One of the five things you can do to make your business sustainable is to make yourself operationally irrelevant from your business. Today that’s our topic for discussion. Join us as Mark Ferguson helps us understand why operational irrelevance is so important to you and your business.
I know from personal experience, that operational irrelevance was the most important thing I did in helping the businesses that I’ve been involved with to prosper. It’s something I want you to pay attention and find a way to make yourself operationally irrelevant.
Here are some of the things you’ll learn in today’s podcast:
- How being operationally irrelevant helps you take advantage of opportunities in your life and business.
- Why being a good manager is one of the keys to creating a business where you can come and go as you please.
- What it means to give up being a tactical manager and becoming strategic in your business.
- The story of how Mark found he could let other people do work that he used to do.
- Learn the importance of having a team that picks up in the areas that you have operational weakness.
Transcript:
Narrator: Welcome to The Sustainable Business Radio Show podcast where you’ll learn not only how to create a sustainable business but you’ll also learn the secrets of creating extraordinary value within your business and your life. In The Sustainable Business, we focus on what it’s going to take for you to take your successful business and make it economically and personally successful.
Your host, Josh Patrick, is going to help us through finding great thought leaders as well as providing insights he’s learned through his 40 years of owning, running, planning and thinking about what it takes to make a successful business sustainable.
Josh: Hey, how are you today? This is Josh Patrick. You’re at The Sustainable Business.
Today, we’re going to be speaking with Mark Ferguson. You know, Mark probably has a lot in common with me although he looks like he’s a gazillion years younger than I am. But he started off with the family business. He actually took over his family business from his father. His family business happens to be the real estate business. As we all know, the real estate business has been one that’s relatively challenging over the last couple of years.
One of the things that Mark and I were talking about just before we started was the fact that he made himself operationally irrelevant so he can work on some other projects which will help add value to his business. And as anybody who’s been listening to this podcast knows, making yourself operationally irrelevant is one of the five things you need to do if you want to create a truly sustainable business.
So, today we’re going to talk about that operational irrelevance part. Mark is going to help us understand (1) why it’s important and (2) how do you go about doing it? So let’s bring him on. Hey, Mark. How are you today?
Mark: I’m great. Thank you for having me on the show, happy to be here.
Josh: I’m happy to have you here. So you have kind of an interesting business. You know, you don’t think of the real estate business as being one that you can become operationally irrelevant in. So, how did you come to decide that that was important for you to do?
Mark: Well, I began in real estate in 2001. I actually started working with my father, as you said, who’d been a realtor for 30 years before that, almost. Eventually, you know, we bought and sold some houses. I own some rentals. And along the way, we built up a team. So we had a couple of agents working with us, a couple of assistants. In 2013, I bought him out to take over the business and I just realized there were so many things I want to do with the investing side. I had started a blog. Then I was spending too much of my own time selling houses, working with buyers and sellers, so I kind of transitioned from doing that work myself to hiring more agents, hiring more assistants and building a team that worked on its own and that allowed me to just pursue other interests and keep building other businesses.
Josh: So how do you spend your time right now?
Mark: You know, people don’t believe me but I probably work about 30 hours a week, maybe 40 some weeks. But I spend a lot of time looking for houses to buy. I spend a lot of time on my blog, writing articles. I have a podcast as well. And then, I have very little time with my team. I have a team manager who manages our agents. Then I like to golf. I have five-year-old twins and a wonderful wife so I try and spend as much time with them as well.
Josh: So when you actually do some work, what is it that you actually do?
Mark: You know, a lot of my work now is focused on the blog, on building it. So, I write every article myself. I do every podcast episode myself. I kind of started from not having a clue what I was doing to building it to a pretty sizable website. So, I’d say 60% to 70% of my time is actually writing, researching, doing marketing things for the blog. And probably another 20% to 25% of my time is looking for really good deals for houses, driving around, searching the MLS and then managing my team. I’ve got a couple of assistants. I’m just working with them to make sure the agents are doing good, our contractors are in line. So, a lot of it’s management. And then, really, the blog is where I spend most of my time.
Josh: So you’ve essentially traded tactical work inside your real estate agency to tactical work as a blogger?
Mark: A little bit. That’s true. One thing that’s nice is it’s really fun for me. I really enjoy the writing part of it. So, I mean, I’ve got four paperback books out now. And I am working now on transitioning the blog to be more operational without me. So, I have hired a couple of people to start working on that. I’m hiring a consultant right now to help work on marketing different ideas. So, while I still do a lot of the writing myself, I am slowly shifting the operational side – the backend side to other people.
Josh: So, lets’ talk about this for a second. How did you decide what were the activities that you had to do versus the activities that you could have other people do?
