Business Lunch

Roland Frasier is a phenomenal negotiator. Not only was he a business lawyer for 12 years, but Roland has also founded, scaled, or sold 24 different 7 to 9 figure businesses ranging from consumer products to industrial machine manufacturing companies with adjusted sales ranging from $3 million to $337 million. You don’t manage that kind of success without knowing a thing or two about negotiating. So listen in today for some excellent principles to help guide you through a tough negotiation. 

If you enjoy this podcast, be sure to subscribe on ApplePodcasts, write a review, and share this episode with your business-minded friends. If you find yourself needing to do some negotiating right now, you may also find this episode, and this episode (both with Roland) useful.

Back in World War 2, in the 1940s, the Nazis occupied France, and parts of Burgundy were under their control. Orders were given to appropriate large quantities of lower quality French Burgundy for the troops, and higher quality wines were to be purchased and sent to Germany for the officers and higher-ups.

To save as much of their better wine that had not already been designated “Grand Cru,” several of the local producers gathered and established a new designation, “Premiere Cru,” to permit that wine to avoid appropriation.

The plan worked, and that saved quite a bit of wine. But, the best wine of the region was also at risk, and even if the wine was being purchased for the officers, the French didn’t want all of it to leave their region to be lost forever.

Several of the winemakers built false walls in their large, sprawling cellars beneath the city of Beaune in the heart of Burgundy to hide their most precious wines. Among those was Bouchard Pere et Fils (which Roland recently had the pleasure of visiting). Bouchard has an immense underground cellar that covers several blocks beneath the city above, and this cellar stores millions of bottles dating back to the mid-1800s. They chose one of their off the beaten path cellar rooms that held about 35,000 bottles as the primary storage spot for their best wines and then built a false wall behind which to hide their liquid treasure.

However, false walls were not uncommon, and the Nazis knew that they were likely to exist in cellars, so they were not shy about breaking through walls at the end of cellar corridors to check and see if anything was hidden behind them. So, when they arrived at Bouchard’s cellars, the Nazi soldiers did indeed knock down and break through the false wall Bouchard had built.

However, rather than finding the most precious wines, they found a cache of lesser wines instead and, delighted that they had foiled the winemaker’s attempt to hide these bottles, took them all away.

What they did not know, however, was that Bouchard had built not one false wall between its prized 35,000 bottles and the main cellar, but three, and cleverly stashed a large quantity of lesser wine bottles behind each false wall so that the Nazi’s would believe they had found the best wines and not go any further. Fortunately, the soldiers were not well-versed in French Burgundy terroir and therefore were unable to discern the quality level of the wines they found hidden behind the first wall.

The plan worked, and thankfully, the most prized bottles survived throughout the war, hidden safely away behind two additional false walls.

There are several lessons in business and negotiation that we can take from what Bouchard did.

Whenever you have an absolute that you cannot give on and do not want your negotiating opponent to discover, take the time to construct several “false walls” that you can allow them to “breakthrough.”

This will allow you to give them the pleasure of getting something in return as you concede the issues that you are perfectly comfortable conceding, which will, in turn, be more likely to allow you to protect your most precious negotiating points.

Listen for Roland’s examples!

The French resistance could have opted to take a stand in the cellars and fight it out with the Nazis, but that would have risked the destruction of the cellars and the wine within, as well as the loss of hundreds of French lives.

When fac...

When you put yourself out there online, the haters are going to find you. How do you keep them from getting under your skin?

In today’s episode, host Roland Frasier shares honestly about some recent critical feedback he’s received on his paid ads online. If this were constructive criticism, that would be one thing. But some of it has been hateful and hurtful comments—about his intelligence, his motives, and even his facial features. There’s never success without criticism. Roland encourages you to understand that this hate has nothing to do with you and everything to do with the hater. They’re either angry or jealous or insecure or just having a really bad day. You can’t let them stop you from doing what you were put on earth to do.

Listen in to get some helpful advice about dealing with hateful critics in a healthy way.

