How To Intentional Grow Your Business With Ryan Tansom

John Corcoran 12:43

You had self awareness of that, though, too. You know that it was not the right fit?

Ryan Tansom 12:48

I don’t know. I hear Yeah, I don’t know if I would be I don’t know if I could get enough credit to say I was self aware other than I just knew that my dad made me crabby. Okay, and then like it for almost certain perspectives.

John Corcoran 13:00

So then what happened because you ended up with a business anyway. So

Ryan Tansom 13:04

my dad like that business, that old industry. I mean, you could sell a copier 200% fair market value, you could finance it bundling. I mean, the amount of money John back in the day. I mean, I grew up poor, because like he was all all that was going back into the business, I believe this conversion van that only one door worked. And he was delivering copiers and then installing them himself after he’d sell it with that van. But when I went to college, the business just took off and the money started flowing. And then it was the boats, the cars, the cabins and all this stuff. And he started going through this personal he had to deal with the personal stuff in the past, that then led to some conflicts with my mother. And so there was all this personal turmoil going on. And there was enough cash flow, John, like he just didn’t have to go in. So he kept giving our GM more money to essentially just avoid having to go in. And so the business just plateaued to that 20 million for like, a long time while the cash was getting, you know, while the cash flow is going. Yeah, so like, I worked in another business. And then what happened was no nine, I graduated college.

John Corcoran 14:09

The economy is just Yeah,

Ryan Tansom 14:10

I mean, like, dude, no one was hiring. Yeah, I had a bunch of job offers because I was a salesperson willing to work for 1000 bucks a month. And I was actually going to go in I was going to sell healthcare benefits. And the GM that was running our companies like right, you’re an idiot not to come work for the family business. copiers are still people are still buying them. They’re still Britain and all this kind of stuff. But I was like, honestly, what the heck do I got to lose?

John Corcoran 14:35

So that so the a lot of businesses are really suffering in that period of time, but you’re the family business was not suffering that bad at all.

Ryan Tansom 14:45

I mean, like, well, that’s the benefit of locked in bank finance, maintenance contracts tied to a new piece of equipment. I mean, with on 20 million, you got 12 million that’s bank finance locked in contracts. So like that, that that income is coming from other people. Rent or not? The other 8 million was new equipment. And so people are still gotta print. Yeah, I mean, like there was certain part, you know, certain of our clients that couldn’t afford their lease payments. Typically the mortgage mortgage industry, the real estate, we did a lot of exposure to that. Anyways, man I like as like, Okay, what the hell?

John Corcoran 15:18

And the GM talks you into joining the business, okay, doing what sales

Ryan Tansom 15:22

sales got thrown right into the bullpen. And what was that like

John Corcoran 15:26

going into the family because you’ve you’ve been in it from the beginning, but you’ve probably been away at college. I imagine. Sometimes it’s hard for a next generation family over to come in because it’s hard to earn respect, or people are like at the owners kid, what was that like for you?

Ryan Tansom 15:44

Let’s imagine so we had a 26,000 square foot building with 110 115 people in it. And let’s pretend you’re walking into that building, they walk you walk in. So think about it, man. Like we all we all remember the first day of our first job. Yeah, right. And you know, who is everybody doing? Everybody knows what’s going on, except me. Now leaving the fact that every like, so imagine walking in and everybody going? areas. And so here’s my here’s a huge, you know, you’re right, you nailed it, dude, it’s two options. There’s not a gray area in between, I don’t think it’s either you’re gonna be like, you kind of fall into the entitled prick that everybody thinks you’re gonna pay out. Or you work twice as hard to earn the respect that everybody would give someone that normally works, or half that.

John Corcoran 16:29

So like, because they’re not giving you the benefit of the doubt at all. They’re like, yeah, so you have to work as hard as again. Yeah, I

Ryan Tansom 16:37

don’t know if there’s a choice. Honestly, if I were to say the benefit that I had with the position that I took this thing about sales, your producer you don’t like salespeople are the easiest people to fire, right? Because it’s like, Hey, John, you haven’t told me Right? Right? Yeah, just that simple. It’s black or white active. Yeah. So I just got into the bullpen, and it was 22 salespeople, I sat right next to them to Clint Miller. And I was like, Okay, well, here’s my zip codes. And it was 400. Phone calls, 15 appointments, eight news, five proposals, three closes and 40 grand and quota every single month and six months, I was $3,000 shy of an annual quota of a season drop.

John Corcoran 17:16

So like, I just didn’t say no,

Ryan Tansom 17:19

I didn’t accept no. And I just called because I was like, this is not only respect, but I needed the money because I was making 1000 bucks a month. So you know, you jump into the deep end, you can either swim or drown. 

John Corcoran 17:29

Now, when you joined, it turns out that there were some financial difficulties that the business was experiencing, that you didn’t know about previously, how did that come about?

