Intrepid Logo
Bob Pattersono and Jordan Howard

Jordan Howard sits down with Bob Paden, a seasoned advisor in the realm of small business transition and strategy. With over 15 years dedicated to guiding small businesses and a rich history in corporate America, Bob shares his insights on the transformative journey from corporate life to entrepreneurship. He discusses the nuances of navigating small business dynamics, the challenges of bureaucracy in large corporations, and how he assists small businesses in maximizing their strategic potential. This conversation is a must-listen/read for anyone interested in the real-world applications of business strategy and the personal shifts required to thrive outside the corporate sphere.

Jordan: Hello, everybody, like to welcome, you all to my conversation today with Bob Paden. Bob is what I would call an expert in the small business transition and strategy space. He spent the last 15 years in an advisory role in small business groups. Prior to that he’s in corporate America. But he was smart enough to get out of that, that rat race and come in and join the chaos that is small business.

Jordan: Welcome, Bob. Appreciate your time. Why don’t you just kind of start with giving us an idea of your background and what you’re focusing on right now.

Bob: Yes, I was smart enough. It only took a few times to figure out that I needed to. But yeah, big chunk of the corporate background was here at Rolls Royce, locally, Indianapolis even. I’m so old, it was general motors when I started. So to give you some idea of my age, but literally 20 years of my life there in the corporate and regional business jet, regional jet market, doing everything from project management, program management to supply chain. And then truly 2008, decided to leave and go on my own, which, and know what that was at the time, but quickly figured out that what it was like to be in the outside world of a small business owner and did, you know, I caught the put my shingle out type of thing that most people do when they leave the corporate space and did parts of it well and parts of it not, and learned a ton through that process. Short version that ended up sending me overseas to do a short consulting.

Bob: I gigged with Qantas, the airline in Australia, so really lived overseas for about a year and a half, came back home, worked for Cummins here in Columbus, Indiana for a little while and then opened up an engineering office in downtown Indy. And again, truly remembered why I decided left the corporate space and been out on my own ever since and done a variety of business advising, coaching and consulting. And so that’s where I’m at.

Jordan: Tell me a little bit more about what inspired you to kind of leave the corporate world. I kind of expand on like your, your transition from corporate world to being able to help small businesses and some of the challenges that, because, I mean, you and I both know that the corporate environment and the small business world are two very different animals.

Bob: And probably like a lot of people, you get really exhausted or I did personally by the bureaucracy of a corporate entity. It’s not that we weren’t doing good work, weren’t doing good things or interesting things, but just the machine itself really just grinds on you after a while. And maybe just my personality, I really don’t like waste much so there is weight in a entity. There just is. And it’s really hard to move the ship sometimes.

Bob: And so I think that was the genesis of the thought of exiting that space. The flip side is I also interacted both inside the business and outside in a more small incubator, smaller business type of environment. I wasn’t initially in production for the first 15 years, as an example, so we dealt with small and medium sized suppliers every day, both on the repair side, and then eventually I did on production. And so I’ve really gained an appreciation for a small business and what they were doing, and to be frank, what we were putting them through. And so some of my work when I left in 2008 was actually that the smaller business understand how to interface and deal with a corporate that’s buying from them.

Bob: And so just over that time, and obviously then in your own thing, even as simple, you know, you joke, you try and run a lemonade stand on your own after leaving the corporate world. Not as easy as it looks. And it’s just not, um, and so, yeah, so it’s, it’s one of those that I’ve learned an incredible amount of things in 15 years from some really incredible small business owners. And obviously, the benefits that come with it are great. Um, but it’s hard, right?

Bob: So it’s, it’s, it’s quite a transition. I don’t tell people to take it lightly. Is there a movie that sums up corporate America better than office space? I don’t think that there is. I always say that, like, you know, going, when I transition from, you know, the banking world to work over small businesses, it’s like it, it humbles you because you like, you get a false sense of how smart you are when you’re working.

Jordan: You’re like, oh, yeah, I’m an intelligent person. And then you go and you work for, like, you know, some of these entrepreneurs. Then you talk to some of the lawyers that they work with, some of these, these key people that are doing stuff, and you’re like, wow, these guys are really like, they’re seeing things on a different level. And it kind of, it’s an experience to kind of be able to see. That the corporate world, you have people with a fought, and I was one, right, that had what I’ll call positional power.

