Hey everyone and welcome to the podcast dude so anyway it is the ESOP guy and we are on a journey to an ESOP and we're in season 3. And I will tell you that it is. One of those things that I really am challenging myself to do this year which is to break out of the normal stuff in as much as I love doing what I do, with Aesop's in. It's like we all get into these these ruts and we and we start doing the same things over and over again so I am going to challenge myself with this podcast in 2022 to be. Just a little bit different and try to push towards other topics and things so. I want you to understand before I get into this podcast episode that's what I'm all about today and really looking to make this not just the same old thing that we've done we've been doing for now season. Three and so so look for new topics and things that I'm exploring some of these things are coming out of, meetings that I'm having with people I some people ask me like where do you get your topics I'm going to say hey, it is some of its just really thinking about the times that I've spent with people recently what I've been talking about and so a lot of that is really just to kind of help me to use something that's relevant and also something hopefully that is helpful to you. [1:38] It's the place I find myself and my story I think is just a little weird, I'm really not a unbelievably weird but I find myself here at a CPA firm after 21 years of time in my career and before this I was a commercial Banker. And before that I was a college student and you know here I am boom 51 back then I hated debits and credits and I still do, accounting was for me the bane of my academic experience and why I mentioned even accounting is because I'm a partner of an accounting firm so how did this happen I thought who in the world would find this stuff, you know interesting and I can't say that I ever thought I'd be working you know add an accounting firm but here I am. Anyway I say all this to T this idea up today that different people have different skills and as businesses grow each individual has their own way to, innovate and and contribute to that growth and so you can be a non CPA and become a partner of a certain CPA firm just like I did but you can contribute anywhere and everywhere and the bottom line with this is why. [2:48] Why because I'm going to answer that question after this hold on so we're going to start this with this what I think is a really cool kickoff. [3:00] Dare to walk A New Path dare to strike out and find new ground I'm hearing rumors John, about some unorthodox teaching methods in your classroom breakout John Keating he began by teaching English now, he's changing lives tear out the entire introduction which one was it this man is. Mr. Keating are we just playing around out here what do we mean what we say. [3:31] Cool that is a quote from. [3:35] I think one of the coolest movies I've seen in my history of living on this Earth and that's Dead Poets Society with. The late Robin Williams excellent movie and one of the things I like about this movie as I was alluding to is. He goes into this school and he really. Sees what he sees are these people that are just continually being conformed to this this. [4:03] World in the way it wants everybody to be molded into and he breaks them out of that as a teacher I think this is just a phenomenal concept he breaks him out of that thinking so that they can be. Unique and Innovative and different. And so part of the inspiration of this podcast is because I see the need and businesses for them in their. To foster a creative atmosphere. With their people and so that their people can innovate and come up with new ideas and to continue to grow their businesses so. What happens when times get hard and we're not there yet but I think we're going to be there soon what happens when times get difficult is people have to kind of think through an innovate through problems or they have to innovate through into opportunities that they haven't had before in business and so. I'm I'm crazy lie I'm passionate about this whole topic because I think it's just so important so yes it affects esops how does this affect Aesop's well if you're thinking about selling your business to an ESOP one of the first things you got to think about. In understand and look at is where is my where are my people. Where where am I going to be leaving these people if I'm exiting the business and is it successful is it going to be a successful transition. [5:28] If you're going to stick around which is great A lot of people do we have to deal with the ongoing development of our people and making sure that they have the skill set. That it takes to manage companies in going into the future and so this idea of fostering creativity is really going to be the title of this podcast and I think it's absolutely appropriate for companies that are thinking in, to the future of how they might put together their own ESOP transaction. [5:58] I want to say this that there is one thing stronger than all the armies in the world and that is an idea whose time has come. [6:07] Victor Hugo. So this is a quote from Victor Hugo who wrote Les Miz and some of the other great literary works and it's really just this idea that. When you bring something to the table that is a little outside of the box people are like hey I don't really think that's going to work. You're going to be met with challenges and I think part of the problem that we have in our business is that we were wanting to process-driven drive everything which I'm a big believer in process. Process types of systems in businesses because I think you can't scale right correctly without processes but at the same time. We also need to continue to challenge how we're doing things and what ideas we have in the future so, so this is the topic that we're going to hit today as I said all of that I just want to say this for those that are brand new to the podcast thank you