Part of the key ingredients for a successful small business is educating yourself, say in accounting or other related knowledge. This episode will surely help you understand what it means to be a relentless learner.
Technical details may overwhelm some small business owners. However, this is just a normal reaction since only a few people know the technical aspect of business like accounts and profitability. With Randal Dehart, you can pick up promising and useful advice on how to effectively and efficiently go through the nitty-gritty of entrepreneurship.
- Randy shares his humble beginnings growing up in a construction family
- The challenges a small company encounters and overcomes
- Rule of thumb: Restricting the business until it grows huge
- Trust and verify bookkeeping and accounting
- Helping clients grow with you
- Randy’s 100 different applications in business marketing
- Choose a guidebook for rules
- Keep focused on learning
- Once you educate yourself, focus on the tools and process
- The luck factor – Attracting investors
- Create or look for a business plan that works
Websites Mentioned / Where You Can Find Today’s Guest:
Links, Tools and Resources:
- Becoming Steve Jobs
- Outliers Malcolm Gladwell
- Think and Grow Rich
- The E-Myth Revisited
- Rich Dad Poor Dad
- The Lean Startup
- The $100 Startup
- Out of the Crisis by Dr. W. Edwards Deming
- Mastery by Robert Green
Welcome to Smart Tradesman, the show dedicated to bringing entrepreneurship into small business. Whether you are a seasoned business owner or just starting out, it is our mission to help you design a business that works for you—and not the other way around. Now, here’s your host: Daniel Eric Bowling.
DANIEL ERIC BOWLING: Hey you. Yes, you. Thank you for joining me for another episode of Smart Tradesman. I am your host Daniel Eric Bowling. I had an amazing conversation with today’s guest and I can’t wait for you to be able to hear it yourself. I do want to apologize in advance for the audio quality on both ends, actually. There’s a little bit of feedback noise as well as my audio level is a little low.
I hope that you understand, doing all the recording and editing myself, I promise in the future things will get better. But there’s no reason to ditch this conversation due to bad quality of audio because the content makes up for it. In our conversation you’ll hear a bunch of book recommendations as well as us talk about the importance of educating yourself, which will act as the catalyst to improving yourself and wanting a better future for your life, for your business, and for your family.
So going to pick up some great accounting tips, a new mindset on educating yourself, or just simply some podcast or book recommendations, then you’re in for a treat in this episode. Without further ado, let me introduce my conversation with Randal Dehart.
DANIEL ERIC BOWLING: With Me today is somebody who is out to make our lives much easier as small business owners. He understands the money side of your business and is not scared of dirty words such as accounting, bookkeeping, and worst of all, taxes. I’m very proud to interest my guest. Thank you for joining me, Mr. Randal Dehart.
RANDAL DEHART: Well, Daniel, thank you for having me. It’s a real pleasure to be on your podcast.
DANIEL ERIC BOWLING: So Randal and I we’ve been talking for about an hour now on Skype, before I even hit record for my podcast, because I had the good fortune for being interviewed for his podcast, Contractor Success Map. I will link to this in the show notes because there was a lot of valuable content that we had talked about and discussed in his episode, so please go check it out. And Randal, if you don’t mind, I’m going to turn it back over to you. Could you tell us exactly what it is that your business does and the message you try to get out there with your podcast?
RANDAL DEHART: Daniel, I’d love to. Thank you for asking. I’ll start from the beginning. My background is I actually grew up in a construction family. My step father had a construction company which he started in 1949 and he retired in 1999 after 50 years. He’s passed away, but he’s one of the greatest guys on earth. A real neat fellow. He had what I call the dog and pickup truck business, because literally he had a pick up truck and a cocker spaniel.
Ever so often, he would grow to salt of the earth, which his three employees. Now the reason he had three employees because he could hold one by the throat in each hand and eyeball the third one. Haha! And once in a while, he’d become a professional contractor, and that’s somebody who has between 4 and 20 employees. So he got the, you know, up to 9 in various points in his career. He never made it to enterprise level which is over 20 and up to hundreds and thousands.
Any event, like I said, I grew up in a construction family so I helped them in the family business after school and really enjoyed it. Got into high school, married my high school sweetheart, went to college, got my first degree. I got several degrees, and my first degree was in accounting. So went to college, got my degree in accounting, and I said construction, see ya, wouldn’t want to be ya. Moved forward, I was working in the accounting firm for a very short time.
And it just so happened, an interesting event took place. The universe has a sense of humor. A guy comes in the Cadillac—brand new Cadillac at the time. He gets out of his Cadillac, and it turns out he’s a home builder in the ‘50s. And he comes rolling in, using bad words, repeating them 4 times a second. He didn’t like the way financials looked. And because I had worked the contractors, he didn’t bother me, so I worked. And we got to become pretty good friends and very quickly, I came home one day and tell Sherry, my wife. You know what, I went to college, I’ve done my thing. I miss construction.
Long and short was, I went back in construction. I served an apprenticeship for plumbing, became a germ plumber, and spent not quite 20 years in plumbing. Just had a blast, Daniel. And what took place was because of a construction background and an accounting background, we actually opened our own businesses, we opened several remodeled businesses, service businesses.
The problem was I opened a business, built it up, and somebody would come by and say, hey do you want to sell that business? I’d say no. They’d put a pile of money on the table. I said, well maybe. And I’d say, well here’s another big problem, money, and I’d say, okay, I do want to sell, now we’re negotiating price. So I sold these businesses and I’d go build another one. And the last one we built, actually… started 1991 was a plumbing business. I built it up to—it’s a small company. We had 20 several employees and 7 trucks that we did search for a period model.
