Emerge Dynamics Podcast: Recent Episodes
Emerge Dynamics
“The single most important factor in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10%, then you’ve got a terrible business.” — Warren Buffett
Episode OverviewThe final installment of a three-part pricing series focused on implementing pricing strategies in middle-market private companies. This episode covers the psychology of pricing, common errors, and a step-by-step execution framework.
Key Topics Covered1. Strategic Foundation of Pricing* Pricing as the single most important factor in business evaluation (Warren Buffett) * Pricing power as an indicator of business quality * Connection between pricing strategy and overall company value creation * Reference to monopoly control as a key value builder driver
2. Psychology of Pricing Loss Aversion:* Business owners’ fear of losing customers vs. gaining new ones * Understanding that not all customers are good customers * Overcoming the fear that price increases will hurt new customer acquisition * Dan Cremons’ warning about “the race to the bottom” with competitor-based pricing
3. Common Pricing Errors Under-pricing: Setting prices just to win deals * Set and forget: Not regularly reviewing pricing strategy * One-size-fits-all pricing: Failing to segment customers by value perception * Inconsistent pricing:* Allowing sales teams to discount without strategy
4. The Airline Industry Case Study* Example of sophisticated pricing in a commoditized industry * Revenue management departments optimizing for customer segments * Differential pricing based on booking timing, route urgency, and customer needs * Almost no two passengers pay the same price
5. Step-by-Step Pricing Implementation FrameworkStep 1: Baseline Assessment
- Document current pricing model
- Analyze how prices are established today
- Review historical pricing trends and experiences
Step 2: Research & Validation
- Competitor pricing analysis (as input, not driver)
- Customer value research (most critical)
- Gauge perceived value by customer segment
- Understand what customers actually value vs. what you think they value
Step 3: Testing
- Use test markets and customer subsets
- A/B testing for web-enabled businesses
- Avoid “ready, fire, aim” approach
- “In God we trust, all others bring data”
Step 4: Execution
- Assign clear ownership for price changes
- Timing: Connect price increases to events
- Segmentation: Tailor communication approach by customer importance
- Major customers: In-person meetings
- Smaller customers: Phone calls or personalized emails
- Communication: Be clear on the “why” and “what’s in it for them”
- Avoid impersonal form emails
Step 5: Measurement & Monitoring
- Continuous feedback loop
- Regular quarterly reviews (minimum)
- Adjust pricing frequency based on industry (daily/weekly/yearly)
- Never “one and done”
6. Core Principle: Value-Based Pricing* Always match price to value created for customers * Focus on customer’s perceived value, not competitor pricing * Ensure pricing enables reinvestment in value creation * Balance: Don’t leave money on the table, but don’t overcharge
Action Items for Listeners1. Assess your current pricing model * Document how you establish prices today 2. Conduct customer value research * Survey or interview customers to understand what they truly value 3. Review pricing quarterly * Set calendar reminders to evaluate pricing strategy 4. Segment your customers * Identify different customer tiers based on value perception 5. Test a price change * Start with one product/service (as discussed in Part 2) 6. Assign pricing ownership * Designate a point person for pricing strategy execution 7. Plan your communication strategy * Determine which customers need personal outreach vs. email 8. Set up measurement systems * Create dashboards to monitor pricing effectiveness
Resources Mentioned Book: Winning Moves by Dan Cremons * Previous Episodes: Parts 1 & 2 of the Pricing Series, Episode on Value Builder Drivers * Contact:* podcast@emergedynamics.com for questions or to share your pricing success stories
Key Quotes“The single most important factor in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10%, then you’ve got a terrible business.” — Warren Buffett
“To those taking a strictly market-based view of pricing and setting their price based primarily on competitor pricing: good luck in the race to the bottom.” — Dan Cremons
“In God we trust, all others bring data.” – Unknown
Episode OverviewIn this second episode of the pricing series, hosts David and Eric bridge from pricing theory into practical strategy and application. They explore the critical differences between cost-plus and value-based pricing, discuss price elasticity, and provide actionable frameworks for optimizing pricing in middle-market private companies.
Key Topics Covered1. Marginal Buyer Theory Recap* The last buyer-seller transaction indicates market pricing potential * Prices function as market signals about resource value * Ignoring the marginal buyer leaves money on the table
2. Price Elasticity of Demand High Elasticity: Small price changes cause significant market share loss (e.g., hotdog industry – one penny change = major impact) * Low Elasticity*: Price changes have minimal impact on customer retention * Revenue optimization: Selling at 2x price with only 5% customer loss increases overall revenue and profit
3. Cost-Plus PricingWhen It Makes Sense:
- Regulated industries (utilities, government contracts)
- Commoditized products
- New product launches (to establish break-even baseline)
How to Calculate:
- Add all direct costs (materials, labor, freight)
- Allocate indirect costs (rent, depreciation, admin)
- Calculate total unit cost
- Apply markup based on contract requirements or industry standards
Limitations:
- Focuses energy on cost side, not demand side
- Misses shifts in market dynamics and pricing power
- Leaves value on the table from marginal payers
- Doesn’t account for subjective customer value
4. Value-Based PricingCore Principle: Maximize profitability by capturing the value created for customers
Implementation Steps:
- Identify the specific problem your product/service solves
- Quantify the cost of the problem to your customer
- Lost sales
- Production inefficiencies
- Higher operational costs
- Calculate economic value created
- What would alternative solutions cost?
- What’s the total economic benefit?
- Set pricing below total value to ensure customer benefit
Example:
- If your solution creates $100K/year in value
- Pricing at $100K = customer breaks even
- Pricing below $100K = customer realizes net benefit
- Consider multi-year value (Year 1: break-even, Year 2+: 100% profit to customer)
5. Pricing Optimization StrategiesFor Established Businesses:
- Run pricing experiments to optimize revenue and profit
- Test different price points carefully (consider elasticity)
- Create multiple proposal versions with different pricing
- Differentiate by geography or market segment
- Track conversion rates and customer response
Key Insight: Value pricing aligns your interests with customer interests – if you’re not bringing value, you shouldn’t be in business together.
Action Items for Listeners1. Complete the homework from Episode 1 * analyze your data using marginal buyer theory 2. Quantify the economic value your product/service creates for customers 3. Calculate what alternative solutions would cost your customers 4. Begin pricing experiments in your business (if appropriate for your industry) 5. Prepare for Episode 3
Coming Up Next* Hourly pricing vs. value-based pricing for services * Comprehensive pricing strategy framework * Putting all the pricing concepts together
Key Quotes“A price is not something you set, even though yes, you do set them, it’s more of a signal of what the market is saying about the value of certain resources.”
“Value pricing always aligns ourselves to the interest of the customer and the client. If we’re not bringing them value, then what the heck are we doing?”
“When all of your pricing energy is going to the cost side, you’re paying less attention to the demand side.”
Resources* Episode 1: Pricing Theory & Marginal Buyer Concept * Economist referenced: Ludwig von Mises
David and Eric launch a new series focused on one of the most critical yet misunderstood topics in business: pricing theory and pricing strategy. This episode lays the groundwork for understanding how prices are set, why they matter, and how business owners can leverage pricing as a powerful tool for profitability and growth.
Main Topics Covered:
- Why pricing matters for business value and profitability
- Pricing theory vs. pricing strategy: understanding the “why” and the “how”
- Price as a signal, not just a number (wisdom from Ludwig von Mises)
- Market dynamics and price setting (cost-plus pricing, market examples)
- The invisible hand and market signals (Adam Smith, government price controls)
- Marginal payers and market clearing (Böhm-Bawerk, horse auction example)
- Subjective value and ethics in pricing
- The dynamic nature of prices and market size impact
- Practical applications for business owners (M&A, product pricing)
Key Takeaways:
- Adopt a “price as signal” mindset—every price is a signal of value.
- Experiment and gather data: try changing a product’s price and observe the results.
- Beware of over-reliance on cost-plus pricing; focus on value.
- Understand the role of marginal buyers and sellers in price setting.
- Recognize the subjectivity and ethical considerations in pricing.
Notable Quotes:
- “Price is not a number you set. It’s a signal you read.” – Ludwig von Mises
- “Good managers have to set prices according to market conditions.”
- “Each individual player in the market has a subjective value. This is going to play into how we start implementing pricing strategy in our next episodes.”
- “If nothing changes when you raise your price, you may have more pricing power than you think.”
Action Items & Listener Challenge:
- Try changing the price of a low-risk product and observe the results.
- Share your experiences with the hosts at podcast@emergedynamics.com for a chance to be featured in a future episode.
What’s Next:
The next episode will dive deeper into actionable pricing strategies, building on the theory discussed here.
