215: Build a Trophy Business with Colin Sanburg

Colin Sanburg, the Founder and Visionary of FinElevate, a company that works with small business owners and their leadership teams to drive the business to new heights of profitability. We discuss Colin’s journey founding FinElevate, driven by his experience overcoming financial challenges as an entrepreneur, eventually creating a framework to optimize growth, profit, and cash flow with the ultimate goal of empowering entrepreneurs to create valuable, trophy businesses.

 

Build a Trophy Business with Colin Sanburg

Good day, dear listeners, Steve Preda here with the Management Blueprint podcast, and my guest today is Colin Sanburg, the Founder and Visionary of FinElevate, a company that works with small business owners and their leadership teams to drive the business to new heights of profitability. Colin, welcome to the show.

Yeah, thanks for having me, Steve. I appreciate it.

So, we haven’t had a finance company, an entrepreneur on the show for a while. I don’t know whether that was intentional or not, probably not, but it’s great to have you and I’m sure you’re going to make very interesting topic because sometimes finance can become a little bit dry and I think I’m allowed to do it because I started life as an accountant and then as an investment banker, so I can now look back on my past and I know that I can get obsessed about numbers and most people get drained by numbers.

Yeah, yeah, no, I know that and I’ll make sure to keep it, you know, I’m not a finance guy by trade, I’m an entrepreneur by trade, so we won’t go too deep into the math or nerd out on the numbers too bad.

Fantastic. So, tell me right off the bat, what triggered your decision to launch FinElevate, your company, and what is the problem that you guys are solving?

Yeah, so, again, like I said, I’m an entrepreneur by trade, so I’ve had four or five different companies that I still own. FinElevate is the newest one, but what I found in my very first business, it was actually a turnaround, and we struggled financially. I came into the business as kind of a kid, I say. I was 21, 22 years old, didn’t know anything about finance, didn’t know anything about small business. And, you know, we were running into these financial problems and so I slowly but surely dug out of that hole and figured out the challenges we were facing and kind of overcame them one by one. But along the way, I realized as I met other entrepreneurs, how rare that is. Most entrepreneurs are, you know, really good at sales, they’re really good at finance. They’re passionate about what they’re offering their customers, but you ask them to get in the spreadsheet and go figure out the numbers and it’s like pulling teeth. So, that was kind of just from my experience. And as I became that person across my different businesses that I own and in my friend network with other entrepreneurs, I was like the guy they called to ask financial questions. It just kind of was an aha moment. Like, wait a minute, this is the business that I should really be pursuing where I can help people better understand their numbers. And so that’s it. Essentially, it’s easiest to tell people that we’re kind of a niche version of a fractional CFO because that’s a concept people are familiar with. But when I really talk about it, we help people make more money. That’s the bottom line. Just like better sales help you make more money, we help people make more money with the financial side and the data side of their business. Share on X

Yeah. And, you know, what I like about the numbers is that they don’t lie unless they are wrong, then they need to be fixed. And then when you fix them, they don’t lie. And it really helps you dash and slice in different ways. They reveal different problems and then you can address those problems. Now, you really are a master of it. And the reason I led up with this, let’s not make it too dry kind of introduction was because you really have developed 450 different ways to improve a business. So that is kind of overwhelming. And then you created this financial score, which kind of simplifies it to four different aspects of financial success that you then monitor and refine. So tell us a little bit about your financial score and what these 450 are, not one by one, but how did you come up with these different ways and then how did you synthesize it down to these four different aspects and what they are?

