In this episode, Josh talks with Todd Palmer from Extraordinary Advisors. They discuss getting unstuck around imposter syndrome, fear and self-doubt.
Todd Palmer is an executive coach, keynote speaker, renowned thought leader, author, and CEO who is committed to helping business owners tackle their obstacles and clear their path to success.
As an entrepreneur and active CEO, Todd knows the struggles business owners face regarding people, cash, strategy & execution. He took his company from being $600,000 in debt, to making the INC 5,000 as one of America’s fastest-growing companies (an astounding 6 times!).
Todd is also the author of the #1 International Amazon Best Seller- From Suck to Success: A Guide for Extraordinary Entrepreneurship.
In today's episode you will learn about:
4 Ways for Entrepreneurs to Conquer Vulnerability and Rebuild
Getting unstuck around imposter syndrome, fear and self doubt
How To Be Human: Transparent, Authentic and Vulnerable
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 emergency strikes, fully fund a growth program, and fund your retirement program. When you do this, you will 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 Patrick: Hey, how are you today? This is Josh Patrick and you're at Cracking the Cash Flow Code. Today, my guest today is Todd Palmer. And Todd is from Extraordinary Advisors. He's an interesting guy. And he signed up for the podcast. I was having a good time reading about him and all the stuff he does. And I'm sure he'll talk about a bunch himself. So, instead of me wandering on about talking about somebody I've just met, we’ll let Todd come on and he'll talk about himself.
Hey, Todd. How are you today?
Todd: I am Excellent. Thank you so much for having me on the show today. I'm happy to be here.
Josh: Oh, it's my pleasure. I always enjoy these things.
One of the things I was really excited about having you on about is almost nobody in the business world ever uses this word. And it's a word, I think, which is really important. And when I say it, most business owners will go hide under their desk and say, “I can't do that.” And that word is vulnerability.
Todd: Ah, yes.
Well, it's a big part of life as well as a big part of being an entrepreneur. And I found that, when I wasn't vulnerable, I was at my most risk. When I was able, as a CEO for, gosh, almost 25 years, to be vulnerable, that's where the best ideas came from, the best team environment was created, and the most psychological safety was achieved.
Josh: It also shows the most trust.
Todd: Oh, for sure. I found it was more of trusting the room, trusting others, trusting myself. For me, the layers of trust is around being vulnerable. That's why I put it in the book. I call it ATV - authenticity, transparency, and vulnerability. And when you put that into a recipe, when dealing with leaders, when dealing with boards, when dealing with everybody in your life, family included, I find that much more rich and generative conversations take place versus wearing lots of masks which is usually the opposite of being vulnerable.
Josh: Yeah. Well, the truth is you cannot be authentic unless you're vulnerable because you have to talk about your warts, if you want to be seen as being authentic. Otherwise, you're seen as a fake.
Todd: Oh, absolutely. It's so interesting that you said that. I do a lot of work with forums. I work with a group called EO, the Entrepreneurs Organization. I go and work with their forums. And I have a motto which I talk about the worst day of my life, within the first 10 minutes, to show that my messes become my message and to set the tone in the room versus saying, “Let's have a safe room. Let's have an authentic, transparent, vulnerable room.” Let's demonstrate that. Let's show you what it's like to be vulnerable.” And like you said, it's you're really talking about a lot of tough things. And I find it's really interesting when someone typically steps out first and is vulnerable, then a lot of other people feel a sense of relief, like “Oh, I can show up as my true authentic self as well.”
Josh: I tell people, we often advise folks to do customer advisory boards. And one of the things I tell people, when they're putting their board together, is you have to have a curmudgeon in your board. because nobody's going to tell the truth until somebody raises their hand and says, “You know, as much as I like you, there are some things I really would like to see you do better.” And once somebody says that, it opens up the room. Same thing with peer‑to‑peer forums which you're doing with EO.
Todd: Sure, absolutely.
And, you know, we use an exercise called the Johari Window exercise where it's got the four quadrants. In the one quadrant, there's the parts of me that I know that you know. The second parts are the parts of me I know that you don't know. Then there's parts of me that I don't know and you don't know. But the most valuable part I find, as a facilitator and as a coach, is the parts of me that I see that you don't see and how do we shine a light on that so that you can have that opportunity for growth? Because when people have those breakthrough moments, those light bulb moments, especially, where I'm being authentic and demonstrating vulnerability, then it shifts the room. The energy in the room literally changes.
