Journey to Entrepreneurial Freedom: Insights from Simon Fallows

Speaker 1: 0:11

Hello everyone, welcome back to the Emotional man Weekly podcast Today. I am really excited to have Simon Fallows here with us. He is the president and chief coach and consultant for Freedom for Founders, where he helps business owners go through the whole process whether it's a startup or a scale-up or multi-generational stages for the operation he gets and helps them get ready for the sale. So, simon, thank you so much for coming on. If you wouldn't mind just giving us the story of where you got the idea for Freedom for Founders and where you're currently at with the business, yeah, no, thank you.

Speaker 2: 0:44

Yeah, we're going to get the idea for a lot of serial entrepreneur. I've owned and operated multiple businesses of my own and I'd 35 years old I was burnt out. I was running multiple companies and had 30,000 square foot plants with 60 employees. We were on the front end wave of all the flat screens, right Plasmas and LCDs were installing and integrating them in installations all over North America, and so it was a busy time and I was honestly burnt out trying to keep a hold of it all.

Speaker 2: 1:15

And I made the strategic move to bring in a consultant and within eight months, I made him CEO by organization and it was the best decision I ever made. He became a business partner and he really helped me understand this idea that I needed to make myself replaceable. If I was ever going to transition the business or ever sell a business, I had to get in my own way and let others lead, and that led to his eventual leadership right IE CEO of the organization. That's how it really had all started, and I've been on a path since 2008 to help other owners achieve what I did, and that was successfully exit that business, certainly, but that helped other owners do the same.

Speaker 1: 1:55

So what do you find is the biggest problem that you had in that transition and what are the things that business owners just really have a hard time adjusting the way they think about their business?

Speaker 2: 2:06

Yeah, it's really about owner dependency, right, there's too much dependency in the context of that owner and their ownership of that organization, and what I mean by that is that dependency equals control, and most business owners think that they need to control everything, and certainly 95% of all businesses in North America are under one million. In you, we're all small enterprises trying to make it over that hump right. The very few have done it because there's too much control, and that control equals letting go of our personal responsibilities, right, of the relationships we have within the company. Hey, we go golfing with the senior sales staff, right? Or the sales manager. Maybe we should rethink that, right, if we want to professionalize the business. So that's some of my number one pieces of advice.

Speaker 2: 2:50

It's helping owners understand that too much on their dependency or too much control is actually detrimental to their business and it doesn't make it transitionable. And then they end up in a situation and we call it a triggering event. It could be a health concern, a divorce, unfortunately, like I went through and I've got a personal story I can share there and or, yeah, health, we call it disease. Divorce, distress with a business owner, or outside distress, like the pandemic, creates issues in the business where if we're not prepared then there's very little money that could ever be extracted and most businesses end up having to liquidate.

Speaker 1: 3:29

Yeah, yeah, now you mentioned you had a story here. One of the big issues that I have found with both my clients and just business owners in general is we don't realize we're in the burnout quagmire till we're drowning. I could share your experience with realizing you had entered the quagmire and how did you get out, or the warning signs.

Speaker 2: 3:52

I worked 60, 70, 80 hours a week and I did that for the better part of five, six years and then I got the operation in place. But then we hit some new strides in the marketplace in 2006, seven, eight, right before the collapse, I was doing a pivot in the business. I was moving from flat panels into healthcare like a full workstation on the wall and in that transition I was back to again where I'd gone back to reasonable hours. Now it was doubling down again at 60, 70, 80 hours a week, but it was really unhealthy and it was impacting my marriage. It's what created some of the fracturing in my marriage and eventually I think it's in part what led to the separation that I went through.

Speaker 2: 4:33

But and the reason why I was open minded to consulting and then this consultant positioning it as well CEO of the organization was all in relationship to this burnout. And the burnout was real. It was doing too many things, too much focus on too many areas within the context of the business, and then we tried to pivot and do something different. It was just, it was overwhelming.

