Business Scaling Expert with Brandon Dawson

0:01Boom! Shake the room, Fire Nation. JLD here and welcome to Entrepreneurs on Fire, brought to you by High Level Level, the all-in-one sales and marketing. platform. Today, we'll be breaking down the business scaling experts. To drop these value bombs, I brought Brandon Dawson into EO Fire Studios. Brandon is one of the youngest to ring the New York Stock Exchange bell. He sold his first business at$29 for$38.2 million. He sold his last business for$151 million. He's a business scaling expert and precision health optimizer. And today, we talk about adding value without investors, tools for growth, the exit strategy, success qualities, and oh, so much more.

0:37And a big thank you for sponsoring today's episode goes to Brandon and our sponsors. Whether your company earns millions or even hundreds of millions, NetSuite helps you stay ahead of the pack. Right now, get the business guide, Demystifying AI for free at netsuite.com slash fire. The guide is free to you at netsuite.com slash fire. Are you ready for the ultimate all-in-one platform for entrepreneurs, marketers, coaches, and agencies? Build funnels, automate follow-ups, manage clients, and even white label your own software, say hello to our featured partner, High Level, and visit highlevelfire.com to start your free trial today.

1:20Brandon, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. Well, that it's not available to everybody. Like, I disagree that anybody that chooses to become successful can become successful. It doesn't matter where you're at in life. It doesn't matter what country you're from. It just matters what you choose and what position you choose to put yourself in. So, you know, a lot of people will say being successful, you have to be lucky. Being successful, you have to be willing to sacrifice and give up certain things. And I just disagree with that.

1:58Being successful is simply a choice to take action, to do something that you don't know how to do. develop yourself, never quit until you exceed at it, and then you're successful. So I think taking action with intent is a choice, and doing nothing and excusing that you can't is also a choice. Brandon, you are a business scaling expert. In my audience, they are entrepreneurs, they're small business owners, and they're always asking, how can we grow our business, not someday, but starting right now? What would you say to them? I'd say it's a great question. And I'm glad that they're asking that question.

2:38Growing a business, though, starts with flow. You got to create flow. So the first question is, how do I create more flow? Flow is attention units. It's whoever your business serves, whatever products or services you sell, how do you grab somebody's attention to decide to do more business with you. And what we find with thousands and thousands of business owners is when they don't have enough flow, they blame their marketing companies. They blame the social media channels for not doing a better job. But the fact is they can't take their own phone out and they can't present in 30 seconds the seven promotes.

3:18Promote who you are, promote what you do, promote why you do it, promote your value prop, promote why somebody would want to join your team, and promote people to take over your roles and responsibilities to create an ambition within your own organization and then teach all the people in your organization to do that. So when we break businesses down and interview employees and we ask those employees, how do you promote this business in this marketplace? Most employees are like, we're not equipped. We don't really promote it. In fact, Gallup poll says two thirds of employees are disengaged or actively disengaged.

3:46So if you've got a business with 10 employees, six are not promoting you in the marketplace. The bottom 20 % who are actively disengaged are actually promoting how bad it is working for you. So if you can't master you doing your own promotion and you can't master your team doing promotion, how can you possibly create more flow by asking a third party to represent you within the marketplace? So I tell business owners, if you want more clients, go out and recruit customers, recruit employees, and teach your customers and your employees to go out and promote you into the marketplace and you will have a thriving business.

4:22It's the only way to do it. It's how every business owner started their business. They didn't do it by setting up fancy funnels and fancy websites and creating great landing pages and running multi-channel, multi-omni directional marketing. They did it by telling somebody, I'm in business. I chose to do this. This is why I do it. And here's why I'm better than somebody else. And then when they get busy doing the business, all that promotion goes away and they hand it off to a third party and get frustrated. The seven promotes, I mean, And Fire Nation, how fire is that? We could literally saw the interview right now and those value bombs alone would be all that you need to go out and start growing your business today.

5:00Let's talk about adding value without investors. I mean, you say outside investors, forget about them. How can entrepreneurs add not just value, but massive value to their company without ever giving up control? Yeah, so first and foremost, I don't say forget about outside investors. I say that when you're an emerging business, and that's a business that's from startup to at least$25,$50 million, bringing outside investors in dilutes your equity and 97 % of all businesses fail. So it's highly likely if you do a friend and family round, you're going to end up sitting across them at Thanksgiving and dinner after you've lost their money and they're going to be ticked off at you.

