Fix Any Business In 100 Days | Jeff Sands

I worked with um one guy who was quitting and I said Bill if you leave now you're it's going to haunt you for the next 20 years he was like 60 and and and it's going to te up inside for 20 years you're going to be a loser and you're going to know it and there you can your way around it but you're going to know it in your bones but if you stick it out here for 6 more months we'll kick ass and you can walk Out of here a winner with your head held

high you'll be a better F grandfather and husband and um what do you have to lose what the hell are you running home for there's nothing there for you you got to stay here and you know I I had like 30 seconds to make that pitch but it stuck it worked Bill Bill actually stayed for two years but he totally kicked ass we did a great job saved the business and um and and he went on a hero and everybody recognized him for That and I I think more than anything that's what people want um

deep down inside they don't want Comfort they they want they want want to do something cool all right guys bang bang I've got Jeff here uh Jeff you are probably the number one turnaround artist in the United States maybe even in the world uh there's lots of crises that occur uh some of it's mismanagement and sometimes people just started a bad business Either a bad Market a bad business model Etc when you see the crisis how do you determine whether the business can be saved or it's just a bad business and it deserves to die

you know um for sure everybody says oh it's it's external factors it's the industry it's something else um and and really it's you know sort of manufacturing you try to figure out what what root caus is try to get to the basis of that you know if it um if it Really is industrywide I worked with a computer reseller recently and according to him the all the manufacturers pulled back credit a couple years ago you know so okay if that's true and you're in trouble what what's if everybody else in trouble is are you the

best performer did everybody else go out of business with this set of circumstances what happened is that was Universal but then they everybody hit this Pivot Point like My credit's gone what do I do they made a horrible decision and wning got uh merchant cash advance money and that's ultimately what's killing them $47 million business and um and there's just nothing left because the MCAS are picking picking them alive um the so it's it's really that you know you talk to the owners and you just get a sense uh you know are they really committed

are they goofballs are they are you know do they have the wrong Focus somewhere Else H those sorts of things now when you've seen I don't know hundreds maybe thousands of these crises at this point I kind of think of it like you're the firefighter the fire is blazing someone's called you up and said hey we come put out the fire what are the things that you see in the fire that would cause you to not want to go save it right or like what of the things that would turn you off from a situation

is it people are there other things that Are kind of the red flags where you're like hey even though I'm the best at what I do I can't save that business or I don't want to go spend time doing that um in general there's no set of circumstances that'll scare me off um probably my most radical was I got a call um from a bank the CEO committed suicide yesterday um there's uh four felonies being investigated revenues have fallen from 46 million to 6 million and about to go to zero and I was in There

next day running the business um be because as long as I can draw a clear line of all that fraud and all those felonies happened previous to me and you know in that case I reached out to the um State Attorney General and just said hey I just arrived if you need to arrest anybody you know give me a call I'll have them meet you in the parking lot uh but we're running a clean ship here and we're trying to fix the business so it's not some much Circumstances it's really the people it's um you

know kind of if you if you think of um alcoholics synonymous or CrossFit gym um it's the people who come in and really are ready to change your life and really are ready to to to go down A New Path with passion and commitment if I have somebody who's bullshitty Dick around with like oh I think I want to lose weight I'm tired of being 400 lbs but you know um you can tell if they're not serious About why should I be more serious about fixing their problems than they are um we once had a

guy who was drinking himself to death locked himself in his apartment when he should have been at work was out of options called AA and AA said we don't go in mug people with treatment they have to come to us um and um and and that's kind of me you know when somebody's ready to change uh in their heart then you know they're my best client I'm their best friend but It's they've got to have have that commitment and there's a lot of people who sort of Dilly do around the edges but aren't aren't ready

to take that that plunge yet so you wrote this book corporate turnaround Artistry fix any business in a 100 days and when I read this I was like I got to talk to Jeff like this this is a uh Bible it almost seems like in terms of corporate turnarounds it's almost 300 Pages or about 300 pages and my number one lesson From this was your job is to motivate people like there's all kinds of tips tricks you know hacks all these different things but at the end of the day got to motivate people to actually

want to uh fix these businesses can you give me a couple of examples of things that you've done to actually when you walk in there's the folks who kind of messed it up and then there's the people who are going to stick around what are the things you've done to motivate People that you kind of now use as part of your playbook you know I I would say if you step back if you gave everybody in the world the opportunity right now today you can relive the most heroic moment of your life or you can

sit on the couch and take it easy um they're all going to say no no no no I want to go relive the most heroic moment of my life and that probably involved a lot of sweat some pain discomfort fear all these things that no one really wants But we do as humans deep down inside because we know it's it it's worth it in the end um so I think everybody has that latent urge to run up you know charge up the hill and do something awesome um so for me it's trying to Define that