Speaker 1: 4:57

No, I want to dig into this. One of the common problems in any business is the owner agent dilemma, right when the agent, such as the CEO or the people you put in charge, don't necessarily. Their interests don't align with the interests of the owner. That is one of the main causes of concern for owners who have a hard time letting go. Can they trust these people to operate this the way that they would want operated or to care for it like they would, since it's their baby? What helped you overcome that? How did you manage that relationship so you could enjoy freedom?

Speaker 2: 5:38

You nailed it. Let's go back to the story. It's back to this Brad Chitty it was his name. He was my business partner that I made CEO, if you back up with a relationship to what happened. I became real honest with him, maybe for the first time right With another individual another man, in this case that I explained my situation with the business and my desire to stop being attractive to everybody in the market. We kept manufacturing solutions for a marketplace that was literally exploding. It just created a bird nest Everybody. I needed somebody that would be professionalized, the business and settle into something I wanted to do.

Speaker 2: 6:18

This project move into healthcare. It started with a conversation, being open and honest about my business situation and my personal situation and what my real goals and objectives were. Then it created in me an ability where I had to start handing off. I had to start letting go of the engineering and the sales and the marketing and all the departments I was trying to run Effectively. We took one day a week, brad and I, and we started strategic planning. It was a few hours to Thursdays and then we bought a boat and we did the strategic planning on a boat. We went golfing but we interjected play with this real hard pivot. When it came to it. We let eight people go in one day and four more followed a couple of weeks later. It was a very and within a week we had all the replacements. We hired 15 to replace Answering your question.

Speaker 2: 7:16

It was very deliberate, very intentional, really hard. It took a lot of communication in this case, who became a business partner, a confidant, to make sure that we had the right people. They were on the bus, they were doing the right things, but we needed to change. I needed to change. I was going to physically implode. With that came that decision to re-scope and re-take the management team and re-scope it. Then. That's when Brad became CEO. Once he had really put the team in place, I let him take it over. I could focus on what I love to do. I still had majority share of the company. It was a great position to be in.

Speaker 1: 8:02

What would you say was the main If you had to narrow it down to the biggest problem? What do you think it was the biggest problem that you had to overcome in letting go of the company, letting go and button delegating?

Speaker 2: 8:17

Oh my God, yeah, it sent me into counseling, honestly, the people I had so much fun Like.

Speaker 2: 8:21

I was the owner that got his car wrapped in cellophane, right, I was the one that bought a blow-up doll and because I thought that would be fun to put in somebody's office, and who went on an extended vacation and then that blow-up doll ended up like in various positions around the plant and fork left driver would back up on a string coming off the racking. I mean, we just had so much fun. It was a great culture and it was an intense time, but it led to a lack of professionalization. Honestly, that when we wanted a patent product move into healthcare, do something really specific with the goal of 10xing the business and me working smarter, not harder, I still worked hard, but I worked out of the office, I traveled, I was in Boston to San Francisco, right In hospitals, developing products in the field where they needed it to be developed, and I could only do that when I was able to release myself from the organization and boy man, did I ever thrive, and both personally and professionally.

Speaker 1: 9:19

Let's transition a little. We understand the kind of company and kind of that hit moment you experience a genesis or freedom for founders and why this was so important to you. Let's talk a little bit about on the family side Now, as I understand, you have three children. What are their?

Speaker 2: 9:33

ages and names. We got Madison, Dawson and Brooklyn, and now we had three children in three years. That was added to that breakpoint right. The last one was born in 2005. They're now 17, 19, and 20. The youngest is catching up faster. She turns 18 in a month and okay.

Speaker 1: 9:53

So you have these three kids Now during this tough time. So during this time, how old were they? Were they in the teen, tween years? Was that During the challenge time?

Speaker 2: 10:04

During the period of the great pivot. Yeah, no, young, they were like three, four, five.

Speaker 1: 10:11

Oh wow, so they're still up all day. That's a tough time 2007,.

Speaker 2: 10:16

Yeah, two year old, two and a half year old. Yeah, like we were. Yeah, part of the reason for the pivot right was to hey, when I invest in including my kids, I was the all in dad man. So I talk about taking business trips, trade shows. They'd be coming with me. Even if my wife didn't, I'd put them in the car We'd drive over flying. I heavily involved myself, both personally and professionally, and I was burning out. I was playing hide and seek, purposely so I could hide and sleep.

