Have you ever found yourself on a vacation or a holiday, spending too much time thinking and worrying about your business? Rich Allen, a highly sought-after business advisor, believes that if your team is properly engaged, it’s far easier to scale your business without getting bogged down in day-to-day minutiae.
In this podcast, entrepreneur and business advisor, Rich Allen, dives deep into the true value of empowering your employees.
Speaking from his experience turning a small manufacturing company into a $100 million enterprise, Rich explains why and how an engaged team enhances the work environment and leads your company to unprecedented growth.
In this episode we discuss:
- Harnessing the power of your team
- Key benefits of a highly engaged team
- Leveraging transparency and honesty
Host: Josh Fonger
Guest: Rich Allen
Josh: 00:00 - 01:01 Welcome to the Work the system podcast where we help entrepreneurs make more and work less using systems. And I'm your host, Josh Fonger. Today we have a special guest, we have Rich Allen. Rich is a nationally renowned speaker whose primary mission and purpose are focused on one single objective: to help business owners engage and activate the power of their team in a way that is profitable, sustainable, and is as easy as riding a bike. Alright, so Rich, why don't you give us the backstory? How did you become an expert at getting people to activate their team?
Rich: 01:02-03:10 Well, Josh, it's a pleasure to be with you today, man. Thanks for having me on the show. You know, my story begins back when I was working with my dad in his small business. I'm from Ohio, near Cleveland. If anyone's in that neck of the woods, you'll appreciate kind of what that might have been like back in the day. I was from a fairly large family. I've got 11 brothers and sisters so there were 12 of us, and my dad worked constantly. He was the hardest working guy you'd ever know. But at age 36, Josh, he made the decision to start his own business. He thought maybe if he opened up his own business, he controlled his own destiny, he could truly make something for himself. He basically had a big dream, he wanted to build a business and leave a legacy for his 12 kids. And while my dad was really good at his trade, he opened a window washing business, he was great at his trade, he had no clue how to run a business. And as a result, it was a tragedy. My dad really struggled for years and years and years. And I was right there with him along with many of my brothers we were the slave labor and on the team. And one at a time, each of us just said, look, there's a better way to do this. And each left, one of my brothers even left to go start his own competing window washing business with my dad because he thought he could do it better. And I got a lucky break, got a chance to go to college and went into the military for a time, but I always wondered what my dad was missing. And after the military, I had a chance to work for a couple of big companies. I've worked for Texas Instruments and then Tele Corporation, had a chance to run my own business, and it was there that I kind of got my chance to play my hand that what it took to run a business, and inspire the team, kind of use a team, to kind of grow the business. And that's what basically got me to this point today.
Josh: 03:11-03:55 That's a really interesting story. And you probably don't know about me, but one of my companies, I started several companies when I was high school in college, and one of them was window washing because I had a summer and I didn't want to work a normal job getting paid, you know, five bucks an hour or seven bucks an hour. So I just kind of did all my friends and family and washed their windows for a few 100 bucks a day. And I was like yeah, so that was my first business, but I had no intentions of growing it just to make some summer cash. That's interesting. So, in your bio, that I was reading you talked about those watching the video can see you're on the bikes. So how does this analogy of the bike fit into work in business and team?