Ryan Tansom 17:41

And it’s, so the way that this whole transfer transpired is so again, my dad very distant from the company, and I want to give him a because I we work with a lot of people like this man. People like Holland, God’s name, could you get to that situation? Well, when you have cash flow coming in and out of a business, it can fund the owner’s lifestyle for a long time, even if it’s not healthy. So every single month, we’re selling millions of dollars worth of stuff. And so money’s coming in another business. My dad kept giving the gym more money, because he just like he had to deal with this stuff. He was going to therapy and counseling and he was going through a bunch of personal stuff. And by the way, he’s he’s amazing. Right now he’s so it’s, it’s amazing. So I say that because he was given the guy more money to avoid having to deal with because he didn’t have the mental capacity to deal with the operational issues. A lot of cash flow hides a lot of sins, John, and so we’re sitting in then so because of the nature of me jumping into the business in the bullpen. Even though my dad was distant, not in the day to day, I’m calling him every day all day long, like hey, like, like wills to learn from even though I was always abiding by my structure of it a sales manager, they had a VP of sales. I mean, so I was like living in this structure, but he’s my frickin dad. Right? So I’m calling me like, how do I how should I sell this better? This or That? Yeah, you didn’t have the bank in the CPA meeting that December of oh nine. And we found out that we lost 940,000 bucks. Wow. And people people say, Well, how is that possible? And it’s like, well, because cashflow hides the actual final income statement of the year when you close it out. And so in there’s a lot of other technical complications, but we just at that moment, John, we had a decision do we do a fire sale? Or do we double down and I’ve been essentially what, that’s what we did, and we spent the next six years turning the business around in order to make it worth it.

John Corcoran 19:35

And what was your relationship like with the GM?

Ryan Tansom 19:45

Oh boy. I say oh, boy, because I I get stomach aches of like the stuff that I said in my early 20s. I mean, I had no filter and so like, it’s tough to look back, John because like, I think, you know, like you think back and like well, I’ve made Good decisions. But then you’re like I was freaking young probably said a bunch of stuff. So I say all that because the GM leaned more to the green side. I mean that totally. I mean, that’s I’m trying to, there’s nuanced here, but lean more towards the greedy side, lean more towards that he didn’t know what the heck the difference between revenue and net income was lean

John Corcoran 20:21

more to see more of a sales background kind of guy. Oh, sure.

Ryan Tansom 20:24

He sold copiers with my dad back 30 Some years ago. So like, I mean, that’s what happens when a salesperson gets promoted to CEO, right sales at all costs, all sales, right? Yeah. 100%, man. And so and then I don’t like people that BS man. Like, I started running into massive friction, because he was just putting blinders over all the crap. And like, we’d be sitting in a meeting with Kenan or my dad and I don’t know one cell and like that the comp plan super messed up. Like, why are we why are we not talking about the truth here? Because it was a reflection of him. So the more I became like the advocate for the truth, the more he like, the more him and I just didn’t get along. And right. I mean, there was a couple times I tried to quit, and it’s like, it’s me or him. That’s it, man. Like, like, because I can’t deal with it. And the way I describe it is, we opened up the rock, because we ended up eventually firing him and all the toxicity. I mean, it stems from the top. Right, I ended up having a fire like 60 5060 people by the time I was 25. That’s about

John Corcoran 21:28

what you said, 100 and something employees is that like half the company?

Ryan Tansom 21:32


John Corcoran 21:34

Wow. So did you move into that GM role at some point? Or did you hire someone else to be the GM? How did that go?

Ryan Tansom 21:40

That was the executive vice president role. I mean, like, if people listen to him in a family businesses, it’s like, Hey, John, what would you like your title to be?

John Corcoran 21:48

It doesn’t matter.

Ryan Tansom 21:50

Like, I could have been the president, CEO, V. B, I doesn’t matter. It’s like, the way that it ultimately ended up is my dad and I were running the business. He was, I mean, I was running like 80% of the day to day, maybe a little bit more. The CFO and him were juggling cash with the bank and a CPA firm, which probably 80% of the time and then dealing with a lot of our large accounts, and the payables and all that stuff. Yeah. While I was dealing with comp plan, sales, marketing ops, finance it, that kind of stuff. How did it

John Corcoran 22:16

go, then once the GM was out, and you had to have this relationship? You said previously, that you and your dad didn’t always get along? So how was the relationship with you and your dad wants to Jim was out of the way back up and kick you to, like, get a better container on this. 

Ryan Tansom 22:31

My dad and I, from a young age. He’s been my friend, John, for most of my life, not like a friend slash mentor, like so many hats. It’s confusing as all hell. And but first and foremost, mostly since I was went to college, my friend that I look up to, and so like, it was this weird dynamic of like, we’re so close. That’d be like you, I don’t know, if you’ve dealt with this. I’ve had multiple partnership buyouts where you get so close to someone, and then all of a sudden, you can’t be objective anymore. So that’s where we didn’t get along is like, so it’d be like, for example, I mean, John, when I started, there was an org chart for 110 people. Like we didn’t have an inventory system, like we 24 vehicles that were carrying an average of maybe 50 to 100 grand, or the inventory. We didn’t know if it was obsolete, what kind it was, like, he was a sales guy running the business. And so like, I go in and be like, holy crap, this is so messed up. And I love messes to fix them. But what he heard was, you’re my babies, my baby’s ugly. And then it would be like, Ryan, do you know what I did? And how long it took me to build this. And like, I risked everything and 20 million from someone with no high school, and I’m like, I get that debt. But it’s really messed up compared to what good looks like. So it was like it was this way of communicating of, hey, you’ve done like, this is great what we have, but it could be so it was just this that complication, John where? I don’t know, man, he was so in his head. That it like, I knew that he was so mentally consumed with all of this shit he had going on. Yeah, he couldn’t. And I knew that I guess I was giving him a handicap and a handicap. But that’s so

