Ryan Tansom helped turn around his $21-million family business and facilitated its 8-figure sale in 2014. Leveraging this experience, he founded multiple companies and created the Independence by Design™ Framework, a guide for business owners to achieve personal clarity, play the game, and maximize independence. Over 1,500 entrepreneurs have attended his workshops, gaining a new mindset for decision-making and helping them create freedom over their time, optimize cash flow, increase equity value, or prepare for a future exit. He's been involved in numerous transactions and speaks at industry conferences and CEO Masterminds, including Vistage Worldwide and Entrepreneurs’ Organization. Ryan has also been podcasting for over eight years, with over 400 episodes featuring guests like Gino Wickman, Mike Michalowicz, Jack Stack, ITR Economics, John Warrillow, and editors from Inc.Magazine (Bo Burlingham) and HBR (Tom Stewart).
Here’s a glimpse of what you’ll learn:
- [03:45] Ryan Tansom shares his story of rescuing and selling his family’s business
- [05:05] Identifying your company’s financial goals
- [08:27] Why you shouldn’t focus solely on top-line revenue
- [12:19] The importance of establishing clear targets for equity valuation
- [14:26] How to assess and rectify cash flow mismanagement
- [21:50] Strategies for overcoming the loneliness of entrepreneurship
- [34:28] Do business owners need financial knowledge?
- [40:37] How to use your business to create the lifestyle you want
In this episode…
If you struggle to align your business growth with the life you aspire to live, daily business decisions may be distracting you from your personal goals. How can understanding the financial intricacies of your enterprise make the difference between scraping by and achieving true independence?
While maximizing his company’s top-line revenue earned him a spot on the Inc. 5000 list, entrepreneurial coach Ryan Tansom lost tens of thousands of dollars. Rather than focusing on short-term growth goals, he advises identifying and aligning long-term personal and business objectives. This requires concentrating on equity valuation to make informed operational decisions that increase your company’s value and achieve your desired freedom. Additionally, building a working knowledge of finance allows you to manage your cash flow and capital effectively, supporting sustainable growth and informed decision-making.
Join Pat Mancuso in this episode of Destination Business Freedom as he interviews Ryan Tansom about harmonizing your personal and business lives. He shares how he transformed and sold his family’s business, how to overcome the loneliness of entrepreneurship, and why business owners need financial acumen.
Resources Mentioned in this episode
- Pat Mancuso on LinkedIn | Website
- Recover My Tax Credits
- Mancuso Consulting Group
- The Mancuso Method
- Ryan Tansom on LinkedIn | X | YouTube
- “Bridging the Gap Between Personal Freedom and Financial Success” with Roland Frasier on Destination Business Freedom
Quotable Moments:
- "The reality is, focusing on top-line revenue and K-1 was the wrong goal."
- "Understanding ownership thinking is essential — it's about the asset you're building, not just the daily grind."
- "What if scaling actually reduces all of your time and leaves you with no cash?"
- "Money is the means of exchange for our trust, and accounting is the language of that exchange."
- "Being an entrepreneur is one of the most lucrative opportunities to live the life that you want."
Action Steps:
- Define a clear, personal goal for your entrepreneurial journey: This helps create a focused roadmap to align your business operations with your desired life outcome.
- Understand and leverage business valuations to build an asset, not just income: Knowing the value of your business is crucial for maximizing wealth and provides a gauge for strategic decisions.
- Regularly assess the enjoyment and fulfillment your business brings versus the effort and sacrifice it demands: Re-evaluating your business's impact on your life ensures you're investing time in something worth your energy.
- Identify mentors or thought leaders who can guide you in specific areas of business and personal development: Seeking specialists for particular challenges or goals can provide tailored solutions and prevent costly mistakes.
- Learn the financial fundamentals relevant to your business's health and growth: Having a firm grasp of financial principles aids in making informed, long-term decisions that safeguard your company’s future.
Sponsor for this episode...
This episode is brought to you by the Mancuso Consulting Group, a go-to resource for entrepreneurs, CEOs, and business owners dedicated to personal and business growth.
Our team of experts has coached, consulted, and trained over 15,000 entrepreneurs, C-suite leaders, and business owners in areas of sales, leadership, organizational development, and personal growth. Additionally, Pat Mancuso has launched multiple multimillion-dollar business ventures, giving him a firsthand understanding of entrepreneurs' daily challenges.
At the Mancuso Consulting Group, we are committed to exploring innovative ways to help businesses and leaders grow their people and improve their bottom lines.
To learn how the Mancuso Consulting Group can help you unlock your full potential, visit www.themancusomethod.com, email us at pat@themancusomethod.com, or call 651-503-7355.
Episode Transcript
Intro 0:02
Welcome to Destination Business Freedom, hosted by Pat Mancuso. Join us as we explore success strategies and hacks from leading entrepreneurs, helping you bridge the gap between financial success and personal freedom. Your journey starts here
Pat Mancuso 0:16
Pat Mancuso here I am the host of the Destination Business Freedom podcast where we interview thought leaders, entrepreneurs and business owners who've either exited their business or on that journey. We're very excited that you're here today. We're very excited for the guests that we're going to talk about. And he's going to share his journey and the things he's learned and talk with 1000s of other business owners. My goal is to help small to medium sized business owners close the gap between their finances and their freedom by utilizing tools and advisers so they can ultimately define and arrive at that destination, whatever that looks like to them. This episode is brought to you today by the Mancuso Consulting Group, which uses this proprietary inclusive method process to help entrepreneurs and business owners who are dedicated to closing the gap between their finances and freedom. Pat Mancuso created the Mancuso Method and it encompasses over 30 years as an entrepreneur of multiple businesses and has worked with 1000s of business owners and entrepreneurs. When you go to www.themancusomethod.com and take our short assessment, you'll receive a full report with your personalized roadmap to your destination. Additionally, you'll have an opportunity to jump on a call with Pat. And in that 30 minutes or more, if he doesn't demonstrate $10,000 of value to you, he will write you a check on the spot for $500. That's how confident he is in the Mancuso Method is to go to www.themancusomethod.com. So, ladies and gentlemen, I am very excited today to introduce a gentleman that I have an opportunity to meet. I feel like I've known him forever. But we've known each other for a couple of years now. And his story, his journey and what and how he's impacted business owners today is just amazing. And that's why I'm excited to have him on the show. So I did receive an introduction to you Ryan Tansom. Ryan's played a pivotal role in reviving his family's $21 million business and facilitating its eight-figure sale to a competitor in 2014. He must have only followed at the time leverages is experienced to start off book companies and create the independence by design framework of business owners guide the personal clarity playing the game and maximizing independence. Over 1500 entrepreneurs and thought leaders have been through these workshops and walked away with a new mindset that changes how they make decisions and I have been fortunate enough to be a part of one of those workshops. Whether your goal is to create a freedom of time optimized cash flow, increased equity value, or prepare for a future exit. Independence by design is the stepping stone towards achieving these objectives. Ryan has been involved in numerous transactions and is a sought after speaker at industry conferences and CEO masterminds including this sage worldwide and that printers organization. Ryan Tansom Welcome to the show.