Connect with Us:
Email: podcast@emergedynamics.com
Thank you for listening to Emerge Dynamics! If you enjoyed this episode, please subscribe and share your feedback. Stay tuned for more insights on pricing and business strategy.
Summary
In this episode of the Emerge Dynamics podcast, David and Eric discuss the critical role of operational efficiency in business success. They explore the often-overlooked tweaks in daily processes that can lead to significant growth and impact. They use just one of the numerous possible examples to demonstrate their point: The order-to-cash-cycle. The conversation covers practical steps for improving the order-to-cash cycle, identifying pain points, measuring workflow efficiency, and implementing quick wins. They emphasize the importance of testing changes and documenting improvements to ensure sustainable growth and efficiency in business operations.
Takeaways
-Operational efficiency is crucial for business growth.
-Small tweaks in processes can lead to significant improvements.
-Mapping out workflows helps identify inefficiencies.
-Measuring the order to cash cycle is essential for cash flow management.
-Identifying pain points can reveal opportunities for improvement.
-Quick wins can be achieved by streamlining processes.
-Testing changes in a pilot program is important before full implementation.
-Documentation of processes aids in training new employees.
-Continuous improvement is key to operational success.
-Every business can benefit from focusing on efficiency.
Chapters
00:00 Introduction to Emerge Dynamics Podcast
01:39 The Importance of Operational Efficiency
03:05 Mapping the Order to Cash Cycle
05:40 Identifying Pain Points in Processes
12:00 Measuring Workflow Efficiency
17:01 Identifying Quick Wins for Improvement
18:15 Testing and Piloting Changes
20:19 Documenting Improvements for Future Reference
Because of their recent projects, David and Eric give some updates on the current dynamics they are seeing in middle market mergers and acquisitions (M&A). They emphasize factors that influence business valuations and sale-ability. They discuss how external risks like geopolitical tensions and tariffs impact M&A, but stress the importance of focusing on controllable internal factors to maximize business value. There are key strategies for business owners to prepare for a successful exit, regardless of market conditions.
- Over-reliance on the owner: Buyers discount businesses where the owner is too involved in daily operations, as it raises concerns about continuity post-sale. Building a strong team and processes mitigates this risk.
- Customer and supplier concentration: High dependence on a few customers or suppliers reduces valuation. Diversification and long-term contracts help stabilize revenue streams.
- Recurring revenue models: Businesses with predictable, recurring revenue (e.g., subscriptions or contracts) command higher valuations due to lower cash flow risk.
- Market timing vs. controllable factors: While external conditions influence M&A activity, improving business fundamentals ensures better outcomes in any market.
Visit us to learn more about Business Value Acceleration.
In this episode David and Eric focus on the importance of businesses identifying and understanding the specific problems they solve for their customers. They emphasize how this clarity drives purpose, improves marketing, and differentiates businesses in competitive markets. They also discuss the balance between passion-driven purpose and addressing real societal needs, using examples like Apple’s iPhone to illustrate innovation that meets unexpressed desires.
- Introduction and podcast mission: Highlighting the value of sharing insights for business owners.
- Core topic: The necessity of defining the problem a business solves and its impact on purpose and marketing.
- Purpose vs. business viability: Distinguishing between passion-driven causes and sustainable business models.
- Innovation and market education: Examples like the iPhone show how businesses can address unarticulated needs.
- Differentiation and competition: Avoiding price wars by solving unique problems and creating customer loyalty.
- Call to action: Encouraging listeners to engage with the podcast and suggest topics or guests.
Timestamps
00:01
Emerge Dynamics: Unveiling Middle Market Champions
This podcast spotlights the risk-takers and innovators in the multi-trillion dollar middle market, exploring how they outperform peers to deliver both financial returns and community impact. Through their stories, we uncover the unseen forces driving economic and social transformation.
00:38
Podcast Reunion: David and Eric Return
After a brief hiatus, hosts David Cusimano and Eric reunite with palpable excitement, signaling fresh episodes ahead. Their camaraderie hints at engaging discussions to come, like old friends picking up where they left off.
00:58
Passion Over Profit: The Heart Behind Emerge Dynamics
While business growth has stolen their recording time, the hosts reveal their podcast thrives on pure passion—no ads, no profits, just a shared mission to empower entrepreneurs and sprinkle wisdom like ‘nuggets’ into the world.
01:53
Current Events with a Business Twist: Upcoming Podcast Series
Instead of just rehashing headlines, Eric and David are crafting a multi-episode deep dive into news that actually helps entrepreneurs make smarter decisions—because running a business isn’t about noise, it’s about actionable insights.
02:37
The Core Question Every Business Must Answer
Entrepreneurs often get lost in selling products without realizing the deeper problem they solve—like selling widgets without understanding how they improve lives. This oversight not only drains purpose but also weakens marketing. When businesses grasp the real value they provide, it ignites team motivation and crafts authentic customer connections. The key? Constantly asking: ‘Why do we exist?’
03:58
Purpose vs. Business: Why Not All Passions Pay
A heartfelt purpose like filling the world with pink teddy bears might ignite your soul, but without solving real problems, it’s a charity—not a viable business. The key? Aligning passion with societal needs to create value that others will pay for.
05:26
Innovation Before Demand: The Art of Solving Unasked Problems
Like Apple’s iPhone revolutionizing life before anyone knew they needed it, true innovators identify latent desires—creating solutions for problems society hasn’t even articulated yet. This paradox of ‘building what people don’t know they want’ separates visionaries from followers, proving demand often follows invention rather than precedes it.
07:02
Pitching with Purpose: How to Frame Problems and Solutions
The key to a compelling pitch lies in balancing problem awareness with solution clarity—whether it’s as obvious as a hangover cure or as niche as serving 5 million underserved customers. While some audiences need no education on the problem (like hangovers), others require data-driven proof of an unmet need. The most effective pitches start by highlighting a tangible gap and immediately presenting a viable solution, turning skepticism into curiosity. Surprisingly, even non-innovative companies can craft compelling narratives by focusing on specific, underserved markets rather than trying to mimic industry giants like Apple.
08:59
The Power of Purpose: Why Your Business Must Solve a Real Problem
Forget competing on price—businesses thrive when they identify and solve a unique problem. Like a lighthouse in a storm, differentiation guides customers to you, not just to the cheapest option. When your team wakes up to change the world, not just collect a paycheck, magic happens. The alternative? A race to the bottom where the ‘winner’ is the one who earns the least.
12:14
More to Come: Stay Tuned for Future Episodes
In this episode of the Emerge Dynamics podcast, David Eric discuss the transformative impact of artificial intelligence (AI) on various industries, particularly focusing on knowledge work. They explore how AI is reshaping business processes, the importance of identifying unique value in a commoditized landscape, and the responsibilities that come with leveraging AI technology. The conversation emphasizes the need for businesses to adapt to these changes and harness AI as a tool for good, while also being mindful of the ethical implications and societal responsibilities associated with its use.
Takeaways
Just like the steam engine leveraged man’s muscles to create exponential productivity gains, AI leverages our minds to create exponential productivity gains. Those who embrace this will benefit incredibly.
AI is not going away; it’s transforming business.
The efficiency gains from AI are unprecedented.
Knowledge workers face significant disruption from AI.
Identifying the unique value in a commoditized landscape is crucial.
AI can enhance decision-making in healthcare.
AI is a tool that can be used for good or bad.
Businesses must adapt to the changing landscape of AI.
The societal responsibility of programming AI correctly is vital.
AI has the potential to leverage human intellect significantly.
Embracing AI can lead to leadership opportunities in the future.
Links
https://finance.yahoo.com/news/goldman-sachs-ceo-says-ai-192852635.html
https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/superagency-in-the-workplace-empowering-people-to-unlock-ais-full-potential-at-work
Ranking
Many thanks for Feedspot for acknowledging the work Eric and David have been putting in and recognizing the Emerge Dynamics Podcast as one of the top “Business Podcasts to Listen to In 2025”
https://podcast.feedspot.com/business_podcasts
In this episode of the Emerge Dynamics podcast, hosts David Cusimano and Eric Wingerter discuss the importance of perseverance in entrepreneurship, especially in light of current economic trends and challenges. They explore recent data on CPI and Fed rates, emphasizing the need for business owners to adapt to changing circumstances. The conversation highlights personal stories of overcoming adversity and the significance of having a purpose-driven approach in business.
Takeaways
Perseverance is essential for business owners and entrepreneurs.
Current economic trends, such as rising CPI, impact small businesses.
Adapting to change is crucial in a rapidly evolving market.
Personal experiences of struggle can strengthen resolve and purpose.
Having a clear purpose can drive motivation beyond financial success.
Historical examples of perseverance, like Milton Hershey, inspire current entrepreneurs.
Success and failure are not permanent states; learning is key.
