The Small Business Black Holes with Alan Pentz

The conversation kicks off with Greg's philosophy that most financial statements obfuscate the core drivers of a business. He advocates focusing on labor as it creates revenue, not the other way around. Greg outlines his pioneering "Labor Efficiency Ratio" which measures gross margin against total labor cost. He demonstrates how analyzing this ratio, along with the splits between direct and management labor, illuminates operational strengths and identifies underperformance. Greg emphasizes that beyond just a health diagnostic, these ratios guide strategic labor deployment.The dialogue dives into Greg's insights on achieving exceptional returns on invested capital, targeting at least 50% for most businesses. He outlines a framework for calculating the true equity invested and setting profit targets accordingly, illustrating the superior returns small businesses can generate.Alan and Greg discuss Greg's "100 Company Model" - an aggregated real-time data set across industries that provides unique economic insights. They analyze current trends showing an "upstairs-downstairs" economy, with management failing to adjust labor despite declining revenues for a third of companies. Greg stresses monitoring rolling 3-month labor and profitability metrics to navigate market volatility. He advocates building a capital buffer to withstand potential shocks after the 2024 election. Throughout, Greg emphasizes making data-driven decisions rather than relying on intuition alone.Episode Highlights:[2:15] Focusing on labor-driving revenue instead of revenue-driving labor[7:00] The "Labor Efficiency Ratio" framework[10:48] Using DL/ML ratios to analyze labor strategy beyond just diagnostics[18:22] Achieving exceptional 50%+ returns on invested capital[28:00] Insights from Greg's "100 Company Model" data set[40:24] An "upstairs-downstairs" economy with mismanaged labor costs[43:30] Monitoring rolling 3-month metrics to navigate volatility[48:30] Advocating for data-driven decision-making over intuitionQuotes:"The numbers are not unique, and we have perpetrated this crime upon entrepreneurism.""You can't make one general statement about the economy and be correct.""If you carry inventory, how much gross margin do you get for a product you don't have? Nothing.""You've got to look at it and say, 'Am I capital efficient or not?'"Episode Resources:Greg Crabtree on LinkedInSimple Numbers websiteAlan Pentz on LinkedInCorner Alliance websiteThe Small Business Black Holes Podcast is handcrafted by our friends over at fame.so Check out our three most downloaded episodes:Defining and Tracking Outputs: The Key to Employee Performance with John SeifferSmall Business Strategies and Market Dynamics with Jon Matzner, President at Lazy LeverageFranchising: The Best Business Model with Brian Beers

Aleksey Chernobelskiy brings a wealth of expertise to this episode, having worked as an SVP at Store Capital overseeing underwriting for their massive real estate portfolio, before starting his own business advising limited partner investors. He provides a enlightening behind-the-scenes look at how to properly evaluate private real estate deals as an LP.Aleksey emphasizes the importance of not blindly transferring one's risk tolerance from entrepreneurship to investing. As an LP, you have less control, so assumptions around things like future valuations, rent growth, interest rates and refinancing must be rigorously stress-tested. He highlights common downsides that LPs often overlook, like depreciation recapture and tax inefficiencies for non-real estate professionals.The conversation dives deep into impacts of the current market environment, with deals from 2020-2022 facing major challenges like plunging valuations, rising rates, and financing difficulties. Aleksey explains the harsh realities of capital calls and preventative equity cramdowns that LPs are now navigating. He provides a pragmatic perspective on which asset classes may be more resilient.Throughout the dialogue, Aleksey stresses the need for LPs to truly understand the risks rather than being lured by rosy tax benefit projections or inflated returns. He offers tips on analyzing sensitivity to variables like exit cap rates and renovation costs. The discussion also covers Aleksey's transition into entrepreneurship with his newsletter, podcast, courses and consulting services tailored to LPs.Quotes:"I think feeling bored is actually the signal from the body that there is something deeper that hasn't been tapped into yet. The exercises that we use bypass the frontal lobe and tap into the nervous system to uncover that path.""The broad strokes is digital ops is AI tools plus global talent plus automation. The underlying idea is that you're designing processes and workflows and digital infrastructure in order to support the use of AI and automation and a global remote team to lower your cost structure and increase your task volume.""I think 90% of those LPs don't understand. Then you have to keep in mind like when you see a few hundred million, it might be in the billions, by the way, I don't know. But when you see those numbers, it's like, Oh, like you know, that's one check from, like, a pension fund. Like, what's the big deal? Right? But the reality is we're talking about people that have invested 50K."Episode Resources:Aleksey Ivanov on LinkedInLP Lessons WebsiteLP Lessons PodcastAlan Pentz on LinkedInCorner Alliance WebsiteThe Small Business Black Holes Podcast is handcrafted by our friends over at fame.so Check out our three most downloaded episodes:Defining and Tracking Outputs: The Key to Employee Performance with John SeifferSmall Business Strategies and Market Dynamics with Jon Matzner, President at Lazy LeverageFranchising: The Best Business Model with Brian Beers

