195. How to Run a Small Business Like a $100M Company

0:00Most people after spending decades running$100 million companies would probably slow down, maybe retire, maybe pick up golf. But not Dan Frank. Instead, he walked away from boardrooms and global travel and bought a screen printing shop. No background in the industry, no experience with ink or presses. Just a belief that his sleepy little shop in Reno, Nevada could run like a high-performing production machine if he applied the same efficiency and business principles that made him successful in the corporate world. Today, Silver Screen has doubled in size, employs nearly 100 people, and operates more like a logistics powerhouse than a typical print shop.

0:34But how exactly did Dan use systems, technology, and efficiency to fuel that growth? And more importantly, what can other small business owners learn from his approach? I'm Ryan Atkinson, and you're listening to the Up the Podcast, where we uncover the secrets of building and running successful businesses. I am so excited to welcome Dan Frank to the podcast today to talk more about print shops and the technology he used to scale to where he's at today. So Dan, thank you so much for being here. Oh, you're very welcome. Thank you. Let's reel back the clock, because I talked about you being a CEO,$100 million companies, So you've made that transition from a corporate CEO to owning a print shop.

1:08Can you walk us through that transition and what drew you to make such a drastic change? Yeah, I was in international logistics, a lot of travel, been doing it for 30 years. And so, you know, I felt like getting closer to home, which Reno, Nevada is close to my hometown, which is very small. And taking care of my elderly mother and just kind of slowing down a little bit. I think the main decision for me was the travel. I was probably 78 % of the time on the road. I enjoyed the experience, but, you know, I felt like spending a little more time with family and friends and things like that was a priority.

1:39Well, let's talk about what attracted you to the screen printing industry. Talk to us about this opportunity that you identified and how you eventually took advantage of it and got on to what you're doing now. Yeah, that's a funny story because I pretty much picked Reno because it's an hour and 15 minutes from my hometown, which is 1900 people. So Nevada is a very business friendly state. I saw some advantages to California's struggle in manufacturing, warehousing, trucking. Those industries are really struggling because of the labor force and things like that, and also regulations. So what I did is I just decided, all right, I'm going to buy a company in Reno.

2:11And I started engaging the business community. And this business was for sale. I met the owner, very nice guy, started in his garage, built it up to two and a half million, something like that. And I saw a lot of areas where he could scale. So the business definitely was not in trouble. In fact, it was a good business, but it definitely hit a plateau. He had burnout, things like that. And he had some priorities with family that he needed to deal with. So he was 43. That was the only concern I had. He's still consulting for the company six years later. So that was successful. But that was a concern is what is he going to do?

2:45Is he going to become a competitor? And he was not. So I just decided to pull the trigger. I mean, the sales price was pretty reasonable. And I felt like the business needed capital, which I had. And so I decided to proceed. Nice. I love it. Well, let's talk about that transition then, because basically then you would get into a silver screen through an acquisition, essentially, or buying a company. Let's talk about how that transition was. I mean, what was the reaction from the employees? Talk to us like emotional. I mean, what you're going through. I mean, two and a half million dollars a year.

3:12I'm sure that pretty nice multiple. So I'd love to hear a little bit more about that transition as well. He didn't tell the staff. It was his baby, right? So I had to tell the staff. That was a very interesting meeting for sure. his processes. In fact, I had a meeting with him yesterday about technology and some things like that. Him and I think completely different. And the first year was a struggle, a lot of conflict. I tried to just stay pretty neutral and learn the business. He had excellent processes, proprietary software, try to gain a relationship with them. That was a difficult year for sure, but COVID happened about six months into the purchase.

3:45And so he decided to work from home. We had to obviously downsize the company and kind of restructure it. So at that time I really took over. And that was good because the conflict wasn't really good for the business. We thought very differently, but as a consultant, he's done an incredible job because he's really a systems process guy. And so I'm the sale and he's the rudder, if that makes any sense. I don't know if you ever heard that analogy, but he's got some really good insight. I tend to take risk and make kind of entrepreneurial decisions. He will call out the risks of those or the concerns.

