Okay. And it doesn’t make it doesn’t seem like the kind of thing that you can just kind of like teach yourself on the go on the fly. So what was it like in those early days, how did you put together deals if this wasn’t something that you had, you hadn’t worked for another investment banking firm, previous Oh, no,
Bill Prater 10:01
no, no, no, no, but I didn’t understand deals. And so what are the investment bank that I screwed me the investment company did put together what are called syndications. So we syndicated investments and their their deals. Now they were for our own benefit. They weren’t, we weren’t doing it for other people. So I understood conceptually, deals, I understood investors. I understood, I understood where the investors were. I discovered during that time, that although there’s a lot of glamour and high technology, and there’s a few people that end up scoring gigantic home runs, and lots of investment bank, excuse me, venture capital firms invest in these companies wait for the next big winner. The truth is regular, ordinary b2b companies in all sorts of industries are where the real wealth is. by that. I mean, I don’t mean people that are multi-billionaires. But there’s 1000s and 1000s, and 1000s, and 1000s of multimillionaires that own all kinds of ordinary companies. So I did, that’s why net so I met the investors. So I had those in my mind, when I decided to go in into the investment banking field, which you introduce.
John Corcoran 11:32
And I know that a lot of the work you do now is working with management teams, helping them to coalesce and to grow. You grew your company up to 125, people talk to me a little bit about some of the growing pains and putting together management teams underneath you because that certainly for that size company, required. I’m sure, a lot of managers and other managers to help manage everyone.
Bill Prater 12:00
But correct. However, that was a difficult transition. So I think of businesses growing through three phases. Now a lot of people will say entrepreneurs, small to medium sized businesses, corporations, enterprises, and that’s fine. But that’s not the way I saw it, then still see it the following way, you really got solopreneurs, which, which are people that own a business, they might have one or two people working for them, I call that solopreneurs with staff. The next phase, and this is the phase I was in for years and years and years, was what I call a boss centric company, which means John, that the boss calls all the shots, makes all the decisions, hires, everybody fires, everybody has basically a flat organization, even though there may be managers, then then the next page. And this includes lots of companies at the large end, but very few at the small end is where you get to the point where it’s team centric. And John, that’s why I ended up out of frustration selling my investment back because I had built a boss centric company with 125 people driving me crazy, because I really didn’t understand how to manage them at all. And what I found simultaneously was, it was easy for somebody to come to me and ask for five or 10 or 20 million a business owner, because they’d have a business plan. And they would, they would describe the project they wanted to invest in. And we would raise the money for them. Now what I discovered is, I went from being a money store, if you will, John, to a company babysitter. So I had all these investments, almost $1,500,000,000 with money invested out in these companies. And I’m just that tiny extent exaggerating when I say nobody knew how to run their businesses, they were just like me, they built a business, but they really didn’t understand running a business.
John Corcoran 14:17
So we’re using an extra five in a database isn’t afraid. I’m sure some of the business here
Bill Prater 14:23
too. Yeah. So I ended up bumping into a competitor of mine. And she said to me, Bill, you’re you’re emulating the wrong companies. I said, What do you mean? She said you’re looking at things like best practices, and standards and things like that. The word standard refers to average and she said so when you are trying to emulate average, you just get better at being average. Do you look at a traditional bell curve, the people in the middle of enter every niche every industry, their average their average companies. And she said, what you need to do is look at the elite players, the top players, the very top players in all these industries. And you’ll find that they run their businesses the same way. And it’s not the same way as the rest of their industry is the same way as all of the top players in niche after niche have an issue. And so I looked into that, and lo and behold, she was right. So I figured out what it was, applied it to my own company was able to sell it 1999 after using this system that I created, out of cobbled together some of this knowledge I’ve gathered. And then I also John used it for my, for my investment clients. So people would come they’d say, hey, I want 10 million. I say, great, great Gladys, raise the 10 million as long as you run your business the way I want you to. Okay, because, you know, they wanted the money, John. So yeah. So what I discovered is, wow, what I did for my investment bank, worked for other companies, too. So when I sold my company, I just changed hat from being money guy to being a business advisor meddler Jiminy Cricket alchemist type of guy. So I helped people with using a system, a systemized approach to managing their company. And frankly, the results I’ve had since I founded Business Mastery in 1999, far exceed the results I had as an investment bank, discovering that it isn’t the money, it’s the management, that makes a huge difference.
