Episode Transcript
[00:00:16] Speaker A: Welcome Back to power CEOs the truth behind the Business. I'm Jen Goday, your host here with David Kleiman. And before the break we talked about the financial stress CEOs and small business owners often don't talk about.
Now I want to shift into that next layer because making money in a business and building lasting wealth are not the same thing. I'm going to speak from experience as a founder, a multi time founder. I had to learn this lesson too. We can have strong revenue, a full client roster, years of hard work behind us and still not have that clear path to retirement, succession, tax efficiency or long term wealth. We're really good at generating income. We might not necessarily be the best at building the asset, the business creates income. But it's time for you to think about what that real financial structure looks like around that and beyond that. So I want to kind of dive into that now, David. I want to shift towards turning the income into wealth and before I dive in.
We're seeing a lot of wealth transfer. We're seeing a lot of people wanting to retire. They're older, they've been business owners for a very long time and they haven't really planned well for this piece. So can you, do you have a formula or a suggestion if someone's entire net worth or a large portion of their net worth is tied up in their business, when is the right time to think about exit or diversification from a wealth building standpoint?
[00:01:44] Speaker B: Well, again, I mean it really depends on their own personal. Like I say, see some people that want to work till 90, then they're coming in every day. It really depends on what their plans are and what their values are. It always comes back to that. And whether they can afford to retire. Is that a possibility?
So one of the major areas, one of the major differences between building income and building lasting wealth is to make sure that you're creating assets, systems and structures that continue to produce value over time.
And that means that perhaps, you know, maybe you want a person wants to retire, he's whatever age, 75, 80, 60, whatever age that is. But is he able to continue with his lifestyle even if he does want to retire? Has he created the assets, the systems and the structures that will continue to produce value over time. And that goes back to what we talked about before the break. What are the margins like? What is the cash flow like? What can the business support and where, what areas can it go into? And, and perhaps there is a successor there. Maybe there is a son or a cousin or maybe there is Someone that can take over the business and if not, and a person, even if there is a person that could, that, that, that is, that is in line to take over, maybe that person is not the right one for that. And you need to hire a professional manager. So these questions have got to be asked before, before that or perhaps it's a question of selling the business and then it's a evaluate question of valuation. What.
And you want to pursue that route down, down there. But one area that one person evaluation expert always told me that when he's dealing with a client and the client says to him, oh, you know, what are you going to do when you retire? When you're going to, when you sell? Oh, I'm going to spend more time with my family. If the person doesn't have a specific idea of what he wants to do when he retires, he doesn't work with them because that person will not pull the plug at the end of the day.
[00:03:39] Speaker A: You're absolutely right. I can't tell you how many deals fall apart the day of or the day before because they freak out about what will happen once they're done. This transition, I see it all the time. So let me ask you another question because we touched a little bit on risk management before and you know we're talking about having a plan but let's be real, something could happen out of the blue. It happens out of the blue all of the time unexpectedly. And a lot of times in my experience, entrepreneurs tend to be underinsured, especially from a like a he man standpoint or they're, they're, they haven't planned. It's like you said, everything was in their head. They haven't really planned. Succession etc. So where do you tend to see entrepreneurs over insuring under, insuring or buying the wrong product for the stage in business? Like, like, can you give us some clarity around that risk mitigation and what happens if you know, the worst case scenario happens? That is an unplanned scenario in our business.
[00:04:35] Speaker B: Yeah, I mean we see this all the time. We actually just had a, we have a, we had a worker, one of our assistants and it was actually a mother daughter team and the daughters called us the. Yesterday, yesterday as a matter of fact they said her mother just passed away. She was working for us the day before and yesterday she was, she's gone. I mean it's things like that. It's a crazy thing. I'm still getting over it as you can see. I'm still shocked by it. So people, the entrepreneurs that Underinsure in the areas that matter most would be their own ability to earn income because they're the most valuable assets. So you want to make sure they have enough disability protection. What would happen if they're not able to work? So make sure you have a disability policy.
Also the life insurance protection, especially if it's a buy sell. A lot of buy sell agreements we see they spend thousands of dollars on the attorney to put it together but then it's not funded. And when the one of the partners pass away is how's that going to work? Like what are you thinking? Like how are you going to get the funds to pay off the family? And you don't want the wife perhaps maybe the wife is the right person, but the wife to come in that's never work in the business to take over her, her husband's, her husband's part and, and become a major part of the business. I mean otherwise you would have the funds to be able to pay to pay that off. And then using that also for the key person protection. A lot of times you can use permanent insurance. We do this all the time. We use it to, to, to ensure a key person in the business so that if something were to happen to that person you would have the funds to overcome and to wait till you find the other person. But you can also have a, if it's a permanent life insurance with building cash value and it's not a whole life policy, we're not big fans of that. We like the ones that have illness protection. But something that he can actually vest in over time so become, become part of his compensation package as well. That oh, you stay five years, you're going to own this insurance and it's going to have $100,000 of cash value that you're going to have as well. So those are some of the basic areas that were, that we would look at.