Ryan Tansom 3:45
Brian, Pat, good job on that. I know. It's always like you don't always say when because I've been on plenty of days where it's somewhat like when someone sings happy birthday to you And everybody's staring at you. Like, let's just eat the cake.
Pat Mancuso 3:59
Yeah. You know, what's funny is that, you know, I'm using Rise25, and I know you've had conversations with them as well. I was going back over the weekend as we were getting prepared for the podcast and they said Ask your guests for a three to four sentence bio. Now I know why they
Ryan Tansom 4:20
Ryan speaks and he has a podcast. He's got a coaching company we're gonna do we're gonna talk about it. I love it. Well,
Pat Mancuso 4:26
First, you know, Ryan, we're very excited to have you here today. And you've had an amazing journey. And you've impacted hundreds of 1000s of business owners through your events and in podcasts. And so I want to start today. I want to start with the journey that you experienced as a business owner yourself. And you know, so let's I mean, I know your journey, obviously from our interaction, but maybe let's talk to the folks that are listening and watching and just talk about that journey. If you can, where it started, and you know how it gyrated to the point where you exit it?
Ryan Tansom 5:05
Yeah, I think we'll kind of set a container for the conversation pan, oh, just give everybody a cliff note, you can pull on whatever thread you want. Because the last 10 years, the three companies I've had, since we sold, have all been in the spirit of trying to figure out what I would have done differently prior to my father and I selling our company. So I mean, everything is tied into this big idea. And I noticed that where you and I really aligned as far as helping entrepreneurs, but when I My journey started with my father started our family business in the early, early 90s. Mortgage, our house bought a bunch of copiers and had zero employees. And I like my, this is where I became addicted to business patent, it became my sport, where at nine o'clock at night, I'd be sitting home waiting for my dad, he'd come home from the business, and I get the play by play at nine because he was working so long and so many late hours. And I watched him steal the company from zero 21 million. And I've worked in the business my whole life from cold calling, selling copiers drawn in the suit at 19. To your name, you name that different job from moving, you just do all the different stuff, sort of my grip, I'd never go work for him. And in 2009, when I graduated in the world with a dumpster fire, there was no, I had a bunch of job offers, because I was willing to work for 1000 bucks a month as a salesperson, well, I ended up getting sucked into the family business bay. And at that point, my father was distant from the company. So there was a GM running the business. And I joined and there's two choices as an owner, son in a family business be the entitled prick, everybody thinks you're gonna be or work twice as hard and earn a little bit of street cred and sales. At least you can't lie with the numbers. I mean, you've been in sales most your life too, right. So like, there was not any ambiguity. And so. But here's where the story turns to Pat. And I kind of just got to the point is what happened was I was blissfully selling and actually hit a couple of the biggest deals in the company's history in the first six months. And I was sitting in at a bank and a CPA meeting in December of 2009, with my father, and he'd been distant from the company regime running the business. And we found out we lost 940 grand and 21 million in revenue that year. And yeah, we hit the 5000, fast 50. And we're going to talk about what metrics and goals we should have as owner operators. But the next six years of my life, I mean, it was selling a couple of branches for cash, I ended up replacing 60% of the employees built up the IT service offering the software automation, we rebranded so we could be head to head with all the other business technology providers in the Twin Cities, new comp plans, new ERP systems, I mean, you name it, Pat. And it was the whole goal was Don't miss the 240,000 our payroll every two weeks, you know, and so this whole deal was turning the business around. And then my dad and I couldn't get alignment as far as what we want to do with the business long term. So I was running the business at the age of 27. So a little bit older than 12, but not not too far off. And, the reality is, we couldn't get alignment. And it's all about how to think about the business like an owner, not just an operator who sold the business. And in 2014, we sold for eight figures and had to go back to the office. Our 90 employees told them we sold by and only 33 Out of the 90 guy jobs paid 53% taxes. I don't want What the hell was that. So last 60 days, and I've spent a decade ever since trying to figure out how to help people like you and I work with owner operators and companies. And I love your philosophy of just more time and more freedom, make the whole thing worth it. And a lot of times we have the wrong goals.
Pat Mancuso 8:27
So let me ask you a question before we jump to your journey on the other three companies. So as as somebody who was robbing the company, but ultimately you're you know, second if you may, I mean Dad,
Ryan Tansom 8:42
Dad was the kid I was in and I was actually in the key executive Vistage group. And I was the executive VP, President, GM, whatever you want to call it, but there was my dad. And then there was me with the executive team running the company. Yeah, so no,
Pat Mancuso 8:59
That is the backdrop. Once you look back on it, would you say that was the biggest mistake you saw me know, I know your dad too. So this will be fun. Do you see was that the biggest mistake that was made? You know you are sitting in that second chair if you make it?
