In this introspective episode, Rich Russakoff, CEO & Founder of Coach to the Best, shares how he attained a solid reputation based on cutting edge knowledge and combined with his make-it-simple / make-it-happen approach.
You will discover:
– Why 20% of Fortune 500s were GONE in two years
– How you have to evolve as a founder through each stage of the journey
– How to build the pillars of a foundation for success in your organization
Episode Transcript
Scott Ritzheimer
Hello Hello and welcome. Welcome once again to the secrets of the high demand coach podcast and I am here with yet another high demand coach and that is Rich Russakoff. He is an internationally acclaimed business coach, speaker, author, and serial entrepreneur, he brings more than 45 years of experience successfully starting and developing businesses working with CEOs and other entrepreneurs, training, consulting and business brokering. Rich offers fresh eyes to business owners, allowing them to see things that they would otherwise not see. And reach recently rich presented taking the big leap for entrepreneurial master’s program at MIT. And he’s also the author of people time and money, Volume Two, a number one best seller on Amazon. Well, rich, I’m so excited to have you on the show. I can’t wait to dive into what it is that you do for your clients and how you help folks take that big leap. But before we get to all that, I’d love to actually hit rewind for a second and just hear your story. What were you doing before coaching? And how did that ultimately meet lead you to take the leap?
Rich Russakoff
Well, first of all, I’m a third generation entrepreneur. And I learned from my parents, the values of running a business of the importance of honesty, the importance of being willing to take calculated risks to grow. My father was the marketing and my mom totally focused on the numbers. And collectively, they grew a small, dry cleaning empire in Philadelphia. And my two brothers went into dry cleaning, I’m the one that got away. And in the 1970s, I moved to the Outer Banks of North Carolina, I loved living there. And my former wife and I opened up a business called r&r Junction. And we ran that for 10 years. And while we were running that, I learned the importance that your job wasn’t to be loved. But it was to be respected. I learned to read the numbers and understand the financial side and create a culture where customers walked in our door in the summer after, I’d like to say our average customer was a woman from Pittsburgh, who has 3.2 kids, and has been waited in line and treated poorly at McDonald’s. When they come into our door, they’re going to be treated with respect and dignity. So nine years later, we sold the business. And I relocated to Richmond, Virginia, and joined a business brokerage franchise called VR business brokers. And while I was there, I saw sellers, I saw buyers and sellers, a buyer buy a lemon and turn it into a lemonade and buy lemonade and turn it into a lemon. And my buyers became my sellers, my sellers became my buyers. Many people that were brokers for VR Business Brokers were struggling. And I managed to do very well. So I did a seminar for them on how to do it right. And I was asked to become a regional director and go around the country, working with brokers, and the owners of the companies, and I loved it. And I did that for a couple of years and went on my own and started what I called bottom line consultants. I no longer consider myself a consultant, I consider myself a coach. And I was very fortunate to hook up with Ink Magazine. And I became a major coach for them. And they opened so many doors for us. And one of the things I learned at Inc, when we studied the class of 1982 that made the Inc 500 list. We were looking for the secret sauce, then it was only the Inc 500. And, and what we discovered when we did this in 1984 was 18 to 20% of the companies that made the list were out of business. Wow. So we said hey, we need to find out why. And what we discovered was it wasn’t the industry. It wasn’t their ability to raise capital. It wasn’t the competition. It was the fundamental things that entrepreneurs did at each stage of growth and will get you to one stage will not get you to the next and I thought we had it tied up in a bow. And then I had the opportunity to work with Gay Hendricks, who wrote the book, The Big Leap. And I had now been working with entrepreneurs coaching for at least 2530 years. And I got a couple of key A hoss. Most entrepreneurs burn out, because they’re not doing what they love doing. They’re not in their zone of genius, and zone of genius is, what do I do exceptionally well, rather than being caught up in things that they’re excellent at what they don’t love. So they work out. And the other factor is, sometimes success is hard to deal with. How did I get here? Do I deserve this. And with upper limits barriers, we sabotage what we have achieved, we can do it with drugs, we can do it with affairs, we can do it with not paying attention. We can do it with not looking at our health, and basically, not really being charged and vitalized. And we’re sabotaging it. And that’s all in the mind. One of the things I like to teach is Don’t believe everything you think. So that’s led us to where I am today with one additional thing, Inc asked me to be part of a program, which was called birthing of giants, which is where I first got involved with the Entrepreneurs Organization network. And I’d say 80% of my clients come from EO. And it’s a wonderful organization, with chapters, literally throughout the world. And I think we’re up to about 15,000 entrepreneurs. So I work independently, but I speak at their events, I’ve spoken all over the world. And primarily, that’s where my business comes from. And it comes from referrals, and speaking more than anything else.