for joining and listening to this podcast hopefully I haven't completely thrown you off. This isn't a podcast called the journey to an ESOP which is really for people that are thinking they might want to use an employee stock ownership plan in their succession planning. Exit planning growth planning and in any kind of way you can possibly use it whether it's a partial ESOP or 100% esab so there's just a lot of things you can do with an ESOP. [7:25] So if you like what you hear please go to our website at journey to an ESOP.com you can check out all of our episodes, we are in our third season I think we've done over 100 episodes there's a lot of different topics that are available for you as you start to explore the concept of Aesop's, so thank you for again for joining if you do like this podcast subscribe to it and also check out our YouTube which, is really just all the interviews that I do I started this last year I try to post these on YouTube too. Some people just really like to watch YouTube videos so I'm like why not right, so check that out you can just Google on YouTube not Google but you can go to YouTube and search. Journey to an ESOP or east theesopguy and I think you'll find those as well. [8:14] All right so let's start off with this the importance of creativity in business. So let's just start off what is why am I even talking about this today in bothering you and your car is your driving well it is something that I see. First off in just my own experience of working so 420 say 28 years in my career Going on 30. I see that there's. [8:42] Definitely a lack of in the new generations with this sense of freedom, be more creative and try different things so I'm just saying in general my over this 28 to 30 year period I've seen less and less of this so I think it's a need that we have and it's a need that we have, to consider how are we in our businesses. [9:13] Creating a platform or let me use a better way to approach this how are we. [9:21] Approaching this type of development of talent in our businesses. [9:28] Whether that be in the way you recruit and hire or whether that be the way you train whether that be the way you strategically Mentor your people how are we. Targeting the idea and the goal of. Creating work of helping our people become more creative and Innovative in their jobs. And first off is it even allowed I mean in business now let me say something that I think is really just so opinionated and I can say that because it's my podcast. My opinion is this. [10:06] And you can disagree with me I'm fine with that is as you get larger as you get businesses that are larger that have way more bureaucracy to them. [10:17] And they start to function as a corporate business. Then you kind of know what I'm talking about right I mean you got business big big big businesses that operate and they and they have, you know huge Market reach big resources they can do all kinds of stuff because they've got tons of money Capital there publicly traded, and there's there's something about these businesses that I think. [10:44] Actually do the opposite in terms of what this topic is all about they they do not want their people to, um have any and they can't afford to have their people have really any decision-making say so they want them to do their thing step in line you know like this movie is really a good there's a scene in this movie Dead Poets Society where, he has all the all the kids outside and he and they're walking around and they're following him in a circle. And he's like immediately they all start he changes the pace and he changes the way he's stepping and they immediately start doing the same thing. So what this basically says about people in general is that they're they're pretty much followers and then in these kind of big Corporate America type of businesses. My opinion is that is that they really do breed a type of risk mitigation mitigation of everybody we want everybody be in line, follow the thing you know if it's the Office Space movie fill out your TPS reports and you know send those in and make sure so that you don't do anything outside of the box, because we don't want that we want people to be you know corporate robots one of the things I love about Aesop's man is that. Are the the beautiful thing of creating. [12:08] And keeping small businesses intact where this Innovation can stay alive. [12:14] You know what what's what is in business world what is what is at the death of a company it's the death of a company is when people they they sell the business and this. Big private Equity Firm comes in and they turn the screws on everybody and everything is about just making money. I'm a business person I mean we have to make money we have to have a profit if we don't have a profit we're in big trouble but everything's about when everything's about that. They just they just basically fire people when they don't do exactly what they're supposed to do there's tons of politics and in the private Equity people you know that they're not saying that they're doing anything I mean that's their job they are there to make money that's all they're there to do, and so when you link when you think about the ESOP world one of the things I think about is about as the beautiful thing of keeping the the the culture and the Innovative properties of these companies. [13:10] And I think for America this is one of the greatest contributions to society that can be made. Because. [13:21] People that can flourish in have ideas taken seriously and use those ideas and innovate first off they are more fulfilled in life secondly the businesses have more potential and, in strength and they create, you know innovate and they become larger businesses that can do more and help other people and their communities and so Aesop's to me, because they're the because what they do is they help sell the business to the company employees through this through these means and mechanisms of a retirement