John Corcoran 24:17

in spite of those comments, though, did he give you enough leeway to make the implement the changes that you needed to implement based on what you’re seeing on the ground? Okay. Yep. And which was a lot of ton of changes that sounded like, yeah,

Ryan Tansom 24:32

And it was, again, I think about how I communicated those changes. I probably could do a lot better. Yeah.

John Corcoran 24:39

And you actually studied in college, your degree was management leadership. So it’s almost like this was like, the most real world experience you could possibly have like stepping into a business that was a bit of a hot mess and having to turn everything around. Did you feel like you were prepared when you when you hit the ground from from your background in your training, or was it just like, oh my gosh, I’m learning everything that I didn’t know.

Ryan Tansom 25:07

I realized that my private college education was for drinking and making friends. And I didn’t learn anything besides maybe what a SWOT analysis was, but not how to use it. No, honestly, man, I got a liberal arts degree. And the whole time throughout college, it was like, this paper doesn’t really matter, as long as I can sell stuff and be nice to people. So like it was, I don’t know, I’m a little in the whole education system. And I’ve got a whole we could do a two-week podcast on that. But no, I don’t feel like it did. But what I what I think I did have ingrained in me, John is, if there’s a problem that needs to be fixed, why aren’t we just going to fix it? Like, like, let’s let’s fix things. And so instead of like, dilly-dallying around or making excuses, the one thing I’ve always known for my dad is no shortcuts, no excuses. It’s your it’s your, it’s your problem. You’re responsible for it. And I don’t know how you argue with that. So it’s like, here’s the mess. The bank is not going to fix it for us. My VP is not going to fix it for me. Like the CPA is not going to no one cares. Yeah, it’s our business. It’s kind of like your health at the moment. So like, I think that that helped a lot. Because then that wasn’t I didn’t spend time wondering why I just started fixing.

John Corcoran 26:20

Yeah, and I suppose I know the answer to this. But you mentioned earlier about when you first stepped into the business, and we all picture our first day, and you walk into this 26,000 square foot, you know, facility with 100 people and it’s like, in the movies, like the record stops and ever looks at you that kind of thing. That’s what I’m picturing. Right. But then you start to step into these roles. And eventually, the GM is fired, and you have to fire other employees and stuff. And how did your relationship start to change in the company as you worked with the rest of the team?

Ryan Tansom 26:58

The good or bad news is because my dad was a distant figure and in the copier space, John, the sales reps turnover a lot of technicians, not very much admin, there was some decent turnover. So like, I didn’t walk in where my father was, like, some golden statue. You know, I mean, like there was it was just like a normal business with the GM who didn’t own the company and a lot of trucking. I mean, just normal stuff. Yeah, the GM hired in a lot of there were a lot more toxic people that I liked I just didn’t care for. But there was a lot of really, really, really good people. And those really, really good people saw me sell more than everybody else. And they’re like, oh, and then by the way, salespeople that

John Corcoran 27:35

probably earn that earn some respect, then

Ryan Tansom 27:39

100% Man, my first I signed one of the largest clients ever archivers right before they went bankrupt, I sold them 50 copiers across the world across the US. And a couple million-dollar contract. I mean, I mean, a buttload of money in my early 20s. That was earned. And so these are what happens with salespeople, and a lot of organizations, they don’t treat service people very well. So like me, I’m like, well, these are my family, because it’s a family business. So like, as people are installing copiers, Christmas or Christmas Eve or whatever, I’m buying people pizza, beer, and I’m hanging out with them. I did technician rides like I cared about every facet of the business instead of just sales. So not only was I selling more, but I was experiencing every angle, the business through self motivation. Like I was talking to the service manager, I’ve known for him, like, I want to ride around with text, like what are we doing here? So like, I think it was a lot of that, that then I got advocates and people that knew I was in there to make a change. I was in there to break stuff, man, it was like this isn’t working. And so like, they just knew that I just was gonna get stuff done. And that’s I think that got me into trouble is I got I was too naive rights and really toxic people that use me, you know, and they could play me like a fiddle. Like, look at this kid. Oh, the news. 

John Corcoran 28:52

How did they? How did they play? You like looking back on it? Now? Can you give an example of a way in which you’ve realized after the fact that some toxic person was actually manipulating you and you realize that later,

Ryan Tansom 29:03

we had a very, very specialized, very high paid, high production print specialist as well as a software engineer. They were not being treated fairly. I lobby to get the new titles. I got the one guy who went from a $50,000 salary to I think 120 over four years. I paid for his master’s program. And he quit two days after he got it. Oh, wow. And then they both went to the competitor. Yep. So like, so they were like they were there long enough to watch me change everything, get what they wanted, and then just jump without any remorse do it.