In this episode of the Small Business Mentor podcast, Alan Pentz is joined by John Seiffer, known as @BetterCEO on Twitter. John is a CEO coach and author of the book "Output Thinking". Join them as they discuss John's framework for defining and tracking employee outputs to boost productivity and scale a business. They also dive into John's Stages checklist model for analyzing a company's growth phase.John shares the story of building and eventually exiting a VHS rental business for apartment complexes that he started with a partner in the early 1990s. The business model involved renting and rotating movie collections to properties on a monthly basis. Despite technological disruption from DVDs and streaming, the business lasted until 2016, even outlasting Blockbuster and Netflix's DVD-by-mail service.The conversation then turns to John's Stages checklist, which defines the characteristics of Stage 1, 2 and 3 companies across dimensions like owner focus, people, energy, accounting, and wealth. John emphasizes that most small businesses are Stage 1 "owner job" companies with little enterprise value, and cautions entrepreneurs looking to acquire to really understand what stage a target company is at.Finally, John explains the core concepts from his book "Output Thinking". He argues that business owners often get frustrated by the disconnect between what they expect employees to produce and what actually gets done. The solution is to concretely define the outputs required for each role and use that to hire, train, and evaluate staff. John breaks down how to implement an output-based approach in a knowledge business.If you enjoyed this episode, make sure to subscribe, rate, and review on Apple Podcasts, Spotify, and Google Podcasts, instructions on how to do this are here.Quotes:"Why do we even hire people? We hire people to do something to produce some kind of output. And if you're hiring a contractor that's defined in the scope of work in the contract, and that's the definition of an output. But when you're hiring an employee, we often just say, Well, you get good people on the bus and everything is gonna be fine. But what does that mean?""If you own the company, it's what you want, not just the money. It's the lifestyle, the things you do at work...Those things that you want will drive your business decisions unconsciously or consciously. You're better off bringing them up to the conscious level and saying, Yeah, I'm gonna build this company the way I want.""Outputs are produced in two ways. They're either produced by Grandma who's got intuition, experience or they're produced by a repeatable system, and we start with documenting what the output is. Then you back into saying, OK, what's the system that produces that output?"Episode Resources:John Seiffer on LinkedIn@BetterCEO on TwitterAlan Pentz on LinkedInCorner Alliance WebsiteThe Small Business Black Holes Podcast is handcrafted by our friends over at fame.so Check out our three most downloaded episodes:Defining and Tracking Outputs: The Key to Employee Performance with John SeifferSmall Business Strategies and Market Dynamics with Jon Matzner, President at Lazy LeverageFranchising: The Best Business Model with Brian Beers

In this episode of The Small Business Mentor, host Alan Pentz interviews Ankit Patel, owner of optometry practices and founder of My Business Care Team, a vertical-specific BPO for the optometry industry. Ankit dives deep into the economics of optometry practices, from average revenues and profit margins to the key expense ratios to monitor.He then shares how acquiring multiple practices opened his eyes to the power of offshoring, leading him to build offshore teams for his own practices in the Philippines, centralizing functions like call centers and billing. Seeing the transformative impact, Ankit launched My Business Care Team to help other optometry practices leverage offshore talent, cutting-edge AI, and proven processes to streamline back office operations.The result is a tech-enabled, vertical-specific BPO that Ankit believes represents the future of outsourcing - niche, high-value services rooted in deep industry expertise. Ankit and Alan riff on the game-changing potential of this model and why generalist outsourcing providers will struggle to compete.If you enjoyed this episode, make sure to subscribe, rate and review on Apple Podcasts, Spotify and Google Podcasts. Instructions on how to do this are here.Quotes:"We basically went from using 14 people to do the same amount of volume that we can do with 6 in-office now...because we're able to take so much off their plate and do back office tasks.""Our whole job is - you outsource your processes to us. We're really good at phones - everything inbound, outbound communication, back office tasks like insurance, verification, billing, revenue cycle management - those type of things we're good at.""A lot of our practices are looking for expansion...they can self-fund more growth versus having to take on debt right now. And they can get debt, but it's going to be expensive."Episode Resources:Ankit Patel on LinkedInMy Business Care TeamBloom's TaxonomyRequisite Organization (Elliott Jaques)Alan Pentz on LinkedInCorner Alliance WebsiteThe Small Business Black Holes Podcast is handcrafted by our friends over at fame.so Check out our three most downloaded episodes:Defining and Tracking Outputs: The Key to Employee Performance with John SeifferSmall Business Strategies and Market Dynamics with Jon Matzner, President at Lazy LeverageFranchising: The Best Business Model with Brian Beers