Mark: You know, when I first got really busy as a real estate agent, I was listing REO, bank foreclosures and HUD homes. So, I would list those from the banks and I was driving all over the State. I mean, I probably drove 25,000 to 30,000 miles a year. And I was doing the inspections myself. I was doing the reports myself. I was doing the listings myself. And at that time, I kind of felt like “I had to do it all myself for I wanted it to get done right.” But I got to a point to where I was driving myself crazy, my wife crazy and I could not work as much as I was, so I hired an assistant.
And the funny thing was that things started getting done better when I hired my assistant because she had more time to focus on the details. She was getting stuff done right and faster. And kind of a light bulb went off like, “Oh, I guess I can’t do everything myself.” Perfect. And from that point forth, I just started slowly giving her more and more tasks. She kept doing a good job. And as the years went on, we hired another assistant. And right now, I do almost none of the real estate work myself. It’s all my assistants or other agents.
Josh: So, it sounds like the assistants that you’ve hired had different skill sets than what you had?
Mark: Yes. I am very big picture, idea-oriented. And I can sometimes forget about the details and be too impatient so my assistants are really good with the details, making sure everything’s done correctly and don’t get in a rush. So, that’s where they’re really good at doing reports, paperwork, accounting. And I’m better at management, big picture ideas.
Josh: If you’re like most private business owners I know, I bet you have some tension between your assistants and you every once in while.
Mark: Yes. It does happen. My main assistant, Nikki, has been with me six years, so she’s been really great, but once in a while we will differ on opinions. My other assistant, John, has been with me three or four years. We have some disagreements about when he wants to wake up in the morning and get to work sometimes but he still does an awesome job when he’s here. And so, there are some disagreements but for the most part I try and be very transparent, work with them a lot. I’ve had more disagreements and problems with the agents we hired than my assistants.
Josh: Because the assistants are detail oriented and you’re not, how do you guys get past that sort of thing? Or do you just let them handle details and you just ignore – period?
Mark: I pretty much let them handle it. So, when I first hired them or first started working with them, you know, I would check things out. I would make sure things we’re done correctly. But once I realized that they can do the job, that they knew what they were doing, I let them go.
And, I mean, if there’s ever a problem that pops up, I’ll check things and see what happens. But for the most part, I trust them and they’ve done a really awesome job with the details. I’ve tried to reward them, be very hands on with, you know, positive reinforcement for how they work. I don’t spend much time micromanaging at all. I’m a very high-level manager without getting too involved in it at all.
Josh: So, it sounds to me like this was a trial and error process for you. That it wasn’t something where you sat down and read a bunch of books and said, “Gee, I need to change how I work.” You just, you know, bring an assistant in. And also, when you found out, things got a little bit better for you.
Mark: Exactly. Now, if I would do it all over again, probably smart to read some books – some research beforehand. But yeah, at the time, that’s kind of how I did it. I just hired an assistant and I hired a good one – luckily and it went really well. We’ve hired a couple of other assistants who didn’t work out quite so well. But, you know, I think a lot of it is trial and error no matter no matter how many books you read too just based on people and personalities.
Josh: So what caused the other assistants that you hired to not work out? Because, you know, I’m going to bet, there’s a lot of listeners who hire two or three people for every job they have open.
Mark: I would say part of it was my fault for assuming people were good at certain jobs because they’ve done them in the past for other people. Like, there’s someone I hired to help with broker price opinions which are reports for the bank on valuations. And she’d done a bunch of them for other banks in the past. And I just assumed she was good at them without doing any actual checking up on that. So, once I hired her, I realized she took three times as long to finish them and they weren’t very high quality compared to what our other assistants were doing. So, that was just me not really doing my due diligence.
Some other assistants kind of saw we were making really good money, you know, saw what I was doing with different businesses and they kind of assumed they would be mentored exactly how to do everything I do and become an entrepreneur themselves, where that wasn’t really the job description, it was more the, you know, “be our assistant, help out in the certain jobs.” So they had different expectations of what the job was.
Josh: So how do you think they got those different expectations?
Mark: You know, maybe it’s miscommunication from myself. But I think, even though you tell someone—we’ve had some agents who did that as well where they see everything I’m doing and they want to become an agent. And all of a sudden, they want to try to make four different businesses at once and it usually does not work out pretty well, you know. I think focus is a very important part of success. And I think, they just get it in their head that “I need to be successful right now, right away.” And they don’t realize how much work is involved. Even you tell them, sometimes they don’t listen. And maybe it’s somewhat, my communication. maybe it’s just a mindset that success happens faster than it does.
Josh: So, it sounds to me like you’ve got four different business units that you operate, I’m going to bet you didn’t start all four at once.