John Corcoran 29:37

And no contingencies that they had to repay the degree or stay for a certain period of time, right?

Ryan Tansom 29:43

That day, the title, the education, and the experience I gave him were so valuable that someone was able to write a $50,000 check and pay 100. And I was like, Hey, man, like, that sucks really mad but Like, Hey, do you think you can like stay for two months and help me with standard operating procedures and like new paths? And at the time, he’s like, nope, two weeks.

John Corcoran 30:06

And so in retrospect, what was it about that personality or the company that led them to leave?

Ryan Tansom 30:14

They were resentful towards the the GM and the culture and the tie. So I get that, man, I like it. But then I thought, like, like, Hey, I’m different. Like, I’m here to help. Are you here to help me? And then he, I felt like he betrayed me. Even though I was trying to help him. So I don’t know, man, like, I would have seen that comment. But like, it’s back to the owners kid like, yeah, who was trying to? And I don’t have, you know, generational money. But that’s the same people, I think same issue, those kind of people run into, like, why do people really like you? Yeah. Is it like this, this gets to conflict or polluted.

John Corcoran 30:46

Now, eventually, within I think about a five year period, you eventually sell the company. Now, did you ever have a discussion with your father about taking over equity in the company? Or did you remain, you know, a salaried employee with commission?

Ryan Tansom 31:03

That right there that question is the root and the origination of what I’m doing now? Because so my father and I ran a lifestyle business, even though it was 20 million. And so there’s a lot of jargon out there a lifestyle business? What does that mean? Here’s my definition of it. If it because everything boils down to what is the goal of the entrepreneurs, like if we want to get in our car, we put in point B, where are we going, if we don’t know where we’re going, the timeline that we want to get there, and we’re just making things up. So what happens is, everybody that’s running a business right now is guided towards some Northstar. Whether they’ve articulated it fully or not at all, they’re still waking up solving towards something. Most people solve towards revenue, optimizing the gross profit dollar amounts, how much then falls into their checking account with a hope? And then how much can you pull in cash out of that entity each year? So salary distributions perks? So revenue gross profit checking account should allow me to suck a bunch of money out of this company? Well, that never once was it? What could it be worth? You know, so there was no like, conversations about equity, because it was like, how do we get our hands on that cash flow? That’s a lot because there was a lot of cash on that business. Yeah. Even though there was a lot of different we were fighting it, we had a financial structure that was messed up, which was resulting in a lot of our problems. But so the challenges was John is my dad just wanted out, it was how are we going to slice up the annual cash flow, which was being sucked up by debt, and by all this other, you know, payables, receivables, all the inventory? So there wasn’t a bunch of actual cash. But there’s a lot of cash flow. Yeah. And so we, we didn’t know how to slice that up. And therefore, there was conversations for years, John? Oh, he’s like, I want out, I want out. What am I going to give you more my cash flow for what the hell for? I did this in versus Hey, what’s this thing worth? What’s the difference between reinvesting and taking the distribution? So that’s why like, one of my big components is we have to separate leadership roles. Like you have a normal org chart, everybody should get a W two for the jobs that they do, whether they’re family, friends, This or That doesn’t matter. Get an org chart, pay everybody what they should get paid. Kind of like a sports team, you got all the pet players, then you have the ownership group. Right? You don’t watch Mark Cuban going on to the basketball court right now. And then that separation, we didn’t have the intellectual ability, or data to even have that conversation, John, so it was back to that cash flow, trying to slice that up. And finally, we’re like, there’s no way the bankers the CPAs. We’re visted dude, like, we’re 20 million. We had good advisors, supposedly, in quotes. 

No one was able to have us. No one was able to sit us down and have that conversation. Say, Hey, guys, what’s this worth? What’s Corey trying to solve for? What are you trying to solve for? Personally, financially, professionally, and it just so then, like, there’s just that massive, like feeling of being stuck? Because you can’t move forward? And it’s not the EOS type stock? It’s like, it’s the ownership leadership company, cashflow, equity, swirling soup. And then we’re like, after a year and a half. He’s like, I just right? We’re sitting on having beers. He’s like, give me my money. I never want to talk about copiers again. So selling

John Corcoran 34:21

was kind of the out well, so you have the benefit of hindsight. It’s been about 10 years now, since you’re sold. Looking back on it now. Is there anything that you would have done differently? Or do you think you would have still sold?