[00:06:35] Speaker A: Yeah, and you talked a little bit about, you know, maybe we're looking at transacting, maybe we're looking at potentially selling something or planning for an eventual asset. So from a financial standpoint, what are the financial conversations that business owners, entrepreneurs should be having with their spouse, their family or the next generation before that transition happens so that it's not a surprise or so that they're adequately prepared. And let me preface this by saying I can't tell you how many people come to me because they know that I do a lot of things.
I'm a consultant in business growth scale and especially in the M and A and exit space. And so when they come to me, they're like, I want to exit in six months. And I'm like, that's like the worst thing you can do because you're completely unprepared. So can you walk me through what kind of things should be thought about maybe five years, three years and year of before transacting a business or transitioning.
[00:07:29] Speaker B: So you're exactly right. And we find that many founders will wait until the, till the end when they're about to, when they want to leave instead of thinking about it beforehand. And the most important part about that, about the whole transition planning, it's not an event, it's a process. It's not something that you do it and then you forget about it. It's something that you have to always have to be thinking about and refining and defining as you know business changes. So also your plans have to change. But some of the areas is several key areas is that you have. They have to clarify what they are actually trying to accomplish in the bill, in the, in the business. It's a successful transition is not only about maximizing the sale price. The owner needs to define what matters most. Do they want to retire completely? Do they want to stay involved in a different role? Who would family members? Do they want to pass it to? Do they want to reward some of the key employees? And how are they going to protect the legacy that they, that they, that they built and they need to then said this over again build a business that can operate without them. It has to be on a professional basis that it can run by itself. It's not going to be based on what's in his head. It's got to be on. It's got to be written down manual. It's got to be a clearly defined goals and processes that everybody knows and has agreed to and they should start developing future leaders early. Don't wait to the last minute and expect somebody to just have all of the qualifications necessary. You want to identify a successor and develop that person with training and transferring knowledge, creating accountability and giving him a chance. Don't just have him run whoever it's a him or her coming into that position at the last minute when they're not, they may not, they may not really be ready. And don't feel though the leader should not feel like, oh I made this decision on this person, I can never change it again. It's a process. If you don't feel that that's going the right way, you could change it. It doesn't mean it's locked. It's set in stone. You also have to understand the financial impact of the transition. I have a one client right now. They're in a construction business. The son is in the business, but everybody wants to talk to the father. And now the father has to God to say, don't talk to me, talk to my son. But he's not really able to do that. And again, on the financial part of the business, is the business worth enough to support the desired lifestyle? What happens if the sale value is lower than expected? And what about taxes and liquidity and future income be managed? And most important, does the transition plan align with their own personal financial goals and again, plan for that emotional transition? It's not an easy. It's not easy to do, but it's got to create alignment between the future of the business and the future of the founder.
[00:10:11] Speaker A: Yeah, I couldn't agree with you more. So, folks, just to kind of recap, it's time today, whether you think you're going to exit or not, to plan that succession. What are those goals? What needs to be done in order to exit that role? It doesn't mean you don't have to keep. You can't keep doing that role. But if you've got a plan in place where you can exit the role and you can go away for six months and the business still grows without you, then you know you've done your job in setting your business up as an asset. Then make sure you have a structure around the money. That's why financial advisory is so incredibly important. Have the right advisors in your pocket who can help you with the structure to make sure that you are actually building the asset that you mean, mean to build. David, how can people reach out to you if they would like to learn more?
[00:10:56] Speaker B: So again, we, I work with my son. We're in climbing financial.
You can reach me. I could give my cell phone. We always like to answer on our own phones. We don't have any prepackaged solutions. So we just, it's everything is structured around people. My cell is 201-898-6960. You can reach me through our website, which is climbing financial.com climbing with a Y or my calendly and just send me, shoot me an email davidleimanfinancial.com and we're happy to speak with anybody.
[00:11:28] Speaker A: Thank you so much for your expertise. I really appreciate you coming on and sharing that with us today.
[00:11:32] Speaker B: Thank you for having me. Thank you for having me.
[00:11:35] Speaker A: Absolutely. And you. Yes, you. The goal is clarity, valuation, insight. A financially clear CEO Entrepreneur founder makes better decisions. Better decisions support stronger margins, more disciplined growth and that stronger long term enterprise value. We do have to take a break, but we will be back after these important messages. Stick around.
Sam foreign.