In this episode of The Small Business Mentor, host Alan Pentz interviews John Wilson, owner of Wilson Companies, a high-growth home services business offering plumbing, HVAC and electrical services. They discuss John's journey growing the company from $1M to $26M in 8 years through a combination of 9 strategic acquisitions and organic growth. John breaks down his take on the best home services businesses to scale, favoring the recurring revenue of plumbing and HVAC over project-based models like roofing.A key focus is how to overcome the dreaded "owner's hell" phase from $3-5M where many businesses get stuck. John shares his formula of acquisitions for rapid scale, continued reinvestment instead of owner payouts, infrastructure upgrades like ERP systems, and building out a leadership team. Now at $26M, he reveals his two priorities to reach $50M and beyond - an innovative omni-channel marketing "moat" to maximize lead flow, and revamping training to successfully onboard new techs at scale.If you enjoyed this episode, make sure to subscribe, rate and review on Apple Podcasts, Spotify and Google Podcasts. Instructions on how to do this are here.Episode Highlights:[00:02:34] - Rapid Growth Through Acquisitions - In 8 years, John grew Wilson Companies 25X from $1M to $26M through 9 acquisitions, though most were under $1M. He used acquisitions to quickly add new services like electrical and blow through plateaus at $5M and $10M.[00:10:59] - Ranking the Best Home Services Businesses - John favors plumbing, HVAC and electrical as they have large total addressable markets, cross-sell well, and offer recurring service revenue. He likes the service-install mix of water treatment and is wary of low margin, non-recurring models like roofing and cleaning.[00:37:22] - Escaping the Black Hole of $3-5M - Many owners get stuck or tap out at this phase, but the "good stuff" starts at $5M with managers, reinvestment and growth. John advises fighting through with acquisitions, avoiding excess owner payouts, and investing in people and systems.Quotes:"We basically went from a million in 2016 to, uh, 26 this year in 2024. And that's obviously been quite the journey.""I am deeply fascinated right now by the people in between my TAM and my customers, which is like engaged prospects...600,000 of that people have heard of my name. How do I interact with those 600,000 people with regularity?""If you're going to sell it, if that's the goal, then that's one thing. I paid myself under market, but I also got the desired result, which was the business 10 X'ed. So if that was the goal, then that's what, you know, the outcome is what matters."Episode Resources:John Wilson on LinkedInWilson Companies on TwitterOwned & Operated NewsletterOwned & Operated PodcastAlan Pentz on LinkedInCorner Alliance WebsiteThe Small Business Black Holes Podcast is handcrafted by our friends over at fame.so Check out our three most downloaded episodes:Defining and Tracking Outputs: The Key to Employee Performance with John SeifferSmall Business Strategies and Market Dynamics with Jon Matzner, President at Lazy LeverageFranchising: The Best Business Model with Brian Beers

In this unique episode, Small Business Mentor host Alan Pentz interviews Lauren Feldman, a veteran business journalist who spent decades covering entrepreneurs and small businesses at publications like Inc, Forbes and The New York Times. A few years ago, Lauren took the leap into entrepreneurship himself, launching 21 Hats - a multi-channel media brand providing news, education and community for owner-operated businesses.Lauren traces his long career arc in business journalism, the impact of the internet on traditional media business models, and why he finally decided to strike out on his own. He discusses the origin of 21 Hats, early traction with his newsletter and podcast, and how he pivoted when his initial funding partner had to pull back during the pandemic.Alan and Lauren then dig into the nitty-gritty of 21 Hats' business model and revenue streams, ranging from sponsorships and affiliate deals to paid events and communities. They brainstorm paths to further growth and profitability, including developing more focused, high-value niches, finding ways to productize Lauren's network and expertise, and potentially partnering with service providers. Finally, Lauren shares why he loves the new event-driven direction and the satisfaction of being able to experiment and learn as a solo entrepreneur.Whether you're a budding media entrepreneur or just fascinated by the future of niche publications, this episode provides a masterclass in the challenges and opportunities of building a targeted, multi-platform media brand.Quotes:"I thought, you know, the best sports stories are people's stories. The best business stories are people's stories, too. And just as in sports, in business, there's somebody's keeping score.""If you talk to a newspaper journalist in the 1980s, you were likely to hear something along the lines of 'What are you talking about? We don't need to do marketing. People have to read us. It's their civic duty.' That wasn't a good strategy.""I define my niche as the owner-operator business owner who has a whole range of issues to deal with, has to wear 21 hats. I'm hopeful that we can get to as many of them as possible, but it means we're not going as deep as we might if we were focusing in just a handful of areas.""It's actually an interesting business model. By eliminating speakers, you're eliminating one of the biggest expenses of meetings. To me, being at these events is like being at summer camp again."Episode Resources:21 Hats Website21 Hats Newsletter on Substack21 Hats PodcastLauren Feldman on LinkedInAlan Pentz on LinkedInCorner Alliance WebsiteThe Small Business Black Holes Podcast is handcrafted by our friends over at fame.so Check out our three most downloaded episodes:Defining and Tracking Outputs: The Key to Employee Performance with John SeifferSmall Business Strategies and Market Dynamics with Jon Matzner, President at Lazy LeverageFranchising: The Best Business Model with Brian Beers

