How Business Owners Can Double Net Income by Removing Themselves as the Bottleneck

Cary Prejean (00:00)

Yeah, again, if the entrepreneur or the business owner is spending too much time working in the business, it’s going to impede the business. the two things happen out of that. Number one, they’re not doing their most valuable function for the business. They’re not going out and creating revenue, right? Because they’re distracted with all this other stuff. And number two, they wind up being the bottleneck in the business because everything has to come through them, right? Well, if you’ve got to make all the decisions, and let’s say you have, I don’t know,

20, 50, 100 people in your business and all decisions have to go through the owner. Can you imagine how things get bottled up and get jammed up?

Michelle Kesil (02:08)

Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil, and today I’m joined by someone I’m looking forward to chatting with, Cary Prejean, who is the founder of Strategic Business Advisors in Baton Rouge. With a background in accounting and coaching, he has 40 years of advising, consulting, and coaching business owners in profitability, efficiency, and effectiveness.

So excited to have you here today, Cary.

Cary Prejean (02:36)

Michelle, glad to be here. Thanks for having me on.

Michelle Kesil (02:39)

Of course. So let’s dive in. First off, for those not familiar with you and your world, can you share what your main focus is?

Cary Prejean (02:48)

My main purpose is, well, there’s four things I typically do. What I normally start off with is I’m gonna help the business owner, and not through the business owner doing it, but through his, you know, every business owner has like go-to people. When you really need something done, go give it to so-and-so. I work with them using 12 strategies to double the business’ net income in a year or less.

Again, how do you do that? Well, there’s 12 specific strategies, and if you follow them, not everyone’s going to work for every business, but for some businesses all 12 will work. And again, you only have to average 1.5 % improvement in the 12 strategies to double your net income, assuming you have a 10 % bottom line. So if you only have a 5 % bottom line,

more opportunity for the upside but it might take a little more improvement in some areas. I’ve done it hundreds of times, hundreds of times over the last few decades, it works. ⁓ I also help get the business owner, most business owners find themselves trapped working in the business.

So by developing a system of processes that will actually run and manage the business with some oversight, I can get the business out of all that day-to-day grind and let them work on, number one, what they’re good at, what got them into business, is seizing on the right opportunities as well as building strategic alliances and partnerships, ⁓ relationships, ⁓ and generating revenue. I mean, that’s how they scale. You can’t scale if you’re the owner and you’re enmeshed in the business all day every day.

Working 80 to 100 dollars a week, it’s not going to scale. So the way to scale is get the owner out of the way, get the bottleneck out of the processes and have some processes for the business to run on. Also, most business owners think they all want to manage by the numbers, right? Well for most business owners, managing by the numbers is what’s in the checkbook and have a good feeling about things. That’s not managing by the numbers.

So what we do is we get them actionable financial data in terms of where is sales month today? What do your CBLs look like? What do your payables look like? What do your inventory look like? For real estate people, what do your occupancy look like? If you have construction and renovation costs, are you under budget, ⁓ over budget? Are you on time, out of time? How many units are coming available? In other words, whatever the key performance indicators are for your business.

That’s the owner looking at on regular basis. Generally weekly. And I call them a dashboard because like your dashboard in your car, for the most part you’re not gonna notice it. When do you notice your dashboard? When it’s flashing something’s wrong. Check engine light, oil is low, overheating. My truck has, ⁓ it’ll give me a warning if ⁓ the pressure on one of my tires is low. That kind of stuff.

So that the owner can manage the business in real time managed by the numbers and take maybe an hour a week to do it.

And finally, what I help business owners do is how can you design your business into the future to where it at some point on the horizon and generally before that, you’re going to start experiencing what we call ultimate satisfaction. The business is going to produce exactly what you want out of it in terms of income, in terms of being able to take time off, in terms of wealth building, in terms of what markets you serve, what goods and products you deliver, et cetera, et cetera, as many details as possible.

So again, it’s a very holistic approach. ⁓ It’s a long time approach to help business owners.