Josh: Yeah. I've done a bunch of speaking as you have over your lifetime. And about four or five years ago, I used to do this short two‑minute introduction about where I came from. And it was mostly the highlights or almost none of the lowlights that were there. So, I decided, I'm going to take seven minutes out of my talk and I'm going to go a deep dive into the lowlights of my path to where I got because the truth is none of us who run our own businesses and build them past 50 employees do it without making tons of mistakes along the way. And most of those mistakes were really painful at the time they happened. Years, and years, years later, they're not as painful and sometimes even funny but--
Todd: Yeah. I can completely relate. I started off my book, From Suck to Success, talking about the worst day of my life. September 9, 2006, I was $600,000 in debt. I was two months away from running out of all of my money. The bank had called the line. They were going to take my house. My son and I were about to be homeless. And I was suffering from massive imposter syndrome. My head was telling me how much I sucked.
I had 600,000 members to that board, so there was a lot of noise going on. I finally got out of my way. I hired a coach and got help. And I find that when people like you and I, we go out and talk about our lowlights, the tough stuff. And then, if you show how you can pivot into having a successful outcome, it removes that idea, I think, for people that “it's easy for everybody else, but it's not easy for me.” Or it's “everyone else's an overnight success, but there's something wrong with me.” Or the elevators to success is from floor one to floor 100 is just a straight line versus this looping corkscrew of misery that folks like you and I've been through.
So, when I do tell them the happy ending of the story, that we paid off all the debt in eight years and made the Inc 5000 as one of America's fastest growing companies, crazy six times, they know that it wasn't just an overnight success story. It was about I had to show up as a leader differently because I'm the one who got us into debt. I'm the one who had to get us out of debt and change the team, change the culture, change the process. Change, change, change, change, change, starting with me.
Josh: Yeah. $600,000 sounds like such a paltry amount because I was at $1.8 million.
Todd: Well, it's all proportional.
Josh: Really, it depends on the industry you're in and the business you're in. I was in the vending business where machine cost $2800 and that was years ago. And we were supposedly very profitable and growing like crazy. Except, we were spending all our money, all we could borrow, and all we couldn't borrow on credit to buy more machines.
Todd: Oh, wow.
Josh: And on top of that, my bank got red lined by the Comptroller of the Currency. So, they called me. And there was a book by Tom Wolfe called A Man in Full which is a great book. I highly people recommend reading it. The first 60 pages are a workout committee meeting. And it was a carbon copy of what I went through with my bank, not a good place to be.
Todd: No. It's not a good place to be.
We were at $600,000 in debt on about a $2 million run rate, but we were in the staffing space, so margins were razor thin. I didn't, as the CEO, have a good framework to price things appropriately. So, we were running razor thin. Two clients of ours went belly up on us. So, of the $600,000, I think it was like $245,000, give or take, was immediately discharged - completely uncollectible.
And if you understand anything about the staffing space, 85% of your invoice to a customer is your payroll and your burden which is paid to other parties and to the employees. So, your margins are super, super thin. We didn't have enough cushion built in there. And when you look at $600,000 in debt on a $2.5‑million dollar run rate when, really, your profits on that are about $300,000, you're incredibly upside down relatively quickly.
Josh: Yeah. I would love to have a $300,000 profit on $2.5 million in sales. But the truth is-- let's talk about that for a second, because I think this is something that's really important, that most private business owners, especially blue‑collar private business owners never test which is pricing capacity. When did you learn about that?
Todd: So, I learned about it from my coach. I hired a guy named Greg. He ran a $600‑million staffing company. Before he came to work with me, he retired. They'd sold that - scaled it and sold it.
And he talks about it in the book. He was nice enough to contribute a chapter about margin magic. And he talked about how pennies really do add up in these really razor thin margin businesses. So, what we did for example, is we were $600,000 in debt. We had stopped the hemorrhage because, essentially on September 9th, I fired everybody. Started over. Re‑tooled the team. Hired for culture, not for resume. DNA over resume mindset.
