Josh 0:00  

Welcome to the Work The System podcast where we help entrepreneurs make more and work less by managing their systems. And I’m your host, Josh Fonger. Today we have a special guest, we have Joseph Frasco. Joseph is a serial entrepreneur, with 30 plus years of hands-on experience in multiple startups and exits, as well as sea level executive experience in over a dozen companies. Joseph will help you walk the path of success by conquering process people, technology and data. He lives in New York, and enjoys spending time with his wife, seven children and many grandchildren. Alright, Joseph, well, welcome to the podcast excited to interview you. It’s been a long time we’ve been talking about this for a while. And finally we made it happen. So why don’t you give our audience the backstory about how you got here.

 

Joseph 1:09  

I started off really in engineering and finance and pretty much out of college went straight into the business world and had a little bit of experience success with some, you know, m&a transactions, you know, buying out companies and then selling them and really ended up going into the investment world. And after that going into private businesses. And really, invariably, most of what I experienced was just, you know, the failures and successes in businesses and trying to understand what caused the failures and what causes successes. And for the most part, they’re almost invariably tied to poor systems. So, you know, I went into that space.

 

Josh 1:51  

Okay, so poor systems. So why do you think all these companies you worked in, couldn’t identify that, like, what was there they had their blinders on? Or what was the reason why they didn’t see that?

 

Joseph 2:03  

So you know, the way I capture business owners, I call them freedom fighters, and, you know, they really become business owners to have the financial ability to make their choices and have some type of work life balance. Building a business is really hard. You know, people don’t realize the amount of time and resources really that need to be invested. And you know, your success isn’t always rewarded. Very often, your choices really make money or have free time, but not both. The other thing is, most business owners are what I would call Craftmasters. Also, you know, they have an area of expertise they’re really good at so they might be really good at finance, or they might really be good at some creative side. But they really don’t have a full rounded Kip skill set. And what ends up happening is when they need to be when they need to expand and scale their business, they have a really hard time communicating what they have in their head to, you know, to their staff.

 

Josh 2:59  

Okay, so why don’t you walk me through an example of this, I know you’ve been going around the block a few times with helping companies. So how does this shift happen? So they’ve been keeping on their head, they’ve been the craftsmen, they would like to have some possibly either more money or more time, they know, they can’t have both? How would you go about helping them?

 

Joseph 3:22  

Okay, so I think it’s fairly straightforward. There are three critical components to success. And these are actually encapsulated in the Work The System process. The first part of it is what I you know, I call leadership and communication that really is, you know, what we call mission and vision. But most people think of mission vision as an external thing, meaning, the way you’re projecting yourself and the company to the world. Really, what it is, is about projecting who you are, to the people that work for you in the company. So what’s the purpose of your business? What are you trying to accomplish? So that’s really the first step, but I think is for most people, that’s the hardest lift, because they don’t really think about it, they just do it, and you know, then it becomes very difficult to communicate it. The second component is really the planning side. And that really is identifying the customer journey, and, and how each step impacts, you know, every aspect of the company. So there might be finance, it might be marketing, might be sales, maybe own operation, it might be legal areas, right? So you have to understand how that process works in the way the customer experiences it. The third side of it is really execution. So in all the different areas that we talked about, like in marketing, sales, people, operations, finance, legal, is making sure that all the things that you do all the tasks that you do are tied to those overall goals, and being able to make sure that you capture it in a way that your staff can actually execute on that on that task the same way every single time.

 

Josh 4:55  

Now, as we were talking beforehand, We’re to talk about good lessons we’ve learned and how some of them are learned through losing money, and some of them through making money. But with the companies you’ve worked in, can you share any, I’ll give you the choice, either a horror story or a positive story, where a company didn’t clearly have that, you know that that strategy written out didn’t clearly have the processes figured out, it didn’t clearly have their execution on point. Like, what typically happens in those situations?

 

