Entrepreneurs - Growth Expert Troy Hazard's Strategies on Buying, Scaling & Selling Your Company

0:00I'm really good at sitting down and finding creative ways to fund growth. And if you can do that in a small business, it becomes relatively easy to turn it into a bigger business. Troy Hazard, serial entrepreneur, was the global president of Entrepreneurs Organization. Has over 30 years in business, founded and built 13 different companies. You've got to learn from the past, apply it to the present to protect that future. The business works for us, we don't work for it. I realized I was getting up going harder, but for no purpose. Once we give it purpose, then the business has a plan. And you almost get pushed to the edge of that cliff and you either decide to walk away from it or jump off it.

0:37And, you know, on a few occasions like that through my life, I think I've just decided to jump and see what happens. So, Troy, always first question. What's your definition of success? Yeah, there's probably a few parts to that. I think as you get older, that changes a lot. It certainly has for me. If I look back at a 20-year-old entrepreneur, it was rainbows and, you know, going as hard as you could, make as much as you can. And as you get older and tighter, the definition changes a bit. I turned 60 last year and now my definition is if I've got enough, I'm okay. If everyone's fed, that's fine.

1:11If we've got enough to do some fun things and not have to worry about stuff, then that's success for me now. I think I've kind of dialed it back a little bit in the last couple of years and starting to enjoy myself a little bit more because you never know how long you're going to be on this planet. So that's my new definition. It's get up when I want to, do what I want to, when I want to do it, and I'm good. Yeah, and for people watching, yes, have enough to race your cars, travel most of the year. Yeah, so when you talk about enough, it's different to most people. So when do you think you chose success?

1:48Was it as a young man? Was it as a kid? Was it brought into you as your parent? Where did you choose success for you? Yeah, I think it probably chose me. And I think that probably happened at a very young age at school. I was a terrible scholar, almost failed high school, never got a degree, didn't have the grades to go into university. So at a very young age, I had a number of teachers that would tap me on the shoulder and say, you're a slacker, you know, what are you going to do with your life? And so I kind of felt like I had to try harder at something else other than, you know, reading, writing, arithmetic and try and find a different path that was going to suit my personality, my learning style, which is a bit different.

2:34And that kind of pushed me into this whole private enterprise entrepreneur type piece where I could kind of fend for myself but didn't have to live in a box. I think that's probably where I had a fork in the road was school for me was a real box and I didn't fit in that box. So when I stepped out of that and decided to go and, you know, try something on my own and run my own race in a pace and place that I wanted to, that suited me, everything got a little bit easier for me. You know, it reminds me of that old Einstein quote, if we judge everyone by, you know, if you judge a fish by how it climbs a tree, then it's always going to fail type thing.

3:11I think finding your space. So what did it take, though, to have the confidence to find your space? Yeah, I think there was a second fork in the road where, as a young guy, I was working in the media, I was working in radio, and did a little bit of time in television. And I had a new boss that arrived in the mid-'80s, and he didn't like me much. I didn't like him either. And I can recall walking into his office one day saying, look, I need a help, I need a raise or I need a holiday. And he said, well, how about a holiday? I said, great. He said, good, you're fired. So I kind of, I had to go and find something else to do.

3:49And that was the second aha moment for me was this is the good nudge that you needed to go out on your own and have a go. You had a little bit of money, not a lot, but enough to get started. And there was no turning back from that. I figured I don't need to have those conversations with someone running my life anymore. I'm just going to go out there and give it my best shot. And like every entrepreneur, the first couple of businesses were pretty average. The hours were long. The money was short. But we kind of found our way and got into a groove. So I think these moments in time are good for everybody where you almost get pushed to the edge of that cliff and you either decide to walk away from it or jump off it.

4:28And on a few occasions like that through my life, I think I've just decided to jump and see what happens. You know, it's interesting. the number of entrepreneurs that it took them getting fired for them to kick off their first business is quite a lot. Well, that leads me to this then. What is your formula or recipe for success? What are the ingredients that make success happen for you? I think what I've been relatively good at over the years is having clarity of vision. Know what you want to be when you grow up, where you want to end. Start with that end in mind. By the way, when are you going to grow up?

