People in Production Podcast with Ryan Nelson

Episode 11 - Brandon Worrell (Part 2) From Digital Frontiers to Factory Floors

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This episode covers the inspiring journey of a tech entrepreneur transitioning to the manufacturing sector, sharing valuable insights about entrepreneurship through acquisition, business readiness, and the vital role of communication. Listeners will gain practical tips on preparing for a successful business sale and fostering a thriving workplace culture. 
• Exploring the transition from technology to manufacturing 
• Importance of mentorship and personal background in career decisions 
• Understanding the seller's perspective in the exit strategy process 
• Key factors buyers consider when evaluating a business 
• The need for clean financial records and separation of personal/business finances 
• Critical steps for preparing a business for sale 
• Insights on talent management within the manufacturing industry 
• The significance of communication in leadership decisions 
• Ways to run a sellable business for long-term viability

Speaker 1:

no-transcript. So you said you were in the technology space before. Tell us a little bit about the role that you played in the technology space. And then somehow you made that leap from technology into I want to buy a manufacturing shop. So let's hear a little bit about your journey, if you don't mind.

Speaker 2:

Well, you know, my earliest professional life was as a web developer. So I started a web-based software websites pretty much self-taught. That was like dot-com boom, dot-com bus days. So when I started that, I worked for a couple of different uh agencies advertising agencies, a sports marketing agency, a pharmaceutical agency so that was over many years. And, uh, that was great.

Speaker 2:

And, uh, I had a partner that I worked at those two companies with, who was more of a creative guy, and so we kind of worked in tandem and we just got to a point where like, hey, we're pretty good at this and we know what we're doing and we've got some connections. Now let's just do it on our own, let's go out, start our own business. So, um, so we did that, we. Well, I took the, we took the uh, you know we have the kaufman foundation here, uh, entrepreneurship, and they do these at the time at least, they did these new venture classes. So I really didn't have any business background or anything right. But being in a marketing uh environment, you just you you learn a lot about a lot of different businesses and how they made money so how big of a shop was the marketing team that you were at before you guys started exploring your own venture?

Speaker 2:

uh, the last one you know 30 people, not huge so small.

Speaker 1:

Big enough to haveable contracts, but small enough that you're getting a piece of everything that's going on in the business.

Speaker 2:

Yeah, and I had a lot of experience in pitches and you know traveling and so I was learning business skills alongside of doing development. You know heads down development and I was also learning how to run teams. I eventually was, you know, had kind of development and I was also learning how to run teams. Uh, I eventually was, you know, had some hiring responsibilities.

Speaker 1:

Um, so I was kind of developing all those skills.

Speaker 2:

But, um, so we started this business. We went through the new venture program and that was basically do a basic uh business plan, yep, uh. And so we did a business plan for a little interactive agency and once we got out of that, we started it. We started in my partner's spare bedroom crammed a server into the closet and started doing business. That's awesome, Love it. Paid ourselves peanuts for a while, but eventually we started to grow, started to hire staff.

Speaker 2:

Right before I exited, we were a dozen employees in an office down here in the crossroads just down the road from KCSB coincidentally, kcsb coincidentally and yeah, well, now we were 50-50 partners and I think we just after about nine to ten years we just kind of had strategic divergence and he ended up buying me out of that company and took it over and so I exited and didn't just kind of software consulting for a few years, but I always wanted to get back into business ownership. I just felt like that was where my heart was right. So I, you know, had started, owned and operated a agency and uh, I that's where my heart was, you know.

Speaker 1:

Yep. Not really great working for other people, so and for some people that they thrive in that space and other people, they need to have a say in the bigger picture for them to really feel like they're achieving what they were made to achieve. Yeah, yeah.

Speaker 2:

I guess that's kind of where I'm at. So I so I had exited and I was doing like I just started a little software consulting. I was just doing small projects for people for a number of years.

Speaker 1:

But at that point you're, you're still just working a job for yourself. It's not a company, yeah.

Speaker 2:

It's sole proprietorship, yeah, yeah, just working a job for yourself. It's not a company, yeah, it's sole proprietorship, yeah, yeah. So I uh eventually I had one of my customers who was software development manager there had been a former employee said, hey, come in, do some consulting for us. You know, be real flexible with you. It's like, okay, sounds good. And then, uh, eventually they talked me into a job. So I did take a job, uh, but I was like, okay, I'm still looking actively.