To help business owners guide the ship so to speak become the captain of their ship most business owners are really good at Seeing some possibilities turning them into revenue as well as building strategic alliances and partnerships and relationships What they’re not good at is building systems and not good at strategic planning that very most entrepreneurs are very distracted by what they call You know the next shiny object. this is nice. That’s nice. That’s nice So a lot of times they’ll have 20 ideas. I have 20 ideas that we can you know growth

business with? Well you don’t have the resources, time and energy to take on 20 at once. So let’s add that down to two, maybe three if you have some three really really fantastic ideas and it’s not going to cripple you to trial three. But let’s focus on a few at a time. They need help in channeling that energy and that’s what I do.

Michelle Kesil (07:44)

Awesome. And where do you see business owners usually missing the most opportunities?

Cary Prejean (07:55)

opportunities can be missed when you’re not looking at them, right? And that’s the struggle with a of entrepreneurs and small, medium business owners is that they’re distracted with the day to day. They’re always, and again, I call it the My Way Syndrome. They run around like, everything’s done My Way. Are you familiar with the movie Casino? You haven’t seen it with Robert De Niro? Well, there’s a scene in Casino with Robert De Niro. He’s having breakfast with.

Michelle Kesil (08:13)

I haven’t seen it.

Cary Prejean (08:20)

an associate and he notices the two blueberry muffins. One of them has so many berries in it, falling apart. The other one probably has any berries. So you see him going to the kitchen, he’s got the two berries in his hands and he tells the chef, I want the same number of berries in every muffin from now on. And the chef looks sad like, you know how long it’s gonna take? I don’t care how long it’s gonna take. Same number of berries in every muffin. That’s what happens with entrepreneurs. They go around and they something ridiculous, make sure we have the same number of berries in every muffin. It’s gonna happen sometimes that you’re gonna have an

of berries because they have to make the dough in such big quantities you’re have a concentration of berries sometimes and a sparsity of berries and others but that’s not what business owners do it my way I want these results rather than being clear on this critical function in our business these are results I’d like to see this critical function produced on a consistent basis not perfect

But if we can get a 95 % success rate of these results in this process, I’d be happy. Then have the employees who actually all participate in the process come and do a little homework assignment of listing what it is they do that helps the project. Then you have someone in leadership put the process together and test it. And once it works, once it produces those results the owner said they wanted, that’s the process that the company is going to use.

can now step back. They don’t have to run around and get involved in it all day. Does that make sense? So yeah, when you’re enmeshed in the day-to-day business, you run around, you spend half a day looking at receivables, or payables, or vacancies, or the construction budget, or you’re doing things that aren’t what got you in the business, when you’re working in the business that much, you’re gonna miss some opportunities.

Michelle Kesil (09:50)

Yeah, absolutely.

Right. And so when you work with someone, what process do you walk them

Cary Prejean (10:49)

Generally we talk about like what are their biggest headaches? know, what are the things that need to we don’t want to fix what ain’t broke as the saying goes, right? Yeah, what’s going well? What’s not going so well? What’s your biggest headache? The biggest headache is generally a sign of that you know what they’re pointing at is this is a function that doesn’t have a highly functioning Doesn’t have a highly functioning process to run it Give you an example e-commerce client. I started working with four years ago

When first started working with him, the owner was spending half his time in the warehouse yelling at the guys in the warehouse. was an e-commerce business. They brought product in, they shipped it out based on the orders they got on the internet. He would spend half his time yelling at the guys in the warehouse because they didn’t have the boxes. They would throw boxes in the aisle. They weren’t doing things his way. He spent the other half his time arguing with his accounting firm, which was located in India, over account payable because they kept screwing it up.

So he brought me in to evaluate the accounting firm and basically what I said is your accounts payable process is dysfunctional.

And said, what does that even mean? I said, it does not function well. That’s dysfunctionalism does, does not function well. He says, no, the process is fine. I said, well, look at this breakdown, look at that breakdown, look at all these breakdowns out of your accounts payable system. That promiface evidence does not work well. It is dysfunctional. And he goes, no, the process is fine. You guys just don’t know how to read the numbers. Really? A bunch of accountants don’t know how to read the numbers, and you, with an e-commerce and architectural background, you know how to read the numbers better.

you selling? So I said let me me fix the process let me put a better process in place and see how that works.

