How Equity Consulting Can 10X Business ROIs

0:00Yeah. And I think just to further set the context, this is really relevant to you. If you're in consulting, obviously, we'll kind of open up our playbook a little bit for how we go about delivering value.

0:30And that is incredibly important because, you know, when we first started talking with this particular client, I don't believe it was everybody on the leadership team completely agreed on the problem that was being solved for.

0:45Hey, everybody. Roland Frazier here and my business partner and good friend Ryan Dice, who is joining me for this business lunch, as he often does. And we are going to talk about some fun stuff today because we just did a consult together. So I don't know if you guys know, but we do. We don't like trading dollars for hours. And therefore, we're not in a consulting business, at least not a traditional consulting business. We do something called Consulting for Equity, where we go in and do typically a what we call a half day consult, which is four hours of time. And sometimes it goes goes to eight.

1:26It'll be a full day. But we go into a company and we help them with whatever things that they are trying to improve. And Ryan and I just did one, and it's typically fifty thousand dollars for us to come in and do this. And so it's a significant investment by the company. But we work with companies where it'd be kind of hard for us not to provide at least a five, if not ten times return on that. So, you know, we're looking for him to get, you know, a pretty significant 250 to half a million dollar minimum, minimum benefit from what we do. But think about like our ability to just come in and see things from a different perspective with all the experience and the portfolio companies and the consulting that we have done.

2:10It's not that hard to add that value. And I'm not saying that as a pitch or a brag. I'm saying, you know, we really have a pretty good opportunity to come in and get perspectives from a lot of people and a lot of different companies. So this is a company that we've known the founders. We've known it going through some significant changes and management changes. And we were referred in to this company to come back and basically help them see what they could do to boost sales. And sales had been falling off. And it's in a highly competitive industry. And the things that were working before, particularly during the pandemic, and I think you guys, a lot of you that are watching or listening might experience this too, is that things were kind of scary there at first, you know, end of 2019, going into 2020, then free money from governments, you know, everybody stuck at home, lots and lots of opportunity, lots of innovation, and pretty good years for most of the companies across every type of business that we know, even restaurants, even real estate agencies and things like that, that we have interest in did well during the pandemic.

3:29And now high interest rates, high inflation, election uncertainty, and no more free money from government is creating challenges for a lot of people. And it's translating into challenges for businesses. So that's kind of the context of the background. And we were asked to come in and basically take a look holistically and just say, how do we get from our current sales of X to, I think it was 4X, four times the current sales in order to hit goals that they wanted to hit. And so I'm going to let Ryan, so that I don't dominate this, I'm going to let Ryan talk a little bit about how we first assessed that with our initial conversations and then what we have done in terms of analyzing this so that you guys can see, because there's some very common things that they're having challenges with that I think will apply to almost everyone who is in our audience today.

4:28So Ryan, do you want to talk a little bit about the, like, we're basically saying, okay, where are you now? Where do you want to go? They told us. And I think let's talk about the first thing that we ask about looking into. Yeah. And I think just to further set the context, this is really relevant to you if you're in consulting, obviously. We'll kind of open up our playbook a little bit for how we go about our process and how we go about delivering value. It's also, I think, going to be incredibly valuable to you because we're going to be giving you the process if you're a business owner and if you want to go through a similar process yourself, because so much of this is about asking the right questions.

5:08And so, yeah, step one is exactly what you said, which is to figure out what exactly are we solving for? And that is incredibly important because, you know, when we first started talking with this particular client, I don't believe it was everybody on the leadership team completely agreed on the problem that was being solved for. And so some people are like, oh, we need to solve for, you know, growth and new customers. Others thought like that, oh, no, It's more of a specific marketing strategy issue. And all on the board. And I'll tell you, that is priority number one. Step number one is you have to get alignment on the problem to be solved.