in you know take a a union Shop full of bunch of tough old guys who have been working in a factory that's pretty easy because I just go in and talk to them like a high school football coach and um you know Hey listen this got all screwed up Y'all had a bit a bit of this because you weren't working hard enough but what we're going to do is we're going to work hard we're going to go kick ass and you really need to motivate them everybody wants to go kick some ass somewhere and um

and you give them like we're this is what we're going to do we're going to go and with a linear Focus people hatch on to it they love it now I go into you know you take a pharmaceutical business and I'm talking about let's do more with Less and they all want to do less with more um that's just the culture where everybody's kind of overpaid and taking it easy that's a lot tougher so you have to get their attention you know maybe it's shutting down a division maybe it's firing their boss uh but there's

got to be some sort of um Thunderclap to get everybody's attention and then once they realize they're fighting for survival some will leave because there's an easier path but um a lot will stick out And and and do the heroic battle to bring this business back reclaim our pride you know and then you can leave I I worked with um one guy who was quitting and I said Bill if you leave now you're it's going to haunt you for the next 20 years he was like 60 and and and it's going to te up inside

for 20 years you're going to be a loser and you're going to know it and there's you can your way around it but you're going to know it in your bones But if you stick it out here for six more months we'll kick ass and you can walk out of here a winner with your head held high you'll be a better F grandfather and husband and um what do you have to lose what the hell are you running home for there's nothing there for you you got to stay here and you know I I had

like 30 seconds to make that pitch but it stuck it worked Bill Bill actually stayed for two years but he totally kicked ass we did a great job Saved the business and um and and he went on a hero and everybody recognized him for that and I I think more than anything that's what people want um deep down inside they don't want Comfort they they want they want want to do something cool so I remember watching uh years ago Marcus lonus uh he had a TV show called The Profit and one of my takeaways from

watching that although There Was You Know cool stories and cool businesses and stuff was sometimes he showed up and They were like oh my God thank you Marcus for showing up and saving us other times he showed up and they were like get the hell out like we want nothing to do with you what is the receptivity when you show up right you're you're known as the turnaround guy like are they excited to see you is it a mixed reaction what is that been like it it's a mixed reaction um the screw balls definitely don't

want me around the the people who you know The hard workers who feel oppressed do and then there's sort of a Middle Road of people who sort of doing their belly um one speech I often given you didn't walk into to this business whatever you 15 years ago go with this shitty work ethic you don't tell your kids if your kids knew the shitty work ethic you're bringing in here every day they'd be embarrassed for you if your parents knew they'd probably slap you um and you didn't walk in here like this the Culture brought

you down we're going to fix the culture and you got to you got to bring the culture back up and the culture is going to bring you up and that's the that's the bulk of the people and and they like that they again they want to be part of a winning team and um and they're willing to you know people were raised right people have a good work ethic they know right from wrong it's just that the culture hasn't required or demanded that of them in a Long time and um and they're actually relieved and

inspired when when you do demand that of them because people people want to perform at their best that makes complete sense uh we've talked a little bit about the internal uh changes that you have to go through uh another thing that you talk about is one of the first steps once you get inside of these businesses is you immediately call up all the vendors and aggress L start renegotiating with them Or trying to get some relief from them uh it's not dissimilar from you know maybe a private Equity Firm like 3G is famous for you

know being hyper hyper aggressive with a lot of these vendor relationships and so what is those conversations like and what are some of the tactics that you've used and now you say Hey whenever I've got to renegotiate these seem to really work this episode is brought to you by cal.com what do I have in common with Chad Hurley from YouTube Toby from Shopify and Alexis from 776 and the co-founder of Reddit we all use cal.com instead of cly and we are all early investors as well cal.com is leading the charge of scheduling Platforms in the

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c.com and use code pomp to get $500 off when you sign up cal.com an open-source tool that allows you to take back Control of your calendar be efficient when scheduling and make sure that no one can steal your time and I walk into a tough situation because generally um payables are all waged the vendors haven't been paid and um and and I you know ideally I don't want to pay them anytime too soon because I don't have cash and I want them to give me a lower price which is probably impossible so what I say

is here's a plan where you're going to keep Shipping us we're going to we're eventually going to deal with the past dues but most importantly I want to keep you as a vendor I could replace you today but I don't want to I want to keep you as a vendor but I need cash flow I need I need additional terms I need you know this that or the other some kind of Grace from you once we solve the cash issue then we're going to go over to the p&l issue because the company is not profitable

