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#23 РGene Blanton: How to grow and scale a business. Gene Blanton, USMC veteran and entrepreneur, shares with us how he has led, sold, and invested in many companies and the hints of success they all have in common.

AUTO-TRANSCRIBED

Aaron Spatz  00:05

I’m Aaron Spatz, and this is the Veterans Business Podcast. A podcast centered around the stories of US military veterans, and their adventures in the business world following their time in service. Its stories of challenges and obstacles, and an inside look at how veterans find their life’s work, their purpose, and their post military lives. Welcome to the Veterans Business Podcast, I’m so excited that you’ve taken the time to tune in your if you’re listening to this on Apple, Spotify, or wherever you get your podcasts, I just want to let you know that this is now available on YouTube. If you’re listening on YouTube and watching on YouTube, I’m so grateful. Please be sure to subscribe that way you’re up to date and current with all things that that are on the horizon for the show. So really, really appreciate you tuning in. I’m really excited to introduce our guest this week, pumped so we share the common bond is US Marines. So we’re already off to a great start. But Jean Blanton has a man of many talents. Jean served in the Marine Corps and has been an active entrepreneur for many years, Jean has experienced starting a company and later selling a company with his first startup summit communications. Since then, Gene has been intimately involved in startups, the incubation process, and business transactions as partner bold more Growth Partners, and additional bold more. He’s also the chief warfighting officer at the Semper Fidelis Leadership Institute, and the vice chairman and chief relationship officer at capital works. And capital X is a digital investment bank that combines expert advice with a proprietary process and software platform that gives business owners growth strategy, access to capital and exit options. Jean, thank you so much for being here today. Appreciate it.

Gene Blanton  01:48

Thanks much, Aaron. Great to be here.

Aaron Spatz  01:50

Awesome. Awesome. Well, yeah, let’s let’s just let’s just dive right in. So share, share this little bit about your story. Give us a little bit of context as to who you are. What made you so crazy to go join the military and give us an idea of what you did when you served?

Gene Blanton  02:04

Well, I appreciate it. When people asked me what I do or what I am I tell my buddy, Aaron, I tell him I’m an entrepreneur, that’s a French word meaning incapable of gainful employment. And so my journey does start in the Core i, my father served in the Army during the Korean War. And I tell people when I first got to boot camp at Parris Island, my, my father was not only a it served in the Army, but he was also a pastor. So from the time I walked in, the boot camp in the Marine Corps to the time I, I put on a five strikes was only 17 months. And so people asked, Well, how did that happen? I said, Well, I woke up that, that first day at boot camp at Parris Island, I had some guy, you know, veins, bulging, spit, blind, screaming, move, move, move, and I just woke up and said that so it felt right at home. I’ve been kind of raised with that. That discipline I was in at the end of Vietnam, and you young guys could couldn’t, wouldn’t recognize it. Today. I did. Was was very fortunate to be promoted very quickly there. But it was during Carter’s malaise. You know, I joined on April 29 1975. And you know, right at the end of Vietnam, just the morale was tough. You could believe or not walk so the NCO barracks back then and dope would be rolling out from under the doors, etc, just nothing, nothing at all like it like you say today. And, but everything that I learned there and was was laid the basis for everything else that I’ve done, we did start our first company, summit communications Incorporated, started out of our garage with my beautiful wife, and we had $20,000 and our two business partners at the time, but youth and ignorance and God blessed it anyway, grew it within several million, and as you know, sold it after three years. And so after I sold it, my wife walks in one day she said, I got a real problem with you. She said, It’s three o’clock in the afternoon. You still have your robe bone, and you’re watching cartoons, and you’re only 30 Get out of the house, go find something else to do. So I really started down down this road after the initial ownership really started around what I love to do and what I’ve done since then. And between my business partner, Wade Meyers and myself we bought sold set on the boards had stakes and 50 plus companies and but really love the entrepreneur and the Love coming beside the entrepreneur. So I got into advisory work. And then I’ve had the privilege to the in generally how work is is one big catch these companies after the startup stage, they get to that point Aaron called too big to be small and too small to be big. And you know, one of the first first things I do is they’ve outstripped their capital. And they usually outstrip the kind of the hands on management of the founder. And so anyway, I got into the advisory business, I had a friend of mine that had a little company that he had started and they were small at that time, about 1.2 million bleeding red all over the place. And after I sold my company, and he wanted me to come in and run it, but as you probably know, once you’ve once you’ve run your own business, you’re kind of ruined for live. So I, I went and looked up, you know, consultant in the dictionary, and told me that I’d worked with him. They’re not run, and I didn’t want to do they to five for somebody else. But I told him, I did advise him on it. And so we took that little company from 1.2 million bleeding rare to 11 point 1 million, with about a 17% margin and did that in under two years. And so I often run in what I really love to do and, and so since then, I’ve I’ve had a bunch of different type companies had one where our team there, we’ve processed over 4000, SBA loans. I’ve run a geospatial imaging firm I’ve run, I have run logistics firms, you know, worldwide logistics. And so you have the gamut that types of companies that we’ve run, I’ve run a Google analytics firm. So there’s, there’s a lot of different backgrounds there. That really given the insight to to entrepreneurship. And so the that journey took us to Bowlmor, that you mentioned earlier, growth advisory firm, I was just finishing up and kind of how I’ve worked is come into a company, they’d want some temporary help. And then I would bring capital to the table, and usually take a you know, the CEO role. And many times I’ve done that tour, I took the role temporarily, kind of trained the CEO, and then gave them back the range and kept the kept the investment in the company. And so I’d finished up a hands on gig and was kind of looking at what to do next. And then my apartment, my partner, white Mars, former Army Ranger, that pad was introduced to us by Nathan Wright Rhinelander marine here in town, he’s now risen to Lieutenant Colonel in the reserves. But he introduced us. And so I started using white background to Harvard Business School. Boston Consulting Group, just a very strategic analytical mind. And I started using some of his analysis on the the SBA stuff that we had had used, and the close ratio on the loans just started going through the roof. And so when I finished up this gig with the company I was telling you about? They are that was the Google Analytics where my colleagues said, look, let’s, let’s take these things to the middle market, and like, like myself, but he’s always had a passion for that, that small business entrepreneur. And so we’ve done that. And so over over a period of about five years, any client that we engaged with, if we engage with them more than 12 months, we more than doubled their value. And so how wide no kind of work together, he would put together a brilliant strategy. He’s kind of like a chess savant. You know, if you’ve seen one guy that walks around the room and plays 12 players at a time, yeah, he does that piece, then I’ve come in been the grunt on the ground doing the execution. And so we had a great time doing that. And then when we look to scale it, in ever, every, every client would engage, it would offer us some type of transaction one way or the other. They were looking to get capital to grow, they were looking to sell their company, they were looking to sell off a piece of their company or do a leasing deal or whatever. And so that’s how we built capital works. Or we’ve embedded the intellectual property from Bowlmor Growth Partners into capital word twitches, a transaction management platform that matches up capital providers, the guys that are running out the pay to the order of and companies that need the capital. So anyway, I probably hit you with a water hose but that’s what I that’s what I’ve been up to the last 4040 plus years.

