236: Invest in What You Know Best with Richard Parker

16
Aug

Richard Parker, CEO of Diomo Corporation, is driven by a desire to make business ownership attainable for anyone committed to the journey, advocating the principle to invest in what you know best.

We learn about Richard’s path from growing up in a lower middle-class neighborhood to becoming a successful business owner and mentor. He explains his 4-step Business Buying Framework, which includes discovering the right business for you, embracing imperfections, having a strong need to buy (burning the boats), and following a proven blueprint. He emphasizes the importance of understanding uncertainty, narrowing down options, and surrounding oneself with experienced advisors. His systematic approach helps prospective buyers navigate the complex process of business acquisition, turning their dreams into reality.

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Listen to the podcast here

 

Invest in What You Know Best with Richard Parker

STEVE PREDA: Good day, dear listeners, Steve Preda here with the Management Blueprint podcast. And my guest today is Richard Parker, the CEO of Diomo Corporation, to be found on richardparker.com, a platform helping the prospective buyers of businesses with a proven systematic approach so that they will understand what to do at each stage of this fascinating, yet difficult process, buying a company. Richard, welcome to the show.

RICHARD PARKER: Thank you, I appreciate you having me. It’s great to be here.

STEVE PREDA: Yeah, you’re a unique guest, a unique topic here. I don’t think we had anything like that in the last 200 plus episodes. So I’m curious to get into it. But before we start, I’d like to ask you, what is your personal “Why” and what are you doing to manifest it?

RICHARD PARKER: Great question. I like starting off with a nice deep question. Perfect. So my personal “Why” would be to make business ownership attainable to anybody. Because there’s so many myths and misconceptions and one of the things you mentioned earlier, the difficulties that I look at it, it’s not necessarily difficult, but it’s complex but it’s certainly obtainable by anyone who has the mindset, the attitude and the aptitude to do it. So my “Why” in one sentence would be to make business ownership attainable to anybody who's committed to doing it. Share on X

STEVE PREDA: Why is this important to you?

RICHARD PARKER: Probably a number of reasons but certainly that at the top of the list would be the fact that I grew up in a lower middle-class neighborhood, hard-working parents, and my mother had three jobs at one point. I never went to university, went to two years Canadian version, I live in the US now for many, many years, but went to the Canadian version of like community college, and I saw that how through some little bit of creativity, a lot of hard work, and probably double the amount of luck that a guy like me, and I’m not the smartest guy in the room, can make financial dreams and other dreams come true through business acquisition. So I like I’ve been very blessed. I’m very grateful. I’m at the stage in my life where I feel it’s my obligation to be teaching and helping people. And besides all the businesses that I’ve been involved in, I just get incredible gratification from being able to help the average person turn their hopes and dreams into reality.

STEVE PREDA: I’m really curious about this because obviously I interviewed a lot of entrepreneurs, I’ve worked with entrepreneurs, I love entrepreneurship, but I’m still wondering, is this good for people to be entrepreneurs? Is it good for the average people to be an entrepreneur or is it maybe a mixed bag, maybe it’s more negative than positive?

RICHARD PARKER: Well, I think for the right individual, it’s overwhelmingly positive. At the same time, it’s not necessarily for everybody. I mean there’s the world has employees and it has employers. Some fit into some categories and others fit into the other category. My take on it is if you have any inkling or any desire whatsoever to get into your own business, whatever that may look like, I just think you owe it to yourself to explore what paths are available to do that. You don’t necessarily have to do it, but it just seems foolish to me not to at least learn what’s involved and whether or not you want to do it. So is it for everybody? No, but it’s for a lot more people than one would think.

STEVE PREDA: I love that answer. So what is it the kind of person that is good for entrepreneurship or for whom entrepreneurship is a good potential fit?