Yeah, so that’s great. So I guess the simplest way to explain it is a little bit of the story of how it came to be. So again, as I was overcoming some of these different challenges, you know, I didn’t have a big cohesive plan. This wasn’t some sort of a strategy. I mean, I was young, I was new in business. And even as time went on, I was just facing big challenge after big challenge. So I was having to come up with ways. And a lot of it came down to researching and finding the right expert. I’m a huge fan of the idea that there’s someone in the world that would make whatever my biggest challenge is, they’d make it look easy if they faced it, right? And there’s always somebody at that level. So, as I went through this and then ultimately starting FinElevate, I had to come up with a more cohesive and kind of streamlined way to deliver the results that I’d been experiencing. And so, what I came up with was, number one, we call it the elevation formula. Number one, I have to know what the business owner’s goal is. If I don’t know what the goal is, then how do I know if we’re on our way? Right? Number two. So that’s typically for people, it’s to make more money. If you’ve got a cash problem, cash is everything unless it’s not a problem, right? And then so, for most people, it’s either cash or it’s profitability. And then really once I know that we’re going to get there, most business owners at some point want to exit, whether it’s selling the business, turning it over to professional management or a family member, whatever it is. And so once we know that goal, I then build the FIN score. And the FIN score is just a simplified scorecard. Everybody knows from report card days that a 92 is better than a 77, right? So it’s just a super simple way to track our progress. And then the 450 plays, it’s a big number. It’s a daunting number. But in reality, we did a research project. I spent a long time throughout my career gathering this information. And so once I know your goal and I know where your score is, I know kind of what your strengths and weaknesses are, and the next play is fairly obvious. So in other words, what I don’t do is try and give you 450 different things to do.

What I do is say, we've got a giant pool of different options based on your goal, based on where you stand, here's the next move, the next domino we need to knock down. Share on X

Okay, that’s great. So you basically figure out what the goal is and then run this FIN score process so that you diagnose what the score is, and you know the ballpark, it’s 77 or 92. And then, what are the strengths and weaknesses? And then you talked about cash and exit. So the four things I noted down in a pre-interview was growth, every business needs to grow. That’s kind of an imperative. If they are not growing, you can’t keep the good people. You can’t keep ahead of the competitors. So growth, profit, top line is vanity, bottom line is sanity, but really cash is reality. So number three is cashflow. And then ultimately you want to not just make money, but you also want to create a variable asset that when you transition out of business, you want to cash out most likely. And that’s the exit piece. So what do you do with all these four pieces? So how do you approach growth, profit, cashflow and exit?

Yeah, so I’ll take them kind of in that order. So, growth being the first one, the interesting thing to me about growth is you can go on the internet and find a thousand people who will tell you they’ll help you grow your business. What they don’t tell you is how to tie that data into the operational experience and ultimately the financials. And so, you know, what we do to help companies grow is, we’re not a marketing company, but we are kind of a data company within your business. And so, we’re actually helping people make sure that they’re getting an ROI. Are they looking at the different sales channels? Are they making sure that what they’re promoting and what they’re selling, is it to the right kind of customers who are profitable? Is it the right kind of products that are profitable? And do they have premium pricing? And so those are kind of the core fundamentals of what we’re really helping companies with. And a lot of it is, I always say there’s kind of three categories of your business. You’ve got the front end sales, you’ve got the operations in the middle, and then you’ve got the financial piece. And unless they’re all synced up and speaking the same language, it’s very hard to know what’s working and what’s not. And so a lot of people treat sales as this isolated area. And so they’ve got a marketing company that’s going and selling the easiest thing to sell instead of the thing that makes you the most money. And so that’s really how we focus on helping. Again, it’s not a replacement for a marketing firm or a, you know, you advertising. It’s really making sure that the data makes the most sense to be the most profitable, best business you can be. So that’s the growth.

Yes. Okay. So it’s basically optimized. So whatever you have, how do you make the most out of it? And how do you make sure that you grow the right way so that you are getting more of the good customers and less of the bad customer, none at all of the bad customers? Or how do you maybe transition out the bad customers that drain your energy and not make money? And then how do you rechannel the energy into the good stuff and be more intentional about that?

Yes, I love that. And to your point, as you’re optimized, now I’m able to be more aggressive with my pricing. Now I’m able to, to your point, I’m able to run off the kind of customers who cost me all the money, but don’t help me make money, right? And so, you’re able to just, everything gets better. You get that kind of circle working up instead of down as, as we know, right?

Now. Okay. So, basically you do this optimization, you get more customers. Maybe you need a sales system as well on the side, but you know, what kind of customers you have to go after, and then you focus on getting those customers. How do you approach profit and then cashflow?