Rich: 03:56-06:36 Well, where the bike came from Josh was, you know, when I had the opportunity to run a business myself, right, I'd always wanted to do it. I had been in business for many years, but always was in a functional role in business. But I had the chance, I guess it's been about 30 years ago, but I had the chance to run a small manufacturing business. It was about a $30 million business, we had about 200 employee and we had just acquired the business and I was given the challenge to go run it. So I got really excited to move my family to Minnesota. So we could do that right and run the business from there. I walked into the shop the very first day, frankly, and frankly, I didn't know what I was going to do. I was absolutely scared to death. I walked around for days Josh just thinking, I don't have a clue how I'm gonna make this business better. And I kept thinking, everybody here is just, they're just going through the motions. They're just doing their job, and then checking out looking for the paycheck. You know, going to spend their weekends doing whatever. Not thinking about whether the business is good or bad or whatever. And I came up with this idea, I had this idea, this idea of the hit where every I do, wherever great idea hits you right in the shower, I had this idea, I jumped out of the shower, I called my admin assistant, and I said, hey, schedule a meeting, I think I know what we're going to do. And so we cleared out a part of the warehouse, I brought enough room to put all 200 people in from both shifts. I bought this bike that hangs on my wall and put it on a table at the front of the room. And when I got everyone's attention, I said, hey, guys, what's this? And they looked at me, like I'd lost my mind. Some said it was a bike, others said it was stolen property. I assured him it wasn't stolen property. But I said, look, this isn't a bike, this is our business. And if we can understand how this business is like this bike, we can tune up our business and make it go really fast. So I started to explain to everybody exactly how our business was like a bike, just comparing every component of the bike to part of your business. And Josh, for the very first time, everybody in the factory, could understand how a business worked. It was amazing. And they then started to tell us what was wrong with our bike? That's on the top again.
Josh: 06:37-06:47 So tell me more about this company. So what was the culture of the team? Like? I mean, you kind of mentioned that they weren’t really engaged. How long had it been? Where the team just kind of going through the motions, had it been a long time like that?
Rich: 06:38-07:30 It was like I said, we were doing about 30 million in revenue. Okay, we're not making any money. It was kind of a breakeven business. The equipment was tired, the people had been there doing the same things forever, the owners weren't really very innovative. And, frankly, everybody was in a small town, and everybody was just glad to have a paycheck. And so they come in and do the same things every day. Nobody did anything new. Nobody was excited. It was just the mindset of everyone. They're good workers, don't get me wrong, great people. But just no, enthusiasm.
Josh: 07:31-07:49 So tell us what happens next? So they see, they hear this analogy, they think, okay, so it's a bit bikes business. And they might think of the chain or the pedals or the wheels, the brakes. And then how does that translate over the coming weeks and months into success? I can’t paint more pictures.
Rich: 07:50-09:50 Yeah, so we so what we did is that, you know, I went through the story afterwards, everyone kept coming. And they started coming up, and they'd say, hey, I know where we need to get better. So, we would take their ideas, and then we just start to work on them a bit at a time. We introduced this notion called Kaizen, if you're familiar with that, but it's a kind of a continuous improvement, rapid continuous improvement methodology to get them engaged in finding better ways to do the business. But Josh, here was the defining moment. For us, we identified that by using the bike we said, look, there are five things we want to accomplish in this business. So I said, I gave them five goals. One of them was a safety goal. One was customer service, one was around quality, one was around on-time delivery. So we just set targets in five areas. I got everybody together and I said, look, guys, I'm going to set these five targets and the first month that we hit all five targets, I'll put all of your names into a hat into a drum. I'll pull out a winner and that winner will own my vehicle, will own my car. tThey all started raising their hands. They said what kind of cars I said were like a two-year-old Jeep Grand Cherokee. How many miles? I told them about AMFM. Yeah, air conditioning. Yep, four wheel drive. Yep. I said, look, I'm going to drive it until we hit all five of these in a single month. And so for the next five months, every time I'd come to the factory, people would come, they get huddled around my car, they would ask me how it was going and I said look, I'm still driving it. But five months into the deal. We hit all five.
Josh: 09:51 Oh man.