RICHARD PARKER: Well, we talked about some of the altruistic stuff if you feel this burning desire to be an entrepreneur, but a lot of people can’t get themselves through to the finish line because they fall off too quickly. They get setbacks that are going to certainly arise. The same way, it’s a great test going through the process of acquiring a business or entrepreneurship because much of what you encounter along the way mirrors what you’re going to encounter as an entrepreneur. Meaning there's ups, there's downs, there's failures, there's successes, there's pivots, there's change in plans. Share on X And those are all the things as you know well as an entrepreneur, those are the things that are common to business ownership or entrepreneurship, whatever guise that may be. And so, I think that people have to learn most importantly that, I have a number of sort of rules, if you will. One of the things is I like to tell people that you should embrace uncertainty. You have to learn how to embrace uncertainty because it’s not devastating. And one of the things that I’ve tried to teach my kids, especially over the years, because there’s been incidents, they’re all adults now, but I’ve tried to teach them that, when you’re faced with uncertain times, and I see this with individuals that are considering entrepreneurship, or oftentimes with business owners, there’s some uncertainty in their life, personal, but certainly on the professional side, and the first reaction is usually a knee-jerk reaction to deal with the uncertainty. Like, people don’t like uncertainty, and so they make, oftentimes, they find foolish decisions just to eliminate the uncertainty, as opposed to taking a step back and my philosophy has always been, with individuals buying businesses and certainly with my kids, I’ve told them look when you’re faced with uncertainty, because you will be, rest assured. It’s a long life and you will be faced with uncertainty. The first thing you have to do is decide how long do you have to solve this problem? In other words if your house is on fire and your family’s inside you got to go like this. You got to run into the house and take care, but if you have a strategic decision and you’re looking at a business and trying to figure out some financing, it’s uncertain but you don’t have to make that decision the same way you run into a house on fire. So I find what happens is individuals that are not used to running a business when they’re going through this process, the uncertainty oftentimes cuts them off at the knees, whereas they should embrace it and understand this is just part of life, it’s part of business. You have to embrace it and look at it in a good way, because if you do examine it in a good way, oftentimes you're going to come out the other end with a much better outcome. Share on X

STEVE PREDA: Yeah, I think this is very true, because essentially the way you create the value is by embracing and managing some kind of an uncertainty. And I recall I was the advisor of the CEO of a big commercial bank, and I had the privilege of sitting in on meetings and listening. I was in my early 30s and I basically I saw the executive team and they were deliberating on things. And we had a CEO who was over 60 years old, very experienced, chain smoker of cigars, a Frenchman who had run a regional bank in France for 30 years. And there was this discussion about risk, what to do, and how to avoid it. And then he said, wait a moment, gentlemen, our job here is not to avoid risk. It is to pick the right kind of risk that we understand and then manage that risk. That’s what we are in business for. And it really stuck with me, this idea. Okay, so it’s all about embracing uncertainty. One other thought that came to mind while we were talking was that I believe that what entrepreneurs do is they are willing to put themselves into the uncertainty and have the uncertainty as a forcing function to make them come up with the goods, make them come up with the solutions that the average person doesn’t want to go through the pain of forcing themselves into a situation where they kind of burn their boats, but that is where they come up with the ideas which then can help them be successful. Do you see that as well?

RICHARD PARKER: Absolutely. 100 percent. Definitely. And there’s a different motivation, as you have the opportunity, when you speak with true entrepreneurs. They’re motivated by goals that are not necessarily “normal” to people, meaning it could be they’re not necessarily motivated by the money. Sometimes a problem, the solution to a problem is the motivation, is figuring things out and then embarking on a better path. And so, I find that entrepreneurs, when they have situations or problems, it ties into the gentleman that you were talking about, who ran the bank, is they don’t see it necessarily as risk, they see it as reward. Now they’re not going to be reckless, but they understand when you come out of something difficult, you generally come out much stronger on the other side, whether it is a business solution, a relationship. I mean, when you solve a problem, you’re generally stronger. And entrepreneurs just have it in their DNA to be able to do that, not only to be able to do it, but to recognize that they have to do it and not just put it off. They’ve got to address it and solve the problem. It reminds me, many years ago there was a book called Thriving in Chaos by John Peters. Terrific book. I don’t know if you remember that.

STEVE PREDA: Yeah, I read it.

RICHARD PARKER: Yeah, you’re younger than me, but it’s from the 80s, right? And one of the things that he was talking about is when General Motors bought EDS, which was Ross Perot’s company. And he was frustrated beyond belief, Ross Perot, because he said at General Motors, if someone sees a snake crawling in the hallway, they set up a committee on snakes. At EDS, we kill the snake, that’s it. And so it was like, the compare and contrast the two environments. And it was like, that’s the entrepreneur kills the snake.

STEVE PREDA: Yeah, love it, love it. All right, so let’s talk about a framework. So you are helping entrepreneurs buy businesses or wanna be entrepreneurs, prospective entrepreneurs, buy businesses, and you developed a four-step business buying framework. So can you explain to our audience what that framework is and how it works?