enough then I'm going to Really work you over for pricing and we're going to make it fair but I want the sharpest price you have not not the dullest price you have and then once we solve the profit issue we're going to go over and deal with the balance sheet and that's where your past dues are which we're freezing for the moment uh and then we're going to find a Equitable way to deal with those um worst case we all know that bankruptcy um provides the opportunity to work out debts to haircut Or stretch or

what have you I don't want to do that I'm not threatening it but we all know that's an option so after we get to solve the cash and then we solve the profits then we're going to deal with the debts fairly um and we know we'll have open conversations and see what the the company can afford to pay and and um you know I'm thinking of like every damn client I have right now they just can't afford even when we fix the company they can't afford the balance Sheet because they just have too much debt

um and then it's really a conversation of I mean I got one right now um I can give you 20 cents I can I can pay off 20 cents on the dollar um over four years or we can just go into bankruptcy can get 10% over three years it's it's your choice but you know let's be friends why not work this out out of court um keep the lawyers out of it and get you a higher recovery but mathematically you know um how can you Show me how I can pay anymore here's our projections and

um emotionally they'll fight but eventually the logic part of their brain takes over and um and they say yeah I I get it unfortunately um and you usually have to go through several people in the organization and get to CFO or president somebody who can really understand in their lawyer who says yeah it kind of is what it is and we you know we need to accept this does it change or they fight Or they fight like hell and then my number one mission is to get rid of them um yeah and you know and

go give somebody else our our profit or go allow somebody else to make profits on us for the next 10 years does it change at all when the vendor is a software vendor versus maybe somebody that's you know providing equipment or some other kind of physical economy type product yes um only because of the cloud it used to be you know you buy software and um they'd Say well we're not going to service you I'm like fine um I'll call you when I need service you know I don't I don't give my plumber a monthly

retainer why the hell would I give you one uh but now they have Cloud access they can just turn it off so it's it almost has become like a utility you know like the gas company we just got to pay a monthly maybe we won't you know we'll put the old balances on ice but we've got to pay monthly um either full or or or partial But it's yeah software has a lot more leverage than they used to now one of the uh quotes uh that I've heard over and over again that's probably one of

my favorite quotes in business is that companies die by Suicide not homicide and it's just them doing constantly stupid things um in the book one of The really stupid things that you highlight is you say Google IRS 941 prison and you call it the dumbest crime in America explain what this is and then why do People fall victim to it um so a 941 is the as an employer you um you're a trustee for the withholdings for taxes from your employees the employment taxes and whatnot um and and all it does is I take it

from your paycheck and I give it to the government it's not mine to touch or take but when company's getting trouble and CEOs get in trouble they say well geez there's a bunch of cash why don't I just use that today we'll pass it on to the government in a couple Months um the problem is the IRS has made this the number one um the the number one law to go after and punish and when you Google IRS 941 prison you'll find all these people who got uh you know um found guilty and are in

prison because they Tred to play the 941 game it's you know my my first question is what the hell are you accomplishing I mean if you really have the miracle solution yeah maybe it makes sense to take that risk if you really have the Miracle Solution none of these people had the Miracle Solution they were just hoping and dreaming and thinking I'll rip off my employees in the IRS to fund my delusional fantasy and eventually you know the the order fairy will come around um of course there's records you know I always say if you're

going to rob a bank go go in with a ski mask because they don't know who you are when you're doing like white collar Bank crime they they know where the money went to they Have the accounts they have the records they have the Ein n numbers like there's no possible way you can outsmart that kind of crime um but people do it it's impulsive um and it's boy the IRS just hammers on folks so when I come in and find that we have to um quickly deal with the IRS make it known come up

with a payment plan and um and you know stay away from their their sharp knives so you mentioned delusion and one of the things immedately jump to is there seems Like uh there's a growing number of entrepreneurs who don't have uh what I would consider kind of just basic Financial skills or understanding read a p&l read a balance sheet understand how some of this works uh and it feels like maybe those two things are related like you get increased delusion the less that you are uh well-versed in kind of core you know accounting or or

financial metrics uh is that true in your experience where you know people just if You don't understand the numbers then dreams run wild and it leads you to ruin yeah yeah largely um interestingly people who really understand the numbers still delude themselves it's just you know it's it's a human trait but you're right the further you are away from reality which is the numbers um the further you are away from reality so in the book you say quote few Executives have ever thought of Themselves as a chief profit officer but that's what the leader needs

to be in a recovering company so the CEO or executive is the chief profit officer in a recovering company how's that different than a normal company or a growing company should they always be the chief profit officer or is it specifically during that recovery period where it's essential they should always be the chief profit officer and somebody should always be I I entered a company Recently the CEO is the on his business card and and email Chief Visionary the number two guy was Chief something else ridiculous and I said listen y'all got plenty of this