5:04is the next question.

5:08Well, figuratively speaking, let's use it as a broad term. And so I spend a lot of time referring to my vision. I have a one-page plan that I do every year. What do we want to do as individuals? What do we want to do as a family? What do we want to do in business? And then how's the business going to help us pay for that stuff? And I go back and reflect on that pretty much every week. And that's been one of the things that's been incredibly helpful to me is that when I feel like I'm getting taken off course, I go back to that one page and it helps me remind myself that I'm either heading in the right direction or I'm not focused.

5:44And that clarity of vision and the focus that sits below that has been incredibly helpful to me over the years. And not just for me, also for Dominique, my wife, and the family. It gives us all a bit of clarity as to what we're going to do for the rest of the year and how everybody fits into that puzzle. And that makes it a little bit easier to assess what's in front of you so you don't get taken off path. How do you guys put that together? Do you do a retreat? What do you do? What's the process? Yeah, that's a good question. We've got a little bit loose on that over the years, but typically Dom and I, we're going to cruise or something around October, November.

6:20We'll spend a week on the boat and pretty much chill out. I spend a bit of time thinking about what I want to do for the new year. She does the same thing, and then we just spend that moment with the Kids in Kids Club out of our hair a little bit, out of my hair anyway. And that gives us a chance to put a formula together for the new year and work out how the pieces come together. And it always starts with us, and then we work out how the business can feed that. So the business works for us, we don't work for it. And that was a big shift for me probably 20 years ago now where I realised I was getting up going harder, but for no purpose.

6:57And once we give it personal purpose, then the business has a plan. It's working for me. I can feel it doing its job and it becomes ever so much easier because it's not as if I'm on the grindstone every day. I'm getting up and working as much as I need to to fulfill the plan we've created as individuals and as a family. What's your view on the relationship between failure and success or failing and success? Yeah. What's the saying? It's not about how many times you fall over, it's how many times you get up. I think I probably wasted the first 10 years in business not paying attention to the failures.

7:36I'd be disappointed in the failures. I would make excuses for the failures even, but I wasn't paying attention as to what caused them. And in the mid-90s, about 10 years into my journey, I found a place where I needed to reflect when things went wrong and take a moment. And the example I can offer you is we had a moment in the late 90s where we lost like a million dollars in a matter of a week. And instead of running into the office and tearing everything apart and trying to fix it, I actually turned around to everybody and said, I'm taking the week off. And I'm going to go and sit on the beach.

8:08And I'm going to try and work out how we never find ourselves in this position again. That was a real big turning point for me because it taught me how to take a beat and reflect on what just happened and make some notes and make some changes so you never found yourself back in that position again. That's not to say we didn't, but it certainly helped me understand that you can't just rush out into the next opportunity. You've got to learn from the past, apply it to the present to protect that future. Yeah. But when you were president of EO, Entrepreneurs Organization, I mean, you had to apply a lot of your business knowledge to that organization.

8:47What were the top two or three things that you found built that team or built that organization when you were in charge at that point? Yeah, and that's an interesting question because the organization was an amazing experience for me, in particular, as to how I handle myself as a leader, and how I interact with other leaders. Because essentially, you know, at the time we had 14 ,000 members around the world, everyone's smart. I mean, there's smart guys and girls, that's why they're part of the organization. And my predecessor said to me, it's kind of like being the only fire hydrant in the street of 14 ,000 dogs.

9:24And he was right because everybody had an opinion and you had to take that opinion on board, listen to it, acknowledge what they were trying to say to you because lots of times they were really good ideas and then find a way to manage that with the other 13 ,000 leaders in the organization so that everyone felt like they were part of the process. That was an entirely different leadership shift for me and it took me how to be a little bit more vulnerable. It taught me how to be a little bit more collaborative and understanding and empathetic of people's positions. I think before that, I was probably more threatening people to follow me rather than leading them.

