The Art of Business Turnaround with Stewart Ervin

Freddy D: 00:02:01

Stewart Ervin's passion for business started at a young age. But like many, he faced the challenge of finding the right direction for his future.

He was fortunate to launch his first business at just 16 years old.

While attending college, he gained hands on experience working in a small business, holding nearly every position imaginable before transitioning into a large corporation. His journey eventually led him back to entrepreneurship where his true passion lies.

With a career that has woven through both corporate and entrepreneurial paths, Stuart gained extensive expertise in operations and financial management.

For the past 15 years, Stewart Ervin has dedicated himself to business turnaround and growth, helping small to mid sized businesses unlock their full potential.

As the driving force behind Bracket Management, a premier fractional CFO company, he provides strategic financial leadership to businesses looking to scale. His belief in the power of innovation and entrepreneurship continues to drive his mission to create lasting impact and success.

Welcome Stewart, to the Business Superfans podcast. We're excited to have you. Stuart is with Bracket Management out of North Carolina. Stewart, welcome to the show.

Stewart Ervin: 00:03:17

Awesome. I appreciate you having me.

Freddy D: 00:03:19

Likewise. Tell us a little bit, Stewart, about your story of where did you come from and how did you end up running Bracket Management.

Stewart Ervin: 00:03:28

Yeah, I knew at a very early age I wanted to go into business like 12, 13 years old. I just didn't necessarily know exactly what I wanted to do. Was it entrepreneurship, was it small business, corporate, so on and so forth.

So my dad started a business, was about 14 years old, and he made me start at the very bottom and work my way to the top in that same timeframe. I had the opportunity to actually start my first business at 16 as well.

So I started dabbling and trying to understand was an entrepreneurship or small business being that I started at the very bottom of my dad's business, I had to really hold every single position in the business. And I didn't really know at the time how much that would pay off for me in the end.

But what it really did is it taught me all the ins and outs of running the business, every aspect of it. So Fast forward like 10 years, I was in my early 20s, I got my opportunity to go into the corporate arena and I learned that.

So at that point, by my early to mid-20s, I had done everything. Entrepreneurship, small business, and then corporate America. I decided, you know, I want to step out and do the entrepreneurship full time.

So I had been investing heavily in real estate and I was flipping houses and that stuff. And so I had a couple small businesses that really were not large enough to really have any overhead at all.

gement. Now, bracket, back in: 2008

We would do your bookkeeping, marketing, so on and so forth.

Your hiring again, it really was more or less, let's pull our resources together between me and my buddy to help run our businesses, that started to take off a little bit. And people in our local church, people in the area said, hey, we were really interested in it. We'd love to.

We'd love for you to help us in our business. So we was starting and stopping, trying to figure out what bracket really should exist.

So if you know anything about: 2009

Freddy D: 00:05:27

I got spanked in that area.

Stewart Ervin: 00:05:28

Yeah, so did I. So everything I made, I lost and then some. It forced me to go back into corporate America. And for me, that's really not that big of a deal.

her. So we shelved bracket in: 2010

And I had the opportunity to start to be a business turnaround guy. So I was in supply chain, and what would happen was basically if a supplier wasn't performing, they would send me in to fix them.

So I go back to what I started with. When you learn every aspect of a business, you can walk into a business and it pretty much jumps out of, this is your problem. Let's go fix that.

So I did that for about four years, and then I got the opportunity to be hired by my first company to really turn them around, like, solely focus on. This guy came to me and said, I want to sell my business. I like the way you do things. I know that you understand the finance and operations piece.

I want to sell my business. I'm heavily into one particular customer, and I know I need to diversify to do that. And so we turned that company around.

Then I got the second and the third. And so it just started to really. I started to realize I was a turnaround guy.

And I had that knack again from everything I had learned back in my teens and twenties. So then I'd got to. I started realizing that I need to really look at potentially starting Bracket back up.

But what I really wanted to do is take all my corporate knowledge of finance and operations and try to get out in front of the businesses. Before they were needing to be turned around. Then at that point, the fractional world started popping up.

And so I was like, hey, I think this is really a big opportunity. I really started to hone in on the finance and strategy portion of this turnaround stuff.