And as we're going through the pricing model, we started hunting for nickels and dimes. And we figured out that, if we could find that inflection where there's a greater demand and a diminished supply of human capital, then what that will allow us to do is we can actually charge more for what we do and get paid faster which, ultimately, was how it worked out. But we took a look at every single line item on the P&L and “Where could we cut? Where could we re‑renegotiate? Where could we peel 20 cents off of every dollar there?” Figured that out.
Then, we went to the client and the employee side of things and where can we make up 20 cents there? Essentially, treated 20 cents on one side of the ledger and 20 cents on the other to come down to 40 cents. You’d think, “40 cents, that's not a lot of savings.” Well, we had 600 employees. We had all this payroll going out the door. 20 cents added up relatively quickly to scale. And we got paid faster, so we didn't have to pay the bank as much. So, we peeled a lot more than 20 cents off of the financing note.
Ultimately, it was always hunting for pennies and nickels versus-- I think a lot of entrepreneurs, I know I was, looking for that ability to come in with a hatchet. Clear out a huge piece of-- I added 15% to the bottom line because I made this one decision. For us, at least, it was a lot of small decisions - looking for pennies, peeling money back, using the money we found wisely and being able to pay off the note we had created.
Josh: We call that fail fast, fail cheap.
Todd: I like that.
Josh: Which is the improvements you’re going to make in your business, if you're doing some sort of a process improvement program. And everybody who's listening, you need to have your process improvement program. It might be Lean. It might be Agile. It might be the Theory of Constraints. It might just go back to old Deming from 1984 and his 14 points. But you need to have a process improvement program in your company. And that process improvement program is nickels, dimes, and pennies.
Josh: Mostly nickels and dimes, not pennies. But it's not dollars, I'll tell you that.
Todd: No. We didn't find dollars either. What we found also, for us anyways, and I think that when I coach my clients, I often help them try to figure out, “What is your unique niche? What do you do better than anyone else in the world? What is your ikegai? How can someone pay for it?”
So, for us, we doubled down on skilled trades labor staffing in Detroit, Chicago, and Houston. And in those three markets, we had three definable niches that we went after and we decided to own, not the opportunities from the client’s perspective, but we decided to own the supply chain. We decided that we're going to get as many candidates during the recession - this is ’07, ’08, ’09, that we can, that will help us fill the need when it comes back because we did survey questions. The survey question of the client was, “When the economy comes back - because we believe it will, what was the first position you're going to hire for?” And we kept hearing the same things over and over again in those three cities. In Houston, oil. “If you can find me an underwater welder, we’ll pay whatever it costs.” In Detroit, it was, “I need CNC mazak machinists to do high‑end non‑automotive parts.” And in Chicago, it was around food manufacturing. And it was all these high skilled people.
So, as we collected those resumes, we figured, “How do we pivot them back in the marketplace?” So, we decided that, for us, we want to own a very razor thin niche. We want to be the number one player in that niche. Own the supply chain - not the demand side and be able to charge more and get paid faster so that we can be where we should be versus being seen as a commodity provider.
Josh: Cool. I love companies that go to really small niches. When you have a really small niche, it's easy to own the market.
Josh: When you have a big niche, unless you're Microsoft and you have brains of Bill Gates and Paul Allen, you're not owning any mark. In fact, you're probably going to get eaten then because you're a minnow with a bunch of sharks running around you.
One of the reasons I really like vertical software company. They almost don't have any competition and they get to have ridiculous margins because it's such a small niche. The big guys aren't interested.
Todd: Yeah. We're the same situation. We were in a very tight niche. We took our margins.
We talk about it in the book. I think we took it from like 6% or 7% to 26% in less than two years because we owned the niche. We had the supply. So, when a client says, “Well, I don't want to pay your fee. We really like Josh in the interview, but we just can't afford him.” Like, “That's okay. We've got three other companies Josh is interviewing with this week. So, it's fine if you don't want him.” “Wait a minute. You’ve got three other companies?” “Oh, yeah, because our job is to own the candidate like a Hollywood or a sports agent. How many offers can I get them?” That became our KPI, our metric, so that we were able to own that really small vertical.
