2423 - Building Scalable SMBs Through Structured Systems and AI with Modern Operators' Damon Flowers

0:03Welcome to the Thoughtful Entrepreneur. If you're committed to growing your business by serving audiences with generosity and real expertise, you're in the right place. This is a daily 15-minute show featuring leaders who believe real impact comes from generosity, not hype, which means as a listener, you're going to get the good stuff. In fact, we created podverified.com to give thoughtful leaders like you free tools to show up better on podcast stages like this one. That includes your free podverified score, free podverified guest training, a free media kit builder, and so much more. It's the first ecosystem of its kind built by podcasters who genuinely want to help guests thrive and grow in podcasting.

0:46Visit podverified.com if you'd like to be featured as a future guest. I'm Josh Elledge. Let's get into it.

0:57With us right now, it is Damon Flowers. Damon, you are the founder of Modern Operators. You have also had a couple of eight-figure exits, so congratulations on that. You're a four-time CEO. You've been there, done that. You are found on the web at modernoperators.com. Damon, it's great to have you. Awesome. Great to be on your show, Josh. Before we get going talking about the work that you do and the impact that you have today, I understand as of when we're recording this, it's prom season and you're in the middle of things. As a dad who's been there, done that a few times now, tell me what's going on in your world.

1:42Yeah, great question. So this week, we are winding down to the end of the school year. I've got twins, boy, girl, twins that are getting ready to graduate. And so, wow, you know, this weekend is prom and all the festivities are going on with that and all the friend groups and get togethers. And sometimes parents are included, sometimes they're not. There's a lot of figuring that out. And that's also leading in to end of year dance shows for my daughter, end of year banquets. We're putting on our soccer banquet for my son's high school men's soccer team. And then rolling right into graduation, which is just so crazy to think about.

2:24It's here. It's happening quickly. How do you think their prom is shaking up compared to your prom? I don't know if you went to prom. I did, yeah. Sometimes it's the same. uh one thing that's different is there's called a uh a promogram or a prom prom something prom gram anyway it's where like you know usually the guy will come over with a poster that sort of has a funny ask to it right and then it's filmed and presents that to the girl and it's like oh cool yeah i'll go to prom with you so uh that was a little different uh and then of course fetties this day these days i guess you know ordering a fetti uh to take a bunch of people over to a house or, you know, wherever they're kind of getting together before going.

3:10So nice, nice. The learning of those terms, you know, we're ordering a Fetty. Yeah. I couldn't get any girls to go with me to prom. So I went to a bonfire party instead and carried around a boombox playing Metallica with all the other guys that couldn't get dates. Well, I've had those seasons of my life too, for sure. So, Damon, let's talk about your work with modern operators. Can you give us just maybe start with just a quick overview of what modern operators is? Yeah, for sure. So I've been an entrepreneur for 20-something years, just in tons of different niches from real estate to SaaS to private lending, e-commerce, training and coaching.

3:54Stumbled and failed my way through many of those years. I'm going to tell you, lots of failures, lots of lame outs. But along the way, started kind of figuring out what worked and what didn't and really culminating around what my gift is, and that is growing and scaling companies. And so kind of figuring that out, we were able to take a training and coaching company to an eight-figure exit in five years. And then we took an e-commerce company from$3.5 million to$30 million in two years. And really taking it over, it had nothing. There was nothing significant about the company. In fact, it was running on Skype and Google Docs at the time.

4:33That was it. So that's kind of been the impetus for creating modern operators. So we've brought in our playbooks, frameworks, all of that to help other entrepreneurs experience growth and transition and success much faster than it took us. All right. So the billion dollar or the eight-figure question here is how does someone build a company for an eight-figure exit? You've done it a couple of times. You teach on this. I'm sure that there are some, obviously, every company is a little bit different, but likely you've seen some principles that are pretty consistent. Yeah, yeah. So great question.

5:14And it turns out that you really, I want to take your listeners back in time and talk a little bit about history and kind of where we've come from and why we are here today. So most of our listeners will kind of remember back in, you know, 1999 timeframe, that's when Salesforce first came out. And what we started to do as businesses is we started to outsource our main functions. after Salesforce was the launch of DocuSign, Asana, HubSpot, and all these others. And so as we began to outsource our CRM, for instance, in sales, we outsourced that process to a tool. And then we outsourced another process to another world-class tool and outsourced another process to another world-class tool.

6:02So if you look really between kind of that late 90s till about 2010, we started to see the fragmentation of a lot of these disconnected siloed tools that are running various parts of our business, right? So we have a tool for support and we have a tool for sales and we have some tools we use for marketing and tools for finance, right? Etc. And then in about 2011, we start to see Zapier come on, come on the scene. If you, most of your were listeners or kind of remember that Zapier, Pably, Make, you know, and then we started to see N8N, et cetera. And during that time, really kind of that 2010 to 2022 or so, we're starting to try to stitch these tools together because we're realizing that we have way too many tools.