That same year, I started this accounting business. So we were doing bookkeeping for own and for some of our friends and competitors. In 2000, we sold our last business and we focused at that point, fully, on the construction counting business. So what we’d do, the short story is that we provide construction accounting and bookkeeping outsourced to all contractors, all across the USA including Alaska and Hawaii. Everything is fully on the web, serves everywhere. And we use a product called quick books. And it’s the quick books desktop version that is resting on a server, so a person has a Mac or a PC or a large enough tablet, they can see their quick books desktop on a remote server. And that’s what we do.
One caveat, we restrict ourselves. We only work with brand new contractors, startup, and once they get to 5 million in annual sales, we’d like to encourage them to go elsewhere because our niche is a smaller contractor. Zero to 20 employees, under 5 million. That being said, we do have, for full disclosure, we do have several clients that are over the 20 million mark, and we don’t do alter bookkeeping and accounting. We serve as remote CFO. I do a lot of consulting. But otherwise, for other contractors, we do all the bookkeeping, the taxes, the payroll taxes, sales tax. Everything except we do not do the annual income tax. There was a president in the 1980s who had a wonderful phrase, he said, “Trust but verify.”
So I tell my clients, trust me when I say this guy is blue, the grass is green. Trust me when I say we’re doing the best possible job we can for your day to day bookkeeping. Now, once a year, take the file to somebody else, an outside person and have them do the annual taxes and ask them to review what we’ve done. Trust and verify. It works out great. But we do all the bookkeeping. Our clients will send paperwork via a scanner. We have a number of phone apps that can just take a picture of it. Getting paper to us is really simple and it works out great. So that’s kind of a quick overview of what we do.
DANIEL ERIC BOWLING: Randal, so are you saying that if you do your job correctly, that you help them grow and they eventually outgrow meeting you? So you don’t keep them as a customer forever?
RANDAL DEHART: Actually, no, what happens we have a lot of clients who have been with us since the beginning. So what does happen is we help our clients grow. We also use a product called live plan, which is a web based business buying tool. So ideally, we actually help our customers grow profitably. Now some do bring in house bookkeepers, which is fine, but ideally they’ll stay with us for an enormous amount of time.
We have a few situations where the client has actually built their business and they’ve sold it and got a nice pile of money and retired. So oddly enough, ideally, we hang onto them, but we do have situations like we say where do they outgrow us, and we have a few situations where the client has far outgrown us. They’ve gone from 0 to 10 million in 2 or 3 years. In those cases, when they’re growing that fast, there’s a concept called the expansion and contraction isoquant, using basic calculus. It’s like a stair step and I’ve shown them. I say, you’re growing too fast, and you’re going to have a problem.
And most of them by the time they get to that point of 20 employees, there’s a wide gulf between 20 and 100, it’s called death valley. If you get to 20 employees, you got to go to 100 quick. Because in the middle, you’re going to die. And a lot of them do. So ideally, they stay with us basically forever, but not always the case.
DANIEL ERIC BOWLING: Yeah, you said the key word: grow profitably. Sometimes you can outgrow the size that you should be.
RANDAL DEHART: Absolutely.
DANIEL ERIC BOWLING: How do you market for your business?
RANDAL DEHART: Well, Daniel, that’s a very great question, glad you asked. We use over 100 different applications to market our business. The one that we do the most that works out the best, we actually have a website as most accountants do. and we focus strictly on construction accounting. Construction accounting is so different from regular accounting, it’s just astounding.
I actually wrote an article on this. You can look it up; it’s at www.FastEasyAccounting.com/CA. And there’s an entire article on construction accounting. So, because we’re a niche focused, so if I get somebody calling me up and saying, hey, I’ve got a business that does some retail, I’m going to say that’s great, knock yourself out. Go find somebody else, we can’t help you.
So to focus on the construction accounting, what we do is our website is all geared to that, and we’re also, we only focus inside the USA, including Alaska and Hawaii. So that website is what we use to drive a lot of business. That website is large. It has over 14,000 pages and over 10,000 landing pages, so we dominate our niche with the website.
The other thing we do to market our business, we’re heavy presence on LinkedIn. We have a heavy presence on Google Plus, and also a heavy presence—we’re getting more of a presence on FaceBook. In addition to that we have a lot of videos on YouTube in various places, and that works out well. The other thing we do is we’re actually members of the master builders association and other construction associations, and that’s between that and the various chambers of commerce, that’s how we market our business. We also get a lot of business from referral.
So, really quite common, new contractors start up their business, they don’t know what to do, they come to us. We do more than just accounting. We do some consulting as well, and of course we had one here just recently. Fellow started a construction business and it was called Commercial TI. So what he does is he goes into strip malls, and they take a section of that strip mall. Let’s say it’s a new shoe store, and they’re the ones that convert that empty space into a shoe store. So they do a lot of commercial work.
And what happened was we got him rolling o nit and identified some areas for him to focus on. He was profitable to beyond 20 percent in the first couple of years and doing pretty good volume just under a million. And it was kind of funny because he didn’t know any better. I kept telling him, I said you’re doing okay but you can do better. You’re doing okay, but you could do better.
And one day he comes in, mad as a hog. He said, I have talked to five different contractors. I’m not just doing okay; I’m doing wonderful! And I said, you’re doing okay but you could do better. Hahah! So that’s kind of how I work. Different people have different ways of doing it. And he’s just doing very, very, well, so… that’s how we market our business.