Speaker 2:

So I uh I had sold a business, I had started a business and sold a business and I sort of knew like we basically hired a consultant to help us negotiate the separation and the value of the company and all that Yep. But I still didn't know enough about just going out and buying a business. So I really dug into the world of ETA, entrepreneurship through acquisition, and it's a big one, you know. So I just like you, you know, got all the books you know there's a book by a guy named Walker Dybul buy, then build. Harvard Business School has a book on buying small businesses and got into that community and just kind of dug it.

Speaker 2:

So I started really just seriously looking at evaluating businesses in the Kansas City area. I had this geographic restriction because I had family here. I didn't want to move somewhere and so manufacturing was on my list. You have to have some flexibility if you've got this geographic restriction. So what could you see yourself running? You know, and I'd kind of done technology and software. So I was I was kind of low looking for that, but maybe a little different. But manufacturing was on the list and my father worked in manufacturing for 40 some years.

Speaker 2:

There's a company in which dog called chance rides they make amusement rides. Okay, um, he started with them very early on and uh, he, you know, worked with them until they absolutely kicked him out the door. But he, uh, he just loved that job. You know he always talked about it. He started as a draftsman in their engineering and then, you know, eventually went through several roles and then towards the end of his career he was running their production and I remember visiting as a kid seeing prototype rides and I can remember him pointing out to me these new machines they had that would cut parts automatically, you know, and he was basically a CNC lathe, but you know how amazing it was. I was like, oh, that's cool. So I just, yeah, manufacturing was within the realm of possibility for me.

Speaker 1:

And I just want to pause on that for a minute, because I think some people in manufacturing would say that they don't see that everyone around them is miserable, like it's just a bunch of blue collar workers that hate their job and they can't wait for Friday at five to go home and get on with their life.

Speaker 1:

I think it's so important that a fundamental influence on your view of manufacturing was someone who loved it so much they couldn't stop talking about it even when they weren't working. And it's not because it doesn't sound like it was, because your dad always had work on his brain because he couldn't relax, but he loved what he was doing. And I think that I think leaders need to be very, very intentional about communicating what they love about what their company does, because it's easy to get so bogged down in production that people don't ever remember that. This is an amazing thing that we're taking a lump of something and turning it into a difference maker. I don't know you telling that story, just it brought it to life in a real powerful way. I really appreciate you sharing that.

Speaker 2:

Yeah, yeah. So yeah, and there's some similarities into the business I had run before in this business. So that was a essentially a custom software shop. So people would still just come to us and say we need this, we need to make this and we had to get, we had to. You know, there was customer service involved, there was estimation and you know all of that is very similar to how we work. Now, hey, I've got this part I need to make. I've got to figure out what's going to take us to do this part, how long, what are all the variables around making this part so very similar to custom software, just it's's. You know, yeah, bits and bytes versus pieces of aluminum or steel, yep, um, and then all of the production process, the service after production, um, and then obviously all the regular business functions. So I felt, uh, in a custom shop like this, I felt pretty good that it's a different world, maybe a lot to learn, uh, but I can handle it yep, that's amazing.

Speaker 1:

So so you went from a career to having some independence, back into a career mode, knowing that's not where you wanted to be, into a career mode, knowing that's not where you wanted to be. And then manufacturing was one of the things on your radar and this opportunity came up, and I guess I'd love to shift the conversation a little bit to benefit those who are. They may own a shop and they think you know what, someday I'm going to want to get out of this, or or maybe they're thinking about retirement now, or maybe they're like you know what. I've been running this shop for 14 years and I just need something different in my life and they're wanting to sell it. With you being a year and a half out from this acquisition process that you were going through. What would you tell that guy that's thinking about their exit strategy? Someone like you is looking for and you don't speak for everyone, but to the extent that you can share your journey, what do sellers need to understand about it?

Speaker 2:

Well, you can go out and if you do some research on the ETA community, you'll see lists of things you know. Here's what you have to have it you know here's what buyers are looking for.

Speaker 2:

So that information is out there. So do some research. But you're looking for something with a good track record, a steady track record and, of you know, like growth and revenue. You might have a specific revenue target you're looking for, but you know that's very important and you need to have clean financial records. That's one that's pretty key, like you have to be using QuickBooks or some financial software where you can produce a P&L or a balance sheet and you have to have those ducks in a row. And you have to have your finances personal finances separated from your business finances. So, as buyer, when I was evaluating a business, if I saw like this seller's personal finances are completely intertwined with this business's finances, that was a big red flag, because what I'm trying to do is figure out how healthy is this business as far as its ability to generate cash and profit? And if I can't sort that out, that's bad.