Scott Ritzheimer
Wow, there’s so much to unpack in it, because it’s such a rich history. And you can see how it’s all woven together. One of the things that jumped out to me was this idea that it’s startling, right from the Inc 500 To not in business anymore in two years. If if I heard that right, 20% of them one in five right now, these are not like, you know, the failing startup that never got off the ground, right? These are folks that are hurtling through the atmosphere, they’ve done something right to be able to achieve that type of, of notoriety. And you bring up this point, I want to dig into a little bit further, because I think it’s a myth that’s just rampant when we’re looking at why organizations fail. And that is it wasn’t the industry, it wasn’t their ability to raise capital, it wasn’t a competition. So what I’ve found, and I want to hear your thoughts on this is that nine times out of 10, there may be some kind of catalyst outside the organization, but nine times out of 10, there is an internal root for the the challenge that that can end a business or stole a business. And so what would you say? Are some of those core internal causes that that take successful organizations and evaporate that success seemingly overnight?
Rich Russakoff
Well, first of all, a CEO has to be a lifetime learner. And I was just on a call with a client before this. And we had a major Aha, on how they’re going about managing their financial side. And it reminds me one of my favorite quotes, which I shared with him by Felix Frankfurter, which is that wisdom. So rarely comes that one should not reject it, merely because it comes late, which means you have to be willing to change. There’s no status quo. I know, you know that. You can’t make the ocean stop, you can ride the wave. So, the first thing is, do you have a good handle on the financial side of your business? Because if you don’t, margin, shrinkage will kill you. Margin creep will kill you. And suddenly, you go from 10 to 15% to the bottom line, and your cost of goods go up. Your sales go up. Your prices have not adjusted accordingly. And suddenly you’re in the I read, and now you’re reactive rather than proactive. The other thing is, you know how to manage people? Are you good listener? And are you listening inside your organization and to the other stakeholders, which includes your vendors, and your customers, the community, so that you’re seeing things change in the marketplace, and you’re making the changes necessary for growth. And unfortunately, and I’m sure you know, this, sometimes the people that worked so hard at phase one, or phase two growth are not the right people, when you continue to grow, and you have to face that, and let them know, they’re not the right people. Yeah, because without the right people, the right software systems, the right rhythms, you don’t grow. And then there’s one other point I want to share along those lines is culture. The culture you create is far more important to success than having a team of rock stars that are individuals that aren’t tied into a culture. And that begins with this is how we do business, our core values and staying with that.
Scott Ritzheimer
Yeah, again, there’s just so much that if you’re listening to this, just stop, don’t listen to me rewind and listen to everything that Rich said, again, because it’s so good. You’re making it hard on me, because I’m trying to like I’m trying to pick out just those few little nuggets to really dial in on and there’s so many of them that you’re making me choose. But we do a lot with growth stages here at scale architects, it’s a really, really important, you know, kind of tenant to what we do. And you talked about this idea that, you know, first and second stage growth, you know, those first couple stages that folks who excel in and succeed in those stages are oftentimes not the ones who will get you through the later stages. And I couldn’t agree more that are named for the third stage this one where complexity rises up or profitability margin shrink happens. We call it whitewater purgatory. Yeah, I can understand especially we get stuck there. Yeah, it’s that is no fun. So this purgatory stage, this whitewater stage, what are found the number one reason in my experience that folks don’t get through that and either choose to maybe shrink back, which is fine, there’s nothing wrong with that, or have this kind of catastrophic loss that you’re you’re talking about? Or just kind of burn on get stuck in Purgatory? The number one reason is that leader on the team, who’s got the sweat equity, like their godfather of the CEOs, kids, your godmother, you know, like, there’s this relational equity, there’s sweat equity, sometimes there’s real equity, but they’re not the person that they need in that seat moving forward. And is that something that you’ve experienced? And if so, what would your advice be to that CEO?
