From Concept to Cash Flow | Michael McFall | 480

And welcome, welcome, welcome. This is Peter Winick. I'm the founder and CEO at Thought Leadership Leverage, and you're joining us on the podcast, which is Leveraging Thought Leadership. Today, my guest is Mike McFall. Mike is co-CEO of Biggby Coffee, which is the third largest coffee franchise in the US. He's the author of an original book entitled Grind. Which is a practical guide to starting a new business that skips past the MBA and goes right to the nuts and bolts. And without further ado, let's just dive in. Like, hey, how are you today, Mike?

Doing great. It's cold here, but, you know, I'm a Nordic creature. I enjoy it.

Hey, well, have another cup of coffee. I think you know where to get that from.

Don't worry, got plenty of that.

There you go. So books like yours, and I'll tell you the category I'm putting that in. Meaning they come from real-life experience, are always really interesting to me because you've got academics that write books that are very theory-based, consultants that write books that are based on methodology, but your grind is obviously based on the Bigby story. So maybe tell us what the origin story is.

Well, I think the interesting/sexy part of my origin story is that I started as a minimum wage barista in our first store. And I worked for my partner.

Well, and that's when minimum wage wasn't $40 an hour.

Yeah, I was, yeah, we were, I think I was billing at about $5.25 at that point, you know?

Yeah, exactly. It's a different, yeah.

1990, that would've been 1996. And so, you know, I started there and, you know, really, I mean, frankly, fell in love with the business, meaning I loved showing up to a coffee shop and working. And it's the rare,— rare job that you can have where you actually get to make people happy. You know, people walk in the coffee shop and, you know, you treat them in a certain way and you deliver a product and people genuinely walk out happier than when they came in. And so when my partner approached me about taking more responsibility, maybe becoming a manager in the business, I was on my way back to graduate school at that point. And so, you know, I politely turned him down or said I wasn't interested, but we ended up having a conversation, kind of a interview of sorts. And what that turned into was a 4-hour walk around East Lansing, around the campus at Michigan State University. And, uh, and, and that turned into a handshake at the end of that walk where we agreed to, uh, to become partners. And, you know, that handshake led to the, the formation of a company, uh, and that formation is the company that we all work for today, uh, that we all report into and is the franchisor of our, our company, or our— I should say the franchisor of our brand, uh, Big B coffee.

And how many units? Because Bigby is not, you know, it's a little bit more regional than obviously some of the other players. How many units did Bigby have?

I think we just eclipsed 340, so we're like 341, you know. And then probably the most challenging and exciting number is the 147 that are signed to be opened in the next 12 to 18 months. And that's a—

that's a— you'll be over 500. Yeah, yeah.

Yeah, we'll be over 500 within 2 years. And you know, it's interesting. Yeah. And you know, those are contractually obligated stores to be open. These aren't some, you know, pie in the sky development schedule.

Hypothetical. Yeah, yeah.

Agreed to. I mean, these are actual contracts.

So the book was born out of sort of your journey as a leader at the organization, right? And I think it touches on culture, touches on leadership, et cetera, because On the one hand, it's a quick-serve restaurant business, high turnover. We're hearing again and again and again about the challenges in the labor market. So what is it about the culture that you've curated and created and hope to keep alive and the franchisees that you've codified in the book that we could all learn from?

Well, you know, this book is— the first book is called Grind, and that one is very much about the startup mentality. Which is, okay. And so how do you take a concept to your first day of positive cash flow in that mentality? What you're talking about though is actually the premise of my second book, which comes out in May of this year, and that it's called Grow. So the first book is Grind, the second book is Grow. And that one is about what we need to do as leaders in order to build environments to take on the challenges of the day, which is Making sure that our teams are healthy and that our people are healthy and that our people want to show up to work and they do show up to work and they're in a good space when they do, right? And that's the challenge of leadership.

So let's roll back to Grind then in terms of, you know, there are lots of folks out there that talk about a side hustle and, you know, do what you're passionate about, whatever. And the first thing that you said when you started to explain it was how to get to cash flow positive, which doesn't seem sexy, but is at, you know, breathing isn't sexy either until you stop doing it. So talk about that.

I love the correlation between breathing and cash flow. Well, it's true.

I mean, as a business, right? Like, yeah, you don't think about it until there's none left, whether it's cash or breath. Yeah.

Yeah. Well, you know, so what I've done is, you know, I've spent the last 27 years of my life assisting other people in opening businesses. And, you know, I've lived it with them. And, you know, we used to do a 45-day call post-opening and go through and review where they were and how they were doing. And there's certain people, certain mentalities, certain approaches that I've seen work. And then there's some that I've seen not work. And so what I wanted to do is really capture the mentality of the people that are able to start a business and make it flourish. And that's what I try to do in Grind. And the revenue generation is, to me, is the guiding principle. You have to sell. And if you are scared of selling—

Well, and I think a lot of where I was going to go, I'm sorry to interrupt you there, is that a lot of folks that are entrepreneurial, they sort of skip that part.

Yeah, well, I know they do.

