Episode 88: Establishing Core Values and a Clear Company Vision with Michael Erath of The Traction Hub
In this episode, we sat down with Michael Erath who is the owner of The Traction Hub in Scottsdale, AZ. In the first 15 years of his career, Michael grew two businesses to over 45 million in revenue and over 200 employees. In 2009, the housing market crash, as well as a betrayal from a business partner and his own blind spots, caused him to lose it all. Late in 2010 Michael leveraged all that he had and started a new business. During that process, he was introduced to the book Traction by Gino Wickman and began implementing EOS into the organization. The business grew tremendously and even made the Inc 5000 list in 2015! Since 2015 Michael has been a full-time EOS Implementer where he and his team at The Traction Hub help others through the implementation of EOS.
Not many books have made an impact on the two of us as much as Traction did. We too saw the benefits of implementing the EOS system into our business Brothers Pool Service. When a client referred to the book one day, we both read it and felt like it was talking directly to us! There are 6 major components discussed throughout the book, but for this podcast, we wanted to focus solely on the vision component. This is the section of the book that discusses core values and core focus. Michael tells us why it is so important for the whole team to understand the company’s vision and how once everyone is aligned, it can be something incredible. He also gives advice on how to create your own set of core values and core focus, and how to roll them out to your team. You will definitely want to take notes on this one! This is an episode that you don’t want to miss!
Episode 88: Establishing Core Values and a Clear Company Vision with Michael Erath of The Traction Hub transcript powered by Sonix—the best automated transcription service in 2020. Easily convert your audio to text with Sonix.
Episode 88: Establishing Core Values and a Clear Company Vision with Michael Erath of The Traction Hub was automatically transcribed by Sonix with the latest audio-to-text algorithms. This transcript may contain errors. Sonix is the best way to convert your audio to text. Our automated transcription algorithms works with many of the popular audio file formats.
Tyler Rasmussen :
Thank you for joining us today on episode 88 of The Pool Chasers Podcast. As always, our mission is to help educate and inspire in the form of a podcast. So, Greg we have a episode that we're super excited to share with everybody. We sat down with our friend Michael Erath, who's the owner of Traction Hub. The main focus of the episode is really the vision component of the book Traction, which there's not too many books that made that big of an impact on our life. So, you know, once we discovered it, it truly changed our business. You know, the importance of core values. And wouldn't you say that it was just kind of a game changer.
Greg Villafana:
Oh, yeah, most definitely. I remember actually doing a pool service bid many years ago. This family had a small business and they actually recommended the book. And just the way that they were talking about this book was like, man, I really gotta check this out. And sure enough, actually listen to the audio book. On the way back to the office and just remember having that that crazy feeling like you just hit gold, you know what I mean? Yeah. And after listening to the section where it's talking about the roles of the visionary and the integrator, I knew right away there was talk in, you know, about me and you because it just was spot on with explaining those roles. So you listened to it and we just, you know, dove in head first. It really changed our business and our personal lives, really excited to, you know, really have the opportunity to share this all with everybody, because it's it's a phenomenal book. We've talked about it quite a few times on the show. And there's a lot of I think some of the more successful people we've had on the show.
Tyler Rasmussen :
A version of it. Yeah. Yeah. And Michael, you know, his company integrates the system, the EOS Entrepreneur Operating System into other businesses. So we thought I'd be cool to have him on and talk about the vision component of the book traction and have him discuss why it's important for your companies to understand the vision, developing core values and a core focus and the importance of all of that, you know, within the company. Please enjoy this episode with Michael Erath of the Traction Hub.
Intro:
Welcome to your go to podcast for the pool and spa industry. My name is Tyler Rasmussen and my name is Greg Villafana and this is the Pool Chasers Podcast. Well, thank you so much for joining us today, Michael.
Greg Villafana:
We really appreciate you taking the time to be with us on the podcast today.
Michael Erath:
Yeah, absolutely. Appreciate you guys. Invite me in. Yeah. So can you introduce yourself to our listeners? Yeah. My name is Michael Erath, the founder of a company here in Scottsdale called The Traction Hub. I'm a leadership team coach. I work with executive teams of businesses anywhere from 3 4 million up to 100 million in revenue. 10 to largest client has twelve hundred employees currently. Twelve hundred employees. Twelve hundred! Yeah, it's a franchise business. And I'm also from a certification standpoint, I'm certified as an EOS implementer. That's the entrepreneurial operating system based on the book traction.
Greg Villafana:
Very good. And we're really excited to jump into this because traction has been huge. It changed everything when we had our pool service company, Brothers Pool Service. It really changed everything. Yeah. So like we do on every podcast, we really like to jump in to our guest background to see how they grew up and, you know, what's gotten you to where you are now. So you want to go back as far as you feel comfortable.
Michael Erath:
Sure. Yeah. Gosh, my so my wife and I both actually grew up in North Carolina town in the central part of the state called High Point, kind of in between Greensborough and Winston-Salem. I was a second generation in a family business.
Michael Erath:
So my father back in the late 60s had started a manufacturing company, manufacturing hardwood veneer for the furniture industry. So all through high school and college, I worked part time for him, worked summers him, and so really have a lot of background in dealing with family business issues and working with siblings and parents, things like that. So my wife and I like said we both grew up there in High Point. We've known each other since we were four. We started dating at 15, got married right out of college and we had some changes going on with management in our manufacturing business or sales offices were in North Carolina. But our manufacturing facility was in Virginia and outside of Roanoke. So we moved right out of college. We got married. We moved to Roanoke and got settled in there and started started our family at that time. And over the course of about 10 years of growing that manufacturing business, I went through vertical integration, started another company kind of as a sub, as a sister company to our manufacturing business. We got into timber trading, buying lots of different grades of hardwood logs to help really expand our supply chain and that entity. I started with a business partner who was one of my log buyers and we kind of over time became really, really good friends. The business he was running was the timber trading company. We'd buy standing timber, we'd buy lots of different grades of logs off of sawmills and we would merchandise all the logs we couldn't use for the veneer production and veneer production takes a higher grade log.
Michael Erath:
It's it's more difficult to source. And so this really opened up our sourcing. And as we grew those two businesses, I ran the manufacturing company and he essentially ran the other company. The two of us became best friends. We grew the business from 8 million. When I took over to 45 million right about the time of the crash, we had 200 employees. So we became best friends. I was a son's godfather. We vacation together with our spouses frequently as the collapse came in 2008 2009 and revenue started to drop. One of the things that I ended up discovering was that he had not only embezzled half a million dollars over the prior 18 months, but he'd been committing bank fraud, so he'd been submitting falsified borrowing base certificates on behalf of the company that we owned together to a federally chartered bank through the whole vertical integration process. I had the same lending relationship with the bank for both companies. And so when this happened and I discovered what was going on, I had to go, of course, appealing to the banks and report what I'd found out. I also had to go to the U.S. attorney's office and report what had what we had uncovered. So at that point, the bank pulled credit on both companies because I needed to kind of protect themselves. So that immediately made the company illiquid while on our manufacturing business side. I had taken us through a capital expenditure project in 2006.
Michael Erath:
We invested about six million dollars in that company and new machinery, new equipment, new production lines. And so that immediately created a case of insolvency with the business. And at that time, lots of people were throwing the keys at the bank and just dealing with it in court, fighting out the guarantees. And so I was in a unique situation. I had bought my mother out of the business. My father had passed several years earlier. But at the time that I bought her out, the. Think had her stay on as a guarantor, which at the time we didn't really think too much of. And so now I had my mother stuck on a guarantee. The company is illiquid. I'm also a guarantor. And so I needed to protect her. I need to protect my family myself. So I was able to negotiate with the bank for me rather than putting the company in bankruptcy where they would have gotten pennies on the dollar at best at that time. I negotiated time with them for me to stay on and take the company through an orderly liquidation while the U.S. attorney essentially prosecuted my my former partner and best friend. So I was through a series of kind of fortunate events as that was going going on. I was able to get the bank made whole. I was able to get the creditors made whole. It took about 18 months to unwind the business. So I took the haircut personally, but it allowed me to get out of that with my credit intact.
Michael Erath:
And I was able to kind of restart from scratch so that, you know, 2009, 2010, we went through this transition where my wife and I lost everything and had to just really rebuild from scratch. So at that time, we relocated to Ohio. There was a contract manufacturing facility outside of Columbus, Ohio. We kept a few key employees, started a new business and moved Ohio, started sourcing our production there. And as we were building that business, that's when I came across the book Traction. And, you know, like what you had talked about when we spoke prior in reading that book, I felt like finally somebody has taken all of these different books I've read over the last 15 years of my career, kind of extracted all the best pieces and rebuilt it into a system that I could get my arms around. That made sense to me that I felt like I could implement in the business. And so started implementing EOS in early 2013 and by 2015 had gotten to a point where our leadership team was so clear on our vision. We had really had things dialed in and they were executing most of the day to day of the business. So I was able to get out of the weeds. I mean, I had spent a lot of my career going out on the road, buying logs myself, talking to customers and doing sales myself. And I'm just way too deep in my own business.
Michael Erath:
And so this gave me a system and a platform to build a team that could really help execute the business. Let me spend more time working on the business. And so as time went on, it allowed me to to elevate into more and more of a visionary, you know, true CEO type role in the business to set that up to grow. So 2015 we made the INC 5000. And later in 2015, I was able to exit the day to day kind of handed over the reins to my leadership team and then fully exited the business. A few years later, with my free time, I had a couple of friends. I was a member of YPO Young Presidents Organization. Back when we had our first manufacturing facility, the family business and in the second business side transition into EO and Entrepreneurs Organization. And I had several friends in Columbus that were in EO that asked me to kind of help them with their implementation of the EOS. And when I did that, I really fell in love with the facilitation role, the coaching role, and kind of helping them get unstuck in areas where they were stuck with their own businesses. And that became something I got very passionate about and decided to eventually just fully exit the business to this full time. So I've been doing this full time since 2015. I've led over 65 companies through the C.O.s journey, facilitated about seven hundred full day sessions, strategic sessions with clients since that time.
Greg Villafana:
Well, that's a that's an incredible story. And congratulations. And you know, before we jump in, you know, the book traction and everything else. I'm sure there's people out there listening to this that some of this could be going on, what you went through. Hopefully not. But, you know, what advice would you give to people like if you could go back with your partner and with everything going on? Is there something you wish you would have done sooner? I mean, was this intentional on his part? I mean, did you ever get to the bottom of why?
Michael Erath:
Sure. Yeah. Good question. We did. And I think probably my my most clear advice and in hindsight, the thing that sticks out to me the most is there were there were warning signs that something wasn't right. And because of our friendship and just how close we were, it just I allowed myself to kind of write it off. Right. And it just can't be. And so whatever. And he was really Salesians. So whatever he would come back with the kind of explain things away. I was okay with. And in hindsight, this was one of the real things that traction actually brought out was we didn't have great scorecards in place.
Michael Erath:
We didn't have systems and structures in place that I realize now would have helped really smoke that out much sooner and it would have been much harder for him to hide what was going on. Had we had a true operating system in place.
