MBA2053 Guest Teacher – Patrick Bryant – How to Use Scale and Innovation to Grow Companies

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Hey oh. Welcome to the Hundred Doll. Because a better business begins with you. That's why we deliver daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started with my co founder back in 2014 and today's episode is a guest teacher episode. On our guest teacher episodes we bring on an expert to teach their area of expertise. Today we have Patrick Bryant and he'll be teaching you how to use scale and innovation to grow companies. Do you ever feel like you are pushing a boulder uphill? That it's incredibly hard to grow or bring in customers or see your business move to the next level? Well you could be doing it the hard way. In today's lesson, Patrick Bryant's going to show us some strategies to implant to infuse scale and innovation in our business to make things easier on us so the boulder is getting push downhill so that we can serve more customers so that we can expand our business and grow easily so that we don't put a ceiling on our growth and capabilities. Patrick Bryant is a serial entrepreneur, professional speaker and the co founder and CEO of Code and Trust which is a software product agency. He is an expert at taking your passion, your idea your business and helping you make it a scalable business. He's going to encourage you in today's lesson to think differently about the way you are building your business, how you're expanding, how you're growing. This one's powerful. Let's get into it. Let's get down to business.

ADP knows anything can change the world of work. Like what if a blocked shipping port caused a worldwide coffee shortage? Suddenly, businesses are scrambling to manage an increasingly drowsy workforce. Productivity slips 20% just due to the extended time it takes to conduct a job interview while yawning. Anything can change the world of work. From HR to payroll, ADP helps businesses take on the next anything. ADP always designing for people.

If you're a new entrepreneur or even somebody who's been building your business for some time, hustling away trying to make it happen, you're going to absolutely love today's lesson because it's all about understanding the future of your business, thinking big and thinking of easy to implement ways to to scale your business to reach more customers and allow your business to be open to new opportunities. Today's guest teacher, Patrick Bryant is going to show you some ways how to utilize some of these strategies so you can scale but also to infuse innovation so you can stand out from the crowd and grow your business. I want to pass on to Patrick right now, but I'll be back to wrap up today's episode and give my takeaways. But for now, take it away Patrick.