Aaron Spatz  09:57

Now that I mean, that’s amazing. There’s There’s like a million different directions we could go, I mean, you, you’ve been involved with more than 50 Different companies. And that’s I mean, that is that is mind blowing. And then the the plethora of different industries and different opportunities that you’ve had is just been unreal. And so

Gene Blanton  10:15

we’re very fortunate the main main thing that gives us just a different perspective. And I would challenge our guys onto guys and gals entrepreneurs listening to as you can, the one of the things we kind of see time and time again, if you’re just in one industry, they are you you, you kind of get siloed. And I’d love to call it drinking your own bathwater, because you’re listening to all the industry experts. And you know, it just kind of starts this cycle, a lot of times the problems and the challenges that are faced within your company that’s within an industry, sometimes it’s best practices that are outside of your industry that can be applied to that that’ll really solve the problem and take your company to the next level. Yeah,

Aaron Spatz  11:00

no, for sure. And you actually kind of touched on a topic that I wanted to just dive into real quick just to just to get your perspective, and I don’t expect it to be like a strictly binary answer. It’s probably situationally dependent, but, but I’d love to get your insights. So, you know, we’ve seen so many different companies in the news, and you know, they’re through television and through various means we’re, we’re able to kind of understand how startups go from nothing and, you know, into into millions. And, and, and it’s usually like two paths, it’s like they’ve either bootstrapped their way they’re self funded. And they just keep pouring the profits back into the company and reinvesting or to they bring in PE or some type of investor, to the table to just pour gasoline on the fire. And so do you, do you have an opinion on that? And in terms of it, is there a better strategy? Or does it is it really just that this just really depend on the company and a company’s goals?

