EntreLeadership - #128: Verne Harnish—What’s Holding Your Business Back?

Episode Date: January 4, 2016

What’s the fundamental weakness that keeps companies from scaling up? Verne Harnish, the best-selling author of one of our favorite books, Mastering the Rockefeller Habits, joins us to discuss what���s holding businesses back and how to get them growing. To start your new year right, we’re featuring a clip from Dave on making the most of time management. Another great episode sponsored by our friends at Infusionsoft Learn more about your ad choices. Visit megaphone.fm/adchoices

helping business leaders grow themselves, their team, and their profits. This is the Entree Leadership podcast. Now here is your host, Ken Coleman. Happy New Year from everyone at Entree Leadership. We are broadcasting from the Music City. Unbelievable, 2016, off and running. It's truly extraordinary how time flies. It's going to be a great opening episode as we get you ready for a brand new year of great leadership content.

Vern Harnish is our feature interview. Vern is a favorite of the Entree Leadership team here. They love this guy. He's the author of scaling up how a few companies make it and why the rest don't. Fascinating stuff.

Really good book. Great conversation. That's our feature conversation. You're also going to hear from Dave Ramsey reading from Chapter 3 of the New York Times number one, best-selling book, Entree Leadership. It's the field guide. It's the playbook of everything we do on this podcast.

So you're going to enjoy that. and then a special treat. I find that we learn the most sometimes from people who have made it and continue to stay on top. When you just really dive into their life and learn as much as you can about them, Dave is one of those people. And one of his dear friends, Aaron Walker, successful businessman in this area, and really a member of this little inner circle, this mastermind group that Dave has been a part of for years. Like-minded men getting together to challenge each other personally and professionally.

We thought it would be fun to get some insight into what that's like and how it helps Aaron and Dave and the other men in there, and then how you men and women can adopt a similar method for pushing yourself to the next level. So that's all coming to you from my good friends at InfusionSoft. We'd love for you to check them out. Infusionsoft.com slash entree. Infusionsoft.com slash entree. They exist to help small businesses, period. Well, the book from Vern Harnish scaling up, brand new to me, but Daniel Tarty, John Falcons,

they're huge fans of this book because it is so very, very practical. This is a great conversation. I love how Vern gets right to the Snickers bars. I mean, it's just coming at you right and left, so get out your pens, pencils, something to write on. First conversation, 2016, coming to you right now, Vern Harnish. Burn, it's great to have you on the podcast. I want to dive right into four practical ideas from the book scaling up that absolutely anyone can implement. People strategy, execution, and cash.

Let's start with people. What would you say to these folks? We know it's an idea that I learned from the guy that coached the late Steve Jobs. Regis McKenna, I convinced him to coach us on marketing. He said, look, the key is to take a piece of paper out and write down. a list of the top 25 people, influencers, relationships, that you absolutely need to get behind what it is you're doing right now if you want to double or even 10x the size of the organization. So I did.

You know, and I was young and dumb, which is useful because he said, the bigger the names you put on the list, the bigger things you're going to achieve. And so I want to build a student organization for entrepreneurs. And I write down President Ronald Reagan. And then I write down obviously Steve Jobs and Michael Dell and the owner of Venture magazine. I didn't even know who that was. And then he said, next, you've got to set aside an hour a week to work the list. That's really the key to marketing, which is what I point out in the book, is the fundamental weakness that keeps companies from scaling up.

You know, even when you get a bunch of tech guys together that want to launch a company, if there isn't somebody there focused on marketing, then you're not going to go as fast. And so we took an hour every week. We began to work that list, find a way to network our way to those key people. And, Ken, it was crazy. In 36 months, we were global. And we had the president welcome everybody through a message and an event. I hosted in L.A., which was the first public speech for Steve Jobs after being fired from Apple. And we had full-page ads given to us by Venture Magazine and Inc. Magazine did a six-page story.

