Smart Scaling for CEOs: Lessons from 45 Years in Business with Steve Smith

Summary

00:00 - Introduction to Smart Scaling and Coaching

06:06 - Transitioning from Corporate to Coaching

12:38 - Lessons Learned in the Coaching Industry

16:33 - Understanding Market Dynamics for Growth

19:13 - Identifying Signs of Scaling Issues

23:53 - The Importance of Clarity in Business Vision

26:57 - Assessing Capacity for Growth

30:24 -Trade-offs in Scaling Decisions

33:51 - The Shift from Tactical to Strategic Thinking

38:50 - Characteristics of Successful Scaling CEOs

‍

Full Transcript

Jeff Holman (00:01.164)

Welcome back friends. This is Jeff Holman, host of the breakout CEO podcast. I am having a blast talking to so many fun, wonderful, insightful guests and really glad that you're joining us again today. We've got Steve Smith with us. Steve is a coach. Steve is out of California and has, you know, we were talking before the recording started about a couple of things that he shares with his clients and with other coaches. And I just, the theme

like just appeared, right? It was really apparent. Steve is gonna, and I just noticed this Steve Smith smart scaling with the theme is essays today, I think. But yeah, so, but we were talking, you and I, Steve, about some experience you've had and some things that you've learned and observed along the way. mean, you got like, would I read 45 years of experience doing this stuff, right? Is that right?

Steve Smith (00:40.009)

Dang, that's serendipitous, isn't it?

Steve Smith (00:58.323)

Yeah, mean, years in business and that has taken a, that's taken a shift over time. But looking back on it, what I realized was my first 30 years was actually a really good setup for the 18 years I've been in coaching now. So.

Jeff Holman (01:13.324)

What was the 30 years?

Steve Smith (01:15.037)

I was in consumer products manufacturing and I went to, you I was, I worked for companies like general mills and Lysol chemical. And, you know, at one point I was with the largest manufacturer of burial caskets, which was a really strange business to be in. But, you know, all of these assignments took me to great places. I learned a ton and it was a great experience. And really what it did was it set me up to where I got into this in 2008.

Jeff Holman (01:17.848)

Okay.

Steve Smith (01:43.215)

And I started to realize that my point of difference in the coaching field, because I do executive coaching for leaders in large companies and I do business coaching for small business owners. But what it did was it set me up with a really massive background in just how business works. And, you know, look, there's a lot of great coaches out there. There's some that are infinitely better than I, but when people are looking for help making the business better, which might include making them better.

Jeff Holman (02:00.727)

Yeah.

Steve Smith (02:11.808)

I've got a lot of background in that.

Jeff Holman (02:13.526)

Yeah. And I think just to put this in context, I think a lot of our audience, because we're talking with scaling CEOs, they're, I mean, you mentioned some company names. Those guys are established. Those guys are large scale, you know, massive global companies. A lot of our audience, they'll be like, maybe someday I'll be there, right? But that's one of the values of a podcast like this is to be able to say, somebody who's seen where you're going,

can help you navigate where you are and set yourself up correctly so that as you go down the path, even though it's going to take you a while, you're going down that path, you know, because a lot of our audience will say consumer product goods. Yeah, I'm in that too. I have one product. I sell it on Amazon. I get it, you know, manufactured in China and shipped over in half a container twice a year, like different, you know, different.

Steve Smith (03:04.208)

yeah, it's like that whole industry has morphed tremendously, predominantly because of the internet and e-commerce and all the things that come along with that. But what I will tell you, having worked on both sides of the fence, big companies make the same mistakes small ones do. It's just when they make them, the financial risk is massive.

Jeff Holman (03:24.014)

Yeah, yeah, yeah. Well, and that's a point that we've tried to emphasize here on the podcast that whether you're big or small, you're making the same mistakes. You're dealing with the same issues, different scale, right? And a lot of our audience, they're dealing with all the same problems at different times. Some people run into manufacturing issues before they have employment issues and other people hit the employment issues first before they run into it.

Steve Smith (03:39.091)

That's it.

Steve Smith (03:52.691)

Yes.

Jeff Holman (03:52.876)

These are just cycles that we're all in and the magnitude varies. But the one thing about somebody like you with this, you know, 30 years of experience in large business is there's a discipline that exists in large businesses that just by virtue of resources and everything doesn't typically exist in smaller companies. we had a, I had a guest on recently. It'll be aired before.

Steve Smith (04:15.923)

Yes.

Jeff Holman (04:22.478)

before yours airs. And so people will recognize Greg Scow. He talks about buying businesses. He's bought three or four, I think five businesses now. And one of the he emphasized is I think what we're gonna talk about, and that is some of the discipline around running small businesses. Because if you don't have that discipline, your first business might be shooting arrows in the dark and you might've hit something. But your second business, if you're just shooting arrows in the dark again without that discipline, like,

chances of hitting bullseye twice with your eyes closed is pretty slim, right? So I think we're gonna get into some of that.