Like, there’s a company we talk about in the book, they own a vertical of-- they were in medical staffing. Then, they doubled down on medical staffing for schools. And then, they doubled down on medical staffing within schools for very specific two skill sets. And they owned the marketplace, because it owned the candidate supply back into those schools. Schools, by law, have to have these people on staff. Essentially, the schools had one choice for a provider. And price became not as much of an issue versus being seen as competing against the big behemoths in any space.
Josh: About 10 minutes ago, you mentioned something I wanted to make sure we came back to before we ran out of time which is hiring for fit or culture/values versus hiring for skills. Talk about your metamorphosis with that because my belief, of the four areas that you need to pay attention to your business, values is number one on the list because if you don't have values-led, you don't have a company worth anything. So, talk about your journey that happened with that.
Todd: Oh, great question. I agree with you 100%. Values and culture beat strategy every day. And for us, we had to really figure out, “As the leader, what are my core values?” We figured out that the mistake I made was I was only hiring people prior.
Josh: By the way, I want to tell you something. You just said the key. “What are my core values as the owner.” This is not a group activity.
Josh: So, continue. Sorry.
Todd: Well, at least, at that stage, I mean, there-- and fired everybody. There was a group of one.
Todd: There's only one person getting a vote.
And so, what we figured out was, I could train someone to be a good recruiter. And, actually, we ended up hiring a third party because they were better at training people than I was. But we couldn't train people to be good people so we came up with a model called “Hire for DNA, not for resume.” And in that process, we were able to flesh out and identify people who matched our core values as an organization. And every one of our core values had a story attached to it. Some of them, in the beginning, were my stories. Over the course of time, it became other people and their stories because we added into the team and started collecting stories. So that in the interview, the interview became very much a conversation versus “Here's your resume. Here's your background. How are you going to fit our organization?” That's part of it.
But when we started telling people our stories-- so the first story I tell is the 2006 where we're firing everybody and being in debt. And if people are still in their chair and they hadn't gotten up and ran into the corner, screaming, and hollering, then I knew I had at least somebody to talk to, pivoted that through the course of time so that, when we were out recruiting people, they knew they're going to come work for.
Second piece I thought was so important is I, as the CEO, had to be willing to hire and fire by their core values that I had put out there and that I had established, not only for the internal staff we had but also for clients.
A coaching client I was working with, and their core value was honesty, pretty good core value to have. First night, I'm in town. I meet with the leadership team. During the day, we lay out all of their plans. Go to dinner that night with the CEO and his wife. Have a great time. Next day, we're doing a wrap‑up session. He goes, “Hey, let me take you to the airport. But first, let's stop off and get some lunch.” Perfect.
At lunch, I met somebody who wasn't his wife, I believe it was his girlfriend. And we're driving to the airport and I say, “Hey, I just want to let you know, your core value is honesty. It’s the first thing and you bang that drum all the way throughout our meetings. What you just demonstrated in your personal life will show up in your business.” And I just choose not to be a part of that. I'm not going to coach somebody whose value were out of line with mine but, two, who's basically showing up two‑faced. I can't do that.” So, I fired the client. That's when I know. I'm doubling down on my core values or, as a company, we're doubling down on our core values when we can hire and fire by.
Josh: Yeah, it sort of goes back to vulnerability and authenticity. And it's okay to have a core value be an aspirational value as long as you say it, but you have to say it. My, my core, core, core, core value is personal responsibility. When I started down that road, I was not personally responsible. I would blame others and I would justify my way through life. And here I was saying how wonderful core value of personal responsibility was and all my employees were snickering behind my back and call me a BS‑er. I mean, that's what you get when you don't tell the truth about this. Had I said, “Personal responsibility is something that's really important. I am going to work really hard to make myself personally responsible. I want you to help me with that but we're not there yet.” As a company or me, now, that's a value I can use on a daily basis as long as I'm honest about where I am in the journey.
Todd: For sure.
There is a space for aspirational values because we're human beings, we're not done yet. We're always evolving. We're always growing. Inside‑out, leadership is an evolutionary experience. So, if you can be aspirational, you can state that.
And I love what you said, like, “Can you help me get there?” If I could get there by myself, I would already be there. I need a little help. So, that makes a [inaudible 00:18:33] sense.