4:15And we've ended up with a really good relationship, but a pretty good, there was conflict, but he's a super appropriate guy. Obviously, I valued him. I didn't want him to leave the company. And so, you know, once we got through that process, we began to communicate a lot better, make better decisions together. And I would consider him, I always call him my partner and not anything else because he's still very involved in the business. I want to ask you, talk about COVID a little bit. So you bought this company six months later, COVID comes through. I mean, that's a huge adjustment to anybody's business model to how they operate.

4:46Talked about the impact COVID made on your guys' business. I mean, I'd love to hear you guys are doing two and a half million or so up to this point. How did it like really elevate you or like hurt your team? It almost destroyed the company. The governor at the time said essential businesses were not supposed to operate the next day. It was, I think up on the Thursday or Friday. So we did close the company and tried to really figure out, okay, what are we going to do? One of the big problems is 40 to 50 % of our business was sports printing, universities, colleges, high schools, elementaries, things like that.

5:15So that business was gone for two years. Dave's thought was, is this going to last a couple of weeks? Mine was, I don't think so. I think this could last a while. A guess is a guess, but my guess was correct. So what I did is I furloughed all the 38 staff except for probably about 12. We furloughed them, so we kept their medical and things like that. That was a good move. So we really didn't have much business. We did apply for PPP, had a really good banker. He got us those funds pretty quickly. I had some capital as well, but it wasn't going to last for three months. So when you have that type of rent and things like that.

5:47The first thing to do was to downsize the company, get some funds from the government. Then we also had some other disaster loans and different things like that. And my decision was, let's just go ahead and innovate. We had to pivot the company from sports to other things. And I really enjoy retail. I come from logistics. We did a lot of retail work. So, but you got to do a lot of different things, tagging and bagging and, you know, drop shipping and all the things that we didn't do. So we just kind of re-engineered the company. We also looked at our software, which was proprietary. And with that money, we decided to go ahead and redevelop that as well.

6:18And Dave took that project on. So really, it's hard to go back, but I remember in my mind, I told my team, either we just skinny down and we just try to survive or we innovate, we figure out how to pivot. And we did that. I would say that, you know, without the funds from the government, EIDL, disaster loan, a PPP is over$2 million we got. So, you know, the government really took interest in us, I guess, through those programs. And we took advantage of that. Yeah, I think it talks about being an entrepreneur, as you said, and taking risk of saying we have to cut sports completely. We have to go into straight like e-commerce.

6:50That's what's your background was. One thing that you've also noted here is like you're big on measuring like everything, operations, just measuring, measuring, measuring. Let's get actual for listeners that also want to start something similar here. For shops that are just starting to attract like efficiency, what would you say are like the most three impactful metrics they need to focus on? I don't think anyone is better than the other. Probably one of the ones that everybody knows is lean manufacturing steps. The first thing to do you just mentioned is you have to measure everything to be able to make any progress.

7:21So the good news is when I took over the company, he had schedules, he had a lot of times for certain jobs, and he had a really good process for that. But I felt like we didn't labor share enough. We didn't really study steps and really try to figure out efficiencies and work with the team and train them. So for example, if somebody had a position, that position they were trained in, but they weren't cross-trained, if that makes sense. They didn't work between departments. So what we began to do is say, hey, we really need to invest in these folks. Pay was a little bit light. We had no benefits.

7:50So it was kind of a job where you did more of a trade. And I really took a few years, but now we have medical and dental and vision for all our employees. And we just took a risk with that money. And we just upped our pay by about 20 or 30 % for all employees. but it really was required if we were going to head down that road, right? So that was a bit of a risk as well. And we operate what's called the meritocracy. When you say measure, yes, measuring is important, but my opinion, especially with the young people, because I'm 61, is that I think there's a skepticism that the company is not going to come back and reward them.