Yeah, so to your point, you know, and I’ve been in a business that struggled in every one of these different areas, which is obviously how we all learn. So profit, you know, I think really comes down to two core things. Number one, I want to know your simple profit formula. And so I describe this as I want you to understand how you make money on the back of a napkin. So what it really comes down to is looking across the major areas of your P&L as a percentage of revenue. So it’s looking at your sales and marketing spend, it’s looking at your cost of goods, your cost of sales, any kind of outside vendors. It’s looking at your labor, it’s looking at your overhead. How are those five factors working for you or against you? And over time, how are they trending? What we see a lot is that, let’s say a company gets growing and they actually click into gear in the marketing and sales piece, they don’t grow profitably. Well, why is that? It’s because their labor is growing faster than their revenue. And so, there’s some sort of a sticking point there. And so that’s the simple profit formula. That’s a huge part of how we help companies get more profitable. The other piece, I kind of talked about the three different areas of business being sales and ops, and then finance.

The other one is we want to come up with a common unit of measure. So I've got one of my businesses, a cabinet business. Share on X

I want to know in terms of the number of cabinets, and I want to be able to look at what is our sales pipeline in the number of cabinets? How many cabinets are we producing in operations? And how many cabinets when I look back at revenue, or even you can take it as far as when I look at cash in the bank, how many cabinets worth of cash do I have in the bank right now? And the ability to see one common unit of measure that goes through all areas of the business is life-changing. Because what we’re really talking about with getting good with business is to optimize, like you said, to where everything’s built on a similar platform and you don’t have the lumpiness that comes with kind of a disjointed business. So that’s it for a profit. Cashflow, I mean, you know this from your background, cashflow is a discipline. Cashflow is, it’s not a fun problem to solve. It is not you need a better cashflow strategy. It is we need to implement the best collection procedures for your AR. We need to look at how to pivot as much of your payments into a delayed payment, whether it’s a credit card, whether it’s better terms with your vendors. So we want to collect as fast as we can, pay as low as we can, shrink that inventory. If you’re an inventory-based business, we want to get in the weeds of like how fast, not that your overall inventory is turning, but your number one product line. And then what are the product lines you shouldn’t be carrying at all? They should be special order, right? Getting in the kind of weeds of that. And all of these are things, theoretically, a business owner could do themselves. But the reality is they don’t have time. They’re selling, they’re managing their team, they’re setting a vision for the future. And so, that’s where we kind of jump in and help them put all those pieces in place so that the business is optimized. And then I always say the same business that you want to own is the same business somebody else wants to buy.

Okay, let’s not go there yet.

Okay.

I take your point. So I’m going to rewind back to the profit piece. So we talked about the growth. You know, what are the right products, the right customers that you grow the right way profitably. Then you grow your profit, and then you find this common unit of measure that will allow you to have more transparency of every part of your process, your sales, your operations, your finance, and that gives you an insight as to how to improve your profitability. I would like to ask you about on this common unit of measure. So one of the things that I like to talk about with my clients is this Jim Collins idea, the profit per X. Actually, there is an advanced version of that, the advanced profit per X. And the idea here is that this common denominator is all about optimizing the business around a scarce resource. So whether it’s cabinets, I don’t know, whether it’s customers, whether it’s a certain input into the production, whether it’s our ability to market, maybe it’s the size of the market. There could be different bottlenecks for the business. And then this is how we drive this common unit of measure. So is this how you do it as well, or you have a different way of identifying that common unit of measure?

So I would say that mine is more around, and I do love that concept. I think the way I try and teach it is a little bit more, I don’t know if you’re familiar with “The Goal.”

Of course. Eliyahu M. Goldratt.

Goldratt. Yeah.

Yeah.