And so I decided to relaunch bracket and rebranded as a fractional CFO company focused on operational excellence, strategic focus, and operational financial accuracy. So you take those three wings and combine them together and then it really does some pretty cool things for small businesses.

Freddy D: 00:07:30

Okay. Yeah, I just recently the same thing. I just recently worked with a company and started out as just helping them with sales.

And the next thing I know, I was helping them with operations. And the plan was that they were going to retire and let me run the company because they were happy with where I was taking it.

Unfortunately, the husband passed away unexpectedly, so that changed the whole dynamics. And I still, I took over running the company and we grew up by a million dollars in one year. This is an interpreting and translation company.

So you're talking $50 per hour or two hour increments or it's a dollar a minute phone interpreting. So you got 10 minutes, 12 minutes, 15 minute conversations still.

Over time, the number of calls and stuff grew that by a million dollars position them to be acquired middle of last year when I was done with that project.

So I can completely appreciate what you're talking about because the things that business really needed is they never were looking at the bottom line. They were just looking at the fact that they're just making money. Look, we're making money.

Yeah, but your profit margin's crap, your net income is crap. And so one of the things I did was I just increased what we charged by five bucks.

They had an increased pricing in five years and I had pushback from some customers and they'd gone like, what's this? We're used to paying this. And what's this new pricing? We haven't increased anything in inflation and all that stuff.

It says it's just a minuscule five bucks after five years in rico. Oh, that makes sense. That's fair and poof. But that $5 is completely changed the bottom line of that business.

Stewart Ervin: 00:09:10

Absolutely. Yeah. So we have these key plays that we focus on when we go into a client. And the last play is about value creation.

And one of the key focuses we have in there is price and strategies. It's one of those things where I go into our clients and I say, what's your win loss record again, we really don't lose much.

We get about everything we quote. And I say, okay, you're charging too little, you need to do better nearly every aspect.

We will come in and say, hey, let's do a 3, 4% price increase and see what happens. And nine times out of 10 to your point, it's just, yeah, okay, that makes sense because they've never received the price increase right. Ever.

And every dollar you get on pricing goes right to the bottom line. So it's a no brainer.

Freddy D: 00:09:47

Yep. Yeah, little tweaks make big results.

Stewart Ervin: 00:09:51

Absolutely. And that's the thing. So we look at value creation through pricing strategies, cost management and new business growth.

And if you do small improvements in each, like 3% in each one, it could most, most of the time would represent a 10% increase in your net profit. But it's incremental. Right. And so that's what most people, they think they have to hit a home run.

But it's really incremental cost, incremental improvements in pricing and then always striving to bring in new business.

Freddy D: 00:10:18

Absolutely correct.

So let's go into what are some of the challenges that you found or some of the companies that were doing things really messed up that you guys really turned around and transformed that company? Because we both know that especially the smaller businesses don't do a good job of managing their finances. They're just chasing the invoice.

Stewart Ervin: 00:10:42

That's right.

Freddy D: 00:10:43

So there's no financial planning. It's reactionary versus proactive.

Stewart Ervin: 00:10:48

Yeah. So that's the very first thing that we try to do is we try to get the. We don't try. We make the business owner start looking forward.

And so we pretty much out of the box, we'll develop at least a 30 to 45 day forecast. And then we're going to sit down, I'm going to develop a 12 month plan to at least have something to shoot for.

And it's a, it's amazing that when you get to the end of month one and you say, okay, here's what we thought we were going to do, here's what we actually did and why. And these are the behaviors you need to change.

It's like eye opening for these guys and they go, now I see what you're doing, now I see why you say what you're saying. So we do that right out of the box.

Because in nearly every situation you got to realize that most of these small businesses, the founders are the technical guys. Right. They're really not traditionally business guys. And so it's quite good at what they do. Amazing. At what they do.

Again, they are the technical backbone of that company. But it's amazing in that they just go, I got good money in the bank and my payables are down and my receivables are on time, so we're good to go.

And that's really, at that point, they say, hey, I'm. I'm in a good position. I'm in a good spot.

And so it's really trying to get them to again, to recognize the results, but really turn their focus on going forward. Because I, I. It was in one of my corporate experiences that I worked for one of the most profitable aerospace companies in the world.