John Corcoran 16:47
I want to dive into what the different pieces are of that system that you put in place. But first, I want to ask, so these companies that came to you asking for $10 million to invest? They certainly I imagine many of them were substantial size, by that point. Just do well, how are you able to? Well, one question would be convinced them that, Hey, you got to do it this way. And maybe they just sorted themselves out. Like some people said, Forget, it’s not worth it, I’m gonna go do it my own way and get money from someone else. But also, how were you able to get them to change the way they’d been operating so far?
Bill Prater 17:26
Well, so two things. Now, money is just another shiny penny. By that I mean, in addition to money, people, business owners get in your mind, gee, if I only had a better website, or the get in their mind, gee, if only my management team and I were better on LinkedIn, or they’ll get in their head Gee, if only I understood how to advertise on Facebook, or Holy cow, if we only could get a better CRM system, all of those are shiny pennies. And so majority of business owners think, or if you will get attracted to some sales pitch about something, and they’ll buy it. And so, larger companies are not exempt from that they do the same sort of a thing. And money is one of them. So they’ll they’ll say, and they’ll get undermined, gee, if only I had $10 million, then I would be able to go to market faster, or I’d be able to do X, Y, or Z or like, open up a new branch or, or start a new project or, or build my new office building, whatever it was. They weren’t thinking strategically. They were thinking tactically, they were trying to select ideas out and go, so I was the store, they went to for money, but they would go to other stores for marketing or another store for sales, training, etc. All of those are tactical things. So in the process of them asking my firm and I to raise money for them, they would explain their business. And then I got pretty good at saying, Well, it seems to me that what you’ve described is you don’t really have this strong of a management team is just as you’d like to have. Right. George? Yeah, I’m kind of disappointed whether so I was back to if you were to think with a clear slate I said I would use the same old question I used back when I was 19 years old and that is how can you imagine changing things and they would immediately John jump off money into something else. And usually it was develop a clear strategy be able to to finally reach my vision to have my team Buy into what I want to do to be able to have people hold accountable to have people deliver on what they promised they would do all that verbalization. And I tell you what, I have the same problem in my firm. And the last several years, I’ve been solving that. So here’s my proposal will raise the money, if you allow us also to to be your consulting firm and help you reorganize your company. They don’t say yes, because I had huge leverage giant was already Yes. It wasn’t really convincing them. They knew that I was going to say no, if they didn’t improve their business, it was a long answer. But I
John Corcoran 20:40
did you have adequate buy in then you had the money leverage over them? But did you get the psychic buy in also? Or did sometimes these companies say yes, yes, because we want the money, but you didn’t get them to really fully commit? Right?
Bill Prater 20:57
So that’s a great question. So the system that I developed then and still use today is very fast, very fast. By that I buy fast, I mean, that the economic result is fast. And so somebody, when they invest money, they get a return back in 30, or 45 days, when you’re invest when you’re building a new division or starting a new product line, the investment cycle is law. So they can actually see the results from changing the way they run their company. they’d see that faster than they would see the return on their on their investment, if that makes sense. It’s quicker. So so even today, John, I basically say to people, hey, look, don’t trust me. Just just agree to do what I tell you to do. And if you don’t like it, don’t pay me. So I’ve done that forever. Since 99. I’ve never had anybody not say you’re right. This is it, I totally understand that they get it. Here’s your money. So So that’s kind of an odd. That’s, that’s beyond risk. A lot of people will say, try this. I’ll give you your money back in 30 days, if it doesn’t work. Okay, good. That’s fine. I don’t do that. I just say to people, I’m gonna give it to you for free. And then, and then pay me after it works. Wow.
John Corcoran 22:27
Yeah, that’s, that’s pretty hard to turn that one down. But I wanna I want to ask you about I know you, there’s a construction firm you worked with, you had some pretty phenomenal results for they were on 10 million in revenue, scattered up to 250 million working with you. Talk to me about some of the things you put in place for that client in particular. All right, so.