Greg Villafana:
Yeah. So you think that if you had the. You know, EOS system and the different meetings that you would have had back then, you think that you would have been able to kind of sniff something out sooner?
Michael Erath:
Yeah, I think so. And it was really I think the companies absent what went on, absent the things that he did. I think the companies could've survived the crash. And this just essentially, you know, was was a devastating injury we can recover from. And I believe with all my heart, had I found EOS back in 05/06 and started implementing it then that we were those businesses would still be around. Those people would still be employed by the same employer and we'd still be growing.
Greg Villafana:
Yeah. I mean, what got you through all of that? I'm just curious, because that's a I can't imagine kind of taking over sort of the family business and then just building up to be something bigger and better and then something like this happens. I mean, that's a that's a huge loss.
Michael Erath:
You know, really the the foundational relationship I think my wife had, because we we were we grew up friends. You know, before we ever got married and started a family.
Michael Erath:
Her support was unwavering through all of it. And that was a big piece of what got me through. I know people who have struggled, entrepreneurs that have been successful, and they've struggled financially and families fall apart.
Michael Erath:
And I think the two of us coming together, I mean, she started working in the business.
Michael Erath:
Her background was she's trained as a nurse. That's where she got her degree. And she came in and started working in the office and helping with bookkeeping and just kind of figuring things out and just just really put her shoulder to the plow and got beside me to help help me work through it. And that was more than anything I think that's what kept me going.
Tyler Rasmussen :
Right. In your book, you talk about, you know, kind of how you guys had to overcome some stuff prior to that happening because you had talked about that little bit, because I think that's a sure important piece to that yet.
Michael Erath:
So we had we had reached a point where this literally was was months before the crash happened, where in our in our marriage, my success growing these businesses. And I mean, I'm a pilot. We had a King Air and I was flying all around in that. And just I had really gotten to a point where I was letting my success create a lot of blind spots. And it's not I don't believe that it's in my nature to be have a huge ego. But that was starting to creep in. And there's a great quote by Bill Gates who says that success is a terrible teacher because it seduces intelligent people into thinking they can't fail. And I think that's a lot of what was going on for me. And that was creating problems even in our marriage, because I was starting to feel a little bit invincible and a little bit too proud of what I had accomplished. And God lover, she called me out on it and we went through a pretty difficult struggle for a period of time. But it it helped us get through any issues that we had. I spent some time with the counselor just gonna get in my head. Right. That literally we got through that stage about two months before I found all this out in the crash happened. And I really believe and I write about it in the book that had we not gone through that when we did, if those underlying issues that existed in our marriage and in our family, the collapse probably would have destroyed our family.
Tyler Rasmussen :
Yeah, I think that part is really cool. You know, you talk about how you had to get over a lot of your issues and then you kind of had to pursue her again and make her believe and trust you again. And that's a really cool piece that you kept you guys really strong through all the other stuff that happened right after.
Michael Erath:
And I appreciate you saying that there's actually something that I teach when I'm teaching team health. A lot of my clients I use there's a book by Brené Brown called Dare to Lead. And in that book, she talks about the anatomy of trust. And there's a really good video that she's put together. It's probably a 20 minute segment of one of her talks. And one of things she talks about is that, you know, trust is built in the smallest of moments, but that's also kind of help. Betrayal works. And I think slowly over time, as I was becoming more successful, then a little bit more egocentric, I was beginning to betray trust and I didn't really realize it. And I think that's something that lots of lots of business owners and entrepreneurs can get seduced into unintentionally. But it does have serious consequences if you don't get it under control.
Greg Villafana:
All right. Yeah, I think that's all super important. And off of what you were just saying, making sure everything is right at home and having that rock and foundation is super important. I remember I watched this over against one of my favorite war movies called Act of Valor. And before this Navy SEAL team actually goes overseas on a mission, you know, the leader of the team, this is like one of the biggest things. They do it before each mission is they discuss like, hey, like if there's something not right at home, we need to know now so that we can take care of it or you're not going to go. And that's how important it is, because if something's off in your relationship with your your wife, your girlfriend, your kids, whatever it may be, it's going to go it's going to throw everything out of whack. And that's why it's so important maybe not to treat your family like a business. But, you know, you have to keep yourself under control. I say that because I do have my ups and downs or you have to look in the mirror and know that you know the problem and you got to figure out ways to fix it. But it's like when things are good at home, it's like things are good at the business and vice versa.
Greg Villafana:
It's about, you know, having that that balance and keeping yourself in control. But I just wanted to share that because I just saw recently and I thought that was kind of the same thing.
Michael Erath:
That's a great point. And that's one of the things I think. And, you know, maybe we'll get into this a little bit later. But I think all entrepreneurs, especially in the early days when they're starting up, you've got to find a good peer network because. For a lot of your a lot of your listeners and a lot of the clients that I work with, their friends don't get it. They don't understand because most of the friends we hang around with have jobs, right? They don't own businesses. And there is this perception that, OK, you've got your own business, you know your names on the side of the truck, whatever, that life must be great. You're making all this money. Things are so wonderful. They don't understand what the sleepless nights are like. You know how difficult it is to at the end of a day, you know, show up as your best self at home for your family. And if things aren't right at home, how to shop is your best self for your employees and at work. And you've really got to be able to do both. And that's that's a that's a hell of a challenge.
Greg Villafana:
Yeah. I think a lot of us are afraid of what's on the other side. You know, it's like we're afraid of success or something, but might be afraid to have somebody jump into our business or jump into our personal life or jump into anything but. It's just going to get worse as time goes on. Wouldn't you rather just say, screw it? Today I'm gonna get somebody to step into my company and we're gonna figure this shit out, guys. Yeah, they're gonna fold or you're gonna do it at some point. Why not just do it in the beginning? Because there's a lot of people out there that are, you know, dedicated to running businesses. You might be very good at the technician, the technical part, but there's people out there like yourself that really know how to run a business and how to build this up. You're really just expediting the whole entire process.
Pentair Ad:
We want to thank Pentair for supporting the show. You know, as a podcast pool professionals, we know that when you sell products, it's your reputation on the line. And when they are Pentair products, it's theirs as well. That's what Pentair has got your back with their Trade Grade Program, which supports your business and reputation by offering exclusive tools and support for lead generation, attractive product rebates and longer warranties and it unmatched expertise when it comes to accurate equipment selection, setup and service. So to learn more about how Trade Grade protects, empowers and helps your business grow. Visit pentair.com/tradegrade. That's pentair.com/tradegrade or click the link below.
Greg Villafana:
So we're gonna be getting into a lot of things that are all kind of revolving around the book Traction by, you know, Gino Wickman. Can you explain to us, you know, what this book is really about? And all the different things that come along with it?
Michael Erath:
Sure. So I don't I don't have the exact years top ahead, but I would say probably right around 2000. Gina Whickman had taken over and turned around a family business. He was able to to get the business turned around, grow it successfully and then sell an exit, that business.
Michael Erath:
And after he did that, he realized that there was kind of a void in terms of a really holistic, simple system for entrepreneurs to use to help systemized and grow their businesses and run better businesses. And so with the freedom he had after selling the business, he decided he really wanted to try to attack that that problem or that void. And so over a period of I want to say it was about five years through lots of work with some of his entrepreneurial friends back in Detroit. He was able to essentially extract from other books that were out there and other systems and things, kind of a new way of looking your business called the Entrepreneurial Operating System. And it's based on the underlying or fundamental belief that of all the different things you're wrestling with in your business. There are really only six key components of every entrepreneurial business that to the degree you strengthen those six key things. All of the issues you tend to be dealing with on a daily and weekly basis kind of fall into place because those things are symptoms of a weakness and one of these six areas. So that's ultimately with the entrepreneurial operating system is about. And the book Traction is a book about that system. And he really wrote it as almost a text book or a how to book to help you understand how to implement some simple practical tools that will help you strengthen those six key components of the business.
Michael Erath:
What are those six key components? So the six key components. The first is what we call a vision component. And it's really at a high level. It's about getting your leadership team and the entire organization clear on where we're going to go as a company and how we're gonna get there so that the path is clear. Everybody understands this is going to where the company is headed. This is what I'm a part of. The second is a people component, which is really just about how to attract and fill the company with great people and great peoples is defined differently for every business. And we'll talk a little bit more about that later. But it's really about people who share the values and fit the culture of the organization and who have the skill sets or as Dan Sullivan talks about in strategic coach, the unique ability for the role that they play in the company. The third key components, a data component, which is just about really boiling the organization down to a handful of key numbers that give you a pulse on the business, help you predict. I like to say that it's going to like the vital signs of the business, like when you go to the doctor. Right, is just to let you know that the business is healthy or where there may be issues. The fourth key component is the issues component.
Michael Erath:
And it's about really strengthening the muscle of solving issues and solving them at a root level so that they tend to go away. What a lot of organizations do is they focus on symptoms, not issues, and they're constantly dealing with symptoms and trying to just get past the symptoms they're feeling, never unpacking them and really, really solving the underlying root. So the issues keep coming up over and over again. Fifth key components, a process component, which is really about systemizing the business, building your business playbook. So if if I came into work as a technician in a pool service company, is there a playbook you can hand me that walks me through how to do my job when I'm out in the field by myself so that, you know, I'm consistently doing things your company's way and really following a best practice system or he just basically gives me a pole and a truck and some some chemicals and a net that and let me go at it. Right. And so and then the final component, the sixth key component is what we call traction component. And that's just about bringing discipline and accountability into the organization, helping you achieve that vision. So the book is really about an overview of those six key components, why they're important. And essentially two simple disciplines are tools with each of those six key components that will help you strengthen those components and run a better business.
Greg Villafana:
All right. Yeah. Thank you very much for that.
Greg Villafana:
So what was the reason that Traction made such an impact on you at the time that it did? And you remember that first feeling of, you know, what it was. I mean, what was it about the book that really connected? You remember what it was?
Michael Erath:
Yeah. You know, I've I've always enjoyed reading. I've studied lots of business books and I've always enjoyed kind of the science of business. But there were of all the great content that's out there is just very disjointed. And when I remember when I read Traction, it really felt like somebody took the time to create a system that was simple enough that they could really get my arms around it, use it in the business, but also complete enough or holistic enough that it would help me manage all of the various facets of the business. And the whole idea that of all the different fires we're putting out, all the different things that we're dealing with 24/7 as business owners really are more outcomes and symptoms of a weakness in one of six areas in the business that really resonated with me. And I was able to kind of step back from the business and think about which of these six areas in my business to have a weakness that if I can solve that, it's kind of that one domino that knocks down one hundred more. And that's I think we spend so much time as entrepreneurs when we're we're too deep, when our bit too deep in our business. We just spend too much time trying to put out every single fire. And sometimes the fires rotated, just burn themselves out.
Tyler Rasmussen :
All right, agree.
Tyler Rasmussen :
I remember the first time we talked about it and you had recommended it. I'm reading this book. You should check it out. But as soon as I was reading it, man, I I remember feeling like, oh, my God, like this is explaining exactly where we're at. And every piece of this right now. And, you know, we changed a lot. You know, based on that, I remember that feeling of like, wow, this might be this actually might be it. You know, my this might solve everything we're going through right now.