Ryan Tansom 9:20
Well, let me answer it like this. It's not a way of avoiding this question, because there's a shitload of mistakes that we made. I mean, like and I say we like because in
Pat Mancuso 9:31
What do you wish you would have done differently? So I'm
Ryan Tansom 9:36
going to explain the big idea that I figured kind of on the tenure journey. I've been at Pat because I think that underneath is Ness, my father and I story, the three companies I've had the 1500 owner operators that have been through it. So Cory and I were focused on top line revenue and k one. It was about how we scale top line revenue and k one well guess what? We lost 49 and 40,000 bucks hit the Inc 5000. But we lost money and went out So like, even if we were focusing on our k one pet, it's like, we weren't focusing on what is the target? Cash flow equity valuation, this asset is everything is revenue, day one, what's in the checking account? And I mean, I was on a call, I mean, 1000s of people are in the same boat. So what happens? The reason I bring this up is we have to shift our mindset away from top line revenue k one owner operator mindset to what is the valuation of this business? Think like an owner? Like what is the target equity valuation? Well, we've got the normalized EBIT to others two numbers, really three KPIs, but two numbers, target value, or the equity valuation is based on normalized EBITDA, which is a proxy for annual cash flow, times a multiple, which is the number of years someone's willing to give you for your number of years of cash flow someone's going to give you based on the risk of that cash flow. We were just in most people just applying, why wouldn't you have to when you have the wrong goal, every decision ripples in the wrong direction. So it's like if you and I talked about this point B, and I love your destination Freedom podcast, where it's like, if we have the wrong goal, like most entrepreneurs have a goal. But if we have the wrong goal, every KPI is wrong. And I'm gonna go back to answering your question. Therefore, how in the hell are Koreans supposed to talk about the right things at the wrong goal? Right. So like, there was missing, there was miscommunication from his perspective, I'm in pet, I'll give you one thing that I did wrong, which was if I would have known, we would have sold in 2014. To a competitor where they were buying 3100 clients for the CSV file with the lowest amount of employees and infrastructure possible. I want to force us to spend a couple million dollars building out the managed IT services and a half a million dollars building up the new logos and new branding, because it was just literally pissing money away, if I would have known what that goal was. So I think the succinct answer to your question is our problem and a lot of people's problem that I have figured out over the last 10 years is that owner operators and companies are focusing on the wrong goal. And if we understand that this was personal clarity, and then playing the game, what game are we playing? Right? Are you solving for annual K one income? Or are you solving for target equity valuation? And what's the trade off between more income today, and more wealth tomorrow, and people don't have a clear trade off mechanism for that decision?
Pat Mancuso 12:19
Well, it's interesting that you triggered a few things here. But Roland Frasier who I know, you know, rollin is that we had a conversation recently on a podcast, and we were talking about the egg with eggs that's in that's the world that he lives in. You said something that just triggered me thinking about this. We talked about older in yet, if there was an investor, they would be definitely thinking about that the target equity mountain, correct? Well,
Ryan Tansom 12:48
yeah, and that's where it's taken me 10 years to figure out my ideal audience. And it is not people trying to raise money for the next app, or the burn it like because like when you're in VC, your goal is burn cash until a strategic buyer buys. So like people over the years, when I'm saying target cash flow valuation with sustainable cash flow, they're like, I've never made any money. And so then there's, that's the startup. And then there's the other side, where if you have institutional or professional investment from an investor, they give you money for more money back. So like they enjoy, they inject, yeah, your to your point pad, they inject the internal rate of return, I need to make my money back in a period of time, from the onset of them giving the money. What happens is in this huge world of owner operators, where there's 6 million privately held companies in the US quarry, you know what you and I both agree, he's a hell of a copier salesperson. He didn't go to you, barely went to you, barely went to college for a couple of months. I got a D in accounting, and I was a copier sales rep. And like, now I teach weighted average cost of capital to people. It's hilarious, but like, we didn't go to school for financial engineering evaluations, it was like, sell more copiers, get more margin, make our employees happy. Yeah, that was like our, but then we didn't have this other mindset. What's
Pat Mancuso 14:07
interestingly, a lot of very successful entrepreneurs don't go to school, and yet, the people who do go to school sometimes are, you know, very good business owners as well. But my point is, there's a lot of knowledge that a lot of these business owners are missing. And that's, you know, that's kind of what is the world that you're in is that education of those business owners to understand the things that are important to them. Owner, important,
Ryan Tansom 14:38
right, Pat? And like if you think about my workshop that I was going through last year, and and I'm off going and I've kind of doing the 3.0 my material, I'm really excited for the book and that framework that I'm putting together and it's ownership thinking Pat, and it's taken me 10 years to figure this out where like, I am convinced that that if you think about the the the owner operators and entrepreneur entrepreneurs that you work with and same thing with myself is that everybody that I that I meet generally really, really understands how to run the business. Sure, they might need Eos, which is you need your Eltons in your org chart and your KPIs and more margin and more pricing and better marketing. But like, people have a general understanding of what they need, or they need, you know, they need they got work to do, but so that when I say owner operator, it's like, people are good at operating. But like, it's like, what does it mean to be an owner? Well, you have an asset. And as an owner hat, you have a couple of decisions to make, what is the difference? And the trade off between it? Like if I gotta have a million dollars in income and cash flows here, am I gonna pay 300 grand in taxes? You and I both know, hopefully, they should mitigate that. But let's say we paid 300 grand in taxes, we got 700 grand leftover, okay, well, if you need $200,000, for distributions for your lifestyle on top of your 150k. So now you got 350 As your take home, you literally only have a half a million dollars left to reinvest in the company. Where are you going to put it? Like, if you don't have this facility, as an owner, it's like, if you don't have an investment, that is clearly going to get you a return back to your point about professional investors, right? Taking money home, don't just piss it away in some random marketing strategy or ERP system unless it's going to get a return on the value.
Pat Mancuso 16:21
Or they'll go buy equipment at the end of the year, because the column tells them they need to because they write off and then you know, three or four months later, they don't have any cash to pay for operations.