vehicle, help to Foster that so so I'm kind of on a tangent with this because I wanted to kind of make sure I understood I wanted to start off with what's why is being creative and business so important but I think the biggest thing I wanted to do in this first part is just compare the differences between, the the large companies are these companies that come in by small companies and they roll them up and they become these big large companies and you know and I know that so opinionated I'm sure there's, corporate companies out there that are just phenomenally Innovative but I'm going to just say in general that's what I believe you know and, one of the reasons I want to do ESOP deals and help people do Aesop's in is because I think it does help support ink and protect a culture. [14:44] Has something unique about it and something that gives back to the employees the community the customers and it's a very rewarding process. But why is why is being creative important in a business. [14:58] Creativity in business is a way of thinking that inspires and it challenges and it helps people to find innovative solutions and and, create opportunities out of problems it's the reason some companies that come into something and they just wow us with like amazing ideas and and they solve problems in our world that nit that frankly need to be solved and. In the reward of doing that obviously is is building a solid business and helping people ultimately. Help their customers and in the process become successful whether we define success has creating wealth. We we define success as creating more time to enjoy our lives. There's a lot of ways to think about that but I think creativity is a building block and it's a pillar. To what I would say is a ultimately a successful business which. [15:57] Basically is a successful business that has inside of it and successful people and so creativity is really to me one of those pillars now in 2015 this is just for, interesting parts of what we think about when we think about creativity and and our awareness for its need. In 2015 based on future of jobs report by the world economic forum. In the top ten skills which included complex problem-solving coordinating with others people management. As the top three the number 10 the number of the the creativity is being a skillset that was that was valued was number 10. And so in 2020. [16:45] The top three skill sets are complex problem solving critical thinking and creativity now what has changed in that 5 years. What has changed I think we know the answer to this but because I think it's fairly intuitive. But I think it's primarily a technology shift because technology as we would all agree is changing at such a rapid Pace that nobody can really grasp. These types of things so a couple statistics. In this idea behind it is that ninety percent of the world's data was generated in the past two years alone which is just phenomenal at this point five billion people in the world own a mobile device. [17:28] Two point six five billion people in the world use social media one in every five Americans is what we call smartphone dependent and if. That basically means you're probably listening to you either your smartphone or your looking at your smartphone a million times a day I'm just being exaggerating at that's not a statistic so. What I'm saying is is that that, technology has shifted everything so quickly and the reason I think that this is is ultimately the like the reason behind creativity being such a such a, higher demand skill set in the workplace so we go from 15 to 20 and look at that jumping up to number three. I think in the future it's going to continue to climb into number one but that's just my opinion is because technology. [18:22] Eliminates so many barriers that had protected certain companies from having to be creative and Innovative so if this trend continues this is probably one of the most important things I can say on this podcast is is you got to get your head around as the CEO of these businesses you got to get your head around the changes in technology and the changes in your business and the need that we have. To be to have creativity and to Foster creativity so so again I think it's such an important idea and topic, it's not something that people are comfortable with in general because look at let's just face it it's like how do you how do you describe creativity I mean do you teach this at college no but I think one of the things I want to share, before we do this I want to share why I think it's important and then move into the sum of the how to is, is coming back to just being an ESOP company and the couple things about being becoming an ESOP company that need to be spelled out and connect and we need to connect the dots because this is an ESOP podcast by the way is. Contemplating the transition of your company going into an ESOP and so one of the things that we love about esops is they really are. All about people now business-wise every company has a different structure and some companies may be rely on some people more than others but for an ESOP. [19:49] I'm going to say that it's about the people and it's about people going on into the future. And the people are what makes a difference in the valuation for sure and a lot of companies and how they that leadership talent that they might have or the, experience or the credentials and all of those things that go into creating certain types of really powerful cultures you got to say wow that's got to have a lot to do with people. Now take it to a from an ESOP standpoint what were contemplating within an ESOP is a leveraged transaction which means. That these people are now going to be transitioned into beneficial owners which basically just means that they're going to own shares of this privately held Company stock, in their retirement accounts and they're going to end up having the. [20:41] Be able to grow the value of that business