Rich: 09:52-11:30 And so we rented out the surf ballroom which happens to be the last place that Buddy Holly played a concert before his plane went down and crashed and died. But we rented out the surf ballroom, I took the car and had a detailed. We drove the car onto the ballroom floor, invited all the workers and their families to have a big dinner for them. And I had a big drum on a stage, I had my wife pull out 20 names. She wasn't very happy with me. But I had her pull out 20 names, the 20 finalists, they came up on stage. And I said, look, one of us driving home with my vehicle. And I said, or I've got some cash. So I'll give you 200 bucks, if you want to opt out right now. One guy took the 200 bucks, we drew down to 10. Then we drew down to five, and he ended up pulling out the last guy. The winner was a 28-year veteran on third shift, a mechanic. We signed, I signed over the car to him on the hood of the car, he got in, he drove home. And Josh, I got up, back up on stage and I said, look, guys, I got to ride home with my wife, and she's not very happy with me. It's not gonna be a fun ride home. And I'm going to expect that you're going to make every target that we set from now on. And they did. It was amazing. And from that point on, the business really took off.
Josh: 11:31-11:34 You should have given them your bike.
Rich: 11:35-11:46 Yeah, that. I don't know if that would have gotten them there. But you know, the guy that drove my car around, my jeep around, he was like a rock star. Because he had gotten to the boss. Right?
Josh: 11:47-12:17 That’s awesome. Well, that's an amazing story. And it just shows that empowering people and giving them a goal to hit really, really brought some life into your business. Well, so tell me what happened afterwards. So they were all empowered. They reached this goal. They did it together. And then did the momentum continue? I mean, you said it did. But tell us how? Because it seems like no, no, it's no big goal. So what's the point?
Rich: 12:18-14:34 No, but at that point, we had, we had started, you know, the, I'd say the biggest thing that we did is we took the whole idea of running a business and we demystified it. Okay, so using the bike, we, you know, they could understand how everything fit together. And once we went through that explanation, we continued to harp on that. And then once we got them involved in helping us make it better, so we made them part of the solution rather than in many businesses, right? It's the owner or the senior people, they go off, they huddle up, they come up with a strategy, or several things are going to do, and then they declare what the right answer is, and hope everybody's going to buy into it. And we took a very different approach. We said, we're gonna identify the problem. And then we're going to go find five or six people in the business, and we're going to tell them the problem and say, your job is to come up with the best way to make that at least a little bit better. And then we're just going to do that every week. And the more we did that, Josh, the more they loved it, the more they started to get engaged in it. And oh, by the way, the other thing when you said there, you know, when you know about the idea of not having a real reward, one of the things we did that was critical, was we introduced the idea of profit sharing. So the notion that we made to them was and when we got there, we showed them exactly that we weren't making any money at all, that our costs equaled our revenues. And we showed them the math of how business works. And we told them, you get 20% of every revenue of every profit dollar we make. So they knew that they made two dimes out of every dollar we made. It went into a pool and was distributed to them. And so they said, look, you can, you're effectively owners, you just don't take any of the risks. And honestly, by the time we got to the end, most of them were making an additional month's pay on a 12-month period, they made an additional month in profit. Sure.
Josh: 14:35-14:58 That's awesome. Yeah, oftentimes, was that shocking to them? I think a lot of times employees of companies have no idea and they think that the owners are really making a lot of money, because they think the park costs $3 and they're selling it for $30. And think, you know, the owners make a ton of money here. So were they surprised by how much profit was leftover?
Rich: 14:59-15:01 In the beginning or in the beginning?
Josh: 15:02 In the beginning, were they surprised, you know.
Rich: 15:03-16:37 Again, let me just tell you a quick story. Because here's what I wanted to do. I wanted to make it really real. We manufactured doors. So we manufactured storm doors, our average storm door sold for $120. So what we did is in one of our meetings early on, we brought in a door, I put it at the front of the room and I said, who wants to own this door? Somebody raised their hand. They came up, I gave him 120 bucks. I said, we sell this door for $120. I said, you get to keep every bit of this. That is that we don't have to spend on things to make to manufacture the door. And I said, so what do we spend on manufacturing this door? And somebody said, well, it's got glass in it. I said, yeah, give that guy $5. Okay, it's got wood in it. Give that guy $3.50. We went through this for everything. Somebody said, we scrapped doors. I said, yeah, give that person $4.50. We do some rework. Yeah, give that person $3.20. And so by the time we got done, we went through everything. The guy that owned the door, or had two dimes. He had two dimes left. And I said, guys, you get profit sharing on those two dimes. And they said, yeah, but there's somebody over here in the rework, and he's got $4 and the guy for scrap. He's got $2.50. I said, yeah, if we could get that back, guess what? You get a part of that. And so we made it real. And all of a sudden, they said, that's crazy. That's our money. Let's get that back.