DANIEL ERIC BOWLING: Now out of all those tips and strategies, are there any ways–? Because I mean you know my target listeners so well, but you’re kind of in a different market. So is there any ways that you’re finding working for you that you could say would work for my listener as well?
RANDAL DEHART: Yes. Yes, I can. For your listeners, I think you covered this in your podcast too, the first thing I recommend to everybody and I recommend to your listeners. Pick up a book. It’s called—now, first We call the Rules, and it talks about paradigm shift. And the second book is Discover your Strength. Those are two books on how people can discover who they are and move forward.
The other book I like a lot is called The E-Myth by Michael Gerber. These three books apply to all industries. And I would say the first thing that all industries can use, very effectively, there is a program we use it frequently, it’s called live plan. LivePlan.com, and it is a web based program. It’s very inexpensive. What that does, it helps a new business or existing business focus on crafting a business plan. So plan your work, work your plan. So I guess the first thing, I would say, is begin to read and get involved.
And unlike your particular situation where you have the group on FaceBook, the FaceBook.com/groups/SmartTradesman. So getting involved at different trade groups like what you got going is fantastic. Reading some books, and understanding the paradigm shift because one of the things that happens is when an employee working for a business, carpenter, plumber, electrician, baker, butcher, banker, upholster. There is a whole different paradigm shift from being good at your trade, to running a business.
DANIEL ERIC BOWLING: Yes. Michael Gerber, E-Myth Revisited.
RANDAL DEHART: Yes! I love that book.
DANIEL ERIC BOWLING: That’s my biggest take away from that book, that, I forget the exact wording. The person that may be good at the technical trade that they’re in, doesn’t mean that they’re good at running the business that offers that technical trade.
RANDAL DEHART: What’s great, and Michael Gerber is fantastic because he identifies, or he suggests that the butcher should become a consulate banker. Among other things, he suggests that is one path to look at, and I think that’s great. I have found that the butcher who opens a butcher business and then steps out of the role of the day to day and focuses more on his trade can actually develop a very strong butcher business or upholstery business like you’ve done.
But yeah, I love Michael Gerber, and his books are fantastic. The whole key is—and I’ve said this many times. We look at someone like, take two people. The person that stands by the free way entrance or exit and it has a sign, need money, will work for food. That person could be, metaphorically, say five foot nine, 165 pounds. Say, early 50s. And fairly intelligent.
Take a better person who could be roughly, I’m guessing five foot nine, I’m guessing 160 pounds—I don’t know for sure. And some are in the 50s, I’m kind of guessing. And that second person is Bill Gates. Well, physically they’re not terribly different. What happens is Bill Gates seemed to have gotten a different group of knowledge. And he has some different answers. So, the people on your podcast, they’re listening to this podcast, I suggest find the mentor that you’d like, and another person I really admire immensely is Steve Jobs of Apple. It’s too bad he’s not with us any longer.
But same thing. Steve Jobs new and has an understanding of some different things. So those three people—I think the biggest difference is, what do they know and how do they acquire knowledge? So, I would suggest that most important thing I’d talk to, and I’d consult with my clients is, let’s look at your current paradigm, look at your money magnet. I call it the money thermometer. In psychology they call it the comfort zone.
What is your comfort zone and what can we do to raise that? Do you want to raise it? Maybe you don’t want to raise it. But if you do, start examining those paradigms and questioning the core beliefs while maintaining your own core values. So a lot of what we do, it sounds funny. The numbers are only a fraction of what we do; just a fraction. We also, we call it holistic approach to accounting. So we work with the entire person. And we got a lot of people, Daniel, you’ll love this.
We have a lot of folks who have relatively small businesses. They’re the happiest clams that I’ve tied. I can think of a dozen of them right now that are doing half million dollars a year. They’ve got maybe 2, 3 employees, and they’re making 20 percent. Making six figures. And they’re happy. We ordered clients that are over 10 million and they’re doing 20 percent, so they’re making 2 million a year. And there’s no difference between those 2 people because they’re both doing what they like. Does that answer your question?
DANIEL ERIC BOWLING: Yeah, don’t remember what the question was, but haha!
RANDAL DEHART: Okay!
DANIEL ERIC BOWLING: That’s why I like the conversation. I can’t stay focused enough to remember the question I asked. So I call it a conversation, not an interview.
RANDAL DEHART: There you go, I love it.
DANIEL ERIC BOWLING: No, but you brought up some very key points. You’ve got to focus on educating yourself and how you educate yourself. But then, what are you going to do with that knowledge and those skill sets? Because are you wanting to just apply your trade for the rest of your life or are you looking to grow a business that works for you. Because if you’re barely getting by and you’re just doing the job, you might as well be doing the job for somebody else and not running a business that you’re going to pull your hair out of or…
RANDAL DEHART: Correct. That is so true.
DANIEL ERIC BOWLING: And Steve Jobs—I love him. I would say 2 months ago, I did not know how much he shaped the world around us. And what taught me was the book called Becoming Steve Jobs. I got it on audio book and I loved it.
RANDAL DEHART: I got to get that. I haven’t got that yet. Sounds like a great book.
DANIEL ERIC BOWLING: Oh, it comes from a very, I think, unbiased position from somebody that has known him his whole life—his whole career, pretty much. Actually, no, he met him when he opened the Next company which was after Apple.