Speaker 1: 10:47

We've all done it, we've all done it.

Speaker 2: 10:50

Yeah, yeah. So, yeah, it was an impetus for change, right, and I wanted, as the kids became more aware and now there were three and four and five I just thought, man, this is the time I get to be the best dad and really drive into them the values and the things that I missed. Right, I had an absentee dad when my mom and my dad worked, like I did, and yet I said, man, I don't want to make that mistake. I got caught in both worlds, but I think I did a really good job at bringing them up and spending that time. I sold the company for them when 2012. I was 39 years old and that was a big part of the decision. It was for my marriage and certainly for my kids.

Speaker 1: 11:30

Talk a little bit about that. Selling the company and moving on can be scary, especially if you have a golden goose that's going well. So talk me through the process. Why did you choose to sell the company and how did that factor in with trying to maintain family relationships?

Speaker 2: 11:47

Yeah, the choice to start the company again was just a good strategic advice. We were looking for money to grow. The healthcare division was fully pivoted and we were getting specified in hospitals all over North America. Our patent was in place and so we were looking for money to grow. And I had a business broker approach me. I said you know, you should have a broker on your team. And I said, sure, why not? And the strategic advice he gave me was instrumental. It's why I have freedom for founders.

Speaker 2: 12:14

Today. Founders think that they're going to, they're going to prepare their business or not prepare it and or begin at some point. It's going to sell in in six months. They're going to be offered to freedom. And I said, no, there's dozens of ways a company can sell or transition. And I chose a very strategic way to do it and through great advice.

Speaker 2: 12:32

And so we had positioned the business for investment. But it was who we put it in front of. We put it in front of somewhere largest customers and knowing that if they lost the opportunity right through through an acquisition or an investment, that would put them outside of the product that we had gotten specified so many hospitals. So that created disruption where it really forced a decision and in time it didn't take long. We found a third party manufacturer bottom line that was supplying to all those businesses. So the sale for me was strategic and that we got 10 times the value of the business. So right, I've got spent another five plus years growing the business, but I got to come on board as a strategic acquisition. My goal was to remain in place for five years and grow the overall division within a $300 million business. It was really exciting and I didn't have to worry about the paint line and the people and the production.

Speaker 2: 13:26

Iso certification was turned key strategic exit and what I didn't see coming was the whole business uprooted itself and got sold and moved to Grand Rapids. You can never predict everything, but that was the. That's how it unfolded. It was very strategic. I wouldn't have sold right to anybody. It was. It was not an exit strategy per se. It was more of a transition so that we could grow and use other people's money and their plant, their facility, their QC teams right, qc was brutal in healthcare, so it was very strategic and they insisted part of their culture that you work 40 hours a week if you're an executive, and so it met my goals there as well, and I got to grow the business within a business and still meet my, my, my family goals, which were to spend more time with them and be able to travel.

Speaker 1: 14:19

A week to run a company, right, if you're trying to start up or scale it up. How would you respond to that? Do you think it's possible to work less than 50 hours a week and starting a company or growing a company, and to do it relatively?

Speaker 2: 14:35

quickly. The startup phase is always hard, right, and I've been in it countless times. It's always difficult. And if you're growing organically, you're self-funding it. Right, on your short for cash personally. Right, if you can't pay the mortgage, you're betting on your business.

Speaker 2: 14:49

Then, yeah, individuals get caught into the 50, 60 hour weeks because they're just wearing so many hats. But that's got to come to a pretty quick conclusion. You got to get the business into a place that you can commercialize and you can really understand the value that you're bringing and the value you're extracting. And most business owners don't understand that. Right, they jump into all kinds of opportunities that where they shouldn't, right Before realizing what it's going to take to actually monetize and pay themselves. First, right, a reasonable income, but, more importantly, pay somebody else and today that could be subcontracting to India or around the world in subcontract employment to.