Greg Villafana:
Yeah. And, you know, we'll talk more about it. But when he was talking about the roles and management and things like that, talking about implementers and visionaries, it was just it spoke to us right away. And we think that anybody that, you know, reads the book, like you just said in such a way with all the different diagrams. And it's such a easy read and it's pretty not fundamental in a way that we could have wrote it, but it's just broken down because as a business owner, entrepreneur, you're so busy with a million things that you can glance at it. You know, for an hour or two. And right away it just clicked. You're like, oh, I need to give this all my attention. Right. And that's what we did. No matter how busy we were, we just did exactly what you just said. We let those fires just burn and we're like, you know what? It's more important for us to focus on this and figure all of this out because we're going to eliminate fires and have better processes to put out fires for the future. You know, and all that kind of stuff.
Tyler Rasmussen :
Yeah. I mean, and that's what we want to focus on. Just like one of those portions, I think one of those six topics, you know, right now is just the visionary component of it. But before we get into that, what do your evaluations of trade businesses over the years? You know, what are some of the most common struggles that you see them face?
Michael Erath:
No, I think the the most common that's really more prevalent, I think, in various trades businesses than even anywhere else is something that was captured really, really well in a book by Michael Gerber called it E Myth.
Michael Erath:
Originally, it was called E Myth. And the more current book is The E Myth Revisited. I would highly encourage any of your listeners if they haven't read that one to read it. And what he really. I guess when you break that book down, what he's really surmising is that there's this entrepreneurial myth in America that, you know, all these businesses are started by these just hair on fire, entrepreneurial people, and that that's just not reality, that in reality most of the businesses, these these smaller startup businesses that exist are started by somebody who was an employee in a company, learned a technical skill. There's some sort of a technician and they either found a better way or wanted to work for themselves. You know, like the company or the boss they had and just decided how well I'm going to go do this myself and started the business and in the early stages. So take, take, take the pool service business, for example. You know, maybe you've been running a route for somebody decide you're going to start on your own. You're going to going to build your own routes and start your own business. The magic of that business and the reason your clients love you is because you're the owner. You're showing up at their house. You know, you're your livelihood depends on keeping them happy. So you do a great job with service. And all of those things are great. More and more people start to use you and it starts to grow and all of a sudden you start to hit a ceiling where you really can't take on anymore.
Michael Erath:
And now you've got to start managing accounts payable and doing things that you didn't have to do when you were working for somebody else.
Michael Erath:
And while you may be a great technician, great at selling yourself and your services, that's a whole other area, the business that you may have no skills or background for. Right. And either it becomes this big vacuum or black hole that sucks a lot of your time and energy and starts to create frustration. Maybe you're not very good at the marketing piece. Right. And so being able to generate new leads and whatnot. So that becomes kind of a ceiling that you hit. And what I find with a lot of trades companies is it's very difficult for kind of that that technician to truly start to morph into an entrepreneur and allow themselves to let go of the reins, hand some of those things over to people, bring some people into the organization to execute the day to day so they can spend more time working on the business, less time in the business. And I think that's one of the biggest things that that that younger entrepreneurs get stuck with, especially in the trades. And it's something that this that the book traction, I think really gives you a simple system to help you start recognizing those issues and breaking through, breaking through. And that's that's another one of the things I think that attracted me to the book originally is that. For companies that are not at a scale yet where they can justify the investment and work with a coach, they can still get tremendous value out of spending 20 bucks on the book and putting the time and energy into studying it, using some of the tools. And, you know, at some point they may get to a scale where the value then of bringing in an outside coach is something they can justify. But even even absent that, you can make a lot of progress. Literally just from from the book.
Tyler Rasmussen :
Yeah, I agree. You just kind of nailed a lot of the pool service company businesses for sure. You know, these single pole, you know, businesses that that key piece is the owner and that key piece is that connection to the client. And there's a big jump from, you know, when you're doing by yourself to bringing on two or three people and, you know, pulling your face away from, you know, the company, it's that where the customers are no longer seeing you every day. And then it becomes not. So, you know, it's a whole nother challenge to get to the point of customer service where they they still want to stay with you and not go with somebody else. You know, there's a big jump in. You know, I think you're right. It breaks it down in a way of like at least you understand by, you know, right. Reading the book, you can understand which pieces you may need help with. And you can always find somebody to do those pieces. You know, you can get a bookkeeper, you can get a, you know, CPA, you can get, you know, somebody help with marketing if you need to. There's other avenues instead of trying to juggle everything. You obviously have to like budget and figure out to do all that. But, you know, there's ways that you can add all these things without, you know, overwhelming yourself.
Michael Erath:
Right. You know, to the point of I think the the overarching topic of this particular podcast and talk about vision is if you don't step back and create a clear vision for where you want the company to go, you can absolutely do those things and bring those resources in. But it's just kind of patchwork, right? I mean, it's it's it's duck tape and stuff. And it's not really part of a more systematic approach to how am I going to get to the business? I want to be five years, 10 years from now.
Tyler Rasmussen :
Right. So when you talked about earlier in the book Traction, you know, there is a component called the vision component. That's what we want to focus here on on this episode, which talks about core values and core focus or, you know, a mission statement is another way to say that. We'll get into that for a second. But let's explain why it's so important for everyone in the company to kind of understand the overall vision of the business.
Michael Erath:
Yes, I think there are there are a couple of reasons that that's that's important. And really starting with the with the business owner, there's a there's a great saying that if you don't know where you're going, any road will take you there. Right. And so as an owner of a business and I think this is a fundamental question that the E Myth gets at is. Do you truly have a business or do you have a job, right?
Michael Erath:
And so a lot of people start their business and in essence end up with a job and they're focused on just getting through the week, getting through the month. And there's no long term vision, no long term plan.
Michael Erath:
And so really clarifying and strengthening that that vision for where we're gonna go and how we're gonna get there is key to determining who you need to have in the company with you. You know, you can start to challenge financial resources, access to capital depending on the amount of growth that you're anticipating. But also having a clear and defined vision helps you with employee retention. Right. And so we're in a market now where we have underemployment. Right? I mean, it's the employment rates are as low as they are if they've been in decades. And when employees don't understand where the company is going, what the future looks like for them, it's just a job. Right. And so if they're looking for more money, if they're looking to advance their careers, they're likely looking elsewhere. And so when you can give employees kind of an inspiring motivational picture of where we're going and why this is the the ship that you want to be on, it helps them be more engaged. It helps them. It helps you retain them. And more engaged employees perform better. They do better work. There's there's really three things beyond money that most employees are seeking in their employment. And one is to have purpose in their work. And it's difficult to understand that absent some sort of a long term vision. It's also to be appreciated. And it's to have an have a relationship with their boss. I think if you really can break that down and help employees understand why there's value in what they're doing and what that purposes, which comes back to this vision component, but also making sure you're giving them appreciation, making them feel appreciated and allowing them to have a relationship with the person that they report to. Those three things really create tons of engagement. And there's a stickiness with employees. They just tend to get more engaged with the company and stay longer.
Tyler Rasmussen :
Yeah, sure. I think a company cultures is talked about quite a bit all over the place now. But, you know, you're you're trying to develop a piece that's like connected for the employees, you know, as the main thing that goes along with I think it's overplayed now in a lot of our talks and conversations, like all culture. Culture. Culture. But, you know, establishing something like a vision of what it is is a big piece of of that, for sure.
Greg Villafana:
But I think that there's a lot of there's kind of a bad stigma around here, company culture, because when you think of company culture, you think about working at Facebook or Google or something like that. It's it's much more complicated than that. To have good company culture is everything that you just talked about. And that's having genuine relationships with all of your employees. And everybody knows they're going in the same direction. And when they know they're going in the same direction and they want to hit the same goals that you do, everybody's happy. And like I just said, you're going in the same direction, the right direction. And that's really I mean, to me, anyway, that's what company culture is. It's not, you know, having the gym inside the facility and all this and that. It's like, yeah, that helps in keeping people around. But that's not everything. You can't just give people more money. You can't just give people all these different things and think that you can't have a relationship with them. They want to feel like what they do matters, you know, right. Day to day basis. Yeah, exactly.
Tyler Rasmussen :
Yeah. Absolutely. You know, one of the things I think that's a big piece of this vision component, obviously is the core value.
Tyler Rasmussen :
So we we had to take time to just to establish ours. And once we did, I think there is a big change in a lot of what we did. So before you get into that, though, if someone doesn't understand what core values are, can you kind of break down what those are to a company?
Michael Erath:
Yeah, absolutely. So core values are really kind of a timeless set of principles that guide how you behave, that attract people who are like you or who share the same values. And so the interesting thing with core values, I run into this a lot when I have clients starting with me. And oftentimes they'll kind of when I want to go through a core values discovery, exercise and discovery is really the operative word there. Sometimes I'll get pushback. We've already got core values. We did like, you know, three days in Sedona and figured out our core values. And when I start to test what they've come up with, it's very common that one of two things have happened. Either the way they've designed what they communicate is core values really has more of a marketing spin. If we're gonna put them on our Web site and put them out there, what do we want the public to to see our core values as?
Michael Erath:
Or they've become very aspirational. Right. They'll say these are our values and that's what we profess. But that's not really how we live and show up every day. And so what's important with core values is if you're going to use core values as the they ultimately are intended, it's to help you determine who. As Jim Collins writes about in good to great. Who do we want on this bus with us? Go to your. Do your story about the Navy SEALs movie. If these these guys and girls go into battle and they don't share the same values, they're probably not the right people to be going into battle with. And if you look at your business has kind of gone to battle every day because in reality, that's what you're doing. Who do you want to have around you? Who's gonna have your back? Who's going to stay with you in the fight? It's typically people who are connected with you at a very deep fundamental level around core values.
Michael Erath:
And so what I tend to ask companies is who was really kind of let go of what you have thought your core values are? Start with a clean sheet of paper and work through a discovery exercise to really break down and understand what your true values are. They already exist. There's a reason the two of you guys worked so well together, got along so well. And since you've gone through that, my guess is it's because at a very fundamental deep level, you share a common set of values that draw you together like magnets. And when those are very clear and they're part of your day to day life and how you speak and you you speak in terms of your core values, just like a magnet. If the poles line up, they attract people. But at the same times, they can also expunge people or push people away who don't fit. And if you've ever had a situation, you've worked with somebody who just doesn't really share your values, it tends to just feel off. Right. And it's just not a comfortable, great, great relationship. One of the two of you usually go somewhere else, right.
Greg Villafana:
And that's really well said, because I feel like prior to reading traction, it was more of like looking at what, you know, Zappos and eBay and Nike and Apple, like what are their core values, what is their mission statement and how do we manipulate it, be us? How do we get through this as quick as possible as we know this as a box to check off. But getting through traction, I think it became so clear that when you're choosing your core values and what your mission statement is, that it just became so clear that you need to feel it. And this being posted up in your office or wherever it is, every day you look at it. It's meant to hold you accountable and you should feel it. When we got done with ours, like we felt that's who we were. And there was some people that were not in line with those values. And we couldn't say that these were our core values. If, you know, eight out of 10 people, you know, felt, you know, the same way as these core values. So I think you really have to feel it and connect with it. And, you know, no, it like the back your hand, like you were just saying you were over it. Anderson manufacturing the leak detection company Yeah. And you said he just recited it like nobody's business, right?