therefore. Their stock values going to increase in their in their retirement accounts the more that they can do that so so they're going to be connected to the ultimate equation that the business owner was connected to which is if I grow my business is going to be worth more, and I'm going to have at the end of the day I'm going to have some Financial reward for so. [21:04] Let's think about that for a second form a leveraged ESOP standpoint what we're planning when we transition into it like just going into a transaction what we're planning is. That the business itself is going to take on debt. That's going to have to be paid off so the first first part of this is that we need to run our companies in maximize cash flow. In order to pay that debt off of course that's important and and again. The better we have positioned the company with the people and the talent and if we get back to our topic and helping them be Innovative and creative, the stronger they're going to be in the competition from the competition standpoint, and then have these types of competitive advantages to generate the cash flow they need to pay the debt off and then secondarily as they do what we're going to be doing. Is creating value and that value it will. Ultimately come back as the financial reward for the people for the employee so this is all about people when you get down to it. So with that I want to point this out before we go to the how to but I wanted to play this again as we come back to the concept behind the Dead Poets Society. [22:22] Then upon my desk to remind myself that we must constantly look at things in a different way. [22:31] She's the world looks very different from up here don't believe me come see for yourself come on. [22:41] Come on just when you think you know something you have to look at it in another way even though it may seem silly or wrong. You must try now when you read don't just consider what the author thinks to what you. [22:58] Boys you must strive to find your own voice to the longer you wait to begin the less likely you are to find it at all so row said most men lead lives of quiet desperation don't be resigned to that. [23:12] Freak out don't just walk off the ends like lemmings look around you mr. Christie thank you. [23:21] So in this scene it's pretty it's pretty cool and I play it because I want it I want to kind of point out that in this in this movie. [23:29] Robin Williams who's the teacher is trying to challenge everybody to see the world differently so he has everybody he stands on his desk which in the very conservative boy school this is kind of unheard of, and then he has everybody get on his desk as they walk across and then you just kind of points out the fact that we have to start thinking we have to start looking at things differently. One of the things that I do which is just kind of silly and doesn't mean much is I just try to park in different places every you know, so often so I don't know if you know this but people get kind of into a rut and they park at the same place they said at the same table they do the same things over and over again because we're creatures of, so breaking those habits is really important so that segues this into talking a little bit about how as a business you should fostering, this kind of concept of creativity so we've talked a lot about the reasons behind doing this so I want to talk about, what sort of things that you can do to help improve the potential for creativity in your own businesses and let me first off just say this for people that maybe I they need to listen they need to hear this let's stop being afraid. Of our people being creative let's stop. Being afraid of people coming up with ideas that we don't want to implement or maybe that affect us in a way that we just don't want to deal with I'll stop being afraid of that unless make time for this because when you get down to it. [24:58] Really well organ organization really well run companies organizations embrace. Change and they Embrace new ideas and there's a place for this, I will say and there's a there's a there's a place for this in companies but there's also a place where we need to kind of quiet it out and do the work to write so I'm not I'm not an advocate of just completely creating chaos, in a company but I am an advocate for for facing our fears in trying to change things and getting uncomfortable because I think that is how people grow and that's how individuals grow that's how organizations grow and become better. [25:36] So with that, the idea behind it then it's really to think about the possibility of rewarding creativity is as one way to Foster it so if you have somebody in or a committee of people that have a breakthrough how could you reward them is there a financial reward is there a place where they could actually get some days off of you as you be creative and incent people I think it's really important for them to know that this is something that the company even if they don't get days off or money, that they recognized and they tout and so. One of the ideas that I got in putting this podcast together was just from a client who's an ESOP company now that we helped and I actually got to speak. [26:23] They're what they call their Innovation Summit so what they do to reward creativity is to recognize people and they actually have an innovation award for their employees and I think it was just a really good idea and I'm just going to. Kind of throw it out to every company out there that's thinking about this and so in the the opportunity that they do they pull everybody together for a day. And I believe it's a significant amount of time where they're like hey let's put our put our work to the side for a second and let's talk about Innovation and what we're doing on our company and so they really Foster that, creativity by making that important and they reward people so every year they're going to have an innovation award for an employee that has