RICHARD PARKER: Okay, certainly. So there’s two parts of it. One is, which I’ll talk about in the last point, which is a whole module, a series of modules, but basically four key things, which is, number one, you have to understand what is the right business for you to own. Now that doesn’t mean there’s lots of good businesses, but if they’re run by the wrong individual, they go south quickly. It’s not like overpaying for real estate, where if you could service the debt, time heals every real estate area. If you buy the wrong business, you’re going bankrupt. So the right business is not necessarily a business that’s a good business, I’m a fundamental believer in that, but it means, is it the right business for you? And the mantra that I’ve always used is whatever it is that you do best has to be the single most important driving factor of the revenue and profits of any business you consider purchasing. So the goal is you have to match your greatest skill set with a business. And the only way to do that is go out and see a lot of businesses and speak to a lot of business owners and what do they do every day and what drives the business because people tend to think what they’re good at is what they enjoy and it’s not necessarily their greatest skill set and everybody has one. Sales, marketing, operations, putting a plan together, manufacturing know-how, whatever the case may be, you have to match your greatest skill set. The second thing is, which we talked about embracing the uncertainty, I look at about embracing the imperfections. When you buy an existing business, there’s no such thing as a perfect business. The only perfect business is the one that isn’t in business yet where you can have all these ideas and think it’s terrific but embrace the imperfections and understand there’s going to be warts, there’s going to be blemishes, you have to separate like your former colleague, this 60 year old cigar smoker from France. There’s risk, you have to solve for it and mitigate it and understand what is really a risk and if it’s overbearing then you can’t proceed with the acquisition but being able to embrace the imperfections, understanding that there’s no such thing as a perfect business. You mentioned very early on, which is this concept of burn the boats. I’ve dealt with tens of thousands of business buyers over my career, 30 plus years. We’ve sold 100,000 copies of our program. If you were to take and separate those individuals that get to the finish line from those who don’t, and understand in our industry, the statistics are dismal, over 90% of people who begin to search to buy a business never complete a transaction. Our success rate is almost the inverse at 82% who do. But if you were to look at the groups that succeed versus the group that fail, one common item is almost pervasive with everyone who succeeds is they have a need to buy a business. They don’t just want to buy a business, they have a need to buy a business. They need to buy one to improve their lifestyle. They need to buy one because they’re not willing to put up working for a boss anymore, they need to buy one because they don’t want to have a limit on their upside, they need to buy one because they want to improve the lives of others, they need to buy one because they want to build value. So that’s the third when I talk about burn the boats, or in your language, is they have this need versus a want. And the fourth thing is a blueprint, which is if you embark on something that you’ve never done before, no matter how smart you are, no matter how much money you have. If you would bark on a process that you’ve never done before, the oldest formula for success is find someone who’s already been successful at it and copy them, or align yourself with people that have solved the problem. Don't just surround yourself with people who have the same problems, surround yourself with people who have solved the problem. Share on X So having a blueprint of what to do at every one of the steps, because there’s 23 steps in the buying process, having that blueprint is critical. Knowing what you need to know, what you need to do and how to do it.

STEVE PREDA: That’s great. So, discover, is this the right business for you? Embrace the imperfection, burn your boats and follow the blueprint. Now, I get these, I’m wondering about the burn your boats. I mean, it seems, it sounds very simple, burn your boats. But what does it take for someone to get to the point when they are willing to light the match and throw it on the board? So what does it take to be able to burn your boats?

RICHARD PARKER: I think there’s two things that it takes to burn the boat. The one is the individual who reached the point and say, look, I’m not doing this anymore. I’m not working for anybody else anymore. I’ve got a good education, I’ve got good skills. I’m tired of having a limit to my upside, or someone always putting their thumb on me, never letting me grow to the way I want to grow. I can’t build value in my business. So the people that have already reached that I need to do this, that’s an easy category. It’s the other ones where I think it becomes a little more difficult, which is the ones that are not really sure. And so for those individuals, I say, if you want to transition from being a business want to buy versus business need to buy, the turning point comes when you would start to investigate the process. Look at what’s involved, understand, go out and meet with some business owners. Finally realize it’s generally a confidence issue. They don’t believe that they have it in them to be an employer for whatever reason. They may or may not have had a successful career but they lack the confidence and so what I find with those individuals, go speak to business owners that are moderately to very successful. And you’re going to find out that by and large, they’re not sending men to the moon. These are just average people. They’ve locked themselves into the right industry. They’re repeating something over and over again. And if there’s an economic benefit to it, and thus they are successful. So go out and expose yourself to the world and you’ll find out that, hey, you know what, this guy or this lady that I just met who’s running this $12 million business is making $2 million a year. They're not that smart. They're just really good at that particular thing. Share on X And so when you start to get that type of exposure, I think people start to build the confidence and they can start to really understand the burn your boats mentality of having that need. Because it becomes infectious, right? You’re very excited about this idea and, hey, I can do this. It’s not just for rich people, it’s not just for big companies. This is really doable. So when you layer on the knowledge or get the right advice, you say, my God, I could do this. And this can change my life. So I think they end up going into the need camp. And then they see burning your boat, hey, I’m getting this done. No matter what, I wanna do this.