And their main driver was everything they did was with discipline and intent. And I saw what discipline and intent would do for your business. And again, we start with a plan, and we do not deviate from that plan.

We reforecast every month, always. What did you do last month? And how can we make some changes in order to drive forward?

That's really the biggest issue, and that's if they're really willing to change. There's been many cases where they're in trouble, right?

So in most cases, if I get a phone call because the company's hit a ceiling, either they're, they've hit us, and I don't know what else to do. I'm beyond my comfort zone.

Sometimes it's the business is going backwards, and sometimes we'll go in and we'll start working with these guys and say, okay, these are the things you need to do. And you can tell they're not comfortable doing that.

And so there's been times where I've had to look at the business owner and say, you probably really don't want to be as big as you think you want to be. You are probably much happier at 2 million a year and being on the lake every weekend, so on and so forth. You're really beyond your comfort level.

And there's been times we've had to separate. But if you're really willing to and want to change and grow, focus on driving your business forward and go from there.

Freddy D: 00:13:21

And how important is it, Stuart, to involve the whole team into the vision of the company? Because a lot of times the team doesn't really know what the owner's vision is, right. Because it's in his head or her head.

And they don't do a good job of sharing and getting everybody what I would call into the rowboat and one of those racing boats where you've got the four people in a line and if everybody's going pulling at the same time and the stroke is not exactly the same, that boat's going to go like this versus yeah. Yeah.

Stewart Ervin: 00:14:01

So one of the other key plays we, we have is the communication play. The goal there is for everyone internally plus externally knows why you're existing as a business.

A lot of times you'll see that people, I have core values and I have a mission. I say, yeah, but is it a part of your DNA? And if it's really not a part of the DNA of the business?

And we will revisit those mission, vision and values and start putting in the forefront of everything we do. So once the owner is comfortable with his why, we put in things in place to make sure that we're winning to the Y.

And so that's the regular communications that is like you're doing the day to day.

In manufacturing, we call it a gimbal walk where you're, you're out on the floor every day, you're talking with your employees, you have a plan for today, so you look and say that I win yesterday. Everything is about communicating why we exist, so on and so forth.

One of the key things we do when we develop that annual plan which is in play two, the biggest thing that we try to do is we make sure that we get buy in from the bottom all the way to the top. And again, it's pretty much everything is set from the top level, right. We're setting the sales targets, we're setting the cost parameters.

But I always tell these guys, you got to make sure that the management team beneath you buys into it. Because if they buy into it, they are more likely to help you get there. If it's just pressed down on them, they're gonna fly. This is crazy.

Where are they coming from? I tend to be more of an open book, particularly when it comes to through middle management of why.

And then I've even gotten to the point where sub will pull some stuff together and make it very simple and communicate it all the way down to the frontline employees so they know exactly what's going on in the process. To me, if you're not communicating, that's why we have it as play.

Number one, communication is the most important part of the business because traditionally that's where people fail the most. Because people's imaginations are their worst thing, right?

And if you can really nail down the communication side of things and always communicating your why and hey, we're winning or we're losing and it's all focused around that Then you'll be much, much better off.

Freddy D: 00:16:00

Okay, so Stuart, how about sharing a story related to you guys worked with a company where they were at and where did they end up at?

Stewart Ervin: 00:16:11

Yeah, so probably the biggest turnaround that we were able to accomplish was a company that was at one time 80 million a year. They called me in, their on time delivery was 50%. Their past dues were sitting. Probably 10 to 12% of their backlog was past due.

We're talking about 12, $15 million backlog. And they just had no clue what was going on. They called me in and for me the business is really set up as inputs and outputs.

So you have the demand side, which is sales, you have the supply side, which is supply chain, you have the execution, which is your production and then your back end stuff of quality and finance. And so when I go into a situation, I really look at the inputs and the outputs associated with each one.

So I walk into this particular company, they were like, man, our supply chain sucks. Our suppliers are terrible. I just, I don't know, we don't know what to do. We have to be with these guys because again, it was an aerospace company.

The ability to switch suppliers is pretty much non existent. But we just don't know what to do. Our suppliers suck.

And so I go in and within the first week I actually recognized that the issue wasn't the supply base, the issue was the sales team. And what was happening was this was a publicly traded company so they would have to go in and create monthly forecast.