Eli Goldratt. So his concept was, and he was one of the initial people, it’s now easily termed the bottleneck, but he talked about the theory of constraints, but it was essentially the bottleneck. One of the most powerful things that really shaped how I look at business in that book is that he talks about that really the ultimate constraint should be the front. It should be sales. And so this idea that I always use with people is if I were to take a big jug of water, right, let’s say it’s a five gallon jug of water. If I turn it upside down, because of all the weight and the pressure and the fact that there’s not enough oxygen going in, it’s going to very slowly come out. I mean, it’s going to be dumping out, but it’s going to be going out relatively so. Now, if I could cut the bottom off of that five-gallon jug, turn it the other way and hook a hose up to it, it’ll go as fast as that hose can go because everything is getting wider the further you go in the process. If it’s a true funnel, the bottom being the bottleneck means that the funnel builds if you go fast enough. And so, what I try to look at in a business is I want to make sure that your finances are as wide open as anything in your business and that your operations can handle anything your sales can deliver. And if we can get that pressure point put on sales, what that really forces us to do is build our resources, align our resources about work going as fast from one end to the other as possible. And to me, that’s typically the businesses that have the best customer experience. It’s kind of the Amazon model, right? Amazon, they lapped the field with every other business with how fast they could deliver, and again, they don’t necessarily live up to it all the time these days, but when they dominated the competition, when that became true, and so the companies we work with that build the operations in such an efficient way that it can deliver on that sales promise every single time.

I like this approach. So first you make sure that no bottlenecks in finance. You’ve got the funding, you have a good cash flow system, you minimize your inventory, or maximize your receivable, actually, or actually receivable, slow your payables. So you optimize that and then you go to the operations. And then because now that’s the bottleneck, so how do you make sure that any sales you made can be delivered? And then you can scale the sales because you know that the back office is basically the pipe is wide enough to handle all the flow you’re getting. So, obviously later it can get clogged up, but then you can systematically divide it. I like this because when I read the goal, I love the idea of the theoretical constraints, but I was a little bit challenged about visualizing how these constraints really develop and why they are in certain places and not other places, and how do you analyze it and how do you optimize it. But I like the logic of where to start and then go from there. Obviously, if you have a huge bottleneck in operations, you start there, right?

Of course.

You don’t see any major bottlenecks, then you start with finance and work your way up.

Yep.

 And the chain. That’s awesome.

Yep.

All right. So we covered growth, we covered profit, we covered cash flow. So the three major things is reduce receivable, collect receivables, slow payables, and eliminate inventory to the degree you can. There’s a big three. And then exit. So how do you make sure that you create a valuable asset at the end of the rainbow for you?

Yeah. So to that point, you know, and I’ve bought businesses myself. I mean, I know the eyes of a buyer, right? What you really want in a perfect world is you wanna sell to a buyer who wants to buy cashflow. They’re not trying to buy a job. If our company stays small enough and it’s challenging enough that the person says, well, it doesn’t have professional management, I’m gonna have to buy this thing, go in there and run it myself, that naturally depresses the value of what you’re selling. There’s a couple of, you know, size thresholds that you need to get through for that to be true, but you also need to have a really well-run business. And I’m a huge fan of Keith Cunningham. One of his concepts he talked about when I went and did some training with him was around this notion of like, I want to sell that trophy business. And if you think about like a trophy hunter, it’s like, I want to sell that business. Somebody wants to hang on their wall because it’s almost bragging rights.

This business is so good. And so, I love that notion of how we think about business. Share on X

And it doesn’t have to mean it’s the biggest business in the world. It doesn’t have to mean that it’s got the most employees, but a business that can think is systematically what we’ve been talking about. And has all of that figured out and really understands like that common unit of measure, understands like resource allocation. So, if we scale sales to this level, I’m gonna need this allocated in my operations. And here’s what my financials will need to look like to support that. If you’ve got that figured out and it works, you can turn that business over to someone to run for you and you can own it remotely. You can also find a buyer who’s willing to pay at the top end of whatever it would be worth.

Yeah, I love that concept of building a trophy business. It brings in this idea of the buyer not just buying it for the cash flow, as you say, but it’s also buying it for the pride of ownership, for the bragging rights.

Yes.

So that’s extra goodwill that you build up. It’s like, maybe it’s a wrong one, reason to use, or maybe the time lapse is not right, but it used to be the Trump properties used to demand a premium in the market. Just because the slum’s name was on the building, it was worth more. I don’t know if that’s true anymore, but that’s the kind of thing that you want to do. Create that badge of validation that the buyer gets when they own that business. Okay, so you work on growth, profit, cash flow, and then you create the trophy business. And then what’s then? So you create the profit trophy business, you run it remotely, you sell it, and then that’s the end of the road, or then you start acquiring? What’s next?