Ryan Tansom 16:31
Let's pull that thread, you can get me going because I love this stuff so much is it? So I had a client. So one of the businesses I've had three businesses over the last 10 years one was in personal finance in 2015 and 2016. So I've gotten the series 65 and all that stuff, then I had a consulting firm doing valuations and due diligence libraries and building leadership team exercises for value growth strategies. Then in the last one for five years with education and CFO Services and Financial Dashboard business. I've been in the world of finance for a long time, and it's ownership thinking going back to your point is okay, so the tax and the tail wags the dog were like I had this client and one of our CFO business or one of our CFO clients. I think they were like 40-50 million construction companies. They all got a big tax bill, they bought a building for $1.5 million, they put $4 million into that, and they mitigated our taxes. Well, they ran out of payroll money in May of the next year, because they didn't have that cash flow statement with that trade off. As an owner, it should be like working capital do we need for our growth? Right? Then how do we manage our taxes in distributions? That's ownership thinking not, I need another dump truck.
Pat Mancuso 17:45
They're not even looking at it. I mean, you and I talked before we started. I just got off a call with somebody that I'm in a mastermind group with, and they had a business owner who reached out to them and, you know, 4 million top line revenue making 1.7 million bottom line and they were out of cash. And if that's not a business, that's not successful, I mean, highly successful, you know, great margins. And yet, you know, you touched on the cash flow statement, and, you know, I find that I don't know if this is true for you, as well. But I find most business owners, you know, what, this is gonna vary for size, but even the larger ones, they get to the profit and loss statement. That's cool. They understand most of that, but that balance sheets and then cash flow statements that are kinda like, yeah, there's subpoenas are so stock and operating the business every day, that's where there's
Ryan Tansom 18:33
that, that it's intimidating. They've never gone to finance and the people that are in the finance function, CPA, CFO, banker, accountant, name, don't know how to speak operations. Because at the end of the day, like I was talking to, like I had, I have a decision, I have to hit the $240,000 on Thursday night. And if I don't have the cash, I don't hit payroll like, it is a very binary decision and I have to manage my receivables, payables and inventory. Every business owner knows that at their gut level, but what happens is, they manage everything by their bank account, which is Mike McCalla wits from the Profit First, he's been on my podcast quite a few times. But what that's actually called in finance speak is cash conversion cycle, working capital, and the copier rep. Like my dad and I are going ah, what? So like, my point is like, I think that fundamentally pet owner operators know this stuff, but they don't have the language to speak to it. And back to your back to the ownership thinking is, it's understanding what are the tradeoffs of those decisions and having the clarity because I think if people have that clarity, then they'll know the trade offs, but instead, what happens back to that person that you were saying as that huge income if you're focused on your k one, right, everything's an expense. So you're going okay, well, I can pull 1,000,002 out of this. I got to pay 40% in taxes at 1,000,002 than that is Is everything through the personal lens? So Pat, you come to sell me an ERP system? This was a true story for us 300 grand, it's like, well, that goes against our personal income. Why would I do that? Well, it's only if it is? Well, yeah, it's what's saving taxes or if you don't do it, then you pull the money home. But I think going back to you, I mean, you got a long career in real estate. If you and I bought a multifamily house housing structure with 10 units or so we have two choices. Do we pull every dollar of cash out of that rent every month and not do any updates? Right? Well, the building would eventually not be worth that much money in 10 years, because we didn't do anything to it. And that's exactly. It's an asset, right? The company has an asset. So they're either reinvesting to make sure that things are not dilapidated for the next owner, or they're just whether they consciously make this decision or not, the decision has been made.
Pat Mancuso 18:33
Well, and it goes to the you know, why I'm doing what I'm doing. And certainly with the podcast, what you're doing is that it doesn't matter where they want to go, but they just need to understand where it is, and then understand the decisions that impact that. So let me ask you this, I want to transition here in just a bit and talk about what you're doing and what you've learned in this journey to help business owners. But if you bet on three other businesses, I see some common things that happen in the entrepreneurial world, small, medium sized business world. And so what as I asked every, every individual, I interview this question in that what has been one of the biggest surprises in the journey of you owning businesses that you didn't expect?
Ryan Tansom 21:50
I thought everybody had it figured out. Oh, okay. I went through our exit. And then I went, what the hell happened there. And so I went on this journey for I mean, that's it. It's been a 10 year therapy session for myself. That's usually what's going on. And so like, I always thought, I mean, because I was super young in the business, like you said, and so I just figured, like, well, these people know what they're doing. Right? Right and wrong. Most people are just waking up trying to have more time and have more income and balance that out, name, the profession, name the entrepreneur, and there's no grand plan. And like, it's been like this, what the hell. And this leads. So I went through this weird journey of like, over consuming, I mean, 400, podcasts, 350 books, you name all these workshops, designing all this content as a therapy, trying to figure out what the hell that happened to me. And then I realized I'm like, wait a second. I'm normal. And like, and then it kind of was like this weird transition from student to teacher that's happened over the last 10 years. That was like a personal identity crisis for myself. But yeah, I don't know. I don't know if that makes sense. Well,
Pat Mancuso 23:00
it does info what's funny is when you realized you weren't normal. And you probably realize you were way above normal, and some of the things that you've heard and the experiences that you've had with business owners, because it's as crazy as we think it is. Sometimes we have no clue how much crazier it is. This
Ryan Tansom 23:19
one, yeah. And I think what I absolutely love about what I do now is like art, it's so freaking lonely. Being an owner operator like, cuz here's the deal, you're like, Okay, I make this decision. And it ripples into my personal finances. I would like to do personal guarantees over here to plug the hole over here for payroll, and then like that, like every advisor makes money off of me. And then my employees, if I like, say, Hey, by the way, I might not want to do this anymore. They freak out, like everyone relies on you, the owner operator staying there. And so like, what I love about now is that like, like, it took me years to figure out what is normal, because like, I've now had so much exposure to 1000s of companies that I can walk in, it's like even going back to real estate. The only way you know value is if you've looked at comps of 1000 houses, and it's like, well, I can walk into a company now and be like, your fault, and they just look at the owner or it's like, oh, here's the one thing that's going on in the financials, because like it's just like, there's just this constant exposure to see what is the median and average situation? And then what honestly, but back to the therapy point, then I'm like, Hey, I'm normal. Hey, it's okay. Right?