IN THIS EPISODE YOU’LL LEARN:

• Mindset shifts that will give you much-needed perspective 
• How to not take the hate personally when that’s all you know to do  
• Creative (and funny) ways to deflect criticism and hateful comments
• 3 things to always keep in the front of your mind

OUR PARTNERS:

• 7 Steps to Scalable workbook
• Get a free proposal from Conversion Fanatics
• Get 3% cash back on your ad spend with AdCard
• Get my book, Zero Down, FREE

Thanks so much for joining us this week. Want to subscribe to Business Lunch? Have some feedback you’d like to share? Connect with us on iTunes and leave us a review!

In an interview with Roland Frasier, Marcus Lemonis, host of the hit TV show, The Profit, breaks down what really matters most in business.

Marcus was scheduled to speak at T&C 2020, but the event never happened. Roland and Marcus still had a chance to sit down and chat though, and this podcast episode revisits that brilliant interview.

And exciting news! Marcus will be speaking at Scalable Impact Live in Austin, TX on November 2-3, along with NFL Hall of Fame running back Emmitt Smith and Kendra Scott, who has had a billion dollar exit in her fashion brand.

Marcus is known for looking at the 3 Ps—people, product, and process—when he’s evaluating a business to invest in. When asked to break that down, he said it’s important to first establish the fact that this framework works for everyone. It’s an easy way for him to communicate with people on TV about how to think of their business differently. The application is universal.

Product, Process, People

These are the three things that matter in a business, but you have to rank them in terms of priority, Marcus says.

Product is the easiest one to think about. A relevant product or service is something everyone can understand. It’s got to be real time, digestible. It has to be able to change when the environment changes, and it’s got to be driven by the market, not your emotion.

Process is all about how you develop the idea, how you properly document it, build the case study around it, test it, roll it out to people, and continue to improve on it. Where a lot of companies die is that they don’t evolve, and you have to. Your process has to evolve and take into account new technology, trend changes, etc.

People are the most important. It’s easy to say you care about people, but Marcus has started to rev this up a little more recently. Start with yourself. You can’t respect other people if you don’t respect yourself.

2020 has been a crazy year. It has wreaked havoc and played tricks on people’s minds. We’ve lost a lot and need to take stock in who we are as individuals, family members, community people, and leaders. Then apply that to people who work with you, not for you. We get frustrated with people, and we change our tone. We have this mindset of you work for me, instead of you work with me. We can be collaborative and thoughtful and still be good leaders.

“I can go into any business and help them to think differently about themselves and other people,” Marcus says. “If you’re not capable of thinking differently, you shouldn’t be a leader.”

What Is So Attractive About Turn-Arounds?

The Profit is all about turning around businesses that are having challenges. What makes someone want to tackle something so difficult? Marcus says he’s always just been more at home with looking at things that are broken (processes, products) and really understanding it. “I’m more comfortable with things that are fractured,” he says, “because I like to be the guy with the glue who puts things back together.”

How does he decide when to help people and when to cut his losses? He says a lot of people think he’s crazy. “Why do you waste your time with knuckleheads?” people ask him. And he does it because of what other people learn while they watch him do it. He invests time in people to prove something to himself, to help others, and he knows it also resonates with the people watching. He wants to raise people’s self-awareness about their behavior.

How does he deal with people attacking him while he tries to help them? Well, that part isn’t much fun. When the cameras leave, those relationships don’t always work out. If they’re delusional about themselves, they usually don’t change. Don’t rely on the other person to dictate your behavior, he says. You can’t let people take you off your game.

The Profit is one of the longest running shows on television today. He’s ultimately learning for himself and teaching others to think differently. It would be easy to kick people to the curb, but it’s better not to. Marcus thinks of people like himself when he was starting his own business. How would he have wanted people to have treated him while he was struggling? That’s what he does for others.

