Ep. 150 - Michael Erath talks helping entrepreneurs grow businesses

Welcome to the AZ Big Podcast, sponsored by Burst and Crack yolo. I'm Michael Gosse, Editor in Chief at AZ Big Media, and I'm joined by my, joined by my co host, our publisher, Amy Lindsay. Today we're super excited to be joined in the studio by author and founder of Next Level Growth, Michael Erath. Michael, great to see you.

Yeah, thank you guys for having me.

Thank you for joining us. Michael, start off by tell us a little bit about yourself and Next Level Growth.

Yes. So Next Level Growth is a Phoenix based firm of business guides. There are seven of us total currently. We've been around since 2015. And we help entrepreneurial leaders, we work with executive teams to help them build elite organizations through a very principled approach versus more of a prescriptive system. And we do that not only here in Arizona, but we're working in about 28 different states with some of the guides that do travel.

So what did you see in the marketplace that you saw the need for Next Level Growth?

So before doing this, I was CEO of a family manufacturing business. And in the latter years of my time with that business, I had come across a book called Traction that talks about the EOS Entrepreneurial operating system which I implemented in that business. And we had a lot of success with it. But I had also spent part of my career as a member of YPO and eos Young Presidents Organization, Entrepreneurs Organization, and through those groups and through my forum groups within that, I'd come across different systems like Mastering the Rockefeller Habits, Top Grading. And as I was implementing eos, there were certain tools that to me didn't feel like the best possible tool to achieve the outcome that was intended. So I would substitute out different tools from different systems where I felt like it made more sense for my company, my organization. And so after I exited that business, I started working initially as an EOS implementer. But I was, I was doing the same kind of hybrid implementation with people. If somebody felt like something wasn't a great fit for them, I'd go find a tool that we could substitute that was a better fit for them. And then when I finally left EOS and started Next Level Growth, that just continued. And we really decided to model our business more on a principled approach than a, than a prescriptive system.

So, Michael, can you name a few of the companies that you've helped grow?

Sure. You know, so before we, before we got started recording, we were talking about upper projects and Lauren Bailey spent several years working with them.

Yeah, we love, we love that company. The restaurants are Just amazing.

Yeah. Fantastic concepts. And Lauren and Craig have an incredible story of kind of how they started and what they've accomplished has been. Been phenomenal. There's a company, the name has changed, but there was a company in town, Bayless Healthcare. Justin Bayless. He was a client for a number of years, did a fantastic job building that business, had a fantastic exit, and has now started a venture studio that I worked with for a little while.

And he's been on the COVID of Arizona Business magazine.

Yeah, that's right. You know, we do a lot outside of the restaurant business, but some of the more well known brands happen to be restaurants. So worked with Grimaldi's Pizzeria for a while. Hop Duddy Burger Bar is popular here. They're based out of Austin, Texas.

They're making me hungry.

Right, exactly. But also in the healthcare space, there's a local company, Embark Behavioral Health, another great company that I got connected with through Alex Stavros, the CEO. They're all across the country. They've had phenomenal growth as well. So we're in lots of different industries. We do a lot with home service companies, a lot with the trades.

So very. It seems like you guys work with vast verticals a lot of times.

We do. What we do is very industry agnostic. It's much more about finding. Finding entrepreneurs and leadership teams who are really willing to commit to building something elite. We work with nonprofits. For example, Goodwill Dallas. Goodwill Industries in Dallas was a client for a number of years. So even in the nonprofit sector.

So what are some of the elements of the program you use to help these companies?

So. So we get them to focus on five specific principles we call the five obsessions of elite organizations. And so what we really want them to focus on is how do we build a system within the business to ensure that we're growing and retaining and keeping great people. We like to refer to them as a players, but we help them build a custom tailored system around how we do that. So we focus on great people. But we also. The second obsession is what we call an inspiring purpose. And I believe when you, you know, Jim Collins in Good to Great, back in 2001, started this concept of right people in the right seats. And he uses the bus analogy. I think as great as that is, I think when we can, we have people who share our core values that fit our culture and also have the skill sets to perform their roles to a high level. If we can capture their emotions and get them emotionally connected to what we do as an organization, what our Inspiring purpose is they will always bring more creativity and passion to the work that they do, and they'll get more joy out of it because they'll see a sense of purpose in what they're doing. I think most organizations come up short by spending all of their marketing energy and budgets on external marketing, when they should also spend some portion of that marketing internally to really share our story with people inside the company and help them see it, help bring that to life. The third of those obsessions is we call optimized playbooks. And so if you think about just about anything in business, even like setting up this morning for the podcast, there's a consistent, best way to do that every single time. It may or may not be documented, but if you've got that process documented, you're using checklists and maybe some photos and videos for how you do it. Onboarding new employees becomes very easy because now we've got a system. They can learn the system and they. They fit right into it.

Right.

I often like to, to somewhat tongue in cheek, ask companies that we work with or even people we're talking to, do you. If I were to survey the last 15 or 20 employees that you hired, would you think they would say that they had a great onboarding experience, or would they tell me they got waterboarded? And the reality is somewhere in between.

I was gonna say, I know we've got some major room for improvement in that area.

