Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
Bored with running a “lifestyle” company with about $12 million in annual revenue, CEO Steve Bloom in 2005 brought on a new president and crafted an ambitious goal for the firm he joined in 1991: Triple the revenue of his management and technology consulting firm in three years. A new team hit $22 million in 2006, well above its goal of $18 million, and subsequently raised the bar for the next three years. The hard part, he says: getting everyone aligned to go after the new goal, and especially getting everyone who’s not interested “off the bus.”
“I’m surprised at the amount of work that’s required to take an organization to the next level.
For us and a lot of entrepreneurs a comfortable level is probably about $9- to $12 million in annual revenue. Getting to that point … doesn’t feel like it’s a lot of hard work because it’s fun. People are excited to go out and get customers.
The No. 1 thing by far is to get a team, starting with an executive team, aligned to the same strategy. I’ve learned in sometimes painful ways: The hard part is people don’t tell you what’s really on their mind. They don’t want to upset you.
For instance, as you’re growing a business and you’re established, you reach a point where you want to take it to the next level. As a business owner that’s innate to you. But the person who’s been very happy making a good income at the $10 million sales level, says, What’s in it for me? Why would I want to bust my hump to get to $25 million?
What’s in it for me? That’s what the entrepreneur has to answer for that employee.
What happens is a lot of the people who got you to that level are not those who can get you to the next level. It’s a very difficult process to get people to align to that strategy.
In ’98 we were a $12 million business. Then we shot up and did $20 million for four years. That was the economy driving our growth, not us, as opposed to the sustainable model we’re creating now.
We then backed down from ’02 to ’05 to the $12 million level again. We shot up, then slid back down at about the same rate. We shed a couple of practices. We did it over time.
It wasn’t fun but I never panicked. I knew we had great people.
In 2005 I faced a decision. I have to 1, accept that this is a lifestyle business. There’s nothing wrong with that. Two, I can sell it. Or 3, I can grow it.
I didn’t want a lifestyle business. In my opinion, it’s an easy and a boring way to go through life. I didn’t want to sell because I hadn’t achieved the next level yet.
I sat down with Mike Kerrison, a consultant at the time. He said, if you built Pragmatek to be the company that would put Pragmatek out of business, what would you do? I went on for 2 1/2 hours about what I would do. And he said, so why aren’t you doing it? Mike is now president of the company.
We asked, how do we build a culture of sustainable growth regardless of who owns it. In ’05 we did $12 million. In ’06, we did $22 million. How?
First we did an exercise called “change the game.” Get your executive team aligned around what you want to accomplish in the next three years. We said, we want to triple in size over the next three years.
Two, does everyone on the executive team support that strategy? If you put that stake in the ground, then you’ll see who was on the bus and some weren’t.
Then you start deciding, what do you have to do to get there? There was a whole list that we call the strategy map of who was going to do what, by when, and then we’d hold each other accountable.
Our goal was $18 million in ’06, $24 million in ’07, and $36 million in ’08. By having that strategy map, we accomplished a lot more than we thought we could. It surprised me.
If you really look at your business and say, do I have alignment, and do I have a great team, most small businesses, they don’t. They say, Bill’s here because he’s married to so-and-so, or, it’s too painful to let that person go, or, I’m fishing buddies with that guy. Those are very painful things to go through. Getting the wrong players off the bus — it’s not easy.
Now that we’re at $22 million, the major difference is for many of us, being an entrepreneur is great. Going from an entrepreneur to a manager, A, not many people can make the jump, and B, they don’t want to make the jump. I have to be the CEO, with different responsibilities. You have to delegate.
We changed our goals. $35 million in ’07; $49 million in ’08, $69 million in ’09. Am I having fun again? Yeah. I have my smile back.
But it’s a different role and type of work. It’s a lot more work. Even though the hours are the same or less, what I have to do every day doesn’t come naturally. It’s kind of breaking through new skill sets.
After we reach our goal, what next? Now you’re asking me about my crystal ball and my crystal ball is broke. I always say, enjoy the ride while you can. I don’t know what’s going to happen. I have no idea.
Will I enjoy running a $70 million company? I don’t know. I’m at peace with that.
— As told to Beth Ewen
[contact]
Steve Bloom is CEO of Pragmatek Consulting Group:
612.333.3164; st*********@*******ek.com; www.pragmatek.com
The use of fractional executives — those hired by companies on contract to work a fraction of the hours at less cost than full-time hires — has been on the rise for years. That accelerated during the COVID-19 pandemic. John Arms, co-founder of Voyageur U, helped establish the organization to help educate free agents on what it takes to make it as a fractional executive. He’s now put that knowledge into print, recently releasing the book “Consult Your Way to a Full-Time Job.” Arms joined Upsize Minnesota Editor Andrew Tellijohn to talk about how the book can help potential fractional executives carve their new paths.
Branding expert Kate DiLeo wrote a book about how branding agencies need to do less storytelling and more listening to better meet their clients’ needs.