Steve Smith (04:58.178)

yeah, I know. Yeah, and like I said, the discipline, a lot of it, quite honestly, the majority of it is getting comfortable learning from your mistakes. Sometimes entrepreneurs are so much go, go, go, and they're chasing fame and fortune, so to speak. They don't sit back and just say, okay, what did I learn from my last go around that I don't wanna repeat again? And...

If you don't get into a discipline of going through those metrics to figure out what holes you should be looking for and avoiding, or what decisions seem to be really attractive, but you really need to get under the surface to figure out what the consequences are of doing something like that, then you're just destined to keep repeating, buy it, kill it, buy it, kill it, buy it, kill it. And I have worked with people over the years that were under third or fourth business venture.

and they finally said, I can't do this anymore. And I'm thinking, how did you last this long? I mean, do you have any money left, any homes left? I mean, is it all gone? Because when you keep doing that, you're not gonna break even when you get out of stuff like that. You're gonna take a hit.

Jeff Holman (06:06.306)

Yeah. Yeah. Well, I'm excited to talk about this smart scaling discipline issue, but I don't want to skip over the last 15 years. had 30 years, big business. What happened after 30 years? Like you made a shift and is this what you've been doing for 15 years? Or tell me how you got from there to here.

Steve Smith (06:24.582)

all right. right. Okay. So the last company I was with was the casket manufacturer and they were very, very well run. They had an extraordinary market share. I mean, they were the big gorilla in that industry, but it just wasn't a fit. You know, I lasted six years and it was just, it was time for me to go. And so that was back in 2008. And at that point, at that point in my life, I realized, because I was thinking about this since I was nine years old.

I thought one day I'm going to own my own business. I just didn't know what it was going to be or when it was going to show up. And so at 52, 2008, I decided this was the time. Now I still didn't really know what I was going to get into. Like so a lot of people, you know, I'm out investigating a lot of things. I'm looking at a lot of different business models and I kept running into people that would kind of look at my background, ask me questions, you know, they're trying to help, right?

And I kept getting the response is have you ever considered being a business coach? And I had heard of it before more on the executive side by virtue of the companies I'd been with prior. But I didn't know anybody that did that. And quite honestly, until about the mid 90s, prior to that, it was pretty much reserved for politicians and celebrities and Fortune 500 CEOs. The whole business coaching climate.

Jeff Holman (07:32.76)

Yeah.

Jeff Holman (07:48.355)

Mm-hmm.

Steve Smith (07:51.017)

had not gotten down to the street level where just about any business or professional could take advantage of it. So I started looking into it. I had the help of a consultant that worked with me. And so when the time was right and the opportunity presented itself, I bought into a startup coaching franchise. And it was a big chunk of money. I was like, my god, you're kind of signing the check and you're thinking, do I really want to do this?

Jeff Holman (08:10.465)

Okay.

Jeff Holman (08:17.038)

Yeah.

Steve Smith (08:18.184)

But, you know, I went and did it, you know, and that was a whole other story in and of itself. But that is what launched me into what I'm doing today. And even though that company actually went bankrupt two and a half years in for me getting there, because I got in on the first wave of them going from a private company to a franchise operation. And I got a whole bunch of stories about that. but but just. Yeah, so quite honestly, it was like buying an MBA, you know.

Jeff Holman (08:30.088)

wow. Yeah.

Jeff Holman (08:36.28)

Got it. Yep, yep. A lot of franchise owners have stories about franchises, so yeah.

Steve Smith (08:47.496)

But I still look back on those days and realize I would not be where I am today if I hadn't gone through that.

Jeff Holman (08:53.046)

Yeah, I mean, that's how you learn a lot of times. And I've got an MBA and what I learned in my MBA is very different from what I've learned from the successes and failures and obstacles and, you know, attempts that I've made throughout my business. They're both valuable in their own way, but very different.

Steve Smith (09:06.162)

Right. Right.

Yes, absolutely.

Jeff Holman (09:13.068)

So you took 30 years, leveraged it into the last 15 years or so of coaching. In 2008, well, was a wild time for a lot of reasons, but you're okay.

Steve Smith (09:22.9)

Oh yeah. That was, look, a lot of people like myself left large companies and went out and pioneered their own thing. None of us at that point knew what was happening or what was coming. And so 2009 through about 2011 was some pretty lean times. Uh, it was what I considered the kind of the, the purging of the market. Okay. So people who were just dabbling were the ones that washed out quickly.

Jeff Holman (09:40.12)

Yep. Yep.

Steve Smith (09:50.137)

when my company, the company I bought a franchise in, when they finally went BK, within about a year, everybody that had come in that company had gone back to whatever industry or profession they were previously doing before they fell in love with coaching. So I just decided that point, there is no going back. I mean, I had a great 30 years, but I had no interest in going back into the industry. A lot of it had changed. And so I was definitely looking to pioneer something new. And I just said, okay, I'm on my own.

Jeff Holman (09:54.978)

Mm-hmm.

Jeff Holman (10:07.47)

Okay.

Steve Smith (10:20.286)

I'm gonna have to do it, sweat it out myself. Thankfully, I had a ton of examples from the franchise company of what not to do. So that's got some value in and of itself. And I just kind of pursued it and kind of made it my own. I changed a lot of the programming to things I thought were gonna be more beneficial. And I was fortunate, it worked out well.

