On this episode Josh speaks with Carl Seville, a Partner at SK Collaborative. They talk about the importance of systematizing your business, particularly if you want to get it “sale ready”.

Carl Seville is a consultant, educator, and speaker on sustainability for the residential construction industry.  His firm, SK Collaborative consults on and provides green certification for single and multifamily buildings. 

Previously he owned and operated SawHorse, Inc, one of the largest design/build renovation firms in Atlanta for over 25 years.  While at SawHorse, he was instrumental in the development of the EarthCraft House renovation program and personally supervised the pilot projects.  He has won more than 100 industry awards and has held numerous leadership positions in the building and remodeling industries including the board of the Atlanta branch of the USGBC.

In today’s episode you will learn about:

  • Developing business systems for growth and management
  • Customer service
  • Getting rid of whoever you talk about the most
  • Sustainability as a core value – our employees believe in what we do

Transcript

Narrator:             Welcome to “Cracking the Cash Flow Code”, where you’ll learn what it takes to create enough cash to fill the four buckets of profit. You’ll learn what it takes to have enough cash for a great lifestyle, have enough cash for when an emergency strikes, fully fund a growth program and fund your retirement program. When you do this, you’ll have a sale ready company that will allow you to keep or sell your business. This allows you to do what you want with your business, when you want in the way you want.

In Cracking the Cash Flow code, we focus on the four areas of business that let you take your successful business and make it economically and personally sustainable. Your host, Josh Patrick, is going to help us through finding great thought leaders as well as providing insights he’s learned through his 40 years of owning, running, planning, and thinking about what it takes to make a successful business sustainable and allow you to be free of cash flow worries.

Josh:                      Hey, how are you today? This is Josh Patrick. You’re at Cracking the Cash Flow Code. My guest today is Carl Seville. I hope I pronounced his name right. Carlo is from SK Collaborative. He has a long history in the world of construction. He builds himself as a green curmudgeon, which I kind of really like a lot because I build myself as a curmudgeon. He has a company called SK Collaborative now where he works on green technology. Let’s bring Carl on, we’re going to talk about how to systematize your business and why that’s really important to do. It’s one of the four things we need to do to have a sale ready company.

Carl, welcome to the show. Thanks for coming today.

Carl:                       Appreciate the opportunity.

Josh:                      Carl, tell me a little bit about yourself and your business systems and how you came to say systems are like the lifeblood of running a great business.

Carl:                       Well, I had a construction company for a long time. I was a partner in a renovation firm. It came to my attention at one point. We had a lot of employees. We were up at 60. At one point, we kind of settled back down to about 25 employees, I realized that if I ever got asked the same question twice from anybody, it was an indication that we were lacking some kind of procedure.

So back in that company’s going back almost 30 years ago, I put procedures together. They were notebooks. We would print out type or print out pages. We just sort of forget every step. It was just something I just learned by doing, figuring out what has to be done in the company, how people are supposed to do it and give them directions is how to go that way. Then in my current company, we’ve done the same thing in the past couple years put very comprehensive procedures together.

Josh:                      Carl, when you put procedures together, what happens with the employees in your company? Do they feel like they’ve been stifled?

Carl:                       No, actually I feel really empowered because we give them directions as to what to do, what decisions to make, the right decision matrices to use to make those decisions. They don’t have to ask us a lot of questions there. They actually are free to do things on their own. At any place that worked or volunteered boards and things like that, giving people direction and guidelines sort of bumpers as to where they can work within, it empowers them to do what they want to do without having to ask a question every time.

Josh:                      This is almost counterintuitive thing because I went through the same process with my food service vending company years and years and years ago. We found that putting guardrails, which I call systems in place, helped people to actually be better at the job. The more systems we put in, I was surprised, but the happier employers got, was that your experience also?

Carl:                       Oh, yeah, very much so. I think employees really enjoy having these things there. Because if they don’t have clear direction as to how to do everything, they’re often sort of floundering around saying, “What do I do next?” Then constantly have to go back and ask questions of the boss, when I haven’t set up that people can go to a document or website whatever to find out what they need to do and don’t have to ask me the question.