It's all about, you know, like if you like to make ceramic bowls, go make ceramic bowls and put them on Etsy. But the whole point is, if you can't sell it and market it and get an actual product or service in the actual hands of a paying customer, you're done. It's lights out. There is a, I don't want to say a dark side to being an entrepreneur, but I think there's this fantasy that's portrayed often in not just the media, but books and things like that, where I think you need a solid dose of reality. Like without that, you know. Yeah.

I call it the myth of the million-dollar idea. Everybody thinks that they just have to come up with the idea and then that the idea will be so good that the marketplace will accept it and buy it and buy a bajillion of these things. And the next thing you know, you're doing an IPO and you're rich, right? And that is the farthest thing from the truth. It is about having a mentality of how you can put a product in a marketplace and iterate enough to get the consumer to pay attention to that product and understand the value of that product and then buy a lot of that product.

And that product, by the way, you have to have a basic— and this is where a good franchise or comes in— has to have a great model in terms of margin, profitability, scale, consistency, quality, et cetera, right? So oftentimes people have a great product and then they try to get it to market and you're like, yeah, it's not a great product because you're selling something. You would have to sell that at $50 and your competitors are selling it at $10. So therefore it's just never going to be.

Yeah. And I, and so I really spend a lot of time in the book on selling. I spend a lot of time in the book on doing due diligence on yourself as the entrepreneur. You are the number one ingredient to the success of your business, period. And you need to spend time doing due diligence on you, understanding your strengths, your weaknesses, understanding how you're gonna be powerful in the business and how you're gonna be a detriment to the business. And then you need to supplement your weaknesses and then leverage your strengths. And so that's chapter 1, right? Which is, to me, people do not give it enough credence that the entrepreneur, the individual person, is incredibly powerful to the success of the business. And then I go into the chapter of— title of Chapter 2 is Sell More Shit. Like, just sell more shit. You want to be an entrepreneur? Sell more shit. They asked Calvin Klein, you know, they asked Calvin Klein, they said, hey, you know, what kind of plan did you have in place? And, you know, did you do a lot of research? And, you know, all this stuff about this traditional thinking about how to start a business. And he goes, no, we just sold a lot of coats. And that was the formation of Calvin Klein, right? They had those Calvin Klein, whatever they were, they had a name for them, those coats that they saw and they sold a billion of them.

And he's like, oh yeah, yeah, yeah, yeah.

We sold coats. Like, that's all we did is we sold coats and then it turned into Calvin Klein. But so, so, you know, to me, the entrepreneurial, you know, what you need to do to be a strong entrepreneur is figure out how to sell a lot of a product.

Love it. If you're enjoying this episode of Thought Leadership Leverage, please make sure to subscribe. If you'd like to help spread the word about our podcast, please leave a 5-star review at ratethispodcast.com/LTL and share it with your friends. We're available on Apple Podcasts and on all major listening apps, as well as at thoughtleadershipleverage.com/podcast. Podcast. So on that note, let's think about this in a parallel path of, you know, this is your journey as a thought leader. Some would argue that's a different type of entrepreneurial venture in terms of books and all that. What has your experience been like and what have you learned in this process of not just writing a book but marketing it, getting it out there? Give us a sort of a download on what that experience has been like. Well, different than coffee, right?

Well, you know, we all wake up in the morning and need it.

Yeah.

And I tell, I tell, I tell my kids this, I tell, you know, it's like nobody gives a shit what you got to say.

Yeah. Right.

Nobody cares.

Period. Full stop.

Right.

Right. Right.

And, and, you know, it's, it's like, but, but that doesn't stop me from doing it because I, I really, it's cathartic for me. One, I really love the process of really trying to think through, And this book was written as a, you know, as a manual for my prospective franchisees and my current franchisees. Right.

So it was really written for one moment though, because I don't think a lot of people, most people, when they talk about the book process are talking external. Right. But I love the fact that you mentioned the, you know, sort of the cathartic piece, because it's actually a forcing mechanism to get you to get really tight and really clear on your things, because you knew everything that you knew before you wrote this book. But then you had the challenge to say, "Well, how do I communicate this in X number of chapters, X number of pages to make only the points that I want to, leave out all this other extraneous stuff so that people can use this as sort of an operating guide?" Because it's, in essence, a sales tool for the franchise system, correct?

Yeah. In many ways, it is. Or I like to look at it as if you read my book and you connect with it and you agree with it, then I want you, and I want you to self-select into my program. If you read my book and you think it's a bunch of hogwash, I don't—

I'm not your guy, right?

Right. I don't want you.

Right. So, so with that, from a sales process, going back to what you said before, I could read your book and go, oh, this is crap. Or it's not for me. Great. Then we're not going to engage. You just, you can now move on to somebody who read the book and said, wow. Wow, Mike, this is really, I love what you're saying. I love what you're thinking. You've connected with me at a visceral level, or, you know, I have a same belief system. Let's talk. That's a whole different game.