I'm Patrick Bryant, CEO of Code and Trust software development firm. Thank you for joining me today. I'll be teaching you how to use scale and innovation to grow companies. When I was 15 years old, my family started a newspaper. My dad had been an expert in newspapers his entire career. He had sold advertising for newspapers and I was so excited that I put $2,500 of my saved up money into into the business and I learned everything that I could learn. At the time. Macintosh computers were brand new and I became the network administrator and as my summer job, a graphic designer. Inside of the newspaper at 17 I vividly remember my dad coming into my teenage room and telling me that they were filing bankruptcy. We would lose our house, my parents would get divorced and I would feel the pain of losing this business. This thing that had been so exciting to me was now imploding my entire family. I had found rock bottom. At 17. I took everything from that business. I took the pins, I took a computer, I took the used minivan and I was driving it around town. I started a graphic design firm selling my own time in order to use that computer and the skills that I had to make a little bit of money. Many people would have seen their father go through that late in their life and say, wow, why did he risk our family at that point in his career? Why start a business? Shouldn't I just go get a good job? On the other hand, I took away the opposite. I decided that I wanted to be the best I could possibly be at starting new businesses. Much like someone that almost drowns and then becomes an Olympic swimmer, I was motivated to make entrepreneurship my superpower, learn everything that I could about creating businesses and become really good at it. Since then, I have started eight more companies. Six have gone multi million and are still on the way and growing. We also founded the nonprofit Harbor Entrepreneur center that has helped over 90 companies as they grow and understand innovation and and scale. I believe entrepreneurship is the number one change agent in the world. And over the next 10 minutes, I'm going to work with you to find business ideas and grow businesses that have scale and innovation. It doesn't matter if you've got a new business idea and you need to figure it out before starting that business, or you're in a multi generational business and you need new products to grow into the future. Everyone else will tell you, just start a business that you're passionate about. What I'm saying is create a growth business model around your passion. There's a big difference between starting a burrito truck because you love burritos and being limited to by the number of burritos you can sell in a day. Because you only have one truck, it's very difficult to scale. And on the other hand, you can love burritos and you can start a burrito app that everyone around the world could use to create their own burritos and buy burrito supplies from you. And with that same burrito passion, you've now created a business that can scale around the entire world and grow through other interesting innovative solutions to the burrito problem. First, a quick primer on business valuations. Few owners know this. When you go to sell a business, the formula for calculating its valuation is based on how much innovation, scale and and growth that company has. If you're in a situation of a normal kind of unscalable business, you're gonna get a three times multiple on your revenue. So in the case of our burrito truck, if you were doing $100,000 a year, you're now going to get a purchase price of $300,000. On the other hand, if we create some innovation and scale into that idea, not only is it going to be easier to grow, but even with that same $100,000 in revenue, we now get to sell at a 16 times multiple. Now we're selling for $1.6 million. So 300,000 to 1.6 million just because we've created innovation and scale into our business. I want you to picture a field. In that field, there are blades of grass, there's a clump of bushes, and there is a large oak tree. You want to be the oak tree, normal, non scalable, with not a lot of innovation businesses, they're all those blades of grass. On the other hand, when we get into a place that no one can compete with us due to our innovation, we've protected our product or our process, it makes it very difficult for other blades of grass to be around us. And we are also able to cover a large area of space in our scale. And now we are an oak tree. So let's look at scalability. It's our first factor because it allows us to grow fast and large. And every business should be graded on its scalability. Scalability is what allows us to sell a lot of the same product. And in doing so, we have really high volumes, which creates economies of scale. And these things allow us to be very efficient. And with those high volumes, we can create a lot of revenue. The three factors that we look at when it comes to scalability are first, the area in which a particular product or service can be sold. If it is in a very small area, such as I start a business that can only be sold in my neighborhood, let's say lemonade on a weekend. Now I'm limited by that small area. On the other hand, if I can sell globally very quickly, such as software or a medical device, all of a sudden I have great scalability. Second, in scalability is who is our audience? Is our audience limited? Such as I might say I'm selling a product and I'm only selling it to men that are 20 to 25 years old. I've created a limited audience. That's still a lot of people on earth, but it is a limited audience. On the other hand, I would want to be able to sell my product to everyone around the entire globe, every single person. That is a much greater scale. Finally, our third factor is how many times our clients will purchase that particular product. And we want one that is sold repeatedly. So if we have a one purchase opportunity, let's say we're going to sell tires. Tires are a good business, but there's a limited scale in the sense that people are going to buy them once and keep them for a very long time. On the other hand, we might have products like toilet paper that can be used around the world by everyone repeatedly. That is tremendous scale. Our next topic is innovation. And innovation is what allows us to outpace the competition. We are an oak tree. If we can figure out something that no one else can get close as we grow the business, it really gives us time to figure out all the nuances of that particular business. But more importantly, it gives you really high margins. Because if you're selling something that no one else can sell, and it solves a problem in a unique way, then people are going to pay a large amount for your product. That's what drives high margins. So let's look at the three factors that go into innovation. The first is, is our product an existing technology or an older technology? Is it something that has already existed in the world? On the other hand, is it something new? Is it something no one's ever done before? Is it something that we can protect through a proprietary, secret formula, a patent, some sort of brand or trademark? Our next factor is whether or not there is a barrier to entry for other people to come along and do what we're doing. A low barrier to entry means that anybody can jump in and start offering that product or service. Let's say landscaping is somewhere that there's a pretty low barrier to entry. Almost anyone can do it, and all they've got to do is start buying the right equipment and start mowing lawns. On the other hand, we want a really high barrier to entry for our new business idea or product. This high barrier to entry means that you're going to need degrees or certifications to start doing that. Perhaps like a certain type of doctor, you might need complex education. You could need large equipment or a complex supply chain or other research and development. Those are all examples of things that slow people down from getting into your business and competing with you. And the higher the barrier to entry, the more you're going to be able to grow without a lot of competitors around in the space. Finally, our third area is the industry itself that we're going to operate inside of. If the industry that we're talking about has been around a while, let's say cigars, for instance, then that's going to be a contributing factor to make growing the business difficult in comparison. I mentioned medical devices. Medical devices are an industry that are changing and growing and have a lot of new technology. And in doing so, that particular medical device industry is a place we would want to focus when it comes to innovation. Now that we've covered scale and innovation and why they're important in growing your business, let's look at a business in Google that ranks perfectly in both of the areas. They are not in a small area. They're sold the world over and used by every person almost on earth. In addition, they're used repeatedly and so their scale is huge. Innovation with Google is a constant. It's very difficult to jump into business and compete with Google. You would need to invent a lot of technology and have some really complex marketing army. It's also in a growing industry of software that allows that innovation to continue to grow with other ideas. So Google gets a perfect score for scale and innovation. There is no shade on Google. They are an oak tree. At this point, the most common question that I get is, Patrick, can I run some business ideas by you? And the answer is yes. I love talking to people about starting new companies, about starting new products. We have created at our website a form that you can use codeandtrust.com growth score. There you can run through each one of these items, think through your business, and also get communicate with me in order to continue talking about the idea. Picture a day when your business idea is scalable, innovative and growing. Picture a day when someone comes up to you and says, how do you come up with those amazing business ideas? Picture a day your business can grow forever. Go to codeandtrust.com/growth score and connect with me and we'll work together to grow a business that has scale and innovation. Now back to Omar.