It frees me up to do more business operations things instead of having to get down into the weeds. I was actually taking a walk with my wife the other day, and we walked by a house and I saw one of my signs in front of it. I didn’t know anything about it because somebody else is managing the project.

Back in my construction days, and now, I really appreciate when I see a sign and know that it’s being managed well and I have nothing to do with it.

Josh:                      What do you say to business owners who come up to you? They say, “You know, Carl? Yeah, I get these systems, but my people are different. They like to do things on their own. When I put systems in place, they feel like they’re being punished.”

Carl:                       Well, I think you’re stifling your opportunity for growth. In my current company, when my partner and I started working together about five years ago, we were especially just the two of us. We’re doing most of the work ourselves. We started to grow. We realized we needed employees. I told my partner, I spent enough time managing employees. It was not something I didn’t want to do again.

So he was responsible for managing the employees but I would put the systems in place to allow him to do that. It’s allowed us to grow very steadily, bring people on, train them, given these procedures to work with. We have very brief weekly meetings that don’t have a lot of detail. We get very few calls on a day to day basis. Ask what do I do here? What do I do there? Because we have 140 page procedures document that our employees can review. They can just search it and find an answer to almost any question they have on a project.

Josh:                      So is your employee manual or your operations manuals out online. It can be searchable online, there’s a big notebook.

Carl:                       It’s a PDF that linked and searchable. It’s basically every employee can open it on their laptops or on their iPads. There’s links in it within the document. There’s links to our cloud documents so if somebody needs a document that’s noted in the procedures book, they just click on it. It takes the right to that document. They can open it up and use it.

Josh:                      A lot of times, Carl, when I recommend to somebody that they put systems in their company, they gave me a lot of pushback not because of their employees, oh, that’s the first excuse they usually give me is I don’t want to study for my employees. We get past that in a similar way that you do. Except I’m a little bit more blunt about it because I’m might be even a bigger curmudgeon than you.

Carl:                       I’m not sure about that.

Josh:                      You haven’t seen me in full blown. At any rate, they say I don’t want to put the system together, I hate systems. I don’t want to put them together. Essentially, I find owners push back against systems because it puts limits around what they can do and act as poor employers instead of good employers. That’s we’ll get into a conversation in a second. If you can have somebody establish systems in the employer really like me, I’m great at designing systems. I just don’t like documenting them. How do you recommend they document them in a way that’s actually operationally doable?

Carl:                       You have to find somebody who’s got sort of the mindset and the skill set to do that. In my case, it happens to be something that I like to do. You might hire an outside consultant, if that’s not something that you want to do, to basically interview you and say, “How do we do each of the things in the business?”

What I’ve always done is, as I start drafting any kind of procedure, it goes out to everybody that does the work with it, say, “Hey, does this make sense? Is this what you’re doing in the field?” It’s not an easy process, but anytime I put any system together, any business I’ve owned, going back to construction, we put really comprehensive estimating systems in that that sped up and mechanize the estimating process, that was a six month process.

I basically camped out and put it together over a six month period essentially acting as a consultant to my own business. You have to have somebody either in your business or outside the business that you can bring in to do those things.

Josh:                      Yeah, I actually have a different methodology for doing that. I make the person who is doing the job document what they do. I do that for two reasons. One, because I’m incredibly lazy human being and I don’t want to do it myself and two, the person doing the job, least in my opinion, is the expert at the job.

They really should be the one that documents what the process is and once they document and I just look it over and make sure it makes sense to me. Then if I was pretending I didn’t know what I was doing. I would say, “Gee, could I learn from this?”

Carl:                       That’s a good point. I have certainly had employees help put that stuff together, give me drafts, and then work with it, just going to combine it with other drafts. Just make sure everything’s looks consistent and reads consistently. In our particular case, when I was putting these procedures for current company together.

My partner and I had the most knowledge of that, because we had been doing it recently. As we’ve grown, I have other people doing work and procedures have adjusted as they have come up with better ways to do things.

