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Cooper's owner, James Stevenson, made his first podcast debut a few weeks ago on Craig Willet's show, "The Biz Sherpa." They sat down to discuss Cooper's experience navigating the pandemic as a small business in a ski town, starting Cooper's, and the importance of communication as an owner.
Listen to the podcast here: https://bizsherpa.co/james-stevenson-episode-10/
Or watch below:
Enjoy the full transcript, courtesy of The Biz Sherpa blog (here).
Speaker 1:
From his first job flipping burgers at McDonald’s and delivering The Washington Post, Craig Willett counts only one and a half years of his adult life working for someone else. Welcome to The Biz Sherpa podcast with your host, Craig Willett. Founder of several multimillion-dollar businesses and trusted advisor to other business owners, he’s giving back to help business owners and aspiring entrepreneurs achieve fulfillment, enhance their lives, and create enduring wealth. The Biz Sherpa.
Craig Willett:
This is Craig Willett, the Biz Sherpa. I’m grateful that you’d join us today for our podcast. We have a special guest. And before I introduce him, I just want to thank you for your continued viewing and listening. I hope that our episodes are very helpful. I think our guest today, James Stevenson, will be a great example for us to learn from on the principles that we try to teach here at The Biz Sherpa podcast. What I like about James is, he’ll have a story of leaving corporate America to start his own business, which I think is the American Dream and I think all of us can benefit from his experiences. The other thing that I like about James is that he’s honest. He’ll speak from his heart. He’ll tell you exactly how he feels. So it’s my pleasure to welcome to The Biz Sherpa podcast, James Stevenson.
James Stevenson:
Thank you, Craig. Thanks for having me. I appreciate it.
Craig Willett:
Great to have you here today. Now, I forgot to mention. James is from England so I don’t want you to misunderstand that he might have an Australian accent, but he’s really from England.
James Stevenson:
That’s right.
Craig Willett:
Tell us a little bit about your upbringing in England—what you did and what part of England you’re from?
James Stevenson:
Yeah. So I grew up on the south coast of England, Brighton. Just a little town outside of Brighton, went to school just outside of Brighton, did what we call a sixth form and then decided whether or not—I was trying to chase that dream of being an English soccer professional or football player as we would call it, realized that I wasn’t that good and just had to accept that I probably was smarter than I was good at football. My dad and my mom coached me through that, if you like, and instead of going to university in the UK, I went to university in Long Island. And that was my first thing. I had a soccer scholarship out there, which was a really fun thing to balance. You always have that athletic drive, but then you manage to sneak in some schooling at the same time.
So it was the perfect balance for me leaving what I thought was going to be a career in soccer to then actually focus on some academics as well. So I went to school in Long Island, Long Island University, had a soccer scholarship, and then graduated from there. I got my MBA there as well and then started working in finance in New York. That was the start of this long journey, if you like.
Craig Willett:
Great. What was it like to give up the dream of a football career, or in the United States, what we would say a soccer career? How did you make that connection and decide that you had to rely on your education?
James Stevenson:
It’s really difficult and I think a lot of players struggle with it especially when they don’t have anything else to fall back on. I think professional athletes, you have to admire their drive, their passion for it. As soon as that drops off, we go back and we look at some of the players that we played with that made it to the professional leagues. And the differentiating factor wasn’t necessarily skills, it was their driving passion. As soon as you dilute that with something—for myself was I do want to go to university, I had other dreams, I had other travel dreams, et cetera. As soon as I diluted that dream of being a soccer professional, it was pretty much over. I realized that I didn’t have that same drive as everybody else did. And you have to respect the commitment that those athletes have to that next level of professional sports.
Craig Willett:
One thing I like about your background, I always have thought that owning a business is like being a professional athlete except instead of playing at your peak for 70 minutes, you’re playing at your peak for seven to 10 hours a day. You never know what’s going to happen when that phone rings, you always have to be performing at your top level. Whereas an athlete, they practice, they get some time off, they get time to mentally prepare but then they give physically for an hour, hour and a half on the field.
James Stevenson:
And that’s easier sometimes, isn’t it? You’d love to just focus for two hours and know that that was your workout or that was your thing. Unfortunately, seven to 10 hours can become 18, 20 if you don’t know how to switch off. You related to the sport so well and we’ve talked about the scorecard. It’s hugely important for someone that was in sports to realize you’re still competing. You’re still competing whether it’s nine to five or whatever, but you have to be able to switch off because their game ends at that final whistle. We don’t have a final whistle so you have to score yourself on your years of growth and realize you’re winning or you’re losing and act accordingly.