Emotional resilience helps navigate business challenges.
Focus on logical choices amidst external noise and distractions.
A purpose-driven business is more adaptable to change.
Links
https://data.bls.gov/timeseries/CUSR0000SA0&output_view=pct_1mth
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
https://www.businessinsider.com/fedex-saved-from-bankruptcy-with-blackjack-winnings-2014-7?op=1
Episode 72: Understanding Price Controls: From Hurricanes to Global Tariffs
Many thanks for Feedspot for acknowledging the work Eric and David have been putting in and recognizing the Emerge Dynamics Podcast as one of the top “Business Podcasts to Listen to In 2025”
https://podcast.feedspot.com/business_podcasts
In this episode of Emerge Dynamics, we welcome Ali Beck, a blockchain and Bitcoin expert.
In previous episodes, we discussed the necessity of understanding Bitcoin and bringing in knowledgeable guests. Ali Beck, who co-founded HollaEx and did his master’s thesis on cryptography and Bitcoin security using elliptical curve cryptography, certainly qualifies. This episode promises to be enlightening for anyone who has yet to pay attention to the Web3.0 tsunami that is rapidly changing the business landscape.
Ali explains how emerging technologies like blockchain create new foundations for financial activities, moving beyond traditional banking systems that have been in place for the past century. Ali elaborates on the many use cases for blockchain, including the tokenization of real-world assets such as real estate, stocks, artwork, and even wine. He emphasizes the simplicity and opportunities that tokenization brings, allowing for automated and programmable money transfers without the need for traditional intermediaries. Ali shares fascinating real-world examples of tokenization, such as a client who tokenized premium wines for easier and more secure international trading, and an art museum raising funds to purchase artwork through fractional ownership tokens. These examples illustrate how blockchain is merging physical and digital worlds, offering new ways to manage and trade assets.
Ali’s company, HollaEx, addresses these opportunities by providing white-label crypto and blockchain solutions for businesses looking to integrate these technologies. HollaEx offers an interactive platform that allows businesses to create and manage digital assets, build trading platforms, and offer secure digital wallets to their users without understanding all the technical details of blockchain. We also explore how different regions across the globe are adopting blockchain technology.
Ali concludes with insights into the rapid advancements in AI and blockchain, predicting that 2025 will be a pivotal year for these technologies. He advises business owners to pay close attention to these trends and modernize their practices to stay competitive in a fast-evolving landscape. Listeners can learn more by visiting https://www.hollaex.com/.
David and Eric kick off 2025 by discussing the impact of current interest rates on business valuations. They delve into the recent trends, causes, and implications of ‘frothy’ valuations in the middle market, particularly focusing on how private equity investments are altering the market dynamics. The episode also explores the discrepancies in interest rates, the importance of mission preservation during business sales, and the critical elements that distinguish highly valued companies from their peers. They reference the Pepperdine Private Capital Markets study and numerous media articles covering how 10-year treasury rates are going the opposite direction of the Federal Funds Rate.
https://digitalcommons.pepperdine.edu/gsbm_pcm_pcmr
https://seekingalpha.com/news/4393383-us10y-soars-about-100-bps-since-fed-rate-cuts-signaling-a-diverging-inflation-outlook
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
In this captivating episode of Emerge Dynamics, hosts David and Eric delve into the transformative power of purpose in business. They discuss why defining and implementing a clear purpose is vital for driving employee engagement, improving company valuation, and achieving outstanding results. The episode also offers practical advice on embedding purpose into every aspect of business operations, from recruiting to decision-making processes. Eric and David wrap up by connecting purpose to profit and offering reasons why you might want to use a facilitator.
- 00:01:30 – Ok – this squishy stuff is nice, but I have a business to run
- 00:03:38 – If you want to fix the valuation of your business, fix the purpose of your business
- 00:04:15 – The gut check exercise
- 00:06:30 – You have to hire using this
- 00:11:00 – Self implement? Or bring in a facilitator?
- 00:12:35 – Companies that are more purposeful are more profitable
In this episode of the Emerge Dynamics podcast, Eric and David discuss the critical importance of defining the true purpose of your business beyond just making money or supporting causes. They reflect on previous episodes and reintroduce the concept of purposeful business operations, stressing that the actual work a business does should inherently be good for society. They present actionable exercises to help business owners identify their company’s core purpose, including the ‘if my business didn’t exist’ (from Guy Kawasaki: https://guykawasaki.com/) statement and the ‘why’ exercise. These tools aim to help businesses create meaningful impacts on their communities and structure their goals aligning with this higher purpose.
- 00:01:30 – Hearkening back to episode zero of the Emerge Dynamics podcast: Purpose
- 00:02:55 – 3 common fallacies that most business owners think are the purpose of their business
- 00:06:00 – Society should be better off because you open your doors each morning
- 00:07:05 – Don\’t fall into the trap of thinking that doing good things with your profits can atone for a problematic business purpose
- 00:07:55 – Business exists to provide a positive, meaningful impact on society
- 00:08:45 – If my business didn\’t exist the world would be worse off because…
- 00:11:35 – Asking yourself \”why am I here?\”
- 00:12:20 – A coffee shop example
In this compelling episode of the Emerge Dynamics podcast, David sits down with the insightful Jen Reed from SpeakWrite. Jen unveils the captivating story behind SpeakWrite’s inception and sheds light on their unique value proposition in the transcription industry that bucks the rush to AI. The discussion reveals the critical role of human transcription in high-stakes scenarios like legal proceedings and law enforcement. Jen elaborates on enhancing quality control through rigorous training processes, balancing AI integration while maintaining human accuracy, and navigating the complexities of scaling a business effectively. She also shares profound lessons learned from hiring mishaps and the importance of preserving core company culture. Aspiring entrepreneurs will find Jen’s wise advice on embracing the messiness of business and trusting one’s judgment particularly empowering.
Learn more about SpeakWrite: https://speakwrite.com/
- 00:01:15 – The SpeakWrite story
- 00:03:40 – How to ensure top quality: The Training Process
- 00:06:45 – Why not just use AI?
- 00:07:25 – How sticking to your niche and vision allows you to out-compete AI
- 00:11:30 – The limits of SOPS: overly corporate folks that slowed down the company
- 00:17:35 – How SpeakWrite uses SOPs today
- 00:22:00 – Leading your company to its potential
Join David Cusimano as he dives into a compelling conversation with Andrew Collier, co-founder of Kitchenery. Learn about Kitchenery’s innovative strides in the kitchen appliance industry, specifically their groundbreaking wireless power technology. This episode covers essential business strategies, from leveraging blue ocean market opportunities to overcoming funding hurdles through crowdfunding. Andrew also shares insights on effective consumer engagement and the importance of a robust company culture. Kitchenery’s unique approach to recruiting its board of advisors is one you will want to pay attention to.
Learn more about Kitchenery at https://kitchenery.us/
00:01:28 – The Kitchenery Story
00:05:09 – The Perfect Pour Kettle
00:06:28 – Playing In A Blue Ocean
00:09:11 – Crowdfunding
00:12:50 – Strategic Positioning: The Direct Connection To The Consumer
00:15:20 – How Strategic Positioning Affects Valuation
00:18:39 – The Big Vision: Wireless Power as a Service
00:19:00 – Focusing on a Niche and Dominating It
00:22:29 – Building Culture When Your Team Is Remote
00:24:20 – A Unique Approach to an Advisory Board
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In this exhilarating episode of the Emerge Dynamics podcast, David sits down with Rob Haddock, the visionary founder of S-5, and a trailblazer in metal roof attachment solutions. From humble beginnings as a cowboy and rodeo competitor to becoming an acclaimed expert in the metal construction industry, Rob shares his incredible journey.
Rob started in an industry that is often thought of as delivering only commodity products, but he saw a need in the industry and decided to solve it in a unique way.
Rob delves into the pioneering inception and global expansion of S-5, the company’s groundbreaking innovations, and the critical importance of a strong mission, vision, and values in shaping company culture.
Rob’s wisdom and insights provide aspiring entrepreneurs with invaluable lessons on focus, sticking to your core competence, and remembering that business is human to human. You don’t want to miss this inspiring conversation that explores how to turn challenges into opportunities and build a successful, people-focused company.