Joseph 5:28  

Well, from a personal side, I’ve had more failures than successes, but thankfully enough successes to keep me going. But I think in terms of helping companies, they’re a couple of them stick out in particular, one of them is an E commerce company, was doing about a million dollars a year, in the perspective of E commerce, you know, at the time, it was, you know, doing very, very well. But it was stuck, they really needed to find a way to delegate tasks so that they could grow, the owner was very creative, really had a good sense of how to merchandise and how to identify products. But he had no way to leverage off of staff and have them execute on the things that really need to be done. And particularly, this was a company that was selling on Amazon, and Amazon has thousands of rules, a very complex environment. And if you don’t really have good systems and documentation in place, you really can’t scale and grow. So what we did was we really helped them, you know, capture in various methods, their their tasks, convert them, and at the point that you were able to convert it in a written format or electronic format, they could share it, they were able to delegate it, and I’m happy to say in that particular company, took them about 18 months, but they went from 1 million to about 5 million a year in gross revenues. So that was one example. The other example for more traditional businesses retirement home, and they had great revenues, but they were losing money every single day, every additional client, they added, they were losing more and more and more, they really couldn’t figure out where it was, you know, where it was coming from, where the bleeding was coming from. So you know, they brought me in. And you know, the goal was really to start capturing their processes and documenting some of the best practices. And what they found was that where they were losing most of their money was in labor, and purchasing of goods. And that was through actually capturing the process, they could see where the money was being lost. The good news was, you know, that when they realized where it was coming from, they were actually able to document better systems and better processes through collaboration, some internal and some external to the company. And their actual cost of operation dropped, I think was like 30, or 40%. So instead of having a two or 3% operating loss, they were now, you know, operating at a profit of 35%. Just to give a little bit of perspective, on a five or $6 million in revenue base that amounts, about $2 million in bottom line. But for the most part, you know, systems can help people save somewhere between 20 to 25% of their operational concept, they know how to do it, right?

 

Josh 8:06  

Wow. So those of you listening to this who are kind of new to the Work The System model, Joseph’s, a true pro, add it to our method, and he’s just doing amazing work. And I think those stories are amazing. They’re not rare, right? You know, this 20% bump of actually getting systems in place is a reality if you’re patient enough to just stick with it, you know, so you went from 1 million to 5 million. And people are like, that’s amazing. Well, it took 18 months of hard work. Right? That’s some serious time. Now, I know, there’s other aspects of what you do, which I think is really cool is that you actually take it not just for the operational benefit, which is massive. But there’s a long term benefit, right? For the owner who wants to sell someday maybe you can speak to that, for those who have not really thought about it, maybe they’re stuck in the day to day, and their mind isn’t even thinking about selling one day. But what is this? You know, the work you do with systemization? What does that do for valuation?

 

Joseph  9:05  

So that’s a great question, Josh. You know, I think most people don’t realize that the value of their business isn’t just on the, you know, quantitative side isn’t just how much revenues and profits you generate. The value of a business at a given point in time is actually 80% tied to intangibles. You know, things like your documentation, your SOPs, things that make it easy to transfer the business from one person to another. So the more an owner is tied to the business, the less valuable the business is. It might be a great lifestyle business if you’re generating income for yourself, but in the longer term, there’s no long term value of the company. So you know, part of Work The System, part of documenting your processes really is the ability to make your company transferable to a third party. Whether or not you decide you want to sell it is a secondary, you just want to build value in the company in case some point you decide you want take some money off the table, maybe you want to retire, maybe you want to buy a home, maybe you know you have kids getting married or paying for college, you want to know that that value is there and ready readily accessible in a given point in time. So by focusing on these intangibles, right, again, the systems and the documentation and the processes to be able to make the company transferable, you create the opportunity to have freedom and ultimately, as business owners, that’s really what we’re working for. We don’t work just to put, you know, have a number in the bank, we want a certain kind of lifestyle and freedom to be able to, to experience.

 

Josh 10:34  

Yeah, that’s definitely true. And how soon should somebody start thinking about the let’s just say they’re thinking I want to find business in a few years or five years? Like, How soon should they start building in this infrastructure, these intangible elements to the business?

 

Joseph 10:52  

So actually, that’s an even better question than the previous question. I think the answer is, the way to look at it is, Exit Planning is a really good business strategy. It’s not just about preparing for leaving, or getting out of the company, partially exiting the company, it’s that going through this process makes your business significantly better, it helps not only the bottom line, but also helps the top line. And obviously, the more financial capability you have in the business, the better it is for you all the way around, including the ability to step out of the business from day to day and experience life the way you’d like.

 

Josh  11:31  

Well, let me ask you a question for me, right to help me with what I do. Right? So you and I talk to a lot of the same type of folks, they’re stuck, they’ve hit a wall, they had this dream of going to this next level, whether that’s new locations, or selling or increasing revenue, more time, wherever it might be. And then they get stuck. And they’re talking to you on the phone. And they’re saying, Joseph, I had this problem, that problem. What is the number one reason why they don’t move ahead? Cuz it seems so logical, right? As you’re painting this picture, of course, you should do this. It’s obvious, you should do this. But so many people don’t. I mean, the vast majority of people don’t do this. They treat their business as just being an employee and their own business. And they never get beyond that. Eventually, they burn out and it spirals and it fails. So what have you found the secret in your sales conversations? As you’re talking to people, and they’re pondering working directly with you? Why do they, why do they not move ahead? You figure that out?