So they'd go in and to make their forecast work, they would start monkeying with the dates and in the system to get a forecast that's accurate financially because we think this is what we're going to do. No one in the business recognized that changing those dates consistently and constantly changed the dates on the demand side of the supply chain.

So the supply chain team was constantly getting updates on bring this part in, push that part out, cancel this part, we got to hurry and urgently rush this part. So it's creating absolute chaos in the supply base.

Suppliers had no clue, they had no clue what they were supposed to do and what they were not supposed to do.

And so the very first thing I said is, let's determine a different manner to go and manage the forecast and let's keep the dates the same, keep the dates in your ERP consistent. Then we can determine which suppliers are no good.

And once we understand that now we can start producing parts on the floor appropriately because we had stuff sitting everywhere. Our wit was through the roof because again, we had partial builds and so on and so forth.

Within three months, our on time delivery went from 52%, 53% all the way up to 98. Our past dues went to zero and we consistently stayed in that 98% on time delivery, $0 past due.

So what that was able to do was now there was confidence in the production team. Again there was confidence in the supply base.

And so now the sales team could go sell because for years all they had done is firefight and explained our poor on time delivery. And so when I walked in the door, the sales were about 61 million. When I left after four years, they were at 72, 73 million.

It really all stemmed from the one poor process which was we've got to do our forecasting so we're going to monkey with the dates. When we fix that, it just rippled through and improved the business dramatically.

Freddy D: 00:19:18

Now that company's got to be a super fan of you guys.

Stewart Ervin: 00:19:20

They were. Yeah, we no longer with them, but yeah, once we got them turned around, it was great.

Yeah, it was, it was very good to go into that first quarterly and say, yeah, $0 past due, 99% on time delivery, and see the corporate guy's eyes go, dang, that's crazy. Because it had been years of fight and struggle.

Freddy D: 00:19:39

Right, Right. Yeah, it's. It's amazing how quickly that can make a left hand turn and go down the drain.

Because if you're not paying attention to can run away from you very quickly. So sometimes it's important to bring somebody like yourselves into that company because you're not in the mix.

So you're looking at it from a completely different perception. And you can see the things that are not ideally working in an optimal way.

Stewart Ervin: 00:20:10

That's right.

Freddy D: 00:20:11

They can't see it because they're living in it every day.

Stewart Ervin: 00:20:14

Every day. And that's the thing too. We constantly try to tell these guys is you're living in the weeds. We're an outsider.

And all I try to do is get these leaders to step up. And again, I help coach that and say, okay, stop looking at this, stop looking at that.

Let's focus on this instead and try to get these guys out of the weeds. So I go back to what we talked about earlier. They're the technical brain behind the business. Their comfort level is sitting in the weeds.

I know how to do X. I'm the one who designed Y. It's. Yeah, but that's not necessarily your role today.

Your role is to come here and So I do a lot of coaching with the clients and the leaders, owners of these businesses to try to get in and start focusing on the macro level of the business and get out of the weeds.

Freddy D: 00:20:56

Right. Because you got to really empower the team because otherwise you can't scale.

Stewart Ervin: 00:21:00

Yeah.

Freddy D: 00:21:01

Like you just said, the guy that's the leader of the team, that's the specialist and knows how to do that one thing very well, they gotta let it go because it's impossible for them to scale. I recently worked with the commercial flooring company, been in business for 30 years.

I started working with them, but the owner just couldn't let go of the power. He was one of those types. I'm sure you've ran it. I'm sure I have to do it. And because I let him do it and now it's all screwed up.

I've lost money and everything else. I'm going like, yeah, but did you really train the guy? Did you empower the guy? No, you just said, go get this done.

It was really eye opening for me because I never really had worked with somebody that wanted to go forward but did everything to screw it up.

It was baffling because in six weeks time I got him bid opportunities because Arizona is exploding with construction, especially commercial construction. $159 billion worth of construction going on in Arizona. And in six weeks I had him $1.1 million of bid opportunities and he just couldn't handle it.

Stewart Ervin: 00:22:11

Yeah, sometimes you think that would be enough, but that's when I go back to. He probably was a lot more comfortable at a smaller level doing his thing.