8:23I consider it an employed asset. If you measure them well and you measure the business well, and then you come to the table with rewards based upon that measurement. So we have metrics, not only for the business, but also for the employees. So let's say if a printer is printing at 85 % and through training can get to 90, they immediately get an increase for that. And there's measurements for that. We call it a meritocracy. That word's actually starting to be used more and more. I've heard it more and more. And I always give this example. We had a gal from Elko, which is a small town in Nevada, come.

8:53She had no experience and she really wanted to learn the business. She literally ran from the machine back and forth. Not that you need to run, but her energy was very high. She was a good communicator. She got, I think, six increases in less than a year. And now she's one of our supervisors. So, you know, meritocracy sounds great, but she was just killing it. I would say her income increased about 30 % within a year. Most people spend months, sometimes years, just thinking about starting a business. But what if you could do it in just 10 days? That's exactly what the 10-day business launch plan is designed for.

9:26It's a step-by-step roadmap that takes you from idea to real operational business in just 10 days. Click the link in the description below and get ready with your business. I want to talk about like implementing something like that. So what exactly if someone's opening something similar to this, I mean, what exactly should they be measuring? Let's start with like themselves and like employees on like, what are some of the most important metrics to track daily for like productivity and like performance? Well, manufacturing, I think is a little easier. I think in the office, it becomes a little more complex.

9:55But in manufacturing, I mean, you really have to study what is 100%, right? So that's productivity, those measurements, how long does Bob take to do a job versus the standard? If you create the standard, then Bob can see what he's aiming at to be at 100%. By the way, 110 % is possible, but 100 % should be something that is obtainable and provable, that Bob can see that somebody else is doing it and then learn those skills and continue to grow. I think one of the things that are really important is not make them feel judged or criticized, but have people around them and they're mentoring them. You give them an experienced printer, for example, and have them raise up and really define the goals.

10:34Some people honestly would say, you know, I don't know if I want to push so hard and that's okay. You know, you want to make sure that an employee that maybe goes at a slower pace doesn't feel criticized. I was on a podcast where they said, well, you know, what about the guy that's not learning this fast? Well, that's okay as long as he cares, right? As long as his attention to detail and obviously quality is a big issue as well. So we measure speed, but also quality. How many damages did they do in a day or a week or so on and so forth? But I think the most important cultural change was when I first came on board, they thought, you know, Dan wants money and he's critical and he wants faster this and that.

11:11And that really wasn't the case. I wanted to build the people up and I would tell the employees, we're trying to get wages up. We're trying to get benefits. We now share 7 % of our net profits and develop a culture of understanding that we're all in this together. Right. But clear goals and measurements are critical. Can't be a speech. Right. It's got to be something they can see. Yeah. Dan, what I love is just like ring between the lines. Like I get like the genuine passion. I like your team, like really does treat people so well. You've talked about, you know, compensation going up 20 to 30 percent.

11:39You guys are sharing net profits. I feel like that really does build the culture, as you talked about, of we are all in this together. It's not just Dan's money hungry. Dan wants to go all quicker. It's like, no, Dan actually cares about the people. I feel like building a culture like that is super important in manufacturing. Yeah, there's like five competitors in Reno. We're probably the biggest by about four or five times, but we weren't when I started. And we're now the place to come if you're in the industry as far as, you know, pay. However, if you kind of want to, you know, work at night or we do have shifts at night as well, but, you know, we kind of expect a full-time experience, very dedicated employees.

12:16Those bonuses are wrapped around attendance, attitude, their performance, and then also their rank as far as their rank within the company. So there are metrics even on the bonuses. They get a sheet that tells them their scores. So it's not just 7 % out to everybody based upon tenure doesn't matter to us. If you've been here one year or 10 years, I mean, it's really about those things. So I think the biggest struggle I see with companies is how to develop the metrics so that it becomes real to the employee. And I don't think there's some easy math to that, right? Or some easy program to implement.