Welcome to Power CEOs the truth behind the business. I'm Jen Goade, your fearless host, entrepreneur, investor and business strategist. Why are we here? Because iron sharpens iron. And when we bring industry leaders, experts and disruptors to share what's working in business and even what's not, we're all able to learn and grow. As a result, our businesses grow and the ripple effect impacts not only ourselves, our teams and their families, our, but also our communities and our world. Today we're going to talk about one of the most overlooked pressures in business ownership, the personal financial stress, especially at the beginning stages of business.
A lot of entrepreneurs and small business owners assume their business is not working or it's not profitable because they feel stressed, stretched or constantly behind.
But sometimes the business is working just fine. It's profitable and actually doing quite well in the industry.
But the real issue is that the owner's personal financial life is putting strain on them.
Lifestyle creep, debt tax surprises, family expectations, insurance gaps and retirement uncertainty can quietly hijack their business decisions. And when a CEO does not have financial clarity, they might start making decisions from that place of scarcity, lack or fear instead of strategic decision making.
Joining me today to dive deep into this is David Kleiman, a financial strategist and advisor who helps business owners reduce money stress, protect family wealth and make clearer leadership decisions. David, welcome to the show.
[00:14:21] Speaker B: Thank you for having me, Jen.
[00:14:24] Speaker A: Listen, you heard my intro. A lot of business owners are not running bad businesses. I see it all the time. They come to me, they say I'm not profitable. Jen, I need you to help me grow the business. But their profit margins actually 20, 30% net.
And so what they really mean is their business is not supporting their lifestyle. While the numbers show that healthy margin and the business is viable, it's not working for them. So if their lifestyle, their tax burden, their obligations or other things on the personal side are heavier, are weighing on them, they might say yes to the wrong clients, they might delay hiring, they almost always avoid investing, they overreact to those slow months. So I sort of want to take that lens and apply it to the financial stress that is impacting the decision making decisions. And since this is really, you know, something that you tie into on the, on the wealth building and the personal finance side, I want to start there.
What is it that shows up first when they're having this sort of an issue like where does that financial blind spot typically surface first?
[00:15:37] Speaker B: Well, Jen, you've already pointed out a lot of, a lot of the ideas that, that are super important in these types of areas.
One of them that you mentioned is the, you know, the areas that are most often overlooked is going to be cash flow versus profit. You know, they could be very profitable. Like you mentioned, you could have a margin of 30%.
But you know, when the cash flow they go to look at the bank account when they need to make payroll or make tax, pay taxes and the money's not there because there's a, maybe they're a seasonal business and they haven't planned properly for those, for those years when, with those months when it's not the cash flow is not as strong.
Another area, of course is the over dependence on the owner. These are, you know, a lot of these businesses have been, have been built by the vision of the owner. The hard sweat labor that the owner has put in and everything's in his head. But you know, the over dependence on the owner, it's hard for the owner to give up that control. A lot of times the over dependence on the owner can be, can be, can be a difficult and liability. They don't have a personal financial plan. Whether you're, it's on the personal side that we're approaching or business side, it's really all the same. You need to really have that personal financial plan. You have to think about what you want to do.
And even though the entrepreneurs are often reinvesting every dollar back into the business, they'll neglect the other side. The retirement planning, the investments, the emergency reserves, the personal wealth accumulation which should all go into building and building their wealth and not become, and the business should not become their only asset. And a lot of times they have inadequate risk management.
They'll insure their buildings and equipment but fail to protect what matters most, their ability to earn income, which can be solved by disability insurance or perhaps keyman insurance.
Families need to be protected. All of that is super important that a lot of times they'll, they'll ignore a huge area, huge is the tax planning instead of tax preparation. They're meeting with their accountant once a year. Maybe their accountant is only, you know, looking at their current state of where they are. That's what accountants do. They're going to take us, they're going to take a snapshot in time. They're not going to be doing the proactive tax planning that you really need to do and that that will also come into the exit strategy. Eventually the business owner is going to want to sell. You know, he doesn't. He has no idea what he's going to do. But you know, if that proper exit strategy can really reduce the risk. And the most important one area for personal or business whatever is that misalignment alignment between money and values. We have a little car game that we play, deck of 52 cards with 52 values. That's where we start with every client, whether it's personal or business, just to get an idea of what they're of, where to make sure that their financial decisions will align with their goals and their goals with their values and prepare them for the certainty of uncertainty. Because we know there's always going to be something that's going to happen that they didn't expect and they might to make sure that these elements are always going to be aligned.