Jeff Holman (10:28.654)

Yeah.

Jeff Holman (10:37.678)

Mm-hmm.

Jeff Holman (10:42.562)

That's awesome. I was waiting for you in there to say something like, I couldn't go back. The casket industry was dead to me, but you know, we'll just.

Steve Smith (10:50.376)

Yeah. I know that whole industry is full of those kinds of jokes and it's like, no, I got to leave that back. Right.

Jeff Holman (10:55.214)

I have so many questions, but that's probably for another show. So before we talk about some of this smart scaling, we're almost there, but I wanna know, is there something, like what is, from all that experience that you had, maybe from what you experienced there to what you're doing today, is there something that when you look back, you're like,

I like, know exactly what, like I teach this now, but I didn't realize then that I was getting the lessons that would turn into the perspective that I have today. What's one of those, one of those lessons that you maybe experienced or one of those things that you went through during that initial, you know, precursor stage to where you're at now that, that carried over into this stage.

Steve Smith (11:44.379)

the one thing that was kind of a watershed moment was when I finally realized that this is a big industry and there's a ton of solo and small company players in this profession. All right. The vast majority of them don't ever make a livable company out of them. So it's something they do while they're working for Wells Fargo or, know, something like that. It's a side hustle. I'm talking about coaching.

Jeff Holman (12:09.612)

And you're talking about coaching right now. Is that right? Okay. Just want to make sure.

Steve Smith (12:12.678)

And so what I started to realize, you have to be committed to stay in the game long enough to outlast everybody else. That was a huge learning lesson. And quite honestly, it was one of the reasons that the franchise company didn't work because they kept changing their strategy and people just got confused and it was like, okay, let's just wait and see how long this lasts. And so I realized from that, I've got to create a persona.

Jeff Holman (12:23.405)

Yeah.

Steve Smith (12:40.262)

of who I am, what my company's here to do. And I've just got to keep hitting it and hitting it and hitting it and hitting it till it's just patently obvious that it's not a workable model. But if you stay it long enough, eventually the market will adapt. They'll start to recognize, okay, I see him here. I see him here. He's talking about this is it's everything looks the same. So there must be legitimacy. Cause when you're in a professional service business, it's all about being legitimate.

Jeff Holman (12:51.406)

Yeah.

Jeff Holman (13:06.605)

Right.

Steve Smith (13:06.76)

You know, it's not like you can say, I have this product you can buy. It's a great product, even though I'm a crappy company, the product's good. That doesn't work in a personal service environment. So you've really got to kind of fine tune who you are in the marketplace and what you do distinctly different from everybody else. And you got to stay the course.

Jeff Holman (13:25.314)

And I imagine there's a way to, because persistence or grit or this idea of overcoming failures enough times that you succeed, that's really prevalent in startup scale up worlds, right? It's like, hey, you just gotta be there long enough to find success and you're gonna experience failure along the way. But I imagine there's a way to persist smarter than some other ways that are less smart to persist. Is that right?

Steve Smith (13:52.681)

It is, and I can tell you that it all boils down to how well do you know your customer? Because the people that I've worked with all these years who have had a hard time of getting their arms around, you know, who am I in the marketplace and what do I do distinctly different than others who are in my space? They've never gone to school on why the customer buys that product or service.

and what it is they like or don't like about people that are generally in that business. know, industries, niches of businesses, they all have perceptions as to what people like or don't like about them. And you have to understand what that is because you're not just selling to somebody who needs a bottle of water. You're selling to somebody who has a specific requirement about why they buy a certain bottle of water and what it means to them once they take it.

That's where you market, that's where you live. You just don't live on the transactional level. Gee, I got all the water you need. I'll give you 50 % off. That's where a lot of people, what they run into when they're trying to maintain volume and keep the lights on. They get into that transactional way of running the business. And that's usually the kiss of death. It's very, very hard to get out of that.

Jeff Holman (15:10.562)

Well, I mean, that's insightful. I want to put this one more layer of context around this because I'm just thinking about as we're talking and I want to make sure that it's apparent to our audience. But, you we talk about persistence. There's that zero to one phase where you're trying to, because you said you need to persist long enough to succeed, understanding who your audience is, right? And I think in the scaling stage of business, that's exactly right. Some people are

or earlier than that and they're in that zero to one, I'm trying to find product market fit, meaning I don't know exactly what my product is, I don't know exactly who my market is, but if I can do it long enough, maybe I can find a fit between a product and a market. So we're really talking about that phase after you know who your client is and persisting long enough to build the brand, to build the success with that. necessarily, something else might apply to that phase earlier where you're.

where you're trying to find product market fit, so.