Gene Blanton  11:57

Well, the first thing we’re fond of saying is that capital will not solve a bad business model. And, and so what we see all the time, is that when the guys at the quarter of a million dollar, you know, revenue level, they, Aaron’s unprofitable, he’s always talking about, you know, if I, if I, if you look at it, and we’re big on analysis, in fact, we’ll, we’ll offer anybody that’s listened their free analysis of their business that we do, but But in essence, the analogy I use is, is rather than then trying to really focus and make it profitable out of the gate, and build credit, out of the gate, they’ll get into it to a wall, and a lot of times it is reached that too big to be small, too small to be big. And financially, if you analyze them in use on aircraft analogy, they’re, you know, upside down in a cornfield with smoke roll now the cockpit, and then they’re saying, Look, if you’ll just give me a million dollars of your money, I promise you the neck from here on out flat, right? No, Kemosabe, it doesn’t work that way. And so I really challenged people to, to work on making the model. Well haul ideas small. Now, obviously, if you’re building some, you know, manufacturing plant or whatever, that’s capital intensive, but we’re also fond of saying, never build infrastructure, when, when it’s already there. We’ve had folks that come to us, and they’re usually kind of the mad scientist type, we call they’ve come up with a new new widget. And they’re, they’re very good, or a new product, and they’re good at making it. And then they’re, they’re coming to us for 25 50 million in capital to build a plant around that. And so when you ask them that you want to make money or do you want to own your own your kingdom. And so the ones that get it understand that in that case, a licensing opportunity might be their best choice. And so I’m kind of bouncing around here, but that is actually the the least expensive money you can get. And and they But what many small businesses new, they they don’t anticipate the fact that they’re, they’ll, you know, they they’ve started the money like most of us did. You know, our money comes from the three F group, you know, friends, family and fools. And so they burn through that. And then they go try to get the bank to loan the money. And so I would caution people to look and build the build it in such a way that they’d have that capacity down the line. And then the other thing is is how you do your business model and we Got on our website, a capital, we’ve got some webinars we’ve done on this and all four years, Amazon was was without profits, but their business model because they charged up front and then charge their vendors later down the road as they were growing until they got scale and raise their prices and did some plants where they’re hugely profitable now, they actually built that based on their business model, is they you know, so that’s another thing to take take into consideration. They are the equity is fine. They are and we do that, and we were my partner. And all we’ve done that a lot of private, direct private equity, although that’s not what we’re doing. Now our stuff is primarily based on matching up PE firms, with companies but there there’s a there’s a cost that comes with that there’s the old saying he He who has the gold rules, you know, the bank banks gonna own you and the PE firms gonna own you one way or the other. Yeah. So, but it’s, you know, it comes back to building the business model is sale, and don’t think that a whole bunch of other capital is going to fix you fix your problems,

Aaron Spatz  16:23

that sage advice. And that’s that, that’s advice that you that you no doubt hard earned over the last many years in your different business ventures. Thanks for Thanks for sharing that golden nugget with us because it actually plays into the next question I had. So, you know, like, how have you seen companies, especially startups, when like they’re trying to scale and I hate to use the word scale, because that’s like, that’s like this sexy term everybody likes to use that really, I think is overused. I think I’d rather say the word getting from zero to profitable slash sustainable to where there’s, there’s no, there’s no longer a burn rate, we’re actually floating. How have you seen companies overcome that? That those initial it could be months? Maybe it’s yours in the case of Amazon, where they’re, they’re burning cash? But how have you seen that

Gene Blanton  17:15

play out? Well, a couple things like in the Amazon model, which has been studied at Harvard Business School and everything else. That that was planned. I mean, what I’m saying is that was part of the the game plan. Here’s really one of the biggest impediments I’ve seen to that. There is a start out underfunded. And so really understanding, even understanding the language, you know, Warren Buffett said, accounting is the Language of Business. And so I was doing a presentation to a bunch of CPA types. And I showed that on a on a slide. And then on the next slide, I had a picture of, of tonto, are you even old enough to know who Tonto is? Yes, yes. A few youngsters would know that. But yeah, he, on the next slide, you know, he said wrong Kemosabe. Accounting is only the root language of business. But most entrepreneurs don’t don’t speak accounting. They actually speak up operations. And then the the guys writing out the check, the private equity firms, the banks, the family offices, they are they they don’t speak accounting, either. They speak finance. And so one of the things we do is our platform actually acts as an interpreter in interprets for all parties, but a basic understanding of cash flow. And what what cash is more more companies, actually, you can have companies that are profitable on the income statement, and where they go broke is on the balance sheet. And so not understanding the fundamentals of accounting, and the cash cycle. And though those type things are really the greatest impediment, Now, assuming that you’re fueled properly, then here, here’s another one that I’ve seen. And that’s, that’s comes from my company. That’s the simple finance Leadership Institute. One of the great privileges of my life. There was no shooting going on. When I won. I was even. But I’ve been teaching this Marine Corps leadership. Because all I knew as a young entrepreneur when we started stacking steel, up to 2000 feet and built a company around that. The only thing that I knew was that that is what I’d been taught as young Marine NCO. And so I started talking about that to different groups and all and the I started speaking professionally on that by and large fortune 500 companies Macy’s one nails federated, John Hancock life, New York Life etc. And so in that process in in 2005, I actually went over to, to Iraq actually went on my first combat patrol when us to the day to the hour, 30 years after I got got to boot camp, my first combat patrol women, I was embedded with two more deep out in Atlanta bar and the first patrol I went on there in all the patrols and I never embarrassed myself with young guys, Greg my fat rear end up over walls and everything else. But the difference was we’d get back to base and young guys go pump iron and play basketball, I’d find a corpsman get an IV started. But But in that I was writing about in written the book Semper Fidelis leadership on the application of marine leadership to to the business world. And so one of the big things that I’ve seen out there that impedes the growth amongst companies is the ability sometimes you have a pretty good personal leader, some sometimes not. But most of the leadership and that’s why we love working with with military guys on it virtually our whole team is here is because of that leadership in the ability you cannot scale, if you cannot delegate leadership. Yeah, and and so, you know, I told a lot of audiences about the concept of the three block war, you know, what you’re familiar with the young, when I was over there, you know, a young sergeant, you know, three years ago, Mama couldn’t get him out of bed, he came from hip hop culture, you know, trousers hanging off his rear end and all that, and now he’s making life, his life and death decisions on the battlefield leading there because of the training that he had. And so, that’s another big element that prevents that scaling, is that you know, John Maxwell talks about the law of the lid, you may have an opportunity as a TN you know, your your business opportunity may be a 10. But if your leadership scale is only ascetics, you’ll you’ll keep hitting that lid, you’ll never rise above the level of a six. So I would say those are the two big contributors is not understanding cat cash and capital. Okay. And, and, and the second one, they’re just not being able to gather the leadership team around that they really need to grow if you’re a true entrepreneur. Aaron, when you have your team around you, you will be the dumbest guy in the room. Yeah, that’s what I’ve always tried to do.