Craig Willett:
And make the adjustments, right, Make the adjustments, get the healing done, right?
James Stevenson:
Yeah, absolutely.
Craig Willett:
Get injured, right?
James Stevenson:
And realize that you were injured because of a weak ankle or you’re injured because of a weak employee, and you have to go back, and you have to rehab, and do physio, and you have to do training with the employee, whatever it is. It’s tough, but there’s a lot of comparisons you can draw between them.
Craig Willett:
I love the analogies in there and I think it’s something that we all have to consider as business owners that, Are we in top condition mentally, emotionally, and physically for the rigors of business ownership? Not to discourage anyone. But I think that’s why some of your background makes you a good business owner. So you graduated with an MBA and an emphasis in finance and you went to work in finance in New York?
James Stevenson:
Yeah. So I was working for MassMutual, a big insurance company, and I did believe in the product, but I wasn’t immersed in it. I wasn’t truly passionate about it. My network of my clients and the products, the trust and the estate stuff we were doing, it wasn’t relevant for the network that I had at that time. I was pushing products and trying to sell to people that were 30 years my senior and I just realized after a while, I was like, “I’m not passionate about this. I’m not passionate about whether it was wills, or—.” It just wasn’t relevant to me. The pain wasn’t close enough for me.
Craig Willett:
But that’s a big step to go from New York City. England to New York City to Park City, Utah. How did you make the jump?
James Stevenson:
Well, I made a sneaky jump in between. I’d done a ski season when I was 18 right before I came out to New York to go to school. In a ski season for most people, as much as they want to pretend it’s educational and it’s professional development and stuff like that, it’s really just a gap year to go and have some fun. So I’d done one in Les Deux Alpes in the French Alps and then I couldn’t stop talking to my wife now about how fun it was. So we went back and we actually ran a—it was an eight bedroom ski chalet and it was eye-opening for her. It was eye-opening again for me to realize the way that the service industry is treated.
We look at the service industry and sometimes we think of them as the help. Now, we’ll talk about my business a little bit. We’re the help, right? There’s a way that the help is treated and sometimes it’s pretty demoralizing. So one of the things that differentiated us and one of the ways we were able to cope with it, was we explained that that was a choice for us. We explained that when we moved out to France, we didn’t have to. We were making good money. We were educated. We could do whatever we wanted. We made that choice.
So when travelers came out or people came out on their vacation, we were able to—by the start, when they thought of us as the help, to the end of it where they realized that we were choosing that lifestyle, to watch their behavior pattern shift—they were in the kitchen helping us cut carrots.
Craig Willett:
So you became their friends?
James Stevenson:
Exactly, right. They wanted to know where we were skiing. They wanted to experience what we were experiencing because we’d made that choice. It wasn’t that we had to sit in that kitchen and bake a cake for tea time or whatever it was, we chose to do that so we could ski for 120 days.
Craig Willett:
So you no longer were the hired help, you became, “Hey, we can help you understand what’s the best thing to do here and we have aspirations similar to yours.”
James Stevenson:
Absolutely. And that was a lot of fun to see that transition.
Craig Willett:
I think that’s a great principle in business is to be able to become friends with your customers and to be able to relate to them. And I think that really has been a key common characteristic that I’ve seen in a lot of people that I’ve interviewed. So you went over to France. When was this?
James Stevenson:
This was eight, nine years ago.
Craig Willett:
Okay. All right. But you were still working with MassMutual?
James Stevenson:
No, I’d quit. Lindsay was a teacher on Long Island. I was working for a group on Long Island and we just upped and went for it and everyone thought we were crazy, absolutely crazy.
Craig Willett:
How do you go from the French Alps, then to the ski resort of Park City?
James Stevenson:
Yeah. Well, something that’s interesting about the English tourism industry was we’re set in our ways. What we realized was if we tried to take the English or European model that traveled in France and tried to relate that to Park City, we thought, “This is going to be great. We’re going to have English travelers come out to America. We’re going to have the US travelers embrace the European style experience.” And then we got here and we realized—we wrote a whole business plan the entire time we were there. We were planning on Utah.