Learn more about S-5: https://www.s-5.com/
Rob’s personal and consulting website: https://rmhaddock.com/
- 00:00:00 – Become a guest on the Emerge Dynamics Podcast
- 00:05:59 – The S-5 story
- 00:08:55 – Problems when people mount things to metal roofs
- 00:10:56 – The disruptive technology
- 00:14:14 – The BHAG (Big Hairy Audacious Goal)
- 00:16:00 – Drafting the Mission, Vision, and Values
- 00:17:10 – How this plays a part in forming culture
- 00:20:30 – The temptation to get distracted
- 00:23:30 – Focusing on your core competence
- 00:27:00 – Strategic plans and unexpected world events
- 00:30:00 – Whatever your lot is, build on it
- 00:31:10 – Culture beats process and is the most important
- 00:32:25 – Business isn\’t company to company, it\’s human to human
In this episode of the Emerge Dynamics podcast, David explores the negative impact to business valuation of owners thinking that the show is theirs . He provides actionable strategies for business owners to shift from an ‘I’ to ‘We’ mindset, build strong management teams, and ultimately increase their companies’ value and attractiveness to investors.
Reference:
https://www.forbes.com/councils/forbesbusinesscouncil/2022/03/14/why-leaders-should-move-from-a-me-to-we-perspective/
https://hbr.org/2015/03/if-you-want-to-be-the-boss-say-we-not-i
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In this episode of the Emerge Dynamics podcast, hosts David and Eric explore the dynamics of managing and investing in middle market private companies. They provide insights into calculating and interpreting breakeven points, emphasizing that breakeven is a moving target, particularly for small businesses. The discussion covers the crucial difference between gross profit margin and contribution margin, as well as the implications of fixed vs. variable costs. With reference to an article from Harvard Business Review, they stress the importance of maintaining profitability and sustainability as businesses grow, particularly in the face of economic indicators like the yield curve that signal potential recessions. The episode encourages listeners to plan ahead for potential growth and cash flow changes, ensuring that their businesses can remain resilient and impactful in their communities.
Reference: https://www.investopedia.com/terms/b/breakevenpoint.asp
Episode 56: Does Your Business Scenario Planning Include the Inverted Yield Curve and the SLOOS Report? It Should.
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In this solo episode of Emerge Dynamics, host David delves into the art of public speaking and presentation skills. He emphasizes the importance of avoiding reading directly from your notes and being compelling in your delivery. David shares essential tips to ensure your presentations are efficient, effective, and genuinely engaging, aiming to help professionals improve their communication and pitch their businesses better.
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In this episode of Emerge Dynamics, David and Eric delve into the critical financial challenges faced by small and lower middle market businesses. They highlight the importance of effective cash flow management and the risks of overleveraging. Drawing insights from the Harvard Business Review article “A Small Business Is Not a Little Big Business,” they discuss concepts such as resource poverty and liquidity needs. Offering practical advice, they emphasize the significance of planning, measuring, and predicting cash flows, while also advocating for the use of outside financial expertise to help navigate these complexities. Tune in for a deep dive into strategies that can help small business owners optimize their financial health and ensure sustainable growth.
Reference Link: http://www.alcocks.co.za/downloads/Appendix%20B_Harvard%20small%20biz%20article.pdf
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In this episode of Emerge Dynamics, hosts David and Eric discuss the challenges and strategies related to employee retention in the middle market business environment. They explore the impact of the yield curve inversion and how companies can create a culture that retains highly trained employees, balancing professional development with genuine organizational loyalty. The conversation touches on the importance of camaraderie, mentorship, and the potential role of both non-compete agreements and alumni networks.
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In this episode of Emerge Dynamics, David and Eric discuss the profound impact of price controls, particularly during emergencies. They explore why price controls often fail, using examples like hurricanes and fuel shortages, and delve into the unintended consequences of such policies. Additionally, they touch on tariffs and import subsidies in a global economy, offering practical advice for business owners to navigate these challenges.
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In this episode of the Emerge Dynamics podcast, David and Eric dive into the topic of price controls, examining their historical context, economic theory, and practical implications for business owners. They discuss how price controls, often instituted by governments, impact supply and demand, leading to market distortions and shortages. Using examples such as the dairy industry and historical references from the 1970s, the hosts explain how such policies can hurt vulnerable populations and business owners. They also provide insights on how business owners can prepare for and react to potential price controls, emphasizing the importance of awareness and political engagement.
In this episode, David and Eric dive into the recent stock market volatility and its impacts on the economy. They discuss the latest employment report, trends in the job market, and what these might mean for private company owners and managers. The episode covers practical advice on navigating economic downturns, reflections on previous episodes about business readiness, and tips on seizing opportunities during uncertain times.
For more insights and tools discussed in this episode, visit below links:
CME FedWatch – CME Group
Employed, Usually Work Full Time (LNS12500000) | FRED | St. Louis Fed (stlouisfed.org)
Employment Situation – 2024 M07 Results (bls.gov)
Visit us at www.emergedynamics.com
In the latest episode of Emerge Dynamics Podcast, David and Eric chat about the key to finding purpose in any business beyond profit margin. They also talk about why it is an important driving factor for long-term success. Speakers also exchange views on what is the greatest fear of the mass and how it can be used as a catalyst for discovering one’s wakeup call in life. With reference to real life examples, they also throw light on various paths that businesses can opt to discover their purpose and maintain consistency in it while building a community that simultaneously fuels personal fulfilment.
In this episode of the Emerge Dynamics Podcast, David and Eric discuss the importance of purpose and passion in business. They elaborate on how purpose can drive business success beyond financial metrics like EBITDA and sales. They also provide practical exercises and real-life examples to help businesses find and cultivate their true purpose, emphasizing the impact of meaningful work on both personal fulfillment and community building.
In this episode, Eric and David delve into the crucial topic of raising capital for businesses. They explore the various reasons why businesses might need to raise funds and discuss effective strategies and tools to achieve this goal.
They talk about raising capital, debt conversion tool, benefits to entrepreneurs & investors, private debt groups etc.
Debt can be a more flexible and cost-effective way for entrepreneurs to raise capital compared to equity. Government subsidies can make debt a more attractive option. Investors also benefit from structured debt financing. Businesses need to have a clear plan when considering equity injections.
If you’re an entrepreneur looking to raise capital, consider the benefits and implications of both debt and equity. Reach out to private debt groups to explore potential funding opportunities.
Join Eric and David as they provide valuable insights and practical advice on raising revenue and choosing the right financing options for your business. Don’t miss this informative episode!
For more insights and tools discussed in this episode, visit this link:
https://www.wallstreetmojo.com/convertible-debt
Eric and David delve into the evolving nature of work and its impact on individuals and businesses.
Work dynamics are changing and the Bureau of Labor Statistics’ jobs report doesn’t fully pick up everything you need to know. We discuss the entry of young people into the workforce, choices of baby boomers to stay in the workforce of exit, the impacts of part-time employment and the paradox of business owners not able to find workers while employees can’t find work. If your growth opportunity requires increasing your team size, you’ll want to listen.
We reference several data sources all listed here:
https://www.bls.gov/news.release/empsit.t08.htm
https://mises.org/mises-wire/march-report-recession-full-time-jobs-here
https://fred.stlouisfed.org/series/LNS12500000#0
https://www.bls.gov/news.release/empsit.a.htm
https://fred.stlouisfed.org/series/LNU01000000
https://fred.stlouisfed.org/series/POPTHM
https://fred.stlouisfed.org/series/CIVPART
https://www.forbes.com/sites/forbescoachescouncil/2018/11/20/why-does-culture-eat-strategy-for-breakfast/?sh=1d5c1841e098
https://www.thealternativeboard.com/blog/culture-eats-strategy#:~:text=The%20culture%20eats%20strategy%20for,that%20make%20all%20the%20difference
In this episode, We discuss the popular slogan, “culture eats strategy for breakfast”. Our current event topic is the jobs report. It doesn’t always tell you what you think it is telling you. The labor force does not seem to be growing. It underscores the need to have a culture built upon a purpose.
Eric & David discuss how AI is rapidly becoming the norm. Artificial Intelligence is different than automation. How disruptive will AI be to white collar jobs?
( our tracks are a bit out of sync so our responses to each others comments don’t always sound timed correctly – we’re working on our internet signal to fix this)
Eric and David discuss some current events including what might be happening with interest rates.
Check out Episodes 36 and 59 where we discuss CPI in more depth:
https://emergedynamicspodcast.com/episode-59-how-to-forecast-seasonality-and-does-shadowstats-com-give-a-better-view-of-inflation-than-the-cpi/
Episode 36: Growing Your Business Through A Downturn – Are More Price Increases Coming? The CPI isn’t telling you what you think it is telling you.
The current CPI can always be found here: https://www.bls.gov/
We discuss the CME Fed Watch tool and what it might able to tell us about where the market thinks rates might be going: https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
Too many businesses are hanging on to life just hoping that interest rates will come down so that they start making money again. If that is true of your business than you aren’t creating the economic value you should our could. Learn more from our strategic planning series:
Episode 6: Strategy – Differentiate or Die
We then get into a discussion on Work/Life balance and if that is a good framework for evaluating if we are spending the correct amount of time on our work.