It all happened. So first thing we do with an entrepreneur, sit down, take out a piece of paper, and write down the names of the local officials, the key customers, the influencers that you need to get behind your venture and start working that list. All right. So I want to ask you a practical question here. Give us an example of what one of those phone calls would sound like. And here's specifically what I'm asking you. I think everybody can identify with you make a list and President Reagan's on there and Steve Jobs and some other. enormous names, would that have obviously, you know, layers of people. You've got to figure out

how to get through and be efficient there. But let's talk about how the ask comes across, because it's not just, you know, obnoxiousness. You've got to be audacious, but not obnoxious, I'm guessing. So give us an idea what those asks look like as you work your way to that ultimate goal of the person you want to be part of what you're asking. You bet. So I'll give you a specific example, and I wrote it up in an article. So we found out, out that the owner of Mentor magazine's Arthur Lipper, I read that he was going to be giving a speech in Dallas, Texas, six hours from where I was in Wichita, Kansas. And so I get in my beat-up old 81 Pontiac, and I drive south six hours. And I figure out a way to get to the event,

and I sit in the front. And when Arthur was finished speaking, I came up to him. And the key is, you really have to have your elevator speech. You have to know what it is that you want to accomplish that is appealing to somebody, whoever it is that you're trying to get to, I got his attention. And then the key is, say, hey, if you were me, what would be the dozen things you would do next? And I began taking notes exactly what Arthur suggested. This is way before we had email. I immediately faxed him back a note about a day later and said, hey, Arthur, here are the dozen things you suggested. Here's one or two I've already acted on. because that's what people want is for you to take action.

And I followed up about a month later, and we're still close friends here three decades. Wow. I love that you send him a fax. I think it would be fun if we just brought the facts back for that memorable thank you note every once in a while. Instead of the email, the handwritten note, if we shot a fax to somebody in 2016, it would freak them out. Yeah, I think it would, absolutely. If they even had a fax machine. No, no, you'd have to literally take it to them and then send it to them.

That's what's fun. All right, let's move into the next category strategy. Well, you know, here it's really about brand. And at the end of the day, the most any entrepreneur can end up doing is owning a word or two in the minds of enough customers that they can kind of piece their business together. So, you know, if I say deliver pizza, almost anywhere in the world who comes to mind is the company Domino's. You know, and that made Monaghan $4 billion. You know, Tim Ferriss owns four-hour. When you think of the word Google, what immediately comes to mind is the word search. And they actually stole that word from Yahoo, which is why Yahoo is in trouble. You know, more importantly, we've got a client, trench safety. That's the name of the company. If I'm a construction company and I'm digging a trench and I don't want to bury anybody, then it's brilliant that he's got a company called trench safety, the two words that he wants to own in the mines of the marketplace. I think that's the most important strategic decision first. Every entrepreneur needs to make.

And by the way, since it's geospecific, you just go to Google, you put in the word or two you think you own even locally and see if you've done it. Are you the number one Thai restaurant? If not, you've got some work to do. If I'm looking for swim lessons for my child in Ashburn, Virginia, of and they don't find me, then you're not doing your job again in terms of marketing. Wow, that's good. That's very, very practical. I love the Google example. That's really a nice measuring stick instantly. All right, let's move into the third area, execution. Yeah, you know, the key that we talk about in the book is setting priorities. You know, we all have a hundred things to do, but you've got to think about them like dominoes, Ken. You've got to line them up. And your job is to

stand back and figure out what is the front domino. What's that first domino that if I push it over, it gives me leverage across the rest. And ultimately, the question you want to ask that helps you figure out that priority is, where is the constraint? In fact, my absolute number one business book in history is Eli Golrat's book called The Goal. I encourage every entrepreneur to read that book first. And Eli's the one who said, what he called the theory of constraints, you have to go to where the constraint is. And it's not the problem.

It's the thing that's constraining you next, whether it's getting everybody on your project management system like Jim Tobin faced, and I talk about with his 28 employees in the book. Or, you know, Ken, I ran into the fact that I was the constraint early on in scaling up gazelles and moving 3,500 miles away to Barcelona and getting away, in a sense, freed up the company. I had a constraint where I was running 42% gross margin, and the reality was I was growing broke. And if I didn't get that margin up to 55%, nothing else really mattered. And we then focused on it and made it happen. So it's always saying, you know, what's that rock in my shoe?

What's that thing that's keeping me awake at night? But most importantly, what is constraining us next? I need someone to help me with marketing. I need to figure out those two words. And you have to go there first. I love that. And then finally, the four key areas in the book, cash. And you just kind of touched on that.