Mark: No. Not at all. So, we kind of started with the real estate agent business, and that got really busy in 2008 to 2012. So, I wasn’t really doing too much with the other businesses at all at that time. And then I focused on building that one into its own operation where it could work without me. And then I focused on the next one, built that one up. Then I focused on the next one. It wasn’t something I did all at once. Kind of one in a row.
Josh: That’s a good warning for the business owners who are listening to this podcast today. How many of you folks out there are trying to do four or five major projects at one time? So, if we listen to Mark—Hey, Mark, you would run across one of these guys to say, “I’ve got these five major projects I’m working on now.” What would you say to them?
Mark: I would say, “Pick one – maybe two and focus on them and just put the others aside.” And once you’ve figured out which one works really well, put all your time into that business in the beginning. And then once you get it operationally kind of working on its own, then go to the other projects and work on those.
Josh: So, why would you give that sort of advice?
Mark: Because people get so distracted and scatter-brained when they’re trying to do too many things at once. It’s kind of like, you know, would you rather be mediocre at five different things or really good at one thing? And when you look at clients who are working with someone, they don’t care if you can do five different things. They just want someone who’s really, really good at the one thing that they need help with. So, it doesn’t really help to have five sort of okay businesses. You need one really good business and then once that’s set up, you can set up other really good businesses.
Josh: So, it kind of sounds to me like you’ve set up a business and you do all the hard work to get it off the ground running, make sure there are some systems in place and things can be done. And then you hire assistants to come in and take over and actually run the day-to-day operations in that business and you go start something else?
Mark: Correct. And for some of the businesses, you know in the beginning, things went wells and I tried to hire someone to kind of takeover everything. And I did it too soon before the systems were set up. I gave them too much responsibilities and I had some problems with that too, so you have to be careful how quickly you hand things over, how quickly you integrate everything because if you do it too fast , you know, you can create some setbacks.
Josh: So, when the setbacks happened, what did you do?
Mark: So, I hired a project manager who had a bunch of experience in the business we’re hiring him in and he really set us back a long ways. He wasn’t doing his job. He wasn’t doing things he said he was doing.
And after that setback happened, I went into the business and I pretty much took over his job myself for a couple of months. I took over everything. I made sure I checked out everything to see how it’s working. And then after I got things stabilized, I brought on someone else from my team who was doing another job and who had some extra time because that part of the business was declining a little bit and I started training them on how to do the new job. I learned to be much more hands on, much more involved in the training instead of just dump everything at once on one person and let them figure it out. I find it works much better if you can be there with them, train them, really be hands on at helping them learn the business.
Josh: So, when you are training people, do you write down systems and how they have to happen so it can be done in a repeatable manner?
Mark: I don’t because I’m really bad at that type of thing. So what I do is I have the person I’m training write down those systems and create those. So, I think that helps them learn as well kind of what I’m teaching them by them writing it down and creating those guidebooks for what they do.
Josh: So here’s a good lesson for folks. You do need to systematize your business. You don’t need to do it yourself. You can easily have the people who you’ve delegated the job to, to document the process that they use.
So, Mark, when you document these processes, how do your people go about documenting them?
Mark: You know, I pretty much leave it up to them, how they do it. I kind of tell them, “Hey, can you create a guide for what you do – a system?” And I see how they start, and if it looks okay, I let them do it in their own way that makes sense for them. So, I mean, a lot of times, it’s just a word document that just goes through different tasks and jobs they do and checklists. Or with someone else, if it’s more involved, they do more a guidebook – a handbook on what it is. But I don’t give them a certain system they have to use or do. I let them decide what they’re most comfortable with, what works the best for them.
Josh: Do you have several, different types of systems running around or several different types of way people document systems running around your company?
Mark: For the actual guides and how to do the job, the job description I’d say, I mean, it’s pretty much a document that describes everything but our entire team uses Podio for our kind contract management, our database management, our property management. We all use that same system to document different businesses and what’s going on with them. So we all use that system to communicate with each other, to document the day-do-day activities. But we just kind of have word docs and things like that for the actual job description and responsibilities and how to do things.
Josh: When you are looking at your business, how do you know you’re on track or you’re off track?
Mark: You know, that can be tricky. Especially in real estate with so many ups and downs. I think, really, what I want to look at is trends – how I’m doing now compared to last year. How I’m doing this quarter compared to last quarter. And then, looking at cash flow is very important too because when you’re running a team like this , you know, you have employees, you’re buying properties, you have marketing expenses, it’s very important to have plenty of cash flow in the business coming through to meet all of your expenses, so we do what’s called a blue beast every month which lists out every business, the profit and loss statements for that business, the expenses, money that’s coming in and that give me a really good overview of what every business is doing each month. And, you know, if there are certain things that are alarming, I can look at and say, “Okay, what’s going on here? Was there more expenses this month? Or, did something happen?” But that blue beast really helps us, or at least me, get an overview of the month-to-month operations and how we’re doing. And if there’s anything I need to be alarmed about.