Tyler Rasmussen :
Yeah. Here. And he went through each piece and like, why?
Tyler Rasmussen :
It was very impressive. I like, you know, to understanding the business that well and everybody be aligned. It's pretty. You're right. It's it's attractive. It brings that you connect with that. And everybody has worked as somebody in their lifetime that just doesn't fit or you're working for somebody else. You just in disguise. Doesn't this guy or girl does not fit like what we're trying to do here. And it's always day to day, buddy. You hang your head against somebody like, why are you even here, man? Like, you don't want to even be here, but you're just here 'cause you need to check out, go be somewhere else or be negative somewhere else. You know, it's it's hard. When I worked for the vitamin company and there's two people there that worked it and I'm just like, I don't mean like, don't talk to me. Just go talk to yourselves because you're so negative and you bring all this like you have to be here anyway. You might as well make the best out of it. But that's the same thing. If you're not connecting, though, and if you're employees together aren't connected, you're just gonna butt heads all over and over again about every little issue or every piece you're trying to accomplish. Yeah. And we had a line that it makes so much of a difference.
Michael Erath:
Yeah. And you know, you brought up a good point. You talked about it. Was it Anderson Manufacturing that the owner, when you were talking to him, just like they were top of mind, proud of the hard part of conversation. Right. And the importance kind of at a first level. It's important that people can memorize your core values so that they can use them in an everyday language, because if you're going to use core values as a way to determine who's a right fit to be in the company and who's not. Then you've got to be able to tie behaviors to the specific value. And if you're saying it one way and I'm calling it something else and you're saying it another way, that creates confusion, right. That's complicated and it's difficult for people to understand. I always tell my clients, try to write. Your core values. First of all, use your own kind of vernacular. Right. So, I mean, I've had I've had clients in the trades that, you know, one of their core values is get shit done. And like, that's the code on the wall. It's fine. Like, if that's the way you guys talk on it, do that.
Michael Erath:
Be proud of it. Because if somebody comes in and that's offensive to them, they're probably not going to be a great fit anyway. And that's what you want your core values to do. You know, other people will will soften that and say it differently. And that's fine. It's got to be unique to you, but it then allows you. So take that as an example. If that's one of the core values and you've got a guy in the field who, you know, solves a problem on his own, stays over to get the work done, to make sure the client's happy, then you can come out like that's an example of what I mean by getting shit done. That's exactly what we're talking about. That reinforces to them how they behaved in a certain situation and how that ties to a core value, which ultimately we want to be able to evaluate them against kind of on a quarterly basis to help them understand how their behaviors align with the values. So it's really important when you arrive at your values that you've written them simply. Everyone can understand them. People can remember them and connect them to day to day behaviors.
Greg Villafana:
Can you give maybe an example for people don't know what these words might look like, maybe give an example of one that you might know?
Michael Erath:
Yeah. So, I mean, my four core values at the Traction Hub are take ownership, be resourceful, have a thirst for learning and be fun to work with. And when I went through this kind of discovery exercise, my wife helped co-found this business with me. We went through it together with with a key employee. What we really started to realize were the first one take ownership to me in the way I explain that to potential hires or people that are joining the firm is that we we make zero excuses. We take 100 percent responsibility for what's going on, for what we're tasked with. You're never late because of traffic. You're late because you didn't leave early enough to allow for traffic. Right. That's taking ownership. Really embracing your role. Asking the questions you need to ask to understand what's expected of you. If the expectations are clear, all of those things are examples of taking ownership. And so we will talk about, you know, what the absence of that value looks like and why that's so important. Being resourceful, that's something that really for me as the founder, I will always be frustrated with people who aren't resourceful. And so I just I can't have them working for me and in the kind of work that we do. We have to kind of improvise and think on our feet and help clients solve issues on the fly. So we have to be resourceful and we have to for things that we may not have specific experience with, be able to go find the right answers to help our clients. And that's how we need to show up with each other at work. 4 Be fun to work with. Life's just too short. You know, I like to have fun with my clients. We joke around. We try to make our sessions a lot of fun. And I don't really want to spend my time with people who can't have a little bit of fun.
Greg Villafana:
Right now I'm just thinking back. We're like choosing these words. We went up to Flagstaff with kind of our management team to get this all sorted out, figured out. And it's a good time. But I had picked a word that I mean, we all cracked up and probably had it was must've known that we were with a good group of people, but I chose a word for them and it was obedient.
And we're just all died because they're like, what do you think? We're like dogs here. Let you tell me to say, give me a treat. Whatever it was, we always have a good laugh about it.
Greg Villafana:
I mean, it was years ago, but so if you're doing this exercise when you get through that direction. But pay attention to the words it used.
Michael Erath:
Yeah, that's that's that's not a good one.
Michael Erath:
Now, you're right. It's always important. And really the entire you know, when we talk of the vision component, the entire vision statement that you write out, you really need to think about who your audience is. Right. And these things are written not just for the owners of the company, they're really written for the employees. And so you want to make sure that you write things in a way and you say things in a way that your audience will receive it. So sometimes it's not how I as an owner would understand it. I need to write things in a way that my employees will understand them and communicate them that way because it's as an owner, you've got to meet them where they are and not expect them to be able to adjust to how you particularly say things. Right?
Greg Villafana:
Right. And I think it's so important that I think this is where we are just talking about how the book really has. You understand all of this much more clear and how you've just explained it. But we started once we figured this out, you you're now setting an example for the entire team. And when you're doing interviews and now that you have core values in a mission statement, those are now a part of your interview. So when you're looking for the right people to be on your team, I mean, especially if you've gotten to a point. You're letting people go because they're not aligned with your core values that that is. That's how I don't say complicated, but that's how useful this whole entire exercise is. And being a part of your business, because it's now, you know, exactly the type of people they are looking for. Because if you're honesty, integrity, these different things. If those truly are your core values, you're going to be. You look at the world completely different. When you get your car washed, you go to Chick-Fil-A, you go, you know, anywhere, you start looking at people completely different and you're like, you know what?
Tyler Rasmussen :
Like, Chick-Fil-A is a good one. Oh, yeah, I know a good one.
Greg Villafana:
Is there like feel like after we did that, like just the world didn't look the same anymore. It's really cool because you think that you can just, you know, find a pool service person that, you know, wants to leave another company. But that's not the case. You're you're right. We'd rather look for somebody that has more those core values. And if, you know, working hard is in their DNA, then they'll be able to adapt and learn what the actual job is. Right. So just want to share that. You know, it's it's used all over the place. It's not just something goes on a Web site or. Right. You know, inside your office. This is something that is kind of the living spirit of, you know, everybody.
Michael Erath:
Right. And, you know, it's interesting. So I got my first pass at this with clients is I want to get my clients to have evolved a point where everybody's memorized and knows the core values and can talk about them.
Michael Erath:
But then beyond that, I want to see him get to a point where everybody's internalized them. And I think that's a big difference, is when they've really started to internalize the core values. And one of the things I like to do for fun with companies I work with, usually about a year or so into the journey together and they've rolled out core values they've been through. All of that is I'll ask them if all of the employees, if they believe all the employees know the core values, then usually they're yes.
Michael Erath:
Or most of them say, great, let's pick one and column and we'll put them on speaker phone and call them while we're in one of our strategic sessions.
Michael Erath:
Sometimes they'll, you know, make some wagers as to whether or not they're going to get them right. But it's always kind of fun to put something on the spot to see.
Greg Villafana:
Yeah, that's awesome. I think you're breaking up. I can find exactly that cell signal. And here go on our Web site real quick. Yes. Marisa's, give me a sec. And we're going online, find this flashcards.
Greg Villafana:
So, you know, in the book, it states that once they're defined, you must hire, fire, review, reward and recognize people based on these core values. You know, this is something that was very clear to us after we built ours. Can you talk about the importance of living by those core values?
Michael Erath:
Yeah. You know, when you when you think about what most organizations do, when they need to hire somebody, they really get almost. So specifically focused on finding somebody who has the right skill set or the right experience or background that. If they meet those criteria, we sign them up. They've got a job. They start working and we've not really put them through the filter of core values yet. And so what happens is we end up with people in organizations who are good at what they do, but they're just nobody likes working with them.
Michael Erath:
They're the jerks in the company and they're really toxic and they're affecting our culture and other employees. And sometimes they'll run off other employees who are great employees and great fits because we're not dealing with the cultural misfit of those individuals. And it's hard to smoke out because we don't have clear core values to uses as a measuring stick.
Michael Erath:
So so once the core values are clear and we know how to articulate them, what I've always done when I hire for a new position and we did this in our prior company is literally in our job, just are in our job posting. We will start by laying out, you know, ABC company is a a company that's fully focused on core values. This is what they are. This is what they look like. And I'll say in the job posting, if this feels like a great fit, you're gonna do really well here. You're gonna love it. But this if this just isn't you, please don't waste your time or ours by sending in an application or resume. Right. And then I'll go into what the job is. I want to make such a clear statement upfront that if you feel like you know the things I described as our core values, like if that's you and you're going to you're going to do great here, you're gonna love it here. We're gonna have a lot of fun together. But boy, if you're not, we've got a system in place that'll smoke it out, you know, and it's not going to last.
Greg Villafana:
Right, it's almost like you want to put in there, like we're totally serious.
Greg Villafana:
We then copy this and paste it in here to my job posing like we're dead serious. Yeah.
Michael Erath:
And then the the the interviewee should feel like in the interview process, like they should come prepared to talk about core values and to share examples. And one of the nice things I think about, like, you know, if I go back and think about my four core values, even somebody who this is potentially their first job, they can look at these values and should be able to share stories with me or examples from their life of how they've lived these. All right. So take a kid maybe fresh out of high school. So so they take ownership or, you know, be resourceful. You could talk to a kid coming out of high school looking for a job and ask them to share some examples of when they've had to be resourceful. And, you know, it may have had something to do with a class they were taken that they struggled in and how they got past that and how they used resourcefulness to kind of find ways to get the help they needed to get through the class. Great. That's that shows that they understand the value and that without any prodding, they've actually lived that value in their life. So they're probably going to live working for me, too.
Greg Villafana:
Right. And if you know, we're talking about this high school student, if had left three references and one was his coach or something or, you know, teacher, family member or something. Now, I mean, we never really called too many references unless there was other pool companies. But it's now clear in talking with you that if you were to talk to these three people and if those stories were all matching up, like I think this is this is the person we are looking for, because each one of these, you know, references is saying just about the same thing about their personality and their work ethic. Right.