Steve Smith (16:07.912)

Yeah, and that's where I start walking clients down this path of, your first five years have been predominantly internally focused. You know, how do I finance this thing? And how do I operate it? And who do I hire that can do things that I can't? And what kind of vendor relations do I have to put together in order to be able to build this thing out and actually, you know, provide a product for sale? Okay, so that's a lot of internal growth.

building to get your company up and running and be a viable entity. Once you get established in that and you see things are working on a routine basis and you can kind of count on the results of what you're working on, now you've got to shift your focus to outside the business. Okay. What's happening in the market? Is this the kind of market that has some volatility to it? And I've got a constantly looking for that disruptive next generation product that could take me out.

Jeff Holman (16:54.446)

Mm-hmm.

Steve Smith (17:04.776)

The landscape is riddled with large companies that have fallen prey to that kind of stuff. You've got to look at customer trends. Customers might like what I'm doing now, but what could cause them to shift and go someplace else? So it's all this competitors, all those kinds of things you've got to constantly be looking at to make sure that you're navigating the landscape correctly. Because if you don't, you can go away quickly.

I mean, you can just be considered obsolete or second best, neither one of those is good. So you really have to look at, know, where am I going? What is the road ahead of me look like? And do I have what it takes now, you know, people, systems, resources, to be able to navigate that road and stay on the path long enough and be able to come out the other side in a good, profitable manner. And most people don't go to that level of detail.

Jeff Holman (17:33.42)

Yeah.

Steve Smith (18:02.31)

And so they get halfway down the road and they're like, crap, you I got to go out and find an investor because I'm running out of money, you know, or I've got to go out and find another supplier because this one here just got a huge deal with Walmart. And so they're not supplying me anymore because all their, all their volume is going to that behemoth. So all these kinds of things can happen. and they can, they can catch you in the butt because you're not actively staying in touch with those variables that could either hurt you or help you.

Jeff Holman (18:31.842)

Well, so let's go, let's go that direction just for a minute. And then I do want to talk, I want to make sure we talk about any frameworks or things like that that apply to scaling. Cause you mentioned stuff before the call that I think is very valuable for our audience. But what are some things that, that, what are some signs in a business that you, that you're maybe you're off track in this area that you're, you know, you're, you're either distracted, you're pursuing other things you're, you know, it does it show up in the revenue? Does it show up in the financial somewhere else? Does it show up in the team? Like where

where do people start to see symptoms that maybe they're not scaling in a smart way and they need to identify these issues so that they can then regroup and get back on the right track.

Steve Smith (19:15.378)

Okay, so scaling has kind of an interesting concept behind it. One, for the entrepreneur, the person that owns the business, the excitement about the prospect of being bigger and more dominant in whatever marketplace you're serving is like a drug. You know, can completely take over your head and occupy the perspective you have. The reverse side of it is the people that you are working, that are working for you.

Jeff Holman (19:35.073)

Absolutely.

Steve Smith (19:42.559)

that are responsible for having to make all the stuff work to get it out to the market, to serve as the client, take care of the issues, do the billing, whatever it is. Those people are under assault because now the growth has gone way beyond the expectation, what they're used to dealing with. It may have gone way beyond the facilities and resources that the company operates with. And they're having trouble getting the attention of the owner who's still in La La Land about the future.

Jeff Holman (20:05.474)

Mm-hmm.

Jeff Holman (20:11.788)

Well, and that's common, right? Because a lot of CEOs, are visionaries. They build something wild because they're kind of wild. They're kind of unhinged in some ways, good or bad, right? And they believe they can do things that nobody else is doing and they can be successful. Okay. Well, how would that, can I dig into that? I've seen this happen. You know, I've had clients that are on that side of the page, if you will. And I've seen where...

Steve Smith (20:25.758)

So OK, so that's the early warning sign that I'm talking about here. Right?

Jeff Holman (20:40.686)

it's been difficult for team members to necessarily reach the CEO at a level where the CEO is responsive to something other than big wild ideas, right? So I'm not sure that I'm not, think there are situations where the CEO doesn't see it and maybe the team isn't able to point it out. So how, how does, how does a CEO get, get insight into this when, that's the case, is there a way to, that they should, they have a flag they should be looking for?

Steve Smith (20:51.112)

Yes.

Steve Smith (21:08.008)

Yeah, actually, the thing that many of them will stop doing is they'll stop listening to the rest of their organization because they're still wed to this idea of the big bright future down the road. And they're kind of hell bent on getting there. So anybody that comes in with a complaint or a problem can kind of be put in the bucket of being the naysayer. You're not on the team. You're not aligned with what we're trying to do. So they kind of railroad it.

Jeff Holman (21:20.739)

Mm-hmm.

Steve Smith (21:34.343)

Okay, because that's where they want to go. I I worked with a startup solar company a couple of years ago, just a carbon copy of this topic we're talking about now. And the CEOs stopped listening to the people who actually were the kind of the first responders of the day-to-day operational problems. So when you start doing that, what you basically transmit to the rest of your organization is, I'm not interested. Don't bring me your problems, just do the job.

Jeff Holman (22:02.894)

Don't bring reality back into my office. don't want it.

Steve Smith (22:03.332)

And the people, right, right. And so because they're the ones that are start seeing, seeing things like customer complaints are going up or product returns are increasing or, you know, people are not buying as much of something because there's another product in the market that's, that's got a better reputation or works better. Okay. So all of these early indicators at the ground level don't get addressed.