RANDAL DEHART: Oh, that’s a while back!
DANIEL ERIC BOWLING: I didn’t know all this. It’s like a history lesson. It’s a very unbiased position. At first his family would even talk to this guy. He was a reporter that knew him all through the years but he had a personal relationship with him. But eventually, since he’s coming form an unbiased position, people started talking to him and he got people to give him behind the scenes type stuff. Wow, Steve Jobs, I didn’t know he had a position in Pixar and all that. I highly recommend the book.
RANDAL DEHART: That sounds like a great book. I’m with you—I love Steve Jobs. I love both of them; Steve Jobs and Bill Gates because of what they’ve done to raise the entire industry. The one thing I get a little chuckle out of, and we have about 20 computers in our office, and they’re all Windows computers and I love them.
The funny part is that, and this is no—this is an is. Just is, okay. We reboot these things at least once a month, twice a day. Just part of the nature of Windows, okay? And I have clients, a few clients that use Apples and Macs, and they’ll call up once in a while and say, Randal. Randal, you won’t believe it. Here it is 2015, and I had to reboot my Mac computer again. This is like the 2nd time in five years. I’m really getting tired of this.
DANIEL ERIC BOWLING: Haha!
RANDAL DEHART: Because they know once or twice, I have expressed my dissatisfaction with having to do different things. they like to call up, kind of give me a hard time. So, I love technology, it’s fantastic. It really is.
DANIEL ERIC BOWLING: Yeah, well we’re on the book subject. Have you ever heard of the book Outliers?
RANDAL DEHART: Yes! Is that Malcolm… I can’t remember his name. Yes, I’ve read the book.
DANIEL ERIC BOWLING: Gladwell?
RANDAL DEHART: Gladwell, thank you! Malcolm Gladwell, oh he’s a thinker.
DANIEL ERIC BOWLING: Yeah, he opens up to a whole new way of thinking.
RANDAL DEHART: Yes, yes, I love that book! Immensely. What other books have you read that you like?
DANIEL ERIC BOWLING: Well, funny thing is, we’re talking about educating ourselves and we’re changing our mindsets. None of this started before a year and a half ago, I started listening to podcasts and audio books. I didn’t read a book for probably 10, 20 years, probably, honestly. I just started listening to everything. So mostly small business, four hour work week, I would say start with Think and Grow Rich, obviously. The E-Myth Revisited, Rich Dad, Poor Dad, Outliers, Becoming Steve Jobs, The Lean Startup, and The $100 Startup. I believe, I just read a while back.
Any of these books I would recommend.
RANDAL DEHART: Oh, absolutely. Hey, one of the books I’d like to recommend to your listeners to look into is called, the title is Out of the Crisis, and the author is a gentleman by the name of Dr. W. Edwards Deming. Out of the Crisis has been around for a long time.
Just I’d like to segway briefly, maybe just of your listeners—as we know, Japan it had 2 nukes dropped on it in World War II. And so by 1947, when McArthur went over to Japan to help rebuild it, it really was in a bad way. But what’s interesting, Daniel, if the entire country of Japan were crushed together, metaphorically, it would fit inside the state of Montana. And yet, it’s one of the third largest financial powerhouses in the world and rising quickly.
Well, Dr. Deming wrote a number of books where he talks about processes and procedures. And working with systems. So, he actually worked with a number of Japanese countries for I believe about 25 years or something. And, he actually, as I understand it, came to the U.S—he went back and forth from U.S to Japan. He was actually teaching at, I believe it was MIT. Don’t quote me on that, but he came back to the U.S on one of his visits and had a chat with one of the big three automakers in the early ‘70s.
And said, you guys need to kind of wake up and smell the coffee. I’ve done a bad thing. I’m helping Japan develop systems. And he said, I would suppose by the mid ‘80s, Mitsubishi will be larger than GM. And they all laughed at him. Well, by the late ‘80s, Mitsubishi was 100 times larger than GM. And this is just to boil down, part of what Deming’s philosophy is, we use it here all the time. He has a whole new definition of the world quality, because quality is either subjective or objective. His definition of quality is, let’s say that a manufacturer manufacture red, I don’t know, like glass cups for coffee drinking.
And let’s say that every five out of a hundred or 5 percent of those cups were defective. They had cracks or they weren’t’ fired correctly. And Deming would say that company had achieved quality. A predictable result. And, the next question is, what can we do in the system to bring the mistakes down to 4 out of 100? 2 out of 100? 1 out of a 100? So they’re focusing on establishing a benchmark for quality, and then working towards reducing the mistakes. The other thing Deming talked about was 97 percent of all the problems are common causes and arrest of the defeat of management.
Three percent are people problems. So for example, a lot of contractors who may be having a problem finding good people and making things happen—I would suggest, take a look at your systems. For example, let’s take someone who works in dirt like landscapers and plumbers and this sort of thing. We can go to the local hardware store and buy a wooden handle shovel for three dollars. It’s going to last for about four hours.
Or, we can go buy a fiberglass handle shovel with reinforced steel and that shovel is going to last many months. So just making minor improvements instead of telling the worker, hey, you need to work faster and better, more efficient. Give them the tools. An example I use quite frequently is, I’m six foot tall, 275 pounds, in pretty good shape. And if I took my wife and she’s like, a lot smaller to say the least. And leave in the middle of a field, and we’re going to dig holes. With the right equipment, she can go a lot faster, quicker, cleaner than I can if I have a shovel and she has a back hoe.