Aaron Spatz  22:49

That is that is absolutely the goal. And you’re in you’re just you’re just simply providing, providing the vision, the strategy and in the overall direction and the culture of the company and in leading it and and yeah, and letting letting some really brilliant minds Help Help help steer, steer you there also. You talked about fuel so I but what about for companies because I’m because I know, there’s a lot of companies out there that get started on from from just a completely bootstrapped, like they either they’ve dumped their life savings into it, and then they go, and they’re in there scratch and buy, and versus companies that, you know, they like friends and family round, where you’re raising, you know, quite a bit more but, you know, what, what have you seen as being a big differentiator between businesses that are able to bootstrap themselves and just in go for it and and to achieve growth? versus those that decided to go get additional funding? Like, is there any difference between those?

Gene Blanton  23:53

Yeah, there is, in first of all, this is going to sound extremely harsh, but the vast majority, the fact is, Aaron, the vast majority of businesses that start should have never started in the first place. You know, they it was reactive, a lot of times people are starting a business because they were, you know, either jumped or they were pushed one to two. And so it’s not really understanding the fundamentals. It’s tremely hard to raise capital. And so if we were fortunate here in like building capital works, we went out and got got capital, you know, several million to build it. But we also had a lot of experience we had had a track record and things like that. And so the difference is the it still comes down to who’s willing to ride out a pay to the order of four for your product or service. It’s uh, you know, is it a me too product? And, you know, there’s all types of factors that are involved out there in whether it will attract, attract capital. So the bottom line is if you’ve got something that will attract profitable customers, it will ultimately attract capital. And so again, depending on what the business model is, and we’d get again, got several explainers, and all on our website and other places that kind of go deeper into this concept. But there’s a lot of factors that do indeed go into whether a company’s able to raise capital enable able to bootstrap it. And that’s one of the things we look at when we’re measuring a company is what we call non, we measure what we call a non equity growth rate, in essence, without bringing and given away part of the company, based on on, you know, on the our Capital Work score that we use that huge banks use to nail that work with this, that that it’s our proprietary score that we’re scoring, and showing somebody what their capability is, and and what their their financial healthiest. The big thing that that I feel like entrepreneurs miss it. And kind of the whole premise for capital works and what we’re doing, an entrepreneur needs to learn to look at there. We’re fond of saying this, there’s a lot of definitions of entrepreneurship. Stevenson, who weighed actually stunned, I’ve been quoting the guard for 30 years, but wait actually studied on him at the Harvard Business School. Stevenson says that entrepreneurship is not an effect or a particular type of individual, it’s a behavior. And so entrepreneurs will exhibit certain behave, successful entrepreneurs exhibit certain behaviors that unsuccessful entrepreneurs simply do not. And so how do you measure that behavior? Well, we say, Aaron, that your behavior needs to be measured in what we call capital reality. So capital reality is the measurement of entrepreneurial behavior as seen through the eyes of a capital provider. Okay. In essence, if you know what they’re looking for, if you know what your ratios have to be, it’s, there is some subjectivity to it. But for the most part, a small outfit, and that’s what I’m saying is a quarter of a million in revenue, say, and if they can get their margins where they need to be, and the ratios where they need to be that they are bankable, they can get 50,000 to go to the next level, and then what you know, and then get, get 200 and then a million, you know, and stack stack it up that way, but it edge many times what we see as a really fast growth, it kind of goes back to the example I’ve seen, like when I when I would, let’s say you have two companies that reach the same goal, maybe it’s 5 million in revenues, it was just like when I went and patrol with you young guys, and oh, five and Oh, seven, there, we both when we got back to the farm, we both, you know, went through the gate, we both went through standing upright, but we were not in the same condition. We, you know, one this old guy was it was really hurting, you know, and the ability to, you know, if I had to turn around, go after 1214 hour day, go, you know, take a 15 minute now and turn around go do it again, that would have been extremely difficult. For a young guy, even though they both reach the same revenue amount, you may have one one company that really healthy, and then other just depleted all the resources to get to the same point thing. And so it’s understanding that, that I feel like is the biggest impediment to company’s growth. You know, we we studied decision making Boyd’s own a loop and all that we make either analytical or intuitive decisions. And as I wrote in the book, one of the biggest failures of entrepreneurs, is they’ll make intuitive decisions. I think, I feel I believe, even if empirical of you no analytical data is available. Wow. And so there’s some leadership things and day to day stuff that you will make intuitively, there’s no reason to make financial business decisions intuitively. There are set parameters out there that if you stay in them, you’ll stay safe and you’ll you’ll attract the capital that you need.