Jeff Holman (22:23.576)

Mm-hmm.

Steve Smith (22:29.0)

because the people at the top don't really want to hear them. That gets in the way of my vision of being the crown jewel here down the road. And so they stop checking in with the places where the problem first shows up. Now, the people that are handling those problems the best they can, they already see what's happening. They know it, and many of them know the solution, but they can't get an audience. So.

Jeff Holman (22:53.282)

Well, and part of that sometimes can be because the CEO in their visionary attitude is maybe chasing the next big thing, looking for the next product to add, looking for the next business to build. There's a lot of chasing going on and not a lot of fruits sometimes.

Steve Smith (23:02.868)

Sure. yeah. Right.

Steve Smith (23:14.162)

See, okay, so what you just said right there I think is key. When you get into the mode of chasing, you're already on the wrong path. You have to really be able to look down the road and say, what is a viable place for us to be at the end of two, three, four, five years? And what are we gonna look like when we get there? And now you have a target that you can work towards. You can fill in the gap between here I am today with

Jeff Holman (23:21.912)

Okay.

Steve Smith (23:43.017)

all the stuff I have, the way I operate. But if we realistically think in five years we can be here doing two and a half times as much business as we're doing now, what does it look like then? What's going to change? What's gonna have to change? And you have to define a target, a vision that is so clear and so detailed, you can literally close your eyes and see it. If you can get to that point, you'll eventually have it.

Jeff Holman (23:55.096)

Yeah.

Jeff Holman (24:07.949)

Yeah.

Jeff Holman (24:11.32)

You know, I think.

Steve Smith (24:11.614)

But if everything looks kind of fuzzy, fuzzy is what you're going to end up with four or five years down the road.

Jeff Holman (24:15.47)

I think that applies looking backward too in a way. We talked on the show a few weeks ago with Greg Scow who's built several businesses or rather bought several businesses and I was like...

Man, how do you know that you're buying the right business? And there is this whole aspect of looking forward, seeing the numbers, what will the business look like when we buy it, exactly like you're describing. But what struck me from that conversation, and I'm sure you see this too, is he talked a lot about looking backward and saying, we don't buy another business if the business we're working on.

isn't solid, if it's not running smoothly, if something's out of, and he didn't say it this way, but if something's out of place in that business that we've already got, if it's not scalable, if it's not sustainable, if it's not working, why would you buy another business, right? And I think a lot of CEOs, they have the fuzzy vision of the future, but they also have a fuzzy business that's already sort of working, but fuzzy.

and they're already onto the next thing. it's fuzzy. Fuzzy plus fuzzy doesn't equal anything but fuzzy, it?

Steve Smith (25:28.21)

Right, no, but what you're describing are entrepreneurs who have this, I'm sure you've heard this term before, the shiny object syndrome. And at a very small level, you can go through that kind of, gee, it's gonna be this this month or next year it's gonna be that and change direction a lot. And it's more aggravating than anything else. But once you get volume and scale underneath yourself and the business becomes fairly large and you got a lot of people working for you,

making those kinds of visual shifts can be absolutely damaging. And I totally agree with this gentleman you're talking about. If you're going to buy another company and bolt it onto yours because you see synergy, if you haven't figured out and can demonstrate that the organization you're running today is running top notch, it's running seamlessly, it's impervious to any kind of self-inflicted wounds, okay, if you can't say that,

Jeff Holman (26:08.14)

Mm-hmm.

Steve Smith (26:23.208)

Don't bring another business in because all you're gonna do is siphon resources out of the one that's not working well to start with.

Jeff Holman (26:29.324)

Yeah. Yeah. So how, so how does CEOs go about, let's say that, let's say they've got, you know, some stability in their current business or their, their business model, maybe we're not necessarily always talking about buying other businesses, but you know, scaling in some, in some manner, scaling with your current audience, scaling with your current product, scaling in a new product, like how, what's the, what's the starting point for a CEO who says, I think I've got some stability here. In fact, I look at it. I do. I've got alignment on my team.

Like, I think we're ready. What's the next step if they want to scale the right way, the smart way?

Steve Smith (27:05.628)

If they want to scale the smart way, the first thing I would recommend they do is take kind of a basic inventory of your company in terms of capacity. Okay. Do you have the people capacity to divert attentions over to a newly acquired entity that eventually you're going to want to bring in house? Okay. So that or a new product line or something. Yeah, something like that. You've got to figure out, do you have the people capacity?

Jeff Holman (27:25.696)

Or a new product line or a new service offering. Yeah.

Steve Smith (27:34.005)

to be able to do that, or is everybody already 110 % and they're underwater and they're just trying to hang on every single day? You've got to look at that. You've got to look at finances too. Can I weather a short-term hit in the pursuit of integrating a new line of product or a new company that we think is a good fit so that we don't end up bottoming out because now we're taking on more than we can finance? That's another one you have to look at. And then finally, you got to look and say,

If we've got an idea, does this company follow a couple of check marks basically? Is it a business that is already aligned with ours in terms of the customers we're serving? Or is it a completely different customer base for which we don't really have any experience? Do they use operating systems that are somewhat compatible with ours? Doesn't mean they're the exact same, but will they integrate? Can we take, can bring the new one in and quit?