really stepped up to the plate. [27:08] That can that really does generate that and and does something specific to help the company become Innovative and so that I thought that was really cool so that's a way that you can reward creativity. Day at second thing would be just making sure when you start thinking about one of the things we've talked a lot about in the podcast and you think about this for an ESOP company one of the one of the things we spend a lot of time in planning, he's thinking about the people that are in the company so we mentioned that about people being so important to the Future ESOP company so, having the right people in those places one of the things that you can do in your fostering creativity is really interview in recruit for this type of skill set if you don't see it within your within your organization. And how do you interview for that I mean really comes down to understanding, their background and asking the right questions asking some open-ended questions that really help you to determine if you have Innovative and creative people already. You may want to establish them as part of the committee of hiring people and make sure that they're interviewing people as well so obviously people that are creative and Innovative can see that in other people. [28:28] So that's that's something that I think you can actually bring in Talent as you hire and build your company's, another idea in terms of how to Foster creativity is what we call the yes and approach so one method for spring creative brainstorming is trying a technique, that is used in improvisational theater so it's yes and the approach encourages people to build off of their peers. Or ideas of their peers Thoughts by first agreeing and then adding something to the discussion so instead of saying no, they say yes and and so the idea is that finish out the statement so employees could test this approach by simply putting a paperclip in the middle of the table and thinking up as many use cases for as possible. The activity might sound silly and foolish but it could help Inspire creativity so what can we do with this so yes and. So try it if you think it might be helpful another idea is to try flexible work hours. And again I'm a big proponent of getting work done and so I'm not suggesting that anybody violate the the you know if your operations and in workload is very very tight this is really difficult to do, um but. [29:47] Inter in certain time periods of a year maybe things get a little less busy a little less crunched I also am aware that the labor market is really super tight now so it's hard to actually do some of these things when, the focus sometimes needs to be getting work out the door. [30:03] If you can be be flexible with work hours in really help people so if you could do a four-day work week and giving people, a fifth the fifth day off then that can kind of inspire more quality of quality of life and then that can Inspire creativity as well. [30:20] So that kind of. Leads into this idea of giving employees time to recharge and make sure that they they're able to they're not worked you know to death in the of everything so fostering creativity really does it's really important, have them have some time to not just just be burn out and then I'm trying to come up with some some crazy good ideas so. [30:45] Encourage open-mindedness so one of the things culturally that can happen is then it really comes down to culture in this case is that. [30:56] We as leaders in a company or business or an organization can stymie the process because we are not opening the door to discussions so, when we think about that yes and approach it's when people do have some ideas and then you ask them to continue to build and direct those develop those ideas I think it's a good up it's a good opportunity to encourage, the just a general sense of open-mindedness in terms of how do you actually. The Foster an environment where people feel like they're their opinions matter. [31:31] I think part of what's happened over the last you know really last couple years it's been really thinking I think we've all had to think a lot but about diversity in the workplace, and I look at diversity as much bigger, some type of topic then some of the some of the way that it's diversities looked at politically in this country but I think of diversity as like just different personalities one of the one of the best things I was. Involved with in terms of our company and also our CEO groups and different things like that is they'll use of a program called strength finders where you're actually. Looking at everybody's individual strengths and in that and that program what's happening is your take their the top five strengths of somebody and what you realize is that that most people are completely different and you might have the same, you might out of the top five you might have one or two of the same you know but most of the time in the company your top five is going to be unique to you and what does that mean it means that. [32:35] What we all kind of know intuitively that we're all kind of wired differently so I think having diverse a diverse Workforce is important but encouraging not just a diverse Workforce but encouraging to do things, on a different type of perspective just kind of like walking up on top of the desk and looking at that. I think at the end of the day for most of us if the job gets done really really well who cares how it got done as long as it was legal right, you know there's a lot of different ways to do business development there's a lot of different ways to do marketing there's a lot of different ways you know in some ways to to produce something that maybe has been produced the same way over and over and over again so thinking about. Implementing diversity and giving people room to to be different is important and so strengthsfinder comes from the Gallup poll if you want to research that that's a program I know