Aaron Spatz  29:52

That’s great. Thank you. Thank you for sharing all that. What I mean, and I’m I’m sure you’ve, I’m sure you’ve been through hundreds of these scenarios, but share with us an example of a of a major setback or obstacle that you may have had in business, and how did you overcome it?

Gene Blanton  30:12

Well, we had them both myself. And then we’ve had had, hey, I had, you know, seen a lot of them with clients, they are one that that recent here, just to show you, perseverance, is that we had a company that was already, they were already hurting their margins, and everything had declined into being non profitable. And then we just started started working with them. And the loss over the last year had been over a million dollars or so. And so the bank was getting upset, everybody was was, was, you know, coming down on them by threatening to pull their line of credit. And, and that that type of thing, it was really getting dire, and very, very serious. And cash was just, I mean, they just live in almost moment to moment on the cash. And so we stepped in, and you know, everything starts with analysis. And so how we always work there, we we do rigorous analysis up front, what is the ground truth in the mud and blood in the beer in the smoke on the battlefield, what what’s happening on the ground, and then we we synthesize that to where we look at different pieces, then create a strategy, and then decisively execute it. So that’s kind of the system that we use, over and over with this company, here’s what we found in the, to their credit, they moved extremely fast. But here’s what we found, as they had grown, they’ve gotten fat in the field, you know, the brain stalk about the teeth, the tail ratio, and they had grown a lot of tail with for the amount of teeth. So they had all these layers out there. And then we were finding just a malaise of, of, you know, not performing and it just kind of, it’s a grown and they were actually a victim of their own success. They’ve grown rapidly. And huge. I mean, the the revenue figure for for these guys was up in in, you know, high eight figures, almost almost nine figures. But all this sloppiness had said the end. And then there were no. And we see this all the time is they would be a jobs and doom, there was no set way to do it. So if they had three different people bidding the job that all turn out separately, and all that. And so what we went in and did we immediately do the analysis. And so once we did the analysis and created that strategy to full out, then we went and engaged the bank, we said, look, we know that we know where we’re at today sucks. But here, here’s what’s causing it, here’s the steps we’re going to take. So we held their hand, we walked through the bank gate gave them the direction we were going. And then one of the things I did was I was bringing in to the company, a sharp young military guy, you know, to handle the operations. And he came in there and he started identifying people that were punching the clock, but not showing up on the worksite y’all all kinds of stuff, and just really went to work. And then saw these, you know, fat lazy management layers of management, these guys, you know, had just let stuff go, some of them and they were dispersed across the country, some have literally never left their, their, you know, office to really see what see what was going on. And so, you know, the Laird, what was going on, work with the bank, put systems in place to that they would consistently do it went in and fired some customers. This is what what a lot of people don’t stay in there, we’d run a profitability analysis. And we again, this is in a video on there. But in most service type businesses that we deal with, they are about 50% of their, their 50% of their clients are unprofitable. So we identified which ones they were. And so when clients hire you to go in and raise the price on it, or firing, you know, let them fire themselves. And so that that process, they’re within us from the time that we engage them and started working with them to where they started becoming profitable was only a couple of months later. And so, you know, and then then we had COVID hit on top of this, unfortunately, they were in an industry that they could do but even in the midst of all that Just just turn them around tremendously. So I would say it comes down to really analyzing and owner needs to do needs to how an outside, you know, somebody outside, that’s not, not tunnel vision inside the company, because a lot of times it’s happened to me to there that we that and especially for us guys, it seems like that business is kind of an extension of who we are. And so if it’s going south, you know, our emotions and everything else are tied up to that business where you you need cold Analytics, you know, from from the outside, that’s unemotional, unbiased, to say, hey, here’s what we are, here’s what we think we can synergize and put together a plan, here is the plan. Now let’s go execute it. And so in any and all of the issues I’ve run across kind of the the big thing that won’t, our folks to take away from is there’s a systematic way to approach it. And even if they’re not in a in a, in an stressed position, they need to constantly be doing that with their business, because you always need to match it between, you know where you are and where you could be. And then one of the things we’re big on is bringing in industry benchmarking a lot. A lot of people have financials, and they said, Well, I did better than I did last month. Well, how’d you do compared to the 4792 businesses that are in your industry? Yeah, you did better last month, and you’re making a little bit of money, but you you actually rank in the lower 2020 percentile. So you know, stop dumping your chairs, let’s get reality. And let’s go fixes.