Jeff Holman (28:28.334)

Yeah.

Steve Smith (28:31.006)

put everybody under the same accounting system or the same CR system or the same warehousing and inventory management system? Can you get some cost savings because now you're just amplifying the systems you've already got in place and you're just adding more product to it? So you have to look at those things. If none of those things check out, then you seriously got to sit back and say, why are we doing this? Because we're just inviting massive amounts of turmoil.

Jeff Holman (28:39.07)

Mm-hmm.

Jeff Holman (28:54.092)

Yeah, so.

Steve Smith (28:58.8)

And I'm working with a defense manufacturing company right now that's going through this and their turnover has gone through the roof because they have people are just saying, I'm tapped out. I can't do it. My home life is going to SHIT. No. It's no. And so they're just running around like people with their hair on fire. I mean, they're experiencing a lot of growth because of the demand of what they do.

Jeff Holman (29:10.658)

They don't have the capacity. Capacity factor is not working for them.

Steve Smith (29:25.16)

but they have so many obstacles and problems in the way that are potentially short-circuiting what they're trying to move to, that the carnage is just significant.

Jeff Holman (29:36.076)

Yeah, yeah. if it, why, why, why do fuzzy growth if you can do smart growth? Right. So,

Steve Smith (29:43.103)

Yeah, just really be clear about what you want to do and why you want to do it. And you know what? Sometimes the hardest thing for a CEO to do is say, you know what? This is still a good idea, but we're 18 months away from doing this.

Jeff Holman (29:57.25)

Yeah. Well, what I'm hearing is you outlined three factors. There's capacity, kind of the people factor. Do your people have capacity? There's money, the resources, you have the finances in place to do it. And then the third was alignment with your existing business model, revenue structures, processes and systems. Yeah. So, yeah.

Steve Smith (30:19.026)

Your systems, right. Yeah, your operating systems, right. Yes.

Jeff Holman (30:26.102)

That to me, and so what if you have alignment on two of those, not all three? Like how much alignment or how much, how well do you need to check off all three of those? And let's say you have capacity and you have money, but you don't have the system, you know, there's not alignment in processes and systems, or you have the process systems and you have the capacity in your people, but you don't really have the money. Like how adamant would you be with a company that you're consulting with?

You've got to have this level in each of these three areas before you move forward. Is it 100 %? Is it 90 %? Is it a mix?

Steve Smith (31:01.36)

No, but no, it's all of this stuff tends to be flexible. And, you know, these are decisions, they're trade-off decisions that you're ultimately going have to make. So here's a good example. Let's say you buy a business that is a great fit for what you're doing, but they serve a different market in a different state. All right. So, you you've come to an agreement, you you're buying this other company, you're taking over all their stuff, some of their people. You don't really have

the system capability to integrate right now, because they're working off of legacy stuff, older stuff than you've got. So there's going to be some investment involved. And you don't have the investment now because you want to put the money in other areas that's going to help grow this whole thing. But what you do have is you have people capacity. You have people who have demonstrated that they can take on bigger roles and they can move into other disparate business operations.

Start to run it and integrate the culture while you're waiting for the other things to show up

Jeff Holman (32:55.108)

I knew it. We had an issue.

Steve Smith (32:57.362)

Hey, I saw you freeze. just kept going and I finished my answer and I thought, he'll be back.

Jeff Holman (33:02.968)

Awesome, we'll just chop this middle part out. So thank you.

Steve Smith (33:05.96)

Now, I don't know if you noticed this, but you're on a different side than where you started. So I don't know if you can affect that or that's just the way it works.

Jeff Holman (33:13.452)

I have no idea how to do that.

Steve Smith (33:16.048)

OK, because at some point, I was on the left, you were on the right. Now I'm on the right, you're on the left. well, it's audio, so nobody's going to notice.

Jeff Holman (33:21.253)

Yeah.

Yeah, no, I love it. We'll chop that out. Sorry about the interruption there. I'm not sure what question to ask you after your answer because I didn't hear it, but that's OK.

Steve Smith (33:27.794)

No worries, no worries.

Steve Smith (33:34.517)

All right, so very, very briefly, what I was talking about was if you can't hit the checkbox on all three of those things, then you have to decide where are the trade-offs and what can I do with what I have? And most of the time, if you have people capacity, you have people that are capable of doing much more than what they happen to be in now, that's a great leverage point for maybe not having systems integration.

Jeff Holman (33:48.251)

Yeah.

Steve Smith (34:00.455)

or not having the finances to do other things on an immediate basis. You just take some of your better people, you move them over to that newly acquired business, and you let them start doing the internal work of bringing the cultures and the operating procedures together.

Jeff Holman (34:13.606)

Okay.

That makes sense. Awesome.

Steve Smith (34:18.292)

But here's one thing I will tell you, and you can decide how you want to move with this, but most business owners, most really capable, smart, successful business owners, they depend way too much on tactical thinking. What problems do I have to fix today? What issues do I have to solve today? What things are on my list that we need to get done today to this week, this month?