You know, you were talking about your realities of you were growing but growing broke. How important is cash? Well, you know, you can have decent people, decent strategy, decent execution. but you can't live a day without cash, as you know. It is the oxygen that fuels the business. And look, I ran out of cash myself in 2001. Michael Dell ran out when he was 26. You know, we've all hit those walls.

And so a couple of very specific recommendations. You know, first, I immediately began getting my cash reported to me every day. You know, I have my bank automatically send me a statement, an update every single day. It's interesting. Entrepreneurs have a tendency to only look at their numbers once a month. And there it's just a P&L, hoping that they have some profitability. But profit's not the same as cash. And by having it in my face every day, I really focused on it. Number two, I named it one of the best business books of 2014. And it's John Mullen's book, The Customer Funded Business. I've been trying to talk every entrepreneur I know out of raising money, from their friends and their family and fools. You know, I think you should only get money from two places, and that is your own funds that you've saved up and from customers. You know, when I got in trouble, I went to 17 of our customers and said,

look, would you prepay what you're going to spend with me this year? By the way, I raised prices 20% and they gave them a 20% discount. And that put a year's worth of payroll in the bank, which is the very thing that Bill Gates always had as a rule from the day he started Microsoft. And as you know, it's one of Dave Ramsey's rules relative to personal finance. You know, have three to six months of your living expenses in the bank. And I did that in 2002 and have had that ever since. And I'll tell you, you age so much slower.

That's true. You sleep so much better at night when you've got that cash in the bank. And so read John's book, The Customer Funded Business. Oh, that's good. The customer funded business. Got to like it when our guests make book recommendations, so go check that out. All right. So this is one of the things I love to do, Vern, is kind of go through and kind of cherry pick from the books because there's so much wonderful stuff here in scaling up.

And so I want to go back a little bit into the categories we were just going into specifically on strategy. One of the chapters of the book, Chapter 8, the one-page strategic plan. I think this is really important stuff. So I want you to outline maybe a summary of that chapter and why the one-page strategic plan. Why so specific? How is that effective? Well, Ken, thanks for asking. It's absolutely the thing that put us on the map from my first book, Mastering the Rockefeller Habits.

Today, over 40,000 companies worldwide are using that tool from startups to large firms. And the fundamental idea was this. you know, what we have to do, the minute we get a second person, you know, in the business, we have to get everybody on the same page. But the problem is, most people don't have the page for everyone to get on. And so we created this one-page strategic plan that from your core values to your quarterly theme, what you've got to work on the next 90 days, is all on a single sheet of paper so that you can get not only yourself aligned around what you've got to work on the next 90 days is all on.

what we've got to do next, but you can get everybody else around you. And then we've simplified it in the new book, and we even have a smaller page called the vision summary. And if you can answer the handful of questions that this piece of paper implies, look, you're going to be ahead of 90% of the folks that you're going to compete against. Wow. At the end of the book, you give some next steps, and I think that's what makes this such a wonderful tool, and I just want to highlight a couple.

There's five next steps, but I want to highlight a couple. and you were kind of touching on it there, but you specifically recommend forming a weekly council. And I like the concept of this, so I want you to, A, define it as you do in the book, but then I want you to, again, maybe talk about how it works within your organization so that folks can get a practical idea of how they may implement that idea in their world. Well, the credit for the idea of the council goes to Jim Collins. And, in fact, it points to the three most important pages, I think, ever written in business. And those are pages 114 to 116 and good to great. And that's where when I

asked Jim, hey, you talk about the Fortune 500. What about us mere mortals? What's the one thing we can most learn from your work? And he said the importance of having that small group that's got their back you can sit down and talk with for once a week. So very specifically, it's typically an hour once a week. It's different than your management meeting. Often it's done over a meal, breakfast or lunch. And this is where you get to kind of talk about the big stuff. Some of the stuff we've talked about. You know, what is the list we need to go after that local editor of the newspaper that we need to give us an article about our company? You know, what is the word or two we need to own? What is the constraint we have to go after? You can't work on that stuff, Ken, just

once a quarter or once a year, you need some critical talk time around that every week. So even if you can just find one friend. Now, I have a formal counsel every Monday from 9 a.m. to 10 a.m. Eastern time. And it's the CEOs that run our six companies. And it's different than our operations meeting. And we get to talk about the big stuff and almost as kind of mastermind alliance, like what you guys have put together for your people. All right. The last one I want to touch on in these next steps is this idea of a quarterly theme.