Bill Prater 22:50
So this is not an unusual story. It’s just one that that I happen to come to mind when you asked me if I had a couple examples, because I’ve got hundreds of stories like this. But basically, what happens, John is companies, sometimes they fail, of course, most of them fail, but the ones that don’t fail, sometimes the industry sort of pushes them up, or pulls them down. For example, we had this economic crisis caused by the, by the pandemic over the last year or so, a lot of companies went woe is me, and they’re gone. Other companies flourished and prosper. So, but a lot of companies get to the point where everything they’re tried doesn’t seem to work. I mean, so the needle doesn’t move. And a lot of times, business owners will look at top line revenue, or cash flow or profits. And there’ll be they’ll see it, sort of flatlined. Now, flatlining in this company’s case was 10 million, nothing wrong with 10 million, until you hear that their profits were about 300,000 a year. So imagine 10 million of work 300 of profit. Wow, that’s a lot of work for that much return. And it was it was for people that own this thing. So you divide 3000 by four, then it didn’t feel too good. Wow. Plus, they’re up in Washington State. And so all winter long they’re reading, reading, meaning losing money, losing money, losing money, then they make it all in the summer, and then winter again, and they had this huge, you know, red and black cycle and he got sometimes a profitable a profitable deal. So what I learned back in the late 90s, and I modified it, and tweaked it and so forth and so on. But the foundational principles are the same. And so, these three foundational principles are what I put in place at this construction company. I’ll give you what happened in a few seconds. And they are number one having a mindset and You mentioned a couple books I wrote. So one of them is having a mindset of mastery. Now, by mastery, I mean, literally being at the top. So I first I need to have people think, like they’re number one, believe in their mind that they can get there. Now, number one, does it mean dominating the world like Richard Branson, cook, but but you don’t have to do that you can, you can master three square blocks in your hometown, you can have a beauty salon that handles a neighborhood, but there’s no reason that you shouldn’t be the best beauty salon in that area. So Part one is having a mindset of mastery. And that includes putting together a game plan and strategy and things like that, but fundamentally, mindset of mastery number two, and all the superheroes the leaders of all industries do this is number two, they have a management system. So a lot of people have an accounts receivable system or a billing system or, or an advertising system. But few have a management system. So that’s the second element is the management system. And that would that be like if you’re familiar with Gino Wickman’s EOS from his book, Traction is that like an optimizer, I think I’m familiar with virtually all of those. Okay, there are a lot simpler the system I that I invented, it’s simpler. The reason that I wanted a simpler system is that virtually all of my companies are what I call, not exactly homegrown. But they’re not. But they’re not a group of people that went to Wharton and Harvard and Stanford. They’re they’re people that began in the trenches and got promoted a few times. And now they’re in the senior team. But they never, they never ever studied email like management. So I needed something simple. So it’s veiling your background? Starting from the farm? Yeah. Is this the same background? I had?
Yeah, it’s literally the same. And the third one is, and I mentioned this earlier, when I talked about being team centric, and that is developing a high performance team. So a mindset of mastery, a system of management, and third, is developing High Performance Team. So with the construction company, the first thing I first kind of tells where the way that John was his name, described his company, and he described it very limiting way, gave me literally the county of Washington state that he operated and the county should shrunk down, he gave me the kind of worksheet of the size of the work he did. biggest job was a million bucks, shrunk down. And so what I got John to realize is to realize that if he says things like that, somebody in different counties isn’t going to do business with him. somebody that has a job bigger than a million won’t do business with him. So he’s, he’s trapped himself by his own description of his business. So got John to, to think more about his capabilities, as opposed to his geography and, and his previous biggest job. So within 90 days after I started with him, he landed a he was a $10 million company, we land helped him land a $40 million job. Wow. So so because he had a skill within the company, a skill which appealed to this utilities organization, that they wanted this skill, so they landed this big job for tax, the job is four times bigger than their annual sales. Now, that would break some businesses. Good point. Good point. So now we’re into the management system. So what I teach people, John is to focus on the vital few and ignore the peripheral many, because if you allow your your brain to get consumed with all of the details involved in a $40 million construction job, you will be paralyzed. And so we’re going to focus on the very few things we can do to be most effective. I don’t, I don’t disbelieve efficiency, but I’ll pick effectiveness first. And then third, I got John to understand the power of leveraging teams, both was inside his company and externally. So that combination of getting John thinking right, running his system from a from a from a systemized approach, aka also known as accountability, and then third, leveraging high performance teams. And and frankly, we were able to take his himself and his three partners and all of them were able to grow with me and my system and get to the end. Sometimes it doesn’t work, and sometimes some of the players change but in that case, the four key Owners stick around.