Tyler Rasmussen :
So, yeah, I think you hit a key piece of the puzzle industry, too, just like if he does these three things. Good. Like bring him on. You know, when you look through different threads or Facebook groups or these things, people are always complaining about these certain issues. And I think a lot of what they're complaining about is because they hired the wrong person. And you can clearly tell that this guy was good, not just for servicing Paul. This guy was very good at servicing pools. He does everything you supposed to do. And every client, you know, as far as the pool cleaning aspect, is happy. But when he comes back to the office, he's cursing, throwing things around, pissed off in his day, whatever it is that like doesn't connect. And then, you know, that makes the owner uncomfortable, makes other people working with that guy uncomfortable. And a lot of I think the biggest piece that I got have traction was like, you know, that almost that component of this guy, even though he is so good at what he does for this piece of the job, like he's hurting us in so many other ways that, you know, now we can see it kind of open your eyes up to like, wow, like I I see why that person is so toxic and why every person on my team complains about that person every day when before I didn't see that. Or maybe it just was like army. I just put up with it because he gets his, you know, 60 pulls down a week and I'm happy with its results. Right. But you don't see the overall piece of that. And if he does not fit here, she. Sorry, it does not fit that like, you know, piece, then it's it's difficult to have someone on your team like that.
Michael Erath:
Yeah. And I think for any of your listeners who really do have a vision of scaling and growing their business into something beyond just them and one or two other, you know, pool techs with routes, this is something to fix early because fixing it after you've scaled the business is a monumental challenge, almost impossible and very expensive.
Michael Erath:
Very, very expensive.
Tyler Rasmussen :
No way she would have found it in the beginning because it was we had 400 pools, but we found it. So that piece was very, very hard. And we knew we were going to change over a lot of stuff. Right.
Michael Erath:
So and, you know, that becomes when you get to that point, that becomes a big reason that people will avoid dealing with core values, because at that point, the pain of going through and kind of cleaning house like you may have needed do means that you're going to have to work a lot longer hours and pull a lot of that weight. So you tend to just overlook it and not really attack it. And sometimes you've got to slow down to go fast. Right. Sometimes you've got to slow down. Deal with some of these fundamental things so that when you start to put your foot on the gas again, it's almost like shifting gears on a stick. Right. You you've sometimes got to got to breathe off the throttle a little bit to get to the next gear.
Greg Villafana:
Most definitely. And I think in our industry anyway, a lot of people that would apply for these jobs, it's like they knew these questions were coming. And I think you really have to take the time to make that step by step checklist in the questions that you're going to ask and actually calling those references, because I think if you really looked at a number, you know, right by you that showed how much money you're investing into that person, you know, in a month. And if they worked out, didn't work out, you'd have you might look at it a little bit differently because there are so many. The majority of the time, you know, just being honest is that we had a list of questions, but. You know, they could, you know, ace an interview because a lot of it was based on, you know, swimming pool stuff. Yeah. And that's what we thought maybe at one time was the biggest battle, but we didn't, you know, press them because maybe you might be scared or we're scared of, you know, losing this person like person knows what they're doing. Like, don't say the wrong thing. Right. I mean, like, we need somebody in here, but it's like, don't be desperate, I guess, because there are times when you feel like you're gonna be desperate. But if you hold hold out for that right person, then that's one less thing to worry about, because now it's like you were worrying about this and I got to worry about the person that's doing it. If they're going to show up and show up on time, are they gonna be toxic during meetings? And all these different things are so many things that, you know, go into it and God forbid, people start leaving because of this person that's there. Right. Right. They're tolerating. Exactly.
Tyler Rasmussen :
And so it's obviously easier said than done in our business. You the summertime. You got all these pools that need to be cleaned and you're trying to figure out. But, you know, sometimes it is better for you as the owner to go take care of those than bring on somebody that's gonna be that toxic. You know, he created a whole entire repair division for one guy because we thought he fit what we needed so badly. And he did so like, you know, when you find those like whore pieces that you just know and we had to change a bunch of our business to, like bringing this person on and buy a van and do all this stuff. But like, we knew that that guy would change the way we are doing things, you know? So when you find those pieces, you got to do what you can to get it. Get a hold of him.
Primate Ad:
You know, hey, Pool Chasers.
Primate Ad:
By now, you've probably met the awesome guys at primate pool tools either at a trade show or through Instagram. I'll tell you what we love what these guys are doing and the quality product they bring to the market. They're the makers of the first carbon fiber pool poles in the industry. Their poles use high quality motus three grade carbon fiber and are five times stronger than premium aluminum poles, which allows them to be half the weight and makes it easier to navigate through the water. Primate offers three models of poles in various sizes as well as single like extensions that are compatible with any pole model. This will allow you to extend your pole up to 40 feet plus if you ever need to replace any parts. They're poles are modular, so you can do so individually. And best of all, they're handmade here in the good ol U.S. of a if you aren't convinced already the primate team backs their product up with one year warranty that covers any and all manufacturing or workmanship defects. These poles are truly the real deal, so try them out by going to primatepooltools.net And don't forget to enter pool chasers 10 at checkout for $10 off. Click the link below to find out more.
Greg Villafana:
So if somebody needs to, you know, build from scratch or rediscover their core values, what do you suggest? You know. You know, is there a process for all that?
Michael Erath:
I always recommend that you kind of start with a clean sheet of paper. So, you know, you said possibly rediscover their core values. Really starting the process, assuming you have none. If you haven't, you haven't figured that out yet. And what I typically like to encourage people to do, and depending on the size of the business, you know, really getting kind of your key leadership team together. So who are kind of the the handful of people that that help you run the business from the helm of the ship? Get them together, take a couple of hours and just carve out some time where you can really unplug and be disconnected. Right. We can do this with a flip chart, a whiteboard or even just a notepad and a sheet of paper. If you have to go that route.
Michael Erath:
But what I typically like to ask you to do is to think about if you could if you could take three people, two to three people who either work for you, have worked for you, or if you have to kind of look outside the business, look outside the business, but two to three people that if you could clone them and create more and more people who were exactly like them, you could absolutely dominate your competition and just dominate your industry. Who would those two or three people be and thinking not so much about their skills, but thinking about just the character of those people. Back to again to your to your SEAL team and an analogy, right? Like, who would I want to go into battle with if I'm really going to go on a journey with my company? Start with a list of those people. And so let's say the three of us were in the room together doing this as kind of the leadership team of our company. We're going to get, you know, somewhere between six and nine names, put them up on the on the board or on the flip chart. And then the second pass is to think about those those names, the ones that resonated with with you and not on a per person basis, but just make a general list of all of the qualities, traits, characteristics of those people that are why you put them on the list and.
Michael Erath:
Usually when I do this, I'll come away with a list of 20 to 50 words, right, that are just all these different descriptors of these people. And when you step back and start to look at that list, you'll start to see some trends and patterns develop with words that kind of go together or fit within the same theme. And so the way I've found kind of best to start breaking that list down is I'll just use different colors of markers and I'll go with the team and we'll start going through the list. And so let's say the first the first word is accountable. So maybe I'll put a red mark. I accountable and I'll just go through the list and I'll ask the team, so what words go with accountable when you think about people who are accountable, what other words on here or phrases on this list kind of resonate with you? And so you have six, eight, ten words marked marked in red. I'll go to the next word and you may maybe blue or whatever other color. And I'll essentially just kind of parse that list so that everything on the list is assigned a color or as we go through it sometimes will realize there are words on there that aren't truly core values. They're more learned behaviors. And those really don't belong in there. Those are those are more things we learn over time.
Michael Erath:
This needs to be like just what what's in their DNA. It's just how they're wired. They can't help but be this way. So once I've done that, I'll typically have my teams take a break and I'll go back and I'll rewrite the list, but I'll group the words together based on colors and I'll just draw a box around them. So I may have, you know, in that box where I started with accountable, we may have eight or ten words in that box. And so I'll ask the team. Now we've got like four boxes with all the words compartmentalized. So there's four common themes in this list somewhere and there's where you're four core values live. And let's take one box at a time and let's think about if there's a word or phrase in that box that really defines the essence of what that theme is. Or is there another phrase that comes to mind now that you see those words together that would best explain what that value is, because all of those words kind of tieback to some underlying common value. And so the outcome of that is that you'll have typically know if it's three, four or five, sometimes six core values based on those themes. You'll walk out of there with some phrases or words that start to now really explain what those values are and clarify what they are.
Greg Villafana:
Very good. Thank you. And this is essentially branding as well. Right. This goes very hand-in-hand with, you know. Because it is a piece of your marketing as well. I mean, you truly need to believe in it. But, you know, the brand is kind of this image more online than ever that people are seeing. So, you know, that's something to think about as well, that, you know, when you're trying to do brand identity, this is a vital piece of that as well.
Michael Erath:
Sure. I think when you start getting into marketing, anything in your marketing that's not genuine to what your values are, people are going to smoke that out. They're going to sense that. And it's going to make you feel, you know, disingenuous and not authentic.
Greg Villafana:
I think you nailed it, though. I don't remember ever either seeing it in a book or whatever. But the company you talked about and they're one of their core values, their mission statements get shit done. I think that's really cool because you can't you can't fake that if that's what you decided it to be. You felt you felt something. You know, for that phrase and like, why are you going to try to fake being anything else, especially if, you know, you're here in the day to day business? If you're not acting like somebody that's getting shit done. Then it gets even worse because it looks like your B.S. and well enough.
Michael Erath:
The rest of the company is filled with people who do that. And that's just how they're wired. Then the people who show up and are that way, it's going to it's going to smoke them out. It's going to feel weird for them. They're not going to feel like they fit. And when you really embrace and live your core values and you're and you're proud of that, those people who don't fit tend to almost self exit. Right. It's uncomfortable. They don't stick around very long. And oftentimes when they do that, they're not your problem anymore. Right. There's no H.R. issues. You know, them not fitting the core values just was enough to get them to go away.
Greg Villafana:
Yeah. I'm curious, this is pretty random, but do you watch sports or anything? Sure. So when you own a business and you start to figure different things out, you start to look at sports teams, teams, coaches and all these things much differently. Is there a sport that you kind of look at specifically that doesn't really get away at sort of a coach or a GM managing all the employees, the team, the players, the coaches?
Michael Erath:
Sure, I think so. In a more global sense, if you start to think about take college football as an example, you know, who would you consider one of the kind of legendary legacy programs? They're always great to be Alabama. All right. So Alabama comes up frequently. Yeah. So how many what what percentage? Let me ask it this way. What percentage of Alabama's starters do you think they lose every year? Seventy five get serious turnover issue, right? Yeah. And still good. And how do they continue to be great? Right. They they have they're always recruiting. Right. And so that's one thing to think about. Right. So if you're if you're running a pool service company and you're not always recruiting or trying to be as frequently recruiting as you are selling, you're going to limit your ability to grow. Right. So they're always recruiting, but also they have a very good system to determine who's a right fit. Right. And if you if you talk to Nick Saban, he's all about values. He grew up under Bill Belichick. Right. So how did he react? And and so, you know, again, very values focused. And it's not for everybody. Right. Their particular values aren't. But that's what it's about. Right. And so then they bring these players into a great system that prepares them for battle or prepares them to perform. Should our companies work just like that, we should always be recruiting.