Craig Willett:
As a bed and breakfast type?
James Stevenson:
Yeah. We were thinking we were going to run one chalet.
Craig Willett:
Okay.
James Stevenson:
And we’d had a couple of cool interactions with local people. Dana Williams was the mayor. I met him at a coffee shop once when we came out here and just that local Park City feeling was really, really infectious. So we said, “All right. We’ve decided on Park City.” We did our due diligence in Colorado and we said with the airport where it was and stuff like that, we said, “Park City is the place to be.”
James Stevenson:
So we think that this bed and breakfast idea is going to work. And then we’ve even talked about this. If I told you to come down and have breakfast with everybody else on a big, common dining table—thank God we didn’t do it during COVID times, right?
Craig Willett:
Right.
James Stevenson:
Everyone was like, “Well, I don’t really want to sit with those guys,” or whatever it was. So we realized that, that wasn’t the right fit for that.
Craig Willett:
The European model doesn’t—
James Stevenson:
It didn’t necessarily translate. So what else was happening was Vrbo and Airbnb was changing the game. It was changing how people would travel. So people were happy to take someone else’s house. They didn’t want to share it with others, but they were happy to come and rent a home and have the experience like that. We pivoted there and realized that, that was the demand and we’ve got these huge marketing powerhouses just coming off the ground and they were so beneficial for us.
Craig Willett:
I love the thought that you had a business plan and then when you got here, after doing all your research, even then you found out your business plan wouldn’t work. So you threw it out the window, but what did you do? How did you get into the property management business?
James Stevenson:
So we got in because we thought we were going to do this kind of concierge. The services that we thought we were going to offer to the one house, we said, “Let’s try and offer it to a lot of houses.” We weren’t making money. I was coaching soccer. Lindsay was coaching soccer and she took a teaching job. We were just scraping by.
I don’t know why, but a couple of our clients that are still clients with us today—which is a great success story—just said, “We’ll take a flyer on you. We like your passion. We like the fact that you’re going to answer the phone.” I think one really cool story is that in New York when I was trying to sell, no one would ever answer my phone call, right? So then if somebody ever called me, I was like, “Wait, there’s a client calling me for business?” I was like, “This is brilliant.” Of course I’m going to answer. And they were like, “We hired you because you answered the phone.”
I was like, “Wow, well this is great. This is easy.” Right? So after a while, we just pivoted and we realized with offering some of these concierge services and because we picked up the phone, we were doing everything and then we realized, “Hang on, we’re managing properties.” And that’s where Lindsay decided—she went in, got her real estate license. We added a few homes that first year. I think we had six. I was driving a suburban up and down from the airport, trying to make it—that was before Uber luckily, but I was making 100 bucks running people up and down from the airport. But we were doing whatever we could. Then one year goes by, second year goes by, people realize that we’re present, realize that it’s truly owner run.
Craig Willett:
You’re committed.
James Stevenson:
We’re committed.
Craig Willett:
You give it a personal touch.
James Stevenson:
Yeah.
Craig Willett:
Right.
James Stevenson:
And then fast forward to where we are now, we manage 100 plus homes and 20 HOAs. It’s been a serious journey, but it’s been fun.
Craig Willett:
Now, did you start from scratch or did you buy an existing business?
James Stevenson:
So we started from scratch on the property management side and then about five years in we had an opportunity. It was very random from a proximity standpoint. There was an HOA company where the owner was looking to retire. She was right across the road. She was looking to retire. So we did acquire an HOA business and that was really, really interesting. The whole transaction was just interesting. So that’s boosted our growth. We realized there was a lot of synergies between the two businesses and that was something that—
Craig Willett:
So that was a way to augment to the next level. What motivates you as you grow your business? I mean, you had an opportunity and you looked to buy, but what was your motivation in that?
James Stevenson:
Yeah, I think the competitive nature, you just can’t suppress it sometimes. I’m not passionate about property management. I don’t think that’s going to come to a shock to any of my clients. I’m not passionate about property management. I’m passionate about solving problems, seeing growth and then finding efficiencies. I love relating it back to when you get that IKEA booklet of trying to build some furniture. You start going, and then by the end of it, if you’ve got that drive, you’re trying to work out how quickly you can screw something in or how quickly you can put together the next whatever it is.