John Corcoran 30:00
What about the bottom line? How did you prevent them from bringing in that $40 million project, but then eking out, you know, a 400,000 or less profit margin making mistakes, in other words, but just at a large scale? Yeah.
Bill Prater 30:16
Great. Yeah. Excellent question. So, so I said to John, one day, John, why aren’t you guys doing work in the winter? Well, because it’s muddy. Yeah, of course, it’s muddy. It’s random like hell. And so you can’t dig ditches and things like that in the mud can’t do it. I said, I wonder if there’s someplace in the United States of America? Were in the winter it isn’t it used to walk Arizona. I said, Well, John, why don’t you go to Arizona, and then and build a branch or division or something down in the southwest. So that’s what he does. So the fundamental human from one county, in one state, to national in any of the southern part of Canada as well. So it’s a combination of thinking and understanding things. Kind of a footnote, I had a, I had a customer equipment dealer up in North Dakota. And he was complaining about not being able to find diesel mechanics, I said, really can’t find diesel mechanics. Where do you look? all over the state? Really? No kidding. And it happened to be that there at that particular time, there was in Louisiana, John, that number, the the the date breaking and the hopeless getting flooded? I said, Do you think there’s any diesel mechanics living in Louisiana? Probably. I said, How many of you think you’re right now looking for a job? Play? A lot of them? I said, put an ad in, in the, you know, the various newspapers down in Louisiana. And he said, Well, why would you want to move into North Dakota? And I said, Really? So John. So if somebody’s working for you quits work at 330 in the afternoon, they wanted to go hunting. How long would it take him to go out and pheasant hunt? Oh, God could take him. 1012 minutes. I said that. Yeah, that’s pretty attractive, right? To go fly fishing, how much time would that take? 10 to 12 minutes. Everything’s 10 or 12. I think that I said, so. I’m getting I’m kind of getting sidetracked.
John Corcoran 32:30
Or not the point is there. He didn’t see the assets. He didn’t see the asset. He didn’t see the value. He wasn’t selling the value of Yeah, okay, good. Yeah,
Bill Prater 32:40
it just went on and on to you know, you’re in those days, it’s different now. But in those days, you could buy a four bedroom brick house in Fargo, North Dakota, for a 10% of what you buy the same house for in San Jose, California. Yeah, yeah.
John Corcoran 33:04
That’s great. You know, you had another, there was a woman that you coached and trained and, and helped her up also, tell us that story she was making under 100,000 quit her corporate job. And he had some pretty phenomenal results for her as well.