Aaron Spatz  36:48

Wow, that’s incredible. That’s absolute incredible. I love the love that turnaround story. And and I think one of the things that you hit on real real strongly there was just being able to look at your business from you know, as as unemotional as you possibly can, and just go straight, straight straight to the data.

Gene Blanton  37:07

To tell the story in there’s always an old our analysis does, it tells it and communicate it in such a language that a guy will know what he needs to do in the warehouse. Yep. And so it’s always tied back to that. And so we really tried to work there to make in here, here’s another thing that we’ve talked about language laying here. And the fact is, many accountants don’t speak accounting. They speak tax code. That code is a different language than accounting. And so we’ve had in the, in the 4000, SBA loans, our team was involved with about 60% of those deals, we had to go get another accountant that actually spoke Yeah, you know, generally accepted accounting principles there versus somebody that just was really good on the tax code, right? Now, it’s good.

Aaron Spatz  38:06

What would be your advice for companies that are that are just starting out, and they’re going through the, through the phase of like, okay, I need to start, I need to start hiring some more hands and you start hiring some more help? Where like, what does that look like for you? And some of the companies that you’ve been a part of or started, like, Who were those first hires? Like, what? What roles were you looking to to hire first?

Gene Blanton  38:29

Well, here, here’s the the role, you said the key word right there. Here’s, here’s what we do a lot of times as entrepreneurs, that that, that three AF group I told you about before the friends, family and fools, they kind of get there, they’re available. And you know, you hold up the mirror and Billy Bob, you know, fogs it up. So, you know, they hire and we say a lot of this and the companies that we take to the next level, they hired aunt Maude, because she can, she can pick her way through QuickBooks. And so as the company’s grown now aunt Maude is the CFO for bless her heart, she, she could no more balance a balance sheet. And well, she just knows which buttons to push on QuickBooks but not provide any advice. So the key term, you said, Erin is the role. What we’re big on is, is rather than and we say this all the time, where guys rounded a team around him, then they kind of divide up the duties based on somebody’s strengths and weaknesses. Again, no key Masabi if you’re going to build the business, and if you’re looking to scale it, one of the exercises you go through is is scaling that org chart, and really defining what that role requires in that role in defining it, what are the best practices for that for that role, and then hiring to that and so All these kind of a typical client that we’ve had, you know, at that point, reach that point too big to be small, too small to be big, wanting to grow their company to the next level and possibly exit the company that we virtually all the time have to do that bring in a higher level team to get them to the next level. So that would be my 30,000 foot. Answer is define the role first. And then look for the body to feel that role, rather than the other way around, which is what most of us, most of us.

Aaron Spatz  40:37

Yeah, no, it’s true. I mean, I’ve I’ve seen that I’ve seen it with, with my own eyes have also seen done the other way, you know, and so no, that’s, that’s awesome. I mean, that’s, I mean, I guess that’s, if that works, that works, like you got to go and hire in hire those roles. And I think one thing that you hit on really strongly there also was seeing what it’s going to look like in the future. And in just in my own in my own limited business study, just understanding how companies have grown going, that they started with a vision of what they wanted to look like, in the end, like in the mature version of this company. And then they just everyday just relentlessly work their way towards that end vision. And so that they already had an idea of what the org chart was eventually going to look like, it was just a matter of time until we hit this benchmark process