So yeah, one of the things that we, we talk about, there's another play, Play five, which is really focused around employees. We get into discussions around job descriptions, KPIs, which is an agreement between the employee and the business.

Business owner is what success looks like. And I do all that in an effort. I give the analogy of a baton handoff.

If I was the owner, if I have a problem in sales, I want to go talk to this guy, got a problem in purchasing, whatever case may want to go talk to this guy, so on and so forth with these small businesses is a lot of times a guy doing the sales, doing the purchasing, he's also doing the scheduling. And it's, he's. I'm like, who you can go, who are you going to go yell at if it's not working?

And so if you look at a, when you run track, you do a baton handoff. Now I said, the sales team. You need A sales leader to hand the baton off to, an operations leader to hand a baton. Also a quality.

And a finance guy said, if it happens in this arena, that's the person you go talk to, so on and so forth. And when they break it down like that and go, okay, I now see that's the guy I got to go talk to, it really starts to click in their brain.

That's the ones who's accountable, not you anymore. And it isn't that you have to manage the entire sales team. You have a sales leader, you have an ops leader. You break it down like that.

You can say, let's compartmentalize these issues, so on and so forth. It seems to be able to click a button in their head.

But sometimes these guys are just so micromanage, they're so much of a micromanager that it's just no hope for them. And you just gotta look and say, you know what? You're better off smaller because you are the lead.

Freddy D: 00:23:48

That's what this guy was. He was a complete micromanager.

And he would take the flooring material and put it in his truck and drive it out to the site versus sending somebody else to do it, because then he could go out there and beat up the crew. No, that's not how that works.

Stewart Ervin: 00:24:06

That's right. Yeah.

Freddy D: 00:24:07

So you talk about the team. How important is it really to empower a team? Because I'm all about creating super fans.

And what I call superfans is brand advocates, but they're on steroids, as you can see from the picture behind. I wrote a book called Creating Business Superfans, which is really empowering all stakeholders in the equation.

So you're talking the employees, you're talking the customers, you're talking the stakeholders, the suppliers, the distributors, the companies like yourself that are a complementary business, helping that company grow.

Stewart Ervin: 00:24:41

Yeah.

Freddy D: 00:24:42

How important is that whole ecosystem?

Stewart Ervin: 00:24:45

Yes. It's probably what's going to make or break you one.

And even though you may be surviving, you're probably not achieving what you could achieve if you truly encompass the whole entire team. So I tell all these guys, you need to treat a supplier equally as good as you do an internal employee.

They are an extension of you that just happen to be externally.

Freddy D: 00:25:05

Yep.

Stewart Ervin: 00:25:06

The information that you share internally, share with your supplier because they're as impacted by the changes of your business as you are. And so the more that you can work with those guys, any of your business partners, to so they understand internally what's going on.

I've seen amazing things happen when A supplier goes, I recognize that you're in a slow period. I may cut you a break on cost. You know, we'll make it up in the future. I just, I want to develop that relationship and that is insanely important.

And I also tell, from the employee standpoint, they are your biggest fans, right? And so I say pour the swag on them, right? They're out in the community and they want.

You want them to represent who you are on your shirt and you want them to be like, super fan.

Freddy D: 00:25:44

Just call it a super fan. You want them to be promoting and saying, this is the greatest company. I love the company I work for.

And that energy comes across when they're talking to prospective customers. That energy comes across when they're talking to the suppliers. That energy comes across when they're talking to existing customers.

Stewart Ervin: 00:26:03

That's right.

Freddy D: 00:26:04

And so now someone that's looking at potentially doing business with that, then all of a sudden they get to, somebody comes home, hey, good morning, Stuart. How can we help you? When you're all energy and bubbly, you're going to go, wow, this is a cool company. Versus, hello.

Stewart Ervin: 00:26:19

Yeah.

Freddy D: 00:26:20

Oh, how, how can we help you?

Stewart Ervin: 00:26:22

Yeah, yeah, yeah, yeah.

So I do we, I try to do with all our clients too, do a lot for the employees and put that stuff on LinkedIn, because not only do suppliers, but potential customers and definitely employees or future employees, they're going to look at that stuff and see if they look and see a vibrant, happy, excited team, they're going to be a hundred percent more in tune to working with you, working for you, supplying to you. And yeah, it's insanely important.