5:42So I'm not telling you, you shouldn't take outside investment. If you're a responsible business owner with a track record of success and you need outside investment to scale up bigger, better, faster, then that's fine. But if you're a novice business owner, somebody who's never actually built a business, somebody who doesn't understand how to get a business to actually function and work and make money, then outside investment ends up being wasted and you end up with a reputation issue. And I think we've seen some of that with even some of these influencers that talk about how they can scale businesses, go out and raise investor money and then lose it.

6:14So it's just not a good thing to have hanging on you. So what's the alternative? My expertise is in starting businesses, scaling businesses with no outside funding and no debt. Because if you're disciplined in the approach of building and scaling your business, the business should be forced to make money. There's no reason to have a business as a small business owner if it's not making money. The idea that you can use somebody else's money to accomplish your dreams and goals when you have no experience or no idea how to do it, 97 % of them fail, is problematic and it's a little naive. So I tell business owners, you're better to go slower.

6:49You're better to learn the principles of forcing your business to monetize its own success. And you're better to learn how to do that until you become an expert at it and you've built proper cash reserves. And then you have those cash reserves to invest in your business because then you've formed the discipline to have a business self-fund. And I have a lot of friends that went to the market early to raise capital. And then when they sell their business, they grow it to 100 or 200 million, but they only own 3 % or 5 % or 8%. And that's what I did the first time around. And I vowed I'd never do it again.

7:23So I've scaled three businesses over 100 million in value and in revenue and taken hundreds of millions of dollars off the table with no outside capital, no debt, by forcing the businesses to do the job of the business. The business only has two reasons to exist. To give the life to the courageous founder who chose to start it, and it's going to be super hard to make it work, so they deserve to have a great life. The business's job is to give that life to that founder. The business's job is also to give that life to the people the founder needs to help them build a great business. And if the business isn't doing its job for those two constituents, those two groups of people, then the business is not going to succeed.

8:05And because it's already hard to start, grow, optimize, scale a business using friends, family, and outside investment money with the additional pressure of losing money while you're trying to do that and having people be upset with you, it's not a condition for success. And it's not the way I want my friends to have to live their life because I did it the first time around and it was a horrible way to live. So if you're going to go through the pain anyway, go through the pain of forcing your business to do it right. And then you'll have a better quality of life. You'll have a bigger net worth.

8:39And you won't be sitting there at Thanksgiving and Christmas with your family looking at you like you're a dumbass because you lost all their money. Brandon, let's talk about tools for growth because tools can make or they can break momentum. And we all know momentum is really hard to achieve. You don't want to break it once you've got it. So what are the most valuable game-changing tools that you've seen entrepreneurs use to ignite real business growth? It's a great question. You know, if you break businesses down in sizes, so we have, I created the breakpoints. So 0 to 3 million, 3 to 8 million, 8 to 15, 15, 25, 25, 45, 45, 75, 75, 125, and then there's four additional breakpoints to a billion.

9:20So if you think about how businesses start, the average business, 98.2 % of businesses under$100 million are$3 million or less with an average of 12 employees or less. So it's a very small segment of people that bust through the$3 million. So I'm going to focus first on the$3 million. If you have 10 or 12 people, the business actually is not that difficult because the person that started the business is a technician most likely. They're really good at what they do and they've built a brand and they've built a small community supporting them in the effort of building that brand in their market.

9:52Well, how do you get your people more efficient and more effective? 83 % of those businesses do not use reasonable P &Ls if they use profit and loss statements at all and they have no idea what's going on in their business. So the first tool is to be able to make sure that you've got good financials that you're looking at so you can make good decisions. And if you get good financials, you can even upload those into an AI tool, any of these things, gonk. And basically at that point, you can ask it, based on my industry, how are my financials? Like, how am I doing? What recommendations would you have for me?

10:30And so having simple AI tools. But see, in order to have an AI tool that's helpful, you got to be able to have the information to put into it. Or you could simply go right now, depending on your market, and you can ask, just go to Grok, ask, you know, I have a HVAC business doing 2.5 million in revenue. What should be my targeted profitability, my targeted gross margin, and what should be my targeted number of employees to generate 20 % profitability? It will tell you. So those kind of tools are unbelievable. Marketing and promotion tools, follow-up, text messages. There's a bunch of AI tools that third parties have built that you can deploy into your business and integrate with a CRM, but that requires you to actually learn to use a CRM.