In this episode of the Small Business Mentor podcast, Alan Pentz is joined by Hunter Durham, former owner of Impact Industry. Hunter openly shares his intense entrepreneurial journey - from starting a fast-growing agency to acquiring multiple businesses in under a year using SBA loans.What started as a vision to make an impact through business ownership took some unexpected turns. Hunter discusses the complexities of merging company cultures, navigating customer concentration risk, and how the volatility of the COVID era factored in. Ultimately, a combination of factors led to Hunter filing for personal bankruptcy.With refreshing honesty, Hunter reflects on what he would have done differently and the invaluable, if expensive, lessons he's taking forward. He advises others facing financial struggles and shares his perspective on entrepreneurship through acquisition. While it didn't go as planned, Hunter sees the experience as an accelerated business education that will shape his future ventures.If you enjoyed this episode, make sure to subscribe, rate, and review on Apple Podcasts, Spotify, and Google Podcasts, instructions on how to do this are here.Quotes:"Bankruptcy is definitely a beginning, not an end... It's a legal process. That's all it is. At the end of the day, there are laws that you have to follow in order to unwind and restructure your debt or liquidate your debt. And after that, it's discharged and you go to the next thing.""Bankruptcy can't take your kids away. Can't take your wife away. You can't take your sanity away. Only you can kind of take away those things.""If I would have just focused on the agency and growing the agency to be the biggest it could be and throwing off as much cash flow... then I could have made the impact that I set out to do."Episode Resources:Hunter Durham on TwitterAlan Pentz on LinkedInCorner Alliance WebsiteThe Small Business Black Holes Podcast is handcrafted by our friends over at fame.so Check out our three most downloaded episodes:Defining and Tracking Outputs: The Key to Employee Performance with John SeifferSmall Business Strategies and Market Dynamics with Jon Matzner, President at Lazy LeverageFranchising: The Best Business Model with Brian Beers

In this episode of the Small Business Mentor podcast, Alan Pentz is joined by Michael Greenberg, an expert on digital operations. Join them as they discuss the concept of digital operations and its importance for small businesses, highlighting the benefits of using tools, global talent, and automation to streamline processes, lower costs, and increase productivity.Michael Greenberg is the founder of 3rd Brain Operations (transitioning from Clickdown.xyz), who provide specialized consulting, training and implementation services to help businesses optimize and automate their operations using modern digital tools and AI technologies. He is also a digital operations advisor and writes as Gent of Tech. Prior to 3rd Brain Operations, Michael was the CEO and Chief Strategist for Call of Content, a podcast agency that he sold the majority of in 2021.If you enjoyed this episode, make sure to subscribe, rate, and review on Apple Podcasts, Spotify, and Google Podcasts, instructions on how to do this are here.Quotes: The broad strokes is digital ops is AI tools plus global talent plus automation. The underlying idea is that you're designing processes and workflows and digital infrastructure in order to support the use of AI and automation and a global remote team to lower your cost structure and increase your task volume, increasing the amount that you get done by having people not do things twiceAfter bringing on a customer, then we are going to follow that customer's journey. If it is a purely internal process, then we are going to follow the journey of whatever piece of data or document format or project we are trying to track. And so we walk through that journey with as many people as we need to talk with. Generally, this is done in one on one interviews, uh, after initial like departmental kickoff and we find out step by step by step, how the process, how the workflow works. At that point, we can actually do something. LLMs aren't good at doing everything. They're good at doing very specific things, and you can teach them to get really good at one thing at a time. They are knives, and I'm going to pick up a different knife—I'm gonna pick up a Santoku when I wanna do fine precision cuts with creative writing, instead of the GPT 4 chef's knife that I might use every day.Episode Resources:Michael Greenberg on LinkedInGent of Tech WebsiteAlan Pentz on LinkedInCorner Alliance WebsiteThe Small Business Black Holes Podcast is handcrafted by our friends over at fame.so Check out our three most downloaded episodes:Defining and Tracking Outputs: The Key to Employee Performance with John SeifferSmall Business Strategies and Market Dynamics with Jon Matzner, President at Lazy LeverageFranchising: The Best Business Model with Brian Beers