10:02And EO certainly helped me understand how to be a better leader and apply those skills back to my other businesses. Yeah, it's amazing how when you have to be a leader of leaders, it's a different level that is required of you and you have to level up. We're going to be back in a moment with Troy has it. And we're going to talk about how you can future-proof. We're going to talk about arbitrage, rolling up companies, selling them to private equity. That's what we're doing here on the Big Success Podcast. Serious income success for you will come through Brad Sugars' scalability event, massive business growth, and understanding how you turn your business into a commercial, profitable enterprise that works for you so that you don't have to.

10:42Visit bradsugars.com to attend this program as a standalone or as part of Brad Sugars' Entrepreneurial University. And we're back. Hopefully you've hit that subscribe button, get those notifications happening. Big success. Troy has it. When we got together in China many moons ago, you were teaching about future proofing and I love that stuff. Can you give everyone a quick overview of what that is and how you got to that opinion and thought around business? Yeah, so there's a few parts to that. The first is that clarity of vision, like I was mentioning earlier, and how you have to keep referring back to that vision you've created rather than just writing it up and putting it in a drawer somewhere.

11:22But it also has a subset of metrics. So you design your future, then you define what the success looks like within that design, and then you just set about doing it. And for us, that means that we typically have three plans for the year. We have a good, better, best model that helps us future-proof the year. Good is budget, which is a little bit better than last year. Better is a stretch budget. And then best is the rainbows. Best is, you know, if it snows in Florida, dogs and cats start playing together, then we'll achieve that goal. It's a big idea, right? And by having these three things run in concert, it gives me a chance to switch from one to the other and change lanes if I have to through the course of the year without too much disruption on the business.

12:06So by doing that, you protect your future because you haven't got to keep recreating it. It's almost as if you are just simply adjusting it on the fly and it makes it a lot easier to manage. And entrepreneurs have a bad habit of tearing things down to build them back up again because they feel they have to. When it's broken, they've got to change everything. And I think one of the key things is that if you've got that clarity in front of you, you don't have to make those big changes. You haven't got to pivot. I hate that word. You just simply have to make small adjustments. It doesn't frighten anybody.

12:40It doesn't frighten your customers. It doesn't frighten yourself as a leader. It just helps you understand that I've done the thought process already. Now I just need to apply it and go out and do it, essentially. What did it take for you to gain the patience to not be the tear it apart? I've got a new idea. Let's change everything type leader. Yeah, I had to train myself. And I went through a period 20 years ago where I found myself coming up with little habits and behaviors in my office where if I was messing around and not concentrating, not focused, I would stand up on my desk. And that simple, really basic habit gave me the opportunity to rethink how I was looking at situations.

13:25So I did take a pause. I did take a beat every time something was presented in front of me. And I didn't feel like I had to rush out and solve it by five o 'clock. That was helpful to me. And over the years, I think I've just slowed that process down a little bit. So it's made it more of a natural behavior and a consciousness rather than something I had to really work on in the beginning. And that pause is a wonderful time to not only reflect, I should say, but also just to reframe what the future looks like. And with that reflection comes, I suppose, a place of satisfaction, even when you're faced with adversity.

14:05You can still feel like you've achieved something in a crisis because you've just taken the time to remind yourself that things are going to go wrong. I have to just take a moment to learn from that so I don't do it again. Got it. Roll-ups, buying companies. Let's dive into the last one you just did, the swimming pool business, all the products and stuff. Firstly, how do you select an industry to go and buy a whole bunch of companies? Hey, just a quick one. When I look in the back end of this, something that's quite surprising to me, I noticed that it says that 82 % of you who watch the channel regularly haven't hit the subscribe button yet.

14:50So it'd be a great favor if you could hit that subscribe button. Let me tell you why. See, over the lifetime of the channel, we scale the show and get better guests, better production, better everything by having the number of subscribers. So if you hit subscribe, it helps us plan better, do more, get better guests, and so on. Scaling production and making the show bigger is something we all want. We want more success for you. We want more success for the show. And we want to be able to get the best guests to give you the best information. So one favor. click that button if you've watched this show before and enjoyed it just please click that button to subscribe hit the notifications bell and make sure you're a part of it because as the show gets better your success gets better simple as that a promise i'm willing to uh make you do we have a deal if you do better and subscribe i'll get better guests and make it a better show Thanks for subscribing.