And that’s the same way I feel about the business. I’m not passionate about property management, but I’m passionate about improving the process. And that’s something that for me motivated me a lot the whole way through this.
Craig Willett:
So given that, what are some of the key management principles you like to apply in business?
James Stevenson:
Yeah. So communication. Really, I’m a big believer and it’s come back and bitten me in the butt a few times, both employee-side as well as with client-side. There’s the old cliché, “The door is always open to the manager’s office.” There’s something to be said about that. That was a good idea, all right? But then you start hearing some baggage. Then you start hearing about what they need and stuff like that. But if you don’t know that you don’t know why your employee is not performing, and you don’t know why they’re off this week. If you know that their grandmother has died or they’re having a tough time with a kid or something like that, that communication can really keep a true pulse on the business.
Then I would probably add honesty and transparency, and you touched on it. If we’re not the right fit, we’re going to find that out eventually. So you go back to that growth and efficiency phase. If you extrapolate it out and you know it’s not going to work in a couple of years, let’s just cut the cord here.
Craig Willett:
Right. You’re very practical. You want to say, “Look, hey, this isn’t a good relationship. Let’s just figure this out today rather than two years from now through a lot of pain.”
James Stevenson:
And that’s that’s something that I think has helped me become a trusted advisor for a lot of our clients, because I’ll tell them—they’re going to say, “Hey, we want to put these crazy bunk beds in this room.” I’m going to say, “It’s not going to work. That’s a terrible idea.” If you empower the employees to feel the same kind of, “I can communicate, I can tell people this,” that’s something for me that’s hugely valuable because people want that honest feedback.
They don’t want to just be appeased, and going back to the ski chalet, they don’t want to just be the help, right? They’re paying you for a service. Sometimes, we’re just going to be the help. But if you can add to that level of service, that’s really where you have clients for life and that referral network and stuff like that.
Craig Willett:
Yeah, I like that. I tend to call that exceeding their expectations. So if you are empowered as an employee or as a business owner to go above and beyond what they’re normally expecting, then they’re going to come back.
James Stevenson:
Yeah, absolutely.
Craig Willett:
Great. Now recently, you experienced some difficulties. Well, uncertainties I should say. Really not difficulties, but with the pandemic, the ski resort in Park City—I remember hearing, “If you don’t live here, go home.” And they shut down the slopes and they shut down the resorts. How did you respond to that, because I’m sure that impacted the people who were renting homes that you managed?
James Stevenson:
It was really difficult. It was an emotional rollercoaster. We had owners that have true investment properties and they’re worried about their investment. You have travelers that have spent all this money on a trip and they need that money back and now everything’s—we’re all hearing, “Batten down the hatches, hang on to everything that you’ve got.” So you’re in this really difficult emotional conundrum or business conundrum to navigate. And really as much as in hindsight, maybe I wish I’d said, “This is the protocol,” we’re just saying, “This is the answer.” But we had a list of 96 problem clients.
Craig Willett:
Wow.
James Stevenson:
And they were all 96 different traveler groups that wanted something or they had a story or they really wanted to sell me on something as to why they couldn’t come and why they needed the full refund. And then we had the flip side of that where we have 96 owners or so that—
Craig Willett:
Say, “Hey, I have to pay my property taxes. It’s not my fault they closed the ski resort.”
James Stevenson:
And I think going back to some of the stuff you’ve spoken about before, talk about client loyalty. We were just honest with them. We said, “Guys, this sucks. This is horrible right now. How do we navigate this?” We reached out to a lot of our clients that are smarter than I am and I said, “What do we do?” And Craig, thank you, you are one of them. But a lot of people turn around and we saw some amazing, amazing people show their real true colors during that time.
Clients gave money, clients said refund, clients said, “You keep your piece, you give them theirs.” It was really, really difficult, but I would say just being honest in saying, “Guys, this is unprecedented times.” We all knew that. And so how do we deal with it? We didn’t learn that in an MBA book, right? There was no textbook to tell me how to navigate that one at all.
Craig Willett:
Well, there’s certainly dark clouds. It was totally unprecedented to say the least to have ski resorts shut down totally. I can’t think of any time in history where that’s happened and then people ordered to leave town because they didn’t want the pandemic spreading. So that was pretty dramatic in and of itself. So there was this dark cloud, but how did you find your way out because I think some patterns and behaviors changed a few months later?
