Why Working Harder Never Fixes the Founder Bottleneck (Peter S Bergeron)

Simone Henry: You are doing the work. You fixed the thing that broke last quarter, and now something else is breaking and it feels familiar. Like you have stood in this exact spot before. Most owners in that position assume they are the problem. That if they were a little sharper or a little more disciplined, the business would finally settle down. But what if the thing you keep running into? Is not a personal failure, but a structural condition that almost every small business hits and almost nobody names. That's what we're going to talk about today. Welcome to

Nate Grossman: Yeah. Welcome Peter. so Peter is someone who sees those structural s pressure points that you know, the the business frameworks out there weren't necessarily built to describe. Peter has fifty years inside of small businesses. He started on his dad's showroom floor at four years old, spent two decades in bookkeeping, working as a controller, operations roles. Across a range of industries, and then he ran the family business until it was forced to close its doors in January 2020. And that ending sent him back to earn a doctorate to understand why. He is a doctoral candidate at Johnson and Wales University, focused on family business succession, an adjunct instructor of entrepreneurial mindset at Florida Gulf Coast University, and the author of The Trapped Operator. All right, so Peter. You started on your dad's showroom floor at four years old and you closed that same business fifty years later, with the research behind you now. What do you understand about that ending that you could not see while you were living it?

Peter Bergeron: Yeah, I would say more than anything is that I was living inside the failure and I wasn't studying it at the time. And you really can't diagnose what you're basically drowning in.

Nate Grossman: Yeah.

Peter Bergeron: so after the fact, you know, yeah, what could I tell for sure was, you know, yes the business was viable, the people cared, but what was missing was that structure. And specifically the structure to carry what lived in one person across to the next. And that was really what I found after the fact.

Nate Grossman: Yeah. Kinda f finding out the hard way though, huh? Yeah. Yeah.

Peter Bergeron: Yeah. yes, definitely for sure. de and why I went down the book route and all that, because it was an experience I would like others to avoid. to be honest. You know, no no doubt about it. But really,

Nate Grossman: Yeah.

Peter Bergeron: I think what we really was found out more than anything was the failure was wasn't in twenty twenty, the failure wasn't in twenty nineteen. It really was forming long before that, and we just couldn't see it from inside.

Nate Grossman: All right. So the way you know we talk about the thr our our three pillars are visibility, viability, and value in a business. And the way I see it, what we're talking about today and what you're discussing lives in that viable layer. It's the internal structure that either carries a business or you know slowly gives out. and the first thing that the Owners often get wrong, excuse me, is what these recurring problems actually mean. So you went looking for what you did wrong, and you found that what happened to your family was actually the norm, excuse me, and not the exception. So, what's the story owners often tell themselves about these recurring problems, and why is that wrong?

Peter Bergeron: Yeah, I mean, and it's so when we talk about this, we're talking about the business of running a small business and those are recurring problems. So and that's one of the first things that owners get wrong is that aspect, that business of running a small business, those background processes are pretty similar across s all kinds of small businesses. And often owners say, Well, my business is too unique, my business is too this for you to understand. So they get that side to it, that uniqueness. A little bit of it is not having the vocabulary to really describe again that business of running the small business. So what the owner end up telling themselves is it was a bad hire or a lost client, a cash crunch that, you know, if not for that moment out of nowhere would happen. So they're treating those as discrete events. Fix it. move on. And the story persists because the problems persist. They keep coming back in a slightly different way because the business is facing a new challenge or that same challenge in a new format that looks the same. So it's that inability to connect it and almost getting it confused of okay, what is happening that is related to the unique special product service that I deliver? versus what is happening in the just the function of running a small business, which they most likely were not trained in to start.

Nate Grossman: Yeah, someone someone asked me one time to define what a business is. And of course I I went off on this, you know, lot well it's got all these things, blah blah blah.

Peter Bergeron: Yes.

Nate Grossman: And he he's like he whittled it down to no, it's just it's a system, you know. And if just like any system, if one piece, you know, it's a delicately balanced system. So you

Peter Bergeron: Yes.

Nate Grossman: know, maybe if one piece is out of out of whack, then you know, the whole throws the whole thing off potentially.

Peter Bergeron: Com completely. Completely.

Nate Grossman: yeah. So so you draw a line between whether a firm will fail and how structural vulner vulnerability builds up in a firm that is already working. So why why does that distinction matter to an owner who feels fine right now?

Peter Bergeron: And it comes back to that because we are going to build a business around our own beliefs, our own values, our own systems, all of those things, our own fears. So yeah, the business can be completely healthy from that outside. The revenue is up, customers are happy, teams in place, all of those things, but We look underneath the hood and it's an owner carrying three hats that they shouldn't carry. And nowhere in that system do they have any cost accounted for that. So that as the company grows and they need to add that person in, their pricing doesn't have it in there. The model's not set up for that. And it becomes that visibility failure because. Again, they don't know what to look for. They don't know what is that next challenge coming. They're building the systems for what they are operating in today. So they're building

Nate Grossman: Mm.

Peter Bergeron: it for the 20 customers they have. And they're not thinking about is this system really going to work when we have 40 customers? And so, yeah, they're healthy at that moment, but they're heading for a big problem. And the revenue's going and everyone's going. And it's exciting until they hit that. And then it becomes, no, we're thrown back into survival. We were growing. We were feeling good. And it's almost like we're back to startup. So it's those aspects there that are seen underneath. They're being contained in a different way, but we're not really naming it. We're just doing it because that's how we've done it. We're not actually doing it by design. We're doing

Nate Grossman: Yeah.