Rich Russakoff
No, it’s funny. In this program, I do one of the big leap, I talk about that. And I use the analogy of the ugly duckling and finding the right pond. And then there are a swan. But wait, often, you can realize when you look at the role of the CEO, you’re not the right person. And if you haven’t heard of him, or interviewed him, I’d recommend you speak with Randy Nelson, who wrote a book called The second decision, and the third decision, but the second decision is, Are you the right person to take it to the next level? So there’s a couple ways to deal with that. One is you can sell it, or two, you can hire the right people to do it. But as the CEO, you need to be the visionary. You need to give people what they need to excel. It’s all about the people. You’re in the hiring, requiring inspiring, firing, training and communication business. And if you realize you’re over your head, but you have a good business, it just makes sense to turn it over to somebody else. I rarely see that happen. But when I do, it’s the right decision for that particular entrepreneur.
Scott Ritzheimer
Yeah. Yeah. And just for someone who’s wrestling with that decision, because it’s not a it’s not an easy thing to do, right. It is not an easy thing to let someone else kind of take over your baby is what it feels like. It’s not necessarily easy to admit that maybe you’re not the person to do that. So on the back end of that, though, you’re saying hey, it’s it’s worth it or so those few that have been able to make that transition. What’s it look like on the other side?
Rich Russakoff
Well on the the I am starting a program called CEO freedom Academy. And the concept is that your business is only as good as its freedom, your freedom so that the business can run without you. So many times a client I work with in Atlanta, by the way, he told me that 15 years ago, I gave him the best advice he ever had. I said, please tell me what it was. And he said, we looked at selling your business. And it was a service business. And the multiple was about 3.2. So, so in a couple years, it would be the same amount of money he was making running it. And I said, Eddie, you have a great team. Why don’t you let them run it? And you come in once a week, give them Tootsie Rolls, tell them what how good they are, and stay out of it, and do what you love to do. And that was a very successful strategy for him. And for many entrepreneurs, who basically build something, they’re getting a nice income from it. And they go on with the rest of their life.
Scott Ritzheimer
Yeah, yeah.
Rich Russakoff
Did I answer the question?
Scott Ritzheimer
You did, you nail that and you turn it around in a really helpful way. And that is, just to kind of repeat is to look at yourself first. Right? You can’t have that conversation with somebody else with someone other member of your team until you’ve really addressed it for yourself. And I think that’s such a point of wisdom. And it’s really helpful for folks to see, not only the challenge of it, but the benefit of it. So another question that I have for you, here is one that I like to ask all my guests, and is what is the biggest secret that you wish wasn’t a secret at all? What’s that one thing that you wish everybody listening today knew?
Rich Russakoff
Well, oh, go back to two things. So I said, master the art of managing your finances. Uh, you don’t have to be the financial guy. But you have to work out. But you have to have good real time financial information that you trust, you have to know how to read a balance sheet. And for most people, a balance sheet is okay, here’s the balance sheet. It’s the equivalent to taking vitamins. But the balance sheet tells you are you growing in your assets, or are you not. And if you are not reading your balance sheet, it’s not rocket science, get somebody to teach you how to read it. And then look for look to see whether or not your margins are growing or shrinking. And the more you can separate your profit centers, because one of the things that happens is, as you grow, you add additional profit centers. And if they’re all mixed together, you don’t know the sick cows from the excuse me the sick puppies, from the cash cows. And therefore, you’re not putting your resources in the right place. And I would say build relationships. I think having a coach or a mentor, who is a sounding board for you, who you trust is invaluable. Communications rhythms are critical. All these things. I wouldn’t so much call them secrets. But I would call them the pillars to build a foundation of success.