Josh: 16:38-16:58 Now, I love it. So you've made ownership thinking very tangible to the team. Yeah, I love it. I do something very similar to Swiss with a $100 bill, and I just tear up the $100 bill based on ratios of expenses. And then the little, tiny slivers left over at the end, I say this is profit, because they don't understand how much is leftover.
Rich: 16:59-17:14 I know, the reality is you're right, Josh, most people think the owners of businesses are killing it. And it's because we don't share with them what the reality is, that's why I think we have to be really transparent. The more transparent we are, the more they'll come on our side and help us make it work.
Josh: 17:15-17:47 Yes. Sam calls it the mysterious, the problem of the mysterious boss, the more mysterious you are with things, the less you're trusted, and just good to be very honest, open, upfront. Now, are there any concerns? I don't know, if you go into this with your companies, I always do percentages, so that people don't really know dollars and cents, because some kind of blows the mind of some really young employees? And so would you do that? Do you actually go through the actual dollars like we make million dollars in profit? Or do you go through and do more ratios and percentages of costs?
Rich: 17:48-18:17 I'm a believer, Josh, that you bear it all. And so we tell actual dollars, in fact, what we would do is we would post on a weekly basis. And I tell myself I have many clients who do this today. But on a weekly basis, we post up how many dollars that we sold, how many dollars of profit we made, and how many dollars we put into the profit pool. so they can absolutely see what's going on.
Josh: 18:19-18:45 So along the way, I got to believe there's a certain amount of financial education that you have to kind of teach them about so they understand. I've been in situations, maybe you have to where employees say, hey, I didn't realize that the owner was making $100,000 a year doesn't seem right. They're never here, you know, whatever their mind can't wrap around the dollars. But it sounds like you go through a process of educating everybody. So they kind of mature in their financial awareness along the way.
Rich: 18:47-20:18 You know, I would highly recommend that, you know, one place where we do use percentages, Josh, that makes really good sense. And I recommend every business owner do this. Even before you're making $1 of profit, draw a pie, circle a pie of your profit dollars, and allocate how many percent of the profit is going to go to what, right, there are several categories? One would be what are you going to give back to your community? So what's your charity contribution, designate a percentage and market. What are you going to share with your team? There's another one, what are you going to use for debt repayment? If you've had to have debt on the business? What are you going to put? How much of the profit are you going to put into expansion and growth in the business? And then lastly, how much is the owner going to take out? Typically when people go through that the owner ends up with a smaller than half of the pie? And then oh, by the way, there's taxes on that. So people need to be educated that not all profit is free profit is taxable. But as soon as you create that, and I've had several businesses that do that, when they say guys, we're given 15% of our profits to charity. Everybody says, man, I love that. I want to be a part of it. Who's our charity, what are we doing? And they inspire them too, to really help make it happen.
Josh: 20:19-20:33 So how does an owner go from working in the business as an operator to doing things that an owner is supposed to do? Like you're talking about here? How do they make that transition? Or do they have to kind of wear both hats for a while?