David and Eric discuss that the myriad of external risks that business owners face and how to balance insurance and cash reserves with risks the business takes.
They look through the lens of the preparedness chapter of Q Source which is the leadership book of F3 Nation. https://f3nation.com/q/
There are expected circumstances we need to prepare for, but there are always unexpected external shocks that we know will come but we don’t know when or what they will be. How do we prepare for those?
In today’s podcast episode, we’re going deep into the complex world of corporate finance and budgeting as we face the economic uncertainties of 2024. We’ll explore the various challenges and considerations that business owners and managers must contend with in this volatile economic landscape. The recent announcement from FedEx about an expected slowdown really caught our attention—it’s a potential red flag for the broader economy that we just can’t ignore.
Last year’s industry shake-ups have taught us that sticking to outdated annual planning models is like trying to navigate a storm with an old map. It’s better to have a flexible approach to budgeting, such as a rolling forecast with quarterly updates. This could really align companies’ strategies with the actual pace of the market, which is crucial for survival and success.
Traditional compensation structures are no longer serving us. They often encourage employees to game the system, which is counterproductive. Proposing alternative incentive models that adapt to market conditions is something to be really passionate about. It’s about creating a system that’s robust enough to handle the economic ebb and flow.
The importance of diverse perspectives in planning is another thing to keep in mind in 2024. Treating external analyses as helpful suggestions, not gospel, is vital. It’s about fostering a culture of agility and regular reassessment of plans, ensuring that our strategies are as dynamic as the market itself.
This year, more than ever, we need to be strategic and agile in our financial planning. Business leaders need to not just weather the economic storm, but to emerge stronger and more resilient.
Eric and David wrap up a mini series on sales by discussing non-manipulative selling and concepts from the book Find Your Six: Stop Lead Generating, Start Building Influence by Patrick Kilner.
They discuss the importance of authentic relationship and of creating value for clients. They also discuss how this factors into the valuation of your business.
“Here’s the bottom line: if your business is dependent on a lead gen model, you are fast becoming dispensable when it comes to actually generating business.” – Patrick Kilner
Learn more here:
https://www.findyoursix.com/
In this episode, David and Eric discuss the current drop in consumer sales across the country. They remind us to focus on not just selling “widgets”, but to go deeper and to demonstrate to customers how your business or product can improve their lives. David and Eric also share tips for monitoring monthly sales goals in a more effective and targeted way.
In this episode, David and Eric discuss how to incorporate seasonality into your revenue forecast. They give reasons why you should do this and a practical guide on how to do it. They also discuss the September CPI and question its accuracy in tracking how expensive American life has become. They look at www.shadowstats.com as a possible alternative picture.
https://data.bls.gov/timeseries/CUSR0000SA0&output_view=pct_1mth
https://www.fool.com/investing/2023/08/10/warren-buffett-is-sitting-on-a-147-billion-pile-of/
In this episode, we discuss the EVA metric which includes the opportunity cost of running your business. Many business owners think that positive net income means that their business is doing well, but is your business creating more value than it’s costing? EVA = NOPAT – (WACC * capital invested) forsook [fawr-sook] verb –...
In this episode, we look at current and historical data from the Federal Reserve and discuss what the inverted yield curve tells us about the state of our economy. The SLOOS Report is a quarterly survey of senior loan officers of banks. According to their date, over 50% of banks are seeing a decline in...
In the final episode of a three-part series on turning your business around, we discuss ways to use the changes you’ve made to return to being profitable again. It is important to pay attention to the new control systems that have been put in place so that you don’t end up back in the same...
In this episode, we discuss step 2 of the 5 stages of a turnaround, the emergency action stage. We give several practical actions that you’ll need to take in order to get your business through to the next step. It’s all about cash. And you’ll need to map how it comes in and goes out...
Are you following the housing market? All business owners and managers should. While other industries only affect us if we are in them or related to them, housing affects all of us. Will there be a housing crash in 2023? Or is the crash cancelled? Eric and David weigh in on where the year is...
During this episode, we begin our discussion about the 5 stages of a turnaround, specifically the many benefits of making changes in management.
The discussion on turnaround management continues today with a discussion on weak finance function. As a business owner, it is your responsibility to have integrity and to hire people to work in finance who will hold the line. It’s not just about the numbers, it’s about recording financial data according to fundamental principles with correct...
Today we’re highlighting some adverse trends that indicate problems are arising in your business. If your business is struggling because you’ve hit a plateau, or your business is headed in the wrong direction, you’ll want to pay attention to these warning signs of decline. Poor working capital controls will ultimately get your business into trouble....
Emerge Dynamics is all about how businesses can emerge from their peers, and businesses accomplish that when they are well-run. This is especially true during a downturn, so today we’re focusing on how you can guide your business through these challenging times.
There are so many bankruptcies happening in 2023. Why is that? It can be easy to throw the blame to the economy or the government, but the reality is that businesses is trouble now were unhealthy even when the economy was strong. There are some estimations that external factors only account for 21% of business failures.
In addition to the Z-score, which measures a company’s likelihood of going bankrupt, Edward Altman also created an imperial measure for how many businesses will fail in the economy as a whole. One of the variables in the equation is the money supply, which has increased greatly in the past few years. At some point in time, that’s going to stop. This equation may begin show even greater correlation during this downturn.
Despite everything going on in the economy, the main cause for decline is still bad management. When interest rates are so low, businesses may have chosen to borrow cheap money just because they could. If they had put some more thought into it, they could avoid the situation they’re in now that arose from over-leveraging.
Another factor causing businesses to have issues is having an “authoritarian leader.” There needs to be a balance between being a strong leader and taking input from others. If a business is declining and has this type of leader, it’s probably their fault.
Today we continue the conversation around your borrowing base. This episode dives deeper into why you may want to consider a borrowing base to finance your working capital so that you can help your business meet its potential. We also discuss the importance of having healthy accounts receivable, and how to use it in the right way.
The best time to use your borrowing base is to fund growth in your business. You can leverage assets for other projects, and you can also use it as a temporary means for a short-term slow down. It’s not a good idea to use it to fund losses within the business. If you run up this line of credit to the limit, you have already harvested the value of your business, so don’t go buying a yacht or making any impulsive purchases.
Size matters when it comes to accounts receivable. Most banks won’t provide a borrowing base if yours is under $1 million. They also consider whether or not you have healthy accounts receivable versus overdue accounts receivable, which is anything beyond the 90-day mark.
You don’t need the bank to do the math for you. In fact, it’s an excellent exercise in discipline as a business owner to run your own sample evaluation so you can understand your own AR outside of just letting the bank do it. It’s important to note that potential buyers of your business will also want to know the fully optimized business valuation to determine your enterprise value.
When things get really tight, you have options. If you have customers who are approaching the 90-day overdue mark, you can negotiate and open a dialogue. It’s also a good idea to drill down into other strategies. Look at your competitive advantage and business culture.
On today’s episode, we’re discussing the mechanics of a borrowing base. This is an episode that will have value in the current economy, and will still have value in future economies. Discussion will involve current events, but ultimately, the goal is to provide solutions that will be applicable in any economy. This is a tactical and technical episode to explain how borrowing base works (and can work) for you.
Although borrowing base doesn’t sound as important as other issues in regards to business ownership, it really deserves its own episode. In a tough economy, it will provide the opportunity for you to help your business survive. It is most important to understand the discipline behind it, and to utilize it in the right way for the right reasons.
Essentially, banks will lend an advanced rate against your assets. Their lending is based on your inventory and accounts receivable. In this way, you can leverage the dollars that are trapped in your business to use wherever you need them. This is a real advantage for businesses who are trying to survive in today’s economy.
The advanced rate the bank will provide is based on the type of asset you are leveraging. They typically require weekly or monthly self-reporting and operate on an honor system in that reporting. The inventory must be raw material that can be sold in the case of debt recovery.
You can leave this line of credit open in perpetuity, but you have to be very careful with how you use it, or your borrowing base could become an upside-down loan. This can lead to a downward spiral if you keep paying for losses in your business.
Today we’re broaching a topic that’s been on everybody’s minds, which is inflation. This is a crazy time we are living in, and it’s no different in the business environment. For the first time, the Federal Reserve has actually publicly warned that there is a mild recession. The prices we see increasing every day are a product of the inflation of the money supply.
The economy is slowing down, and inflation is coming up. This is a unique situation. Typically in an economy, you either have a lot of growth or you have inflation. Currently, we are experiencing both simultaneously.
What does this mean for the average business owner, and what can business owners do? There are a few strategies to consider. If you’re in the market for new equipment, you’ll want to compare old versus new, or maybe reconsider altogether when it comes to those big ticket items. You can always retool your business or consider restructuring. Look into new technologies that will support your business in a cost-effective way; technologies that could save you money.