Scott Ritzheimer
So good, Rich, one more question for you here. And then I want to make sure that folks have a way of getting in touch with you afterwards. So before we get there, though, hang on to take have you take off your coach hat for a second, put on your CEO hat and talk to us about what the next stage of growth looks like for you as a leader and in your business and what challenges you might have to overcome to get there?
Rich Russakoff
Well uhm, as I’ve grown, and going from one chapter to the next. I have a wonderful network of entrepreneurs I work with. And so many of the clients that I’ve worked with, have sold their business for significant profits. And I’m working with one of my former clients right now, and we’re creating what we’re calling the CEO freedom Academy and we’re going to interview 50 entrepreneurs with a survey who have sold their business? What was the good, the bad and the ugly? What would you have done differently? Did you sign a non compete? Did you know how to deal with a life after you’ve left your business? How would you have set it up differently. And we’re also creating a program where we invite entrepreneurs to take a test. And based upon that test, we’re going to be able to say, if you sold it today, you might get an a multiple of x. If you did X, Y, and Z, you could get a multiple of three to four times more. And then we want to help them get there with once a month sessions, and also bring in some of the successful entrepreneurs to work with forms on how they can take their business to the next level. But just things I’m learning already from this, one of my clients just sold his business. And we were talking about he said, My attorney cost me $600,000. I said You mean fees? He said no. He said, we were supposed to close on the 25th of a month. And because of his procrastination, we didn’t close until two weeks into the next month, which meant I had to pay two additional weeks of salary and expenses. That cost me 600,000. That’s a wow. So I’m looking for these nuggets of learning. And one of the things that I recommend most to CEOs after they sell their business, do not start another business for a year. Give yourself time for your family, for you to reflect. And for you to think because sometimes you go from something you really no well, to a hunch. And you still haven’t figured it all out, and you pay a significant price.
Scott Ritzheimer
Yeah, there’s so many CEOs that I’ve talked to who have not followed that advice. Maybe they were never given it but who have taken everything that they made from their previous business and effectively lost it all on the next venture. And, and so I think that there’s so much wisdom in that for so many different reasons. But it’s just a great way to kind of go out here for the episode. Before we let you go, though, I want to make sure because there’s some folks who are listening to like, rich knows this stuff, like I think can really help me. So how do they find out more about the work you do? And how do they get in touch with you?
Rich Russakoff
Well, I have a website called coachtothebest.com all letters. The to is t o in coach to the best. And you can reach me at rich@coachtothebest. And I do a daily blog, not a blog, excuse me, a Daily Post called Food for Thought. And anybody that wants to get our food for thought posts can just reach out to me and forex includes everything. Yesterday’s post, and the day before we’re post was on parenting and how difficult it is for entrepreneurs sometimes put the focus as well on their kids during those critical years. Because they’re they’re going to go away and on your family. So it’s it’s a, I would say a holistic approach to life that will go from that to an entrepreneurial message on execution.
Scott Ritzheimer
Hmm. It’s fantastic. I love it. So food for thought. Check that out from Rich coachtothebest.com. We’ll include it in the show notes to make it nice and easy for you guys. Absolutely. Check it out. Rich, thank you so much for being here. It’s such an honor having you and for everyone listening today you know your time and attention mean absolute world to us. We got as much out of this conversation as I know I did, and I cannot wait to see you next time. Take care.
Rich Russakoff
Thank you so much.
Contact Rich Russakoff
Rich Russakoff is an internationally acclaimed business coach, speaker, author, and serial entrepreneur. He brings more than 45 years of experience successfully starting and developing businesses, working with CEOs and other entrepreneurs, training, consulting, and business brokering. Rich offers fresh eyes to business owners, allowing them to see things they would otherwise not see. Recently, Rich presented ‘Taking the Big Leap’ for the Entrepreneurial Master’s Program at MIT.
Want to learn more about Rich Russakoff’s work at Coach to the Best? Check out his website at https://coachtothebest.com/
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