Rich: 20:34-22:14 It takes a while loving, let's be honest, it takes a while. But honestly, as you go through the bike, right, one of the things that, you know, I always say, what's an owner supposed to do? Well, the owner is responsible for holding on to the handlebars, and steering the business. Okay, so how do you steer a business? Well, you paint a vision of the future. So you have to paint a picture of what you want the business to look like, in 5 or 10 years. Because if you don't have that, no one's going to be inspired to help you make it happen. Second thing, you have to do is you have to set your standards, you have to determine what's the performance level that we're going to expect and demand here for our customers. And then thirdly, we have to decide what the mission or cause that our business is going to support. In other words, this isn't about me as the owner getting a new car, me as the owner having a lake house or new boat, it's about a cause with a bigger purpose, so that people can say, look, we do good work in this business, so we can support this mission. But in order to do that, the business owner has to establish the frame of their bike, which is the organization structure, org structure, job responsibilities, and accountability system, so that they can move methodically out of each of these different operating roles in their business. But the only way we can move out of them is if we define what our organization structure is, what roles correspond to each of the boxes in the org chart, and then one at a time systematically get ourselves out of each one of those boxes.
Josh: 22:15 Sounds like hard work.
Rich: 22:16-23:07 You know, no one said it was easy. And honestly, Josh, that's why, you know, that's why 80% of businesses never make it to their 10-year anniversary. Right, because it is hard work. And by the time folks get four or five years in and they realize, look, I'm working my tail off, I'm making less than what I made if I was working for somebody else in a corporate job, why should I keep doing this? And they check out, when in fact, it doesn't need to be that way. Most often times we're doing it because we're doing all the heavy lifting as the business owner, and we haven't engaged the power of our team, when in fact, if we can do that, they'll do all the workforce, and we can go off and enjoy the riches that we get from having a successful business. Nothing wrong with that. I think it's perfectly fine.
Josh: 23:08-23:57 So let me paint, because I think your manufacturing scenario is a great example for half our audience. Let me go to the other half of the audience, which is people who have online companies. So let's say you have an online business, let's say you're a SaaS company, you sell software, as a service. And your team is distributed. You have some contractors, you have some part timers, you have some full timers, people overseas, and you're spread out. And you're thinking about yourself because your company's growing. And you used to do the work yourself, you know, selling the software, doing some programming, but now you're like, wow, I got a company, I’ve got 25 people here. How does this bike analogy play out? What would you recommend to someone like that situation doing?
Rich: 23:58-26:00 You know, that's not uncommon, in fact, that's becoming more and more the norm, where most people are not co-located. None of my team, I'm in a small office here. I've got 14 members, none of them are in the office with me. So what I have to do, and business owners that are in that situation, and I've got a couple that are in there that I work with. We've got to be more intentional about making direct connections with our employees, our team members on a regular basis. So there's got to be this rhythm that we establish in terms of communication. There's got to be a weekly rhythm. In some cases daily, but not necessarily so much. When people know what their roles and responsibilities are, but certainly a weekly rhythm. There's got to be a monthly rhythm and a quarterly rhythm. And one thing I highly recommend for people who have businesses where their employees are in various regions or various locations, I suggest that at least once a year, you bring them all together. You put it in the budget, you spend the money to put them all on a plane and bring them to a place so that they can get together we have one company that they call it Thrive week and they come in for a week, they break the week out, this is a great model a great idea. They have seven days, they use a few of the days for education. So everybody can kind of get together and build camaraderie, but learn, they have a couple of days designated to seeing visiting customers firsthand. So while they're in, they go to any customer that's in the local area and sit face to face with them so that they're no longer doing it virtually. And the third thing they do is that they have mission work. So they find a charity for everybody to come together and serve together with. And those three things make up their week. And it builds teamwork, like never before. But they do it once a year.
Josh: 26:01-26:52 I love it. I think that I could agree more. It's a book, I always recommend that Patrick Lencioni called Death by Meeting you're wanting to figure out, and I'm sure you have books you recommend too. But meeting structure, but surely weekly, monthly, quarterly, semiannual, annual getting those figured out, the rhythm is great. Now, but what I'm thinking in the back of my head, is I'm thinking like a business owner, and I'm thinking, gosh, I only have X dollars and in profit, and I'm thinking to myself, I really don't want to get my team to, you know, be in more meetings. I don't want to have my team, you know, all pay for that. And how do you deal with the logical business owner who's not a visionary business owner, but they're more logical? And they're counting the numbers and thinking? Well, I could say myself, $50,000 and just not do any of this stuff. How would you say to someone like that?