I thought this was really interesting. And this is not about a marketing theme. This is internal again. I want you to explain this. Yeah, you know what? What you're ultimately trying to do with the business is, you know, conquer some Everest. You know, Jim calls at the big, hairy, audacious goal. But anyone who's climbed anything knows that what matters next is the next step. And that's the idea here. That I know where I want to take the business the next. three to five years, if not 10 years. But most importantly, I got to figure out what do I need to focus on next? Get my gross margin from 42 to 55%. I need to land three more customers averaging $50,000 a year in business.

I need to get my council set up. It's that kind of very specific, measurable thing. We have a client whose recent one was, I want to triple the number of leads. that we're going to generate next. And so it's something you measure, you focus on, and you work on every single day for a few minutes or a few hours. So when I launched my new book, mine was I've got to get to one influencer every day for the next 90 days. And through that, we were able to power the book to number one. And it remains there a year later in its competition and strategy category.

That's how you do it. is Vern Harnish. The book that we've been talking through is scaling up how a few companies make it and why the rest don't. Vern, good stuff, buddy. Thanks for spending time with us. We're all better for it. Ken, thank you for giving me the opportunity to share a few ideas with your important audience. The book is scaling up, how few companies make it and why the rest don't run. Go get it. Hey, one takeaway here, I want to just make sure we emphasize. And it's not just because I work with Dave Ramsey. But I thought what Vern said was a wonderful reminder of how important cash is versus profit. And especially for small businesses, entrepreneurs, we're looking at those

P&Ls, and let's be honest, those P&L statements sometimes become a talking point, a something to be proud of and brag about. But the reality is, cash is your lifeblood. And I love what Vern said about what he did with the bank. That, to me, huge takeaway. Are you doing that? Do you have some system similar to that where Vern had his bank send him an update every day so he knew it is cash position was, wow, I love that. I thought that was an amazing takeaway. So he always knew every day in his face what his cash situation is and listen, men and women, or small businesses. I don't know that there's a more important practice than every day. Get in a dashboard so you can see where you're at from a cash standpoint. Again, the book website scalingup.com. So go check it out

and implement it. Well, chapter three of Entree Leadership, the number one New York Times by selling book from Dave. I love the title of the chapter, Flavor Your Day with Steak Sauce, Making the Most of Time Management and Organization. This is Dave Reading from this very important chapter, and it is so very timely. Listen in. Flavor Your Day with Steak Sauce, making the most of time management and organization. It is so unsatisfying to work my tail off all day and feel like nothing happened. How many of you have had this experience? You get up our

early and head down to the office. You have an entire day of fire after fire that needs to be put out. You can't remember what happened to lunch. And 12 hours later, you arrive home completely exhausted, collapsing on the couch as your spouse says, what did you do today? And you shake your head thinking, I have no idea. Most of us who bust it, who are hard driving go-getters, have had that experience. That experience is disgusting and unsatisfying. You feel like a stupid rat in a stupid wheel. run, run, run, and get nowhere. To enjoy our work, our business, we must have a sense of traction. Time management sounds to me like some cooked-up corporate training program by someone who has

never really worked themselves. They have never faced an entire day of crisis after crisis. Yet when I apply these basic principles in my life, I get a ton more done, and strangely, I am more rested. Or is it just more satisfied? My friend John Maxwell says a budget for your money is telling your money where to go instead of wondering where it went. Managing time is the same. You will either tell your day what to do or you will wonder where it went. The weird thing is the more efficient, on-task, on-goal

you are with your time, the more energy you have. Working with no traction or, for that matter, simply wasting away a day does not relax you. It drains you. all of us can spend time doing ridiculous things that are a complete waste of time, simply to avoid going outside of our comfort zone. Dr. Stephen Covey explains in his writing that all of our time is spent in one of four quadrants. The first quadrant, important and urgent. The second quadrant, important but not urgent.