So if a contractor has employees, and we get the most out of them because what we do all the time was study and watch the tools that you’re buying. Don’t buy the cheap tools; buy the best tools that you can afford. And put the processes in place like Deming identified. So reading that book, Deming is a wonderful start. I actually have a PMP, my dissertation was in Deming. So I’m very familiar, and I just love it. And we use a lot of processes here. What are your thoughts on that?
DANIEL ERIC BOWLING: Well, I’m going to check out that book because some of the stories, who sounded very familiar because I think it was talked about a lot in the book called Lean Startup.
RANDAL DEHART: Yes, it is!
DANIEL ERIC BOWLING: I really liked that mindset. I thought a lot about it. I listened to the book twice. So I can’t wait to check this book out. And I remember the one question they kept saying, a lot of problems can be solved by one simple word, and it’s why? Stop the production line, and ask why something’s happening, and not just let it keep on going on down the line.
RANDAL DEHART: Exactly. Exactly. Focus on the process, focus on the system. Focus on the tools. That’s very, very powerful.
DANIEL ERIC BOWLING: On the book subject, I just remembered the one I’ve been trying to think of. Mastery. It’s just a random audio book, no one even recommended it o me. I don’t know even know about the author, maybe you know his name? Robert Green?
RANDAL DEHART: Yes, I know Robert Green! I think I read Mastery years ago.
DANIEL ERIC BOWLING: Yeah, I would recommend it for anybody who is proud of the work that they do and is really trying to master a trade, and if they’re wondering if they’re going with the right direction in their life. Because I know as a young upholster, I didn’t know if I was making the right decision of sticking with the trade of going to college. Should I be doing this or doing something else? Reading this book almost gave me cold chills, tears in my eyes practically. Made me feel thankful for what I had done. Put in 10,000 hours and mastered something and now I’m ready to go on to bigger, better things and help other people because of it.
RANDAL DEHART: Excellent, excellent. That makes a ton of sense. Can I throw something out to you? I don’t know how applicable it is today with the podcasts and more online media, but I had read, a long time ago, another book was called In Search of Excellence. The guy had just mentioned briefly in there. The back third of the book, where he had mentioned that all millionaires have a library card. Period.
And I thought, well that’s interesting, because I fit that category, I got a library card. I have since I was a kid; I still do. Not as much, but I used to go to the library frequently and check books out. And I have a personal library in my house that has a lot of books, probably about 10,000 total. But the key is: books, audio books you can listen, podcasts you listen to, and I’m still a big fan of reading books. For what it’s worth, I got a lot of friends and contractors and whatnot who are extremely wealthy, and it’s so funny because they’ll call up, they’ll chat, and I’ll ask my groups and they’ll recommend a book.
Have you read blah, blah, blah? And it’s funny how many times everybody has read Thinking Courage. That’s just a stable. But reading the books and the podcasting, that is so huge because all it does is shift the mind. It’s a paradigm shift. You identified some really good ones, I like that.
DANIEL ERIC BOWLING: I think if you’re not ready to go to a new level, if you want to be content with where you’re at, then don’t start reading. Don’t start listening to podcasts. Because once you do, you’re going to start wanting more.
RANDAL DEHART: Oh yeah, oh that is so true. There’s an old—not old, there’s an ancient zen philosophy that says, when a student is ready the teacher appears. I have experienced that so many times. I tell everybody that guess what, I’m 100 percent certain, I’m 80 percent right. It’s amazing how many times I’ve developed a mindset that the sky is blue, the grass is green, and then suddenly look at it from a different point of view or talk to someone like yourself and all of a sudden it’s like, I’ve got to go pick up that book and read it again.
Read through it, and all of a sudden it’s a paradigm shift. So yeah, when the student is ready, the teacher appears. And you’re right; if people aren’t ready for it, don’t read. But if they are ready for some changes and some growth, pick up a book and read it. And biographies. Daniel, I love biographies. There was a book called The Ray Kroc Story. That one made my stomach turn. That was a knot.
Ray Kroc is the founder of McDonald’s, and the Ray Kroc story goes into all the trials and tribulations that guy had to build that company. I think I read that years ago and I was starting my second company that had already failed twice. I was feeling like, man, I’m just the stupidest man on earth. I can’t even get a business going right. And I read The Ray Kroc Story and I’m like, oh my gosh. I just haven’t had enough problems yet, that’s all!
So yeah, books are great.
DANIEL ERIC BOWLING: The key though, is you failed and you got back up, and you failed and got back up.
RANDAL DEHART: Oh yeah. Oddly enough, I’ve failed spectacularly three times. I mean, I’ve gone from 7 figures to less than 0 three times.
DANIEL ERIC BOWLING: That’s very inspirational.
RANDAL DEHART: Yeah. But the last time was in the ‘80s, and guess what, you learn a lot of good lessons. So now I know what to do. Let me just throw this out for what it’s worth for people listening to the podcast. I mean this with a degree of humor, but there’s a grain of truth in it. A full partnership, not just a joint venture or relationship, but a full blown partnership to one where your attorney draws it up, people sign it and so forth. A partnership is the only ship designed to sink.
I’ve been there, done that, get a t-shirt, tattoo, and sung a song it. And it goes like this: M-I-C-K-A-Y. You know the rest. I do a lot of joint ventures, I do a lot of relationships. But I now stay away from partnerships. If there’s a situation where I’m going to work with somebody else and we’re going to develop a company or something different, then we form a sub S corporation. And we take shares. It’s a little fine line of legalize, but if you have a corporation, a sub chapter S, and you issue 100 shares, and somebody has to have 51. Somebody has to be a dirty shareholder.