Josh: So if you’re about to have a cash problem, how would you know it?
Mark: You know, I think if you look at the trends, if you know what your expenses are. I have a pretty good idea of how much money I spend each month – on employees and on different things. So, once I get to a certain level of cash, maybe, you know, whatever it might be, I start to say, “Okay, we’re getting a little bit close to low to meet next month’s expenses.” Look at things closer. Is there money coming in? Is there not money coming in? And then I also have kind of an emergency line of credit set up that’s there. I never touch. I made a rule, I’m never going to touch this line of credit unless I have approval from my wife and my main business manager. And we have a plan to pay it back right away. So, that’s kind of our safety net in case something goes wrong. In case we run low on cash, I’ve got, you know, some $125,000-line of credit that’s available in case we need it for emergencies.
Josh: Are you familiar with the term key performance indicator?
Mark: Yes.
Josh: Do you use KPIs in your business?
Mark: A little bit but I would say, probably not as much as we should. But I do have certain things we look at, different profit margins, different return on investments that we have out there. So, I could do a better job of it. But, yes, I’m familiar with it. I would say, we use it a little bit.
Josh: I’ll give you a free hint because I know we’re almost out of time, it’s that I’m a big on key performance indicators. The challenge is most people think KPIs are the profit and loss statement. It’s not. That’s a historical thing. And every business has this but they have numbers that are predictive about what’s going to happen in the future.
For example, how many houses you guys are listing is a predictor of what’s going to happen to your cash flow in the future. And for me, I would definitely have a budget for what I expect and every week I’ll be monitoring that budget versus actuals to see if I’m going in the right direction or not. And if I’m not, I’ll probably kick some people in the rear end to get it moving in the right direction, so there’s your free 35 seconds of consulting today.
Mark: Thank you. No, I appreciate that. We do that a little bit. We have weekly meetings with our agents and everyone tells us what they have in their funnel which are the people they’re working with, potential deals going on – listings, and then properties we have that may or may not be selling. So, that does heps ups us a lot predict what’s going to happen in the future but we can do a better job of it for sure.
Josh: So, one of the things I would be recommend that you do is that you actually formalize the system, Mark. And if you did that, you’re going to likely see a little bit more predictable results.
Mark: That’s a good idea. Like I said, I’m very high level that it’s tough for me to get in there, but yes that would be welcome.
Josh: You know, that’s often where CFOs get involved in businesses. But it is one of the issues that people in small businesses have, you know, are challenged with –is how do you know next month is going to be where you need it to be?
Mark: Right.
Josh: And big businesses have been doing this for a zillion years. And it’s one of the reasons big businesses are more predictable than small businesses. But at any rate, we’re out of time. I’ve enjoyed the conversation. I hope you have also. I’m going to bet some people might want to get in touch with you, especially to check out that real estate blog you have. So, if they were to find you, how would they go about doing that?
Mark: Great being and the show. But if people want to talk to me, investfourmore.com is my blog. It’s invest – the number four spelled out F-O-U-R, then M-O-R-E.com. You can email me mark@investfourmore.com. I respond to all my emails personally. I’ve got 400-some free articles on the blog, like I said a weekly podcast as well. So I try to put out as much information as I can on buying, selling houses, rental properties and being a real estate agent as well.
Josh: Great. Thanks so much for your time today. I really appreciate it, Mark.
And for those who are still with us, I hope that’s everybody, I have an offer for you. We have a one-hour audio CD. It’s a physical CD which I actually mail to you and it’s free. It’s called Success to Sustainability: The five things you need to be focusing on create an economically and personally sustainable business. And again, it’s really. Take out your Smartphone, bring up your text application and text SUSTAINABLE to 44222. That’s SUSTAINABLE to 4422. You know, you get a link, you give us your address and we’ll mail the audio CD to you and it’s absolutely free.
Thanks a lot for spending some time with us. This is Josh Patrick. You’re at the Sustainable Business. Now, I hope to see you back here really soon.
Narrator: You’ve been listening to The Sustainable Business podcast where we ask the question, “What would it take for your business to still be around 100 years from now?” If you like what you’ve heard and want more information, please contact Josh Patrick at 802‑846‑1264 ext 2, or visit us on our website at www.askjoshpatrick.com, or you can send Josh an e-mail at jpatrick@askjoshpatrick.com.
Thanks for listening. We hope to see you at The Sustainable Business in the near future.
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