Vision stuff and y'all got plenty of that other stuff uh what y'all don't have is profits or cash flow and um and somebody's got to quit that stupid job that means nothing to me and become the chief profit officer you know but I mean you see it who wakes up in the morning and thinks I got to go shave Some pennies today and I got to go add a couple basis points to my gross profit margin every day like they're a monk and it's the only thing that matters people just don't do it um and

and and if you don't do that when times are good um then you're going to end up where times are bad you know probably Chances Are Over time and um and it's just it's like the most fundamental mindset in the world but we kind of forget about it and um entrepreneurship And being executive and all that crap is so over um romanticized um and it has you know and and and the romance has nothing to do with um scraping pennies but retiring you know retiring with a big war chest has everything to do with scraping

pennies you are probably glamorous of course you are probably the epitome of a wartime CEO uh could you be a peacetime CEO like is it possible for you to run a Business that's not in trouble um somebody else could I I can't um and um and I and I think there's a third you know there's a startup CEO which is a different breed as well um and usually when we buy a business I'll run it for the first 100 days and then and then I think you need a one-year person that kind of sets the

foundation and really just starts doing reps and gaining momentum we're going to do the basics over and over and over and and then the Third CEO type would be the growth uh sort of return to normal and growth and I think they're three completely differ I can do the first two somebody else might be able to do the second to but I can't no I'd be a complete failure as a peace time CEO now in Reverse could the peacetime CEO be the wartime CEO in your experience occasionally you know these guys like Bezos or Zuckerberg

that can take it from zero to gazillions I don't Understand how somebody can have both temperaments um and they're extremely rare there are people that can do both the peace time and wartime but um there I I'm not one of them and and it's extremely rare bird that can um and I'll tell you the worst thing in the world is trying to is fixing a company getting it right falling not in love but really believing that you're on the right path and then the results aren't showing up and you need to turn it around again

Emotionally I have this break where I just struggle to go in and and take apart the organization that I just built over the last two years so I almost need somebody to come turn around me when I need to turn around now uh I asked a friend of mine Lulu m one time about uh peace time and wartime in Communications she said something to me that just seared in my brain which is there is no difference between peace and wartime it is pre-war and post-war and maybe that Is what the Mark Zuckerberg's and the Jeff

Bezos right they just they're prepping for war and then they're kind of recovering from war and PR pre prepping for the next one I guess yeah I I I it astounds me that you know the same person that can get this this little idea off the ground you know anybody who's been through a startup like it is so hard it's um just to get momentum and then to be able to do that and then organ you know organize and Manage a company with aund thousand employees I it's just two different universes to me but the

the occasional rare bird can do it there's another line in the book that uh really resonated with me which is the bottom line is that a turnaround will be some formula of raising prices cutting cost streamlining operations and fixing bad habits can you give me an example of each one of these and maybe we start with raising prices yeah raising prices Um you know the banal is uh raising prices the more aggressive is um we've raised prices on um you know so it's one thing we're going to raise prices going forward it's another to say

we're raising prices on our whole backlog that we haven't even produced yet but we're just going to add an extra 10% to that and go tell the customer the the more extreme version is calling customers and saying hey and I've done this hey we're in a bit of a pinch um Two things one we need cash so you've got to pay us immediately even though you have 60-day terms that you turn into 75 and the other is we're not profitable so we're adding 10% to all the open invoices so um all the invoices you have

ADD 10% to them and pay them today or we're not shipping any further that goes over like a lead balloon but you know you have leverage it works and and you you know I've saved businesses that way um it upsets them but a lot of companies Would rather have a viable supplier than um that than not and if you have that kind of Leverage you can do it um cutting cost it what about cutting costs and what what's maybe the most extreme situations you've been in there yeah you know cut well I mean you know

it's the easy ones like you find I remember this guy was billing 75 hours a week so 35 hours a week in overtime and he had a 20-hour job he was so bored that he started drinking on a job became an Alcoholic crashed the um the um forklift still didn't get fired um you know so you go and like whammo there's there's a bunch of cost that just got cut um you know declare uh no more overtime without approval and everybody fusses I'm like just come and talk to me I'll approve sensible overtime um nobody

does because 90% of the overtime was BS um then you know deeper into cost you know put put your major materials out to bid most people don't frequently bid their Uh their supply items um and just get competitive market pressure going and a lot of it's really Paro analysis you know we're the 8020 and uh people do a lot of just you know they're wasting time on products that don't really work ideas that don't really work just call them focus on the on on what delivers the Bucks and um you know there's your cost cutting