So at some point we got him a warehouse manager, Tway didn’t have to go to warehouse. The warehouse manager knows exactly what he’s supposed to do, the results he’s supposed to produce, and he produces them. We got a different accounting firm because the accounting firm in your head wasn’t that good. But we got them very clear on this is how accounts payable works. Now he spends maybe an hour a week approving what’s to pay on payables through an ACH, and that’s it. So what we did is we freed him up to go do the entrepreneurial stuff that he was really so good at. I this guy’s fantastic entrepreneur.

We took revenue in 2022 from 5.8 million to this year they’re going to do 20 look like they’re to do about 28 million Right that’s in four years

Michelle Kesil (13:12)

Yeah, amazing.

Cary Prejean (13:14)

Yeah.

Michelle Kesil (13:16)

And so what areas do you normally find entrepreneurs are maybe spending too much time in that isn’t necessarily going to move the needle?

Cary Prejean (13:29)

Yeah, again, if the entrepreneur or the business owner is spending too much time working in the business, it’s going to impede the business. the two things happen out of that. Number one, they’re not doing their most valuable function for the business. They’re not going out and creating revenue, right? Because they’re distracted with all this other stuff. And number two, they wind up being the bottleneck in the business because everything has to come through them, right? Well, if you’ve got to make all the decisions, and let’s say you have, I don’t know,

20, 50, 100 people in your business and all decisions have to go through the owner. Can you imagine how things get bottled up and get jammed up?

I mean, it’s insane. And the business owner winds up working 80 to 100 dollars a week when most business owners, most entrepreneurs start a business because look at the income I can generate and look at the freedom I’ll have. And they get in there, they create a monster. Next thing know, they’re working 80 to 100 dollars a week. They’re not really a business owner anymore. They’re a business operator. So what I do is help them go from business operator to business driver.

a true business owner to where the business doesn’t need them to function well. They can take two weeks off, four weeks off if they want to.

Michelle Kesil (15:14)

Yeah, and what type of business owners do you normally work with?

Cary Prejean (15:17)

Like in what industries? ⁓ It’s pretty, I don’t wanna say random, what’s the word, eclectic? I have e-commerce clients, law firm, physical therapy firm, construction company, equipment dealer, ⁓ dry cleaners, ⁓ sports massage therapy clinic.

Michelle Kesil (15:18)

Mm-hmm.

Cary Prejean (15:41)

There’s even a guy out in Seattle that has a three masted ship. He gives tours of Seattle Harbor a couple times a day Makes make great money with it ⁓ Yeah, so it’s you know Business let me say let me say it this way all business comes down to three basic functions Let’s get the work. Let’s do the work and let’s get paid for the work right

Okay, it’s a lemonade stand or a mega global company. Get the work, do the work, and pay for the work. Now what accounting brings to it is what we call scorecard. In other words, the financial statement is going to tell you how well your business is doing in terms of profitability, liquidity, financial strength, and efficiency. But you have to know how to read the financial statements. And we do that monthly with business owners in terms of, I’ll show you the ratios, but I’ll also tell you what they mean. I’m not going to say here’s your numbers.

The other common thing I see is working with businesses as the accounting manager, whoever, controller, CFO will come in and say, here’s last month’s financial statements boss, why don’t you take a look at them tight and let me know what questions you have tomorrow. Well, 999 times out of 1,000, they’re not gonna have any questions. Why not?

Because they don’t know what they’re looking at. They don’t know how to interpret the facts. It’s mainly a page of numbers. What was our revenue? And what’s our cash in the bank? And even sometimes, when we’re making money or losing money. But not like, what are our operating expenses? What’s our, you know, what’s…

What’s our percentage of operating expenses and what is it? What’s the norm for our industry? What’s our current ratio our quick ratio? ⁓ That ratio I’m sorry ⁓ You know all the different ratios and what they tell you about their business and if you don’t know those because they’re accounting geek numbers, that’s accounting geek vocabulary If you’re not if you’re not schooled in that vocabulary, it’s gonna sound like foreign language I’ll you an example. My wife my daughter are both nurses. My daughter will come over they’ll have a

enjoying a glass of wine and start talking nursing, in less than five minutes I’m out of the conversation because I know they’re speaking English but I don’t know what they’re saying. Same thing for medicine, accounting, engineering, law, whatever technical backgrounds that have their own vocabulary and if you’re not schooled in them…

know, there’s distinctions, but you know what they mean. Same thing for accounting and finance. And the problem is most owners are not trained in accounting or finance. They’re not trained to know how to read a financial statement. But you can learn. It’s not that difficult.