Jeff Holman (34:38.981)

Yeah.

Steve Smith (34:46.5)

And what I try to get people to start orienting themselves to is more strategic thinking. You know, more out of the box stuff that goes down the road and kind of looks at the future. Where do we want to be and do we have a chance of getting there? And it's a completely different orientation in terms of how you look at stuff. But if you're not willing or capable of doing that, find somebody else in the organization can do it for you because that's the only thing that's going to ensure that over time, you're still in the driver's seat. You're still a viable business.

You still have the ability to take on these other businesses or product lines that you've done a couple of years ago and now be successful with them in your new business structure.

Jeff Holman (35:25.754)

Yeah, I love that you mentioned that because being strategic is not about just having a vision and chasing a vision and being like, well, I put a plan together and I'm chasing a vision. So now I'm being strategic. It gets back to the strategy, the alignment, the allocation of resources, the capacity, the funding, that alignment, all of that comes into play in a real conversation about strategy, not just this, let's be strategic.

Steve Smith (35:46.088)

Right.

Jeff Holman (35:53.478)

and put together a 12 month plan for the revenue we want to have at the end of the year. It's like, no, you can't be strategic if you're not aligning in those other areas, if you're not deploying the resources towards a unified objective and things like that. So that's a...

Steve Smith (36:05.842)

Right. Well, look, and I'll tell you, because one of the things that I've done quite a bit of in the last five, six years is I work with business owners who have recently bought businesses, you know, through the business broker network. They might have gotten out of a former career they ran and said, hey, it's time for me to own my own thing. And so they go and buy somebody else's business. And usually about 18 months in is when the broker who I I've got some connections with a few.

Jeff Holman (36:20.326)

Mm-hmm.

Steve Smith (36:32.702)

They'll call me up and they'll say, hey, I got a client who's calling me back. You he bought a business a year or two ago and he's really not doing well. Can you help him? And so I'll get on the phone with them to try to understand where they are and what they're dealing with. And before I decide to work with them, but I will tell you that the biggest single problem I run into with most folks in that arena is that they haven't embraced the strategic thinking concept.

Jeff Holman (36:39.718)

Yeah.

Steve Smith (36:59.11)

And so they're totally nailed down to what's going on right in front of them. And sometimes if you got to pay the light bills, that's all you're going to be preoccupied with. But you have to get out of that mindset because it won't lead anywhere good. You know, you're not going to be able to turn around a business that's struggling, let alone be able to scale it at some point down the road. If you don't have the ability to look outside the four walls of your own company and say, what's out there that I need to be aware of and I need to

Jeff Holman (37:07.92)

Right.

Steve Smith (37:28.614)

navigate and need to figure out how to deal with.

Jeff Holman (37:31.61)

Yeah, no, I love that you said that because it's, you know, the things we talked about, capacity, funding, alignment for scaling a business in the smart way, they're really no different than, you know, operating a business in the right way, right? If you don't have those for your business, if you're struggling and it pushes you into the tactical mindset instead of strategic or an imbalance between those, like you're gonna have the same problem. in a sense, scaling smartly isn't.

Steve Smith (37:52.82)

Mm-hmm.

Jeff Holman (38:00.336)

You know, it's different, but maybe not a whole lot different than operating your business smartly to begin with. So maybe put another way, if you're not operating your business in a smart way, maybe you're not set up to start scaling in a smart way either, right? Don't chase that shiny object until you've polished the one that you've got.

Steve Smith (38:15.528)

That's right.

Steve Smith (38:19.922)

And look, I'm working with a kind of an industrial company right now that the guy that's currently running it and owns it is the grandson of the founder. And so it's been around for a long time, but it's got a whole host of problems that he's having real difficulty trying to get past because the grandfather, the way he ran the business kind of contributed over time to it being in this situation.

Jeff Holman (38:47.472)

Yeah.

Steve Smith (38:48.38)

And so, you I always ask him, gee, if you could go back, you know, 30 years and talk to your grandfather about this, what do you think he would say? And of course he knows, he worked for him. So he kind of knows how he is, but he said that whole mindset, was, you know, part of it was the reason that the business got up and became successful. But a bigger part of it is the reason why I'm where I am today. And we can't stay this way. We won't last if we continue doing this. So what I, what I glean from stuff like that is,

If you have to be willing to put your ego aside, because look, business owners, all, we all have a little bit of ego. You know, it's our baby. You know, everybody else must think it's ugly, but we don't because it's our baby. But, know, that's the ego talking, but you have to put that aside and say, what have I been doing that no longer serves me well and acknowledge what that is and make a valiant effort to either stop doing it or do something different that works better for the, for the, the conditions that you're in today.

Jeff Holman (39:29.968)

Yeah.

Jeff Holman (39:46.18)

Yeah, yeah. And I'll say I've worked with CEOs who go through that and sometimes it's a really drastic eye-opener. It's like things aren't going well. Maybe I just need to get out. Maybe I'm just done. And I don't know that that's always the answer, right? But that's sometimes the initial response. Like this is...