It works out great. Because, now, if the relationship doesn’t work out as planned, it’s easy to dispose of the shares but when you’re a partner, it gets a little fuzzy because take it from me, if you have a full blown partnership and your partner receives a shiny new toy, oh I don’t know. Like, I don’t know, maybe a hot car? And if you have a full long partnership, they can go to the dealer, and if your credit and assets are wonderful, they can buy that new car, without telling you, put it in the business, and now you’re liable. Of course you can go to your attorney and your attorney will say, golly, that was kind of a dumb thing.
If you have a sub S or in some cases an LLC, and they go and buy a car, well guess what? They can’t bind you into it without some difficulty, major difficulty. Such is the word of the wise.
DANIEL ERIC BOWLING: You know I love that? It’s not just from a legal standpoint; it’s relying on somebody else to feed your family.
RANDAL DEHART: Right.
DANIEL ERIC BOWLING: I got sued for a non compete, because I was fed up. I was at the company. Me and my former business partner, we brought in somebody that had money, because we were thinking we were at a crossroad where we had employees. But we were burned out. We didn’t know, we didn’t want to keep trying to build something. Basically, I had already felt like I accomplished what I set out to do with upholstery, make something awesome with it. But there’s still something more I wanted to do. it wasn’t necessarily this company but I wanted to feed my employees so we bought somebody in with money who wanted to take it in at the level.
And I was willing to stick it around and see if they did. When we didn’t get along, I told my other business partner, my friend, you have 2 weeks. Then I’m living, or you’re going to be here without me. So he left, and then I left. And then half my team left because if I’m not there, my other business partner is not there, there’s no team anymore. So they left. All the customers left, because—
RANDAL DEHART: Oh no!
DANIEL ERIC BOWLING: Yeah, we were the company. We had such great reports. Without the quality and without the team, we had no company. So he pushed us too far, we left. I got accused of stealing all the customers even though I didn’t. which is fine, they don’t hold up in Ohio, but I settled just to break even and walk away. And, it just made me realize, I don’t think I ever want to be totally reliant on somebody ever again that we’re going to get along forever, and just develop my theory and just strategic partnerships.
You can partner up for a project or for part of your income, but don’t both rely on it completely.
RANDAL DEHART: Absolutely. Oh boy! Yeah. Definitely. Let me share another quick ramble with you, for what it’s worth. This comes from personal experience. a man with money met a man with experience. a man with experience got money; a man with money got experience.
DANIEL ERIC BOWLING: Haha!
RANDAL DEHART: So yeah. I have been there, done that a few times. And you’re absolutely right. It’s funny too, because more cases than not, the person that is going to invest money, if they are a “angel investor” run, don’t walk away. Because there’s no such thing as an angel investor; it doesn’t exist. It’s like that Sasquatch, it doesn’t exist. Maybe Sasquatch does, I don’t know.
People are going to invest into a business, they tend to have money and they tend to have ideas. And they think that it’s good to be the king.
DANIEL ERIC BOWLING: Oh yeah, they think they can see everything that you’ve failed to see up to this point, and they have their own ideas on how to make the business “successful”.
RANDAL DEHART: Right. Because they have better ideas, so… anybody listening to the podcast, for goodness sake, there’s plenty of places to go get funds. Go to the banks. Credit unions are great, and small community banks.
People don’t realize this a lot, but the small community banks are great places to get financing and mentoring.
DANIEL ERIC BOWLING: Mentoring, I think, is key. Now I love these conversations because it’s my way of educating myself, by talking to people like you who have been there and done that. So, I think there’s a time and a place for getting money, but at our level, when you’re starting out on a service type business, usually you can start a business for minimal amount of money and you don’t have to go into debt for somebody.
Would you think that the first step for somebody that says, I have no skill set, I want to start my own business? Would it be to get a business loan?
RANDAL DEHART: No. no, absolutely not. So brash and quick. No… here we go. Daniel, the first place when I talk to new contractors for just getting started. I say, there’s two ways to start and operate your business. The most popular way is PAM. Production followed by accounting, followed by marketing.
I got a job, I went out and did it, I banged nails, I sawed lumber, I poured concrete— production. I’m not going to be concerned with accounting till I get the third quarter blues, three counter quarter pass by and I get letters from the tax agencies. I’m not going to market because all of my business comes word of mouth. Those are the people that end up in debt, over their head, credit cards are maxed out, their 401k is gone, they leveraged their house on a heed lock, which is a home equity land of credit. And they do it totally wrong.
The way to run your business is to reverse that and go map. So, marketing first. Get the accounting system set up. and then the production. So if you’re starting a business, you’re right. Shoe string. Because the first thing a business owner—this is my opinion, but a lot of experience behind this too. Is, identify your market. No matter what you’re doing. If it’s online, if it’s upholstery, if it’s car repair. Doesn’t matter. Identify your market. Is there a market for what you’re doing? And how big is that market?
So if a person is working with technical work, like upholstery or carpentry or plumbing or something like that, then their market is only within roughly a 30 minute driving distance. More than that, it’s foolish. So draw a circle, Google maps, 30 miles around the home base. And discover who in that area you can work with. So spend some time with strategy and developing a plan. Because what I see more often than not, if they develop the marketing and the strategy, and then set the accounting, and then the production. Now what happens, they’ll know the most important thing that every business owner needs to know: who is not my customer?