5:41I have walked into too many meetings, whether it's a consulting session or even in our own executive groups, that we're dragging on and on and on and on and on without seeming to have any resolution and realize, like, crap, do we even know what we're solving for? And so that is the first thing. And yeah, when we're in there, sometimes it's crystal clear. Sometimes it will take the first hour of a consult. And I will tell you that sharpening the axe, that's that's time well spent. Where we typically go after that, that the next step is to talk to the relevant, you know, and usually when we're doing this, it's not just with the CEO and you don't want it to just be with the founder.

6:20You want to make sure you've got, yeah, a voice of all of the, you know, ideally everybody on the executive team. And the question that you asked that I love, and it's a simple question, but it's going in there and saying, what are the things that you think are working that you should we should keep doing and double down? And what are the things that are not working and we should stop doing? And so it really is one of those, you know, keep stop things. And it's just, and I like it because it's binary, but it also gives a tremendous amount of context into this. These are the things that everybody generally agrees are not working.

6:58These are the things that everybody agrees are working. That's instructive in and of itself. But the most interesting part is where there's disagreement. And that always comes up. Yeah, I like phrasing it as what are the things that you're doing that you're like, why the heck are we doing that? because I think that like, and that's from personal experiences in companies is like, why are we doing this? We, we know this doesn't work or this is dumb, or this is absolutely known to be inefficient. Why are we doing this? It seems wrong and getting in a safe environment where all the stakeholders are there and able to speak up so that they can say that like they can answer that question, because I think that's what's going on in a lot of people's heads.

7:44And a lot of consulting is just basically bringing out thoughts and communications that have been swept under the rug. Right. And so I think that, you know, what are we doing now? What are we doing now that's working? That seems like easy. But rather than saying what's not working, it's what are you actually frustrated that we're still doing? You know, so go ahead. And it's important during this part that you do create a safe space. And I think, you know, we typically are doing these virtually now at this point. And so we talk in the past, it'd be a full day meeting. And the problem with the full day meeting is by the end of the day, certainly by like two o 'clock, everybody's just zonked like their brains are mush.

8:24And so the second half of the day we found just really wasn't that valuable. So we shortened it to a half day. But even that there's something really powerful about having a solid two hours of just pure discovery and then being able to go away and think about it and the process. So that's usually what the first couple of hours is, is number one, let's get crystal clear on the problem that we're solving for. Let's pull everybody on the team and find out what's your stops and what are your starts. We should stop doing this. We should start doing this. I think we're doing this and we shouldn't be doing it.

8:56We're not doing this and we should start doing it. But during that period, it's important if you're not doing it in person. And if you are doing it virtually, that that you do have everybody on Zoom. And I get it. A lot of us have Zoom fatigue. Two hours on Zoom is not necessarily my favorite way to spend two hours. But it's really important while you're doing this that you're looking at the faces of everybody who's on the screen. Because from time to time, you'll hear somebody say, yeah, I think we should just, you know, stop doing this. I don't think it's working. And you'll see a face on the screen and they'll cringe a little bit.

9:27And you need to be looking for that. And it's why, you know, we love doing this in tandem. them. So oftentimes, you know, Roland, he's asking the question and I'm really trying to look at the faces and we're both taking notes. And so because we have two sets of eyes, you can notice those kinds of things. And when you do, and this is important, whether you're a consultant or an executive, you need to lean into it. You need to kind of enter the danger a little bit and just call the person out respectfully and say, Hey, you know, Bob, I noticed when, you know, Tom said this thing, you winced a little bit.

10:03You know, is that like they say something that maybe you don't totally agree with? Or is that just kind of indigestion? And that discussion and prompting it, that's where the gold is. And that's where the gold is if you're from, if you're on the outside coming in and it's absolutely where the gold is once, you know, if it's your own team. So that really is kind of the first two hours of discussion. I mean, that is diving into the discovery and the outcome. What we're trying to get from those first two hours is we've identified the problem to be solved. What is that overarching goal that is numerical that we know when we achieved it?