Steve Smith (40:07.988)

That's emotional reaction to becoming aware of the fact that as good as you were and as much as you've done to get it where it is now, you're now starting to become part of the limitation. And it doesn't mean you can't get through it, but most people that have been in business 25 or 30 years, at some point they start getting this kind of short-sighted mindset. When's it time for me to get out? When's the time for me to enjoy my life as opposed to putting it all into running this business?

Jeff Holman (40:10.928)

Yeah.

Jeff Holman (40:20.518)

Yeah.

Steve Smith (40:37.362)

So the idea of shifting your mindset and starting again by looking at things differently is sometimes just way more than they're willing to do.

Jeff Holman (40:46.608)

Well, let's end on this note because I'd love to have your thoughts about one or two of the characteristics that real scaling CEOs tend to adopt that maybe people who are in a different mindset of kind of winding down or I'm not sure if I can do this anymore. I'd love to hear that.

But before you share that, let's end on that. Before you share that, I want to make sure our audience has a chance to connect with you. So let's make sure that they get your information, how to connect either via your website, LinkedIn, wherever you like to connect and anything else you'd like to add to that so that they know how to work with you if they do connect or want to reach out.

Steve Smith (41:29.948)

Okay, so for everybody that has that inquiry, I tell them go right to my website. It's growthsourcecoaching.com. And there is all kinds of stuff on there. I you can find out my background, where I come from, what clients I serve. I keep a roster of all that for 17 years, you know, so it's all that on there. I've got tons of videos that explain certain concepts about management and leadership. I've got interviews, you know, from other podcasts I've done.

I've written articles over the years on various skill building. So people are going to get a ton of value, whether or not they decide to work with me or not. That doesn't matter. What I want to make sure is that they walk away from that visit in better shape than they came. And if along the way they decide they want to have a conversation, they can fill out one of the inquiry boxes on many of the pages, or I put my office number and my email on every page. So it's really easy to get a hold of me if you want to do that.

Jeff Holman (42:25.434)

Very cool. And that was growthsourcecoaching.com, right? Cool. So go there if you wanna connect up with Steve. Let's end on these characteristics, one or two characteristics that you see in CEOs who are poised for scaling, who are kind of equipped to do that the right way. What do those look like?

Steve Smith (42:28.338)

Right, right.

Steve Smith (42:46.132)

All right, so the biggest one is they realize immediately that they don't have all the answers and they're willing to go find people who have the certain skill set or experience level to fill the void of what they know they're gonna need, but they're just not the person. So they're totally willing to back up and fill their inner circle with people who are gonna actually get them there. They might be the captain that's pointing the direction.

but they're relying mostly on a well-developed team to actually move the company in that direction. So I think that's huge is recognizing you are not the one that's going to do everything. You've got to build a team that's going to get you there. The other thing you've got to recognize is depending on what it is you're trying to scale, you've got to be kind of settled in terms of who that other person is that's going to join your ranks. Sometimes scaling,

Jeff Holman (43:28.292)

Yeah. Thank you. Yeah.

Steve Smith (43:45.097)

doesn't come by you just going out and finding another business or product line or buying it. Sometimes it's because you decide to partner up with a venture capital firm and they underwrite the scaling opportunities. But now what you've done is you've brought in a finance partner who's gonna basically start making a lot of decisions. And so you've got to be willing to share the stage in the pursuit of making something bigger and better that eventually you'll call your legacy.

Jeff Holman (44:03.877)

Yeah.

Jeff Holman (44:12.922)

I love that because you've just shared two things that I think line up 100 % with two of the three factors you just mentioned. There's that capacity, the human capacity, having the right person on the team and then with a VC funding or other funding sources, having that financing factor. there's a lot of consistency in the messaging here. Well, I love that we've had a chance to...

Steve Smith (44:34.536)

I love consistency.

Jeff Holman (44:39.012)

chat, get to know each other, that I've been able to hear some of your insights and stories. It's been great having you on the show, Steve. Thank you for coming in and being a part of this.

Steve Smith (44:48.66)

Well, Jeff, thanks for having me. This has been really great. I've enjoyed your style and the way you kind of navigate this conversation was really good.

Jeff Holman (44:56.034)

Good, good. Thank you so much. It's the only style I have, I'm glad it worked today. for our audience, thank you so much for joining us. We're always glad to have you. We want to share insights with you that help you tackle problems, help you maneuver past the plateaus, help you overcome the obstacles of your business and find those breakout moments. so, feel free to share this episode with somebody if you know someone that might like it. If you want to be on the show,

Steve Smith (45:00.358)

I'm glad you have one that works. Right.

Jeff Holman (45:25.988)

Reach out to me. I'd love to have smart people like Steve and our other guests come on the show, share their stories and hear about breakout moments that can help other people navigate their struggles and successes as well. Thank you so much for joining us this week.

Steve Smith (45:40.276)

All right, take care. Thank you.

Jeff Holman (45:43.18)

Awesome. Well, I really appreciate it, Steve. I'm going to stop the recording here.