Peter Bergeron: it almost happenstance, so to speak.

Nate Grossman: Yeah. I love the expression of random acts of marketing.

Peter Bergeron: Yes. Right. And that's a perfect one. And even that, you know, what are they supposed to be doing? So they'll spend hours and hours thinking that they're doing that

Nate Grossman: Yeah.

Peter Bergeron: marketing piece and never really being told, marketing isn't an ad. Marketing is knowing are you effective? Where is your client from? Like this is what marketing is and what you're talking about is advertising. And that's different in all of that.

Nate Grossman: Mm-hmm. Yeah.

Peter Bergeron: And so those pieces again because they weren't ever expecting to run a hole. They weren't expecting to grow this into what it grew into because they started out with just one vision in mind.

Nate Grossman: Yep. And that that carried them so far, right? Like that that can be effective, but up to

Peter Bergeron: Right. Right.

Nate Grossman: a point. Like okay, so you you talk about fatal issues, specifically twelve, but so why why are they fatal? You know, what makes these pressure points different from the ordinary problems that every business deals with?

Peter Bergeron: So and they can be and this is where it's the difference between is it a true upset condition one time thing or is it a recurring condition? So is it a cash management problem because you had a bad just a client who normally pays in forty-five days, all of a sudden went to seventy-five days and there was no signal there? Or are all of your forty-five clients always paying at seventy-five days? because you don't actually have a process for defining your terms with them and all. So they're two different potential problems that could come up in that same way. Both we would say is a cash management problem. But are they? Because some of it's a financial control. So it's again how it comes up, are they ordinary surface level or is it again a recurring pressure? And they're not really random. So like The con the idea of the twelve and fatal is just this is what's going to take you down if you let it go long term. And the

Nate Grossman: Mm-hmm.

Peter Bergeron: twelve comes from research of what it says most common for small business failures and all of that. What I really did was I took the normal S G and A that we talk about with the selling general administrative. And most small businesses would go, Well, I don't have a general, I don't have this, I don't have that. So I was like, Okay. Let's go with terms that are real that we feel as small business owners. So we have foundational, which are our financial and our regulatory compliance. We have developmental issues, which is our customer service and our market presence. And then we have transitional, which is strategy, leadership, and human resources. Again, those back. room side or the business of running the small business aspect of it. And those where they come, but they are definable. They can be tracked. We can see them. And they exist in every business regardless of size and things like that. So a single plumber or a contractor has these same issues that a multinational company has. It's just the level, the complexity of those issues is so different.

Nate Grossman: Mm-hmm. Mm-hmm. Yeah. That's interesting.

Peter Bergeron: Yeah.

Nate Grossman: okay. And I guess that would make that sort of the framework of the system, if you will, you know, like that that's kind of like the commonality that some well, you you could maybe, maybe maybe I'm wrong, maybe you could correct me, but this it's c it's sort of like the the framework of the system of a business, right? Like this these are the fundamental structures. That define a business, in other words, right? Yeah.

Peter Bergeron: Yeah, and again, that's what I was trying to put it into was that realistic terms of how small businesses think of let's

Nate Grossman: Yeah.

Peter Bergeron: get away from what we call it on a PL here or here. Let's just talk about it in common small business bucket terms more than anything else.

Nate Grossman: Yeah.

Peter Bergeron: because when you say a foundational issue, yeah, capitalization is pretty foundational and making sure that you pay your taxes and have those in, those are instantaneous. Yeah, the government can come and take all your money. So that's kind of foundational

Nate Grossman: Yeah.

Peter Bergeron: to your business survival. And that's just where we went

Nate Grossman: Mm-hmm.

Peter Bergeron: with So and that's the thing with Yeah. So from that day-to-day business, they almost never arrive looking like a structural problem. They just arrive looking like a people problem, a marketing problem, a timing problem. And so it's that recognition of having to feel it come here again. Feel like weren't we already here? And so there is a little bit of qualitative aspect to it. You know, you do have to diagnose yourself. And it's an issue to how you set up your business. It's those pressures to how you set it up. So what you're even comfortable with for risk on again, I use capitalization because it's just easiest for people to think of. Because when we think of a small business, it's that personal guarantee behind it. So that is where our first tolerance comes from of launching. So when we start feeling that our only response to these recurring pressures is to be working harder and nothing really starts moving faster. Nothing seems to change. We're putting in more energy as an owner. We're putting in more struggle and we're not seeing it flow through to something positive. Then we start looking at okay, what is what's wrong in my systems? What's wrong in my structure? You know, good people who keep leaving and the owner can't really explain why. Is that really bad hires? Or are we now looking at a leadership problem? Are we not willing to transfer to it? So we have to just start recognizing the results we are getting are the results our systems are built to give us. And Turn and say, okay, why is it doing that? And if the result keeps coming that way, how do I alter it so I get the better result?

Nate Grossman: Someone

Peter Bergeron: Correct. Or I can't why can't I take a week off and really have that week off? Why is it I say I'm going to take a week off? But the moment I walk out the door, I'm worried that everything has stopped moving back at the plant or back of the shop. I don't feel

Nate Grossman: Right. Yeah.

Peter Bergeron: it. There's something there and that's that's really what we're looking for first and foremost. You as the owner, what are you afraid of? Because what you're

Nate Grossman: Mm-hmm.