Right. And I think everybody does. You know, we're. We often are hiring reactively, not proactively. We're trying to fill a need. We've got a pain point and we're overburdened. So we rush people into the roles, but we're not really setting them up for success. And so having a good system through optimized playbooks is a great way to develop that. The fourth is a culture of performance. And we like to use some sports analogies here. But if you think about any athletes performing in a game, they have a scoreboard, they know how much time is left, they know what the expectations are. They can constantly look at data to see are we winning, are we losing, what do we need to do to make adjustments? And so, as businesses, we often don't do that well. And so we work with companies to really instill a culture of performance. It's not a disciplinary thing. It's more of a clarity of data, clear expectations, and then having a system to help coach people up when people need help, but also when people just are not. They're not capable of getting to the level we need them to. Having a system to also coach them out. I think it's important to be able to do both of those. And then the fifth and final obsession we refer to as growing profits and cash flow. And I think many organizations, many systems, many entrepreneurs look at that as a byproduct of doing everything else right, which I think in theory makes sense. But to truly build something elite, I believe you have to proactively be focused on how do we grow profits, how do we look at pricing, strategy, cash conversion cycles, lots of different things that will help drive profits and cash flow. Because if we believe in our purpose, that's the fuel that goes back in the engine that, that helps us achieve our inspiring purpose.

Right.

I love that. Five obsessions. That's a great. Michael, we have a million questions for you, but before we get to them, I have to say, do you need to get a liquor license? Do you need to keep your liquor license? Known as the go to guys, attorneys Ryan Goodman and Jake Curtis of Birchen Crack YOLO have got you covered. They handle all aspects of getting and keeping a liquor license through application and compliance, even manufacturing, distribution and retail sale if needed. Their clients include restaurants, bars, planned communities, shopping centers, hotels and golf courses. Anywhere you can get an adult beverage, they've got you covered. Contact them today@bcattorneys.com that's bcattorneys.com so Michael.

Is Arizona a good place for entrepreneurs in 2024?

You know, I think not only is Arizona a great place, but even Phoenix metro, the entrepreneurial environment and community is so strong here. You take for example the entrepreneurs organization here in Arizona is one of the largest chapters in the country. I believe they have now over 200 members. YPO Young Presidents Organization has two chapters in the state. Vistage is very strong here and the political climate, the entrepreneurial climate is all just very strong for attracting businesses here. We're now, I think I just saw, we've become now the fifth largest city in the country and it just, things here just continue to grow, both opportunities and investments.

How have you seen the entrepreneurial landscape change since you started next level growth?

A couple of things I think, you know, the, the workforce is changing as different generations come in. And it's also interesting. We've, we're at a time where we have more generations in the workplace at the same time than in history. And so when you have older 50, 60 year old people leading 20, 30 year old people, they grew up entirely differently, they view the world differently and oftentimes they don't see things through one another's perspectives. And so those breakdowns and gaps make it very difficult for some of the younger generation to accept the leadership styles from the older leaders. And oftentimes the older leaders are so locked into their ways that they can't morph and modify their style to fit the audience, which is the younger generation of employees. And I think that's a big challenge to overcome. And it takes some self awareness and self reflection and some emotional intelligence to really understand that as a leader in an organization, you've got to be able to speak to and communicate to your audience, which is the team that you lead.

Yeah. I will say this seems to be the biggest divide of employee employer relationships that we've seen that I've seen through my career.

Exactly.

Yeah. So what are some tips you can offer to entrepreneurs?

One of the things I always like to encourage people. When you look at your business, really try to take a who first approach and make the tough decisions you need to where you're tolerating things that, that you really know in your heart you shouldn't be tolerating. But not only focusing on people, but also process first. I often say that most of the challenges and frustrations we face in organizations are a result of either people or process at its core. And if we don't have well defined processes, if we don't have our playbooks defined, if we don't have good training systems, it's really difficult to know if it's a people issue unless it's just an obvious cultural concern. And so I think a lot of organizations have, if not a players, they have people who have the potential to become a players who end up leaving the organizations because they're not hitting performance goals. But it's actually because we haven't provided them the playbooks to know how to perform and set clear expectations. Another, another thing I like to tell people is that I think the, the root of most of our frustrations with people is as a result of unclear expectations. And so we've really got to be clear in our expectations process. Playbooks are a great way to do that. A great accountability chart is a great way to do that so that people know what's expected of them.

Okay. No, I love that. So how can people learn more about next level growth?

So we're easy to find online. Nextlevelgrowth.com is our website. We've got a pretty robust YouTube page with lots of different content divided up into different playlists based on themes. And then also There's a new URL we created called 5obsessions.com. And that's about the launch of my third book, which is going to be coming out in Q1 of next year, called the five obsessions of elite Organizations. And that book is really going to be written for not only entrepreneurs, but leaders and even managers in entrepreneurial organizations to help them understand specific tools, specific things they can do to implement and use each of these five obsessions.

That's fantastic. Well, Michael Erath, author and founder of Next Level Growth, thank you so much for being here today. Thank you for listening to the azbig podcast with Michael and Amy. For the latest and greatest business, real estate and lifestyle news, check out the all new azbigmedia.com Once again, thank you to our sponsors, Burch and Cracciolo. That's bcattorneys.com and thank you to Michael Erath, founder of Next Level Growth.

Thank you.

Thank you for joining us, Michael.

It.