[00:18:38] Speaker A: Yeah, absolutely. I couldn't agree more. And I see it a lot of times, you know, especially recently, the last couple of years, we've had a persistent amount of change like we had, we had the inflation situation that impacted us personally as well as in the business world. We've had rising costs. We're now having this entire new tech and tech evolution with artificial intelligence and robotics, etc. So there's a lot of additional strains. And so there's a lot of flow fear around money that's amplifying fear around what technology is going to help us, et cetera. So we're seeing that every day.
So let me ask you to dive a little bit deeper into this because where we started was a lot of owners and operators think their business is not profitable or their business is not successful. And the numbers really show that it actually is. How do you help them to separate the business performance from the personal financial pressure? Because I think that would be really valuable for the, for the viewers.
[00:19:37] Speaker B: Okay. I mean, what. And as you mentioned, one of the biggest mistakes business owners will make is using their, their bank account as a scorecard for the health of their business. A profitable business business can still leave its owner feeling broke. As you've pointed out, if the cash is constantly being pulled out for the taxes or debt payments, their lifestyle expenses or, or their investment. So when I sit down with an owner and you got to separate the business from the, from, from, from the individual. And keeping in mind, like the psychology of the entrepreneur who built this business is that, you know, first couple of years, it takes two years. You know, when I was in business school, it takes two years to make any business break even. So it was like interchangeable. Him and the business were the same. But as, as now that they're profitable, they have to make that split. You can't have one credit card for everything. You've got to separate the business. You got to separate the bank accounts. He can't be going in and just pulling out money whenever, whenever, whenever he needs. But again, the first evaluation is that the business is actually generating the healthy profits. It's got a positive cash flow, the sustainable margins. And then let's take a look at where are those dollars going?
And as you said, you know, many owners think their business is failing, whereas the numbers show the thriving business. The real problem, I think you alluded to it, was that they were carrying a lot of personal debt. They're supporting family members that are maybe not contributing, maybe out of the cash flow. They're paying for college or funding an expensive lifestyle. It's not the business that's the issue. It's the personal financial structure that's creating the stress. So once we go in and we separate those two pictures, the conversation becomes much more productive. Instead of trying to fix a business that isn't broken and you're just wasting time because you're dealing with a problem that doesn't exist, we focus on improving cash flow, reducing that financial pressure, building the reserves. Especially if it's a seasonal type of seasonal business, you have to have those reserves, creating a plan that allows the owner to actually enjoy success that they've worked so hard to achieve. So the goal is to help business owners make decisions based on facts rather than their own financial anxiety, which become, which can become very overwhelming. And once you understand where the pressure is really coming from, then you can solve the right problem instead of treating the wrong one.
[00:21:58] Speaker A: Absolutely. Like, make the root cause cure and, and everything else falls into place. So let me ask you, in your experience, what is one conversation that business owners typically avoid that creates bigger problems later on, in your experience?
[00:22:14] Speaker B: So I think one of the major, major areas, again, is those conversations that they're going to, to, to avoid is ask them themselves if they weren't there. Is the business going to be able to succeed as successfully as before?
Is, or is everything in his head? Is everything, is everything going to be, you know, tied to what he does? So to me, that's the, you know, they don't want to deal with that. They don't want to think about what that means. And that means really putting in systems in place so that he can really that he can really. That can really run without him being there. You know, let's say if he was away for two weeks or three weeks, four weeks, five weeks, or he wants to completely, you know, retire, whatever, can the business sustain itself? And to do that, you have to answer these questions. Is the business actually making enough profit to support the life that he wants? Is he building an asset or just creating another demanding job for himself? For himself? And who can make the decisions if he's not going to be there? If he's not there? And is he investing in growth or just covering up inefficiency? So you really need to take a hard look at what the company is doing, what the function's doing, make sure there's resilience there. We call ourselves Resilient Riches in our podcast. And you want to build that leadership team, document processes, improve your financial visibilities, and create options for the future.
[00:23:37] Speaker A: Yeah, I couldn't agree with you more. So, folks, the big takeaway is your business might not be broken. The pressure might actually be coming from the financial expectations, obligations, or uncertainty surrounding you personally. And that actually happens much of the time. So before changing your business model or cutting expenses, you know, or making decisions, understand where the actual financial pressure is coming from. Is it actually from the business by the numbers? Is it actually by your financial obligations personally? Because that clarity allows you to have better clarity in your leadership when you understand your personal needs, your family obligations and your business needs, your tax exposure. Everything that we've talked about with David today, you can make a better, more informed business decision from a strategic standpoint, instead of fear, while actually being able to grow the asset instead of create that extra job for yourself. We do have to take a brief break, but we will be right back after these messages.
Sam, Welcome Back to power CEOs Truth behind the Business. We switch gears just a little bit. Before the break, we were talking all things financial considerations as entrepreneurs, as founders, and how to really set ourselves up for success both inside our business and beyond. And now we're going to move into something that we've all been thinking about a lot because it's changing. There's never been more content, more ads, more businesses fighting for the same five seconds of attention.