Ryan Tansom 34:39

I’m gonna answer to is, I love my life right now, John. Like, I could only imagine, man, if I was still stuck in the copier world. I would probably be making an insane amount of money. And that would be so leveraged. I’d be just like every other neighborhood that everybody’s probably financing their age back service calls right now. Like so. I know. I can see what my fate would have been like, make more money, spend more money, make more money. That was my upbringing. That was my dad’s mantra that was mine. And so I’m really happy. I’m not selling copiers and talking about copiers and trying to build out manage IT services and be stuck in that, however, and like, and I really like helping people and I love what we’re doing now. But if I were to mechanically, like, just unlike, you know, kind of like a strategy, operational side, say, we had turned the business around Jen to like, normalize EBIT, DA would have been in the in the seven figures. We were rocking and rolling dude, like I know how to manage it offering we won the Minnesota Wild doing data center hosting, we had a integrated IT services with our help desk, we had rolled out we had people on site, we like full technology provided Minnesota Wild and it took multiple meetings for the buyer to even understand how we built that. And people are still trying to get caught up to that stuff. So like I loved it, but there was no like, there was no path forward. So like, but as far as like if we were to kept growing, because that industry is still doing good.

John Corcoran 36:03

Really even now, now in 2023, as we record this with, with all the digitization that has happened in recent years,

Ryan Tansom 36:10

it’s a commodity, dude. I mean, like it’s there’s, you know, the weaker people getting weeded out. But we were already in the top side. Yeah. So like it was enough size at that point where, yes, we were our print volume was shrinking every year. But we built out software automation to build out the managed IT services. The only thing we did to make them work obviously, yeah, we it was the profit per customer, that man. But if I would I going back to what it was my dad solving for he wanted his annual cash flow that he expected. He wanted to get fair pay for the actual equity. He didn’t need all the money up front. And that’s where like, it’s like there’s this cash flow versus equity. And how do you get how do you get? How would someone like me buy the company from my father, right? In that situation, you’re going to do seller’s financing. And he’s just like this, doesn’t it? We need that in the cash flow, to rebuild and to grow. So there was this, it was a cash flow issue, Jen. So between debt taxes, reinvestment, there was no, there was not enough cash flow to facilitate the buyout on top of the cash like he needed for his life at the same time. But we could have grown it for another couple of years. So if I would have said this is what we would have done, I would have said, Cory, you can now actually just be a board member, you can just be there, you can collect your salary, and I can have my modest salary. I don’t need any distributions. We’re going to turn it around over the next 36 months. We’ll keep going because we had already done a really good job. So then we could have done either a partial ESOP, partial private equity to give him a liquidity with some more skin in the game for the bigger payday, but ESOP or private equity, the partial liquidity event, walleye head control, I mean, I would have been a private equity guys or gals dream, young kid, turn the whole business around.

John Corcoran 37:50

Just need totally. Yeah, that’s exactly their model. Yeah. So all of this kind of brings us to where you are today. So you ended up selling the business before we get to what you’re doing now? How did those discussions come about? Did you end up you know, you know, approaching you sell to a local competitor? Did you end up approaching them? Did you know them to networking groups? Was it a casual conversation over a beer one night? Hey, what if we were to sell? What was that? How

Ryan Tansom 38:19

did that happen? More more juicy than my job. My dad started there. Gabri division

John Corcoran 38:24

started the copier division of the competitor.

Ryan Tansom 38:28

Yeah. And then he because uh, we got transferred, get transferred to Arizona. He came back to Minnesota. Then he started their copy division. I believe there were some conversations had promises weren’t kept my dad quit. I again, I’m not wanting to say

John Corcoran 38:42

Oh, so before starting his company. Yeah. Okay.

Ryan Tansom 38:45

So so literally, my dad quit their company started our bigger company. And then we were saying, I mean, we have to have both parties had to have spent a million dollars over the 17 years suing each other for employees. So those screwed me over. 

John Corcoran 39:02

You sold your company you’d sued? Oh, my God.

Ryan Tansom 39:06

Yeah. It was like the copier industry. So incestual. It’s like, oh, you get your sales, your best salespeople from your competitors, because they got the clients and then in then you hire the technicians. And so everybody’s doing that all the time. So it was his mortal the and my dad started their division. So it was like this more hatred. And literally a bunch of our old employees work there and a bunch of their old employees worked at our place. And so when we got to this point where we’re finally done, Jen, either, again, the business was healthy, was healthy. I had built out what I would call the Zappos culture. I mean, dude, it was so fun. We were solving really cool problems with really good people with little egos. I mean, it was a lot of fun. We just, we got to this point where he he wanted out but he didn’t know out of what it was that the cashflow is that the job is at the end really, really articulate that and then how to how to clarify it, and then structure the plan. So that feeling of trapped and I didn’t under really understand private equity investment bankers, we met a bunch of those people, they took a bunch of money from us to do a deal pitch book, but 50 grand later, they never called us back. I mean, like, honestly, the stories. So we called up three local competitors, I sat down with each of them to say, Hey, I mean, we totally kind of, uh, we total fib, I would call it a fifth. Cory wants out. And Ryan doesn’t know what he wants to do long term, even though I would have if someone could have given me the path and how to buy it and grow it, I would have taken it. But we hit her head against the wall so many times. So we found these three local competitors, to one of them wanted to come into the cities. So they they were they were valuing the business on the cash flow valuation John, which was good. I mean, it wasn’t losing money anymore, we were doing seven figures at least. And so it was a cash flow valuation, which was not enough for my dad to return. And for me to be fine. The other one was just not interesting, because they didn’t have any IT services or any of the technology that we had built out where it was just kind of an old copier in the company. And the one that we did sell to, which I just do think they’re wonderful people it was, I really, really do enjoy them, they got to get the company, because it was 20 minutes down the road. So they only needed 33 Out of my 90 employees when we sold. And they didn’t need the servers, the building the ERP subscription. So I’m getting geeky here, but they add backs, I went line by line by line by line by line by line and just gutted the company, including myself.