Jordan: When you come to the outside world now, it is who you are. And so your position is your small business. So you’re now swimming with the sharks, if you want to call it that. And you really learn. I’ll call it the value of end of example, always joke that, you know, once that brand is gone, now it’s you.

Bob: And that is a much different value proposition to people than just in the room. And, you know, had one of the biggest brand names in my chest at a couple different places, and it opens doors, it makes things easier, and you don’t have that. It truly tests whether you can make it or not on your own. So for sure, who do you feel. Like you can help the most?

Jordan: And kind of tell me a little bit about like your, your process for identifying clients that you can have, like, you know, small businesses, you can help. And then when you, when you do start to engage with them, like, what’s that process like? Two big categories. What I’ll call white collar professional services, and then I’ll call blue collar dirty jobs. Right.

Jordan: Micro type of businesses. Both of those play well in the space. I kind of stay away from what I’ll call the t space, the startup space, those kind of things. Those are kind of different animals, just not my thing. And then size wise, I think between a million in revenue to maybe ten to 15 or 20 at the top side.

Bob: Um, you know, I really like to deal with business that’s been at least five years in, right. Just to have some scars and they’re, they’re not new anymore. Right. The, the red carpet’s gone and the thing, but I would say sweet spot is between 25 and 75 employees. Probably been in business ten to 20 years in that space.

Bob: They’ve kind of been there, done that, seen it, and then watch things change over time. And the kind of the marker that I look for, whether it’s through referral partners or direct conversations that people have with their other trusted advisors, their accountant, their lawyers, all those kind of things that they’re thinking, what would this look like in five years, ten years, and what would my future look like after this business has got to where I want it to be? And as soon as that kind of conversation starts being had, is where I come in, waiting one before you decide to exit. Maybe a little late. Right.

Bob: We can still deal with that, but it creates some real challenges, as you know. So we’re really looking for that. Truly wanting to build on value, not just top line revenue, which we talked a little bit about, and then put them in a best position to. Well, so that’s what I’m looking for. Tell me a little bit more about like, your process.

Jordan: Like you’re, let’s say you’re working. Let’s just give you a hypothetical situation. Working with a 25 employee company that’s doing $10 million a year. They’ve been doing, you know, they’ve had steady growth over the last five years and they’re starting to kind of hit, hit, hit a, hit a wall at 10 million. They can’t get past it.

Jordan: And, you know, the owners are wanting to exit in the next two to five years. Like, how would you, what would you come in and do to assist that. That, that individual, call it two sides. One is the actual owner or owners themselves and then the business. And we have assessment, they’ll use the value builder system to do those assessments of, you know, how ready is the owner or owners ready to truly exit.

Bob: And they probably really never thought about the entire process of what that will look like. As you can imagine, a lot of smaller businesses, they’re very attached to the business. They’re very integral with the business and like that. But just literally, even as an example, what are they going to do after they really haven’t thought about it? And so we actually spent a fair amount of time making sure the owner is prepared, even just from a mindset standpoint, to prepare to exit.

Bob: It is, it’s a journey, right? Just like building their business to this point. And so that’s where we start. We have an assessment that starts having that discussion and talks about certain things they need to start thinking about. Second is the actual business itself.

Jordan: And, you know, the best examples or proxy is, you know, it’s like selling your house. You have to prepare to sell your house if you want the maximum value for that. You know, that asset. And we want the owners, by the way, to start thinking of their business not as a business person, but as an asset. It’s an asset, just their four hundred one k.

Jordan: And are they managing that asset to get the maximum value for that at the right time, at the right place, position themselves to do that. And, you know, there’s definitely an initial assessment of what we call just liability. Are they sellable? And is four from one to 108 different factors that go into that. If we make it past that point, and we would look at an initial valuation of the business, literally, if you did have to sell it today, what is the likely value that you could find if you found a buyer?