Bill Prater 33:21
Yeah. So, uh, so I mentioned earlier that I that I’ve created the system of management, I want it to be simple and easy and applicable to all levels. So in a, in a larger company, the system called Business Mastery System, I designed it to operate at the senior leadership level, at all the departmental levels and all the way down to the frontline by frontline, I mean, foreman and her crew on the job. So a solopreneur that can easily use the sack exact same systems that I’m talking about. And so you’re probably asking me about Sarah is her name. And Sarah is one of many, many, many, many illustrations like this, left corporate america started up her little company, she was great at helping women transition from corporate america into you know, owning a franchise or starting a little business and so forth. And so she had after three years, not even gotten her or income up to the level of her last job. So she left her job. Last money three years in a row. Finally, she bumped into me. And I said, Hey, Sarah, you’re doing too much stuff. I want you to come up with one goal. She said one, I said one goal. That’s it. Is that my limit one, she is okay. I want to triple my monthly income. And I say what time frame she says when you said Okay, good. Well, you will use the rule. Freeze. She said, What’s the rule of threes? I said, Well, we’re gonna pick three things, we’re gonna go through three things, 3% a month, at the end of that time, you’re going to have 300%, monthly increase in your revenue. She says, I think I can do three. And I said, I think so too. So basically, what we did is we came up with a goal to increase her monthly revenue 300% at the end of in 12 months. So, I let people go up to five goals, by the way, but in our case, one. And so we have one goal, then we need what are called vital drivers, I use the word vital, not casually, a lot of people use words like important, Peck was important, was important. All we want to deal with is vital means essential, it is an optional, it’s vital, meaning that everything else should do is of lesser importance than this. So I get everybody in the company is to think out when I got sir to believe this is the single thing I want you to think about because it’s vital. Now we got three vital we got a vital driver or a goal by goal, we went three vital drivers. In her case, we got those three, which is increasing number of clients. Number two, increasing the average amount of the transaction. And number three, was increasing the length of time that she had a coaching rate with these people increased each of those 3%. And do that math, anybody can do that math, take anything and 3% a month times three, get you get to tripling your result in 12 months. And so we did that if she did three years in a row in the last year, she got her revenue to over a million dollars, all of it. John was a monthly recurring revenue, meaning that it was a membership site, basically now she’d gone coaching to bring a membership site. And she sold that business for a little over $3 million made last year, actually the first edition. Wow. Wow, amazing. Sorry.
John Corcoran 37:05
We’re almost out of time. Bill, before I let you go. I want to ask you my gratitude question. So I’m big fan of gratitude. Particularly, you know, if you look at your peers and contemporaries, however you want to define that. Maybe your referral partners, who do you respect who you admire is out there today? Well, there’s
Bill Prater 37:23
quite a few, but one comes to mind immediately. And actually, I am grateful to IBM for a variety of things. And one of which was that I that my boss’s boss’s boss. So quite a bit above me and I got my first promotion. And I got a phone call from this guy named his name was John Akers. And so John called me the phone and he said, Hey, Bill, congratulations on your promotion. And I go, wow, this is cool. I’m getting I’m talking to the regional manager. This is cool. And he said that to me, Bill. If I were you, when you get promoted down to San Jose, I recommend that you buy a house in Palo Alto. So okay, fine. Thank you click Go. Raise your manager kills me and tell me where to buy a house. Anyway, the netivot was he ended up being a mentor, he went on to be the CEO of IBM May was a mentor of mine. And sometimes what I learned one on ww extremely grateful still, after all this time, because John was very strategic. And so the reason that he wanted me to move to Palo Alto, was that was right in the epicenter of all sorts of IBM installations. Think of us I don’t know if you know, the jag. I know, you know, the geography John, but some people don’t. So San Jose, Pablo altos halfway down the peninsula, at the bottom of San Jose at the top is San Francisco across the bay is Oakland, there’s dozens of IBM locations in that environment. Number one, number two, IBM has a policy that you that they will move you if you get a promotion, they’ll move you, however, only once every two years. So if you are living in a place where they can promote you without moving you, they can do it quicker than every two years. And so that was a He did not say to me, the reason is the following. I had to sit and think about it and ask a few people what he was talking about. But I guess the lesson there John was always be asking, How can I do that will come people that are really willing to help you. Many, many of them will give you a fantastic help for no compensation whatsoever, including this guy. And I’ve had that pattern continue over the years where I’ve simply said to people out of the blue How can I And then I just fill in whatever I wanted to do. How can I get the number get the number one company in New York City to have a meeting with me? Somebody will tell you.
John Corcoran 40:13
That’s great. We’re out of time. Bill, this has been great. Business Mastery: Dominate Your Market and Dynamic Growth, are the names of the two books. Where else can people go to learn more about you and connect with you?
Bill Prater 40:23
Well, the simplest thing they can do actually is, is just go to getbillsbook.com. And that’ll give them a free copy of my latest book, which was it which is dominate, which is Dynamic Growth.
John Corcoran 40:40
Excellent. All right, Bill. Thanks so much.
Outro 40:42
Thank you for listening to the Smart Business Revolution Podcast with John Corcoran. Find out more at smartbusinessrevolution.com and while you’re there, sign up for our email list and join the revolution. And be listening for the next episode of the Smart Business Revolution Podcast.