Peter Bergeron: afraid of is probably where we should look first. Because you've already felt comfortable and how you contained it elsewhere. We're still gonna come back to what you feel comfortable about because you might not have done it right. But we still

Nate Grossman: Yeah. Yeah.

Peter Bergeron: wanna go, all right, where do you naturally feel it an X?

Nate Grossman: It's it's it's amazing what people can get used to. So that's yeah.

Peter Bergeron: Yes. Correct, right. What and pr that's perfect. Yes, they they absolutely can and becomes almost even a badge of honor at times. Like you can hear

Nate Grossman: Yeah.

Peter Bergeron: it in that voice and in those early stages, that badge of honor of how hard I worked and all this and that. And then eventually turn around and going, But are you getting a reward for it? Are you getting a payback for it? Are you feeling good about it? So

Nate Grossman: Yeah. Yep. okay, let's get into the framework here that you discuss. so this is like the twelve fatal issues. and you organize these across you know, we've we've already kind of touched on them, but the way that you break them down is across three operational states and four structural systems. And then like the small business durability model underneath that. So Can we dive into that a little bit more?

Peter Bergeron: Yeah, so the small business durability model is that academic side of it. When I went looking, when I found the gaps, what I started to to build out. And the framework side, the 12th Fatal Issue Framework, is that owner practitioner application of it. More than anything, we know how long it's gonna take for the academic world to decide if what I'm saying is worthwhile. But talking with enough business owners and all of that. They feel it, they see it, and it makes sense to them. So we look at small business just again a little differently. It's a model that puts the owner at the center of it. With all the evolutions that we're talking about of thinking of moving businesses from that bureaucratic, mechanicalistic type of organization to more of a living organization, learning organization. It's kind of a shift to what small business has always been. And so, but even as we're doing that, we keep forgetting to put the owner at the center of that model. So that's what this kind of does is put the owner at that heart of it. And the concept of the operational

Nate Grossman: No.

Peter Bergeron: states is the reality of what a small business faces. We don't in a small business have our normal startup and then grow scale maturity stage. We have a lot of shifting back and forth. We start off in a

Nate Grossman: Mm.

Peter Bergeron: I call it survival, like that's launching, that's what you're feeling most. we then have the operational state of scale when we are actively trying to expand territories, grow product lines, doing something to do an exponential growth. Like we're actively in that that mode. And what we're trying to achieve is that stability mode where the business is running at a steady growth, predictable, we have budgets. We have recurring revenues, we have all of those things, and we still have to do a lot of active balancing, but we're feeling in control-ish. At any time, we can be shifted from that stability state to survival by it can be external you know factors, or it can be again our decisions to move in complexity. We want to expand and all of that. We're going to go back to a new state because we've shifted

Nate Grossman: Yeah.

Peter Bergeron: complexities of the company.

Nate Grossman: Mm.

Peter Bergeron: So when we talk about the operational states, it's really just to say what issues, groups, are most active. During survival, it's kind of like a triage priority. We're just feeling like, again, just everything to survive. And we spend a lot of time in those foundational issues more than anything, but everything is active. General scale, we're thinking about developmental issues, and instability is one we should really be trying to solve all our transitional issues and grow our leadership. So how the operational systems organize are those processes that happen in all backgrounds of small businesses, like we talked about. And it's within each one of those structural systems that one of the fatal issues lives. So, our most basic system is our resource system, which has our capitalization, revenue diversification, and strategy. The most basic things you need to deliver a product. You can be a business of one and do that. We go from there. Our next system is the process system, which is where we have the interaction of cash management, customer service, and HR. Then we have a visibility system, which is where we're we're checking on what we are doing. That's our financial controls. Are our marketing effective? Are we staying adaptable? Are we staying involved? Are we staying with technology? And that's that's a visibility. That's kind of seen, tells us are those other systems working. And then in the very last system is the enterprise system. Again, that's that compliance, our overall market presence, and then our leadership ability, what we have for that team. It's in that matrix that we have how we truly manage businesses, because we're never at any time. solving any of those 12 issues, they're always active, they're always moving. But each business is going to approach it differently. So one of the things I talk about all the time is customer diversification. And anyone would say you don't want someone to be 60% of your revenue. Like we would all say no, no, no, that's bad.

Nate Grossman: Yeah. Yeah.

Peter Bergeron: But if you set up a company with high capitalization, if you make yourself an extreme strategic Partner of that 60% person, if you've got enough visibility on long-term contracts and all that, that you can give yourself an opportunity to shift gears with enough warning, you can kind of contain that revenue diversification risk by how you manage those other issues. And that's what the matrix starts to show us. And that's what we start to look at is. How Simone's gonna run her business, how Nathan's gonna run his, and how Peter's gonna run his, is all going to be based on our personal experiences. We're gonna have some

Nate Grossman: Uh-huh.

Peter Bergeron: commonalities, just like we have with personalities and all of that.

Nate Grossman: Mm-hmm.

Peter Bergeron: But our individual personalities, our individual communication styles is also our individual ownership styles. And that's what most models are not doing. And that's what we're looking for first. It's just diagnose. Why did you build what you built? Because once we know why, right. Because then

Nate Grossman: In the way you built it.

Peter Bergeron: we can start to say, okay, how do we adapt it for long term? How do we adapt it for others

Nate Grossman: Yeah.

Peter Bergeron: to come in? So that's that's what we start to look at. And

Nate Grossman: Mm-hmm.