Jordan: And I caveat that with the, if you found the buyer, and this is where we had talked about statistics before, roughly eight out of ten businesses will not sell. Only two out of ten actually make it exit. However, 100% of owners exit one way or the other. And so it’s, we want you to be in that two out of ten and maximize the value that you get for that business. And so we put you through two assessments, and then if you decide to move past that, then we’ll do the valuation as a benchmark and then put a plan in place over the next twelve to 24 months to actually move the value of your business.

Bob: And if we can’t do that, then we haven’t proven our return on investment and their investment in me to make that happen. But on that valuation, probably on a yearly basis, make sure we’re continuing to increase the value of that business. Yeah, so, I mean, you’re probably, you know, there’s, there’s, you know, a lot of key pillars to running a small business. You know, like sales ops, finance, technology, executive team. Like, are you kind of coming in and helping, like, trying to identify, like, what areas they’re weak in, like, financial statements tends to be one that I see a lot small businesses where they don’t have their, their books are just a complete mess and not something I ever want to show to somebody that’s wanting to acquire.

Bob: Like, that’s one example. Sometimes it’s just sales. They’re really good. What they do, they need. They need to get some sales, help them.

Bob: Sometimes their operations is a mess. So you kind of come in and help with all those areas. Do you bring in other people? Like, tell me about. Tell me how that process works.

Bob: Yeah, no, I mean, we end up with basically. Basically eight big buckets. And obviously finance is one of those. But even finances, we call it financial health. It’s not just, you know, are their books in order? But are they actually in order? Right. They may have great profit levels, but if it takes three months for their financial results to come in because they’ve waited and their accountants doing whatever, the cleaner it is. Right. The more efficient it is, the more up to date they are.

Bob: Like, you want to have, like, this is my, like, my current books and this is my, like, trying to sell my company books. And you’ve got to try to. You can’t, like you said, you can’t pivot to that in a week. You’ve got to realize it and go in and do it, you know, over a period of time. So that’s okay.

Bob: That’s one big bucket. Just dealing with that. There are some things that I will have done for a lot of times is review their p and ls and those kind of things, and I’ll tell them what they tell me. Right. Every p and l tells a story.

Bob: They may not like the story. But they tell stories. Right. But if we really get into what I call forensics and things like that, then I bring in other partners, right? I’m not this.

Bob: I’m always not the sharpest people in the room, so I surround myself with really smart people just like yourself. Right. There’s certain situations where they do need a specialist, and sometimes they have that and a lot of times they don’t. And so. But yes, that, I mean, that’s where we start is really the nut is the financials, because we got it in the end.

Bob: It’s a financial transaction at the end. So we’ve got to figure out what that looks like. Second is what I would call the owners dependency of the business on the owner and call it the hub and spoke or whatever you want to call it. It’s how integral is that owner to the business day to day basis. Literally, what would happen if they took a week vacation?

Bob: What would happen if they left for a month? What would happen if they left for a quarter? The various answers to that will dictate how much work do we have to do, which then gets to their team. Have they built up a team that allows them to not be there? And initially that sounds really interesting to a lot of owners.

Bob: They haven’t necessarily thought of that, but we challenge them to look at it through the lens of the buyer, not the seller. If I’m coming in to buy your business and I have to jump into a job, it’s not very appealing. And that takes the value of your business and drives it down. Best case scenario, owner doesn’t have to be there every day. They may have to touch and, you know, be an advisor to their team, et cetera.

Bob: But in a perfect scenario, that owner isn’t integral to the business, which then gets to the third, which is literally. Right. The owner themselves and how they think. So those three, there’s seven others or something like that, right. And combined.

Bob: But those are kind of less important than those big threes for sure. So, like what? What? You know, if I’m a business owner, like, fits your criteria, 25, 30 to 25 to 75 employees and doing, doing well. But I’m like, hey, you know what?

Bob: I probably want to hang it up in the next five years. I’m going to start, like, searching for somebody to help me. Like what, what types of things should that person be looking for? What criteria do you like? How would you suggest that they go through that process?

Bob: Because you’re. You’re one option out there. You might not be the best option for them. Like, but what’s, like, kind of walk me through, like, what, what would lead somebody to you versus what things should they kind of take into account when making that decision? Yeah, like, like a trusted advisor.