Speaker 2: 15:29

I got a co-op student here. I'll always have a co-op student in my office and to be strategic, but do you got to get people in place so that you can work less and start working on the business to the point where I think to answer your question I don't want you to spend any time in your business. If you're 50 plus, I prefer you to be in Arizona and the business is running better than without you. That's the point of the goal. Richard Branson has hundreds of companies. You can't manage that many companies without great leadership and that should be the goal. That's freedom for founders is the freedom to be able to choose what you want to do next and not necessarily sell the company. Bring in an integrator, a 25% partner, like I did. Put in an ESOP, which is an employee stock ownership plan, and there's so many iterations of that where you can just give off and hand off leadership so other people can run the organization. I tell you, the faster you can do that, the more successful you'll be.

Speaker 1: 16:28

What did that do for your family? So, once you were able to free yourself from the company, you sold it, you have this kind of five-year transition period. What was your life like before with your family? What were some of the friction points you were experiencing and how did it affect those friction points after you went through this process?

Speaker 2: 16:48

Kids love being with me, right? So time is the big factor and they wanted just more and more time with me and they were at that age. Now we're just throwing them all on the airplane Like they're in school. They're fully involved. They got friends. But they still wanted my time and I was again that dad, right or wrong, I know. Some said you spent too much time, but I did. I was on the street, I was their friend's best friend. But that took a toll on me personally as well, and this has started to chip away at my marriage, because I was spending more time with them than I was with my spouse. She had other interests like she, right, she liked to do right and we didn't spend as much time together because I invested so much into my children and sports, right, hockey, dance, oh my gosh, do it. Two girls in dance and one in hockey, oh yeah.

Speaker 2: 17:35

And so we're dividing and conquering, my wife going one way and I'm going the other way. And now this is post-sale right, one of the reasons it was going on inside the cell thing Well, it was some good grandparents who were helping it, all of that. But as of 2011, august, when I sold the business and then got transitioned into 40 hour weeks and could take time off, I was an executive now, right, it worked. And then 2013, when the business moved into Grand Rapids, I worked for a not-for-profit and I drove truck, I drove a cube van and I set my own hours and, yeah, everything pivoted, really started to change, and I was glad not to have to move and I was satisfied, right, with the business, the valuation, the whole process. My product still lives on today. It's been sold two or three other times Businesses but it's still a patented vile. It's really vile. We're probably one of the best in the world for bedside administration, computerization and hospitals. I'm really proud of it. I'm proud more of the fact that I've raised great kids and yeah.

Speaker 1: 18:39

One of the challenges business owners have is learning when to balance the needs of their clients in their business and the needs of their spouse and children. Can you think of a time, a specific, maybe an example of when you had to make a choice between the two and how you? When did you decide to spend time with children or your spouse? Or when did you decide to spend a time meeting clients need and why?

Speaker 2: 19:07

Yeah, yeah, for me that was a daily, weekly, sometimes daily call. Fuck in the heyday, a phone, oh, two, three, four, five, six, seven, eight. That time, man, that was a. Yeah, that was a conscious choice. Again, thankfully, we had some family, right, Grandparents that really were supportive and we ended up moving them in the basement or a house. We needed help, right. Wow, three kids under three years and then when they grew up, they were all, they were all together. So, yeah, it's cautious decisions. Yeah, it makes some poor ones.

Speaker 2: 19:41

Yeah, but I tried to always pick the family and the kids first, tried really hard to do that. I tried to block out times of my schedule and not answer calls in the evenings. I learned along the way probably 2004 to be more specific, four to seven where I really dialed in. And cell phones I don't know, it's technology really. I grew through it, right. Yeah, I grew it from the Blackberry to the Apple, but just controlling and monitoring, yeah, my time became super important. And again, another reason why seven, I said like we're going to switch this business model around, right, I can't be on call for a rollout at Walmart or pick a retailer, and now I got calls to installers at 11 o'clock at night or spy like I'm just a small piece in the whole wheel, but nothing happens without what we do right. We can't install or integrate without our little piece, so I had to take that factor away.