um streamlining operations again that's pretty much Paro um you know where are we sitting idle I work on A lot of manufacturing so it's a lot of industrial engineering um you know just work at UH workflows process scheduling is probably the single greatest um place for pickup and profit it's a you can have people looking super duper busy and you re-engineer the scheduling and you can just get out so much more um but it's it's scheduling and and and it makes sense because processes develop Over time um and just become cumbersome and awkward with lots

of bolt-on steps and whatnot um scheduling is the best one for that and then um the bad habits you know family members soft work hours soft expectations um you know are we here to provide people with a work life balance or are we here trying to win the freaking Super Bowl um you know go get a work life balance somewhere else we're Here to we're here to you know get to the playoffs and put some wins on the board and quite frankly keep the business alive we're not we're not here for anything else and I

I fell into this early in my career I thought we if we were more inclusive and we gave people what they wanted it would work better and when I rethought it of if I'm Bill bellich or I'm the general manager of team and my jobs to win I have no quals about swapping out my third string Quarterback for a different third string quarterback but you know when you personalize and treat everybody as family it kills you to get rid of a third string quarterback because you know maybe had they have some hidden potential and it

that's not my problem um you know I'm here to staff a team and and and win um and you just got to bring in get rid of uh or let me say it this way you need to upgrade every position uh Rigorously and consistently and if you do that you'll have an All-Star team do you think that it helps that you don't know the teams before you come in like absolutely the fact that you're an ex external person absolutely because I I would have such a soft heart for so many people if I if I

knew them um without a doubt and and that's my problem when I'm running a business after a couple years that becomes my blond spot you know I love Bob oh sure he doesn't move that F But God what a sweet guy and his wife's got problems I'm such a sucker for all that I talked to Graham Weaver who runs Alpine investors they're one of the top private Equity firms in the world and uh one of the things Graham told me is 100% of the time when they buy a business they switch out the management team

and he said you know sometimes they keep the manager team sometimes not no one has a really hard fast rule he goes 100% of the time we switch him out and one of The things is uh one you get your people in there but also two is uh it really changes the dynamic dnamic of the business because all of those personal relationships and you know everyone knows the person who's the good kind of smooz right who who's able to get different things in the business if you don't have a personal relationship all of a sudden

it comes down to just hey what what are the rules what are the ways that we're going to run this Business yeah what what have you what have youve been accomplishing what you been doing lately as opposed to 20 years ago um and and with CTP certified turnaround professional which is a designation in our industry um sacrificial Lambs is part of the study guide and part of the test and you have to write about the value of sacrificial Lambs um as part of the exam and that is the public display of somebody getting shikan where

and it Tightens everybody else up I had one situation where U declared an end to um to um unauthorized overtime it was a machine shop so guys ran two machines each one guy refused to turn his second machine on that day and said I'm not getting overtime I'm not turning why would I turn on my second machine which makes no sense his supervisor didn't know how to respond to it so he went to manager manager was confused by this they came to me I'm in The office freaked out trying to figure out how to fund

payroll and I don't have a solution for that and they give me this Petty thing and I said listen I'm so busy just bring him in here let me fire him right in front of everybody because I don't have I don't have time I don't have more than 30 seconds to fire this clown um and they said okay and they went out and said listen you're not turning your machine Sans wants you to come in there so he can fire you in Front of everybody in the office and he said I think I'll just turn

my second machine on and that was it but you know the word shot through the whole Factory and and everybody realize I'm serious and I don't play those games and we're here to win and um and you know it's nice to get a sacrificial lamb without actually having to throw somebody out the door yeah you got to change you got to change that thinking you can't you can't soft Pedal change as we have seen uh over the last two years or so tech companies especially early stage uh kind of venture backed companies have struggled quite

uh mightily is this turnaround Playbook can it be used in the tech sector as much as in a lot of the manufacturing or industrial engineering businesses you're talking about I I would say absolutely because um you know ultimately it's about uh cost versus uh revenues and um but you got to have Product Market fit I get Tech compan coming to me that haven't achieved product Market fit and you know what do I do it's like you're a drift in in in the ocean and you've never seen land and you want me to navigate you towards

land like I have no idea what to do but if I can go into a company that like well we were profitable we now we're not fine I just reverse engineer like okay what changed how do we get back to where we're Profitable that's pretty easy but you know people that have never been I I don't know how to make them suddenly and then real quickly Tech also you know you've got your in there's generally two turnarounds income statement turnaround which is your profitability and balance sheet turnaround so you maybe you're profitable but your debts

are killing you um Tech has a somewhat different debt stack as well so that's got to be treated differently but you know on the Surface it's um if gross margins are greater than expenses uh you're you're profitable and if not get them there so debt I think is a really interesting thing where most of the physical economy runs on debt of some form or fashion uh in the tech world most people are only familiar with either convertable debt which really they just treat as an equity investment that yet hasn't been kind of finalized or Venture

debt um talk your perspective on debt and and You know maybe what some of the Hang-Ups are and then also times where you've seen it work really really well this episode has brought to you by frck historically the wealthy had a hidden secret in investing they would spend a lot of money and use very three big teams to conduct tax loss harvesting tax loss harvesting is the timely selling of Securities at a loss to offset the amount of capital gains tax owed from selling the profitable assets later but Now frk is bringing this incredible advantage