Although the interest rates are not historically high, they are higher than they were a few years ago. If there is a slight dip in interest rates, consider locking that in and getting a fixed rate. This will help protect you in case rates increase again.
The rate increases could slow down, or possibly even reverse, but there is no specific timeline for that potential outcome. Your business will face financial challenges, but you can learn to manage them by preparing ahead of time and knowing what to do when your business faces adversity.
Today’s episode continues with a discussion about what servant leadership is and unpacking exactly how to be a servant leader. We’ll get to the core of how important it is to be the best version of yourself in order to create prosperity in your organization.
Humility is the cornerstone of a servant leadership mindset. In our western culture, we have a tendency to lean toward thinking on an individual and personal level, but to be a servant leader you must be “other-centric.” Creating a servant leadership culture takes effort, but this process will create value in the organization, rather than trying to extract it.
There are several ways to express your servant leadership. Employees will in the business will be looking to the owner of the business for how to behave. As the leader, you set the bar of expectation on the rest of the company for the proper way to engage in your work-life balance.
Materially signalling to your organization that you are a different type of leader who is non-superficial and authentic is an example of servant leadership. Not being overly flashy with material goods sends the message to everyone that your leadership is not about money. Prosperity and wealth is for all and not simply for the benefit of the leader.
Design incentive programs to focus on giving back to employees, being customer focused, and using “we/our” language instead of “I/my” language will all be indicators to your employees that you have gratitude for those who choose to be a part of the company’s culture of humility. It will also help those who lead create a winning situation for themselves, their colleagues, and their customers.
Here’s a link to the book Lead Like Jesus that we discuss:
https://hpb.com/products/lead-like-jesus-9780785228905
Today we’re getting into what it really means to be a leader in your organization. People have a tendency to look at the actions and consistency of their leader. You may not even realize how much of an influence you have on the culture of the organization. If you don’t focus on this, then another person or group in your organization is going to create the culture for you.
When a phrase is said or an action is taken by a CEO, it reverberates. Therefore, it’s very important to carry yourself in a certain way. It’s less about being careful with your words, and more about setting yourself up with the right disposition as a leader. If this is done correctly and you’re there for the right reasons, you’ll probably say the right things naturally.
Leaders should enable their people to become the best versions of themselves. Think about setting the tone of the organization for the purpose of serving it, not for your own glorification. You may find that your most rewarding times in life are when you are helping someone else accomplish something.
Step one is just acknowledging whether you’re a servant leader or a narcissistic leader. Sit down and reflect on if your approach is wrong. If it is, remember that we all make mistakes, and we can all improve.
Also, keep in mind the distinction between management and leadership. Managing is more task-oriented, and leading is about relationships. It’s about setting tone and the way that you do things as opposed to what you do. We cannot lead well unless we are looking internally and being honest.
We’re continuing our conversation about how us business owners can improve as individuals, and today’s theme is that how you spend your time really matters. We’re bringing in two concepts: The Rainmaker’s Dilemma, and the “Value Ladder” from the book “Time Really Is Money: How to Work for $5,000 Per Hour” by Rob Slee.
Rob writes that in addition to the corporate ladder, there’s also a value ladder which is taller than the corporate one and that we ourselves decide how high we want to climb on. As business owners, we often do things (for various reasons) that don’t actually provide value.
Let’s say you have a lawn mowing business, and you’re out there pushing the mower every day. You could be amazing at cutting lawns, but there’s a limit to how much value you create and how much income you receive if you choose to spend your time doing that. There’s nothing wrong with this, and that’s what a lot of people want to do. There is some value being created. However, if you were to instead create a process for how to mow lawns, you have an opportunity to create much more value.
If you step back and look at the things you do on a regular basis, there are probably some things that anybody with a minimal amount of training could do. Spending your time on those types of activities is not going to bring a whole lot of value. The things that you are really good at are the hardest ones to hand off to someone else.
Think of activities that you can train other people to do. It’s easy to knock off some easy tasks in your inbox and to feel good about that, but it’s not a real accomplishment that will bring greater success down the road.
There’s so much going on these past few weeks that affects business owners, so today we’re taking a pause from our recent topics to talk about this current environment instead. Suddenly banks are failing, so we’ll get into what’s behind those along with the continuously increasing interest rates.
When looking back at the past 50 years or so, interest rates are not that high. We’ve all become so accustomed to low rates that some business decisions have been made that probably didn’t exercise proper discipline. The increasing rates should pull people back into make more disciplined choices.
Banks that have run into the biggest problems recently have been mostly involved in tech and crypto, so a lot of people are assuming it’s just banks invested in those industries that are in danger. In reality, banks in almost all industries that invested in long-term debt vehicles at low rates are struggling as rates go up.
There are a lot of banks out there that are facing difficult situations because they want to unload these low interest rate bonds and get into vehicles of higher return, which creates liquidity issues in the short-term. This is because they must offer to sell their bonds at a discounted rate in order to make them worthwhile for a buyer.
It’s crucial to understand the position of the bank you’re dealing with. How are they invested? Be sure to ask questions to the right people. Additionally, remember that if you’re taking on debt, you need to be very diligent when analyzing the opportunity. It’s a real possibility that rates continue to rise, and your business shouldn’t live or die by 1-2% increases.
Curious to know what helps businesses emerge from their peers? Documenting your processes is key. This requires discipline by looking at the consistent application of processes within your business. You must have full documentation, and then train off of that to systematize the way your processes flow. This is optimal for growth.
Looking deeper, this relates more to execution, planning, and the journey of the customer, along with how to fit products and services into that process. This all must be done while keeping the same consistency and enthusiasm that originated when the business first began. Keep in mind what creates the optimal customer experience.
For example, when starting a business, an often-made mistake is that when hiring employees, it is assumed they are going to be just like you and deliver the same experience. It doesn’t take long to realize that without training, the same experience cannot be executed. There are processes such as training and documentation that need to be put in place to establish consistency.
Another example of delivering the same experience across the board is a company like McDonald’s. There is a process such as training for something as simple as making a hamburger. Where to place the ketchup, the mustard, the burger, and the bun. This has allowed them to remain consistent.
There are practical aspects of documenting processes and ensuring consistency for the outcome of compliance within the workforce and customer base. This can be done with a notebook, software, whiteboards, etc. The overall key is to just start documenting. Managers, owners, and investors who document their processes are those who become successful in scaling their businesses.
The customer journey is so important, but even more so during a downturn. There needs to be clarity for the customer about what services and products you’re providing. Having this ensures you’re making that experience as amazing as possible. Alongside that experience, it’s an opportunity to make improvements.
With more insight, you can begin to look at what each customer’s individual needs are. It begins with knowing exactly what that customer is buying and knowing your product to better meet their needs. The customer isn’t necessarily buying the product, but seeking what that product will enable or allow them to do.
For example, someone who sells plumbing supplies doesn’t just sell plumbing supplies. You need to understand you are exchanging those products, but the relationship with those products is different and unique. What else do they need? By engaging with that customer, you open opportunities for that customer’s journey.
The journey begins differently for each customer. It could be word of mouth, a sign they’ve seen, or just calling to see what your hours are. The first impression is key. For example, think about a customer who comes into a store and isn’t acknowledged. That customer may take it as a sign that they aren’t important and so they simply walk out, and you lose that opportunity to begin that customer’s journey.
Human interaction is part of our natural being. It’s important to not assume, and instead to ask questions to distinguish where that customer’s journey needs to go. This allows you to give better solutions and generate more revenue. By guiding the customer journey, showing you care, and giving them a great experience, they are more likely to return as a repeat customer.
Today’s episode in our series about growing through a downturn is about acquisitions. This can be a great way to grow, but great caution must still be exercised. Doing an acquisition into an industry that usually falls deeply during a downturn could be a big problem.
We may or may not be in a recession, but if you’re a business that has been focused on things like strategy and building a strong culture, you’re better equipped to thrive during the hard times than most others in your industry. Acquiring businesses that weren’t as prepared as you can result in you saving so many employees that would otherwise be out of work.
Downturns are probably the worst time to sell a business, but the owners often have no choice. As the buyer, you need to be even more critical of the value you’re placing on the business during these times. You’ll have to think about how you’ll pay, and looking at owner financing can be a very lucrative opportunity. Just because you don’t have the cash in your bank account doesn’t mean you can’t buy a business.
You might run into a situation where the seller is in default with their bank, which means the bank is going to control most of the negotiation. It becomes very important to have an idea of what the lender would accept, along with making sure you’re negotiating with the party that can actually make the final decision.