ADP knows anything can change the world of work. Like what if a blocked shipping port caused a worldwide coffee shortage? Suddenly, businesses are scrambling to manage an increasingly drowsy workforce. Productivity slips 20% just due to the extended time it takes to conduct a job interview while yawning. Anything can change the world of work. From HR to payroll. ADP helps businesses take on the next anything. ADP always designing for people.

Thank you, Patrick Bryant, for that great, great lesson. I want to give you an example of how I had to get innovative and scale my business. In a previous business, I had my e commerce business where I sold custom tailored clothing for men. Sales were up and down, depending on season, holidays and things like that. And I wanted a way to have stable income to be able to pay for my regular expenses. You know, expenses were not going down. They'd stayed the same Month after month. So I started a VIP club for my best members. I had thousands and thousands of customers, but I had about a hundred customers that absolutely loved our products and I call them my VIPs members. I knew if I offered something special to these types of customers, they would jump all over it. Basically, I charged $20 a month to be a VIP member. And what this meant is that they got early access to the newest styles. So they had one week advance notice to order some of the best styles that were coming out in the next season. They also got free shipping for all orders above $100, which was pretty easy to do because our clothing was a little bit on the higher end side and most of our products are around the $90 mark. We also offered special styles or colors of our clothing for only VIP members. So say, for example, a dress shirt came in three different colors. There'd be a fifth color that was only available to VIP members. Now, even though I had around 100 VIP members to start with, that was an extra $2,000 I got every single month. This allowed me to stabilize things. Plus it was something I could scale. I can sell as many VIP memberships as I wanted and it didn't cost me any more. I also implemented a referral program with the VIP program where I told VIPs who are already VIP customers, if they referred us to three other VIP customers, they would get a gift certificate for $50. For us, this was a win win because equals 60 extra dollars a month. So we were $10 in profit. Plus these were reoccurring VIP members. So every month after was all gravy. So this is what is meant by creating innovation and scalable products or services that can really move the needle in your business. Think outside the box. See how things are implemented in other industries and see if you can implement them in your industry. You can differentiate and stand out from other competitors in your marketplace. Thanks so much for listening to the 100 RMBA show. If you love what you hear, leave us a rating and review. We'd love to hear what you think of the show, what your favorite episode is, what your favorite takeaway was. Let me know. I read every single review. I'd love to hear from you. Before I go. I want to leave you with this. Before I got to the VIP idea where I sold memberships, I had a bunch of other ideas that kind of didn't do so well. Be willing to experiment. Be willing to try things. It's okay if you launch something and then you close it down. Your customers are not following every little thing you do in your business and every little offer you offer. Experimentation is necessary to find the right thing for your business. Keep trying until something really sticks and works for you. Thanks so much for listening and I'll check you in tomorrow's episode. I'll see you then. Take care.

ADP knows Anything can change the world of work. Like what if a blocked shipping port caused a worldwide coffee shortage? Suddenly, businesses are scrambling to manage an increasingly drowsy workforce. Productivity slips 20% just due to the extended time it takes to conduct a job interview while yawning. Anything can change the world of work. From HR to payroll. ADP helps businesses take on the next anything. ADP always designing for people.