Speaker 1:

One thing I'd like to talk about that because a lot of small shop owners don't fully understand this that if you don't pay yourself um, I'm trying to think this through if, if you don't pay yourself out of the profitability, you're actually needing to look at your role as an employee, and if you leave the company, that money that you are making needs to go to someone else to run the company, who will hopefully run it for the price that you are making, needs to go to someone else to run the company who will hopefully run it for the price that you're paying yourself and not underpriced if you're paying yourself less than you make.

Speaker 1:

So for a person to say, hey, I make X amount of dollars and I have this level of profitability sometimes we distort those numbers because a lot of people what they'll do is they'll say they were this much profitable, but they don't pay themselves any money. And I think the really important things to understand is you've got to know where your money's coming from, and whoever is buying the company needs to understand. So how are you getting paid out of this deal? Are you on the payroll or are you just taking a little draw? And what does that do to the profitability of the company?

Speaker 2:

Yeah you really should be paying yourself a market value salary out of the company. The company should be able to bear that. If not, you need to get it into that shape, and that's probably another key piece of advice is if you are wanting to exit, the time to start getting the ducks in a row is now. It takes time. Do need to get your funds and financial statements together. If you do need to talk to a business broker, uh, do that really early rather than waiting.

Speaker 1:

It's only going to create stability for your company. I mean, even if you're not selling for eight years, oh gee, you got it done six years early. Now you have to run your company on good books for six years, that's only your company.

Speaker 2:

It's not-.

Speaker 1:

Exactly.

Speaker 2:

Yeah, that business. And I highly recommend going to a business broker and having that discussion because they can. They're the experts that can tell you here's what you need to do to look attractive. They'll tell you, hey, you need to start taking a salary out because a buyer's going to look at that. You need to start separating out your finances from the business. Maybe you need to take a year or two to get your revenue on a growth track and you're looking at there's different ways to judge the value of a business, but usually it's some multiple of EBITDA, which is a calculation you do from your P&L and it's, I would say, generally a measure of your company's ability to produce profit. And so they can help you walk through that and tell you what your EBITDA is and what you can do to improve it.

Speaker 2:

but you also you know I wouldn't have come into this shop if I- didn't know there was a good staff in place, like if I had to come in and be the guy running a machine, I wouldn't have pulled the trigger because I'm not a machinist. So you need to make sure that a new buyer can come in and have a reasonable expectation that they don't have to step right into that job, be the technical expert if they don't have that expertise.

Speaker 1:

Yeah, that's great and I think you also need to if you're looking to sell. You need to minimize the day-to-day operations role that you play in your company as much as you can so that there's not that void that occurs when you leave and a lot of tribal knowledge goes. I mean, every ownership's gonna leave with tribal knowledge, but you need to minimize that impact as much as possible and I I encourage people thinking of growing a company they can sell. Take time off, get away from your company for a while so that you can prove that this thing can run three weeks without me and I'm not on my phone all day, every day down. Yeah, that is really key.

Speaker 2:

Everything I looked at, I thought is this person so key to this business that they can't be separated from it successfully? And if I didn't think I could step in and keep the business going once this person walked out. It was a hard no.

Speaker 1:

Yeah.

Speaker 2:

So you got to get yourself in that position.

Speaker 1:

Man, such great insights. I really appreciate you, especially since you're so new into the industry. I appreciate you just letting us crack open your brain for a little bit just to understand that You've got great wisdom and I appreciate your ability to articulate that journey. So anything else you'd want to say to that person who is thinking of selling their business in the next two to 10 years?

Speaker 2:

Well, there's a good book called Build to Sell. Go read that. And this is not just for people looking to sell, but also people maybe that are operating, looking to buy a business. You need to operate it, even if you're never going to sell that business right, or you don't intend to sell it for a long time. You need to run it as if you want to sell it right, as if you're putting something together to be sellable because that is good for your business, to run it in that way. You know, yeah, it's beneficial to you to run it with that attitude, because you'll create a healthy business, yeah, so there's another great book out there called who, not how.

Speaker 1:

Uh, or you're looking to hire people, not how do you figure this out? And if your solutions are through the people you surround yourself with, then you're building a viable company that's not dependent on you as the the, the linchpin of the whole organization. Yeah, that's another one.