Pat Mancuso 24:36
Yeah, no, it's it's, you know, what've you said? Well, they in, you know, some of the things that we're doing, you know, I call the five of ours who's got a significant law firm and another part of the country and I said, I said, Hey, Bob, his name's not Bob, but I said, Hey, Bob, I got an opportunity to Alabama about 150 to $200,000, your bottom line If it isn't something that you're interested in, and he texts me back, and he goes, Are you serious haha. And I go, Yeah, and now we have a college on Wednesday. And my point to that is, that's what should be happening for advisors with the right advisors like breaking their clients these ideas, so it's not lonely. And so they can, you know, get to that place they want to get to. I want to probe a little bit and you could tell me if this is off limits or not. But one of the things that I do find also that's very common is in the entrepreneurial journey is people getting into business with the need not the wrong people is the appropriate but maybe getting into business wrongly with other people. In other words, they have no idea that they come together or a campfire in a cocktail. And then they discovered down the road that it's not the right individual, it doesn't make them bad individuals, just not the right individuals. And I know you've had some of that journey, because
Ryan Tansom 26:00
I've had multiple partners, and that's gone to varying degrees.
Pat Mancuso 26:06
You know, what I find in almost every podcast I've done, you know, both in our destination, business freedom and our success unsent. Prior to this, it was very common, and we're in the people business. So I want to ask you, like, Why do you think that happened? I know why. But I want to, I want to get your perspective, why does that happen? Why do people come together without having to slow it down sometimes, and looking at a process or even having a conversation with somebody independently around
Ryan Tansom 26:37
it? So Ben, through the three different scenarios, if so, by the way, yeah, it's three of my own companies where I've gone through this part in varying partnership situations. My father had a business partner as well, so we had to buy a while we were selling the company, and he was getting a divorce or my mom, so that just, you know, might have multiple complications. But I think going back to your question, I've thought a lot about this about what have I done wrong? What could I have done differently? You and I talked about that? And it's, there's a couple of concepts. I'll try to keep myself on track here. But I'll answer your question, but why but then I'll give the context about why I think that is and how, like what I've been thinking about, but the why I think it is, is because when we sit when I've sat down, I'll just use my personal experience, because I've gone through this with hundreds of other people too, but like, the why for me is I see an opportunity in the marketplace. Like I have a vision, I want to help people go through this. I want to help people solve the problem that I went through 10 years ago. So let's say it was you. And we're sitting down having a calculator, bonnafon this is the problem, oh my gosh, I can uh, here's what I'm trying to do. And like, you know, I get all passionate, a lot of visionaries. And then it's like one plus one equals four. Like, that's what people like, that's where the dopamine comes in. And then it's like, well, together, we can be better. Like it starts when such a good spirited place, every one of mine has started in that spot. So then, then you go off to the races. And if you don't do a couple things that we'll talk about which editors, there's things that you help people with, and there's things that my coaching and education helps people with, and they're both wonderful to work together with. But then we'll explain why I didn't sit down and say, okay, there are two hats. And this is one of my fundamental concepts I teach in my materials that we are. We have two hats, business owners, and business leaders as operators. So Pat, if you and I are getting into an endocortical bed together, where are we going to be fitting on the job? So like, what do you do every day? And what do I do every day? Just because you're an owner of an asset doesn't mean you get a job. So like I have Apple stock, I don't work at the Genius Bar. Yeah, exactly. And that's in private equity. They go by companies and have other people do the work. So we're like, we have an owner hat on, which is where my coaching and education lies, then there's this operator hat. So if you go partnering with someone, it's like, what are we all going to be doing? What are we going to be doing now? And as the company grows? How long is my Am I gonna go from like the Swiss Army knife to then the salesperson to that and the CEO to that, like what? Like some of the problems that I've had is I didn't want the job. That was what the company needed. And I was like, I don't want to do this. So like God, what? Like, well, we're also an owner, and it's all commingled. So it's like I think it's the job perspective pet. And then on the ownership side, if you and I partnered up together. So let's say you and agreed upon the jobs that we both wanted now and overtime, like all right, we're both on the same page for the labor in the paid for w two. Right? Well, what if, what if our goals for the owners are different for the asset? What if I want to create a $10 million dollar company in 36 months and I'm willing to plow every dollar back into it and put more money back into it? And you're like, Dude, I want 100 grand a month or 100 grand a year and distributions. Yeah. So now we're back to this mismatch. I want to grow fast and reinvest and you want to have a cash cow. So there's all these concepts that people, and it never goes past the habit of we're gonna pat, should we conquer the world? Yeah, let's do it, man. And then they don't know the personality types, which I think you can speak to?
Pat Mancuso 30:16
Yeah, well, I didn't Yeah, usually I did write on the hat. And it's the journey, right. And so one of the things that we do when we go into organizations, we'll do an organizational assessment, and we'll, you know, get the CEO or CO CEOs or CO investors, owners, whatever it is. So we'll get those folks in a room and we'll do this. It's a very simple activity, but it's a very powerful one. Well, ask them to identify what they do all day. And they'll do that, and what do they do the majority of the time, and they'll do that, and then circle what you really enjoy doing. And what they do all the time is that they really enjoyed doing and it might have been in the beginning of the organization. But as it grows, they don't ever do that checkup, they don't ever slow down enough.
Ryan Tansom 30:56
And then what do you do about that on the operating agreement on the bios, and then on the pay, like, there has to be a concentrate at
Pat Mancuso 31:03
that time. And you've experienced that I know you have it, and I've experienced it as well, on the exit of a company that we scale from 11 individuals to 804 years with a billion in sales volume I, we as much as we tried to do that we have multiple partners. The fact is, if you don't do it upfront, it's a mess down the road. And even when you do it upfront, it still is kind of a mess down the road, because you never expect some of those things to happen.