Even more so in a downturn, it’s critical to work with the seller, build that relationship, and arrive at a reasonable price with them. Being willing to figure out a path together will usually get you to the finish line quicker. The seller note will often become the pivotal tool needed to get the deal done. Listen and we explain why and how to it can benefit both buyer and seller.
We’re continuing our series about continuing to grow during a downtown today. But, actually, sometimes you might not be able to do very much growing. You may have to just focus on sustaining yourself, which means preserving cash. Of course it’s better to grow, but maintaining the status quo before figuring out exactly what you’re going to do is sometimes necessary.
Recent data in February 2023 about credit card debt tells us that people have likely been having trouble for a decent amount of time. With this data in mind, businesses should prepare for spending to slow down. Unlike some consumers, businesses should be more proactive so that they don’t find themselves in a panic.
One thing you can make adjustments to is your accounts receivable by seeing if there’s anything you can do to collect sooner. This is one of many reasons why relationships with your customers are so important. If they only have a limited amount of cash, they’re more likely to pay the people they have the strongest relationships with first.
Accounts payable is an area that many businesses overlook as a way to get cash to get through a short-term challenge. You may be able to delay paying longer than normal. Remember, AR and AP are a balancing act, and you can still be ethical while doing this.
Having genuine dialogue with your vendors and stakeholders about how everyone can still continue doing business is crucial. Just because we’re in difficult times doesn’t mean that your morality should change. Be open and honest so that you can help each other.
In this episode, the series on growing your business through a downturn continues. This topic is very relevant to what’s happening in the current economy. Planning strategically and looking ahead will help you stay proactive so that you don’t just survive economic hardship, but thrive throughout it.
What people need to know is that whether a recession is coming or not, money is still being printed at a high rate. The CPI, or Consumer Price Index, is a widely used measure of inflation. However, the experience most people are having in their lives financially doesn’t seem to match up with the CPI data.
As long as the money supply keeps increasing, prices are probably not coming back down. We can expect this to continue to some degree. It’s also important to acknowledge that the way the CPI is measured has changed greatly over time.
For example, it no longer takes into account the cost of a house. They now only measure rental equivalence, which is going to lead to a much different number. The CPI is also designed to adjust the cost of goods prices down, which makes it seem even more unclear about what the CPI is actually measuring.
Interestingly, there is a group out there still using the old methodology of the Consumer Price Index publishing what is probably more realistic data. The result is a number that is quite a bit higher than the reported 7.5%. In fact, it’s about twice that much. As a business owner, you must recognize that cost increases are going to keep coming. Find other indicators other than the CPI to help guide your strategic decision making.
Curious to look ahead at how an economic downturn might impact your business? Looking ahead is the first step to being prepared. When a downturn starts, the mainstream narrative explains that a recession begins when consumers stop spending, as if all consumers suddenly wake up one day and decide not to spend money.
Looking deeper, there is a reason consumers decide to stop spending less. Further to this, consumers don’t stop spending entirely—there are certain goods they will still need. As a result, businesses are affected differently across industries. The consumer goods industry, especially non-discretionary consumer goods businesses, are typically the least impacted during an economic downturn.
For example, the degree to which a household buys toilet paper does not fluctuate based on market prices. Personal consumption stays relatively stable over time. Knowing this can help you anticipate the best ways to meet your customers’ needs no matter what state the economy is in.
Another example of anticipating this shift and pivoting might be in real estate. Many people who could afford a mortgage may find themselves moving into a rental property. If your customers are usually homeowners, consider how you might be able to serve the rental community. Being able to meet your customers where they are at in an economic downturn supports them and your business.
If you’re an investor wondering where the best place would be to put your money, the same idea applies. Discount stores and pawn shops tend to do well during downturns. As a business owner, it’s time to consider how you might reallocate your resources during a downturn. It’s critical to understand what your business does and how you can match that with the needs of your customers.
Can you continue growing your business through the downturn? It would be great to be able to predict what’s going to happen in the economy next week, next month, and next year. But when it comes doesn’t matter—the fact remains that at some point, there will be a downturn in the economy.
The real-time, first party data shows margin compression at the top of 2023, especially in certain industries. Sales targets are starting to be missed, which is another sign of what could be coming. What can business owners do to manage this situation? You could panic, you could stick your head in the sand, or you could realize some of the most amazing companies were started or flourished in past recessions.
This is the perfect time to reflect on what your customers need and how you can serve them better. You may need to pivot or welcome a new perspective based on the economic strain on your customers. This is an opportunity to innovate, reinvent yourself, and make your community even stronger.
In any given downturn, there is going to be room for nuance. But generally, there are some main factors to consider during these times no matter what. One factor is interest rates, which are still low to moderate according to modern standards. What’s unique about this downturn is the unprecedented period of time of low interest rates and money supply over the last decade.
Consumers and business people who haven’t experienced this before have a knee-jerk reaction of shock. The differing interest rate environments change the perception of costs for consumers. When society begins to push the rate down, human nature takes over and we have a tendency to consume more. More of this topic will be unpacked and explored over the next few episodes.
In this episode of Emerge Dynamics, we’re wrapping up our discussion about Web 3.0. You can be sure that Web 3.0 is going to be impacting business owners everywhere in a very real way, especially when it comes to creating contracts, decentralization of technology, and other digital expansions.
What is a smart contact? A smart contract sets specific parameters to account for things that might happen, and they can even anticipate the next action that needs to be taken. One example would be the popular application DocuSign. Because they are a trusted party, the experience works very well, and the evolution of this technology is expected to continue to grow.
This brings into question the process of validation. Is it better to have this validation be centralized, or decentralized? Without question, creating contracts using new technology in a decentralized way is easier to use—especially with the rising “gig economy” where many individuals are choosing contract work over traditional employment opportunities.
Moving forward, it’s important to consider how this technology could be further used to tokenize other industries, from real estate properties to buying portions of companies. This would improve the liquidity of businesses. However, documenting these transactions digitally may lead to roadblocks, especially during the initial phases.
So, why should you care about this new technology? Because in all likelihood, it will be impacting your business very soon. Anticipating disruption in the marketplace will help you get and stay ahead of the game, especially for intermediaries. Web 3.0 is on its way, and it will change business transactions in many ways.
Let’s talk about technology. Specifically, blockchain technology and how it is going to impact business owners. This new technology, including Web 3.0 and cryptocurrency, will change the way you interact with clients and other businesses.
When the web was first introduced as Web 1.0, it brought a lot of excitement to business owners because it provided a new means of transacting business. Additionally, it opened up a world of digital marketing opportunities. Another update came with Web 2.0—and along came Amazon, Netflix, and other businesses that completely disrupted the digital space.
In Web 3.0, we expect to see the same level of transactions or more without an intermediary. It will be a decentralized online world. The change is expected to be exponential, and this version will also embrace blockchain technology. If you’re not familiar with how blockchain technology works, it’s essentially a distributed ledger. An entire copy of every transaction distributed across thousands of computers across the world.
Cryptocurrency is a currency that uses cryptography and is built upon a blockchain. Not all blockchain applications are cryptocurrency, but the blockchain is fundamental to cryptocurrency itself. The implications of this technology span across industries, including real estate, medical, government records, and more.
One benefit of the blockchain is that it’s been designed for validation, so it’s not a system that’s easy to alter or manipulate. From a privacy perspective, keeping important records on the blockchain is a better option. You can disclose specifically what you want to the people you choose. On the flipside, there are risks too. There is so much more to cover on this topic, and more information will be coming through this podcast soon.
Today we’re concluding a three-part conversation focusing on money. If you missed parts one and two, you’ll want to go back to previous episodes for a deeper understanding of money mechanics. This topic is so important to be familiar with if you run a business.
For a long time, societies have run on a central banking system, and there is a lot of money being printed all over the world. Our current financial system, and the flaws within it, has left some desire to try and find a better way. More and more, people are looking for a more stable option that ensures consistency.
While it seems the days where a gold smith would give you a note for your gold are far away, our system hasn’t changed that much. Physical money has taken its place, but it still reflects a similar principle as a note symbolizing money. Now, people are starting to seek out options that are quite different from what we’re used to: cryptocurrency.
Recently, cryptocurrency successfully grabbed the public’s attention—even though it’s been around for some time. This technology allows a confident exchange of currency without a central authority. However, there are still some aspects that need to be worked out. This new technology is volatile, and not everyone understands it yet.
When new alternatives come into play, they need to be managed properly if the intention is to reduce the current problems we have in our system, and not create new or worse ones. We need to be able to put trust and faith into a system as important as one that manages currency.
This episode of picks up from the last one where we began a discussion about money and Web 3.0. Alternatives to traditional money have been increasing in popularity, and if business owners want to stand out from their competitors, it’s important to know why and how they work.