STEVE PREDA: Yeah, it’s really interesting. It’s fascinating how you explain it. I see some of the people who actually need to do something like that, they just don’t allow themselves to see their needs. They are telling themselves stories. They are falling victim of a false sense of security. As you were explaining, I remember that 12 years ago, my wife and I, and with four young kids, we moved here to the United States. We settled down in the city. We didn’t know a single person. And basically I sold my business in Europe and we moved here. And my wife was a little bit nervous, although she really wanted to do it as well, but she was very nervous about it. And I said to her, listen, do you know that we are destined to succeed? She said, what do you mean, destined to succeed? How can you even say that? Well, listen, we have no other choice. We are destined to succeed because we have no other choice. And this really was the case. And then I joined this organization called Vistage, which was a peer mentoring organization. You’re familiar with it. And I was an intake of 49 other people. So 50 people in this cohort, they trained us for a week and then they said, okay, now you set up your peer group, you recruit the CEOs, 12 CEOs, and I was the first one to launch my group, even though I just arrived and so on, because I really had to do it, this was like a gun to a head, I had to do this, and then it worked. So sometimes I think about tapping into this feeling that I just have to put myself into this realization that I need to do something so that I can be more successful.

RICHARD PARKER: It’s a great example because it’s not only talking about the need versus want, and I’ve told this story many times about how I got into my own business, but what it really comes down to, when you don’t have options, it’s very easy to make decisions. You have no choice. You’ve got to go one way. And so that’s why when we talk about this need to one thing, when people get to that point they say, you know what, I don’t have any options. Going to work for someone again is not an option. My only choice here is I have to get into my own business, whatever that looks like. And so people always exclaim, oh, it’s great to have options. Well, not for everybody.

STEVE PREDA: No.

RICHARD PARKER: Because sometimes, the options paralyze their decision-making capability versus when you say, if you have less options, it becomes more clear that you don’t have a choice. Here’s what I’ve got to do. And we talked about earlier the house on fire, that’s different than two houses on fire. If the house is on fire, you go in and you do what you have to do. So I’m a big subscriber to the fact that when you have a number of options, narrow them down fast based on probabilities and then give yourself, make the choice obvious. Because if you’re just thinking about 10 different things, you end up doing nothing. Most people anyways.

STEVE PREDA: Yeah. Arnold Schwarzenegger has a video on YouTube that you may have seen, but he actually says that the way to succeed is to have no plan B. So don’t have a plan B.

RICHARD PARKER: Don’t have a plan B.

STEVE PREDA: Plan A and make sure that you just don’t give yourself wiggle room out of a plan A, just make the plan A happen.

RICHARD PARKER: Yeah, it’s a great way of phrasing something very similar to what you and I have both said. Just you focus like a laser beam and go, and you’ll pivot, that’s it.

STEVE PREDA: Yeah, exactly, you create the plan B if you must, but don’t have it to begin with. Okay, so let’s talk about this statistic that you quoted that over 90% of searchers never buy a business. So why do they end up not buying it? Is it because they don’t have a real need or there are other things that prevent them from buying a business?

RICHARD PARKER: First of all, I’ll tell you that I had this conversation recently on a webinar I was doing. I hate the term searcher because to me it’s just like just the label itself means like you’re on this endless quest to keep searching and we have these people on our webinar, I said you’re forbidden to use the word searcher, we’re called finders, that’s number one. Okay, so I know it’s minor but actually it’s a mindset and so there’s no question that the single biggest reason why people don’t buy a business, they have no clue what the heck they’re doing, that’s it. I wish I could tell you something really elaborate but these individuals who embark upon this process, and you see it more now with individuals who have MBAs from renowned business schools, but they have no operational experience, no track record, oftentimes no money, which is not terrible, no money. They have no idea what to do, but they somehow believe that the education that they got at business school has something to do with buying a business, and the two don’t conjugate. One thing is education, the other thing is knowledge. And so you have way too many people in the process that simply do not take the time to educate themselves properly. Or they spend ridiculous amounts of time online searching endless business for sale listings, trying to figure out which, if any, is right for them. And I tell them, you’re doing it backwards. First, you have to figure out what type of business is right for you, then I promise you it’s easy to find and buy it. You’re just doing it the whole wrong way. And then you get very frustrated. And there’s a formula. I know that all clients, I mean, it’s 4-4-4. It takes you four months to look. You should be able to identify four categories and make four offers. And then a month of due diligence, a month of negotiation, the opposite actually, negotiating due diligence. But they don’t have a blueprint. They don’t have the knowledge. And for some reason, they think that this is gonna be easy. And there’s a lot of misinformation on the internet. And a lot of this crazy information of buying these businesses for no money down making hundreds of thousands of dollars and close a deal in 12 days or just craziness. So I think that they don’t know what they don’t know and oftentimes too big an ego to admit, hey, I’m a dumb schmuck. I got to get educated and take a step back and you go about it in the right way and you follow a good methodology, you’re going to be successful. But most of them just think that it’s like buying a house. And it’s not. There’s nothing in common. The only thing that you have is you’re buying something.