10:41Usually, it's going to be some type of lag measure. It's going to be an increase in revenue. It's going to be an increase in customers. It's going to be a decrease in churn. It's going to be an increase in company valuation. It's going to be an increase in efficiency, productivity, Maybe it's prepping for an exit because it's more of an exit advisory type thing. So we want to get clear on the goal. We want to get clear on kind of the state of play. How does everybody agree we should stop, we should start? And the outcome of that is to see like what are kind of the issues and challenges that are upstream that are actually causing us to not hit that goal?

11:19And kind of the question there is like what would need to be true that isn't true today? that if it were true, this goal would just magically be achieved. Ultimately, we're big believers in theory of constraints. We're big believers that if you're not getting what you want, it's because there is some type of throughput issue. Usually it's going to be on the customer client acquisition side. So on the growth sales and marketing side, on the fulfillment capacity side, or it could be on the innovation side. Like those are kind of the three value drivers in business. So we got to figure out, you know, where is that and distill it down into what are one to three issues and challenges that we feel like we can identify and address within a reasonable period of time.

12:06So that's kind of the outcome of that first one. I can I can go more into where we go from there. role. Anything that you would add to that discussion? No, I think that's exactly the way that we do it. And I think it's something like even if you want to self-consult, taking notes here and thinking about this would be good. And Ryan and I were brainstorming what to talk about at Founders Board. I think this is what I'd like to talk about, Ryan, is kind of going through this process and showing people how to do that. I think it could be helpful for them. and I think it's a great idea to a nice exercise.

12:41So then, um, so what we do basically is we start there and then we listened, uh, which is one of the hardest things. And again, one of the reasons that consultants seem brilliant is they just go in and they talk to everybody and they get everybody's take on what's working and what's not. And they listen and then they spit that back to the, to the team to say, these are the things that are going on that are out there. So what I heard was this. Yeah. What I heard you say was this. Is that accurate or did I mischaracterize it? That's yeah. During this first two hours, the one rule is you're not allowed to make a single recommendation or suggestion.

13:20period into story you do not make a single recommendation and this is tough i know for me because i like to think out loud i like to think in real time um but i'll tell you as a as a consultant and as a leader so like you said if you're if you're doing this internally self kind of self-consulting the worst thing that you can do is to make a recommendation before you have fully discovered, you know, all of these things. Um, yeah, I interrupted. I'm sorry. The next thing is I demonstrated what not to do. And we've learned it all. Ask us how we know. Um, the, uh, the, the next thing is, uh, as you are going, you can, you could do this on zoom and have Otter or Fathom or something, take notes for you or designate a person to do this.

14:07Um, we, we generally do both. And as you are hearing what people are saying, you want to ideally write down quotes, you know, little snippets and word blurbs of what they're thinking so that when you start to process so that after you've gathered this information during this first time, and that's really most of what happens during that first two hours. It's just, you know, getting an inventory of the issues and then getting on the same page as to where we want to go. So what we then do is basically gather all of those thoughts and then send them back to the client to confirm that this is what they heard also.

14:57Because it might be, no, I didn't, nobody really talked about it. Well, actually four people did, you know? And that I think can be very helpful in just getting everybody literally on the same page. You know, if you have a page with all the thoughts, that's very helpful. So doing that, the other thing that we'll sometimes do is take all of those and throw them into a program. I can't remember the name of it. That'll give us a thought bubble that will basically say, these are the things that kept coming up. You know, the bigger words are the things that came up the most. And that can sometimes help if there's difficulty in figuring out what do we want to approach.

15:32So based on all of that, what we as consultants do, Ryan and I will then say, okay, so this is, these are all the things those people said. What do you see as the big issues? You know, okay, yeah, I agree. Or how about this one too? Or is that really, and we go through that so that we can then give back to them a list of, here's a lot of the different quotes of what people said. And here are the, what we believe are the major issues to be solved for to achieve the goal that you stated that you wanted to achieve. Does that sound right? Yeah. And what we want to do in what we deliver to the client.