11:13And so these AI tools and the information that's out there is invaluable for a small business owner because they get access to research that traditional large-scale companies would spend hundreds or thousands, if not millions of dollars to get that data. You can literally go and ask chat or you can literally go in and ask it these questions and it will give it to you. And so that alone, information is king, right? So now you've got to deploy the information. For us, we do a lot of research. We've reverse engineered$10 billion of businesses across all the elements that allow them to grow, scale and optimize and become highly valuable.

11:52And now we can incorporate AI tools around all that data. But then you can also now incorporate AI tools to do work for you, like AI assistances and things of that nature. So as a small business owner, having your attention on how to use those kind of tools is super important. But then who you go listen to and deploy what you're learning is equally important. So I think who you listen to, how you deploy it. But if you're not using any of these tools right now, you should stay awake at night just playing around with it, asking good questions and see what kind of data. Job descriptions, it'll write.

12:24If you're a technician and you want to hire a technician, it'll write your job descriptions. If you want to hire a finance person, it'll write your job description. What used to take weeks, you can do in minutes, including promotional pieces. So learning to use AI tools, uploading your best five ads and asking AI to create an ad, a new ad that takes the best of your best five ads and create language around it on how to promote your business, it'll do it all for you. So these are the kind of tools we love to see business owners use in deploying their business because attack speed in business is critically important.

12:56Fire Nation, Brandon's on fire, dropping value bombs, and we have a lot more We're talking exit strategy. We're talking success qualities. When we get back from thinking our sponsors. If you're looking for a full feature design tool that gives you vector workflows, 3D transform, wireframes, image exporting, and more completely free, then I have just the tool for you. It's called Framer. Framer already built the fastest way to publish beautiful production-ready websites, and it's now redefining how we design for the web. With the recent launch of Design Pages, a free canvas-based design tool, Framer is more than a site builder.

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16:01On top of it all, their support team is second to none and has your back every step of the way. Seriously, every question that pops up, they will have your answer waiting. And if you visit my special partnership link, you'll get a free trial. So visit highlevelfire.com to start your free trial and see why thousands of businesses are switching. That's highlevelfire.com where marketing, sales, and automation finally come together. High level. Join the revolution. Brandon, we're back and I want to talk exit strategy. So when it comes time to move on, I mean, we've employed these great tools you just mentioned.

16:36We've exploded our business. our listeners, Fire Nation, they want clarity. How do we successfully exit or maybe even list a company without getting burned? Yeah, well, look, an exit strategy isn't something you decide to do when you're tired, you're burned out, you're frustrated, and you want to sell your business, which is where a majority of business owners finally decide to sell. An exit strategy has to be planned optimally three to five years in advance. What creates value in a business is confidence. Confidence that continue to grow, confidence that it can operate without the business owner, confidence that's predictable in its ability to generate profits, confidence in its ability for long-term growth and expansion.

17:18And so in order to have that and confidence that the right people are going to stay doing the right things the right way and the investment's going to turn out over the long term better because you're asking a buyer to pay a multiple of your current earnings. Anywhere from two times what you currently earn up to exits. Mine was 77 times EBITDA, 77 times what I earn a year. Now, a lot of people ask me, how'd you get that high evaluation? And it's about understanding why buyers buy. Selling a business at a high value isn't about always how well your business is doing. It's who would buy it, what would they do with it and what's the advantage to them.

17:58So the best sell at the highest value is when you can strategically place your business as an advantage for a bigger buyer to buy it to add value to their business. That's the best sell. Now, when it comes to exiting, businesses are only really valuable when they can operate without the business owner. So what I tell business owners is the first day that you start your business, you should be thinking about exiting to the extent that you can exit every single day you're building your business, your business will become more valuable. People confuse the word exiting and they cross it with selling.

18:37Exiting doesn't mean selling. Exiting means moving from one place to another place. And that's how a business owner needs to think. Every day when I show up as a business owner, no matter what I'm doing, I have to figure out a way to exit what I'm doing and hand off what I do to somebody else so I never have to do it again. And the person I hand it off to needs to be taught how to exit them doing it as well. Because business's growth is dependent on the growth and scaling of each person that makes up the value within the business. And if the business owner traps himself in generating the revenue, traps himself in delivering the product or service, traps himself and the business being all about them and their brand and their importance, then a buyer will reduce the value of that business the more those complications exist.