12:49You really have to study your business and create those. Yeah, I can speak from my experience on my own company, like being able to compensate employees fairly for one, but also align like bonuses and like promotions and compensation upgrades based off of like metrics they work on each day. I feel like as you talked about, it's like one of the most beneficial ways like get the most out of your employees, compensate them good, but also align their bonuses, upgrades or whatnot through like metrics that they work on daily. And there's two other principles at work, and I hope this comes across, but the probationary period is very important for us.

13:22We fire fast and that doesn't sound very nice, but if somebody is not, has the care or the attendance or so on and so forth the first three months, you know, I encourage the managers to release them quickly because there's a work ethic here, right? And we obviously work with them to explain the work ethic and so on and so forth, but we probably lose 30, 40 % of people in the first three months. Past that though, the retention is extremely high. I think there's a culture that they either like or they don't. And I tend to want to tell them, hey, thanks for trying. Don't feel bad, right? You don't want to make it a negative environment.

13:54The other thing we do is that if an employee gets to a yearly review, which we do those, and somehow we're misaligned from pay to their happiness or things like that, that's a problem. The yearly review is really to say, are we good, right? It's not about how's your pay. They should already know where they're at, right? They should already know their goals in regards to where they're going. If that meeting is about discontent or things like that, we have failed as a business. Let's talk about succeeding as a business because you've grown a silver screen from a small shop to 92 people, which is just like amazing.

14:25For someone starting a print shop today, what would you do differently to make it like as efficient as possible from day one? The industry is growing up, but most screen printers or we have embroidery machines, digital machines. We have warehouse and fulfillments. We do a lot of different things, but most shops start through screen print just like this one. And it tends to be people that think it's pretty cool and they like the art. They really enjoy doing all those things for the customer, feeling proud about making the restaurants, redesigning their image or their branding or so on and so on.

14:54And by the way, that is very, very fun. But that's one of the reasons I love the industry. However, it's also manufacturing. There's a real weakness in the industry in regards to business principles, delegating authority, creating order, caps, corrective action reports in regards to meetings, in regards to what happened. And then, you know, lean manufacturing. I took all the supervisors that were in offices and I put them in stand-up desks on the floor. That wasn't really popular in the beginning, but that way the operators and everybody on the floor had their supervisors right there. It was kind of a culture.

15:24I call carpet versus a concrete. Create one team and make sure you know that the most important thing is on the floor. Those employees and what's happening there, that's where we all should be is on the floor. I always tell my guys, this is all about the floor. But there was a real culture like, hey, those guys out there are getting the job done and we're the important people, right? And that can happen in any company. I think the main thing is that trying to take people that came into the industry as a passion for art and artistic things and realize, you know, at the end of the day, we're still going to have to put out so many items per day.

15:56And really, we run daily P &Ls. We We know where we're at versus the budget. For example, we do 40 ,000 chargeable activities per day, potentially. Sometimes we do 36. So every time we touch, you know, if a shirt gets three locations, we call it, that's three on that one garment. So we don't cart garments, we chargeable activities. And we are 111 staff now. And we measure every single position, what we need to do, what that means to the revenue. And then budgeting is critically important. It's very weak in the industry. You know, well, if we work hard, the money will come. But in my opinion, you've got to really study, you know, what are we charging our customers?

16:32What are our metrics? What are our goals in regards to hit those daily goals? Like to make budget, we had to build 36 ,800, I think this month per day. Right. So and break all those down into departments. It seems a little dry of, you know, I've definitely engaged in people in the industry, conferences and stuff to some of them. That seems kind of like a buzzkill. Does that make sense? It's like, well, that's real business. Well, you're a business guy. unfortunately if you're going to be in business there are certain principles you have to adopt budgeting measuring things like that yeah i absolutely love that and let's talk about that a little bit more about like budgeting correctly because that's something for my own company that like the first year of operations honestly we like didn't do that much budget about being honest like we just didn't do that much but year two you know you started to get a little bit more strategic you kind of know what you're doing a little bit more you think you do anyways where now if like a client comes in, like a breakdown, like whatever, we'll just make it simple.