there's a lot of other things you can look at but just that's the general. [33:36] Consider flexible work Arrangements implementing, you know giving employees more freedom in that in terms of how and what they work on one of the things that that I've seen really be successful as is helping, instead of doing just performance reviews is helping build a career career plan with, employee so once a year instead of just talking about hey this is what you did last year but it was good, or these are the things you need to improve on which I think is important you should also be thinking about how do we go forward in terms of what that person wants to do in their career and maybe you're developing more than just a one-year plan maybe you're developing really like a five-year plan and so part of the ability to flex have a flexible work Arrangement is help them get to the places that they want to go to now this of course I think helps directly with. [34:28] Strengthened in your retention of your business of your of your employees as well because if they feel valued that way. Can you put them in the right seats and things that really have a passion for then I think it always helps everybody and the process, some companies are really effective at this is just getting everybody to do brainstorming sessions and you can do this in departments you can do this in breakout sessions that Retreats you can you can just generate I'd you know have the practice of generating new ideas and so fostering creativity means you're going to be taking some time. To have, a meeting where you're not talking about the same things over and over again you might run into some issues one of the one of the things I like about traction through Gino Wickham is is that they use this process called the IDS which is issues discussion in Solutions and so they really do breakdown issues in looking at the symptoms of those issues and it's kind of a brainstorming idea to and that there's but there's a methodology behind it so you may want to you know Implement methodologies that that are proven, you may want to just kind of do you know a simple brainstorming and everybody puts an idea and then you start talking through it but do try brainstorming to get people involved in feel like there's actually processes that that try to drive creativity. [35:52] I think one of the major things is you can't comes back to my original point is in terms of, fear is you can't be afraid to fail you can't be afraid to try new things and one of the things that I would do typically with a new idea is I would have somebody actually write out a business plan, you know to took to comp you know, to think about specifically what is going to be needed if they're going to implement something that that really warrants a business plan. Now I don't you know I don't want to invest money in as a business owner in something that's going to fail so I want to I want them to think about that and it does I think it does help people. If you have them write their own business plan to better understand, what is going into it like what is the capital investment that the company is going to make for instance and what's the what's the revenue generation idea or can you quantify that in a forecast over the next couple of years and you know and I get some ideas might be just pretty simple and you would need a business plan so this would be more like to help the company prepare for that and also, you know just think about the idea that if you do fail if you have people do things and it didn't work. I would not worry about that and I would move on and not get stuck in in the failure because I think if you do then people will be discouraged obviously from trying to do something else. [37:17] There might be some other rewards that you want to include or have incentives I think those are always helpful one of the things from a business perspective I would leave you with and when I think about creativity, is is there are companies that have of course research and development departments and then that's the department and I'm going to say great and keep it and do it because it's something that every company, if they can become Innovative that may that may just make sure that they've solidified how they're doing it. [37:48] And include that of course we're going to when we think about the ESOP we're going to include those budgets in the financial forecast, and but I also want people to think outside of that and think about the idea that maybe it's not just on Randy, types of projects where you're thinking about new products or new Services maybe it's just simple processes process improvements which can certainly take take place as well so so I my last part of this is just how you know get on top of the desk and really think differently about the way you look down at your business and say you know what we we probably could, review HR processes we could probably review the onboarding process as we could probably do this in so many different ways but it takes discipline and it takes taking time to do that so I think the companies that do that really well and embrace, the idea of fostering creativity have a very high level of. [38:44] Probability of success in the future I think that as we go into the future with the definitely more of a volatile Market this point, not knowing exactly what feds going to do with the rates I think we can see inflation already happening these are things that start now and so that's really, as you think about your potential ESOP transaction absolutely this is this is warranted as part of your planning is part of how you build your business plan as part of how you you create structure and strength to your company so with all that I wanted to say thank you so much for listening today if you like the podcast Please Subscribe and share it with a friend and we will see you on our next step on this journey to an ESOP.
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