19:26So if I show up to work the first day, I'm going to not use my name. I'm going to exit my own roles and responsibilities. I'm going to exit being required to even be in the business. That's my five or 10 year target. I'm going to build a$25 million business that doesn't require me, that has a great group of people who are all aligned with the success of the business. It's going to consistently be profitable. It's going to consistently generate cash. It's going to consistently grow at some predictable amount per year. And then I'm going to exit it with money. Okay. Or I'm going to exit it and turn it into a cashflow investment.

20:02So exiting doesn't necessarily mean selling. And that's where business owners get confused because they're like, I never am going to sell my business. I'm going to hand it off to my kid. Well, if I got a dollar for every business owner that handed off their shitty business to their kids who went out of business, I'd be wealthier because 98.2 % of all businesses ultimately over the past 10 years are going to fail. So you hand it second generation, third generation, fourth generation is just going out of business because nobody actually understood the principles of building a business. Start, Start, scale, optimize, expand, exit.

20:41Well, that could be a single location. Then you exit and start a second location. Then you exit and start a third location. Then you exit and start a fourth and a fifth and a sixth and a 10th. So now you have 10. It could be exiting the state because you expanded into a new state. It could be exiting just simply your roles and your responsibilities because you backfilled it with people who are better than you. So you have to think exit every day. And then if you're able to do all those transformations and exits, eventually when you're bigger, your business will be, it'll be so valuable because it won't require you.

21:14It'll have an amazing team. And then how you actually construct the sale of your business is entirely different to the extent that you include your team. And even in my case, the reason I got such a high value is I reverse engineered hundreds of exits and I saw what worked and what didn't work. and I created my own equity structure. So when I exited, sold, exit, I included my key employees and key customers. So all of my employees actually, and 250 of my biggest customers all exited with me and I gave them 45 % of the value of my company if they stayed and continued the behavioral habits they were doing that created the value in the first place.

21:53So I included my employees and I included my customers and I didn't have an outside investor. So I gave that money to them. And then we had a phenomenal exit. We were acquired for 77 times EBITDA by a billion dollar business. We integrated our business model into their business and we grew them to four and a half billion in 36 months. Brandon, you've had success and success leaves clues. So from your perspective, what are the absolute best qualities that somebody needs to develop if they want to rise to the top, if they want to sell their business for 77x profit? I mean, what are those success qualities?

22:28Well, first and foremost, your business has to be good at what it does. So for people who start a business and they're poor performers and they don't have discipline, they don't have accountability, those people will not, that quality of being a strong operator. So three things to get big. First, belief. You have to believe you can do it because it's going to be hard. Everyone around you will tell you you're crazy. Most people around you tell you it can't be done. And you're going to be oppressed and suppressed by people telling you that, you know, you should just get a good job and settle in and be happy for what you have.

23:04And now you don't have work-life balance. You're just going to have – so belief. To the extent you believe, you can't achieve. You lower your belief. You lower your effort. You lower your ability to see the future. So you just give up on it. Okay? Once you have high belief, then you have to have high operational effectiveness. this to the extent you can get granular, you can operate better, you cross your T's, you dot your I's, you create synergy, you create efficiency, you create scalability, you develop a team who's focused on discipline and they can execute better tomorrow than they did today.

23:40And they're focused on long-term execution strategy planning. So you incrementally improve. Jim Collins talks about innovation as granular incremental improvement on the thing that you can prove works. That is entirely different than Elon Musk's version, which is you can radically invent and create something that never existed before. Okay. Well, most entrepreneurs are technicians. So they know the thing they do works. They believe there's a demand for it, for the product or service in the marketplace. So they start their business. Now they have to deploy Jim Collins version of innovation, granular incremental improvement on the thing that you can prove works.

24:20And that's operational effectiveness. The third leg to that stool is leadership. It takes a lot of courage to start a business and it takes more courage and more effort to pull a team of people to success, which is why you need to have high belief, high operational effectiveness, now high what I call me leadership. If I don't have the discipline to show up every day, if I don't have the discipline to develop myself every day, if I don't have the discipline to do things that make me uncomfortable, how can I possibly expect anybody on my team to do it either? Now, once you get between eight and 15 million, the complexity of the business with the number of people you have kicks in.