And we spend an inordinate amount of time and effort in our website and marketing to identify to deselect the people who are not our customer. And we get calls frequently from people in our industry who will call up and say, well I’m a commercial contractor in Miami, Florida. I’m doing mid-rise, 10, 12 story buildings, and I need pay application system on twos. We have jobs. And a little bookkeeping because my in house bookkeeper is a moron. And I say, we can’t help you.
We can advise you, but we can’t do your bookkeeping because your outside our scope of realm, so number one is: do the marketing, figure out who is going to serve, and you’re right: that’s all legwork. That’s all mental work. And very quickly, they’ll generate enough capital. The only time to go to the bank or to the lending institution is once the system is in place, the project plans in place, the business plans in place, and they’re ready to expand and they have either expanded or deepened their market. That 30 mile radius, they’re saying, you know what, I’m working with homeowners doing blank, and I realize I can do the same thing with apartments and small commercial buildings. And they have a plan in place, they don’t have a market.
Then they go to the bank and they say, I need those funds. Here’s what I’m going to do with those funds. I always suggest getting a line of credit and taking only what you need and watching the business plan because often times it doesn’t work out the way you want and you’ve only taken out a little bit out of the lending credit and used it. And if it’s not working, stop and figure out why. Like you said, stop the production line and figure out why. So it’s a plan to move. And pay close attention to the expansion isoquot, which is a stair step.
We see this all the time, and I talk to my contractor clients frequently, and I say you’ve got to pay attention—we do the math for them. I look them square in the eye with love in my heart and total respect. I say, the people that got you to 500,000 in the office, in the administrative site are not the same people who are going to get you to a million. The people that got you to a million are not going to get you to 2 and to 5. And once you’re at 5, you no longer need administrative. You need, basically, a custodian. The custodian type mentality will not give you the time of day at 500,000.
So they need to keep changing the administrative people in the office as they grow. Otherwise, administrative people in the office as they grow. Otherwise, administrative people in the office, more often than not, there’s that comfort zone, and they bump up to the height of the comfort zone and I see it frequently in the administration and the office will destroy the business because they are the anchors holding it back.
The answer is, and I do this frequently, our own staff is encouraged. If the contractor or the person in the small business, they will encourage their staff to guess what? Read, read, read. Listen to podcasts, read, and learn. That’s the exception to the rule. Now as the business grows, the staff is growing with it. And they can keep the staff for as long as they want. I’ve had several cases where people have done that. And so the staff member gets five years later, they say, I can’t believe how much I’ve changed the last five years, and I didn’t do anything. And I’ll ask, well, what do you think of Og Mandino? Greatest salesman in the world. I like that! Blah, blah, blah.
Have you had the chance to read The Portable MBA in Marketing? Oh yeah, I like that, blah, blah, blah. Have you read The Fifth Discipline? Oh yeah, that’s fantastic! They really have changed. The key is, I guess, summarize to answer your question: only get money when they’re in a growth mode, not to start your business. That’s foolish.
DANIEL ERIC BOWLING: You know, I really think that most small business help out there is over the head of the businesses that we’re talking about. Because I know that I your website and everything I’ve read and heard you say, you talk about how different the construction industry accounting is than everybody else. And I really, really believe that, because the small business help that I’ve heard is, oh you want to start a business?
Put together a business plan and approach a bank, blah, blah, blah—no!
RANDAL DEHART: No!
DANIEL ERIC BOWLING: Exactly what you just said is what applies to our level of business.
RANDAL DEHART: It does.
DANIEL ERIC BOWLING: Prove it out first. Prove your market, because if you do it right and you find out who is your customer and also who is not your customer, you’re not going to be hard selling anything.
RANDAL DEHART: Right, right. Oh that is so true. That is an absolute fact. On the same lines, for what it’s worth, there is a fellow, his name is Dan Kennedy. He was a marketing guru in the ‘60s, ‘70s, and ‘80s, and I had the opportunity to be in a few of the seminars. The guy was great. One of the seminars, I got a real chuckle out of. The guy was phenomenal. He was like, here’s what I do! this was back in the day.
He said, I would craft a wonderful cover for a book and I would write a blurb, what the book is all about. He did this effectively when Amazon first started. He said, I’d put it on Amazon and I’d sell it. For $19.95, $29.95. Get preorders. He said, what I would do, if I got enough pre-orders, I would actually write the book. If I didn’t get pre-orders in a certain amount of time, he said, we would immediately refund the money and we’d include a coupon and say the book is having a problem getting into print, so here’s your money back. And I’m also going to include ea coupon for $19.95 for any other purchases.
So the key was, the take away there is, test it and see, run the flag poles, use it or lose it. Test it and see if there’s a market, a need for it. We do that frequently. I have contractors, I do this frequently. So you know, put up a webpage talking about aging employees. And start marketing that you are aging in place expert. And if you’re not getting enough response, take it down. 5 polls, see who uses it.
We have one contractor that did that, aging in place. I don’t know why, because he’s about my age, stone on the roof. But, he started doing the aging in place, and now his entire business is aging in place. He’s just making a fortune! And he didn’t do so well on the whole house remodels. Well, there you go, he tried that. He said, Randal, I can link these folks. Enough said. People, I would suggest, try a bunch of different things and then what works, focus on it hard and heavy.