Rich: 26:53-28:28 I would say that they're gonna save $50,000. And they're gonna miss the opportunity at $500,000. Because, you know, and I'm not a big fan of needless meetings. But I will tell you this, I think we fall to the side of having fewer meetings than we need than having too many. And people that don't like meetings, it's because typically, they aren't very talented or thoughtful about the meeting structure. Let’s be honest. And so the meetings aren't very productive. So as a result, they say that's a waste of time. But very honestly, I'm much more of a fan of, we don't get our team together near enough. We don't get them together outside of their work roles, so that they can help us think about ways to improve the business. Here's what I found, Josh, is that most of the best ideas on making a business better, don't live with the business owner. I gotta tell you, I didn't know how to make this manufacturing business better. Didn’t have a clue. But I knew that everybody who was doing the work, had ideas. And if I could just engage them to give me their ideas, and then put it into a format that we could implement them. We killed it. Our competition had no clue how we were doing it. But it was because I didn't think I was the smartest guy in the room.
Josh: 28:29-28:50 Humble leadership. I think that's an important thing and sharing the burden. People want to know that their work matters. And that's a great way to do it. That's great. Well, the time is going really fast. Rich. I know you've got to run, I gotta run too. So let me leave you with a few last, lasting questions here. First one. What's one question that I didn't ask you, but I should have asked you during this interview?
Rich: 28:51-30:02 Well, you know, here's one that you probably didn't, but I'll tell you the answer to it. And that is, what are the wheels on the bike for? Right? And I'll just answer really quickly to tell you on a bike, there are two places where the rubber meets the road. It's the front wheel and the back wheel. And in a business, there are only two places where the rubber meets the road. The front wheel of our bike represents our ability to win new customers. Right? The back wheel represents our ability to serve those customers. And very honestly, every bit of our attention, every bit of our revenue of our available dollars ought to be focused on one of those two functions in our business. How can we win new customers more effectively? And how can we serve those customers more fully? If we do that, and dismiss all the others, right, Keith Cunningham would say don't pimp your ride, right, he would say, you know, spend the money on where it matters, we'll replace it, it matters in business is where the rubber meets the road. And it's the two wheels of a bike.
Josh: 30:03-30:06 That's great. So all the other parts of the bike support those two?
Rich: 30:07 Absolutely.
Josh: 30:08-30:15 Okay, there's like clarity there. That's great. Well, Rich, where can people find out more about you and your business and how you help companies?
Rich: 30:16-30:44 Easy. You know, I'm obviously a bike guy. So my business, my website is called Tour de Profit. So just like Tour de France, the big bike race, it's Tour de Profit, T-O-U-R-D-E-P-R-O-F-I-T dot com. If you go to backslash W-T-S, (https://tourdeprofit.com/WTS) I put some free resources there for your listeners, you can find those there. And, you know, just you'll find everything out about me there.
Josh: 30:45-32:01 Perfect. So Tour de Profit, slash W-T-S, and Rich I really enjoyed this interview, I learned a lot of big and loud notes, and can't wait to kind of refine some of the systems with some of my clients. So we can work on winning the customers more efficiently, and serving them more efficiently and more scalable as well. And I want to thank everybody who's watching this, whether it's on YouTube, Facebook, Instagram, podcast player, our website,wherever, if you want to win a copy of that book right there behind me Work the System, leave us a review, and take a screenshot of that review and email it to [email protected] Once a week, we will be pulling the name of a hat and you'll be winning a free copy of the book. It's not as exciting as winning a free car, but it's something. Right? So you can get that, otherwise, you can download the book for free at workthesystem.com. Otherwise, thanks again for listening. Thanks, Rich, and we'll catch you next week.