Michael Erath:
We should have a great way to filter who are gonna be the great players on our team. How do we how do we attract them? How do we bring them into a system and have playbooks and our business really built so we on-board them while we bring them into a great system. And then we have ways to measure their performance to ensure that they're performing at a high level. Right. And so it is very similar with with your business.
Greg Villafana:
Yeah, I think that's a great example. I mean, they do they do such a good job that, you know, we could probably figure out without ever seeing their core values or anything just by the the the focus that the team has. They have just the right amount of fun when they're in the locker room and they know how to separate, you know, the fun from, you know, going to war on the football field. It's like they take a loss. They they just said we didn't play our best today, but we're gonna bring it next time. They're not holding any grudges. They can get past that real quick. And I like Formula One, for instance, been watching the newest documentary on Netflix. And it's really good because these teams have very little budgets. They're just getting they're just getting beat all the time. They're not even close, but they're just they're like, dude, we're getting like better and better every year. You know, it's it's very small, but we're getting better each year. And it's just like the head of these teams has to keep the whole entire team intact and keep them energized and to be, you know, better. It's like it's not all about money. We can beat them through our our personality and our, you know, being resourceful like you were talking about and all these different things, you know, it's so much of it is mindset. And if you put yourself in a mindset that people are better than you or you're not capable of doing something, then it's like you're probably going to go in that in that path. You're gonna go that way.
Michael Erath:
We'll even hear you describe that. Wouldn't when you think about these these underfunded teams that are trying to compete with the likes of, you know, Mercedes and BMW and. What's really driving them, if you think about it, is everybody in that team has bought into a long term vision and because they all see the destination where they want to go and they want to go there together. They're willing to endure. They're willing to stick with it. And to your point, they're kind of measuring progress and they're seeing that we're not there yet like we're seeing into the sports analogy. You know, we're here to eventually win a national championship, but no new coach comes into a franchise or a program with the expectation you're going to win next year. Right. And so what's that vision? What's the timeline? How are we going to get there? What do we have to start doing now in order to one day when the national championship? Right. And so just starting to build those pieces slowly over time.
Greg Villafana:
Right. And it's crazy because there's an interview where Lewis Hamilton, which is insanely good, is my favorite. But he knows how many people work for Mercedes and especially for the F1 team and even down to what the logistics people do in order to. It's like it's not the only reason we win is because everybody here is doing 110 percent every single day. It's not just me. It's these 1000 people that are busting their ass every single day. And for the person in the limelight that everybody knows his name. Nobody knows the guy in the warehouse or, you know, working on the car. Nobody knows their name. But for that person like on that stage, you know, when that championship every year, like knows that like that must be really just embedded in their DNA. And that's what it takes. Think a lot of people should might not necessarily like sports, but it's such a it's such a good thing to look at. There's so many good there's so many good takeaways when you look at a very successful sports team or racing team or anything like that. The only reason they're as good as they are is because, like you said, they've really they bought into the you know, what it is that we're trying to do here.
Live Podcast Long Beach, CA:
Hey, everybody. This week is the last stop of our live tour, which is in Long Beach, California. We're gonna be discussing in 1099 independent contractors and W2 employees with a goal to help everybody define each one and what steps to take to transition somebody to an employee if that is what is needed to be done. We will have three incredible pool professionals on stage with us for the conversation, all of which have been on the podcast before. Rich Gallo, Javier Payan and Dustin Anderson. This is a hot topic right now, especially in California. So you don't want to miss it. It's this Thursday at 9:30 at the Art Theater of Long Beach. It's right down the street from the convention center directly after the first night of the Western Pool Spa Show. They do serve beer, wine as snacks there. So coming out with us in hear, a great show. Get your free tickets by going to poolchasers.com/events or click the link in the right up below.
Greg Villafana:
So go back away from the sports stuff for a second. So the book also suggests, you know, waiting at least 30 days before rolling them out to the entire organization. Can you talk about why it's important to make sure that, you know, they truly are your core values?
Michael Erath:
Yeah. I mean this So it's the kind of thing that they they're so important to get right that you don't rush this. And oftentimes with the clarity it creates by kind of stepping back and just giving it time to settle in and sink in to really get them right, to get him phrased right, to get all of the language around. How are we gonna explain them to get all of that right? It's not something you can rush. And so what I like to think about us. Think of it as kind of a spaced learning experience where, you know, get together for a couple hours, take that first cut. And if you get him 75, 80 percent of the way there, that's good enough. Go back and work and just kind of start thinking through an evaluating based on where we ended up with our first kind of past of the discovery exercise, how do we define of how do we say I'm a little bit better, how do we communicate them in a way that really resonate with people? And so that's why I think it's sometimes a disservice to golf on a two or three day retreat and come back and figure out you think you've got it nailed. You still have to give yourself some space and some time to to let it sink in and let it let it really kind of come together.
Tyler Rasmussen :
Yeah. You roll on something that that you end up you know, you do this big extravagant thing and then you're like, yeah, we don't I don't really like that one.
Michael Erath:
That's the worst thing you can do from Floyd's right is here's our core values and really push that. And then 60 days later, like crap, we'd for change in this one a little bit. And, you know, I had to pull stuff off the walls and there of these was always smell good and right, dude, man, you just to do it. And you were up there with us. All right. Well, let's see, dear, to your point.
Greg Villafana:
And I know I was like, say, I eat my own dog food. Right. So I I had a fifth core value for a while, which was do the right thing.
Michael Erath:
And the more I started really challenging myself and the core values for the company, at the end of the day, that's for me, that's permission to play. Like if somebody is not doing the right thing, there's no questions asked. Like that's a game changer. They're done. It's over. And so I didn't. I felt like that's that's such a such a permission to play thing for me that it wasn't the fifth core value. There were. Right. Right. And some of those are the kind of things that kind of come over time. But it is it is confusing to employees if you're constantly changing them. And what you never wanted them to start feeling like is this stuff is just the flavor of the month.
Tyler Rasmussen :
Exactly. Yeah. And so I really wanted to put that question in there because I I I feel I get it is everybody gets hyped and super excited for it. And then, you know, we were careful to do this. You know, luckily, I think you had said maybe we should just wait or something. I don't know how that conversation happened, but, you know, we tried to. Yeah. Everybody gets super excited about it. And then you don't want to, like make sure you wanna make sure that they're actually what you want up on your walls and and try to live your business like.
Greg Villafana:
But I think like we just talked about, we had to we had to digest it and. And really be those people for that 30 days and it should come naturally, we were already those people that we had in our core values, but it was much more anytime a situation won't come up. You know, if one of them was, you know, making doing the right thing, it's when things would come up and you might get lazy and not do the right thing. It was like, can I keep this, like, fresh on my brain? You know, 30 days when stuff comes up, like, I'm going to do the right thing. I'm going to make good choices. I'm gonna do everything honest. I'm gonna be transparent. All these things that way. You're not just like you said, come back down the hill from a three day retreat. That's I were super excited, guys. Here it is. We got we got signs going up and everything. It's like did let it like let it, you know, sink in. It's it's more for your entire team and less for, you know, branding and marketing opportunities, you know, because if it doesn't work on that team, it just makes you look really silly. So what is the best way to roll out your new core values to the whole entire team?
Michael Erath:
It typically needs to start with some sort of a core values speech. And it's it's a it's a presentation to the organization.
Michael Erath:
I've seen these, you know, companies will get everybody together for lunch or do some some sort of a kind of all hands event doesn't have to take all that long. When I did this in my own company, what I typically would do and I would go back to this every quarter to kind of bring it back to to the front for employees. But the first one, we actually we all went to a pizza shop in town at 18 employees at this time. Then they had to go to a private banquet room and we just ordered in a bunch of pizzas. And I just kind of stood up and started talking through the core values for each of the core values. What I did is I gave a couple of examples of what the core value look looks like when we live that out at work. And I try to use specific context and give some examples of people who had done things in the company consistent with with that value. I made sure the definition was really clear and simple. So this is this is what we mean by it. But then I also gave examples of what it looks like when the value is absent, when somebody shows up who doesn't embrace that value because people tend to understand the context better. I think when they can also see the negative side or the anti value to make it more, more real for them. So the first time I kind of went through each of the core values and I did it as part of a little bit bigger explanation to the organization of what this operating system was, what iOS was all about. So just high level.
Michael Erath:
This is kind of where we're going as a company. And one of the first foundational things we have to do is get our core values right. And so we've spent a lot of time discovering what they are. This is this is what our core values are as an organization. And I'm communicating them to the employees, making that clear what that grew into over time.
Michael Erath:
It was when we'd come back to them on a regular basis every quarter. And when I call a state of the company speech, and that's something that all I have all my clients doing every 90 days, just getting the company together and going over an updated vision, but also always going back to core values is I would open the floor for people in the company to kind of share core values, call outs for other people in the organization. What was really cool is the first time or two it was a little awkward and people were a little hesitant to speak up. So truth be told and a couple of plants in the audience just to prevent like crickets because that was that way.
Michael Erath:
That's all. I would not go off well.
Michael Erath:
But what happened is they started to they started to get it and they started to get comfortable. And the coolest thing was when you start to see, you know, a guy from the warehouse calling out somebody in production for having done something that helped them out. That was a great example of live in the core value. And so when I can shut up as the owner and they start talking about core values amongst themselves, that's that's gold, that's insanely power share because they usually don't you know, it's one of those things that they're just like kind of sitting in the back seat, like waiting for somebody else to do something.
Greg Villafana:
But if it's, you know, very consistent and it's real and people start stepping up like that, like and what the hell could be sweeter than that?
Michael Erath:
Right. And that's why I said that that's kind of the difference between internalizing values versus just memorizing values. Right.
Tyler Rasmussen :
Well, thanks for sharing all that with core values. In another piece I think of that vision component is is the core focus your mission statement. Can you kind of just to find that piece and how it's a little bit different than the core values.
Michael Erath:
Yeah. So so kind of the second component of building out your vision is, is what we call in EOS is core focus. And this comes from a concept that was originally written about in Jim Collins book, Good to Great. He writes about it as hedgehog concept.
Michael Erath:
And this is a slight variation of that. But the core focus is really based on. On the overlap of two things, so why do you exist as a company? You could that can be a purpose. It can be a cause. It can be a passion. I always try to encourage companies I work with to to try to get to the passion. Right. And sometimes it's just not there. And we end up, you know, what's our purpose as a company? But when you can really get to passion that starts to ignite people, it starts to really, really engage on an emotional level, your employees, when they can associate with your passion or why you exist. And then the second side of that is your niche. And as I grew up in North Carolina.
Michael Erath:
So if you guys say niche, I'm sorry, it just doesn't work. Well, it doesn't roll off the tongue.