The key to business isn’t about being the toughest person in the room and having a poker face. We all struggle in our businesses at some point. Businesses closed daily because of Covid. At the end of the day, be transparent about who you are and where you’ve come from, and don’t try to create a fantasy life. Create wealth for yourself that allows you to have freedom and to invest in others. Don’t create wealth to separate yourself and have an elitist mentality.

A Business Partner Has to Bring Capital, Experti...

There are three ways to buy a business—a normal acquisition, a no-money-down acquisition, and a no-money-out-of-pocket acquisition.

Of those three kinds of deals, Roland Frasier has a favorite. Roland has bought and sold a lot of businesses over the course of his career, so he knows what he’s talking about. In this bite-sized snackable episode, he shares which acquisition deal is his favorite and why—and how you can make it happen for yourself.

3 Types of Deals and the Distinctions Between Them

A lot of people ask Roland what the ROI is on no-money-down deals, but first you need to make a distinction between the three main types of deals.

1. Traditional acquisition deals
2. No-money-down acquisition deals
3. No-money-out-of-pocket acquisition deals.

With a traditional acquisition deal, you need a lender, whether that’s a bank or a fund or an individual or an SPAC (special purpose acquisition company) or whatever. Typically, they’ll provide 70%-90% of the funding. That’s going to be debt. These creditors will loan you this money, then expect you to come up with the difference, the down payment. They typically don’t want that to be borrowed. It has to be your money so you have skin in the game.

Let’s say you’re going to acquire a $5M company. You get a loan for $4.5M and put $500k of your own money down. You do some cool things with it, grow it, and sell it for $10M. That’s a 100% return on your investment, but it’s a 2000% return on your $500k down payment.

That’s when we start thinking of more creatively financed deals, where we’re not coming out of pocket at all. That means our ROI is really going to be infinite, because we have zero investment.

The first kind of deal where you’ll get infinite return is no money down. These are rare as you get into larger deals. There is literally no money going into the seller’s pocket at closing. You’ve got to find a seller that’s totally cool with 100% financing. These deals are very common in small companies, but less common as you get above $1M. You’re probably buying a company from a motivated seller that’s not that great.

The quality of deals, size of deals, and number of available deals with a “no money down” deal is pretty low.

The “No Money Out Of Pocket” Deal

In between the “no money down” deal and the traditional deal is a deal Roland likes to do, and that’s called “no money out of pocket.” No money out of pocket is significantly different because the sellers often receive a whole lot of cash at closing. The only difference is that it’s not coming out of your pocket. And you don’t have to tap your personal credit or assets.

Roland and his team have come up with 219 different ways you can finance your company without getting a commercial loan, and adding to that list all the time. They teach this in an 8-week course, and even then they don’t scratch the surface. What it boils down to is that you’re using the assets that exist in the company and some other creative financing techniques to provide the seller with whatever down payment they want at closing.

You can do hybrid deals where you use some of these strategies and some commercial loans, but it’s really fun to play the game of “how can I do this without any commercial lending?” One thing you can do from the standpoint of credit is use an SPV (special purpose vehicle), a company that’s set up for a special purpose of acquiring the business.

Those are the three types of deals you’re looking at doing. When we think of ROI, we’ve had to come out of pocket zero dollars, we’ve gotten the seller money at closing, so it increases how many deals are available, and we’ve come up with creative ways of financing. And we’re not limited to how much money we have.

When you do a no money out of pocket deal, it’s a win win win. You can buy an infinite number of companies, you don’t have a capital constraint of a down payment, and your return is infinite.

RESOURCES:

• ethicallyprofit.com
• getepicchallenge.com
• Scalable.Co
• The Ready to Lead podcast
• DigitalMarketer Podcast
• Perpetual Traffic podcast

OUR PARTNERS:

• Get a free proposal from Conversion Fanatics
• Get 3% cash back on your ad spend with AdCard
• Get Roland’s book, Zero Down, FREE

Mentioned in this episode:

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What is often called “the five evolutions of a business” can also be thought of as “the five exits every entrepreneur makes in a business” over the course of their entrepreneurial journey.