Michelle Kesil (18:16)

Yeah, absolutely. And so what are you most focused on solving or scaling to next?

Cary Prejean (18:26)

Solving or say scaling Yeah, well again solving is what I really want to solve ultimately for business owners is What do they want for their business to produce of them in terms of if you could if you can have your business give you everything you wanted In other words be totally satisfied that you know, but as I was told a long time ago The secret to life is being totally satisfied getting everything you wanted

Michelle Kesil (18:28)

Scaling? Yeah.

Cary Prejean (18:56)

I mean think about that, a lot of people as Americans we tend to be focused on happiness. I just want to be happy. Well, happy is a fleeting emotion that happens and unhappens all day long.

and it’s generally an assessment about my current circumstance right now. So we generate our own happiness. It’s not something that’s outside of you. satisfaction. For you to be ultimately satisfied, you have to get what you want, but before that, you have to know what you want. And most business owners are too distracted with everything to really have spent any time.

Writing down in detail what exactly they want their business to produce for them in terms of revenue, terms of their compensation, the time you can take off, the number hours you have to work, the market you address, the products and services you offer, what’s the culture of the business, how many employees you want to have, do you want to be expanding? Have you ever heard of Simon Sinek?

and his infinite game. He’s a business consultant and he talks a lot about the infinite game as opposed to the finite game. And if you look at sporting events, those are finite games. They have defined players, defined time period, defined, I guess, point of the game. To win football, you outscore the other person. If you change the point of the game to whoever acquired the most yardage, it’d be a very different game. Right?

But in the infinite game, is the players are not defined. They can come and go. There are no real set rules of how you play the game. You can kind of play it your own way. There is no time period. There is no winning in the infinite game. The point of playing the infinite game is to keep playing in the game. So there is no, hear a of this, I just want to be number one. Number one at what?

In what market? Are you talking about your local market and the nation? There is no number one. It’s like say winning in marriage. There’s no winning in marriage.

nothing you really want to do. But there is no quote winning in business. know, be the best that you can be but define that first. Or let me say it this way, if you never declare what will satisfy you, you will never be satisfied. How can you be satisfied? It’s like, well I don’t know what’s going to satisfy me. Well here, try that. That’s our fight. Well I don’t know. Maybe that should be more. So at some point the business owner for them to really

for them to really be ultimately satisfied with their businesses, for them to sit down and define what ultimate satisfaction is for them. And I define satisfaction as a matter of enough action. So how much revenue, how much time can you take off? How many hours do you have to work? All that stuff. How much action has to happen in your business for you be totally satisfied? That’s the main thing, ultimately, we focus on. But we start addressing the business owners concerns from the beginning with, how can we improve your net income?

How can we improve your cash flow? How can we give you a business that’s run by system of processes that can run on its own without you? How do we give you the key performance indicators on regular basis where you can manage by the numbers? And then we get down to how do we design your business in the future based on ultimate satisfaction?

Michelle Kesil (22:16)

Well, before we begin to wrap up here, if someone wants to reach out, connect, learn more. Where can people find you?

Cary Prejean (22:23)

Well, I’m on LinkedIn. You can find me, Cary Prejean. And I’m guessing you’re going to spell my name somewhere. They can see that. You can also go to my website, which I also linked in my LI profile, LinkedIn profile. But it’s strategicbusinessadvisors.org, O-R-G. And I have a second website that I have two websites. One of deals with the three processes of, well, the

doing processes, actual financial data, and strategic planning. I have another one that deals just with doubling your net profits in the ULS, maximizing profits. That’s strategicbusinessadvisors.us. So it’s strategicbusinessadvisors.org and strategicbusinessadvisors.us.

Michelle Kesil (23:01)

Perfect, we’ll appreciate your time and your story. Thank you for being here.

Cary Prejean (23:05)

Sure, Michelle, thanks for having me. Enjoy the conversation.

Michelle Kesil (23:07)

And for those tuning into the show, you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Cary who are building real businesses and we’ll see you on our next episode.