You, you really are missing out if you're not the focus, all the way from your employees all the way to your business partner, suppliers, so on and so forth.

Freddy D: 00:26:57

Yeah, yeah. So for our listeners, Stuart, name off all the things that you guys can help businesses with.

Stewart Ervin: 00:27:05

Yeah, so for us, our sweet spot really is if you're a company from 1 million to 30 million, particularly in manufacturing, if you've hit a ceiling of growth or you've reached a point that you're beyond your comfort level, obviously if you're going backwards, then what we do is we come in and we assess your business on three levels. We look at what's your financial position, what's your strategic position and operation.

We have about 100 question assessment that we go through and identify each one of those and you get a grade. And not only does it point out what you're good at, it definitely shows where you're Weakest.

So what we attempt to do is go in and prop your business up from a health standpoint.

So we look at your communication, we look at your financial planning, we look at your sales funnel, how are you reviewing your business, how are your employees acting? And everything really is associated with trying to get your business in a healthy position to grow it.

And we talked about it earlier, that last really key play is focus on pricing, cost reductions and new business growth.

And so the thing that Bracket does, it really bridges the gap and it brings a business system in, but it bridges the gap between finance and operations. A lot of the fractional CFOs out there are like really focused on the financial reporting, financial strategy.

But a lot of those guys can't tell you these are the knobs you need to turn in your operations in order to improve this number. And if you do, this is what's going to happen to you on the operations side.

So Bracket is that in between spot that we can help you on the financial and operational side, all in a way to get you propped up and be super strategic and grow your business. And our goal is to try to do a 10x return on the amount that you've invested in our services.

And so we put a plan in place and we say, okay, it should take us two to three years or two to three months, whatever it may be. All that really stems off of that initial assessment that we go through.

Freddy D: 00:28:49

Yeah, no, that's important because it's all interconnected.

Stewart Ervin: 00:28:52

100%.

Freddy D: 00:28:53

Yeah. I used to sell manufacturing software in the manufacturing market space years ago. So I completely understand.

I worked a lot with tool and die shops, mold makers and scrap and metal because they didn't have proper software and things like that was really impacted their bottom line. Yeah. And at the same time, one of the things that we did when I was selling was I set the proper expectations because they brought new technology in.

You're not going to be productive tomorrow. Sometimes these guys think that, okay, I bought this stuff. How come we're not making money with it? It's, wait a minute.

First off, you're going to run concurrently. So you're going to run the new technology and you still got to use the old technology to.

Because you can't just shut it off because you don't know how to use this one.

So you're going to migrate the stuff over and then you got to put the plan together and then it's going to take you a year before you're really going to start seeing a return on an investment I think it's important, and I think you guys do that is set the proper expectations. Because sometimes the owner of the company's expectations are not realistic.

Stewart Ervin: 00:30:03

That's right, yeah. Yeah. A lot of times they'll say, why can't you give me a guarantee? I said, because at the end of the day, it's still your business.

All I can do is take you to the water, but I can't make you drink. And so I will tell them, look, we're going to come in, we're going to do a 3% pricing, how much your costs are outrageous for.

We'll do the industry research and say, okay, we think we can take 8% of your cost out. And you're really positioned pretty well strategically. So let's grow your business by 10%. If you do that formula, that's how you get a 10x return.

And we're going to help you do it in all steps, all aspects and every step of the way. But at the end of the day, you're still the one who's driving it. All I can do is help you get there. And yeah, so far it's worked out well.

We've done very well and our clients are continuing to perform and it's really a happy marriage.

Freddy D: 00:30:44

Yeah. No, I remember there's a one mold shop that I used to work with in Illinois and they started out as a 40 man company.

I really didn't do any business coaching at the time. I was just selling them technology. But I would always set the proper expectations for them and set and help them, help them plan their growth.

And eventually they bought the building next door, built a breezeway, then they bought the building on the other side and built the breezeway. And they went from a 40 man shop to about 120 people. They bought another location and they became my biggest super fan.

I was number one in sales because they would refer other business owners and says, man, you got to talk to Freddie D. Here, he's going to hook you up with the technology. Because these guys were doing overflow work for this company.

Stewart Ervin: 00:31:28

Yeah, yeah.