15:49Yeah. I think that's evolved for me over the years. And an early business mentor of mine helped me with that. And he said, never fall in love with a deal or an asset. That's rule number one. Because if you fall in love with a deal, you find yourself talking yourself into that deal. And even though it's maybe not a good deal, you convince yourself you should do it anyway. So by not falling in love with a deal and an asset, that takes you one step back where you're looking at an opportunity for its real merit, for what it's really worth and for what it can really do for you. And I found myself over the years being more particular about some of those early decisions to even bother pursuing opportunities or bother pursuing an opportunity for a merger, an acquisition or a roll-up.

16:35And again, that beat that you take in life just helps a little with knowing that it is an opportunity because it's for the right reasons, not because the reasons you've just told yourself. That's helpful to me. And Dom, my wife, has a great saying. Every time a deal comes across my desk, the first question she asked is, is it worth a sandcastle? Now, in our family, what that means is, is it worth a sandcastle? Is it worth taking you off the beach, building sandcastles with the kids? Because if it is, OK, great, let's pursue it. If it's not, let's go back to the beach. And that's also a great little test for me as well, because I remind myself I'm doing this for the family.

17:13I'm not doing it for my ego that I have to go and buy that or get involved in that or invest in that. I'm doing it for a purpose. And the purpose is to make sure that these guys have a wonderful future. And if it's getting in the way of that future, then I probably shouldn't be doing it. You know, it's interesting because one of the things I've learned from you is you'll take several years between deals. it must be easy because you're not using other people's money you're using your own money you don't have to place that money right and I think um the reason it I have that longer cycle is that when we get into a business or into a any sort of a deal I always have an understanding of what it looks like when it's finished and so my first job is to try and make myself redundant from the process so I get in fix it whatever I can and then find smarter guys and girls around me to do the the day-to-day operational stuff.

18:06But as we go into a deal, I've pretty much got relative clarity on when we're going to get out of it. And those cycles are typically three, five, even longer, maybe seven years. The Poolworks business was an example of that. We helped bring that business to America in 2015. We sold it to private equity in 2022. It was a couple of years longer than I wanted to be in that business, but it was necessary, largely because the pandemic got in the middle of it all. But we still had clarity of what it looked like when it grew up and what it should present itself when it grows up to others. So we're already thinking about the suitors that we're going to be chasing on exit on entry.

18:47So we're putting the lipstick on really early in the process. How many deals, how many roll-up, how many acquisitions were there in that putting the whole puzzle together? That's a good question. We did three acquisitions back to back in the first 12 months. And the reason for that was to give us a footprint. We bought a business in Arizona. We bought a business in Texas. We bought one that had outlets in California and Florida. So what it did was it gave us this opportunity across the Sunbelt to refine the Australian model for the American market. And that took us a bit longer than we expected because we realized there were five entirely different markets across the US that we had to cater for.

19:25We had not prepared for that. But once we understood that, everything got a bit easier. And then with that footprint, we started to franchise out of that. And we did that in two ways. Traditional franchising is bringing people into a sector and training them. We had that as one of our strategies. The second strategy was converting independence and having them join the brand to give them an exit strategy. So mum and dad, pool shop owner that had the business for 40 years, their exit was sell all the inventory, turn the lights out and go on a cruise. We gave them an opportunity to build enterprise value by converting into the brand, using our buying power, our branding, our marketing, etc.

20:03So they could exit the business gracefully with some enterprise value that was more than just selling the inventory and hoping that they came out okay. Yeah. Now, a lot of people don't really understand the whole idea of why you put all of them together and why you build it bigger. But give people a bit of an understanding as to the distinction between selling a small business and selling a big business to a private equity firm. Yeah, so the private equity tends to work in banners where they're looking for acquisitions of businesses that have an EBITDA of maybe sub$2 million or between$2 and$5 or then$5 plus.