John Corcoran 41:33

And how did you feel about that? Were there good? Did you know about that? Going into it? Did you feel bad about any of that? Horrible? 

Ryan Tansom 41:41

Yeah, it’s horrible. It’s the worst, the worst experience I’ve ever had.

John Corcoran 41:44

So this was something that they didn’t disclose to you going into the acquisition.

Ryan Tansom 41:50

It’s the only way we can get out. This is like this is what’s this is one of the biggest problems with privately held businesses that are not backed by private equity or VC, they don’t have that injection of this is an asset we need to return. So like what happens is we did all that work, turning the business around, but we kept like, my dad still wanted out. But he didn’t know how to the cash flow out of the job, didn’t know how to how to deal with this. So I had spent six years of my life and millions of dollars return like turning this business around to get it to the point where it’s a perfect, you know, platform go to the future. And the only way to get out and for my dad to retire within the money that he deserved, was to get the company so hard. It’s well, it’s just doesn’t it? Well, I know it doesn’t have to be that way. But most people don’t know that. So it was really we were and it also took years afterwards of the work that you do now figuring that out or under in order to even understand that.

John Corcoran 42:38

Yeah. So you end up selling the company. And well, first of all, I actually have to ask, How do you How are you able to, you know, recover from the wounds from years of suing this competitor? To even have healthy discussions and be transparent sell your share your p&l with this company when you view them as such a cutthroat competitor.

Ryan Tansom 43:09

Wonderful question, my friend. It happens every day, man. Because the moment that someone says, Hey, I can eliminate my competitor, take all their with 3200 clients or something like that take their clients. Kick. I mean, it’s a it’s a defeat. I mean, they’ll give you if you really think about it’s like, hey, Cory is finally out. I win. I mean, I’m not I have no idea of Jim actually thinks that I really, really like the company that bought us. Yeah, but it was just like two sports teams. And like, it’s the same thing. I don’t know how like a quarterback that plays on one team. And then they go to the end and go, yeah, yeah, they do the same thing. But what I do know is that my funny story is John, we’re sitting down at Jim’s the buyers lake house with his CFO, Neil, who I love, I love all these guys. And my dad, me, and our controller did it before the transaction. This is this is when we were actually doing those add backs. So we had up on the screen. 

John Corcoran 44:00

So you’re still negotiating it. Okay.

Ryan Tansom 44:02

And I looked, we sat down, I said, Jim O’Neill, if my dad worked for you for this last 17 years, there’s no way his book of business would be this big. So it’s a net positive for everybody don’t even think I just had to like break the ice. And then we and then we got into it. Um, I have no proof behind this. But there was probably I mean, everybody knows that if there’s sounder computer, the moment you get to the client list, because you have to do contract audits. I mean, that is terrifying. I was

John Corcoran 44:31

think right? Because you’re just worrying that they’re gonna be like, Okay, start dialing, guys. And

Ryan Tansom 44:35

we had like, big clients like Valspar and like worldwide and all these and like, all of a sudden, our buyers are going, Hey, are you selling? I mean, so like, I don’t know if it was the closed doors at our office, or, you know, you never know where the culprit is. But time and especially if you’re doing a strategic sale to a third party that competes with you, time is your worst enemy. So like, the goal is to get that done as fast as poss versus like at some private equity firms probably not gonna go steal your clients. And

John Corcoran 45:03

so so if it’s if you’re selling to a strategic partner buyer, it sounds like your advice is hold on to that customer list as long as you can and reveal it as late as you can.

Ryan Tansom 45:12

Like, like the minute before the purchase agreement is signed in the bank, where happens. Maybe, yeah, that makes sense. But yeah, as a customer, because I see, you got a lot of the data without the names. So yeah, do a lot of that work without it.

John Corcoran 45:26

So let’s get to the work that you do now. Because, you know, it’s funny, I think back and when I started my when I started my entrepreneurial journey, which is 2011. And I would practice law for a bunch of years. And I had a bookkeeper who was using QuickBooks Desktop version on his computer, and he would send me the books once a year. And he really resisted switching over to QuickBooks Online. When I got to QuickBooks Online, I couldn’t believe what a revelation it was, I could see my numbers a lot more precisely. And part of what you do is you built dashboards now to help people have literally like the dashboard in front of them, the stuff that you didn’t have that I didn’t have when I was starting out. So talk about now how you ended up building what you didn’t have.