James Stevenson:
They did and I think we were fortunate that we diversified when we did and we bought the HOA business because the HOA community management side of things was the steady paycheck and we were very fortunate that we’d done that. It was intentional, but it wasn’t intentional to prevent against the COVID pandemic.
Craig Willett:
Right. You never thought the other side of the business would totally collapse.
James Stevenson:
Yeah. When that literally shut down in the middle of March, we were so fortunate to be able to keep employees on, cover our core contractual obligations, and then again reached out to people and said, “Hey, what do we do?” And the best reaction was, “As soon as you’re allowed to, we need to paint our house. Can you guys do it for us? We need to redo our deck. Can you guys do it for us?”
So people were almost paying it forward in that dark cloud moment and that gave me the—I went to a skeleton crew in the office and I went to some of my core guys and I said, “You got to keep the lights on here. You got to go for it,” and they worked their butts off. They got through it and then be careful what you wish for. We had the busiest summer we’ve ever had because everyone had these projects lined up for us.
Then what? The pattern shift here in Park City was people came out for a really long time. You had owners coming out for a prolonged period. You had travelers staying for extended stays. So we were just slammed. And the guys that worked their butts off during the spring weirdness, they had to keep working their butts off.
Craig Willett:
Keep really busy still.
James Stevenson:
Really busy. It was dark for a bit there and again, being honest with your employees and saying, “Guys, this sucks.” We heard about other companies. The word on the grapevine was certain people had just fired everybody and just shut up shop. So I think the employees recognized that and instead of just sending an email or whatever, it was like, “Nope, I’m going to call every single one of them and explain what’s going on.” And those are some awkward phone calls.
Craig Willett:
I’m sure they were, but you also had the philosophy—I think as you explained to me—that you don’t want to just let people go. It takes a lot to train them. So you worked with them to try to meet their needs during the interim, but bring them back when you really could use that.
James Stevenson:
Again, being so close to your employees is a good and a bad thing. I knew that certain employees had kids that didn’t have child care. I knew that certain employees needed the paycheck because they weren’t going to make rent. I knew that certain employees had different situations. So I called them up. The cool thing about it being a small business, we’ve got 30 employees. Everybody knows each other. So if I say to them, “Hey, so-and-so has got this situation where he can’t work or she can’t work. Are you happy to work?”
I felt like going back to your reset button, everybody clicked it. They had to. So luckily employees did as well and they were like, “Yep. You know what, I’ll take one for the team here or you know what, someone else can have that shift because I don’t need it,” and stuff like that.
Craig Willett:
Wow. That’s awesome.
James Stevenson:
It was powerful to be honest with you to see that. Now, our core group coming back talking about it, will joke about it and they’re stronger for it. You go through some of those things and you definitely struggle for it.
Craig Willett:
With the pattern change, we all of a sudden became a country where we realized we didn’t have to live in a certain city to be able to work in that city. We’ve seen it. We’ve seen it here, especially in Park City where people from New York and Florida realize that, “Hey, they can still run their high-powered office from wherever they are because everything became remote.” And so did school and everything else. So patterns of stay changed. How have you capitalized on that and how has that impacted your business?
James Stevenson:
And that’s been really difficult because the patterns of stay changed and we have software that’s designed around vacation rentals. Four nights to sort of 12 nights would be your typical vacation rental. And then all of a sudden people say, “I want to stay for three months.” Well, your pricing algorithms go out the window. You have to communicate with the owner. So you’ve got all these extra touches. So it was nothing efficient about it. But we were clambering to grab anything we could.
Again, I would say we pivoted, but we didn’t pivot well. We pivoted how we had to and even to today, it’s not an efficient system that we have yet. We wonder whether or not it’s just going to be short-lived and we’ll revert back to our regular one this winter, but we’re already seeing these longer-term stays.
Craig Willett:
Yeah, it’s hard to know whether we’re on the precipice of a real change in total lifestyle and total travel pattern change, or whether this is temporary.
James Stevenson:
And I think we talked about the consumer behavior a little bit and before this because we hit the reset button, but we don’t think they’re going to necessarily—we’re not going to have a click of that button in the same way to revert back. So that consumer behavior is going to take a while to either transition back or—
Craig Willett:
Or solidify.
James Stevenson:
Or solidify where they are. So we’re just hanging on to those and just adapting to those changes as they come up.