Peter Bergeron: that was the idea of the matrix. That was the idea of the grouping together. That's where it came. Like how are we really doing it? And it it becomes that the core concept of the framework, which is containing the issue pressure.

Nate Grossman: Nice. And so I s it sounds like the missing element that you have added into the mix is sort of the the psychology of the business owner, if you will. because

Peter Bergeron: Yeah.

Nate Grossman: that is what is informing the decisions they made to make the dis the business the way that they did, right? Like

Peter Bergeron: Exactly. And I think it was you and I had it, it was right after I talked to somebody else. I think we

Nate Grossman: Yeah. Yeah.

Peter Bergeron: said it was, you know, that question, do you feel like this is, you know, you you're in doing a diagnostic, you know, checkup with them. And no, it's a little bit of that therapist side of why why did

Nate Grossman: Yeah, yeah.

Peter Bergeron: you do what you did? And i it's vital, but it's a part we always skip and it's a part that's well s and it's funny because it's skipped within the modeling and all that. But then turns around and we talk about all kinds of leadership styles and personality types and building teams. So we know it's vital in the team, but we don't bring it into our ownership model. Like a little off there.

Nate Grossman: Yeah. Yep. Yep. Yep. Someone someone said if there's a problem with the team, it's almost always the owners.

Peter Bergeron: True. Yeah, that will be.

Nate Grossman: okay, so let's let's put this into like a a what if scenario. So

Peter Bergeron: Mm-hmm.

Nate Grossman: we have like a two to three million dollar, you know, owner, business owner, and he's got a team of twelve or th she, they how do they figure out which of the twelve issues is actually the one that's biting the

Peter Bergeron: So first, it's kind of the unique thing because think of how we it's what happens with small business. And again, it's one of those things that kind of makes it interesting. That whole scenario of the two to three million dollar twelve person team can be so different in what the business is. That could be an HVAC company that's serving a region to a financial services company that's, you know. national to a somebody who has a you know job shop in a third country third world country importing something in. It's just so different of what the complexity or what the challenges could be. But everything we always talk to is either revenue or employee count. And there's just so much more to it. So it's just always it adds to the uniqueness of the challenges of the small business manager, small business owner, all of it. And it's just is always a piece that sticks out in my head. because again, size and revenue aren't as much determinant of what is biting them as again as we talked about what they built and the deciding factor behind it. So where we start with them is we start with the fatal snapshot just to gauge how the business is built right now. That narrows us to specific containments of the three issue groups and contained and not contained. It's a quick little snapshot. We do six questions. It's an entry-level diagnostic to the point where we even put it inside the trap to operate a book itself. So it identifies where the structural pressures are concentrated in the business at that time. And so, really for the owner, it's that same question, regardless of the size, is where do problems keep returning? You know, and that recurring. ones are those structural ones as we talked about. So that's what we're looking. But yeah, we started with a quick little diagnostic because it was that. It was it was how do we get people to understand what we mean by this recurring problem? And we start asking the questions of can you survive this? You know, where do you feel on it from a strongly disagree to strongly agree? They start to tell us, okay, what have they put in place structure wise?

Nate Grossman: Is this I I I can't help but think of the I think it was Einstein that said the the same mind that created the problem can't be the one that solves it. So is this is this kind of

Peter Bergeron: Yeah, so right. And that's that's that exactly. But we're getting them to be honest about what it is. And 'cause we don't want to like as we talk about it, we're not looking for a profit and loss statement. We're not looking for anything like that because those are year over year metrics, those don't matter. We wanna know what we wanna know operational, we wanna know structural. So yeah, we we are trying to get you to tell us so we can start pointing you towards solutions and systems and things like that. that can fit with what you've created.

Nate Grossman: So so you built this from your lived experience

Peter Bergeron: Uh-huh.

Nate Grossman: first, and then you tested it against research. So what did or or did it the the research change about what you already knew from you know your experience?

Peter Bergeron: So I went in thinking that it was the family business problem first. And the first research project I did was based on the family business thing succession path that I went down to start to look at. And it was back in nineteen eighty six and they're talking about, you know, the family business succession problem and going and going, going. And the way it was pointed out and the way it was stated, it made it sound like it was truly the standalone, my God, this is the The problem is family business, it's the family, it's the family.

Nate Grossman: Mm-hmm.

Peter Bergeron: The shocking thing was finding out that non-family transfers were even worse. So

Nate Grossman: Ha ha ha.

Peter Bergeron: The reality is I think the whole reason family businesses get a little bit better success transfer is there's a built-in buyer, so to speak, that is almost forced to take it rather than

Nate Grossman: Yeah. Mm.

Peter Bergeron: the business is better structurally for that to survive. And so that sh

Nate Grossman: It's sort of succession by default, in other words. It's like

Peter Bergeron: A hundred per almost a it's finally my time, even if you know you really don't want to step into the role, but still that pride of okay,

Nate Grossman: Yeah. Yep, yep.

Peter Bergeron: I finally get control. Yeah, it

Nate Grossman: Yeah.

Peter Bergeron: succession by default is a great example. So that changed because really when I first started this, it was kind of thinking about it almost like We need to change it so that selling the business, selling the product line is the succession plan and get it to that new generation's passion and all that. And that's when I found out, no, it's not a passion problem, it's not this problem. It's an underlying system. It's the organizations we're trying to transfer. It's how we're building small businesses, how we're thinking about them long term that's causing this. lack of durability within the the whole community. And once we start having that happen, I think as we talked about, you just start having this exodus of local community funds and such, especially now where we've gone to the more national financing as opposed to the community based financing, it just changes so much.