Ryan Tansom 31:32
You don't sign a prenup, when you're about to get a divorce.
Pat Mancuso 31:36
A series of probably a whole series of podcast you
Ryan Tansom 31:40
and I should you and I shouldn't like I think you and I have a lot of different takes on this one topic, which is one of the most complicated ones. And just as another point to that is I'm working on bringing on this individual coaching client to partners, different timelines, different needs for the roles, they have different distribution needs, different equity valuation needs, they have different timelines for the value, like all these different things. But what is this is the important part Pat is like I said to both of them, and like, here's the deal, like, I'm going to help you guys work through all these conversations, what needs to be done, if someone's trying to screw each other over, I have zero interest in being involved in this mess. However, if everybody's coming to be fair, and you want me for what does reality look like? Like, like, what's fair and all? Like, how does valuations work out all these different things? So we're gonna walk through the operating agreement right now while they like each other? Yeah, and then it's your point. And then as things go down the road, it's like, okay, well, at least if, if someone has an idea of like, what's the decision tree that happens? If I don't like Pat anymore at you anymore partners, then it's like, well, at least I know, in my decision framework, like okay, if I don't want to do this, what's it going to cost me for my time and for my money perspective involves
Pat Mancuso 32:55
companies don't truly have because it's heavy lifting, buy sell agreements, and you know, somebody did somebody gets divorced. Some People don't like each other. I mean, that's it. I can tell you is so I just decided we're going to do a series that in that one, you know, you got certain disclosures I'm sure that we got to be aware of but um, so you you validated he validated the people issue is a big issue. And it's its people and it's in the organization.
Ryan Tansom 33:24
Let me add one started before you can hold that thought because I just thought maybe this will change how you want to take the conversation but like, it's, it's this weird thing for me Pat where like, I'm such a people person. Like I just, I'm such an emotional creature. But yet I've been living in finance now for over a decade. And here's why is because like, finances, it's doubled or like double entry accounting and GAAP accounting came around in the 1400s. It's not going away. It's like, like gravity. Money is like gravity, it's a way of storing our trust in each other. So like, I like finance is the language that we use to exchange value with one another. So if I truly want to just focus on being partners and friends with you, if we don't understand the money and how the money works, that's where all the conflict resides pads, where I say there's two sides of the same coin, where like, if the partners really want to, like understand their decision, it's like, well, how does money work? If I understand how the money works, then I can actually focus on my relationship with Pat with a wondering if I'm getting screwed
Pat Mancuso 34:24
or not. You know, it's but it's, it's actually it's not funny, obviously, it's kind of funny, but we were down you know, that we purchased development for Portage subs franchise recently here in the Twin Cities, we're going to develop out sub sandwich shops in the Twin Cities. We're really excited about that. But one of the things that regional developer Ed and Dave liniger, who is the founder of REMAX is also the owner of the capital firm that bought this established very established franchise, but they have this saying and I think I I have it right. But it'll be floating out there talking about the numbers being our truth. That has struck me since the minute I heard it like people. I mean, they'd sometimes attempt to argue with numbers. But numbers are the truth. You can't join here
Ryan Tansom 35:15
a crazy wild stat pad because like, I love this stuff so much. It's ridiculous. So Sumerian was the first language out there. And there it was about five 6000 years ago in Summa, in the Sumerian Did you know that accounting predates written language?
Pat Mancuso 35:35
Well, it said that, but
Ryan Tansom 35:37
So just think about this, like, okay, like, I kill, I kill a draft for a wooly mammoth or something like that. I got a bunch of meat here. And I want to share it with you. Yep. How are we going to account for that? And so tallies were like, Well, Pat owes me tons of meat. And I'm going to make checkmarks. And then it's like, so then we had to like, Okay, well, what kind of meat? You know, what do the check marks mean? So the written language came out. So like, literally, accounting is our store of trust of like, you owe me something based on something I did for you. And so it's, it's actually very true.
Pat Mancuso 36:09
Oh, it struck me and it's just, I don't think enough people understand that. Okay, so let's, let's shift gears, okay. So, you've been on this journey, your 10 years of therapy, if you may. And now what you've done is you really created my vision, but I want you to share the vision, you've created the clarity of a, get my perspective, what every business owner needs to do and understand. And that is, if I get in the car, I'm gonna drive to Florida. I know Florida, South from Minnesota, but I know I'll eventually get there if I just keep driving. So, if I don't put an address in that GPS, it's unlikely I'm going to get there, if ever, but I'd like to get there effectively and efficiently. And you created this mindset. I know, for hundreds of 1000s of people in Dow fashion that around independence by design. So talk about that. Let's just start there. And then I'm going to start pulling things out. Yeah.