Ryan Tansom 46:15

Yeah, so it starts with so we’ve got three, three lines of business really, too. But it’s we have an education business, which is how our CONUS started. So I realized, John, because I was invested. And I was talking to my buddies they wanted to, I consulted and did a bunch of random stuff for five, six years, and got a bunch of certifications out over academic myself, that’s even a word. But when he got a bunch of certifications, then I went back and just realized that everything that I went through was way more valuable than any of those certifications. But I have to constantly sit down with other entrepreneurs. And again, these are not private equity folks. They’re not they’re not Silicon Valley folks. Like what’s his worth? And what’s the return? It’s, it’s all of the story. I just said that most of these people, it’s their psychographic. That’s the ideal person and I have to have constant conversations about like, what the hell are you actually solving for? Is it more revenues and more cash flow? Is it less of a job? No one knew and then they actually so A, the goal was anything but clear. If it was clear, EOS scaling up OKRs, you name whatever system it is, its revenue. Well, I owned a $21 million dollar revenue, the business that lost nine or 40 grand if we would have sold the business, John, in 2009, we owe the bank two and a half million bucks. Who cares? Who cares about revenue. So like, I’m sitting there going, like, okay, so all of my friends and all my contacts, they’re solving for revenue, it’s on their behalf, it’s on there, like, I’m like, you’ve any idea who your company is worth. And so it was like, it was insane. Jonica find this over and over again, because I thought I had so much shame and guilt. I thought we had all of that. And it was our fault. Because we didn’t have schooling, we didn’t go in on all the reasons that we thought we shouldn’t have been able to accomplish that. I’m like, Oh, my God, we’re actually kind of normal. And then I’m like, revenue is your goal. I go, What if you have crappy revenue, your company’s not where they say I’m like, so you’re just waking up every day. And just making insane decisions to deploy capital, people resources and energy into things that you have no idea whether it’s growing value or not. And people just kind of looking at me, like, I guess if you say it like that. And I’m like, Well, is it true that you want a valuable company? Yes. Do you know what it’s worth? No. Do you have a valuation target? No. And here’s Now what that means. So that’s why we started the education business about valuations, value, growth, finance, all the exits, how to think and view it like an asset. How do you put all of that there’s five principles, and there’s all bunch of stuff in that. But then what happened, John is like, mechanically, if you said, okay, like, and this is where I’m, I’m a huge junkie for incentives, which is why I like macroeconomics, monetary policy, any of this stuff, because why are people doing what they’re doing? Well, it has to be the goal, the goal is what synthesizes all of the behavior to go get it. It’s what makes all of the behavior and decisions makes sense. It gives it context. Right? 

So as I was looking like, Well, if the goal is wrong, or like we have asked, all of these problems are because the goal is wrong. Like if you wanted to go to Florida, and you put your Google Maps in California, you’re gonna be pissed at the whole way. It’s been go to the wrong gas station, you go to the wrong and you go to the timings off your gas station stops your breath. It’s just insane. So that target equity valuation. So if we kind of mechanically explain this, and then explain what this means that the owner is like, well, actually, let me inverse that. I don’t know what the listeners are Eugen, but I can speak on my behalf. The reason that I’m owning my business, I want to have a valuable I want equity to grow all my company to grow in equity. So I have more wealth, I want to have clear visibility into the cash flow personally that I have between now. And when that target valuation happens. I also want to know what are my taxes going to be every single year? And how does that impact my cash flow? And then how much is left every single year. So like, hypothetically, let’s say we have a million dollars in cash flow, we gotta pay 300 grand in taxes, you take 200 grand out, we got a half a million dollars leftover to reinvest.

John Corcoran 50:29

Where are you going to put it? What return are you going to get?

Ryan Tansom 50:33

Do you have any idea? Hypothetically, you is, and people are just guessing, like your rocks and us? How much of the cost? Do you have enough? How does that impact your distributions or taxes in your target timeline for your target valuation? There’s no framework for these decisions. So at the end of the day owning a company ownership, you care about equity growth and the trade offs between reinvestment and distributions. That’s it, man. Yeah, that’s when you when you look in your stock portfolio, that’s what private equity cares about, then there’s this job. So what we want is that, like, that’s what people people know that. They don’t know if like, hey, if I buy this building, or hire that CEO for 250 grand while launching that product, and doing that Complan Well, I run out of cash next May? I don’t know. Yeah, the only way you can know is if you take that target, normalize EBITA. So let’s say I want a $2 million, normalize EBITA, aka cash flow. In 2030, you’ve reverse engineer the income statement, the balance sheet, and the cash flow statement has to be all three. Otherwise, you can’t get visibility to that cash flow. And 95% of the people I talked to only forecasts about the income statement, and it won’t show you your distributions or cash flow, or the reinvestment or working capital. So like, people were flying blind, flying blind, to a goal that they don’t have. That’s correct. And so like, I don’t know, it’s just this fascinating conundrum I’ve seen,

John Corcoran 51:58

it’s also sounds like a big software challenge. So did you have to pour millions of dollars into creating something that that solve for this challenge?