Bob: There has to be an effect, right? There has to be a fit between those two people. I’m not for everybody. Everybody’s not for me. The way I describe the clients that I serve, as an example, is humble, hungry, and smart.

Bob: You know, those three, if you’re not, there may be other people for you, and that’s fine. And so initially, that take the swath of people off the table. Um, but I mean, you’re looking, I think, you know, what I bring to the table is a breadth of experience, different environment. So whether that’s your actual business, the function itself, or who you serve, etcetera. I’ve been in small environments. I’ve teams, I’ve hired people, hired people. I know what all that’s kind of like. But there may be, as an example, if a business is, has a really financial heavy type of situation, that may not be the best place for me. That’s fine. Right to your point, simple examples.

Bob: Some businesses may be really great at marketing and sales, but their operations are a mess. Some may really financials, but their team is a disaster. And so depending on what that situation is, with what we try and suss out during the assessment phase, dictate who you kind of use. The way I describe myself a lot of times is, again, I’m the guide that helps you work through the whole process. And so again, they may have trusted advisors.

Bob: I’ve got one H vac company right now having discussions about, he’s got a great CPA. I know who they are. Right. He’s got some really solid financials, but portions of the business not so strong, including his readiness to exit. So those make great clients for me.

Bob: Again, I can touch their p and l and review, et cetera, but if we have to do a deep dive into 17 product lines and understanding profitability of each one of those, I’m probably going to bring in some help. And so it just kind of depends on the business. But I describe myself as a general specialist. I’ve seen a lot of different things over the last 30 years, and I bring all that to bear in our client. And in the end, just like every other user, they have to trust.

Bob: It’s a trust based business. And so I want people to have that type of relationship where honestly, the, literally a phone’s on, right. 24/7 maybe not at 02:00 in the morning. But if you call me at 02:00 in the morning, there’s probably a reason. So I want the type of client that wants that type of relational, across the table, next to each other, on the table type of environment.

Jordan: You got lots of great books behind you there. The two that are facing you, is that intentional? Are there reasons why you’ve got those two facing the camera? This is actually one of my favorite books, is decisive by the heath. I like it because it gives, it’s some really practical tools on not just how to make a decision.

Jordan: Do you have methodology of how you make decisions? And so even as an example, preparing a business to exit, you’ve got 1000 decisions to make. The question is how are you going to make them and what framework are you going to use versus I wake up, I have an emotional outburst, whatever. Ok, I need to do this and I need to do it now. You can make some really, really bad decisions.

Jordan: You know, jokingly, sometimes we talk about we help, you know, I help really smart people keep from making really bad, dumb decisions. And that sounds, you know, our owners aren’t dumb, right? They’re not extremely smart people, but because of the type of thing that they’re going through, it’s very emotional, it’s very draining, and it is a journey. And there’s my dog, thank you very much. But I mean, it’s, it’s so with all that, it’s, you know, we highly advise they, not just someone, myself, but they surround themselves with people to help them make good decisions.

Jordan: And that’s really important. It’s emotional. It’s something that they’ve typically never gone through before. And you can’t always trust all the advice that you’re getting from people because people might be giving you advice that benefits them more than it benefits you. So it’s, it’s like you really do need a kind of a partner that’s been through it before that’s just somebody that’s kind of on your side and, but, you know, I’d much rather deal with you than an attorney, Bob, literally.

Jordan: Back to the h vac owner I’m talking about. He’s got, he’s got a good lawyer, got a good accountant, got a good, you know, etcetera. So the question is, to your point, they all come at it from different angles. In the end, it’s the owner’s business, not the accountants business or the lawyer’s business. And so making sure that you’ve thought through those things and have a framework to do it, it’s one yeah, one of my favorite books for sure.

Jordan: But yeah, just obviously looking for humble and hungry and smart business owner decide they just want to build value. Not necessarily top line. Top line is good, but if it’s not profitable, might not be able. Really appreciate your time and we’ll put in the comments, your information, how to reach out to Bob so if anybody has any questions, you can reach directly out to him. So again, thanks for your time, and we’ll talk to you later.

Related Post