Nate Grossman: Yeah.

Peter Bergeron: So realizing that no, it's not a family business problem, it's a small business problem. changed what it was I was looking for. It's still long term I see for family businesses, it might be a product line sell type concept. And we look at wealth transfer from a different thing, almost like that family office concept right from the beginning, when

Nate Grossman: Yeah.

Peter Bergeron: saying I'm a small business. But that's again dealing with long-term wealth transfer and all that, not not the today problem. The today problem is How do we make these small businesses so that they can last the forty, sixty, eighty years? They really should be able to. saying. Yes, the tactic doll

Nate Grossman: Yeah.

Peter Bergeron: there is that side to it too. There is the tactic knowledge, there is the known side that for succession to be more likely to occur, to succeed, excuse me, the longer time of coexistence, all of those things. So she's a hundred percent right on that, that it adds to it. It's It's the willingness though, because during that same during a normal due diligence that tr that's getting seen. And normally they would be saying, Okay, that's going to be a long term problem. That successor stepping in knows it's a problem, but believes because of having the experience, because of having seen it, believes they can act in that same manner and step into that same manner. and act in the same way as the successor. It's actually the what my dissertation is on is just that of talking to successful successions and going through the aspect of did any cognitive dissonance arise? How did they overcome it? Did they feel any time of any type of an imposter syndrome, stepping into it? All those pieces

Nate Grossman: yeah.

Peter Bergeron: play into and again, that's what succession has looked at. on the family business side for how we improve it. And again, that would be to me the right way to lens to use if we saw fit regular small business succeed better. But we don't so it's not a family problem. The family actually, as Moan points out, probably makes it helps it for that tactic knowledge and that no of even the it's okay to live like this. Yeah, and some people won't want to step in and go, Ooh, this company only cash flows sixty days at a time, you know, we're we're only looking sixty days out. I don't want to step into anything that doesn't have a good hundred and twenty day window and that family is okay with a sixty day window. So again, it's that

Nate Grossman: Mm. Yeah.

Peter Bergeron: side to it as well.

Nate Grossman: Hmm. okay, so let's get back in here. where where do systems and documentation come into this?

Peter Bergeron: They are vital. you know, and that's that's usually one of the very first things you're trying to pull out. And one of the things that really entrepreneurs as they're starting out should be thinking about and should be building as they're going the documentation of why they do certain things so that they have that knowledge to be able to pass along without having that documentation. They won't even at times know what that vision is. So sitting down and writing that vision, it matters. And again, these are the things we say, well, I I just want to get going. I don't even know what the vision is yet, because I don't know it's gonna work. Okay, you still need to have something loosely written, you have to have something loosely put together so that you're able to share it with a team. Yes, you have a vision, you have something.

Nate Grossman: Theory You know, like Yeah.

Peter Bergeron: but so much because it's so opposite of what. The way we think about it, but it's what you do in that W 2 role. And again, it's how you get yourself a little bit trapped from that W two role when you start you're sitting with HR, you're sitting about your retirement, what's my egg I need to get out, all of those things, you're not thinking that same when you're starting the business. You're releasing a framework, you're releasing a diagnostic model, you're releasing a book, and you're working with clients, and you're going, one of these should work. And you know, so there's a little bit of that to it. But what is the strategy behind it? What is the strategy for each piece of it? And how do you explain that to each person that comes into your team? That's side of that documentation, just from the vision standpoint. Then how

Nate Grossman: Mm-hmm.

Peter Bergeron: we do the processes and processes that sit on our our desk, even if we label it bookkeeper. And we are playing the bookkeeper at the time and we label it marketing. And we're still playing the marketing. We at least have that future idea that we're giving that hat to somebody else. We have the recognition

Nate Grossman: Mm-hmm.

Peter Bergeron: that we've we are wearing the hat at that time so that we can start saying these systems do have these hats in there. This is the role it plays. And then how do I get it out of my hands and I'm back on the thing that

Nate Grossman: Yeah.

Peter Bergeron: I am the specialist at?

Nate Grossman: Yeah. Thinking through what would someone in my shoes doing this thing right now need to know in order to perform it, right? Like that's

Peter Bergeron: Yes.

Nate Grossman: yeah. okay, so your your model that you've been that we've been talking about here discusses excuse me, diagnoses where the vulnerability is accumulating. and once an owner actually sees it, what has to happen on the revenue side and how they actually generate and keep their customers in order for whatever fix is decided upon to actually, you know, take effect and hold. Where where does your diagnosis hand it off to to the build here?

Peter Bergeron: Yeah. So one of the things we have to look at is not every fix is going to be fixed with more revenue. it could actually be opposite.

Nate Grossman: Yeah.

Peter Bergeron: We might see the opposite. And sometimes it's even getting an owner to understand the revenue to cash aspect of it side of things. we've done gone in, started looking at certain territories or certain product lines and starting to find that when we look at proper financial controls, we're actually losing money every time we sell an item. We're actually going backwards. And that's sometimes hard to get an owner to understand truly, because when you say we need to cut this and stop selling it, and they go, Well, we need that cash. we need that revenue. And you kind of tell them, yes, but it's cash flow negative. Again, so we've got to look at we're looking to fix the system, we're looking to fix the bottom line. So again, we can uncover weak financial controls. We go and all of a sudden start properly accounting for our true delivery cost. It might shift what it is we do. So really what the diagnosis is doing is just telling you structurally what is true and what happens next will really depend on how it was built, what was built and what is revealed. sometimes it can be a growth opportunity and can be a positive move, or it can be the opposite. It can be a again, a product line cut. It can be a whoo, we should really be closing this whole region. we should be shifting to here, we should be trying to sell it off. So the diagnostic really hands off clarity and less than a revenue playbook. And it gives that owner the understanding of those structural conditions underneath so they can have better decision making about where to invest, be it their time, be it their money, all of that.