The third quadrant, not important but urgent. And the fourth quadrant, not important and not urgent. Most people do not struggle with the first and last quadrants, things that are either important and urgent or not important and not urgent. It's the second and third quadrants that we have to be very specific about in order to win at a higher level. Quadrant three is not important but urgent items. This quadrant can be deceptive because the urgency of the item makes it seem important,

when in reality it is a waste of time. While sitting here right now, writing this chapter, an important task, I forgot to close my email inbox. Ding, ding, I hear I have an email, and like a moth drawn to a flame, I have to stop my important train of thought and find an email sent by a friend whose personal purpose on the planet is to forward every funny or political junk email to me. Might be important or funny in another life, but I am so distracted. I just did something urgent, but not important. instead of something not urgent and important. You do it too. Ask yourself what you or some of your team members spend time on that is really not taking you to your goals. It may be that something is urgent and important enough to make sure it is done, but it's not important that you do it. As your business and responsibilities grow in size, you have to pull back on the scope of what you

personally do. You have to spend your time working on things only you can do. When we first opened all those years ago, I personally did one-on-one financial counseling. But for many years, I have not counseled a soul. When my best friends or even family members need help, they will get better help and quicker help with great follow-up if I assign one of my counselors to help them. I would be doing people I love a disservice by counseling them today. I have learned that. I have learned that that writing these audiobooks or speaking or mentoring a young leader is something that only I can do. And I can't do it if my time is used up doing the urgent but not important. Quadrant 2 is the important but not urgent.

This may be the most important use of your time as an entree leader. The things that fall in this category impact the quality of your life and business, possibly more than any other area. Examples of what falls into this area are exercise, strategic planning, goal setting, reading non-fiction leadership business books, taking a class or three, relationship building, prayer, date night with your spouse, a day off devoted to brainstorming, doing your will or estate plan, saving money, and having the oil changed in your car. The interesting thing is that if you avoid quad two activities, eventually they will move to quad one and become urgent.

If you don't exercise and eat right, because you just don't have time, you will have the opportunity for time off when you need triple bypass heart surgery. If you don't have a date night and make sure relationship building is part of your month, you will get to take time for marriage counseling. If you don't change your oil, eventually, you will get to buy a new engine. These not-so-urgent activities when left undone have a potentially large cost. So budget time to do only quad one and two activities. Avoid quad-four as much as possible and delegate or avoid quad-three things. Controlling your time with a to-do list. When attending time management classes or seminars over the years,

I have repeatedly heard the quote, if you spend 15 minutes planning your day on paper every morning, you will add 20% to your productivity. If you are listening to this audiobook, I doubt very seriously that you are wasting one-fifth of your day. But I would be willing to bet that you have some team members who do. So when you start properly managing time and teaching your team to do the same, you will see a huge change in productivity and even more so in job satisfaction. Remember that traction equals satisfaction.

A very simple but time-honored method to manage your day before it begins is the prioritized to-do list. Each morning, make a list of activities that need to be done today. Then look at the list and ask yourself which items must be done today. Put an A beside each one. Then look at the remaining activities and ask yourself what should be done very soon. And today would be nice. Put a B beside those. The remaining activities get a C and are great. great ideas that if not moved up to a B or an A within a couple of weeks should be delegated or put in an idea file. Now, look at all the A items and ask, what is the most important single item or activity that

must be done today? And if that's all you get done, have you done the correct thing? Put a one beside that, making that A1. Then ask yourself the same question about what is the next most important, which becomes A2, and so on through the A's, then the B's and C's. Of course, we are now going to rewrite our list beginning at A1, down through the A's, then B1 through the Bs, and of course C1 through the C's. You now have, at the top of your page, the most important single thing you need to do today.

A1. I call this steak sauce in honor of A1 steak sauce. Put some sauce on your steak, your life, by spending your most precious moments on this planet doing important work instead of reading junk emails. As you start your day with your prioritized to-do list, sometime in the first hour you will be given a test. You will look up and leaning against your door with a coffee cup will be a co-worker or team member with a problem or a distraction.

You must train yourself to look at them and ask yourself, are they steak sauce? Is their problem more important, not more urgent? but more important than your A1. Usually not. When you have your day carefully planned, it gives you a plumb line, a guidance and measurement mechanism to evaluate interruptions and a place to come back to after the interruption if it is warranted. All right, folks, I want to mention the book, Entree Leadership, is available. Dave Ramsey.com.