Josh: I'm reading Dan Sullivan. I forgot who this ghost writer of his is. He's written his book now called Who Not How. And I ran across a guy named Brian Mayne, probably 12 or 13 years ago who does a thing called goal mapping. And, in there, he started talking about who. So, when I started doing my planning process, I replaced the how with the who and let the who's figure out the how. And the who's are the people you're going to bring on your team to help you because none of us, and I mean none of us, get to where we want to go in life by ourselves.
Todd: Couldn't agree with you more. I always tell people that problems in business are really simple. It's people.
Josh: Yeah. They're not easy, but they're simple.
Todd: Yeah. Every problem in business is people. I don't have enough money. Well, someone in the company didn't spend the money correctly or, like me, they spent it foolishly. Then, they’d show up to the bank meeting. “I have issue with strategy.” Well, which person is responsible for strategy? Crazy as it sounds, usually, it flows right to the top. And the bottleneck is the top. And the bottleneck’s usually the CEO. And I tell the CEO. He says, “Really?” So, your problem’s simple, it's people.
And, as the CEO, you only have two jobs. You only have two jobs. One, you remove bottlenecks for everything in the company, everything in the organization, everything in your life. Remove the bottlenecks. Remove the bottlenecks. Remove the bottlenecks. Number two, make it easy for customers to work with you and make it easy for employees to work for you. You remove bottlenecks and you make it easy for both those parties, life is going to be a dream. It's really hard work.
Josh: Yeah. what I find is what it takes to create a sustainable or a sale‑ready company is really pretty simple but it's really hard to do it. You have to work your rear end off. I can tell you, in 10 minutes, what it takes to create an economically sustainable business.
Josh: You're now going to work the rest of your life to get there.
Todd: Absolutely. It's one of those situations where there's this myth of being an entrepreneur. This myth being a CEO. The reality is, it’s really hard work. Only less than 5% of all companies in the United States ever make it to 1 million or more in revenue. 80% of businesses that start--
Josh: I don't think it's that high, by the way.
Todd: Yeah. Well, I was told it was 4.3%.
Josh: I think it's 28 million businesses in the United States. Only 300,000 do more than $5 million in sales.
Todd: Ah, okay.
Josh: So, it's a really small number once you start getting up there.
Todd: Yeah. And then, you throw into all the other parts of life that come into play. Being an entrepreneur is-- it’s an old quote but it still does make sense. “Being an entrepreneur is that the decision we make to work 80 hours a week for ourselves versus working 40 hours a week for somebody else.”
Todd, unfortunately, we are out of time. So, what's the title of your book? And where can people find it? And where can they find you?
Todd: Yeah. So, the easiest place to find me as at my website, extraordinaryadvisors.com, or my book website fromsucktosuccess.com. I'm very fortunate. It's been an international bestseller. If you go to either website, I'm happy to give anybody who's listening, a chapter of the book for free. So, just remember fromsucktosuccess or extraordinaryadvisors.com. Go there. And should anybody want to have a conversation with me, I'm giving away 30 minutes of my time for free to talk about helping anyone else go from suck a success.
Josh: Cool. I love that.
I have two things I’d like you to do. First, please, please, please, please, please-- and I could go pleasing on for another three or four minutes, but I'm not, I would love to have you go to wherever you're listening to this podcast and please give us an honest rating or review. If you hate us, and I hope you don't, you can say you hate us. And I hope you love us and tell us you love us. Either one is a review. And I want to hear what you're thinking about the show.
The second thing is, those who have been listening to show for a while know I am a huge fan of Donald Miller’s StoryBrand. And, today, when we're recording this, which is April 12-- we are about to launch our second website using the StoryBrand framework which is our sustainable business site for people like you who are listening to this podcast. I'd love to have you take a look at it and let me know what you think. It's www.sustainablebusiness.co. It’s not .com, it’s .co. That’s www.sustainablebusiness.co. And let me know what you think.
Hey, this is Josh Patrick. We're with Todd Palmer. You're at Cracking the Cash Flow Code. Thanks a lot for stopping by. I hope to see you back here really soon.
Narrator: You've been listening to 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 firstname.lastname@example.org.
Thanks for listening and we hope to see you at Cracking the Cash Flow Code in the near future.