 

Joseph  12:32  

Well, maybe I’ll paraphrase Mark Twain, he says the best. It’s not what you don’t know, that puts you at risk. It’s what you know, that just thinking so. So for the most part, you know, business owners think they understand, you know, their, their business, but they’re really focused on the areas that they have, you know, they have their core strengths. And outside of that, they don’t really have a good idea. So the real, the real way to succeed, is to have a full assessment or evaluation on your business, you understand where you’re at, and also what’s possible. And I think once you have, you know, that frame of framework or frame of mind, it becomes much easier to execute, because you now can tie your activities in your any tasks that you do, directly to what the eventual outcomes.

 

Josh 13:23  

So the problem is what they know, that just ain’t so. So an assessment comes in. I really like that. So I’m assuming you all do assessments, right? So maybe you can tell us what is it? What is an assessment, like?

 

Joseph 13:35  

Sure, assessment is pretty, pretty simple. I think the initial stages, about 30 Questions takes about 1012 minutes to do gives you a really good idea of, you know, what your company, you know, intrinsic value is, and it’s, again, it’s very rough, it’s not meant to be a full fledged, you know, 20 or $30,000 valuation, but it’s at no cost available at no cost to everybody. So its initial assessment and valuation on the company’s value, as well as its areas of strengths and weaknesses, and identifies the areas really, that you can spend more time focusing on, of course, which, you know, our experiences, the vast majority need really help in documenting, you know, their finances or their financials as well as their systems and operations.

 

Josh 14:21  

And you probably share at the end of the podcast, but just because we’re talking about now, where do people go to find that assessment?

 

Joseph 14:27  

So they just go to the website, Auroracapitalgroup.org. And, you know, to get my assessment, just click the link and then you know, they’ll start engaging in the process and it goes very quickly.

 

Josh 14:39  

Okay, very good. Auroracapitalgroup.org. Now, there’s some sign up questions that I try to ask everyone to have the show happen, and we’ve kind of touched on a few of them already. But the first one being, tell me about a system you put into place. It could be personal life, it could be business, it could be your business, it could be a client’s business. Is there ever a time where you’d actually put a system in that you think was kind of unique or that would be helpful for the audience?

 

Joseph 15:07  

system that would be unique or helpful for the audience? Yeah, I think most people think of systems for you know, strictly for their business as opposed to also their personal life. So I’m a lifelong learner. And you know, I do have a goal of a certain knowledge base I’d like to have for my own personal benefit. And I actually build out a system where I step, step by step, methodically attack, whether it’s a knowledge base, or designations that are one through it. You know, as it relates to me, this is I’ve probably taken on three new designations in the last 12 months. Wow. So I applied it to my personal life.

 

Josh 15:47  

Okay, so you apply the system. And the idea is to build up your personal credibility. One thing, obviously, is the Work The System certification, which I think we already mentioned before, but that’s great. So a knowledge system. Now, what about one thing I didn’t ask you with? I asked you about what you think would be useful for the audience with these small business owners? Who tends to watch this podcast? So a question I didn’t ask you, but I probably should have.

 

Joseph 16:15  

Okay, so I think, you know, what’s the most important thing that every business owner really needs to understand to be successful? And I think the answer to that question is really focusing on value generation, not necessarily revenue, because business value can be manufactured, and it’s in your control, right, the value of your business is tied directly to your ability to extract yourself out of the business. So you know, we’ve talked about getting your financials done or getting SOPs, you know, in place, that’s in your control, you can’t control the market, you can’t control sales, you know, we’ve had all kinds of interesting things happen in the last 24 months, everyone that everyone’s experiencing. So you know, markets you can’t control, but you can control what happens in your business. So the more you focus on that, the more likely you will be successful.

 

Josh 17:06  

Okay, I really like to focus on building the value of what you’re giving, as opposed to in your business as opposed to just a number. Because that’s what really matters. And you have control over that. Right. Very cool. All right. Well, wherever you’re working, go find out more about you and your business to get help, where should they go.

 

Joseph 17:25  

So again, they can go to the website or Auroracapitalgroup.org, there’s plenty of resources over there that are available for free at no cost, they can get their assessment and you know, if they decide there’s, you know, a couple of other options for them if they want to go into a more formal program. But the first step is really just to get an assessment and look at the resources.

 

Josh 17:44  

Very good. And those of you who are not good at spelling like me, Aurora, spelled a, u, r, o, r, a. So Auroracapitalgroup.org. And you can find more help resources in that assessment. So check that out. Joseph, thanks again for being on the show. Great to hear from you. And I learned a few things. I took some notes, hopefully, those listening to this, that as well. Catch everyone next time with other business experts like Joseph or Author, Sam Carpenter’s here from time to time, and hopefully, we’re helping you with your business so you can make more and work less. If you found the show helpful, then leave us a review and take a screenshot of that review. Email it to info at WTSenterprises.com. Once a week, we draw a name out of a hat. And we’ll mail them a free copy of that book right there behind me working the system, a physical copy anywhere in the world. And of course, you can always get a download of that book at workthesystem.com. Otherwise, we will see you all next week.