And now AI is creating even more of it faster. But this is my burning question, and I know you have the same question. If everyone can produce more, what actually makes a business worth choosing? Today, we're going to talk about how you can build a brand that cuts through all of that noise by emphasizing the values that people actually care about.
My guest is Scott Baxter, founder and CEO of Play youy Court. Scott took a fragmented, highly local service and built it into a multimillion dollar business connecting tennis players with coaches, partners and matches across the country. Scott, welcome to Power CEOs.
[00:26:16] Speaker C: Good to be here. Thank you for having me, Jen.
[00:26:19] Speaker A: I'm really excited about this because it's real, it's relevant, but let's just start with a little bit of background.
You exactly choose the easiest business model. Let's just be real. Connecting thousands of individual consumers with thousands of independent coaches across multiple markets.
Talk to me about what was harder about building this business than you expected.
[00:26:44] Speaker C: Yeah, I mean, it's funny because the way the thing got started, like all good ideas, is I needed it for myself.
So the business started out, I was a tennis coach at a country club in D.C.
really wanted to teach more lessons. There's a very limited private client base at a country club. So I said, I've got to go find my own work.
And so I did. I spent the first, really the only $6,000 I had in my name back in 2009 to build the first version of Player Court. And I was the first coach on the platform. So when I started out to build it, I didn't really think through, you know, how hard is this going to be to build it. I thought, how do I get my first handful of students?
Very quickly after launching it, I realized, oh my gosh, there's an actual business here. The demand here is way greater than I ever thought possible. And then as you would say, the fun begins.
And yeah, like building a double sided marketplace. The thing that definitely was harder than I ever would have dreamt was the constant seesaw of making sure you've got enough coaches and then enough students to fill up their buckets and then enough, you know, it goes back and forth, the supply and demand.
If you do really good job of marketing, you've got way more clients than you actually have coaches for. If you do a good job of getting coaches bought into the platform, then they're all sitting there idle, waiting for your marketing to pick up. So. So certainly that seesaw effect of finding the right balance of having the quantity of coaches and the quantity of students to keep them happy was by far the hardest part.
[00:28:11] Speaker A: Yeah. And so let's fast forward to today. I mean, you've built the business that you have and now we're operating in this market where consumers have all the choices.
What makes someone today who's maybe never experienced play your court choose your business instead of Google, a local club, another app or something different versus just simply doing nothing.
[00:28:35] Speaker C: Yeah, I mean, for us, we built a lot of product differentiators. If you come through our lessons experience, there's a lot more that comes with it than just lessons. The local coach, we had to build a full blown community behind it. We had people come to us and say, hey, love the lesson service. I can't meet new friends. Like I can't afford a country club, which is why use your lesson service. So how do I meet new friends to practice with? So light bulb goes off and we build that out. So we learned very early on, the differentiator is sort of surrounding them with all of the things that they're going to run into along their journey in making sure you can solve more problems than just the initial thing that you really wanted to sell them in the first place. So it's funny, the business has changed quite a bit after just listening to those customers that came in from the lessons business. The lessons business isn't even really our core, our core growth path anymore. It's sort of a satellite around a new, a new core model. So business changes.
[00:29:30] Speaker A: Can, can we dive into that a little bit? Because this is something we've talked about on previous shows and I think it's really worth diving into.
And if you're listening and you're watching folks, I want you to really pay attention. He talked about the feedback. He listened to what the customers needed and what they were looking for that were sort of verticals adjacent to what he was doing. And then he added, he didn't just say, oh, I think I'm going to add X, Y, Z without having that customer feedback loop. So can you talk about how you established that feedback loop so that you could learn what the additional verticals you were going to add to or the other services you were going to add to your product suite, because this is something that a lot of founders have a hard time with, is how do I approach people to get that feedback or to learn that without sounding salesy, et cetera, for sure.
[00:30:23] Speaker C: And the answer to that question changes quite a bit depending on where you are in the business journey. When I was chief everything officer and the first coach on the platform, I was actually teaching these students myself. So I was getting that question pretty early on. You know, hey, Scott, love the lessons. What do I do in between our next lesson? I'm like, well, you should go practice with who? And I'm like, oh no, you're right. We need to figure that Out.