Speaker 1: 20:39

Yeah. Let me ask you this question Are you part of your job or part of what you help business owners do is evaluate their companies? That's right, and it's very easy to determine whether or not you're off-gone track in a business, in a company you have great. You have KPIs. You can take any metric you want. You can use it to measure the success of your company. Now, if someone asked you for four or five KPIs for families to health or success, how would you respond to that question? What would you assess for the KPIs for your family? That if these things are down, we're not doing well, but if these things are happening, we're usually pretty okay. Well, what would you say? Those are yeah.

Speaker 2: 21:22

Oh, my God, your relationship with your spouse right, and in 2018, they went sideways for me. And there's the long story and relationship to some family dynamics and what happened there. But yeah, it's really you gotta be tight with your spouse, man, you gotta be over-communicating and we didn't. We weren't good at it when we'd gone to some counseling, but we just we preferred to avoid conflict and we dealt with issues right, type A personalities as they came and I said we were really good parents but we really, as it turned out, grew apart and even when I sold the company, you'd think, wow, you know what? I did have opportunities, but that fracturing had taken place when so much had happened. And then we had this free time and free cash flow and some family dynamics and issues that I won't get into here, but that that rift had started and there was walls put up, indifference Best described right, there's indifference and left too long. We just we lost track in relationship to how to where'd it even start and unfortunately, by 2018, yeah, it was. For her, it was just easier to move on to somebody else and for me, it devastated me.

Speaker 2: 22:39

But I've come to realize why my part was in that Communicate. I'm getting the answer here Communication right, removing his walls of indifference, and partner with your spouse is number one Cause you can't get that right. It's really hard to get it right with the kids. I did it by pure force and energy and I was very motivated to do something differently than my parents did with me and in my upbringing, but it wasn't always healthy for me. Talk about choosing customers versus my kids it's the decision to choose myself over my kids and I sacrificed myself A lot of friendships. I sacrificed A lot of volunteering opportunities, other opportunities to make an impact or a difference. After I had that big win and look, I was doing some good things with one particular company, but I certainly could have done more and had a greater impact or investment.

Speaker 1: 23:31

Yeah, so communication? You've outlined communication as a kind of key metric. How would you measure whether or not you're communicating enough with your spouse, with your kids? Tell you what, if you had to go back 15 years ago and give advice to yourself, say, Simon, you need to be measuring these things to make sure you're on track. Yeah, what advice would you give him?

Speaker 2: 23:56

That's your. I know it seems so cliche, but it was so simple and it's still simple today. It's like you would date your spouse, you would go to, you would meet once a week, or once at least once a week, right, and. But then it comes down to meaningful conversation. Right, that you would and have the same with the kids, and I started to do that. Right, you're one on ones. You just got to one on one time. You got to spend time and then ask questions like KPI on a scale of one to 10, how do we really do it? I didn't ask those questions.

Speaker 2: 24:25

Um, yeah, looking back now it would be being more intense, definitely more intentional. Right, I had so much fear, so much in my head going on up here, that I just let manifest and continue to spiral and that needed answers. And I can only get those answers if I reached out one to my spouse board, to some other safe people, other men specifically that so that I could trust and Brad was there, for sure Is a business partner. But yeah, I lost my way in relationship to other key men that I could relate to personally. That might have helped Certainly, my marriage situation as things became really tough in that whole family dynamic.

Speaker 1: 25:03

I just want to thank you. You've been willing to dive into some of the most challenging parts of your life and offering these kind of nuggets of wisdom. We all have scars. Thank you so much for sharing them with us. Most of our audience are business owners or spouses, or they know business owners, or business leaders themselves or professionals. What advice would you give them? In terms of this is three things I've learned from balancing my work life.

Speaker 2: 25:31

Your work is your life. For most entrepreneurs they are so intertwined, okay, and in there is the kids and the marriage, but the workplace is right in there, it's our baby. For most owners, right, this is our baby and it's some value at more than our kids, honestly, and our spouse. Or, if we're going to be honest, we put more value on our businesses and what we built and how we're trying to manage and control it than we do on any other relationship. And that's the danger, because eventually you're going to exit the business, whether you want to or not, eventually, like that communication with your spouse or somebody else. You've got to communicate. You got to take this personal business, this entity. It's an entity and you've got to be able to bring it to somebody else. You've got to be able to communicate.