6:50Most small to medium-sized businesses are running 15, 20, 25 plus tools across their entire environment. And the problem with that is that that disconnected environment doesn't set itself up well for where business is headed today. We have, most of us agree, there's this low-grade tension that exists, right, all around us around AI and innovation and how it's just promulgating society. And business owners feel that too, right? So what business owners today feel is, I need to be making decisions faster. I have ideas and I just don't have the capacity to implement those. I need to be able to pivot faster.

7:32I've got a lot of uncertainty I'm trying to deal with, right? Because we got changes in administration and tariffs and geopolitical stuff, all of this happening. And so we're at this inflection point where what has worked in the past is radically coming to an end and it's not serving business moving forward. So when we think about it, we've actually never had a core to our business, right? You wouldn't put Stripe in at the core because Stripe's a, it's a, it's a merchant processor, right? It processes transactions. You wouldn't necessarily put a task management at your core because you're much more as a business than just assigning tasks to people.

8:14So what is it that's really at the core of us as business owners? And that's the problem that once we figured that out and started to implement that in our previous businesses, it was a massive unlock. That's the one thing that allowed us to, again, scale an e-commerce company so quickly over two years. What I'm most proud of is not the fact that the revenue increased like it did and we hit our exit number, it's more that behind the scenes, the margins were dialed in and the fires went out. We didn't have to constantly firefight to keep this thing going. We had a lot of fun in the business. The risk went down considerably.

8:56Our brand awareness exploded. Our cost of acquiring customers went down. There's a lot of benefit that came about in that two years as well. And that's what I'm more proud of. So to answer your question, modern operators really today exists to help entrepreneurs and business owners start to see that that core hub is so critical and so necessary in their business, and it doesn't exist today. And once you start to get that right, and you understand the context and what goes in it and how it's organized for you and your staff, it's a beautiful segue then to layering in AI so that AI can now really start to unlock a lot of growth and scale in your business as well.

9:41So I'll kind of pause there. Yeah, no. So on that topic too, and I know that this is an issue that you and I care quite a bit about, that AI is implemented in a sensible and humane way, in a logical way. I mean, the tools are evolving so quickly. um what what are these conversations that that you have with the folks that you are advising at this point um i don't know if everyone's kind of at me if there's just a matrix some are really aggressive and want to do everything in ai others are apprehensive or maybe even have some ethical reasons why you know they won't they don't they want to do less i don't know uh what what are your observations?

10:25Yeah, so there are specific, you know, touch points and a lot of feedback that we're getting from people that we're talking with. And those are slightly different than the feedback that we're getting specifically around AI. So let's start with the first group. The feedback that we're experiencing is from founders and business owners and entrepreneurs specifically. I'm stressed. I'm working 50, 60, 70 hours a week again. I'm stuck in the day-to-day. Um, I have ideas for how I want to move the business forward, but I can't implement them because I don't have enough capacity. Um, I can't, I can't delegate and get enough things off into my, my teammates, et cetera.

11:08And oftentimes they don't know what to do as well. So I get pulled back into these types of conversations. Um, and that, that stress and that overwhelm is being compounded by owners feeling like I need to be doing more. You know, the world's moving really quick. I need to jump on this tool, this this claw bot, you know, this this new AI, this but not having the capacity to be able to handle these things. And so what often happens then, too, we hear from our from our prospects and our clients that, wow, I tried this tool and it blew up sales, but then my fulfillment totally crashed. So I've got this accordion effect where I'm always racing around to try to figure out what's the next buyer to go put out and the problem to solve.

11:53So there's no cohesiveness, if you will, with the business. Now, from the second perspective of AI, it ranges the board. We have prospects and customers and a lot of folks that we talk with that are on one hand very scared about AI. They're scared about the implications to jobs, to humanity's survival. right? The disconnect between the haves and the have-nots ranges the board, all the way to others on the other extreme who are pretty excited about what's coming, but also recognize that there's a lot of uncertainty along the way. And so if I could sort of distill that down into what are the common threads that I think business owners are experiencing around AI, it is that I'm going to have to understand this new world and I'm going to have to, to be able to play in it.

12:44I need to carve out time to now not only run my business, right, but to figure out how we're going to do this. And also my staff is looking to me to kind of help provide guidance around this as well. And so that's where we, we try to help is laying out a roadmap where a business owner can feel confident now about the next six months, eight months, a year. They may not know exactly what to do in a year, but there's a confidence that develops that they'll be able to manage the changes that are coming. Yeah. Well, Damon, this has been a great conversation. Obviously, you have a lot of experience here.