Now that we're the biggest sentence lessons provider in the world, the way we listen to our customers obviously changes. It's, they're not talking to me on the tennis court anymore. We've got a customer support team and their job is not only to create an excellent experience, but to actually flag the things that they're hearing about from the customers that we aren't solving or that we could be doing better or to sort of earmark new opportunities that could exist because they keep hearing them all the time. I mean, a really good example is people when they were taking lessons for us, particularly when they were buying lessons for their kids, had no idea what equipment to show up with for the lesson. And so one, we want to be able to answer that question. Two, we're a for profit business, so the dream is also to monetize it. So yeah, I mean the way you listen to these customers changes over time, but it is certainly the best way to know what to do next.
[00:31:34] Speaker A: So talk to me about, we talked about the seesaw, but when you look at your growth over the, over the time that you've been in business, what was the biggest differentiator to allow scale? Was it the better marketing? Was it the product and the customer experience? Was it the community or something else?
[00:31:52] Speaker C: Yeah, my answer now changes probably that I'm more experienced than it would have say five years ago. I used to think marketing and front end and acquisition was everything. I've come to realize the longer I've been doing this and the more sort of product lines and services that I built, the best marketing campaign is a good product.
If people come in and they have an unbelievable experience, they're going to talk about it. And that is a great way to grow a business if you get really good at marketing. But then what you're sending them into is an awful experience.
It kind of has the reverse effect and can even do damage. So I think probably my headline statement is if you focus on product, that's going to matter most and then marketing behind that is important and it's in a very close second because if you don't know how to communicate the pain points your customers are struggling with, you're going to have a hard time getting them to experience that awesome product.
[00:32:42] Speaker A: Yeah. And I would argue also that when your clients have an experience that is as frictionless as possible from hey, here's the equipment that we recommend and you can even pick it up on our website all the way through that community that you've built and the resources that you have for them, that client experience, every wow factor also becomes in marketing that you don't have to pay for when they do talk about your business.
So listen, I want to get back to the conversation which was marketing, because everybody's trying to figure out this marketing thing in this, you know, sea of AI slop, if you will.
And a lot of people come to me and they say, hey, Jen, I need more leads. Everybody thinks they need more leads, but they want to get louder. They think they're not attracting attention. But when I dive in, a lot of times it's more of a value proposition issue. It's that they're, they're not articulating the value or demonstrating the value to differentiate themselves. And that's something that you've done really well.
But I know along your journey you probably brought something to light that you thought your customers wanted or that. But, but the data showed something different. Can you, can you talk to me about something that you maybe brought to market in your experience that was a big, a big fail or didn't turn out as expected because customers actually wanted something slightly different?
[00:34:02] Speaker C: Yeah. And I think it's actually products we have, but just the way I communicated that they existed was the mismatch. So until I really studied digital marketing and became good in that lane, I always wanted to sell them the idea that I had for the product versus sell them the solution to the pain point that they had. So kind of a callback. If you're listening to your customers and are sympathetic and understand what they're actually struggling with, and then you're building your marketing and your product around solving those things, that's where you see the biggest win. Some of the biggest mistakes that I, and I think a lot of early founders make is they have this vision for what they want to build and they don't ever pay attention to who they're actually going to sell it to or what their pain points are, and maybe what you think you're going to solve for them isn't even something that they care about. They've got a much different pain point that they're after. So I think it's a combination of listening to your customers and understanding that that front end marketing has to really twist the pain points that they're experiencing and then the product has to deliver, you know, on the promise that you make with your marketing.
[00:35:02] Speaker A: I think that was excellently put. We are kind of running out of time, but I love actionable takeaways. I mean, after all, I'm a coach too. You're a Coach. So I think you got it.
Let's, let's talk to everyone who's in the room or listening. If I'm running a one million or a ten million dollars business or even a hundred thousand dollar revenue business or startup and I'm struggling to stand out, what's the one thing you would tell me to examine before spending a dollar? Another dollar on marketing?
[00:35:32] Speaker C: Is that directed at me or everybody in the room?
[00:35:34] Speaker A: It's directed at you.
[00:35:37] Speaker C: The one thing before I would spend a dollar on marketing is making sure you can deliver on the promise that you're going to put in that marketing. The product has got to solve the pain point that you're going to talk about. So it's maybe a two stepper. I'm cheating here. But step one is understand what the pain point is. Step two is build the product to make sure it solves that pain point.
And then step three is mirror the marketing and tell them that you can do so.
[00:36:01] Speaker A: Okay, we got a three step process. That's okay. We like that. At least one 12 steps. We're good with that.
We're going to dive deeper into this after the break, folks.
Building a brand people trust is one thing. Decide who gets to stand beside that brand is another. After the break, Scott and I are going to get into partnerships. How do you choose them? When do you say no and why? The wrong technology or strategic partner can actually cost you more than that Contract after these messages.
Foreign.
Welcome back to Power. The truth behind the business. Loving what you're watching. Stay connected to this show and every NOW Media favorite. Live on demand, anytime, anywhere. Download our free Now Media TV app on Roku or iOS and unlock non stop bilingual programming in English and Spanish on the go. Prefer pods?