Ryan Tansom 37:16
Yeah. and Canada, the takeaway that led into this, this body material, I like to say, Pat is not like I sat in a basement just trying to figure out this like a random framework. This has been tried on through, you know, hundreds of workshops, three different versions of online training 400 podcasts over eight years. And it's just again, like, it's all about how I would have helped myself what the reality is this framework is, knowledge is leverage. And if I really want to just participate, you know what I want, I want to do whatever I want to do every day. People listen like, honestly, man, I want to do what I want every day, I want to talk to the people I want to talk to about the topics I want to talk to them about doing the activities I'm enjoying. And a purpose is bigger and beyond myself. And if something is stealing my time, I can't do that. Well, money, money is a means not the end. And that's what I'd say, two thirds of the people on my show have money in the end, and I'll tell you what, I can guarantee it doesn't buy happiness. I've interviewed billionaires and their life is a complete catastrophe. And it's like, well, how's that working for you? So I want to do what I want to do every day. But I need money. And what do we do as a business? Money is the means of this. So a business creates the cash flow. So we can have the freedom of time, and the wealth to make sure that we always have the cash flow. And so I say all this because the business of independence by design is like what the hell do you want Pat? Like, we got to figure that out. Because like, you don't get in the car, just spin Google Maps or that you have to plug in a destination. But what I would argue is everybody listening, that's an entrepreneur, you got a goal. I know you got a goal because you're an entrepreneur, but like, it's usually revenue and k one or net income, wrong goal. So it's like, okay, if it's Florida, what if we're going to Motel Six, I don't want to go but if we're going to like you know, like a five star resort you and I own the resort are very good, right? Like it means so who you're going to be with how long you want to go How long do you want to take you want to take road trips on the way there design the entire experience and all of your end results? And then we're gonna figure out how you're gonna find that. So like then therefore the company should be independent by design. The company should be designed for you to play your game and this is where the second so the first first step in the independence by design is personal clarity. What do you want out of all that stuff? Pet there is literally no right or wrong answer. It's just you being intentional with what you want. Then the second part, the second step, and so part of that is that time and money and so part of the first step of personal clarity is understanding business valuations and understanding okay, like how it gets this knowledge, the understanding the game. It's step number one. Step number two is picking your game. So like, what do you want? Do you like it? Do you want to go to Disney, you want to go to the notorious Motel Six, you're gonna go camping, like. So when I say this is the second stage of picking your game. Somebody asked me, I've been invested. I did 50 Vistage workshops in the last 18 months. So its revenue is going to scale up to sell to a third party or ARIA. Is that what's right for you? I literally got off a call with a guy last week, because I almost felt the scale. It's like, okay, it's I mean, what does that even mean? What if scaling reduces all of your time and you have no cash?
Pat Mancuso 40:37
First that you asked me that question, I told you 100 million
Ryan Tansom 40:41
bucks, let's do it. And it's in which it's, there's no judgment on the goal. It's about someone clarifying saying, okay, because like in stage two, step two for us is picking your game. As long as you're focused on a cash flow valuation with your independence of time and understanding that trade off between time and money every day, you want to grow and then transition to an ESOP, maybe private equity, maybe a family transition, maybe an internal buyer, it's like, it doesn't matter. But don't look at the entrepreneur next to you envisage, and be like, well, they're doing this, it's like, your neighbor has a truck, what if you don't want a truck? And so then the third stage and step is, it's, it's playing the game, which is just ownership, monitoring of the financials and the trade offs of ownership and how your operations are getting you to your goal. So that, you know, you and I have talked to me, you got a lot of good stuff going on. And I'm constantly trying to be that person on your shoulder saying, if you do this one other thing, is it going to create the time and the money that you want? Or is it just another thing? You know, I mean, there's no wrong answer. It's just not getting what you want? Well,
Pat Mancuso 41:55
it's, it's kind of like the adviser on one hand, saying you should go buy equipment at the end of the year yet, the advisor has no clue what your goal is, what your cash flow is, for the next six months. So they're advising you without actually understanding how and why they're advising you. So it makes perfect
Ryan Tansom 42:13
sense. And well, I'm Pat. Sorry, go ahead. Oh, go ahead. Just one because you, you've mentioned the advisors a couple of times, and I know you're helping people with all this stuff, because like, you asked about my dad and I and our conflict, I've had partners in conflict. And then there's all these conflicts of the operations versus ownership and like the advisors to is if the owner operator is clear on what they want the cash valuation what they need. Everyone can help them. Yeah. Like, like, every like, so then it'll be obvious which advisor should or shouldn't help you? Because, like, their advice actually has context and makes sense. Now, instead of you just wondering if it's being made up.
Pat Mancuso 42:54
It's titled, like, it's kind of like a recipe, right? Like, if I know what the end product is, and I know what the recipe is, they know what to put in the recipe. And without the end product, I don't have a recipe and therefore, I have to shoot it wide. And it happens all the time. And that's why somebody who was making 1,000,007 has no catch. That's crazy. It's just absolutely crazy. Um, so let me ask you this. Who are some of your mentors and I always define because I've heard this define, and I really love the way it was defined. A mentor isn't somebody that you've met personally, or that you talk with personally. A book could be a mentor, you know, a book written 50-100 years ago could be a mentor. And I was it was I was listening to Alex or Rosie over the weekend and his podcast, and he was talking about reading biographies from, you know, people 100 150 years ago that lived that were successful, and what you took away from those in So who are your mentors?
Ryan Tansom 43:58
I have determined and actually I think that that comes from Napoleon Hill's book. I can't remember the name of the book, but where he talks about your mastermind and could be people that are dead or not dead. And it's like, what I have done Pat over the years is I have gone and sought out people in certain areas where I trust the judgment of how they make decisions in that area. And I think a lot of people are struggling with that these days, right, as is in my Andrew Hagerman and Peter tea for health. Like, I don't need to get relationship advice from him. Right. So like, I'm gonna give him a huge handicap on whatever the hell they're doing with their life and relationships, but like for health, physical and mental health, and so like, there are certain areas where I go and I've got a list of people I say, okay, this person and these things are the places that I go for mental health and physical health, or their spirituality or there's economics and money. And so like I go, I go to books. These are different things and I've got my search for the truth and the first principles as to how I think about bad things. So my goal is to build mental models. So for example, I'm going to use Ray Dalio. Ray Dalio has some of the most amazing economic and monetary policy frameworks I've ever seen. And I've read hundreds of books on money, money and everything. Well, apparently, the guy is kind of a crazy person. I mean, like, like, I didn't know that. And I was really bummed when I figured that out. But like, I'm not going to discredit all of his economic and academic money frameworks. Still, like in the state this like, I mean, there was a hit article on Andrew Huberman recently, I'm like, I don't care, like his material unhealthy. So I do that Pay for like mental models on topics. And then what I do is I've got about six to 68 Really good, close confidant friends that are like my mastermind. So I'm not a part of your decision or anything like that. But these are our own. These are all owner operators, and businesses that are around my size that are around my age. Some of them are different age spectrums, because I get a lot of age variation with the podcast, and my clients and stuff like that. So like, the specific people where they're dealing with small kids running a business, having all this stuff are commingled. And so I can take those mental models of all of the things that I learned, and we all kind of share that stuff amongst each other as we're all trying to play the game and, and win, but I win at whatever it is that we're trying to do not judge each other. So it's a long way of saying, who am I mentors, because I've struggled with that for a long time, thinking I needed what, like, where I let myself down. As you know, when I was a kid, my dad had to be perfect. Well, not going to happen. You and I both know Cory, but also, he wasn't perfect. Well, and you know what I mean? So I think a lot of times people go to like one mentor, and then that person falls short of their ideologies. And it's
Pat Mancuso 46:58
like, well, not one person can have it all. Yeah. Yeah, that makes sense. That makes perfect sense. Okay, so um, what haven't I asked you that I should have asked you? or what have you shared with us or shared with business owners that you want to share? You know, I,
Ryan Tansom 47:21
I know we've covered a lot of ground. I just think that the people listening and it's like, why are you doing what you're doing? Like, you can't ask that enough. Because, I mean, like, I say, we they go out as I'm writing my barber, and I say we because like I'm on a journey to and like one thing that my admission is, I don't want to say I don't like the word should, you should, like, you know what I don't know about you. But I don't want anybody telling me what to do. But if someone has been there, done that, and as you know, is eating glass and said, Hey, by the way, don't eat that handful, like, and so I think what helps me and what everybody I think should think about is like, why are you doing what you do? Or you're doing it right now? And how does the time and money trade off equation? And how do you build the business that actually gets you what you want? Do you just like who you are? Who are you doing it all for?