Josh:                      I have this sort of mantra around systems. I’m curious about your thoughts on this. The reason I tell people they want systems is your employees need to know what they have to do for excellence. Your customers need to know what they can expect for your business and they don’t get either unless you have great systems in place.

Carl:                       That’s absolutely true. Yeah, I think unless you’re a sole proprietor, if you have employees, if you don’t have good systems, you can’t function. I think the big companies. It’s strange to talk about now, but airlines have really good systems. Planes take off and land pretty consistently.

I remember I used to use Fidelity Investments a lot and had called them and I never had an unsatisfying call with them, because they had very good systems down the way they addressed every question, every comment the way they direct you to the next person. Those companies impressed me a lot.

Josh:                      When I was in the food service and vending business, one of my favorite things I did my entire 22 years running that business was I went to Disney for the quality control program and how Disney does quality control.

In my opinion, there isn’t a better systematic company in the universe in The Walt Disney Company. They measure and plan for everything. I remember we went through this. They were using their parking lots as an example of why systems were so important.

Carl:                       Yeah, I understand that they’re parking in there. There are lines and everything like that. Everything is totally mechanized in that organization.

Josh:                      Well, the cool thing about their parking lots is if you go to one of the Orlando parks, they know how long it takes you to drive there from every single Hotel in the whole area. So people lose their cars all the time and they have the security people running up and down the things saying, “Gee, it looks like you’re lost. Where are you staying? What time did you leave?”

They know where you parked and then they take you to your car. When I heard about that, I was saying, this is somebody who’s thinking about systems from the customer’s point of view and not from the company’s point of view.

Carl:                       That’s a very important thing. We pride ourselves very much on our customer service. One of the things we do, we have a server response time requirement for all our employees that you have to respond to every client request with a certain period of time on their side to give them an answer. But you have to you had to acknowledge that they’ve been heard.

That’s really important. I’m sort of probably the most compulsive about it. I have to sort of probably calm myself down and not expect an immediate response from everybody. One of my clients recently told me that if he doesn’t hear from me in 20 minutes, he assumes I died.

Josh:                      Why don’t we tell people, if you want to contact me use emails. I’m email obsessed. I hate text messaging.

Carl:                       Same here. I email everybody all the time.

Josh:                      I usually have an email window open. It’s really bad for productivity if I’m trying to write or do scripts or something like that. I do shut it off for a couple of hours at a time when I’m doing what I call deep work. We have a rule is that you have to answer the phone within three rings. If you don’t, it goes to voicemail. You go check the voicemail as soon as you get off the phone. Because you know, frankly, it’s really frustrating for a customer to call somebody and then not be able to get a hold of them.

Carl:                       One of the reasons our business has grown so consistently is because we do have very good customer service. Nobody ever waits for a response or report or a callback. Everybody’s pretty much, we’re on it. We’re on everybody every day.

Josh:                      So Carl, what does SK Collaborative actually do?

Carl:                       We primarily do certification of buildings under a variety of green building programs. The bulk of it is multifamily housing, both affordable and market rate. Some single family housing, a little bit of like commercial work. We work all over the country.

We do work in the Virgin Islands. We’ve done some work in Mexico. We primarily work with developers who either need the green certification for either financing, or in the case of affordable housing, accessibility to affordable housing tax credits. Some cases, they just choose to do it because it’s a corporate policy.

Josh:                      Yeah, I would assume you have a few clients up here in Vermont because we tend to be on the green side more than most other places I’ve been to.

Carl:                       We have no work in Vermont at this point, but there’s a lot going on in Vermont. New York is the southeast US so we just do a lot of work in the Midwest. We actually have a bunch of work in the Virgin Islands right now, there’s a lot of affordable housing being built in there.

Josh:                      Oh, so you also talked about getting rid of whoever you talk about the most. I love that because it is so true. It is so true.

Carl:                       I have to give credit to my old business partner in my construction company. He came up with this at one point. It is some of the best business advice I’ve ever heard. Whoever your company ends up talking about the most just needs to be removed from your life. It can be an employee. It can be a subcontractor. It could be a vendor.