Gold was the top choice to use as money until people started realizing the pitfalls of using it: it’s heavy and it’s unsafe to carry it around. This led goldsmiths to offer a safe place to store gold as a business. Soon, people went from exchanging gold to exchanging the notes they had for their gold.
Soon, these goldsmiths started issuing out more notes than they had in stored gold. This was the beginning of fractional reserve banking. As our economy has become more sophisticated, it became clear we needed centralized places to store gold. These became central banks. Over time, the government became more involved in controlling these banks.
This led to governmental temptation to inflate the money supply. In today’s world, any central authority can print and inflate currency. Why does all this and the mechanics of money matter to a business owner? Because the money supply of the world has greatly increased, and we’re starting to see the effects.
So how can this situation be made better? This is a problem that entrepreneurs of today have been working to solve. In fact, there is an entire industry dedicated to forging a better way. The change is coming, so we need to get better versed in what this will look like today.
In this series of episodes of Emerge Dynamics we’re diving into a new, highly relevant topic: Web 3.0. The next level of the internet and how it influences transactions is going to have a large impact on business owners everywhere. Within this evolution, you’ll hear other possibly new terms such as blockchain, decentralized finance, smart contracts, and more.
With all these forthcoming changes, it’s important to know where you need to focus so you can emerge from your peers.
We start this series with a couple of episodes about what money is and what some of its shortcomings might be in today’s world. We’ll then bring this to a conclusion by explaining why a business owner of manager needs to understand this.
In a well-functioning society, you don’t typically need to understand how money works on a deep level. However, with this evolution, it’s important to know the state of money in the world and how it’s changing to support your business.
In earlier times, humans got what they needed via direct exchange: bread for cheese, clothes for shoes, one good for another. While it seems simpler on the surface, there were a lot of problems with this system. We then shifted to indirect exchange by using another medium—money—to acquire goods.
In order to be most effective, money has to be salable across space and time. Money is intended to serve three functions: be a medium of exchange, retain store value (not rot or die), and be a unit of account. Our conversation today focuses on the store of value function and how today’s money starts to lose this ability as more and more of it is created.
After thousands of years, humans shifted to using silver and gold as units of money. And then gold and silver were used for thousands of years and for very good reasons. Gold is almost indestructible, difficult to create, and it’s very rare, making it the top choice to use for exchange at this time. Part two of this series will pick up and take the discussion to where we stand with money today.
Here is the link to The Bitcoin Standard which is the book we reference as we walk through the history of money: https://academy.saifedean.com/product/tbs-hardcover/
One of the most impactful aspects of business is customer service. It’s a topic with depth, and therefore may be unpacked further in later episodes. In today’s episode, David leads with a story he recently shared with his kids that relates to this topic.
If you go to YouTube and search “United Breaks Guitars,” you’ll come across a music video about a musician who checks his guitar with his other luggage on a United flight. Once he arrives at his destination, he realizes his guitar is broken. But this isn’t just a music video—it’s the musician recounting what happened to him in real life. Of course, he brought this to the attention of United.
Unfortunately for the company, they declined to fix it. Instead, the musician decided to write a song and create a video about his experience. He put it up on YouTube, and it went viral. It was picked up by big publications, and eventually the story also ended up in mainstream media.
It has been viewed over 21 million times. If you watch it, that number will grow a bit more: https://www.youtube.com/watch?v=5YGc4zOqozo
This highlights the fact that as a customer service representative, the most important thing you can do is step into the shoes of the customer on behalf of the company. Situations like this come up and can’t be treated with a cookie-cutter approach. Every unique issue should be resolved as such.
As a business owner, it’s important to instill a sense of autonomy in your representatives and empower them to make the right decisions when you’re not there. When it comes to customer service, the best approach you can take is to acknowledge when a wrong has been done and make it your mission to put it right.
Partners worldwide is an organization that has a mission of fighting poverty with business. If we believe we are doing something good for the community with our business then it would be a natural extension of that thought that business can also do good for those living in poverty. Eric recently attended Partners Worldwide’s annual...
In this episode, David and Eric will be discussing if now is a good time to start thinking about buying that competitor you’ve been thinking about. This episode builds upon our previous series on valuation and the current economic situation. Today we are seeing more mainstream articles about how we are either already in a...
In this episode we’re joined by the charismatic and creative Austin Sherman, who co-founded a kombucha business from scratch. Like any business owner, he’s seen his share of ups and downs, but they led to an exit to a large multinational company. Austin shares his entire journey building and exiting from Big Easy Bucha. As...
Today we discuss working with equity investors. Small business owners can be hesitant to bring in equity investors, but there can be good reasons to consider this path. Equity capital is almost always more expensive than debt capital, but it can enable you to grow much faster than you otherwise would have. Join us as...
In this episode, David and Eric link the discussion of financial analysis to making banks want you. There can be good cases for using other people’s money to help accelerate your growth. There is so much confusion with businesses about what banks’ objectives and restrictions are. We clarify this before diving into financial analysis. If...
In last week’s episode, David and Eric talked about ROA and ROA and why it’s important to grow your margin, but not at the expense of ROA. In today’s episode David and Eric discuss Financial Forecasting. While many seek a tool to help them see into the future, we believe this is a tool that...
In this episode David and Eric return to unpacking the importance of Financial Analysis for a business. Today’s discussion will revolves around Return on Assets and Return on Equity – which involve numbers from both the Income statement and balance sheet. These two together are used in a powerful way to analyze business performance. Linking...
On this episode we’re joined by Amy Bakay, founder of HR NOLA. HR NOLA is a human resources consulting business that offers both onsite and remote HR services. Diving right into the topic of HR is the perfect opportunity to circle back on and unpack an important component of strategic planning: the people on your...
In this week’s episode, David and Eric discuss Financial Analysis. We had more to day on this topic than we realized – it may be the new series! Before diving into any specifics – How well do business owners or managers need to know their numbers? How well do they need to be able to...
In this episode: David and Eric discuss EBITDA’s limitations and adjustments and why they are so important to understanding your business’ value. We also discuss some critiques of using EBITDA including the famous one from one from Charlie Munger, Warren Buffett’s longtime business partner who boldly stated: “I think that every time you see the...
On this episode of Emerge Dynamics we’re joined by guest Ladi Franklin. Not only is this woman doing amazing things for the businesses she works with, but she has also been working on the value-builder drivers in a culturally different space. She’s proving these principles are globally applicable. Originally from Nigeria, Ladi has been living...
In this episode, David and Eric wrap up their coverage of Value Builder (https://valuebuilder.com/for-business-owners/) drivers with Customer Satisfaction. Do your customers promote your business on your behalf? A lot of business owners assume their customers are satisfied. We discuss some interesting dynamics that often make that not the case. Created by Fred Reichheld and a...
We’re wrapping up a mini-series on Value Builder drivers within our series on Business Valuation In today’s episode, David and Eric discuss: Financial performance, Growth potential and the Valuation “teeter totter”. In depth we discuss the three main moving components mathematically on the business valuation. These components are the inherent cash flows in the business,...
This episode of Emerge Dynamics is a continuation of our series about understanding how much your business is really worth. This time, we’re discussing recurring revenue and monopoly control. Recurring revenue and monopoly control are drivers of your business valuation just like Switzerland and hub and spoke, as discussed in the previous episode. First and...
What are the things that drive the value of your business, and how can you make a positive impact on the worth of your business? Today we’re continuing our series on business valuation, and focusing on the main drivers so you know the right action steps to take to reduce the risk rate inside your...
On this episode of Emerge Dynamics, we’re continuing the series about how much your business is really worth, including passing along actions to improve the valuation of your business. It’s important to remember that value is in the eye of the beholder. Regardless of how you calculate a typical valuation, there is always a value...
Today, we’re jumping into the first episode in a series about uncovering how much your business is really worth. We’ll also be covering the steps that you, as an owner, manager, or investor can do to improve the valuation of the business. If you’re able to put these practices into place and would like to...
On this episode of the Emerge Dynamics podcast, we’re revisiting our strategic “dream planning” conversations to cover an objection to the process. The objection is: does all this planning paralyze? After all, if you plan too far in advance, it may become irrelevant. While the objection is understandable, the conclusion isn’t true. Analysis paralysis is...
This episode is all about inflation. This topic is important for business owners to focus on right now so they can figure out the best way to respond. It’s a fact that the conjecture of how inflation will affect business owners has largely been wrong. So why is inflation happening, and what should you do...
Eric and David go over one more point about Strategy and then dive into Tactics and Actions. When more than one person is accountable, no one is.
What is the best way for a business to develop a strategy?On this episode of Emerge Dynamics we’ll be discussing several frameworks for strategy while highlighting the pitfalls of giving this lip service. Once you know your purpose, vision, and objectives, it’s time to start putting a strategy in place. Your strategy is the “how”...