Pat Mancuso 48:08
Yeah. Is it worth it? Like, are you enjoying it, I can't tell you how many times I talk with or run into or buy something from a business owner. And it's like, I'm handing you money. And yet you just don't seem like it's enjoyable. And we pull, let's do it. Well, and I like it. And I
Ryan Tansom 48:29
do believe on the positive note on that. Because I do believe that people because I've worked very hard at this are like, I want to do whatever I want to do every day. Yeah, like I really enjoy working with you. And I enjoy working with the people that are my clients and like and like, I believe that being an entrepreneur, owner operator, and a small firm, sorry, owner, operator of a small privately held business in America is one of the most lucrative opportunities to live the life that you want. You know, it takes I mean, take on professional investors, there's a whole different journey, it's a different game, like it might be great for you. I mean, like, so I just say like thinking about that, like understanding it so that way you don't regret it.
Pat Mancuso 49:11
I think that that is a great way to kind of close it out. Decide what you want to do and what you enjoy doing and then do it. And you know, it's funny, but I don't know of anyone who's been to at least in my journey, my experience that's been successful. That, you know, they enjoy it. Like if you're not enjoying it get out of the game, right? I mean, it's just not worth it. I mean, let's
Ryan Tansom 49:39
pull a thread just just before we wrap up, because I think what's super helpful is like, I spent 10 years where everybody's out there talking about the exit. So when people hear the word exit, they think of a four letter word they think of death, despair, and selling their identity because if they enjoy it, so here's what I think it's a very interesting psychological, less Isn't that I've learned over the last 10 years, I built a business called the growth and Exit Planning collaborative my second business. Well guess what? I engineered a business that had no clients, because everybody that wanted to work with me wanted me to put lipstick on their POS company, lipstick on the pig. And it was worth half of what they needed to be. And they were burnt out and had no energy. And it was like, the whole Chris Lindahl like, sell now or whatever I was like, Well, it's a pile of crap. And so like, everybody was attracting people that didn't want to do the work and wanted out now with unrealistic expectations. And then the people that I could help who had time, money and energy, were like, I don't want to exit. And I'm like, holy shit. Like, I've literally like mentally broken myself over the last 10 years. But I think going back to your point of view, if you don't want to do this, get out of your job, or your ownership depends on what you mean by that, do you need out of your job or out of your ownership? First question, but then also, Pat, the people that like there's a disproportionate amount of people on my podcast, where they love their business, because it's their identity, their job they love, they've engineered the life that they want. But they don't know how to monetize that asset or grow value, and align it with the legacy that they want to leave or like wanting to die in the corner office. So like, with with my educational workshops, it's like, if you focus on growing sustainable, predictable, transferable cash flow with a cash flow valuation, you can turn around and do an ESOP, monetize your company, pull money off the table, sell it to your employees, where they don't have to write a check. So like, there is a way to monetize that asset and keep doing what you want to do all day long. But back to your point, are you burnt out and want out? What do you want out of, or if you love doing what you're doing? Don't Don't ignore value creation, just because you love doing what you're doing, still build a valuable company that gives you choices, but no matter what it should be, build value?
Pat Mancuso 51:48
Absolutely, absolutely. And Ryan, you have, as always shared so much. And it just got me thinking now as you always do about a different way to look at things. And so if somebody wanted to reach out to you, I know you've got workshops that you're now launching, and you've got your coaching and you've got a number of things that you can help people with. Where would be the best place? How would they get in touch with you,
Ryan Tansom 52:17
I would say the three places right now are to go to my LinkedIn, my X account and I've got those links over to you, I think and then my personal YouTube channel, my website is launching within the next month or two. And then new podcasts will be out on all the channels and then on my personal YouTube channel. So everything's kind of in process right now. But I'll be announcing all that stuff on LinkedIn and action stuff like that when it comes out. And I think we've got a lot of fun stuff in service working together to absolutely
Pat Mancuso 52:45
Well Ryan, thanks again so much. We appreciate everything you contributed today. If you are a listener subscriber We so appreciate you tuning in each week. And if not, please go to your favorite podcast source and subscribe, sign up, follow live whatever it is you do to help us share the message we appreciate it. Thanks so much everybody, we have an amazing story we can tell the next time we talk to you there.
Outro 53:10
Thank you for joining Destination Business Freedom with Pat Mancuso. The insights and strategies shared guide you towards financial prosperity and personal freedom. Continue to navigate boldly. Until next time, keep transforming challenges into achievements. Farewell and stay the course
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