Yeah. Yeah. Yeah. And, and so, and then the cathartic piece. Yeah, you, you're right. I mean, anybody who's written a book knows how it's really a challenge to figure out what to say and how to say it. It, you know, and, and, um, I, I like that. I like that. I like that challenge. And, uh, and I've been, I really enjoyed it. Uh, and so, you know, I've moved on into book 2. Book 2 takes you from your, you know, what I call bootstrapping entrepreneur entrepreneurial phase, which, you know, you're just barely cash flowing. You're just getting into that moment.

Yep.

Through all the way through to sustainability, which I'm, which I define as the leader, the entrepreneur could get trucked by a bus tomorrow and the business will continue to thrive. And so it's this, it's this arc, right? You have to become a really strong leader within the organization and then you have to there then turn yourself into irrelevant in the organization. And that is—

So stay there for a minute because so many companies, organizations, brands, etc., are built around, whether deliberately, intentionally or not, you know, the ego of the founder. And, you know, part of the beauties of any sort of franchise system is it's not about you, right? It's replicatable systems and processes that are applied in a certain territory that we know to be true will yield a fairly predictable outcome. So it's not about charisma, it's not about personality. The founder story. So I love your story of sort of, you know, barista to CEO, because I'm also sure that that's a story that can trickle down every day as a franchisee is opening in the marketplace, right? Like that, that works. But people know what to do every day when they get in the store. And I'm sure your phone's not lighting up every day like, hey, what do I do when this happens? Right? There's systems for that.

Yeah, and I think a lot of leaders— I have two primary things when I talk about this. One, a lot of leaders need to be needed, and so they actually thrive on the dopamine of 25 text messages in the morning and 5 phone calls and this.

Yeah, yeah, yeah.

And, and then the other, the other thing that I, that I am an advocate of is, is not, uh, talking as much as you do. Otherwise known as shut up. So leaders need to shut up, right? Leaders need to shut up. And if you're a strong leader, you will say less words. And the more powerful you become, you'll say even less words because what that means is that you're turning that authority over to others. And that's what true leadership is.

Well, and sometimes that shut up is, you know, someone you could jump in, solve the problem for them. And jump out in 5 seconds because you've seen it before, whatever. But you need to give them the runway, the freedom to make a mistake, not a bet the house mistake, so that they learn that from themselves. Right?

Yeah. But I think there's an error in that thinking too though, Peter. And that is that most leaders assume that they know the answer. And so I'm just going to let them fall and skin their knee so they can learn the lesson. But that thinking is that you know the answer and we don't. We think we do, but we don't always, right? We can have input and so on. And this idea of the primary purpose of a leader is to create other leaders, to me, that is what we're about. That's what we should be doing as leaders.

The compounding effect of that, right?

And so by making that what you're doing, being quiet and letting other people work and other people lead, and then maybe coaching afterwards, you know, and, or working with that leader afterwards on certain things or certain approaches. That to me is, is leadership. And that's, that, I mean, the book's about a bunch, but it's, that's one of the primary threads in, in book number 2, which is the idea of making yourself irrelevant and creating strong teams and strong leaders.

Well, this has been fantastic. Any final words or thoughts on folks that are pondering, hey, there's something special about my entity, my company, or I've always thought about writing a book, any words of wisdom?

Well, write the book. I mean, you know, if nothing else, it makes you really think about what you believe in and what you want to say to the world, right? I mean, I love that. And then in terms of entrepreneurship or starting companies, I mean, yeah, it's spend a lot of time thinking about if it's for you. And because there's also the fallacy of freedom. That being an entrepreneur is going to make, you know, yeah, at the end of the day, you know, 10, 12, 15 years later, you've probably got more freedom than you do today. But the 10 years to get there can be really demanding and really difficult. So, I call it the fallacy of freedom that people go into becoming an entrepreneur for freedom. And it's like, yeah, at the end of the day, if you make it and you're 10 years down the road, you could get the freedom. Or more freedom, but there's a long, long road to get there.

Well, I would also argue that the freedom is not for everybody. There's a certain point in certain people's lives where you need more structure or regimen and you learn from that, even though it might feel like, you know, 5-year-olds want to have ice cream for breakfast. It's not like that's necessarily a good idea, right?

No, right. Exactly. I mean, it's not for everybody. I mean, I tell people all the time, I'd give anything in the world to have somebody to tell me what I'm supposed to do today in order to make my business successful. I would love to have somebody sitting right here next to me saying, Mike, do this today and your business will be— that person doesn't exist.

Well, it's easy, Mike. Here it is, Mike. Sell more shit. I learned that from a smart guy today. That's all you need to do, man.

Pretty much.

Yeah. Well, this has been fantastic. I appreciate your time. Appreciate you sharing your journey with us. Thank you so much, Mike. All right, Peter.

Thank you. Appreciate it.

To learn more about Thought Leadership Leverage, please visit our website at thoughtleadershipleverage.com. To reach me directly, feel free to email me at Peter at thoughtleadershipleverage.com. And please subscribe to Leveraging Thought Leadership on iTunes or your favorite podcast app to get your weekly episode automatically.