Just click on the store. Still a fantastic book. And, of course, you're listening to the audiobook. book. And you can get that as well. What a tremendous, tremendous tool this is, and you can listen to it as you move along through your very busy schedule. So make sure you take advantage of that, Dave Ramsey.com, to get the book, Entree Leadership. Well, I tease this at the top of the podcast that we were given the opportunity to hang out with Aaron Walker, who's a long-time friend of Dave's. He's going to tell a story about how they met, and you're going to hear about their relationship. But this is so important. And we think this conversation will really inspire you to, reach out if you don't already have a close network of men and women who are for you and who will tell you the truth and who will hold you accountable and who will push you because this is something that Dave has done for many, many years and Aaron happens to be a man who walked alongside Dave in this close-knit group. So I want you to hear a little bit of his story and then

the importance of spurring one another along. Well, Aaron, it's fun to have you here because this is kind of a unique conversation, which I think is great for this audience, and that is that you go way, way, way back with Dave Ramsey. So we're going to talk a lot about that. But I want to get the business background for folks because you are an entrepreneur, and this is an entrepreneurial audience. So you started in your teen years. Take us back.

Was it 18 years of age you got started in business? Well, that's when I started. I started working at 13 years old. It Berries, a local pawn shop in Madison, Tennessee, and fell in love with that business. I met a couple of guys when I turned 18 that were in the business. insurance business in Nashville and approached them and said, hey, let's go in business. Let's take my experience and let's take your money because I didn't have any. And we borrowed $150,000 from the bank. They wanted my name on the note. And so we went to the bank and borrowed the money. They had the money to

put up, but they said, we want your name on there. And I said, I don't have anything to lose. Why would I not want to do that? What was the business? A pawn shop. Less than three years, a little over three years, we paid that business off and we just continued to reinvest the money in that business. It grew really well. I bought my second store at 21. one, third store at 25, fourth store at 26, and then Cash America from Fort Worth, Texas came along, and they made me an offer. I couldn't refuse. So at 27, I was done. Wow. I thought this was a good life until I found out that there was no purpose, no meaning in my life whatsoever. I was getting in the bed in the middle of the day, taking a nap. I gained 50 pounds in this 18-month period

of time and went back to the shop I started with and made him an offer and I bought half of it. We spent the next 10 years really building that business. And that's where I met Dave. Okay. I was at Luby's Cafeteria Chamber of Commerce Breakfast in Madison, Tennessee, and there was his speaker talking about a show he just started, and it was intrigued me. And I went up and introduced myself to him and invited him to see our new store. So Dave came up and loved it. And Dave made it very clear to me early on. I will never promote, you know, the Palm Business because that's boring. And that's not what I promote. I'll make that very clear. And he was very clear for 20 years related to that. But he said it's a fantastic place to buy things.

things. And, you know, he himself and sharing the kids, you know, I was just talking to Daniel in the hall. He remembers his child coming down there and buying things. And so it's a great place to get very good buys. And he said, I want you to advertise with me on our new show. And I said, no, no, thank you. I don't even know who you are. And he said, listen, let me give you a week advertising to try me. And I said, well, there's no way I can lose on that deal. So, yeah, Ken, listen, in three days, I called Dave. And I said, I don't know what Kool-A these people. are drinking, but sign me up. And so he did. And he said, listen, I do annual contracts for advertising. I said, I don't care if it's a decade, man, sign me up. I'm ready to go. Well, now

we've been on, you know, Dave's show for 20 years every day for two decades. And it's been phenomenal. And I tell everybody, Dave had that much confidence in himself that he was willing to give me the advertising. And now that turned into a two-decade old contract. So it's been awesome. Well, I want to focus the majority of our conversation on the relationship, Not the contract. Of course, you would do a business with Dave, but then you guys got to know each other. And as a result, got to be together in a group of men. I want you to describe it. Now, long time Ramsey fans, if you listen to the radio show, you hear Dave talk about this group all the time. But I want you to talk about it as though folks have never heard this before. Okay, good. So we started hanging out a little bit together and spending some time, some dinners and hanging out, just getting to know each other. A couple of years went by and Dave saw me at a concert and he came up to me and he said, hey, I want you to join my mastermind group. And I said, you're what? He said, my mastermind group. I said, I only know what a mastermind group is.