Gene Blanton  41:25

of going going through that. And I would challenge you there to shamelessly push a tool that’s out there, I think, we charged a total of 99 bucks for it, I keep telling him to stop giving this away. But if you go to anybody that’s in a startup, if they’ll go to startup financial model.com, it takes somebody through the pricing process, it takes them through the cash flow process, it takes them through the you know, organizational aspect of it, how many folks they’ll need, etc. And this is used in, in all the major business schools across the country, we’ve developed it, just just phenomenal. It’s got over a million calculations on it. But he’s actually kind of how we work together, he comes up with this brilliant stuff, Aaron, and he’ll keep dumbing it down and dominant down till I understand it, that he knows we’re ready to go to market with it. But he really has gotten it in such a way there, that if you’ll do each step each module, which is and there’s videos on there and how to do it, it will show somebody how to scale that up and really think through the process, because I’ve taught a lot on Marine Corps planning. And it’s not, it’s not just the end plan, because the plan will change. It’s it’s the learning process of going through that really disciplined approach to that startup. And, you know, if it won’t work on paper, it’s not gonna work in real life. It’s all said, and yeah, and that’s another another component of it, too. It’s got in there, how to create the slide deck for investors or bankers or anything else. So it’s a very, very disciplined approach to it in hits all these areas that we’ve talked about, oh, well,

Aaron Spatz  43:20

for those that are that are just starting their entrepreneurial journey, or maybe there’s those that are thinking about starting their own journey. They’re still in just the idea process, and they’re working full time somewhere. And I know this is like a super open ended very, very, very vanilla question, but like, but what what advice would you have for folks that are in that early stage of the idea or they’re, you know, they’re they’re wanting to form their own business? Like, what? What, what bits of advice would you give them?

Gene Blanton  43:49

Well, just a general first step in byes is look for a problem to solve. Many times I’ve seen this and the analogy I use, we tried to buy a ranch down in Fredericksburg, Texas, and I don’t know if you’ve ever ever been down there, but you know, it’s a tourist town and, and all that didn’t go through because the older kids have never worn it until Dad started to sell it and then they come out of the woodwork. So the deal didn’t go through. But it spent a lot of time we were down there for about a year. And looking at other properties and all and you would say these downtown Fredericksburg, the shops that you’d walk bound, I mean a week later and it’d be different people, different shops in there. And so what would happen is, you know, people, you know, they like to, you know, they’d like glasses, you know, they like this style of glass. They personally were in love with this glass, and they had a passion about this glass. So I’m going to build a business selling this glass. Well, no Kemosabe you can sell Again, what I’d challenge it is, is find a problem to solve. And people pay the value for the problem that you solve. Yeah, um, the next thing is get get an education, get an education on it, and it doesn’t have to be going to business school and all. And again, I’m gonna shamelessly recommend this. They are, if somebody goes to crown, B is bi z.com, Crown ms calm and looks on their adventure Academy. Again, Wade, who’s just brilliant. And has has taught at Harvard as a guest guest lecturer there, put together what’s about 20 hours worth of training, I think it costs like 199, or whatever, it’s just, again, crazy. But it’s broken down into five and 10 minute modules. And there’s, there’s a ton of stuff on there for 40, if somebody just wants to take a look at it, but it’s going through all the aspects of a startup, it’s going through all the aspects of assessing the business, it’s taken them through the sales and Mark, you’ve taken them through the accounting, taking them through the scaling aspect of it, and how to how to judge a business opportunities actually got away on there. If you’ve got if you’ve got all of the these opportunities, how do you judge those, when we started reel manage, which is now the fourth largest in their industry, out of about 6000 players. And he’s done that in 15 years, before he ever decided to do that. He said, I’m gonna look at these industries, okay, because he just wanted to be successful at it, it wasn’t that he was married to the, you know, this particular type of glass, he said, I want to build something that’s going to provide for my family that I can create value. And so went through that process of assessing these opportunities. And so if somebody goes through that, if they’re whatever they’re thinking about, there is a systematic way to assess that opportunity. And, and look and see if it’s viable. And then you’re at same time getting the skill set that that you will need. So, you know, really be thinking about a problem that to solve. And then the other thing is to get educated on it and understand, start understanding finance and accounting and how to how the a capital provider looks at your business thing. That’s great.

Aaron Spatz  47:43

And really, I mean, I’d love to love to give this last segment back to you as we kind of wind things down. But first, obviously, I mean, you’ve shared quite a bit about capital work. So I think it’s, I think it’s no secret where what it is and where you are now. But people people can reach you through capital dot works. Is that right?