DANIEL ERIC BOWLING: The fact that they’re trying and if they’re willing to take criticism and then fail and keep moving, they’re going to make it. And then, of course, brings me to people like you who they can get to help them in the areas that they don’t understand. So, this is great.
RANDAL DEHART: Excellent. Happy to help.
DANIEL ERIC BOWLING: Yeah, so is there any resources? We had a book recommendation which I love, a couple of them actually. Ray Kroc’s, In Surge of Excellence. Going to check them out. And Randalisms.
RANDAL DEHART: There you go.
DANIEL ERIC BOWLING: Now, is there any resources that you would recommend somebody checking out in their small business?
RANDAL DEHART: I’m going to do what they refer to as a shameless plug, for what it’s worth. Go to our website, which is www.FastEasyAccounting.com. There’s a whole section on the website, in the right hand side. It’s called “about”. There’s a lot of resources there. I have a whole list of the Randalisms. I’ve got a mission statement. I’ve got how we help contractors.
So our website has a tremendous resource for a lot of people. We have a lot of people go on the website who have nothing to do with construction, and they’ve called up, we had little conversations. I can’t help you as far as your bookkeeping, but I can help you as far as other things. That’s one resource. There’s a whole section called free forms. And we have construction definitions, templates, and several tying card templates. These are free, and these tying card templates work great no matter what business a person is in.
They can download these, they’re totally free. They’re also either on Excel or PDF. We do ask, put a name and address—not an address. A name and an email address. And we also have on those forms, somebody to ask the information. It actually says on the form itself, please contact me. They check the box by email, by phone, or not yet. If it’s not yet, we don’t bother. That’s a tremendous resource that they can get all kinds of information for free, and we have a ton of people downloading those things. There’s probably tens of thousands of downloads, of those forms that don’t cost a time.
We want to be as much of a service as we can. That’s one resource, obviously. The other resource—this is going to sound a little funny, but I use it frequently. Two resources to learn stuff. One is the Google Plus. Google Plus is just a tremendous depth of knowledge. You plug in your question, and somebody somewhere probably has an answer for it. And the other one, especially for business owners—I love LinkedIn. So go to LinkedIn, join the groups that apply that your business, get involved, and you can post a question in LinkedIn, and very quickly you’re going to get a lot of responses. Some you may not care for; some are worthwhile.
So that’s 3 quick resources right there that people can use. And I think that you actually have a pretty good resource as well, don’t you? On your SmartTradesman.com.
DANIEL ERIC BOWLING: There you go. Another shameless plug for me this time, haha!
RANDAL DEHART: Yes, yes! Yes it’s… all about marketing.
DANIEL ERIC BOWLING: Yeah, I’m working on—it’s a ground floor, but, building up a go to place for resources of any of these questions that we’re talking about. Now I have you as a resource. I was hoping that you would bring up, and if you didn’t, I was going to—that list of free forms. I was looking it over. There’s a whole page of nothing but valuable, free information.
RANDAL DEHART: Absolutely.
DANIEL ERIC BOWLING: So, can you tell us where we can find you other than—so you told us about this free site, but is there any other way that we can get a hold of you?
RANDAL DEHART: Probably the easiest way to get a hold of me is at the www.FastEasyAccounting.com. Like I said, there’s over 14,000 pages. Our phone number there, 206-361-3950, you can always call us on that number. You can go on the page, you can fill out a form, send us an email. We’ll get it. You can send in an email to us. That’s the two basic ways. Other than that, I am on LinkedIn, so you can contact me through LinkedIn, contact me through FaceBook, Google Plus. There are over 100 different places you can be contacted, probably the simplest is www.FastEasyAccounting.com. And the phone number is 206-361-3950.
DANIEL ERIC BOWLING: And that’s a wrap with my conversation with Randal Dehart from FastEasyAccounting.com. We did talk for a little bit longer and thanked me for having him on and was so excited to hear from any of you that need you to get him started or unstuck in any way. It just so happens that my computer completely filled up and stopped recording, since this is an ongoing journey on my end, I’m still figuring things out. I am not computer savvy.
So, just so you know, Randal says bye and he wishes you the best. I feel very fortunate that Randal gave us so much of his time and great insights. I was also fortunate that the recording didn’t stop much earlier in our conversation. Actually, if it had to stop recording, it stopped at a pretty good time, because we were pretty much wrapping it up. So I will link to anything that Randal talked about today, any of the book recommendations, as well as how you can get a hold of him in the show notes at SmartTradesman.com/FastEasyAccounting. That’s where you should be able to find a full transcription of the episode as well as any links mentioned at all.
I’m very thrilled with the success of Smart Tradesman up until this point and I could not have done it without you, so I want to thank you so much for all the ratings and reviews that I’ve gotten so far. If you’ve not done so yet, if you’d be so kind to go over to iTunes or Stitcher, leave me a rating or review, and then also subscribe so that you can get all the latest episodes directly to your smart phone. And I promise you, you will not regret it.
My gift to you is if you want to have a business plan that works for you, and you want to answer some questions about your business to get you unstuck and move forward, I have for you a free download over at SmartTradesman.com/BizPlan. Basically, it’s a guideline or an outline of a very flexible business plan that you need to get you unstuck and get you moving. Remember, you’re not answering these questions for a bank. You’re answering them for you and to get you moving in the right direction.
So if you’re ready to be pushed past your comfort zone, then I recommend going on over to SmartTradesman.com/BizPlan and download the free worksheets today. So until next time, thank you for joining me. I’m out of here, peace.