He said, well, trust me on this. Just come and check it out. So I came and there were guys in there like, you know, Ken Abraham and Dan Miller and Jeff Mosley and some other guys. And I said, this is pretty cool, you know, these guys get together every week. And so we formed this group with 10 guys and we'd come every Wednesday morning and we'd meet in Dave's office and have coffee. We'd read books together and study.

And then we started doing life together. And then we started going through challenging. with each other. We started going through celebrations and graduations, and then there were deaths that we experienced together, and we would mastermind. We would challenge each other and help each other. And Ken, quite honestly, it's what was the catalyst that took my life to the next level, because these guys that I was doing life with each and every day were trusted advisors. They were guys that didn't have anything in the game to win or lose, so they told me the truth. And oftentimes they would say, that's a great idea of me.

maybe, but here's what's going to be the result of it. And the collective IQ of a mastermind is genius, because you've got guys in there that are pretty sharp to begin with. And when you put that many people together and you have the general consensus of the multitudes, more than likely what they tell you is probably going to work out. So I started implementing these practices in my personal life. And the character, the integrity, the morality of these guys was just unquestionable. And so it really formulated within me a sense of wanting to excel the accountability that it offered.

And you know, as I do, Dave's a straight shooter, he's going to tell you right out of the gate how it is. And I really like that. And most men desire that. They want people to be honest with them. And so we spent, you know, a dozen plus years in there doing that. And it took me through some dark times. And there were times where members would call me and challenge me on things. And we would do that collectively as a group.

And it really was just the catalyst that changed my life, quite honestly. Okay, so you know, you hear a description like this, and the phrase iron sharpens iron comes to the fore of your mind. But the reality is we have a lot of people, Aaron, that are listening right now. And I think they can see the value. They can hear it your voice. You know, it's obvious that it has had a tremendous impact on you. But what would you say to them if they don't know necessarily how to put that collective together? What would you say they need to be looking for?

What was the unique dynamics and are the unique dynamics of this particular group that you believe make it work so well? Well, I think first of all that guys have got to want to subject themselves to the scrutiny of others. You've got to be willing to do that. It's not an easy thing, is it? No, it's very difficult. We're all prideful. We want people to think that we've got it together. But soon as you can let the veil down, the quicker, the better, to say, you know what, I've got it together in these areas.

But these are areas that really I need help in and assistance in. And really, there's strength in that humility. If you will say, because we all don't have it together, right? We really don't. There's places that we need help. We need assistance. We need guys to come alongside us. But we also can be the mentor.

So in this group, we'll have people that are solo panoers or entrepreneurs, people that make just a little bit or people that make a lot. It's irrelevant. We want to do better. We want to go. It's just some people have more zeros on their balance than others. But we're all men of character. We have high morality. We have the ability and the desire to.

to be to our wives and our family and the people that we're associated with in our relationships to excel to help ordinary people become extraordinary. And that's got to be the desire of each participant in the mastermind. Is it a spoken rule that, hey, you're not going to be a part of this if you're not willing to be transparent, if you're not willing to be vulnerable, if you're not willing to be able to handle the direct truth coming at you? Is it said that way? Is that what helps make this work?

You just won't last long. So it's not said. It's just assumed. No, it's not articulated in that. manner, but it's just assumed that if, you know, you can call it a coffee club if you want to and go have coffee. Right. Or you can call it a mastermind and really get down to business.

And so we just elected to do it that way. And I'm going to tell you, man, there were some heated times in there. You know, it's like there's so high deep personalities in there. Right. And so oftentimes it'd be pretty vocal and people shy away from that oftentimes, but not the person that wants to be the iron sharpens iron, right? Just so as one man sharpens another is iron sharpens iron. It's the same way in that group.

I want you to tell me you don't need to do that. One of the guys that was in the group called me one Saturday morning. We didn't talk to each other that much on the weekends. And he called me and he said, I want to talk to you just for a minute. And I thought, well, this is going to be really good because this guy's a great guy. He's always breathing truth into you. And he said, you're really wearing everybody in the group to death. And I said, what?