Nate Grossman: Yeah, so the vulnerabil excuse me, the the diagnosis is setting the baseline, hey, this is where you're at currently, and from there, you know, from that point then you can kind of figure out which way it needs to go. yeah.

Peter Bergeron: Yeah, and it's also a little bit of how so some will just take the fatal snapshot and operate from there. Some will dive deeper. We go into a forty-eight question, even deeper diagnostic, where we're looking at each of the twelve individual issues, twelve issues individually. twelve individual issues individually. Sounds a little redundant, but well. Shows

Nate Grossman: Ha ha ha.

Peter Bergeron: we're live and we're properly talking. so

Nate Grossman: Ha ha.

Peter Bergeron: it can be a little bit of that side to it in what it is we're looking and the nice thing is just getting some of the understanding of the terminology, starting to get the understanding of how your systems internally truly interact starts to change some of the thinking and starts to change what it is they're building. It's how far down

Nate Grossman: Mm-hmm.

Peter Bergeron: they want to go, how much more depth they feel into individual issues again will change based on the business's own complexities.

Nate Grossman: Yeah. And I'd imagine that there's, you know, only so much that they're gonna be able to digest about it. At any given time, right?

Peter Bergeron: Yeah. It's well it's yeah, and really what we talk about is going back and something that you can redo quarterly, like you should

Nate Grossman: Mm-hmm.

Peter Bergeron: any other evaluation because you're going to change along over time. You're going to again there's a whole complexity spectrum piece that goes further in the model that's n just explains why we shift so much. 'Cause you are from

Nate Grossman: Mm-hmm.

Peter Bergeron: an owner, you start on day one, you're by yourself, and you stay a small business owner up to five hundred employees. That's a extreme change in what it is you're doing.

Nate Grossman: Hm. Yeah. Yeah. Right. Yeah.

Peter Bergeron: so it's okay realizing you're going to be reinventing the company over and over again over time. It's inevitable that it will happen to you.

Nate Grossman: Yeah. All right. So let's get into the multiplier effect here. Let's talk about what happens when an owner a addresses this before distress hits and not after. and this is this is where the structure turns into something that the the founder can actually feel. So so when an owner strengthens the structure before anything is actually on fire, what changes about how the business feels? to actually run the thing.

Peter Bergeron: It starts feeling like a series of emergencies and it starts feeling like a plan and you start having long term goals and moves and things like that. You're making decisions with clarity looking forward. So you get away from that cognitive narrowing that happens to us with pressure. You have that time to think stuff through. If you're under financial and operational stress, you've you're just stuck in that reactive short term decision making. So it takes the ability to step away from day-to-day decisions without the business being negatively affected. And you can start to a little bit more understand what it means to work on the business. You start to be able to look at yourself and again, what are the hats that I'm wearing? How do I start to get rid of these hats so that I can go to that next stage that I didn't even realize I could get to that next stage because I wasn't sure I'd get past. Survival. I wasn't sure I'd make it to year five. Now I have to start going with a little more intention. And really,

Nate Grossman: Mm.

Peter Bergeron: it allows the owner to be making decisions from that place of intention and treating the company as the job that they operate in and the company that they own and their distinct entities and the distinct roles for the owner.

Nate Grossman: Yeah. I well I think that you're the one who said you know how to how to you know make get the business to a place where it doesn't own you. Yeah. Yeah. Okay. Yeah. Yeah.

Peter Bergeron: Correct. Exactly. And and so much of us if it always feels like it began again because we have that personal tie to it. We have the personal tie of the emotional child feel to it. We have the emotional tie of the stress of our personal worth tied to it and then our personal identity. So that's a hard thing to be okay with other people having a big control of and taking a big part in, but we have to feel confident that we built something right. And if we built the system right and we built our checks and balances right, we can feel confident that we set

Nate Grossman: Mm.

Peter Bergeron: it in the right motion.

Nate Grossman: Rather than you know, feeling beat up, I guess. It's like Yeah.

Peter Bergeron: Yes, and tired and and feel right, right. We I I somewhere in there, you know, you end up and I think I messed up the sentence because I wrote it I meant to say you end up with a job with worse hours and I've like broke better hours, but so much of what we do when we make our own business is create a job with worse hours for ourselves. And so it's one of those things you look at

Nate Grossman: Yeah, yeah. Yeah.

Peter Bergeron: afterwards in editing and go, how did I not hear that like the seven times I read it back?

Nate Grossman: It was subliminal. Freudian slip there. Yeah.

Peter Bergeron: It's it's what it's really I've gone to using Speechify to read

Nate Grossman: huh.

Peter Bergeron: my book back to my editing back to me because

Nate Grossman: Ha ha ha.

Peter Bergeron: when I listen to somebody else, I'm ready to argue. When I'm reading my own thing, I know what I'm saying so I don't catch all the mistakes. Yes. A hundred percent.