STEVE PREDA: Yeah, I agree with you. Although I would say that sometimes doing less can help an entrepreneur, because I see a lot of experts who are like consultants and they went to work at McKinsey and consulting or they worked in corporate America and they know of so many ways that things won’t work, that they become paralyzed and they become worried that they won’t be able to mitigate all those things.

RICHARD PARKER: I agree with you.

STEVE PREDA: And someone who has less experience, they will tackle one thing at a time and they will not feel overwhelmed.

RICHARD PARKER: Yeah, I mean, I agree with you from a practical standpoint. I think that’s actually more applicable when someone owns a business, isn’t operating it, and tries to bring in a consultant to help them because they’re generally very impractical. It’s generic device. It’s like the king of generalities. There’s nothing specific. And I think that’s very applicable in businesses trying to bring in an outside third-party consultant who doesn’t have exact industry experience. But what happens in the buying process where I would disagree is the knowledge is critically important from the right person. Like you wanna take your advice from someone who is already at where you wanna be. Whatever that advice may look like, they’ve already solved the problem, not in general terms. But there’s a path, there’s a navigation, there’s a road, there’s a roadmap, it’s like a GPS during the buying process and certain things you must do. People become frustrated, so if they don’t, if they try to figure it out on their own and they’re not asking the right people questions or advice, they just spend too much time mired in the looking stage, the searching stage. And after a while, they just give up because they realize they’re not making progress. And so I agree with you fundamentally. I think that’s more applicable once you own the business, make sure you’re getting the right consultative advice. But during the process of going about doing it, you need the right guardrails, you need the right education because it’s so easy to get lost in the process and think you’re making progress, but you’re actually going backwards because you’ve spent an inordinate amount of time and you haven’t gone anywhere.

STEVE PREDA: All right. So if people would like to go about this the right way and they are willing to dedicate themselves to these four principles of the right business for them and embracing imperfection, burning the boat, willing to follow a blueprint, and in fact, if they want to follow a blueprint, where can they go and how can they find that blueprint and what can you offer them?

RICHARD PARKER: What I would suggest to people, I developed an entire website of resources for buyers and that includes tons of free articles and free reports and what have you. And yes, we do have a course that teaches people how to buy businesses, takes them by the hand, we offer support, consulting support. And so if you go to richardparker.com, there’s tons of information there, lots of free information and they can really learn about the processes we talked about earlier. They’ll learn about a bunch of different things and then decide if you want to do it or not. You don’t have to do it, but at least if you have an ounce of entrepreneurial blood flowing through your veins, I mean, personally, I just think you owe it to yourself to go through the exercise and see if this is for you and do it in a meaningful way. And then you could decide. And I think people will come to the conclusion pretty quickly that this is doable.

STEVE PREDA: It’s absolutely doable. And in fact, I did it because I had a need. I had this dream since I was a teenager to become an entrepreneur. But then I had, I was in a golden cage basically because I got a job offer from a great industrial company. I was working in different countries and so on. And then they put me on a fast track management program, I was overpaid, frankly, for what I knew at the time, and I couldn’t leave. And then suddenly, the music stopped, and I got fired, and then basically I didn’t have to make a decision anymore, I could just go for it, and it was an awesome experience. So if you have this desire to become an entrepreneur, definitely check out richardparker.com and see what it takes, what are the, I think, 22 steps you mentioned in this process?

RICHARD PARKER: 23, yes.

STEVE PREDA: 23 steps. So what are the 23 steps and what it takes and see if you can figure out the right business for you. Maybe Richard can help and give yourself a chance because really, I’m sure the beauty of it is that you can get up every morning being excited about doing your own thing and your own creativity and it’s the no limit thing that you can grow it as fast as you’re able to and you have it in you and why look back on life with regret not having tried it. So I’m all for it. Richard, thank you very much for coming on the show and sharing your goodies and giving a direction for people who feel the entrepreneur urge within them to explore. Thanks for coming on the show and listening.

RICHARD PARKER: Thank you, I appreciate you have me, great questions and again thank you for your time.

 

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