, and then we made more hires in 2016 where they were full time employees. Part of that was putting, what did you want to do? Like, did you want to pay yourself more or did you want to reinvest in the company? And the answer for us was we always reinvested into the company. Rather than paying ourselves or increasing the amount of money that we made, that accelerated the growth of the company faster. That allowed us to not wear as many hats. So. And there's also a balance, right, like between Nicole and I, we did every single job you could possibly do in the company. And so I think that's important too, because you learn a lot of things by doing all those jobs. As much as you don't want to do a lot of those jobs, you just do it. And that way, you know, it gives you more insight into who you want to hire, what skill set they need to have, and you learn all the intricacies of how a company works by doing those types of things. We went and utilized the sba. We utilized some SBA lines of credit. We raised a little bit of money in 2018, brought on like a minority partner in 2018 in order to have some.

What's that? What's bringing on a little money.

The first money that we tapped into was Small Business Association. We went through the SBA and we went through traditional lending and we got like process.

Like I'm asking you to shed some light on. People said, I think I might do that. Well, maybe, maybe not so much. Maybe know what you're getting into before you do it.

Yeah. So it's like a financial colonoscopy. I mean, it's like that's what I suck. It's like you have to have all your documents in order and it's painful and it's. Takes a while. Like we, we were able to get through it, I think like in 90 days, but it can take six months, it can take nine months. It depends on, on how much you're, how much you're taking. And you're also personally guaranteeing that. Right. So it's not like you're not on the hook for it. So you're personally guaranteeing a lot. When you start, when you're an entrepreneur and you're starting a business, you have to be comfortable with that level of risk and your confidence level has to be high enough and your outcome that you're able to, you know, you want to make it happen. And, and then as far as raising money goes, we had some people that were interested in what we were doing and we raised money from, I would characterize them as angel investors.

Right.

And we knew that we were going to need, if we really wanted to grow. And we were growing like we were. Our company was doubling year over year. And that's a little easier to do when you're small. But we knew, like to sustain a 40 or 50% growth rate year over year, you've got to have, you can't just reinvest free cash flow back into the business. You're going to need additional capital to do that too.

What was requiring the additional capital? Well, facilities, things like that.

It's actually, it was the rate of growth in the fact that you've got to hire people ahead of that growth. And so we're hiring professionals that have high salaries. You're talking about nurse practitioners, physicians, those type of people. So. And you're also, you also have a lag in your collections because you're billing third party insurance companies. And so you're going to See their productivity. So when you bring someone on, you might hire someone today and they, they may start to see patients and their productivity ramps up over the course of, let's say 90 days. But it's depending on the insurance company and how quickly they pay. You might get paid in a month, you might get paid in 90 days. It really depends. And then when you start to get that going, it's, it gets going faster and you have some inertia behind it. But you do have to float quite a bit of cost within the first three to six months, depending on how quickly you get them ramped up. Because it's up to you to, to get them busy. Right? I mean, you got to give them a salary, you got to give them some incentive pay. And that was really important. And then as you get, as you scale and get larger, you have to invest more money into systems to operate the business. Like everything can't stay the same as it was when you're like a five person group, then a 10 or 15 or 20 person group and then you're 50 and then you're 60. So. And you've got to be able to compete with larger companies. So you got to figure out, how am I going to offer, you know, benefits to people? How am I going to offer the same level, if not better benefits than like a bigger company may offer? There's all kinds of things that get more costly as you get larger. And so that was really important for us to be able to do those things to get to where we wanted to go.

How did you realize when you needed, how did you figure out how to make those steps forward? I mean, do you have, let me ask you this, do you have a facility? How much did facilities play in this?

It didn't play much into it. I mean, we had office space, but it was more for administrative. A big part of our workforce was in the field. Yeah, we had to provide them technology and equipment, you know, so you had to buy laptops and phones and stuff like that. But I mean, as far as capital expenditures, not a whole ton of capital expenditures. We had a lot of software that we had to invest in.

Yeah, that can get expensive. And so now how long did you, were you up to the 75 people on board before you wound up selling the business?

We got pretty big in 2021. And then about the six year mark. Yeah, yeah. I mean it was, yeah, it was like six, six years. And then in year seven, it was really year seven is when we transacted. But we went through growing the company Scaling the company and then we were servicing the long term care industry. A big part of our business was nursing homes, assisted livings, and throughout the course of the COVID The COVID thing from 2020 to 2022, it was an extremely challenging environment to operate in. There was definitely a lot of challenges that we had to overcome over the course of that time. And for us, it was like. It was good timing. It was a long, hard road to get to where we were, and it was just time at that point.

What was the biggest challenge for you, where you. You're running a pretty sizable organization and you're new to the game and what did you have to go through to sort things out in your own mind, to where you could stay on top of things? Did you ever feel like it was getting away from you, the people, the dealing with the people issues, and much less the outside things, the internal thing?

Actually, the internal things were worse than the outside things.

So why is that so often the case?

It's just. Yeah, it is. I mean, it was. It's like, you know what your own dirty laundry looks like and a lot of other people don't. I would say that, like, I always felt it wasn't. Probably wasn't reality, but I always felt like I was just piecing everything together and holding it together with like duct tape. And it just always felt that way. It always felt like if this one thing broke loose, then everything else is going to unravel. But like, it. That never was true.

Right.

And it only felt that way because I think partly is because I'm very analytical. So I would analyze everything. I was acutely aware of, like, how. How fragile certain things are. And you can obsess about some of those things. But what's interesting about building a business is that the larger it gets and the longer it's in business, there is just some natural, what I would call like inertia, where the more you get going and the more it just keeps going and keeps going, the harder it is for it to fail.