Nate Grossman: Interesting. Interesting. Triggers different part of your brain there, I guess. Okay, so so your work, as we've been discussing, you're centering on succession and generational transfer. So how does building for durability change what the business is actually worth and whether it can outlive the foundation?

Peter Bergeron: Yeah, so durability is a huge multiplier. you know, a business that runs independent from the founder, that has the documented processes, the decision making trees been distributed and understood throughout. It has a way of containing those fatal issues, those it just will be five times, six times, seven times a business that has none of those things. One is you're just fire selling a product line. The other is you're selling a company. And due diligence is what's going to expose that right away. it was part of what people were seeing and telling us beforehand about land and sea, that again, we were blind to at the time. And one of those reasons that they talk about, you know, you hear the succession. Yes. Nope. sorry. Yes. Yes, sorry. Yes, I forgot about that.

Nate Grossman: Well real quick, sor sorry, sorry, just not to interrupt. Land just for the listeners, land and sea is the family business that that you owned, right? Yeah, okay. Sorry.

Peter Bergeron: Land and C was the family. Yes, my father founded Land and C, and that was when we we had tried a generational transfer. It wasn't going to work because of the very structural reasons, what we had built, what his role was, the hats he was wearing, and it was the exact same thing that due diligence brought forward to. My father was an engineer that also was running the marketing side and was not struck. We just didn't structure it correctly. So It became less of being a business and really it was just a personal services practice for him. Something he enjoyed doing. He enjoyed his creativity and all that, but it wasn't anything transferable. And to the point where when we closed the doors, it was fire sailing the product line to be able to get things behind us. Building that durability ahead of time allows for exit planning to actually happen. And even if the exit

Nate Grossman: Mm.

Peter Bergeron: planning hasn't happened, the company's in a position, because it's more analogous to what we see in large corporations, where it's just a leader holding a role that can be replaced rather than the leader holding every piece of vision within it. Large corporations, the vision stays in the company. Small companies, the vision is usually in the owner. That's what we're trying to shift with the durability.

Nate Grossman: yeah, I guess it's the the difference between being a keystone and like, you know, one of the bricks on the wall, I guess, you know.

Peter Bergeron: Right. And there's only gonna be so much because if it's techie, if it's anything like that, then you're not gonna be able to in you know, transfer that inventive mind. That piece is going to go away. But if you've got past the invention time and the product is stable, you're now, you know, adding things, components to it, it's a little different. And so it's along those

Nate Grossman: Yeah.

Peter Bergeron: balance of what it is. If it's If it's a law firm, if it's an engineering firm, it may be harder to transfer the same way, but there's still a structure there. There's still another engineer, there's still another person who could step in to that type of role.

Nate Grossman: Yeah, I I it always I can't help but thinking of like Apple as a famous example, you know. Steve Jobs huge personality, you know, carried that business forward. But even so, given given how big his personality was and everything, like they set that up perfectly well for him to be able to transfer that ownership or the the the the that that leadership role. So yeah.

Peter Bergeron: Correct. And it's all those things. Yeah, exactly. And those are the ones we do look to. So there are times we can look to the big corporations and say, yeah, this works and we know it works, but we still have to adapt it to that owner in the middle.

Nate Grossman: Yeah. Okay, so when the structure is actually solid instead of being held together by the owner, what then becomes possible for the team that was not possible before?

Peter Bergeron: Yeah. So the team stops bringing questions and they start bringing ideas. The employees have learned, you know. If an employee has learned that the founder is going to second guess, is going to overrule, is going to be the one that makes every significant decision, they stop trying to develop the capacity to be able to make those types of decisions and instead focus on how do I get the owner to say yes. So you're training them for the wrong thing. You're training them to then just be yes men, yes women, yes people, all in turn. When the decision making Authority is distributed and documented. The right people can move at the speed the business requires. It stops being a bottleneck. The owner can feel that they're part of the team itself and it gets to be what they were looking for. They were looking again most often. I'm not looking to run a big organization. I'm looking to help small business community. Whatever I can do to have others help me make that happen more is what I want to happen. In the beginning, what do I have to do? I have to do all these other pieces to it. So I can become more happy as well if it gets to a point as an owner where the team is carrying all that the team should be carrying. And I'm just a cog as that team member. So I now operate in the business as my position, as I should, and I re get the enjoyment of the ownership reward. And I don't have to be a hard about it because. We've got the right culture inside, we've got the right decision tree. We've all agreed on how we want to go about it. So I feel good as an owner too, because the checks and balances are there. It's all

Nate Grossman: Mm-hmm.

Peter Bergeron: of that that makes a huge difference.

Nate Grossman: Yeah. what that sounds like you know, w what do you call it? un unobtainable dream, huh? Sort of maybe depending on where you're sitting, but

Peter Bergeron: So 100%. So we always and that's the f that's why the whole concept of the fatal issues is containment and not elimination.

Nate Grossman: Mm.

Peter Bergeron: Because we can talk ideal state, and ideal states only exist in academic and theoretical models. We live in the reality. And the reality is we're trying to stay balanced, we're trying to stay stable. It's active management, it's active team, is all of that. It's communication, it's knowing where we are, it's knowing why we built what we built. It's it's all those pieces together that make it happen. But yeah, it's it's a really easy to say it in a single line. just do this.

Nate Grossman: Yeah. Yeah. Yeah. I I guess it helps, you know, to simplify that so you can coalesce the vision, right? That's

Peter Bergeron: And there is a little bit of it, like

Nate Grossman: Yeah.