Speaker 2: 26:17

Far too often, consultants come in or we talk about goals and objectives, company, right, corporate. What's your vision, mission and strategy? Very few people come at it and say look, what's your personal idea? Did you really sign up to work 50, 60 hours a week at 50 years old? Is this really what freedom is? Your wife wants to travel, your husband, your significant other, wants to explore, wants to do new things, but you don't.

Speaker 2: 26:42

I said entrepreneurs were designed to do the same thing over and over again. We were entrepreneurial, we shouldn't. 10 years, that's a lifetime for an entrepreneur. And yet some owners have been doing it for 20, 30 years. I get it, you don't know how to let go. But the communication has to start and I say, start it with somebody.

Speaker 2: 26:59

And unfortunately, what I've learned is our key advisors aren't, aren't initiating conversation our accountants, our lawyer, if we have a lawyer, or if we ever talk to them. But we should. I honestly we should. They've got great advice they can give. We got wealth planners. We've got others in our circle of influence that know our business, perhaps that we should be talking to. But we have to initiate the conversation as owners, because I'm finding that it's not happening from advisors. Advisors are transactional. They're looking in the rear view mirror. Who's looking out ahead of the game right in front and saying look, what is your real objective now? His retirement doesn't have to be selling and just closing the doors right. Sometimes it's a family transition. But look honestly, does your son or daughter want to take over the business? We have to be honest with ourselves and that just honestly. It's hard but it takes communication I hate with a trusted individual.

Speaker 2: 27:55

Join a mentorship group. There's online forums all over on Facebook and LinkedIn and business groups. If you don't want to do something one-on-one, then find a group you can join and start asking questions, block out some time and really discover what it is you intended to do, because we had a plan in our 20s but now we get to our 40s and our 50s, 60s, 70s and we've lost sight of it. We just whatever. It becomes routine. But this is my perspective, what I'm seeing and most owners then find themselves trapped and without a strategy or plan.

Speaker 2: 28:31

And in five years five years I'll get to that. In five years, I'll retire. No, you won't. Unless it's a triggering event, you won't take it seriously enough and if 80% of your money or more is locked up in your business, you're not going to extract it if you're not making it transitionable and that takes two to five years to do so.

Speaker 2: 28:49

Some would say I'm going to wait five years. And then they five years come. They tell you you got another five Because now they're not going to take it seriously enough. Five because now the work starts to make sure the business is transitionable and you get the value out of the business Because your business probably isn't worth $3 million. It's probably only worth a million $750. Right, Because you haven't made it transitionable. You haven't looked at it from a buyer's perspective. You've been treating it like a personal bank account. There's 30 or 50 different reasons, right, why businesses just don't transition. So much customer concentration and I can go down this road. Now I know I have no idea what they're up. Surely what I'm here to do is help All of my LinkedIn profile or my YouTube channel you're going to see dozens of videos there around. Just I call it a rant.

Speaker 1: 29:42

So, for those who are listening, what is your YouTube channel and where can they find you on LinkedIn?

Speaker 2: 29:47

You just looked up Freedom for Founders, honestly, and you're going to find the LinkedIn connection there, simon Fallows. You're going to find pretty easy then the link tree on Instagram. That's going to take you to all my profiles, right? So a little bit of investigation. You'll find me. Not many, simon, certainly Nothing that I know of in it.

Speaker 1: 30:08

North America, thank you, simon, for sharing your wisdom with us. I really benefit from this. This is fantastic as a business owner, as a family man. Thank you so much for sharing everything that you've learned over the years and I really hope that anyone who's listening, who's looking for more freedom, looking for more balance in their life, come check out, simon, see what your options are as a business owner, so eventually you have that exit strategy and you know how to transition out of the company so that you can enjoy the rest of your life. Thank you, simon. This has been a pleasure. Thank you, joseph.