Speaker 2:

That's tough because you you want to be stepping in and take care of things or not spend that money on that person or that consultant or whatever.

Speaker 1:

Man, I have a feeling we could talk for another 20 minutes easily, or two hours even, on some of these stuff. You've got some great insights and stuff. One of the things I like to do with my guests is what I call the speed feed round, where I just throw you some questions and you give me your initial response to it. Are you comfortable doing that? Uh, sure, maybe comfort's not the, maybe that's well big news around here, of course, chiefs going to the Super Bowl. So if you could, you're shaking your head. That's not your dream come.

Speaker 2:

I'm like I can't believe it. You know, I mean I just can't believe it. I'm a long-suffering Chiefs fan, right, right, I mean, you know, somebody listen to this, if you know. Like you know, I went to the Tyler Thigpen days.

Speaker 1:

Like I just can't. You endured the 90s, Some of the 90s were great, but when the Chiefs and and when we kept the guys were great, but when the chiefs kept grabbing hold of 49ers, quarterbacks and anyone that could, and it just wasn't working out right. Well, so if you could go to the Super Bowl with anybody, who would you pick to go to?

Speaker 2:

Oh go to the Super Bowl with anybody. Well, you know, I would have to pick my girlfriend because she'd kill me if I went with anybody else. Let's say I was forced to go with, you know, somebody other than a per or a close personal friend. Jeez, you know, I'll just say Herm Edwards, because he's a former Chiefs coach and he's a it seems like a pretty. He's a kind of a funny guy. You might be entertaining to sit there and watch a Chiefs Super Bowl with.

Speaker 1:

I like that. I like that one. That's a good one, all right. So for those early morning days at the shop, what do you do for energy drink? Are you a coffee guy? Do you do any energy drinks? What are we going to see you holding in the mornings?

Speaker 2:

Oh, definitely coffee, and I'm like a big, stupid thermos guy. Okay, so I come in with my coffee and my kids like to make fun of me because I have this ridiculous thermos that I carry. I love it All right.

Speaker 1:

So what, in your opinion, is the greatest threat to manufacturing?

Speaker 2:

Greatest threat to manufacturing Right now. Uh, right now, um, it's got to be talent, you know. It's got to be having having the right people, you know. Uh, there's things that manufacturing is going to do to get around this talent issue, and that's automation and technology. No matter how much you automate it, you're still going to need very talented people to work in manufacturing, and that's a big problem, right?

Speaker 1:

now? Yeah, really good insights. So what is the most important leadership tool in your tool belt? What do you think is the most critical thing you've learned about leadership that you have to use?

Speaker 2:

you can't communicate enough. Yeah, that's great. I wish you know I need to be better. We all need to be better. Talk, talk to your people, let them know what's going on.

Speaker 1:

Don't don't leave mysteries and that's whether you have a 40 year old guy or a 40 year veteran or a 15 year veteran or someone who's brand new to your company.

Speaker 2:

That communication is important yes, and if I had to pick a number two, it'd probably be just healthy humility.

Speaker 1:

Yeah, love that Great insight. What's one thing that we didn't tap on today that you would love just to dive in deeper, to share just some of your opinions on, if we had more time?

Speaker 2:

Oh boy, I don't know, that's a tough one, you know. Maybe you know big mission of mine is to grow and to scale and it's difficult, especially with a small shop. So you know that's probably a big topic. Yeah, you know it's on my mind a lot and is a big challenge that I'm thinking about constantly.

Speaker 1:

Love it, and so I'd encourage people that if they see you at an upcoming NTMA event or any of the networking events, and if they wanted to continue that conversation, you'd probably be interested in continuing that conversation.

Speaker 2:

Oh, absolutely.

Speaker 1:

All right, love it. So if people wanted to find you, brandon, would they go to kcspmachinecom.

Speaker 2:

Yeah, there's a. There's contact form there. My email is Brandon at kcspmachinecom. That's the quickest way to get on me. I don't really do Twitter. I am on LinkedIn. You're welcome to look me up there and connect.

Speaker 1:

Very good. Hey, this has been outstanding. I really appreciate you giving us some time today and just sharing some of your journey in manufacturing and some of the wisdom you've had from a career of leadership, and it's cool to see you applying those skill sets in your new context. So thanks again for being here.

Speaker 2:

Well, thank you very much for the kind words. I appreciate it. It's been great.

Speaker 1:

All right, man Take care, all right.