Ryan Tansom 52:10

No, we did go through that. So what happened was, we had the training, the training program, we’ve had like 550, some entrepreneurs go through it, where they’re like, Oh, my God, I get it, I get no more normalized EBIT, I get multiples I get how to de risk my cash flow. And essentially, our philosophy, John is that the goal is to build the value of the business based on sustainable, predictable transferable cash flow. And the cash flow valuation hits your goals. If you want to strategically sell to someone got the company, like I didn’t get a premium, that’s your, that’s, that’s your call. But in that situation, if the cash flow valuation for my father and I would have been fine for him, we could have facilitated 1000 Different violets essentially, like 360 degrees of options. But what I say is, as we built that we were showing that to people, people were like, oh, I want that, I want that, I want that. That led us to building out our fractional CFO services. So we have a CFO offering. Each of our CFOs gets five clients, they sit on the L 10s. If they’re running an e os, or whatever operating system they are, but then people were not needing them. They don’t they can’t afford the CFO, plus the reinvestment, or their business is simple. And they kept going. I want the visibility, that dashboard. So we looked at buy, build or partner, and do we’re not a software company, and I was a software reseller, and implementer back and that still complicated. We didn’t want to partner I’ve gone through partnerships, that’s a struggle, and did that my last play our last company like partner with telecom because we didn’t do that, or data centers. And we said, you know, what, there’s a there’s a category over the last probably three to five years, John, kind of like, you know, when CRMs came out, and then email marketing came out. The new category created category that has has been built over the last five years is that f p and a lot of middle market companies don’t know that it’s financial planning and analytics. Big companies have the FPGA division that reports to the CFO, it’s all scenario planning model. So they have these FPGA software’s that connect to your QuickBooks connect your payroll system connected custom data. So you can do that three statement forecast tied to valuation target. Well, it’s the end. So it kind of like if you think about like HubSpot, or Salesforce, John, you get it. It’s a ball of clay. Right? Like it’s got the engine but you have to apply your logic to it. So that’s what we did is take me my partner’s none of us are CFOs or CPAs. But we’ve all we’ve been through dozens of transactions combined together. So we know what good looks like. And so our goal is with that software, we applied our logic to it, essentially private equity logic, John, like, that visibility that you’re talking about. So now, these entrepreneurs who like dude, I know, everybody that I work with, they know how to explain where they’ve been, where they are, and where they want to go very Very clearly, they’re really good storytellers generally.

John Corcoran 55:03

And then you go, Hey, prove it. And they’re like whiteboards, PowerPoints.

Ryan Tansom 55:07

And the reality is, if they go to southern business, they have to tell that story using the numbers. Yeah, so we’re helping them connect that story to the numbers. And when you eliminate the math, the pivot tables, and broken spreadsheets, and the in ability for a lot of finance folks to communicate with visionary entrepreneurs, you eliminate that noise and allow the owner to see into the future, the way that they think they can make a lot of these decisions themselves, man. So like, that’s what we’re doing is building that out. So it’s really just building out that dashboard, with the logic, and then helping them think through their trade offs.

John Corcoran 55:44

That is a really cool solution. And I want to point everyone to where they can check it out. But first before they do, I have a final question that I always ask. Now, usually, I have to warn the audience, I usually warn my guests beforehand, but I actually forgot to tell Ryan about it. But I’m gonna ask him it anyways. And we’ll see if he can work on his feet. He’s a sales guy at heart. So I think he’ll probably be fine. But so I love I call this my gratitude question I love asking people about especially, especially peers, and contemporaries, and mentors who helped them along the way. Now, I will warn that a lot of times people default to mentioning family members or team members or something like that. You’ve already mentioned your dad before had big impact on you. But are there any others that maybe didn’t even come up in this journey, especially peers, or contemporaries or mentors, who you would just want to shout out publicly and thank them for helping you in your journey.

Ryan Tansom 56:43

I have to default the family man. It’s my wife, dude. I’ve been with her since I was 19. And I had long hair at a bunch of earrings and in school. And like, there’s a special spot where regardless of who’s the main entrepreneur, the spouse of an entrepreneur, is a unique person. Because, hey, believe me, trust me, this is gonna work. And like, and like that is no leap of faith. That should be like poopoo it because, like when you’re risking the future of your economics for your family. And I’ve got daughters and kids and like, so I don’t know, man. Like, I’ve had a lot of mentors and entrepreneurs a lot, a lot more of mine, I would take like more like Andrew Carnegie and his, you know, Napoleon Hill book words, people that don’t know who I am or they’re dead. So like, I’m a big reader, but like, I’d say my wife, dude, man, like the stuff that the risks that I’ve taken wouldn’t be possible without having my support. Yeah.

John Corcoran 57:36

Okay, great. Ryan, where can people go to learn more about you and Arkona and the dashboards that you talked about before and the fractional CFO services and all that kind of stuff?

Ryan Tansom 57:44

The website is the best, Arkona. It’s The podcast is there. There’s a starter kit with it’s a bunch of samples of our online training. And yeah, there’s a bunch of stuff out there. 

John Corcoran 57:57

Awesome, Ryan. Thanks so much.

Outro 58:04

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