Freddy D: 00:31:29

We would bring our technology in back then, big computers. And the guys go, I don't need to see it. Jack says, I need to buy it. What's it going to cost me?

How fast can you get it here and how fast can I start making money with it? That was it and that was the sale. I spent most of the time filling out the paperwork and putting in the order than anything else.

Yeah, but it's important that you develop that relationship like you guys do with your customers, Setting the right expectation. They get the growth, they start seeing it, they start referring you to other businesses.

Stewart Ervin: 00:32:00

That's right. That's where predominantly where our work comes from is referrals.

And because the fractional world is still fairly new, it's been around for a little bit. But fractional CFOs, even when they're within ourselves, we really still don't know exactly who we are or what we do.

It's the results that's really driving it. And you have one business owner who's saying, I'm having trouble here. Oh, I got a guy.

And so we're seeing that referral base just keep growing and growing.

Freddy D: 00:32:24

So that's when you're getting those referrals, that's a super fan. That's in turn promoting you to people that they know.

Stewart Ervin: 00:32:30

That's right.

Freddy D: 00:32:30

And when you get that type of a referral, it's usually a pretty much a done deal.

Stewart Ervin: 00:32:35

Yeah. Oh, yeah. It makes the selling process super simple because it's collapsed.

Freddy D: 00:32:40

You're no longer in a pricing war. You're in. Okay, what do we got to do to get this thing going?

Stewart Ervin: 00:32:44

That's right.

Freddy D: 00:32:45

Conversation. Because you already got the credibility.

Stewart Ervin: 00:32:47

Yep, 100%.

Freddy D: 00:32:49

So that makes it much more fun.

Stewart Ervin: 00:32:51

Absolutely.

Freddy D: 00:32:52

Yeah. So do you have another story that you can share with us? Because stories are really cool for people to visualize what happens.

Stewart Ervin: 00:33:00

Yeah. Another story of turnaround.

So most of, again, most of my stuff has been a company has called me early in my career really was because their on time delivery was suffering, which means they couldn't grow the business. And I'll go back to. It's actually the very first turnaround that we did. They're diverse.

They brought me in, they said, look, I want to sell this business, but I have one customer that makes up 70% of my work. And they're actually starting to pull work away. And I was like, okay, let's come in and take a look. They had never opened their books to anybody.

So the husband and wife ran the business. It was a machine shop. They ran the business. They had invested heavily. They were super leveraged.

They had rested on their laurels because they had brought in this particular customer early on, like four or five years later. And it was a small portion of their business and they were heavily in the medical space. But their aerospace business kept growing and growing.

They shut the medical division down and focus all their efforts on this one particular customer. They thought that train was never going to end. So I go in, I was the first non family member to look at their books.

And the reality was that customer was 97% of their business.

Freddy D: 00:34:10

Oh, wow.

Stewart Ervin: 00:34:11

Yes. And they were pulling way more than 50% of their work out of there.

So this guy's wanting to A, sell his business and B, think to I'm going to lose 30% of my business. I'm like, no, brother, you're fixing to lose 50% of your business. I was in there and I'd see these quotes come in every day.

And I'm like, what are these things? And it would be for MRO airspace, if you're not familiar with that.

They bring these airplanes in that are either they need to be refurbished or there's something that's been broken on them and they need one part, they need two, three parts. So you get in with these bigger machine shops, 1, 2, 3 parts. They don't even want to mess with them. And so I was like, What?

I see 35 or 40 quotes a day come in. I said, why are you not quoting these? He goes, it's just. That's little piss parts. I don't want to do that.

I was like, yeah, but you can charge a premium on those things. And no one wants to do this. So it's almost like a guaranteed slam dunk that you'd get that work.

And I said, why don't we set up a sale and we have one guy who does the quoting, that same guy does the programming, that same guy does the running, and he passes it off, the quality and ship it. I said, because you need. These things also need to be turned quickly. And I said, we'll set UP 1 sale, 5 axis that can do a variety of parts.

And let's just see what happens. By doing that, it saved his business from really going under. And you take that. And we landed another larger program.

Both of those combined actually increases business 10% than where we were when. When we started this. So we renegotiated some of the terms and some of the parts with that, the 97% customer.