In this episode of the Small Business Mentor podcast, Alan Pentz is joined by Julie Lopez, a keynote speaker and the Founder of Viva Partnership, a therapy practice that uses non-talk therapy to promote inner healing. Join them as they explore the challenges faced by therapists expanding their practices and the importance of business education.Julie wears the dual hats of being a sought-after keynote speaker and a successful entrepreneur. As a keynote speaker, her focus and passion lie in maximizing individual performance. She provides keynote and breakout sessions designed to illuminate the science behind performance success in business, love, and life. As the Founder and CEO of Viva Partnership, she leads a team of 25 specialists dedicated to helping clients live their best lives through developments in the science of brain-based therapies.If you enjoyed this episode, make sure to subscribe, rate, and review on Apple Podcasts, Spotify, and Google Podcasts, instructions on how to do this are here.Episode Highlights:[00:26] - The genesis and growth of Viva Partnership[04:12] - Developing a scalable and healthy business model[07:05] - Non-talk-based therapy at Viva Partnership[09:10] - Viva’s unique business model[14:15] - Promoting non-talk therapy and building a media arm[17:02] - Finding purpose and meaning in life as an entrepreneur [22:13] - Julie’s transformation methodology and individual pathsQuotes:“Viva Partnership started about 14 years ago, and it really started organically. We didn't have a business plan. We just were like, "Let's do this." And we grew and grew, and soon we were making a million dollars in revenue, but I wasn't paying myself, and the business wasn't healthy.”“I think there's a real opportunity to specialize and promote what we're doing to a wider audience. And create certification programs and a network of practitioners who specialize in these non-talk therapies.”“I think feeling bored is actually the signal from the body that there is something deeper that hasn't been tapped into yet. The exercises that we use bypass the frontal lobe and tap into the nervous system to uncover that path.”Episode Resources:Julie Lopez on LinkedInViva Partnership WebsiteAlan Pentz on LinkedInCorner Alliance WebsiteThe Small Business Black Holes Podcast is handcrafted by our friends over at fame.so Check out our three most downloaded episodes:Defining and Tracking Outputs: The Key to Employee Performance with John SeifferSmall Business Strategies and Market Dynamics with Jon Matzner, President at Lazy LeverageFranchising: The Best Business Model with Brian Beers

In this episode of the Small Business Mentor podcast, Alan Pentz is joined by franchise scaling expert Brian Beers. Join them as they explore franchising, examining why it’s one of the best business models, how to know if it’s right for you, and how new franchisees can get started.Brian is currently President of the Prenlyn Automotive Group, operating 33 Midas Auto Repair franchises throughout Philadelphia, Allentown, and New Jersey. He is also Franchise Owner of That 1 Painter, the largest franchisee for the fastest-growing painting franchise in the country. Brian further hosts podcast Business with Beers, helping simplify business ownership, and has started a membership community called 8-Figure Franchisee.If you enjoyed this episode, make sure to subscribe, rate, and review on Apple Podcasts, Spotify, and Google Podcasts, instructions on how to do this are here.Quotes:“One of the best parts about owning a franchise is you're a business owner, you're a business owner that happens to operate a franchise, but we are business owners". "I think it's really important for anybody who says, ‘Hey, I want to get into a new business franchise,’ it's kind of having a checklist of what are the attributes that you're looking for in a business?""How do I make a million? How do I make more? And franchising can provide that if you can get in the right brand and then, obviously, you as a business owner can hire good people, you can hold them accountable, you can set the vision, you can drive it just like anything else. It's just you don't have to start from zero, you can start from second base".Episode Resources:Brian Beers on XBrian Beers WebsiteBrian Beers on LinkedIn Alan Pentz on LinkedInCorner Alliance WebsiteThe Small Business Black Holes Podcast is handcrafted by our friends over at fame.so Check out our three most downloaded episodes:Defining and Tracking Outputs: The Key to Employee Performance with John SeifferSmall Business Strategies and Market Dynamics with Jon Matzner, President at Lazy LeverageFranchising: The Best Business Model with Brian Beers