It can be a client because you don’t talk about people that don’t give you trouble and you waste endless amounts of energy on the people that are basically driving you nuts every month or so you should just look around and who you’re talking about the most. If you can figure out a way to, if you can’t straighten them out and get them to a point where you don’t talk about them, you probably should remove them from your business.

Josh:                      I love that. I’m a big fan of like off hacks, the world calls hacks today. That is one of the great hacks of all times. We used to have this quarterly appreciation program in my food service company. We had 90 employees and we would go around and I would give a certificate and they get a pin and $10 for every year they’ve been with us to $100.

The key for me in that appreciation conversation was, could I think about something easily to talk about where that person has supported our corporate values in some way? If the answer was I couldn’t really think of something easily. I would then say to myself, “Why the heck are they in the company still?

Carl:                       People who are serving you very well, they tend to be invisible. You have to really work hard to basically give them the proper attention because you spend so much time on the people that aren’t serving you well.

Josh:                      You just see the system around it. I mean, again, most systems I’ve found that are good are these things that sort of start small and they grow and they grow and they grow on themselves. This is a good question for you. How do you keep your systems for becoming bureaucratic?

Carl:                       Interesting point. I think I try and keep them fairly streamlined. We have a big book, but it covers a lot of stuff. The systems are two pieces. There’s the written documentation, and there’s the way we actually accomplish it. I basically built our internal systems essentially using a whole bunch of apps. Compare that to my old company where we had, you know, literally 10s of thousands of dollars of legacy software that we put on servers in our office.

Now everything’s on the cloud, everything’s online. I just found a bunch of apps that are fairly inexpensive. Everybody knows how to use them. They’re fairly simple steps. When you get to this point, you do this thing. In our particular case, it works out well, in our projects, inspections are made, and invoices are sent out.

I have basically no interaction with that because once we set it up, we set it up upfront, when the project starts. Basically, everybody just goes through the steps. They check this app, check a little box and moves on to the next stage. The backup written stuff is actually very dense and very complicated. It’s primarily meant for reference. The end of the actual work is done in these applications that are fairly simplified and basically just a few simple steps.

Josh:                      Do you use any process control methodology in your company? Lean agile Theory of Constraints.

Carl:                       No, we’ve started working with one thing called ELS entrepreneurial operating systems.

Josh:                      Yeah, that’s not a process improvement. It’s a great system, by the way. I love ELS.

Carl:                       Yeah, we’re not using any specific systems like ads, or anything of that sort. We built our own systems and we monitor them. Looking at invoicing, we know how projects are moving along. We can look at our scheduling systems and understand how projects are going look at our budgeting, basically just through various reports. We do that on a regular basis.

Josh:                      Cool. What kind of software do you guys use to help your people become more efficient?

Carl:                       One point we looked at so basically, having a custom system built the kind of compass everything. We never quite got there. Right now we’re using an app called Trello, which is basically a task management system. We don’t need a scheduling system, because we’re not in the critical path. We just have to manage our milestones.

Every project is on Trello and that’s where all the documents lie. That’s where the schedules are saved, how many inspections were scheduled to go to, our invoicing milestones are all in there. The employees just work through that. We just use app called Harvest for timekeeping and budgeting. It does bizarre job costing, as well as our payroll. That’s pretty much it.

We just Google docs for a lot of stuff. We have some extensive spreadsheets that we use to track our projects. I’m impressed at how inexpensive it is compared to implementing legacy software, which we don’t do anymore. It’s entirely cloud based. We are we have no phones. We have a virtual phone system. Everything’s on the cloud when we had to stop coming to the office because of the COVID thing. It really didn’t change how we worked because people didn’t spend a lot of time in the office anyway.

Josh:                      Yeah, I find the same thing. I go back to my first days of when we computerized, our food service and vending company in 1981, I think, or 78 79, somewhere in there. The PDP 1124, which was a digital minicomputer, it had a whopping 256 kilobits not megabits, kilobits of memory.

Carl:                       I got a good story for you, my first computer with an IBM XT in megabyte hard drive that I paid $9,000 for to run my business.

Josh:                      Yeah, my first computer was an Apple II, which I bought in 1978. I pay $5,000 for and I bought it for one reason, I could run VisiCalc on it.