13:24How do you engage with folks? Obviously, I want to point this out. You're a great follow on LinkedIn, by the way. So, you know, to our friend that's listening, I mean, by all means, please go to modernoperators.com. You'll look for the LinkedIn so that you can get connected with Damon and some of the content that you share. Pretty great insights. You're giving me some ideas, just the way that you engage on LinkedIn, which I quite like. But I think you have other resources as well. Would you mind maybe sharing to our friend that's listening, where they would go from here. And also, if you wouldn't mind maybe presenting, you know, if folks do engage with you, what does that look like?

14:10Yeah, perfect. So we just recently launched a new advisor. You can find that advisor at modernoperators.com forward slash advisor. When you go there, it's really a pick your own journey to help you understand as a business owner, where am I getting stuck? What's the cause behind it? And more importantly, what's the solution for me to start to move forward? So that resource there is customized for you and the questions that you ask it and how you interact with it to really get feedback again, because we're all in sort of slightly different places. Yeah. And I see you work with a lot of folks that feel trapped in their business.

14:56Um, boy, I, I, we should, I wanted to start with this, but you know, if I don't know if you could just address that briefly, because I think that, you know, to our friend that's listening, maybe they felt that from time to time, maybe they felt, you know what, I should just, I wish I just had a job. Yeah. I don't have to deal with all this other stuff. I'd, um, you know, you had a really great Reddit post that you surfaced and commented on about someone who did, who absolutely felt trapped in their business. And they were kind of at an inflection point in business where, and my take on this was, you know, you get to that point, you know, you start approaching seven figures, maybe, especially if you kind of grew it from the ground up.

15:38At the beginning, I'll speak for myself, like I'm pretty much white knuckling 24-7, right? Maybe not 24-7, but certainly my business or professional time, it really is that death grip on my company to try to get it for. And then you get to a point where you're like, okay, I don't have to do that, but I start looking for things to still white knuckle on. This is the way I'm just obviously talking about myself. And it really is. There's a little bit of letting go. There's a lot of, I think, trusting in other people, trusting in systems and processes. Do you mind, Damon? I'm sorry to kind of squeeze this here at the end here, but I'd be remiss if I didn't get your take on this.

16:23Yeah, wonderful. This is more and more of a problem that I see not only with business owners that have maybe started a business five, seven years ago, but also business owners and friends of mine who have been running a business for 20 to 30 years. they're also feeling trapped. And that's a time when in the past, those business owners were, you know, everything is working. I got people working for me. I'm feeling good. Those people are not feeling good. Across the board, when we say trapped, I think a lot of listeners will resonate. It means that I am tied into my business. I'm tied in because I'm the one that everybody comes to asking for questions.

17:02They don't know what to do next. Obviously, the world we live in has a lot of uncertainty. So we get a lot more ping, if you will, from our staff, you know, kind of wondering, what do I do about this? How do you want to handle this? What decision would you make here, etc. And so we're also seeing that not only the business owner, but also staff in general are pulled in lots of directions as well, right? And so as a leader today, our job is not only to lead ourselves and to lead our business, even more than ever, we've got to lead our staff. We've got to instill confidence. We've got to, you've got to be able to align around a message and around a brand, if you will, for our company that gets people moving in the same direction.

17:49I think about in that terms, the trapped is, you know, I can't leave my phone. I'm, you know, getting slacked all the time. I'm always thinking about things. And that's really not a good place to be because then we move directly into tactical and away from strategic. And when we move away from strategic, now we are stuck in the day-to-day and we can't effectively lead. That's a huge problem. Yeah. Modernoperators.com, when people go there, what do they click on? What should they do? So when you head to our website, you can join our newsletter. We put out thought leadership pieces and frameworks and principles every single week.

18:28A lot of our readers will just grab those and implement those right away. We also have a growing YouTube channel we just launched several weeks ago, and we put out a lot of content there about how to think about your operating system, how to think about the context and what needs to go into it. We also publish white papers, for instance, a new white paper on kind of looking back at the last 50 years and how business has outsourced its processes to all these various tools, world-class tools. And now that we're in this mode of not having a core to help move forward quicker and how that's gotten us stuck.

19:08So a lot of different resources for people to kind of play with whatever level they want to play. You can also, of course, book a call with us and jump on for 15 minutes, really just to talk about what you're going through, what you're experiencing. We'll give you some ideas. We'll let you know if it's really something we can help you with or not. No obligation. It's always free. I love getting great ideas. Damon Flowers, you are the founder of Modern Operators, found on the web at modernoperators.com. Damon, thank you for joining us. This has been great, Josh. Really enjoyed it. Appreciate it.

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