Well, and so it depends. I mean, again, it goes back to that goal of the business owner, right? For me, in this new business, I’ve acquired multiple businesses over time. FinElevate, which is the one I’m working in now, which obviously is helping other businesses. It’s the only one I work in. So all my other businesses that I own have a professional CEO. All of this is being worked within those businesses and they’re successful. And for me, I get to be a financial investor at that point and not have to wake up every day, put on that shirt and go work within those businesses. And so, if the owner’s goal is to have a portfolio of businesses, that’s highly achievable in this model. If it’s to just maximize, sell at the highest number they can get, right off in the sunset, that’s their prerogative. But what I love about entrepreneurship is the ability to go after your own personal goal and not have to feel like you have to conform to the corporate storyline of what we’re trying to accomplish. And so if that’s true, I wanna help that business owner do whatever it is their dream is.

Yeah, I love it. One of my colleagues told me the other week and it kind of stuck with me that you need three things for happiness. You need health, you need good relationships, and you need a purpose. So, what I like about entrepreneurship is that it really can give you the purpose, plus it can give you the control over your own time. So you can create the health and the relationship as well. It’s an all-in package. If you’re an entrepreneur in the right way, you can get all three. Yep. And you can build the ideal life and your business can be the vehicle to get you to your ideal life. So I love that concept. All right, so finally, before we wrap up, my penultimate question is, what are you working on that most excites you?

So I’ll tell you, this is kind of funny, but I get really obsessive about topics. That’s how I ended up with 450 things in our playbook. But I am obsessing right now over marketing. I think that the world we’re living in, when you think about business models, I’ve been at times in my career selling in just purely enterprise level businesses where it’s all sales, it’s, you know, giant companies with a hundred VPs and you got to find the right one who might be interested in your project. It’s so exciting to me to be able to market businesses in an online way, in a way that just completely changes the nature of doing business. And it’s new for me. So this, you know, again, I know the financial side of how to help companies grow, but I’m loving to learn the actual marketing deliverables to help grow. FinElevate right now, but ultimately, you know, help our clients and for future ventures. I mean, this is what I love doing.

That’s fantastic. So keep on doing that to attract the marketing nut as well and then you can get this to the front end of the funnel. You’re working backwards: exit, cash flow, profit, growth. Then let’s put the marketing machine there and then you can essentially eliminate the growth bottleneck as well. The lead bottleneck and then the conversion, hopefully you figure that out. So that’s great. So, if people would like to learn more about you, or maybe they want to figure out what the 450, and maybe what is the 300 things of the 450 that they are not doing, they want to have your financial score or just have some questions and want to reach out to you, where can they find you?

Yeah, so I’m on LinkedIn quite a bit. You can just find me, I’m sure it’ll be in the show notes, Colin Sanburg on LinkedIn. You can always go to finelevate.com. That’s F-I-N-E-L-E-V-A-T-E.com. And also, a new thing we’re doing is kind of interesting, not what I was expecting, but we’ve actually started a Facebook group. We had a lot of people asking for, you know, just kind of information and to stay in the loop of some of the things that we’re working on. And so if you go to Facebook and you look up FinElevate Profit Playbook, we started a groups totally free. It’s basically, we’re doing a live stream every week and doing other, you know, drop another content to help people, but it’s been great because it just gives kind of that community element, allows people to ask questions and ultimately to learn from other people. You know, this, this entrepreneurship journey, we’re all on it. You know, we’re all at different places, but every one of us is trying to get better. So by no means have we have it all figured out. And I love the idea of, of pulling people together and everybody gets to get better as a team. So that’s what we’re doing.

That’s a great virtual mastermind, online mastermind.

Absolutely.

Do join that, figure that out, check that out. So Colin Sanburg, the founder and visionary of FinElevate with 450 different ways to improve a business and the main steps are growth, profit, cashflow and exit. Thank you for coming and sharing your ideas and insights. And those of you listening, keep checking in on this podcast because as you can see, there are really great entrepreneurs coming, sharing their innermost secrets. So make sure you subscribe to our YouTube channel and follow us, Steve Preda Business Growth on LinkedIn as well. Thanks for coming, Colin.

Yeah, thanks for having me, Steve.

 

Important Links:

This entry was posted in . Bookmark the permalink.