But the reality is, what I did when we went in there with that 97% is I started looking at the profit margins by part number. And I said, look, these, you have room on those. Let them go. You're making no money.

Because again, he looked at the highest level and it's all making whatever 7 million a year off this one client customer. I said, yeah, but you're really not making that. That's your revenue side, right?

Freddy D: 00:36:09

You gotta look at the bottom line. Everybody forgets to look at the bottom line. Oh, yeah, look, we're making 5 million in sales.

Stewart Ervin: 00:36:16

Yeah, yeah.

Freddy D: 00:36:17

But you're making negative 10 bucks.

Stewart Ervin: 00:36:19

Absolutely. So I said, shed these parts, keep these parts. Now you gotta go find another program like this, but you can offset that with this quick turn stuff.

So his whole approach was, I'm looking for the big fish. I got to go land another contract. And I said, start small.

Let's start executing on these 30 parts a day that you can charge 100, 200% on that they need, and then all of a sudden you can become their guy and watch what happened. And so that's how we restructured his business.

We let parts go, we brought in another contract, but we really started focusing small and by repositioning his vision after about 12 to 14 months, we got that business turned around and he ultimately sold that business. And so there was a mindset shift again. He was trying to land a whale to replace a whale. We had to really step.

Take a step back and look at a multi tiered approach to make sure we can make it happen.

Freddy D: 00:37:12

Yeah.

I remember early in my sales career, we had a CE of the company, brought all the sales team together and was talking and said, this is our goal this year. And he goes, I know you guys are hunting the elephants.

Stewart Ervin: 00:37:24

Yeah.

Freddy D: 00:37:24

But until you shoot the elephant, you need some squirrels to eat.

Stewart Ervin: 00:37:27

Absolutely.

Freddy D: 00:37:29

That still sticks in my head. So what you just said is really critical because at the end of the day, yeah, you.

Everybody loves a big elephant, but you got to pay the electric bill, you got to eat, you got to pay the team.

Stewart Ervin: 00:37:40

Yeah. One of, one of the biggest lessons I learned was I had gone into this corporate environment and I had gone in and turned them around. Right. We were.

It turned on time to live around and really started some making some work inside. Somewhat felt like internally I had made a name for myself. So we were really focused a lot on the cost aspect. And we had some big swings, man.

We're like, we're fixing to save some big money. So we get to the end of the year and we missed because two or three of the projects didn't come through because of God knows what.

And their executive vice president pulled me to the side and he said, listen, you're a home run hitter, I get that, but we're a base run business.

He said, so when you get ready to do your plans for next year, why don't you hit 10 to 15 base runs, base hits, and quit trying to do two, three home runs. When I started really focusing on that way, man, our execution and win rate went through the roof and then it really translated that.

So that's what I try to tell people today. Quit trying to hit home runs. Let's just get on the base. You get enough people on base, we're going to win this thing, so.

Freddy D: 00:38:41

Right.

Stewart Ervin: 00:38:42

But I had to learn it the hard way. I'm swinging for the fences all the time and I was humbled pretty quickly.

Freddy D: 00:38:46

Yeah, I can appreciate that. Been there, done that. All right, as we wrap up here, Stewart, how can people find you?

Stewart Ervin: 00:38:53

Yes, I'm Most active on LinkedIn, so you're going to search my name, Stewart Ervin. You can also check out my website, bracketmgmt. Bracket management for short. Bracketmgmt.com we have a ton of free resources on there.

We have a scaled down assessment, the one that we put, we put our, all our clients through at a high level. We, we have a very brief one that you can kind of look at and take just to get some idea.

So there's a ton of resources on there that we use with our customers every day that you can pull down for yourself and make it happen for yourself.

Freddy D: 00:39:24

Great. It's a pleasure having you on the business Superfans podcast.

Great information, especially manufacturing companies and the things that you guys can do with them from start to finish. Not just providing CFO services, but actually really looking at the overall business and treating it as a overall business.

So that's a really big differentiator that you guys bring to the table.

Stewart Ervin: 00:39:47

Yeah. I appreciate you having me. It's been a blast.

Freddy D: 00:39:49

All right, thank you very much. We'll look forward to having you on the show down the road.

Stewart Ervin: 00:39:53

Awesome. Thank you.