17:24Like 80 % goes to our operations slash payroll, 10 % goes to like marketing, 10 % goes to something else. I'll be here if you have like a specific breakdown on like how you budget appropriately. I'm not sure I do it right or perfect or anything like that, but we just kind of figured out our way. The most important thing for us is to measure dollars versus hourly labor on the floor. So for example, you want to run from 38 to 43 % on our jobs. If the labor is higher than that, is it a pricing issue? Is it a productivity issue? And we drill down into those things. So the reason I do labor is that that's the largest for us.

18:01All labor is about 58 % of our business. And I can't control rent. I can control cost of good stuff like supplies and things like that some, and we have a budget for that, but we don't work that every day. I mean, we look at our procurement and say, what, you know, what price we're getting to things like that, but we really study labor. Again, I'm not preaching that that's the only thing that's important, but it's the most controllable. So, you know, if our labor is running below 40%, we know we're going to make money. The second thing is we look per head. I don't really like the term, but I don't know.

18:30The other one is we took a, take a look at all revenue for a month and we divide that by the employees. So for example, we know that it's $6 ,200 or more per head, we're going to pay all our bills. At about$7 ,200, that's our budget, we know that we're going to be within our EBITDA goal. If we get over$7 ,200, we had a month where we're at$8 ,300 ahead and we made six figures in that month, right? But I think it's important to look at headcount and are you being efficient with those? Are you working those things? Well, I would say it may sound strange. Even other people have said, really, that's your number one, but that's our number one thing we look at at the end of the month.

19:06And then you can drill back down into that. Does that make sense? You don't stand there and scrutinize that. You take that and you go, what happened? Why did we drop below 8 ,000? Why did we drop below 7 ,200 and then do that? I think in budgeting, I'm a big proponent of not over budgeting the company, but winning. So for example, we built in this year, a 10 % increase in business, knowing we were going to do better than that. We're at 23%. In my opinion, in corporate America, if there was anything I didn't like, cause I didn't like the finance department putting this, they called it a stretch goal and it was unrealistic and the company always lost, but we lost by less or more, right?

19:41We're winning by 13 % over budget and it's fun. It makes it a lot fun. And then of course, create bonuses based upon over budget as well. Like I talked about, I think a winning culture is one where the goals are realistic and people feel like they can meet them. I think a losing culture could be winning, but they feel like they're losing. Oh man, I resonate with that so much because honestly, we should do this more. But last year, every month we had set a revenue goal. And I honestly think it is good to set every month, like have a revenue goal for what you want to hit. But like every month, I mean, if you're not hitting it, you're just so stretched, like, holy smokes, we're missing revenue.

20:13It's the end of the world. So actually this year we stopped tracking revenue. And so far, I mean, we're talking literally day one of Q3. We literally have already surpassed all the revenue we did last year, which is just like amazing. I feel way less stressful, which is great. But I want to ask the like first time CEO advice that you would give to other CEOs. I mean, what are some of the first things that you get right off the bat? I mean, you've done this multiple times here. So I'd love to hear your thoughts there. Immediately, and this was a weakness of the business. The previous owner basically opened the building, closed the building.

20:41He had 38 direct reports. It's pretty obvious. I mean, he knew it wasn't good either. But, you know, building a management team is a lot of hard work. It takes years. I have five incredible managers, but I have had to, you know, change out a couple managers. I've had to spend a lot of time. I mean, they now, when I talk about business principles, understand what I'm saying, but I've been saying the same thing for five years, right? So it made me feel like I'm not getting there, but transferring that knowledge, trusting them, supporting them, having weekly meetings with them, making sure we have a daily production huddle.

21:14And you could say, wow, that's a lot. It's only a half hour, but we go through everything. We call what's stucks. At the end of the meeting, everybody calls out any problems that they have. We call them stucks. You can call them whatever you want, but they can voice their concerns. Like, I'm really concerned. A lot of times if a department manager will say, I'm not sure I can get it done. than another manager because of the culture we created and say, hey, do you need an employee? I think I've got an extra one. And I smile a lot now because I sit in the media, I don't say much anymore. And they're just interacting.