16:13So the first kind of session, first two hours is the discovery. It's the learning. It's the listening. It's the making sure that you're not offering any suggestions or recommendations. But at some point, you do need to offer some suggestions and recommendations. That really is kind of the next phase. And like Roland said, we'll go back and forth. We'll share our own notes, our own ideas. Where do we agree? Usually we're pretty much on the same page. We're kind of hearing the same thing. Sometimes it's like, oh, no, that's a good point. But what we want to do next is get clear on what are the big issues or challenges that we know for a fact we need to overcome.

16:45Those upstream issues or challenges that are presenting the company that if they were overcome, if these bottlenecks were addressed, then they would achieve the result that they want. And like I said, sometimes it's one big thing. Sometimes it's two. Sometimes it's three. We really don't want to get it into like five, six, seven, a half a dozen of these things. We really want it to get down to kind of like one to three major issues and challenges. So we'll get clear on that. We'll state that. And then we go through a process called 131. And 131 is not something that we invented. I think it was created by somebody at IBM way back in the day.

17:18But it is a way of kind of showing your work and how you're thinking through an issue. And so what 131 stands for is one issue or challenge, three possible solutions, and then one recommended solution out of those three. So what it shows is, number one, this is the issue or challenge that we're solving for. These are three possible ways that one could solve for this solution. And very often, those three possible solutions are coming from that previous discussion. So we might say, OK, so it turns out that there is a lack of clarity around who your ideal customer is, who the ideal client is. What I heard is, you know, it could be A, it could be B, it could be C.

17:59So those are the three possible solutions. Now, you might also want to mention we also considered these. But when you come up with three possible solutions, you're you're again, you're showing your work. You're showing that you've done some research. You're showing what you've considered. But then you're saying this is the one that we think it should be. And here's why. So the one issue or challenge, the three possible solutions, and then ultimately of the three possible solutions. And it could be again, it could be four, it could be five. What is the one your one recommended solution? And so we'll go through this one through one process for all of the issues and challenges.

18:32And we'll put all this, you know, along with kind of a list of start stop items, kind of a list, you know, the stated goal. We'll put all this into a report of findings. And then once we kind of have what we think is a good one, you know, list of these one three ones, that's when we'll say, OK, what do we believe are some overarching action steps that one could take if they accepted kind of these recommendations? And then we'll kind of just put together an action list. So what you have there is a statement of the goal that everybody agrees to, a statement of the general state of play. You know, like Roland said, like here's some of the quotes that people said.

19:10This is where everybody generally agrees that we are now. The three issues, you know, one to three major issues, challenge bottlenecks that need to be addressed. And then a breakdown, the one through one of how we would address each of those challenges. And then a list of action steps can get into what we then do with that document and how we present it. them, but anything you would add or say to kind of that piece, Roland? Excuse me. No, I think that's basically it. The key is not to have too many issues, not to let any one person dominate. One of the best things about not letting somebody make suggestions and recommendations is if there is a dominant personality as there frequently is.

19:58And very often it's the founder or the CEO and also someone who has an authority position that can cloud or color the responses that you're going to get from the other people. So that's, I think, in addition to, hey, let's not make conclusions or recommendations until we understand the problem and we understand all the data that applies to the problem, right? then that's the first thing so that we don't, we have a complete understanding of the issues, but also let's not color the input by having, if you notice what most consultants do is they're like, okay, CEO person that hired me, I'm going to go and leave you and walk the floor and talk to everybody and find out what they think.

20:42And the reason that those are typically done that way is so that there isn't that color. So we, we try not to do that because we're not walking floors and things like that. We were trying to get the executive team in, but the way that we keep that dominant personality or even that, that fixed idea from happening is to say, let's just have discussion. Let's just free form this for a little bit and get everybody's thoughts and opinions. So, and we go through that like each person. So if there's six people on, I think there were six people on the meeting that we did. Um, and it's basically just going around and asking each of them to do that.