Check the podcast anytime you like at www.nowmedia.tv. from business and news to lifestyle, culture and beyond, Now Media is streaming around the clock. We are ready when you are. Let's get right back to our conversation du jour. We're talking with Player Court founder and CEO Scott Baxter about building a company that stands out in an increasingly crowded market. Yes, I know we're all dealing with this, but as companies grow, they rarely grow alone. Many times we bring in technology companies, sponsors, investors, vendors and strategic partners. And every one of those decisions can either create leverage or liability. So I want to dive deep into this. Scott, as Playerport has grown, how has your definition of a good partner changed?
[00:38:09] Speaker C: Oh my gosh, a ton. And across really multiple different verticals because we've raised a lot of money so we should probably start there.
Partnerships there. We found really, really good angel investors. I'm not advising anybody on, you know, PE versus VC versus angel, but for me, finding the right supportive investors was a very key step one. And if we're being honest, I was a tennis pro turned CEO, so I got pretty lucky that I got that correct.
But, yeah, if you're raising money out there, look, finding somebody that's gonna. That's gonna back you and believes in you as the horse that's gonna win the race and is there to support, not take control of your child, I think, in my opinion, is pretty important.
And then if I look to my business, I've been working with my CTO now for 17 years.
So, you know, I've got this product vision. He's somebody who not only helps me build it, but helps challenge me to bring out the best version in that product.
So that's been critical. And then if you look at Nate, my. My. My business partner on the content side of the house, that partnership is so strong that we just turn the camera on and act the way we would act if the camera is off. And that's why our brand sticks out on camera. So as far as raising money and business partners go, it's about as important as it gets if you want to wake up and enjoy your life every day.
Gotten that, I think mostly correct along the way. And then. Then you've got to look at, you know, the partners that are going to help your business actually grow.
Partners, sponsors, very different conversations.
My personal opinion, and I'm big on enjoying every day of my life, so the idea of not selling out, no matter how big the check is to create content for sponsors we don't believe in has always raised a red flag for me. So if you look at player court in the business we're growing, one of the reasons partners want to work with us is because they know we'll only endorse them if we actually like and use their product.
That's certainly personal opinion. There's people out there that'll chase the money, and sometimes that's the right decision for your business, depending on where you are.
But for us, as far as a sponsor goes, it's got to be somebody we actually believe in and feel comfortable telling the Internet that they should check out.
And then on the partnership lane, there's a lot of different boxes, really.
One, they've got to pass that gut check. Can I tolerate talking to you on a regular basis if that's what the partnership is going to. Is going to demand Two, do they create a lot of extra work that doesn't create a lot of extra value?
So that, that's always top of mind for me. How easy is this going to be, you know, to, to partner up and have some success together? But that was a lot. I'll, I'll leave it there.
[00:40:46] Speaker A: Yeah. So, you know, I know a lot of early stage founders and this is a huge mistake because I, I work with a lot of startups and I'm an investor and I invest precede all the way, all the way up through other stages. But a lot of early stage founders take whatever opportunity is put in front of them.
And one of the biggest mistakes for everyone watching is to do that. Because if it's a partner who's not aligned with you and value vision and where you're going, it literally can kill your business, especially if it's a capital partner who has a different idea. So before you just take that big check and Scott said this, it's not just about the money. Make sure you understand what goes along with that check. Is this somebody who's going to have an unrealistic expectation is somebody that when things don't work out well, because newsflash, it never works out exactly how you think it's going to be. There are always pivots in business and there are always challenges. Are you going to feel comfortable communicating with them? Because on the investor side, as an investor, if someone doesn't communicate with me, that puts a real sour taste in my mouth and I'm not going to be as willing to help later on. So these are questions to ask yourself so you know exactly what you're getting into on the capital side. But now you've touched on a lot of different things. Scott, what matters more than anything you think? A couple of things. You said, the gut check, you said you want to be able to talk to them, you want them not to make life difficult. But is it values? Is it execution? It's like, what is it that you use as your filter to determine that they're not going to create a lot of extra work without adding a lot of value.
[00:42:21] Speaker C: For example, I think being on the same page both values wise and trajectory wise, we'll have a lot of smaller partners reach out to us.
And I made the same mistake when our business was far. They just don't understand the game you're playing yet. So I think like aligning with the right size businesses that understand really what a partnership is supposed to look like is key.