Michael Erath:
Well, so I am a niche guy and it's a niche, but it's it's what can you be the best at? And that can be the best in the world, the best in the market to serve. But what is the the sector within your industry where you can absolutely be the best? And I do this with companies in all different different types of industries, but really getting very specific about how you define the space within your industry, where you're going to stay laser focused, you're going to go a mile deep and an inch wide. Instead of trying to go an inch deep and a mile wide with lots of other distractions and other things. And so once those two things are clear, then I think you can really begin to execute. So when I think about my current company, the traction job, our passion is really helping entrepreneurs achieve their dreams. It's as simple as that. Right. And so what we get really excited about is for myself or one of our coaches when we're working with a client and we get really clear on for the owners and for the leadership team. What is the big dream they have for their business? And when we can help them get to a point where they can start to see it coming to fruition and they can start to feel like they're realizing it. That's that's beyond money for us. That's just that's a fantastic place to be because we've helped somebody get there. And this is what we're passionate about. And so that helps us really clarify everything we do as a company ultimately has to be focused on that and is achieving that passion or satisfying that passion. And when we think about our niche in a very broad level, we can say, you know, business coaching.
Michael Erath:
Right. But that's a huge, broad niche. There's thousands of people out there that are in that space. So we have to start thinking about, well, inside that niche, inside that space, within the industry of business coaching. What is it that we can really be the best at? And so as you start to narrow that down, you know, your leadership team coaching. Okay. Well, there's lots of different types of leadership team coaches out there. For us, it's the entrepreneurial operating system and value added services. But everything related to EOS, we're going to be masters at that. We're not going to worry about other systems or other things. We're gonna be absolute masters of EOS and then things that we can add value to companies that are using EOS. And it's just gonna be laser focused on that. Early in my career, which is common for I think a lot of entrepreneurs in my career of doing this, I kind of got drawn into a one on one CEO coaching and like lots of other types of coaching that were outside of my niche and they just they were distractions. It's not what I did every single day. So I was never going to be as good at it as somebody who did it every single day. And I was just I was saying yes to too much. And getting really clear on my nerves just allowed me to start saying no to things that I was never going to be truly great at. So that I had more time and capacity to focus on devotion to what I can be the best.
Greg Villafana:
But that's really good. That decision making can be really difficult. Sure.
Tyler Rasmussen :
Yeah. I think in the end the but bug geno calls that like the shiny stuff. Exactly how you can eat it. Stuff looks nice and good. You know. You might bring in some money, but it's really distracting from your real main passion right now.
Greg Villafana:
And that's inevitable. That's coming.
Tyler Rasmussen :
Yeah.
Michael Erath:
And you know, you think about, for example, you know, companies in this space light like most of your listeners. So you've got a route and we've got homeowners that we've built a relationship with the trust us. Sometimes it can be distracting to start thinking, well, gosh, you know, how do we get more share a wallet from these particular homeowners? What if we started getting into pest control or this other stuff? Well, I get it. Those are growth opportunities. But if you haven't saturated the market doing what you're the best at, and if you if you run a great pool service company, you're a lot better off. I believe selling a service that's already proven and that you have a great track record with to new customers then going and trying to sell some new product. But you're not tested and you're not proven. And my guess is and part of this idea of shiny stuff and staying focused on your niche is that when you get tempted by that and you start adding on these additional services that aren't really related to what you can be the best at. Because of that distraction, you stop being the best at your core. Right now, you're not that great. Pool service company anymore, you're kind of a jack of all trades. And it just tends to oftentimes cause us to to lose focus.
Greg Villafana:
Do you see more of that these days than in the past?
Michael Erath:
I see a temptation for that as a means to grow, and it doesn't mean that over time you can't add different verticals. But think of the complexity that creates, right. If you're gonna get into pest control business, you know, lawn care and maintenance or things like that, because you already have access to those homeowners. You need to bring in somebody who's an expert in each of those things. And you now you're creating multiple divisions in the organization. Things get more complicated. Is that, in fact, at whatever time you are in the lifecycle of your business, the most valuable way to grow? Or is it pouring more energy and time and effort into what you can really be the best?
Tyler Rasmussen :
Yeah, I think often times how we see it in the in the pool businesses. You know, you already have this customer who, you know, you got your guy in the backyard, but you haven't been that back yard, maybe yourself or somebody that's better and like six months to a year, you've never really seen what's going on in those backyards. And really, there's a potential within your own company already to make all that money or that growth. But people don't spend time looking at that, including us. There's a big piece that we had talked about towards the end that we were missing was, you know, going in our own backyards. There's so much money and so much potential, so much upgrade ability like that. We're not seeing or talking to our customers about that. Really, you can get a lot of that growth from your current client base as opposed to trying to take on something like pest control and add that to that client. There's really a lot of stuff, you know, within our business. And I think, you know, conversations have with with with our business coach about it was like, you know, there's so much potential in your current back yards that you should just focus there rather than trying to take on these other random things.
Michael Erath:
Right. And you know, and things like that, too. There's a there's a small book by Dan Sullivan, who's the founder of Strategic Coach.
And I I can't remember the name of the book is. Who then Hower who, not how, but one of the things he talks about is when you have opportunities like that. If that's part of how you want to grow, you've got to think about who do you I need to help me. Get there before I worry about how. Right. And getting that right person and so, yeah, if there isn't if there is an opportunity at more share of wallet. Who's the best person? And that's where a lot of mergers can start to happen. Right. Start bringing companies together. Who's great at, you know, pest control that wants to get, you know, the wants to grow and share and get more share wallet out of a homeowner.
Michael Erath:
How do we partner with those those other people and resources? Because my guess is if you're if you're great at pool service, you're probably. That doesn't necessarily make you great at pest control or handyman services or whatever else.
Greg Villafana:
Right. For sure. It's good. I never thought about doing any one of those for a second. I mean, it just, you know, to if you haven't mastered your niche yet. Right. Don't use taking on something else as an excuse to not master what. You're right because you have a little bit of that burnout, which was probably a lot more of my problem or it's just like just want to move on to like, you know, something else maybe. And that's the that's the worst way to think. You really got to stay focused and make this work like a machine, because that's what we always wanted. Was it to our company to work like a machine? Not so we could step back, but so we could actually get more involved with, you know, talking with the team members and being out in the warehouse, being, you know, surprise visits in the field and, you know, just doing more like fun stuff that really, you know, the morale up instead of like, you know, we're on such a, you know, time constraint.
Greg Villafana:
Got to get out here because I got this meeting and then got this call. And then I have to be over at this house and it's now turned into a machine. It just gives you a lot more opportunities, I think, to to be with your team and, you know, other things like that that will actually help the business even more. Sure.
Tyler Rasmussen :
So you kind of touch base a little bit on it, but. Well, what steps somebody you recommend a company taking, you know, to define its its mission statement?
Michael Erath:
The mission statement, I think, is more of the external statement of your core focus. And so when when we work with companies to help them get to their core focus, we treat that as a statement. That's only meant to be an internal statement. Right. If it happens to lead to a great marketing slogan, that's that's fine. That's fine. But the mission statement just really ultimately needs to be how you how you create a statement that your team can get behind that all the employees can get behind. And that helps also clarify to your market who you are, why you exist and what it is that you do. And what's the value proposition in your in your business. Right. What's the need that you're solving in the marketplace and why are you doing it? And just really clarifying that. And that's usually like a few sentences. Like a paragraph. Yeah. It's the shorter the better. Right. I believe that if that can be simplified enough that, you know, people in the field can can essentially say it and consistently say it the same way it starts to help. You know, you're starting to get into a little bit of a marketing strategy and component now, but it just it makes it more consistent how the marketplace sees you and your brand. The more consistently you can. You can say that, right?
Greg Villafana:
Yeah. It's probably not wise to be like, oh, we nailed it. And then somebody steps him like, you know what? This just doesn't fit on a Frisbee.
Greg Villafana:
So we need to we need to take some words out. Yeah, exactly.
Michael Erath:
Can can you state it simply and is it short? Right. There's a I think was lee-na Leonardo da Vinci. He's got a quote that that simplicity is the ultimate sophistication. Yeah. And if you think about it. Right. It takes time to take a message and really carve it down to make it simple. Then if you think about, you know, great movies. Right. What makes movies great is as much what's not written into the script as what's written into the script. Oh, yeah. You know, because it just gets really, really clear and focused.
Greg Villafana:
They could take a course of 10, 20 years and squeeze it into 80 minutes. Right.
Greg Villafana:
Right. Bad ass. That's why I like. I'd rather not watch it. It's a three hour movie, 20 years long. Right.
Michael Erath:
Exactly.
Tyler Rasmussen :
So I read your book, you know, Rise, which I really enjoyed, but I highlighted a section towards the end and the book talks about how you learn how to fire customers. And we talked earlier about, you know, living core values by hiring, firing, things like that. Some of that's vastly, I think, overlooked in our our industry is is being able to to fire customers based off of beliefs and like I talked about limit earlier. People complain a lot in this industry about certain customers are there. They have no time or no working weekends all the time or they're doing these things. I really, truly believe that when you learn how to fire customers, that is how you kind of change that mentality because you can get new customers that fit better into what you align. So these core values also go, in my opinion, towards your customers, not only just internally with your employees, but you're now you're you're hiring customers in a way of, you know, based off of these what you build. So, you know, tying this into the whole theme. Did you feel like defining those core values, you know, really helped you be able to do that?
Yeah, I think it was it was a huge piece of it. I think there are really three three areas to evaluate your customers to determine if it's really a good fit. And I and I get it. There's a there's a a huge hesitation when you start a thing about firing a customer. Right. Because only God, that's revenue. That's that's margin. And they have a vision to refresh their views. But when you think about it, first of all, do our values align? Right. And so that's that's something that does create a lot of clarity when you start thinking about, you know, and any of your any of your listeners could do this, you suggest 400 pools at one point. So, you know, you could if you wanted to put the time into it, you could have taken all 400 of those customers and made a list, dumped it into an Excel spreadsheet. We did. Right. And literally. Yeah, you know, go through. And I did this with with clients in my last company. I actually do this once a year with my current coaching clients. I'll make a list of all the clients and I'll just go through and I'll kind of color code red, yellow and green writing and green clients. I feel like fit my values. They fit my target market. And so when we talk about target market, that gets a little and a marketing strategy, which can be a subject for another day. But in essence, you really need to understand demographically, geographically and most important, psychographic early, who are your ideal customers and the psychographic components? How do they think what matters to them? And are the customers you're working with a true fit? Are they really do they fit your ideal profile? And to the degree that they don't can, you know, every quarter, every year kind of home that list in so that you fire a few that aren't a great fit, replace them with ones that are. Because what happens is so, you know, take take here in Phoenix, what is a typical pool service tech have the capacity to do in a day on a route.
Tyler Rasmussen :
probably twelve to fifteen. OK, so we've kind of come out with that. So call it 12-15 here, obviously. So.
Michael Erath:
So, you know, if if each of the techs and your company have the capacity, the time capacity to handle twelve to fifteen homes a day. Right. If you. Allowing a lot of homes to be on that route that don't really fit your ideal target market. You're you're probably taking longer. You're having, you know, like you said, no negative reviews. You're in callbacks and lots of things that that are robbing you of capacity to serve ones. That would be a great fit.
Tyler Rasmussen :
Right. And she clearly thought it would be like, yeah. Taking too much time. They don't care to upgrade their equipment. That talented to make it run properly. So there's a lot of variables like that.