21:20So that's a kind of a focused, brief conversation with each of the people that are, you know, that you've decided to be a stakeholder in the consult. And then we're left now with this, with this ability to have recommendations from the one three ones that we can prioritize, like we can discuss and prioritize. Go ahead, Ryan. And, and, and I think the point is, when it comes to the recommendations that we make back to the client after that initial meeting, because you show the work and because it's positioned as these are our ideas and we want to show you our thought process, because if you feel like that you don't like this idea, then there was likely a failure in the thought process.

22:01So let's have a discussion around what we missed, what were some failed assumptions that we made, some information we didn't have. We're not presenting this as a, this is absolutely what you should do. We're presenting the initial report of findings as this is what we believe based on everything we've heard, but this is a kickoff point for the next discussion topic. And this is why we like breaking up the first two hours of listening, us being able to process, us being able to submit back, and then another hour and a half to two hours of discussion around these ideas. But the way that we submit the report of findings is we don't schedule another meeting and say, hey, everybody, let's discuss this.

22:38For one, it's kind of a waste of everybody's time. But two, what you then get is people's response in real time, which isn't always the ideal response. Like there, now you're going to get a response based on emotion. You might get a response, um, that, that could be defensive in nature because maybe a recommendation is that they make a significant change to their sales motion. Well, the sales manager is probably going to have sales leaders probably have problems with that. Right. And if you present it in real time in a group, there's a really good chance that you spend a lot more time in that kind of next follow-up meeting, trying to unwind to all of the emotional garbage before you get to the issue.

23:18So what we do is we produce the report findings. We share the report findings with the client, and then we'll produce a loom video where we're walking through it. And this could be a 30, 40 minute loom video. That's fine. They can watch it on 2x speed if they want to. And it can be distributed to everybody who needs to see it in the meeting. And then they can consume it. They can internalize it. They can have whatever emotional stuff they want to have. And we simply say, let us know if there's any questions, if there's any concerns before we hop on the next meeting, let us know what those are.

23:46If you fundamentally disagree with anything, you know, let us know leading up to the meeting, because when we get to the meeting, we kind of want to discuss around the edges of this and, you know, get into some of the nuanced detail and get into next steps. So it does provide that opportunity for people to receive it without also having feeling the need to immediately deliver an emotional response. And that was a huge breakthrough for us. And I think it's important, again, even if you're doing this internally as a team. This is why memos and things like that still work and are still important.

24:16To be able to say, in light of all these things, here's what I think we should do, and here's how I came to this conclusion, which is what the 131 gets you. This is how I came to this conclusion. And now what we have is a starting point, a jumping off point for, okay, what are we going to do next? And so anything you'd add to that, And then we can talk about how the second half of the meeting goes. No, no, I think that's it. I have no idea why I can't get my throat clear. So sorry for all the humming and humming. But so in this case, the issue was we're not getting the level of sales that we need.

24:57So the issue that you decide is the important issue, like this is something that we need to fix. Um, well, if you're not getting enough sales, then it's either a traffic problem, a quality of, so traffic problem could be the number of leads, or it could be the quality of the leads. And then the, or it could be a conversion problem that we're not able to take the traffic that we get and convert. And in this case, um, it appeared that the, um, the issue was that it's a very, very saturated market. And so there's not enough traffic that is affordable and the traffic is not converting at as high a rate as it needs to hit the goal.

25:47So it's kind of looking at both of those things, which isn't uncommon. And so one of the first places that we ask questions then, and we can extrapolate kind of the how from this and let me know if I miss anything, Ryan. But I mean, we can extrapolate this into a more general, how do you approach this? But I think that some of the questions are obvious. So we need more sales. Great. What do you need for sales? We need more customers or clients. Okay, great. How do customers happen? Well, currently, they happen because we run ads to these sources. We have some affiliate traffic, and we have some organic SEO type traffic coming.