Peter Bergeron: there there is some of that to it of just bringing it back to well, we're not trying to cure cancer here, you know. We're

Nate Grossman: Yeah.

Peter Bergeron: we're j we we're really we're running a business, we're delivering a product, we're delivering a service. We have somebody on the other end who wants that product and service from us. So

Nate Grossman: Mm-hmm.

Peter Bergeron: there's only so much we're really doing. If we can simplify it down to, yeah, we just have to move this to here. Yeah, there's a thousand. Things in between, but we're really

Nate Grossman: Mm-hmm.

Peter Bergeron: just transferring knowledge from one to the other. okay. It

Nate Grossman: Mm-hmm, mm-hmm.

Peter Bergeron: it sounds obtainable.

Nate Grossman: Yeah, yeah. okay, great. So let's get into the rapid c what we call the rapid clarity round. So I'm just gonna ask you some questions and just tell me, you know, what's the first thing that came to comes to your mind

Peter Bergeron: Okay.

Nate Grossman: as far as an answer. all right, these are gonna be like sound bites to takeaway for our audience there. so one question that every owner should ask this month to spot. A potential structural vulnerability early on.

Peter Bergeron: What keeps landing at my feet that shouldn't? And why? What is the condition that keeps having it come back and land here? It's just a little notepad next to yourself. It's it's those little tick marks at first to just get that recognition. Because in the moment, you're just gonna solve it. The fire is there, you're gonna solve it. Just as you solve it, it's just a little, all right. This should have been in this department, this should have been in this, this should have been in that. So you start to understand. What's where am I being pulled in that I shouldn't be? That's the first fix.

Nate Grossman: Great. So if if an owner only ever has has only ever thought about growing the business and not about durability, where should they look first?

Peter Bergeron: Look at who's driving the dur the growth. If the team, if the company is driving the growth, then we're good because our growth is durable. If the owner is doing all the driving of the growth, if it's all owner dependent, then we don't have durability and growth. And if we're focused as a growth company, we need durability in the growth. We can't have it just on our shoulders.

Nate Grossman: Mm-hmm. Durability of growth. Okay. Yeah. okay, so what is the most common of the 12 issues that you see in owners who feel like they are doing everything right?

Peter Bergeron: Yeah, it's the one that they always hate to hear. It's ineffective management. And it's because they didn't expect to be business owners. So again, they didn't go

Nate Grossman: yeah. Mm-hmm. Mm-hmm.

Peter Bergeron: to school. Well think about it, they didn't go into the skills of it. They went in most often as what I call an incidental, accidental business owner. They either were really great at a service, products, they were passionate about delivering something, they really cared about small business. Doesn't mean they you know. Anything along those lines. But their model of what they're running changes so rapidly and so often. It's they start as, you know, something that works logically at five and then shifts to 25 people, it's a completely different animal. And they suddenly

Nate Grossman: Mm.

Peter Bergeron: are pulled into working in the business and thinking that that's working on the business. Because no

Nate Grossman: Mm.

Peter Bergeron: one really understands, because the term is kind of Vegas can be, work on the business. Bringing money

Nate Grossman: Yeah.

Peter Bergeron: in is working on my business, but it might not

Nate Grossman: Yeah.

Peter Bergeron: be. So that's unfortunately where it ends up.

Nate Grossman: Hmm. Okay. And for the last one, finish this sentence. A business is durable when

Peter Bergeron: It can function, grow, and transfer value independent of its founder. That's when it's there because that means the founder's passed everything on to the team and the team knows what they're doing.

Nate Grossman: Nice. All right. That's beautiful.

Peter Bergeron: Okay.

Nate Grossman: okay, so here's what is sticking with me over this

Peter Bergeron: Mm-hmm.

Nate Grossman: over this conversation here. The pressures that you keep hitting are not proof that you're necessarily failing. They are structural, they're predictable in some cases, and so that means that they can be seen and addressed before they turn into distress and you know. chaos, right? And so naming that pattern is the moment that it stops running the business and you start being the one who is running the business, right? So that's yeah.

Peter Bergeron: Right. A hundred percent. Yep. No, that that's completely it. It's because so much of what it is is again is us feeling like we're being we are doing what's supposed to be and it's pulling us in and we think that's the right move. And it may very well not be. It may be doing just the opposite to us. It could be trapping us and not allowing us to get to where we really want to get to.

Nate Grossman: Hmm. Okay. So if what Peter shared has resonated with you, his book, his new book that's out, when when was it released, Peter? July 1st. It's it's hot and fresh off the shelves here.

Peter Bergeron: July first. Yep. Yes it is.

Nate Grossman: it's called The Trapped Operator. It is written, it's it's the plain English version of everything that we covered here in the conversation. Here you can find it and his 12 fatal issues work at the trapped operator.com and connect with Peter on LinkedIn under Peter S. Bergeron. Okay. And if this conversation made you realize that you're not sure where your biggest growth constraint actually is, then that is what we dig into every week. Just subscribe to our newsletter at thegrowceeling.com. Each week you get one growth constraint and how to spot it in your business, whether that is structural durability or something else entirely. And of course, subscribe to the Growth Ceiling wherever you listen, and if this episode helped you see something differently, send it to a founder who needs to hear it. thanks a lot, Peter, for joining us, and yeah, we'll have to have you back sometime.

Peter Bergeron: greatly appreciate it. This was a lot of fun and thank you for having me.