Gene Blanton  48:00

Yeah, they can email me gene at Capital dot works. They can reach me through there now want to be clear, we’ve got those tools, the startup financial model, and the and the venture Academy that’s at Crown biz.com. Okay, so we’ve got startup financial model.com, crown biz.com. Because, frankly, the startup they are will do seminars to large groups, but hopefully you’re by understand, most startups don’t have any money. And so we’re in business to make money. So we’re primarily only advisory working with with larger businesses and what we do, we’re in the middle market. And so I don’t want to set the expectation that, you know, I love this white and I love it all the time. Or somebody said, Hey, I just wanted to kind of take you in for coffee, I’d sure love to pick your brain. Well, I’m sure you would. But here’s what I’ve done before. If I pointed somebody to those tools, and they use those tools and actually walk through room, they, to me, that shows me they’re serious enough. And that’s somebody that’s really going to try to be a professional entrepreneur, then that kind of opens the gate for you know, for additional conversations, and everything else. So we’re, we’re primarily there, the problem that we want to solve is this whole whole idea of access to capital. Um, there’s about 90% of businesses are actually funded with with debt. But But trying to go to a bank is a beat down. So what typically happens from the entrepreneur, I need capital okay to grow. I have no idea what that banker is looking at. He asked me for my financials and my tax returns and I give it to them and then they and on the banking side, they get stacked up, and they’ve got some analysts, you know, with the green eyeshades in the back and all that kind of lock in a basement down there, they got all these reams of stuff, and they’ve spent a lot long time analyzing the process. And so in do due diligence, the the average, like private equity deal takes more than nine months. And the legal cost and the the due diligence aspect that a PE firm pays is north of 800,000, that’s on a $25 million deal. And so what we’ve set out to do is crush that cost. And then on our platform, somebody may not need capital or may not be ready to do it. But our platform with the analysis that we provide there for clients that won’t that we’re offering, anybody that’s listened to you there will run a free analysis form note no charge to, but the clients that we take on month after month, they’re using that to see how they’re moving the needle, you know, are they creating value. And so we run a valuation analysis, we’re running an industry analysis, we’re running a performance analysis. And then our system does that automatically, I’ll give you an idea. We had an entrepreneur had a $55 million company, that was the valuation, they were looking to buy a $22 billion company, we took them to a large global bank, they got back, got back to us with an indication of interest within 48 hours. And they said, Jeanne, this normally would have taken us six months, not six months, but six weeks to get to it. So that’s what we’re about is trying to make that night that entrepreneur, understand what the people right now pay to the order of how they look at their business. And that gives them the tools to run and grow their business that way. And then for the capital provider, making it doing the analysis for them quickly where they can get to a decision. So rather than that entrepreneur going out, spending that six weeks only to get a no, no, and then try to start over with somebody else. What are stills from we had when they have the need for it. And again, these are established businesses that are credit worthy there, we’re able to put that out on our platform, to banks and pre e firms and family offices and corporate acquisition groups that have said, this is the type of deal that we’re looking for. So we know from the analysis, whether that deal fits them or not. And so it’s a way for the entrepreneur to get their deal. And it’s done anonymously. But what I’m saying is they’re seeing the analysis, they’re seeing the industry, they’re not even seeing who you are until the entrepreneur signs, you know, online clicks through and opens the gate to that capital provider. Okay, so we’re looking to change the universe and how capital transactions are done. And that’s the mission that that in our old gray beard years with ya know, that’s the mission we’re on. That’s

Aaron Spatz  53:12

that’s phenomenal. And thank you so much for just spending spending all this time with me and for sharing so much your wisdom and insight perspective it’s been it’s been a true pleasure.

Gene Blanton  53:23

Excellent. Well, I I’ve enjoyed it Aaron thanks so much. I love what you’re doing Keep up the good job and and veterans especially in they really as part of what I’ve had the privilege of doing, they they really do not always understand how how the training they’ve had really equips them for business how to decide, communicate and execute high speed hospice chaos, that’s what business that’s what the military is, that’s what businesses so we need for

Aaron Spatz  53:55

now, man, what, what a fun episode, and if you couldn’t tell man gene is chock full of experiences, and all the different things that he’s gone through, we could probably sat here for hours upon hours upon hours. But it’s clear that he’s been in this industry for a very, very long time. But also has amazing and unique insight into the way that businesses are started, how they’re sustained, how they grow, and then also viewing it from the eyes of the funding source. And so I just I think it was really remarkable I would encourage you to check out all that what gene and his partner Wade, what those two guys are up to truly remarkable work that that they’re doing in the middle market of business. And then again, just to recap the couple of websites is crown biz comm and startup financial model.com In addition to capital dot works and so I really hope you enjoyed this episode. It was a blast to interview Jean. And I would encourage you to go back and re listen rewatch it because there was there was definitely some golden nuggets, pearls of wisdom. That would be phenomenal so anyway thank you so much for tuning in I can’t wait to see you again next week as we roll out yet another episode

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