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the best things you can have is because it it it the discipline and rigor of dealing with Bank debt is so great that it keeps you focused and keeps you online and I see we worked on a company this year who was trying to revolutionize some Building Product they burned up $50 million accomplished Nothing um you can't do that with Bank debt you can do it with friends and family you can do it with Equity but you can't burn up that kind of money on a frivolous adventure with uh with bank Deb and um that's

what I kind of like about Bank Deb the the rigor and discipline keeps you from screwing up to that extent one of my mentors has like 80 companies every single one of them does a daily borrowing base certificate where they you know if you're an Asset-based lending even even folks without debt even companies are incredibly profitable every single day they do a daily borrowing base certificate what's the value of my receivables what's the value of my inventory how much can I borrow against that what's my cash position how much Headroom do I have on cash

um and that's just if you watch that you're not going to get in trouble or you're going to see trouble coming You know months in advance you're not going to be surprised by it same with the 13we uh cash flow forecast which is somewhat similar which works in tech companies or you know even asset light um you know we do 13we cash flows weekly for all of our companies and um are always trying to see around the Horizon uh or Over the Horizon you know what could be coming what what's a downturn and um and

how could we how could we get in trouble that we don't see it and that But family and friends will never make you do that uh investors will never make you do that and um that's why a lot of tech companies just uh flame out um you know the the flip side is they're not going to get Bank debt because they don't have assets and they don't have collateral um and you know you can't borrow from a bank if you don't have either collateral or a hell of a um proven earnings history and which obviously

you know a tech startup Doesn't so I'm going in a circle here so they have to go to equity but you and friends and family but you know equity and friends and family should be running a tighter ship um but they don't and um I think I don't know that's what I like about uh that's what I love about manufacturing it's also tangible it's real and um and and it's if you do it right it's um it's hard to hard to lose your mind along the way you mentioned a mentor uh Most people would say

that you're one of the best if not the best in the business what have you learned from your mentor oh my God all my mentors um yeah everything I I learned I learned a turnaround game from a mentor I learned the um distress investing game for a mentor and um I never purposely sought out mentors but um but I've seem to have always throughout my life had them picked them up along the way um I can't say you know when I was in high school I Wanted to um I wanted to be a professional football

player and we lived outside New Orleans and some of the saints were moving to our neighborhood I went and took took over every single lawn contract of every single player in my town and they all said I got somebody doing my lawn I'm like you didn't understand me I'm taking over your lawn contract if it's price I'll beat them on price if it's service I'll beat him on service but Jeff Sans Is gonna cut Kenny saber's grass and I'm not leaving um and it was awesome and then you know then they all became my buddies

and I got to spend the summer at uh in Vero Beach at summer camp and fly around on the playing the best thing in the world and I kind of did that when I took a fancy to turnarounds I found the best guy I could find and wouldn't wouldn't leave him alone until he basically adopted me um and then same with distressed investing I wouldn't Leave him alone I just kept bringing him deals and then um and then we started doing them together that's there's best career path you can pick talk about the difference between

turnarounds and distressed investing because they're related and they're somewhat sequential but some people choose just to do distress investing and some people want to just be in the turnaround game and so why do you think that there's advantages uh or opportunity in being you know Somewhat um ad advantageous or expert at both of those things um well I I think there's distressed investors who don't really do turnarounds because they're Financial they can run the numbers they can do all the modeling they can talk about it but they don't know how to go on the Factory