20:42And they're entirely different animals with an entirely different interest in that business. So this is why that whole vision is really important, because if you're building a business to have X amount of EBITDA in five years or seven years time, then you're already positioning that business for that suitor. And it'll be a different suitor than the private equity firm that's looking for a bunch of smaller businesses. And so as you step into that process, it becomes a lot easier for you to understand what they're looking for and how you need to position it. So the example I can offer you with Poolworks was I started courting private equity two and a half years before we actually sold the business.

21:21Two and a half years, 46 different conversations with different private equity firms, simply to understand which of these individuals would be our best suitor, our best partner. So we narrowed it down from 46 to 12 to 6 to 3 to 2 and to the final group that actually purchased the business. But it was all done for a purpose. It was not happenstance. There was a strategy behind that to know that these are the things those guys are going to want to see. In due diligence, they're going to want to uncover these things about the business. Let's make sure we've got the answers for that so that when they do get under the hood and start poking around, they can feel comfortable that we have positioned the business with the governance and the strategy and everything's buttoned up so they can walk straight in the front door and simply add money.

22:07That's what they want to do. They just want to add money, make it go faster and sell it again. And so understanding that process is really important in how you assess deals on the way through and how you evolve the business into what it should be when it grows up. Love it. Big success. We're coming back. Troy Hazard is going to teach us how to scale it up. Troy Hazard has consulted countless successful companies, including Goodyear, Baskin Robbins, Subway, and many more. He is also the host of his own cable TV talk show on the BizTV cable network and TiVo, broadcasting into 30 million homes each week.

22:42To learn more about Troy Hazard, please visit TroyHazard.com. And we're back. Make sure you've on the subscribe button. Troy, let's talk about the difference between building a small business and building a very large company that you sell. What does it take to go to that massive level? What's the differences? So I think there's an element of creativity that people miss in that process. When you've got a little business, it's hard. You're always short of cash. You're always short of resource. You're short of ideas even. But if you can be a little bit creative as to how you want to scale that business, then you can uncover different ways to get there faster.

23:22By way of example, how can you lean on maybe some of your vendors to help you funding that growth? How can you lean on minority partners or mezzanine financing or some other way to give you that boost to the next level? Because if you're creative in that thought process, then you work around the traditional needs of talking to a bank or talking to some sort of a financier or using your credit card. When you get a lateral thought process that sits behind that growth, all of a sudden you get speed. and with that speed, it just keeps accelerating. It's like the snowball going down the hill. The more it goes faster, faster it goes, the bigger it gets and then it becomes a lot easier in that process because the more success you have with each deal you do or with each level you get to in that growth, the more attraction the business has.

24:14People are looking over the back fence and wondering what you're doing. They're wondering how it's coming together or how you got there so quickly or how did that work in your world and how could it maybe work in mine? And I think I'm relatively good at that piece of the puzzle. I'm really good at sitting down and finding creative ways to fund growth. And if you can do that in a small business, it becomes relatively easy to turn it into a bigger business. Most people don't think of it that way. What's the mindset shift that you had to make from the early days running a small business to running the big business?

24:48What are some of the things where you had to do it differently or how did you have to think differently? It's probably two things. The first is I had to get off the tools. I had to find a way to make myself redundant in every business as quickly as I could. Because if I got off the tools, I could be creative. I could be strategic. I could think about stuff. While I'm on the tools, and as we've all heard this saying, working in it, not on it, then I wasn't getting further faster. I was stuck with what was right in front of me and not having an ability to think further down the street. So that was the first thing.

25:19The second thing was I realized that I didn't have to be across every element of the business. You know, there's probably 200 bits of data you're trying to manage in a business to understand which metrics you should be monitoring, which levers you need to be pulling. I worked out relatively quickly that I just need to follow six of those metrics. That's my job. Everybody else can do the 194 and I'll allocate those jobs to different leaders in the business so I can focus on my six and do them well rather than doing 200 poorly because I spent a lot of years doing 200 poorly. And that's hard because we're all control freaks.