Carl:                       Now your phone has way more capacity than either of those computers.

Josh:                      My phone had way more capacity than any of that years and years and years and years and years ago. I mean, we used to run a profitability program that we would start at Friday at two o’clock. It would be finished around Monday at 10 o’clock.

Carl:                       Wow.

Josh:                      Today, that program would take maybe 30 seconds to run.

Carl:                       It’s really astounding how technology has changed and how much what we can do with spreadsheets and online apps. I’m just amazed.

Josh:                      All this stuff has gotten a lot cheaper and a lot better. You brought up something which I think is really important for the folks listening and that is buy a software package for what it does well. Don’t try to make your software package fill all your needs.

There are too many people out there trying to sell this all in one software stuff. The only company I’ve seen close that comes through that is Zoho, and the only reason Zoho comes close is they’ve actually written about 20 different software packages under the same brand name.

Carl:                       There are very few businesses they’re going to rely on with a comprehensive software package where everything’s going to work unless you want to alter your business to fit a particular software. You really have to have to customize it. Any software you buy, you have to play around with it a lot.

Josh:                      If you buy a software package that costs you $200 and it saves you two minutes a day. It’s a bargain.

Carl:                       Oh, absolutely. Yeah.

Josh:                      I mean, people don’t think about this. They think about systems and improvement in hours. You should be thinking in seconds.

Carl:                       Yeah, anytime you can shave a minute or two off that repeats itself.

Josh:                      Or even 15 seconds, if you do something 10 times a day, and you say 15 seconds on it. You find something every day to do that with. You save hours over the course of a year.

Carl:                       One of the apps we use, it’s a field reporting app. When we first started doing our field inspection, I would go out with, I take pictures, I’d write notes, I come back, I type them into a Word document, suck the pictures in and I’d spend an hour or two doing these reports.

I did some research and I found a little app that we pay a few hundred bucks a month for and you use your tablet, you take pictures, you type in note to check off boxes, and we can send a report from the field that’s complete as we walking out the door. That saved me literally an hour per report. We’re doing hundreds of reports a month, so it is certainly the best investment I ever made.

Josh:                      Cool. Hey, Carl, unfortunately, we are out of time. I’m going to bet people are going to want to find you. I’ve got your website up here. Is that where they should go or should they do something else?

Carl:                       They can just email and the main address there and I will get that.

Josh:                      I assume you’d be happy to talk to somebody about systems if they’re interested in talking to you.

Carl:                       Sure, they’d love to. I enjoy that.

Josh:                      Okay, cool. I have an offer too. I like to write eBooks. In fact, I’ve written like 25, eBooks and my sort of overarching thing I’ve been thinking about and when we have the financial freedom project. We have Cracking the Cash Flow Code. We have the Objective Review, but what they’re all really sort of leaning towards, is having your company be sale ready.

Now, sale ready does not mean you want to sell your company. It just means you can have your company in shape that somebody else might want to buy it. To get this free eBook on the eight steps you need to go through to create a sell ready company, it’s really easy to get you go to www.sustainablebusiness.co/saleready. That’s www.sustainablebusiness.co/saleready and yes.co was not a mistake. It actually is a new URL now.

By the way to find Carl, since you’re listening to this as a podcast, and I didn’t say it. We have to do that for him is www.skcollaborative.com. That’s www.skcollaborative.com. You’re at Cracking the Cash Flow Code with Carl Seville and this is Josh Patrick. Thanks a lot for stopping by. I hope to see you back here really soon.

Narrator:             You’ve been listening to the “Cracking the Cash Flow Code” where we ask the question, “What would it take for your business to still be around a hundred years from now?”

If you’ve liked what you’ve heard and want more information, please contact Josh Patrick at 802-846-1264 extension 102. Or visit us on our website at www.sustainablebusiness.co. Or you can send Josh an email at jpatrick@stage2solution.com. Thanks for listening and we hope to see you at Cracking the Cash Flow Code in the near future.

Topics: systematizing your business, making sale ready business, carl seville, sustainable business podcast, Sustainable Business, sk collaborative

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