Right. When did that realization come to you?

Probably after I sold it.

Yeah, well. Well, the thing is, it's hard to keep perspective when you're in the middle of the 100. The fire you're trying to put out, the. You got 40 fires going at once and you're. Yeah, it's hard to be the philosopher about things.

I will say. Maybe that's not fair to say that. Like, I guess we. We were able to. I remember in 2021, it was June of 2021, we we bought an RV like half the country did during that time.

Yeah.

And so we were able to take the family on a really long trip out west for a month in the summer.

Okay.

And we went to a bunch of national parks and we kept up with work when we had WI FI access. And we stayed in communication and everything. But there was never a time where I felt like, oh, my God, we got to get back. And that was probably the first time that we were ever able to do that over the, like, over a period of five years. And we came back from vacation and we kind of. Nicole and I kind of reflected on that and we were like, wow. Like, we actually have some good people in place. Like, really? We have some good leaders in place. They were able to manage the business without us there. Every day that particular time felt pretty good.

What was your biggest challenge? Gut wrenching challenge of from start up to the sale of the business. That where you felt the most challenged, like they never stopped coming. But there's certain times that. And usually it relates to money, but our delivery of services or something.

There's probably a handful. There was a number of them, but I guess the biggest one was probably March of 2020. Like I said, we were in the nursing home industry. We're on the front lines. When Covid hit and we were going. I mean, our business model was to go in Pershing. Right. We were not a telehealth business. And so at that point, no one knew what the hell essential meant. No, no one knew anything about what was going on. And so we sat there at the kitchen table. I remember just try, like, looking at each other like, well, are we going to lose our business? All this money and time and energy that we put into it, like, how is this all going to play out? So that was for a period of time that was pretty unsettling. We were fortunate enough that at that point we had a strong enough team that everybody kind of pulled together and we were able to make it through and figure things out.

And when you go through, it's important for people to kind of take the mystery out of how you survive a big unknown nightmare like that. And you basically have to just do what you said, pull yourself together, let the emotion get out of it and get the facts and take the next step.

Yeah, yeah, I would agree. Like, the things that I think the things that we did during that course of time, we had gotten a lot of advice. So we reached out to a lot of people. We reached out to our board, which we were on. Right. And we had discussions with them and we had disagreements with them. And we, Nicole and I just said, like, look, we're going to take as much action as we possibly can because at least again, just kind of going back to the principle of taking action versus not taking action. Right. That at least we can know that we tried and tried to do everything in our power rather than like let everything happen to us. And that was to the degree of like, I was on calls with the president of the Ohio Healthcare association trying to figure out like, okay, well, how are you guys reacting to this? What are you hearing? I remember I found, I found the cell phone number for the physician that was on Governor DeWine's cabinet. And I called him and he answered the phone and he took my phone call. Super nice guy. And, and it was like seven or eight o' clock at night one night. I'm sure he had more, more important people than me to talk to, but he was, he was very kind and was communicated with me on those type of things. So gather information as we could so that we could make important decisions around our company, around patient care. All of those things, I think contributed to the success and the outcome that we had.

You got to shift the focus in times like that from the punches that are coming at you where you're the punching bag and go back and get, get clear your head and kind of get some facts and then look for a way where you can throw a punch back yourself. Like you said, be proactive. It's like, okay, this is great. I'm getting killed here. I got to do something. I got to throw a punch, I got to fight back. I'm just not going to be stumped into the ground here. I am going to fight back and if they wipe me out, great. But at least I put up a fight, right?

No, that's right. That's exactly it. That's the best thing that you can do.

Yeah. Because the tendency is to let it. Your emotion gets you and you just bail. It's never the good answer. Just let, let them keep stomping you. You gotta fight back. And the thing is, you made it that far. You're not the only one in the world who's had to face whatever these problems are. It's like Ecclesiastes said, there's nothing new under the sun. So somebody's been through it and reach out. And that's what you did. You got good instincts, by the way. Rocco.

Thank you.

You might continue to do well in life.

I hope so.

Based off your instincts. Yeah. Congratulations on how well you've done so far. How different would this interview be if I had your wife on, had her answering these same questions?

You know, I don't know that you might want to have her on and see.

Yeah, that might be a point counterpoint thing, I think.

Yeah, you might want to do that. That would be interesting. I'd have probably talked a lot less.

It's always great to hear it from the other side of the story, you know, the other perspective. But congratulations on your business, your marriage, your kids, your accomplishments, and appreciate your insights. And I always like to give my guests a last word to pass on to people who've stayed with us this far.

No, I appreciate that, Larry. I thank you for having me on. It was great talking to you. And the last word would just be, I think that really hard work and perseverance goes a long way. Don't give up on yourself. And I think a lot of. A lot of people have it in them to do what they want to do. And you just have to trust in yourself and, and follow the path. And it might not happen on your timeline, but I think if you stick with it long enough, it'll eventually happen for you.

Fantastic. If you come out, continue to come out skiing, I can tell you that Buttermilk is one of the four mountains out in Aspen. It is the best learning mountain in the world, you know.

So I'll make a mental note of that. Thank you.

So anyway, congratulations. Look forward to the next time. Rocco, thank you.

Thank you, Larry. Appreciate it.

Bye.

Bye. Bye.

Thank you for listening to the final part of this episode of the Million Dollar Mastermind podcast. Great ideas.

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