4 and motivate people um there's people who can go on the Factory 4 and motiv folks who just don't understand leverage Finance and some of these other things uh you know and how to successfully pull off a deal uh you know if you can do both then you're um you know if you can if you can buy the take buy or take over the problem and then actually go fix it um I don't you know if you're a control freak like me that's great because you can you can see the whole problem and the solution

and um you don't have to depend on anybody else to get you there you Know other than like your you know your trusted teammates now um another part of this that seems really interesting is uh labor every single time I talk to anyone in the fysical economy they tell me Labor's a problem it's a restaurant it's manufacturing whatever uh you have the uh blessing of having to recruit labor to a crisis situation it's one thing when you're the turnaround guy you're the guy who's used to doing this you're Choosing to go do this but now

you have to convince people to come work at a business that's basically failing how do you do that how much of it is like you just tell them it's failing you try to motivate them to come and help versus you got to show kind of the shiny you know uh kind of rose-colored glasses and and sell them the dream how how do you recruit people to these crisis situations uh largely selling the dream um you know often I often I go in and uh I remember one everybody's like boy of Rick were're here you should

bring back Rick um boy of Rick were're here and I'm like who's Rick so I went on oh my God I got a bunch of stories like that where you just hear his name and then you go find a guy like everybody wants want you back they all thought you were the best here's what we're doing with the business here's your role you can be the hero of this journey um and what else you doing you know you're your boss Doesn't care about you you're stuck we're we're going to love you and worship you you

got to come back others I just recruited in a um controller for a uh distress company that we don't have a solution for she can see the numbers right there but you know the pitch is um you know you're going to learn all about turnarounds it's going to be fun um it's going to be a hell of a roing adventure if it doesn't work um you know go back and get a boring job uh but you know if It if it does work hey it works and you got this fantastic education and great experience and

I'll give you a heck of a reference and it's a th% sale job you know I'm just you're right I don't have much to work with but I'm I'm shining it up as best as I possibly can that makes complete sense um in the chapter called building long-term value you say there's four things that can be done immediately for a business uh one is get rid of the turnaround Consultant explain that like most people would say wait why is this guy saying get rid of the turnaround a consultant yeah well you know once the uh

the business is profitable the balance sheets cleaned up I um I'm just taking up space I'm billing a lot and I'm not providing much value anymore and it's just it's time for me to move on um some turn Consultants will not have the next thing lined up so they'll try to stay there but it it's just time to get rid Of them get rid of that expense and move on um yeah sorry that was answering your question the second one is maintain a monastic focus on the fundamentals of running a lean and profitable company and

that seems like maybe just like reinforce the good habits yeah yeah basically you know the it's Paro but it's just that that focus and I I don't know how can you be successful at anything without a monastic monk-like Focus on the fundamentals and if you do that you're going to stay out of trouble uh and and probably the reason you end up in the turnaround is you didn't do that you got distracted by other stuff by chasing um shiny objects but if you just do the right things over and over and over and keep your

life simple you should probably avoid trouble number three and four is gain core strength and accumulate resources and then pick the right Strategic Direction that you're lean and flexible and it seems like rather than try to um you know improve your weaknesses to some degree you're saying hey lean into the strengths and really kind of accumulate those resources explain that further yeah it it really is which probably goes back to the Paro you know what are we going to be exceptional about really clean up and focused and um you know uh book profits and just

put them into retain earnings And strengthen your balance sheet don't go chasing shiny objects don't go try to create a new division just do your thing and do it well and get strong get your feet super strong underneath you um and then when it is time to go expand you know do that with just laser like intensity and don't don't loose don't lose your focus your foundation your laser like intensity because everything other than that is just risk and it's a it's a tough world out there um and There's just bad you know you like

remember successories posters they'd say dumb like um you know there's no such thing about luck it's just about preparation and every life coach who says there's no such thing as luck or whatever they all buy insurance because there's bad luck there's good luck and bad luck and um you know bad luck's out there and it doesn't matter nothing else matters you get I mean I got I lost a factory to a I lost a factory in a home To a hurricane what the hell could I have done to prepare for that um it just you

know bad luck's going to happen there's fires there's uh tornadoes and if you don't have a strong core it it it it can be fatal if you have a really strong core you can probably weathered storm let's talk about liquidating a business or liquidating assets uh in these crisis situations you need cash you need it quickly and so selling some of the Assets potentially could help you do that but a lot of times especially if you're selling a a business unit or or something that isn't just a physical asset uh could take a long time

even a real estate deal could take a long time and so how have you in your career expedited these sales and really ensure that you get the cash as quickly as possible um you're you're right that it can take time and um the more of a hurry you're in the lower the price you're Going to get you know for a piece of equipment or real estate it's more than anything um if you think of yourself and then you think of all your stakeholders your customers your vendors your lender everybody else they all have balance sheets

what you're trying to do is pull cash off of their balance sheets onto yours um and then uh and and then at some point you you you push the the cash back onto theirs as you get through this hole you know if I got a piece of real Estate or equipment I can um I can sell an option in it I can sell a part of it I can borrow against it I can take a hard money loan against it while I'm going for a sale um maybe I can get the bank to advance me