You can tell a lot about somebody by getting on a 30 minute zoom with them. So the gut, I think is honestly number one for me. When I get on that call, when I hang up, if I feel icky, it's probably not a good fit. If I enjoyed my 30 minutes with them, then it's like, okay, this is something worth exploring and seeing if the businesses are actually capable of doing some epic things together. You hear every good CEO say this. You have to say no to 99% of the things that come across your desk to stay focused on the one or two yeses that will actually take your business where it should go.
[00:43:11] Speaker A: Yeah, I couldn't agree with you more. Now let's, let's get to a little bit more of a provocative question regarding sponsorship and brand.
You have built this brand. You have built this brand through your values. And actually you and I have had this conversation about sponsors in the past.
How do you determine even if a sponsor is something that some of your audience might like or might align with, or it might align with some of your partners, but it's definitely not in alignment with either other sponsors and, or with, you know, a segment of your audience?
[00:43:44] Speaker C: Right. For us, it comes down to our core values.
I think we're not everybody's cup of tea. If you look in the tennis industry, it's traditionally maybe a little bit more boring than the player court brand likes to disrupt with. So me and Nate have built a very specific brand with very specific followers that like what we're up to. And so just by the nature of what we've built, products and services that Nate and I like fit in with what we're doing. Right. It never feels forced. You're never going to hear us talk about something, you know, that we don't believe in ourselves or that we don't use. And because the customers follow our brand for that sort of personal touch from us, it's a really easy filter to evaluate through, to be honest.
[00:44:24] Speaker A: Yeah, I mean, I use the same sort of filter. If I can't sell something, I can't, I can't put something that I wouldn't personally use that I, that is not a 100% fit. So I think we're pretty aligned with, with that. And I think if you're watching this, this not going to, it's not necessarily going to be your filter, but it's so incredibly important to determine what your filters are based on your values and your direction.
Because it could very well be that you sign a sponsor who then every other partner decides they don't want anything to do. With it because of a major PR issue or something like that. So it's something to consider and to make sure that you know what those filters are if you're watching. So I'm going to ask you a tech question and I want it to be really brief because I need to get around to how everybody can reach you but technology, everybody is leveraging technology. You have a platform, you use technology.
Tech partnerships have introduced a whole other layer, especially recently because of trust compliance. What happens, some people are really anti AI, for example, how are you training the data, etc. Like as a founder and CEO, how are you evaluating technology partners when every company is going to solve your problems with for you and give you some amazing AI powered solution, heavily referral based.
[00:45:41] Speaker C: And that might just be the stage of the career that I'm in where I just have a big network where I can tap into them and ask, you know, whether this is going to be a good situation or not. But when I've got other CEOs that are friends of mine that use technology and they're talking about, you know, massive improvements it's made to their business, it's a lot easier to give them a try.
And then I would just say that the crawl, walk, run strategy, you don't have to rip the band aid off and fully integrate what you're doing with some other business. There should be a way to run through a trial period or run through a beta.
So don't just assume it's going to be a great fit until you really prove it out.
[00:46:14] Speaker A: You're appreciating the choir here. We've talked a lot about AI on here and I just want to reiterate. Walk. I love that crawl before you walk and definitely before you run, you know, that small pilot, make sure that it's meeting your, your definition of success because that's different for everyone before you roll that out company wide and add on to it. So Scott, this has been really enlightening. Thank you so much for, for bringing this information to us.
How can people who are watching get in touch with you if they'd like to learn more about what you got with your business going on or any of the conversation that we had today?
[00:46:52] Speaker C: Yes. So probably LinkedIn is going to be the best place to reach me. I assume most of you watching our fellow CEOs. I love talking to other business and hear what cool things you're building. So feel free to DM me there. I'm not logging in there every day because like I said, I've got to stay focused on the. The 1% yeses. But I typically respond if.
[00:47:09] Speaker A: If.
[00:47:09] Speaker C: If the message is. Is from the heart. If you're. If you're messaging me trying to sell something, expect you to fall into the no pile. But I love talking to founders that are building cool stuff, and a lot of people help me in earlier stages of the business, so I like to. I like to pay it forward.
[00:47:23] Speaker A: Thank you so much for your time today.
And, folks, you know, every single week, we get to the end of a. Of a session, and my statement is, you need to take action. If you've just watched us for the past hour, you're not getting anywhere. You have to pick one thing you heard today, whether it was on the financial side at the first half of our show or whether it's on the marketing, positioning, and partnership side that we talked about with Scott.
What is the one action that you're going to take?
I have a challenge for you. I'd love to have each and every one of you ask, not what can this partnership give me, but does this partnership make the experience better for the people that we serve? Because reach can be purchased, tech can be replaced. But once you've earned customer trust, protecting it becomes part of the business model. And Scott has done that so well.
Unfortunately, all good things come to an end, including the show.
We'll be here same time, same station next week.
So until then, win today, win this week, and we'll see you next time.
