Commentary

Why you need to work on, not in your business

How one mentor taught this vending/foodservice veteran the importance of well documented systems and procedures for every aspect of the business.

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December 6, 2021 by Ray Friedrich

This was a lesson that I learned earlier in my career. We had been in the vending and coffee business for 10 years and in 1996 and were generating about $5 million in sales. My business partner, Chris Peppo, and I were managing all of the day-to-day activities. Route and warehouse operations, administrative functions, sales efforts and so on were all our responsibilities.

There were only so many hours in the day and it felt like growing the company any further would be impossible. To grow, we would need to do things differently. We instinctively knew that hiring people to help us was the obvious answer but who and to do what? That would require delegating responsibility and thus giving up a certain amount of control.

A fortuitous meeting

This was when fate intervened. I was with some friends at the local watering hole one evening when I had a chance encounter with a stranger at the bar. He was a quiet, unassuming man just sitting there minding his own business.

I told a joke to the bartender and the stranger laughed and introduced himself as Carl. We started talking about business and he told me that he had just purchased a local heat treating company and was in town to check in on his acquisition. My first thought was, this could be a new client for our vending and coffee services. Carl agreed to meet with me at his facility the next time he was in town and discuss it.

Carl and I met at his heat treating operation the following week. It was a dirty, unorganized, rough-and-tumble shop with employees who looked like they fit the mold. The receptionist was rude and not dressed very professionally.

A bumpy start on a long journey

The breakroom was filthy and the vending machines looked terrible. Basically, it was a bit of a shithole, but nonetheless, still an opportunity for business. After our meeting, Carl agreed to bring us in as his vending and coffee supplier.

He did recognize the obvious and said they would "clean things up and make some changes," as he wanted to improve the working conditions for the employees.

A month later Carl called and said matter-of-factly, "They just showed up and pulled the machines ahead of the agreed upon date of removal." I told him we would be out there that day and get the new machines up and running.

An amazing business makeover

When I pulled into the parking lot, the first thing I noticed was that the building had a fresh coat of paint and was detailed to present a whole new look. When I walked into the reception room there was a very professional, friendly smiling face who offered me a warm welcome.

Carl took me into the shop and I was amazed! The employees were wearing new and tidy uniforms. The floor was clean and the breakroom had been painted and reorganized with all new furniture, refrigerator and microwaves.

I also noticed many more people than in my previous visit, all dressed professionally. I said, "Carl, this place looks great!" He thanked me and said, "This is how we do things."

I asked, "We?" He replied, "Me and my team."

I knew Carl lived in Ohio, so I wondered where this "team" came from. He explained to me that they were from his corporate headquarters in Ohio. I then asked him if he had other heat treating businesses and the answer shocked me.

Carl went on to tell me that he owned dozens of businesses but this was his first in Detroit and the first heat treating operation. The team was there to establish his corporate operational processes. I thought to myself, clearly this guy knew what he was doing and I needed to know more about him.

He told me had he inherited a small stamping plant in Ohio upon his father's untimely death. It was a small operation at about $2 million in sales.

He said he never had any intention of getting into the family business but due to the death of his father he had to step in at a young age. It turns out that Carl was a natural entrepreneur.

He grew the family stamping business into a large and profitable enterprise. With his profits he went on to buy or start dozens of businesses generating into the hundreds of millions of dollars.

In spite of the fact he was a quiet and rather unassuming man, Carl was recognized by Inc. Magazine as entrepreneur of the year a couple years earlier. His business holdings were amazingly diverse. Besides his heat treating and stamping operations, he owned a prime beef cattle farm, aerospace components manufacturer, the patent on the tool that made the Bloomin' Onion side dish at Outback Restaurants amongst many other business interests. He had thousands of people all around the country in his employ.

An apprenticeship begins

Carl ended up becoming a significant mentor to me. I told him we wanted to grow our business and he offered to work with me as an advisor.

The first task he gave me was to read the book, "The E Myth," and we would discuss it after my completion. If you haven't read "The E Myth" by Michael Gerber, it essentially suggests that just because you are a good baker doesn't mean you would make a good bakery shop owner.

I knew immediately that he wanted to make sure I was up to the challenge of entrepreneurship. After reading the book we had a conversation and he and I were convinced that I would be a worthy student of his.

My next lesson was that I had to build a company where I worked on my business, not in it. My job should be making sure everyone was doing their jobs and focus on strategic planning and execution.

To become a conductor of sorts. Not playing an instrument but leading the orchestra itself. So we had to develop well documented systems and procedures for every aspect of our business. Everything from warehousing operations, shipping and receiving, driver training and performance, accounting, human resources, sales and so on.

He described these as "the buckets" and every bucket had its own mini operational manual all working towards continuous improvement and aligned with our vison, mission and our strategic goal.

Systems and procedures focus

Carl explained to me that if I was needed or essential to running the business we had not built it right. He said, "When you are ready to sell one day, you should be able to hand the buyer the keys and walk out the door and everything would function perfectly as designed, on its own."

He described it as "franchising." Not that we were building something to franchise, but well documented systems and procedures were what made franchisees so successful.

Carl explained to me this is why he can own any type of business in any industry. He would simply bring in his "corporate team" and establish all his processes and procedures or "the buckets."

Carl explained to me whether you are in the feather pillow business or the bowling ball business, his processes worked. Business is business and you need to "work on it, not in it." I also learned the important fact that leadership and strategic planning are the keys to success.