a little bit more if we have the real estate listed it's how do I get cash from other people's pockets into mine so I can I I I can you know pay great working capital pay for my expenses keep keep my employees going buy materials and spin That and then ultimately generate profits and then be able to push that back out and most people if you say hey I'm just going to borrow from you for a little while and then I'm going to give it back but I've got a bombproof plan we're going to track

it every day I'll be 100% transparent they they'll buy into it um you know because they want a customer they want a vendor um and I always you know if you got a good plan people Support it if you got a if you don't have a good plan people aren't going to support that either and and the world's just full of plans that aren't that great when you go in uh how much of it is you come up with a plan yourself and then you approve the plan yourself and you go implement the plan versus

you're looking for kind of consensus right whether it is with uh investors whether it's maybe some people at the business how do you just think About you know setting the plan and then actually approving that plan um the it's a great question um the you know I walk in as baguer as the entrepreneur is I mean some there's just some bad CEOs but usually I say you're still the most qualified person in the world to run this business you don't feel like it you've really had your head kicked in um but you're the single most

qualified person to run this business today and then I get them to give me the Ideas how do we get out of this situation if they can't come up with that with that or you know so often I'll take their disjointed ideas and put into a plan if they don't even have disjointed ideas then I basically come up with a plan myself um there's no consensus there's uh absolute buyin um I don't need everybody to think it's a swell plan I need everybody to get behind it and execute on the plan whether they like it

or not and Everybody's free to leave and sometimes people have to leave but it's it's about the execution and you know if you leave it up to the inmates to come up with a plan and execute it I mean there's a reason I got called in the first place um and it's not because y'all were doing a great job when you think about um maybe external pressure another thing that's really interesting is uh in these let's say a local Town people know that there Is a crisis happening and so whether it is kind of the

whisper Network and and you know people go to the bar at night and they're talking about it or or maybe even local papers writing about the problems Etc that kind of compounds some of these issues how do you deal with maybe the soft stuff right it's not numbers it's not you know the actual business itself but you're trying to almost manage expectations or or maybe change the narrative around a business In the local community it it's really hard um and as you can imagine entrepreneurs personalize their business it it's it's part of them um you

know I get some that won't won't cut the country club membership because they're afraid of how it'll look and I get on the other side I get people who just bravely go into bankruptcy will call the paper and say hey we're going to file it's going to be news I want you to have the inside scoop And this is what we're doing and this is why we're doing it they'll go to the trade show and deal with all the vendors who haven't been paid and um it's I I have one of those now but it's

rare to have somebody with that sort of Courage the employees is tough and the toughest part of the employees like I can talk talk to people all day long and you know pump them up and tell them it's going to be okay and here's their plan all that stuff and they go home and their spouse Starts nibbling at them or their jerk brother-in-law starts nibbering at them like oh blah blah blah that's really hard to overcome and you know Monday everybody needs to be built back up and you lose some in the process but yeah

you're totally right that how it plays out in public is um fragile is probably the best word for it last question I have for you is uh in the book there is a quote uh and I think it's in the beginning of the book It says despite being impatient and Relentless Jeff is the happiest guy on Earth and there's some sort of uh dichotomy almost of like you're running into the fire every single day you're just seeing absolute you know uh uh everything in shambles businesses are failing people are stressed uh there's all kinds of

uncomfortable tough situations or conversations yet you remain really happy how do you do that number one not my neck into the Noose um and when it was my first two turnarounds were in my own business and you know I was looking at losing my home um that wasn't fun but I love untangling big complex problems that other people can untangle and um the ability to do that and have all this action and not risk losing my home is I think it's just the coolest thing in the world um and I often say I you know

I hope on my dying day on my deathbed somebody calls me to talk about Deal structure because i' I'd love to love to have one more one more conversation on buying a distressed asset uh before I check out I love it so Jeff you wrote the book corporate turn around Artistry fix any business in 100 days I highly suggest people if you have not read this yet please go pick it up and read it it's fantastic book and and I think part of what makes it so good it's very practical obviously but um it's also

uh looking at these Turnaround situations and it really can reinforce and teach good habits and and things that you should be doing with the healthy business as well so it's it's focused on turnarounds but it's really about how do you run a business correctly and avoid these mistakes um I've learned a lot today uh I appreciate your time where can we send people to find you or uh if somebody unfortunately has a turnaround situation and needs your help where where can I get in touch With you um so my website is Dorset partners.com doct partners.com

uh you can find me there Jeff dors Partners my email I'm on LinkedIn and um Twitter and stuff like that um but yeah and you know again my dying day um I love these conversations I love getting phone calls and um yeah I I get such a kick out of this it's I it's not work for me I love to hear that all right Jeff thank you so much for doing this we'll Definitely do it again in the future thank you Anthony it's been a blast take care