And I started laughing. He goes, no, really. He goes, no, really. I'm serious. You can't get over this thing. And you need to get over this thing. It says in Isaiah to take the chains from around your neck and move on. And his brother, it's time for you to move on because we're getting tired of hearing it.

He said, I've got to go. I'll see you and hung up. Well, I'm sitting there thinking, I'm going to bite a nail into the audacity of this guy. And then I thought, you know what? This guy loved me enough to tell me the truth, right? He spent effort and energy and years with me. He had earned the right to say that to me. And Ken, it changed my life, right?

I was able to put it down and move on. I said, he's exactly right. Well, you can't get that if you don't have those people. around you on a daily or weekly basis. And so I would just suggest that you look for people that have those same character traits. People ask me all the time, if you're going to join the mastermind group,

what are those qualities and traits? And it's just people that want to do better, willing to subject themselves to the scrutiny of others, and willing to be transparent and vulnerable inside of a closed group that's honorable, that you're not gonna tell their story at the local coffee shop down the road, that there's a great amount of privacy.

In our group, the Eagles, there was a great amount of integrity in that room. And so there was a great amount of privacy. And so it's paramount to have an effective mastermind group. I'm assuming it's not very structured, but I want to ask, because I do think that this is such an amazing opportunity for our listeners here to kind of say, hey, we need this in our lives, because I think we all need it. How would you balance the conversation between business and personal? Was it just you come together and everybody kind of had their own thing and they threw it out there, whether it was personal, a spiritual or professional? Yeah, there was. There was

no formula where we said, okay, 25% of the time is going to be business. There was none of that. We did have a book that we were studying each week. Okay. Because when men come together in a group, they're going to talk about the basketball game or the biggest deer or the biggest fish, right? We got to have something to focus it. And out of that comes these great conversations. There were oftentimes where one guy would have the floor week after week, sometimes month after month,

very, very serious things that would come up, whether it be in their marriage, whether it be with their children. whether it be with their business. So there was no like, this is your time, this is it, moved to the next guy. It wasn't any of that. But we did have somewhat of a semblance of order in regards to the things that we were studying. And out of that came these great conversations. But I would venture to say that 50% of the time it was personal and 50% of the time it was professional. Aaron, it's good stuff.

It really is. I know it encourages our audience. And this is fun to give us this unique perspective of, of this circle of men that included you and Dave Ramsey and some other very accomplished men who were so intentional to add value to each other. And as a result, you know, the mark that it has left on you all and on others is so huge. So we're grateful. Thank you.

Thanks, Kim. I appreciate you having me out. Coming up next episode, really excited to get Chris Hogan back in the studio. For you longtime Entree Leadership podcast listeners, you know that Chris hosted the show for a time. And in the time that he has left and handed me the baton. he has quickly become America's trusted voice on retirement. He still teaches the Entree Leadership Principles every season as we go out on the road. And he really understands how you take the money principles that Dave has taught for so many years

and apply them in the business setting. So we thought it would be fun to getting back in the studio, talk about his brand new book, Retire Inspired, and also apply the business principles, the financial principles that Dave teaches so well to you the small businessman and woman. this is a detailed conversation that will help you with a true time-tested money plan for 2016. So that's coming up next episode. You don't want to miss that.

Chris Hogan in the studio. Hey, folks, also I want to tell you the brand new Entree Master series, brand new format, is coming up. March 13 through 17 in 2016, four days now. So shorter event. And of course, Chris Hogan, Christy Wright, and Dave Ramsey will be teaching the Entree leadership principles. but here's what's neat. For the first time ever, we're going to take that final day, day four,

and we're going to change the format and how we teach, and it's really going to be focused on implementation. So you're going to get the content day one, two, three, and then day four, how does this actually look in your environment? How do you get it started? How do you implement it? All the things that you need to know so that when you'll walk back into your world from this amazing four-day experience,

that you're completely ready and you know what step one, the way through completion it looks like. The website for the event is entreleadership.com slash EMS. Entreleadership.com slash EMS. Well, we want to thank Vern Harnish and Aaron Walker for their time. And for those of you who have been listening, those of you who are new to the podcast, we want to challenge you. This could be your best year yet.

We want to walk alongside of you in this process to build into you, to pour it into you, and be a part of your story. Thank you so very much for listening. We'll talk with you again very soon.