Michael Erath:
Yeah. So when you start to understand your target market and you can evaluate your customers on core values and how well we're aligned, do they really fit our target market? And then lastly, do they really fit our financial model right now and what our needs are from a financial perspective? Do they fit those three things? You know, if you do a pay on time and typically there's probably credit card on file that you guys were billing. So it's maybe less of an issue. But in my case with my last company, we carried receivables. Right. And so there were certain things in our target market and our financial model that had to do with how well do they pay? Do they pay on time? Do we have to chase them to get paid? You know, things like that. And over time, we were able to understand which of the clients are really causing us lots of frustrations, not because of our performance, but because they're just not a great fit. And that's where once you get clear on that, if you can start to kind of develop the. The courage to let some of them go. They're going to be somebody else's problem.
Michael Erath:
I'd rather my competitors deal with the ones that have that than me. Right.
Greg Villafana:
Yeah. And I think, you know, you're using all of those things to vet them like we talked about, because if you know, one of your core values is, you know. And I don't know if this is the right word for it. But like realistic expectations and when you're doing a service bid, you know, when you're there, you're being totally transparent in your beliefs and what is going to happen week in, week out. And they have to understand that, like this is exactly how myself and my team operates. So, you know, we're setting the bar right here. We're not talking about anybody else. We know what the standard is in the industry. But this is where we fall.
Greg Villafana:
And if you, you know, understand all of this, then we're a good fit because there's people immediately, you know, like you just had with the, you know, demographics and psychographic and all that stuff that you can tell when they start talking that they are very unrealistic. Right. Yeah. That they want you to spend hours there every day and not they want you to pretty much lose money and taking care of their pool. And you know, we have to be smart enough and being like, OK, I wasted my time coming here but not wasting any more time than that. Right.
Michael Erath:
And I think to your point, you know, it's it's something that should happen on the front end of the sales process with a new account. But there's a there's a great quote I heard one time. I can't recall who who said it. So one of these days, I'll take credit for it. That the root of all happy. I'm sorry. The root of all unhappiness lies in un communicated expectations. And if you think about the frustrations and and those things that really bother us, it's often because we never set clear expectations. All right. Run it.
Michael Erath:
And I think any relationship, you know, professional relationships like that with your customers, if you can take a little bit of time upfront to make sure that you understand their expectations of you as a service provider and that they understand your expectations of them in order for the relationship to work, you're going to smoke that stuff out early on and deal with those issues before they've actually taken hold.
Yeah. And every company is different. That's what's so special about especially this business. There might be hundreds, thousands of pool service and repair companies, but are our goals and our lifestyles are also different. That that's why it's so important to find that niche and to figure out what your core values are going to be. And that's why it's so much more important for you not to copy somebody else's, because that is not going to do you any good if you copied ours like our goals were aligned with our young families. We wanted weekends off and we wanted to be able to take our kids to, you know, you know, sports practices and things like that. So it was really important that we really expedite this process. And if it took seven days a week with twelve, 16 hour days, then that's just what it was. Putting that initial time and investment on the front end so that we didn't have to do that and we did do that. But that's not everybody's, you know, goals for the future. So you really got to figured out what the hell it is that, you know, you're trying to do. I just wanted to put that out there, because if you take it, you're gonna do it. Take the time to figure it out. Don't don't copy, you know, somebody else, because that's not you might as well not do it, right? Exactly.
Tyler Rasmussen :
Yeah. I think, you know, like you said earlier, if if you already have an established business, which a lot of people do, you know, creating a list of the input of your customers is is a huge thing to do. And we did that. And it's you know, that way you can do it is really like a one by one process. And I talked about it with a lot of people before. But like you bring out, once you have established all this, you know, core values, everything. And, you know, you want to start bringing on new customers this way, which is a good piece, you know, because in your new customers are going to understand all this, but your old ones may not. So, you know, you have to really evaluate that and do these people fit anymore and you make a list of that. And then, you know, these 20 on the bottom, you know, ad you get a new customer that fits it. Get rid of the worst one. Do you get another one next? Worse one and you kind of go down the line.
Tyler Rasmussen :
That's how you flip. That's how you flip these customers over. It may take, you know, six months, but at least in the end that six months you have customers that you really enjoy working with. You're not pulling your hair out because I don't want, you know, specifically up north that I used to go to twice a week or three times a week. And I'm like, this guy is paying a hundred and twenty bucks a month or whatever it was. He's not worth me, myself as one of the owners going out to his house twice a week. Right. I'll get two more pools here, a place that you know. So you have to evaluate, like what you know. And then obviously you talked about the reviews like that's a whole nother podcast. But there's ways to, like, let these customers go in in a nice way. You just look for those little look for them to mess up once and you found that little loophole, you know, but you got to do it nice and easy now with all their ideas.
Michael Erath:
But right. You know, there's two things I think come out of what you just just described. One is that it's it doesn't make you a bad company or them a bad customer. It just means we're not a good fit for each other.
Tyler Rasmussen :
Yeah. I mean, even even any more like you might have been in the beginning. Right now you're not.
Michael Erath:
And I think being able to have that conversation based on that context, you can talk about why. Well, let's break that down. Why is it not a good fit anymore? And maybe. One of you can adjust, know whether that's adjusting pricing, adjusting expectations and you can turn them back into a good account or it's just time to part ways and go elsewhere. The other thing you said was if somebody is thinking about this idea of kind of cleaning up their customer list, you don't don't strive for perfection, just strive for progress. That's one or two accounts a month that you can improve the overall quality of your list. It may take you a year or two, but if you're disciplined about it and you think about how do I on-board new customers and how do I make sure that I as I on-board new customers, are making sure that there really are a good fit and we have clear expectations. You're much less likely going to have issues with them down the road.
Greg Villafana:
I know we were afraid when we started doing it because I mean, we think everybody is over 100 accounts that we kind of chopped off and we actually, you know, were thought we were gonna have more more of a financial loss, but we really didn't. And that just proved how much time, you know, on the phone or physically driving to those houses because they were just so needy and whatever else was going on. It just shows you that, like, you know, just because they're there, maybe they're paying their bill on time doesn't necessarily mean that, you know, you're going to be at a complete loss. Right. So there's a lot of variables in it. Time is a most valuable asset. So where can people get more information, you know, about you and everything that you do?
Michael Erath:
So you can find out more on our Web site, which is theattractionhub.com Also, we're on Instagram and Facebook at the Traction Hub, so you can find us on either those feel free to follow us. We're constantly trying to put some some nuggets and some some gold out there in terms of value. So those are typically the best places to do that.
Michael Erath:
You can also, if you're especially you're in the Phoenix area with our team of coaches, we typically about every four to six weeks try to have a lunch and learn event. So we'll do an hour and a half to two hours with a lot of Q&A. This is an overview of the system and letting companies who are either trying to implement this on their own or who've never heard of it kind of come and bring questions and just help, help get some get some answers and guidance from folks that they may not otherwise be able to get access to.
Greg Villafana:
Right. And if people want to reach out to you or go to the website or anything like that, you have like different things that they can read, download before maybe reaching out to you.
Michael Erath:
Absolutely. Yeah. We've got it. We've got a blog page on there that's got lots of information. They can gain some good content on and they can also sign up to to get our newsletter, which were really big proponents of not filling up people's inboxes. So that comes out typically, you know, maybe twice a month, but that'll also have information as well as on our social media pages about these launch and learn events and other things like that.
Greg Villafana:
Perfect. Thank you. And we ask every guest that's on the show. So that's what can do. And hopefully you have a different book or podcast to say, but do you have a book or podcast that's made any kind of impact in your life?
Michael Erath:
So a couple of books that that I often recommend, obviously, besides traction, which we've been talking about for for the last couple hours. Shameless self plug. If you're interested in mine, of course you can go to Amazon and just Google. Michael Erath Rise to find that the full title is Rise The Reincarnation of an Entrepreneur. I really enjoyed that one. It's really good story, man. And he has really written as a memoir of just all of the struggles that I went through kind of on the heels of my success and then what it took to kind of reinvent myself as an entrepreneur. I also mentioned a couple of times the book E Myth Revisited by Michael Gerber. I think really for your audience. It's a book that any of my trades clients I want to read, I want to get them reading it early in the journey because it really speaks to 99 percent of of those owners. And there's another book, one last book I'd like to mention. And I think this kind of goes back to talking around niche a little bit, but it's by by a gentleman named Greg McKeon. And the book is called Essentialism. The subtitle of that book is The Disciplined Pursuit of Less. And He Does a Fantastic Job is probably one of the most transformational books that I've read in my life around just really, really focusing on on one thing, be essential about it, go a mile deep in one specific area rather than going an inch deep and a mile wide.
Greg Villafana:
Very good. Thank you, and you.
Greg Villafana:
Do you listen to any podcasts at all besides Pool Chasers, Pool Chasers as well?
Greg Villafana:
Thank you so much for joining us. We really appreciate your time. This was a fantastic talk and we know it's going to provide nothing but value for all the listeners.
Michael Erath:
Awesome. I appreciate the invite. I hope it does. And I look forward to talking you guys again.
Tyler Rasmussen :
Thank you. Thanks. Thanks for checking out this episode. If you want to find out more about our guest or the sponsors of the show, you can check them out on the links we have provided in the right up below. We have also provided links to our social media platforms. So please follow us on Instagram, Facebook, Twitter and YouTube. Our tag is Pool Chasers. The podcast brought you any value. Please do what you can to support us through our Patreon page by going to patreon.com/poolchasers And don't forget to subscribe to the podcast to be updated. Each time a new episode is released. One last thing if you're not yet in our Facebook group, join it today to be surrounded by like minded individuals who are all trying to better the industry. Thank you all for the support. We appreciate your time and your ear. See out there, Pool Chasers.
Quickly and accurately convert audio to text with Sonix.
Sonix uses cutting-edge artificial intelligence to convert your mp3 files to text.
Thousands of researchers and podcasters use Sonix to automatically transcribe their audio files (*.mp3). Easily convert your mp3 file to text or docx to make your media content more accessible to listeners.
Sonix is the best online audio transcription software in 2020—it's fast, easy, and affordable.
If you are looking for a great way to convert your mp3 to text, try Sonix today.
Episode 88: Establishing Core Values and a Clear Company Vision with Michael Erath of The Traction Hub
Where to find Michael Erath of The Traction Hub
Book & Podcast Recommendations
Show-notes
02:28 - Michael Erath Intro
05:17 - Business partner/best friend commits bank fraud
08:03 - Starting from scratch & finding the book Traction
09:20 - Becoming an EOS Implementer
20:31 - What is Traction and what comes with it?
22:30 - Six Key Components
24:59 - The impact Traction had on Michael
27:56 - Trade business struggles
33:14 - Understanding the vision of the business
37:44 - What are core values?
45:01 - Example of core values
51:32 - Living by core values
01:01:19 - Build or re-discover your core values
01:15:07 - Waiting 30 days before rolling out Core Values
01:19:30 - Best way to roll out core values to your team
01:22:49 - Core focus on mission statement
01:32:37 - Steps to defining your mission statement
01:34:55 - Firing customers
01:46:40 - Where to find Michael Erath
01:48:13 - Book recommendations