Craig Willett:
One thing that impresses me as I listen to your stories that you share with us today, you don’t mind being in touch and communicating with your clients and your customers. So you have both. You have the property owners and you have the guests that come on a temporary basis. Share some tips on what you use to close deals.
James Stevenson:
Yeah, it goes back to that communication and honesty piece. I think we can joke about the fact that it’s because I’ve got a good English accent so people think I’m more educated, but for me—
Craig Willett:
That’s a good advantage.
James Stevenson:
Yeah, that’s definitely an advantage. But that was one of the reasons I left New York was because it was quite scripted. I think that whenever we look at sales manuals and how to sell, there’s some great principles to pick up on, but it’s got to be in your own voice, and I think that’s hugely valuable. When it’s your own product as a business owner, of course it’s your voice.
I don’t have to pretend that I’m selling a product for, Craig. I’m selling my own products. So that’s the most authentic voice there is. So educate yourself on the product. Make sure you know it inside out, so you can be able to talk to its strengths and weaknesses. And then one of the best things I like when it’s truly coming to close a deal, I like talking through scenarios that are negative because I like going through—
Craig Willett:
With the client?
James Stevenson:
With the client. What would happen in this situation? If you come to that conclusion together like for instance, “Hey, we manage your house. Let’s talk about what would happen if you’re upstairs flooded.” They go, “Oh my goodness. This would be a nightmare, right?” Well, this is what would happen. We’d go through it. So you build value in the fact that you can talk through a negative experience and realize that you are the solution for that.
I think that the honesty and transparency side of it, definitely can create some situations where if you’re listening to the client, you can tell them exactly what your product is. But if you’re not listening and you’re so confident in your own voice, and you’re being fully transparent about what your product is, you might miss on their one pain point. And their one pain point might be, “I need to get this piece of furniture delivered in two weeks.” It’s like, “Well, that’s easy. Obviously, we can do that.”
Craig Willett:
Right. We can have somebody there to make sure your furniture, it’s in your house.
James Stevenson:
Of course. That’s a given. You’re trying to explain to them all these different scenarios. But if you don’t listen to the one thing that they’re trying to buy right now, you can miss and that’s that’s something that I’ve learned is listen to that pain point and realize, “Wow, that was actually a really easy sale.” I could have just told them I’ll meet them for the furniture. I could have been in and out of there in five minutes. Do you know what I mean? They would have signed up.
Craig Willett:
Right.
James Stevenson:
So that’s the part that as much as you want to believe in your product and sell your product, you’ve got to listen to the pain point and realize pick up on that and why they want to hire a service like this.
Craig Willett:
I think that’s interesting because so often I think we think we have to convince people that we’re the best solution for them when I think often you have to either let your past history speak for yourself by referrals, and the other thing you have to let speak for yourself is you have to be able to understand them. If they feel you can relate to them and understand what could go wrong for them, all of a sudden it’s an easy deal. Price becomes less of an issue.
James Stevenson:
Absolutely. And I think that there’s an insurance company that I think is Travelers when they talk about, “We’ve seen it before.” That’s where the experience piece comes in because then they say, “Well, what happens in this situation?” And you can say, “Well, we’ve seen that before. This is what happens,” and you play it out. As cliché as that is and it’s very salesy, there is some honesty to that of having truly experienced that whether it’s floods, fires, whatever. Those are the sort of things that you can say, “Yep, in that situation, this is what happens and I hear your pain point, but we can fix it.”
Craig Willett:
So as you run your business we were talking a little bit about pricing here, because that’s one way to get new business. Sometimes when you start out a business or sometimes you feel to get new business, you have to discount to be able to get volume or to get client customers, what’s your theory on pricing?
James Stevenson:
So I think I messed that up to be honest with you. I think we came in—well, in hindsight everything happens for a reason. We are where we are now because we did what we did. But we came in cheap and we came in to undercut people to realize probably because we didn’t necessarily believe in our own value at the point. I think the hardest thing—and I wouldn’t say it’s our biggest failure because it also created market share that then put us on the map. But it’s now a lot harder to increase my prices. It’s a lot easier to discount your prices than it is to just keep bumping it up.
So you know we came in and we tried to price very competitively and we gained some market share because of that. But now I’m in a situation where I’m saying, “No, but we’re offering a better product than those guys were.”
Craig Willett:
And your cost to do the business has gone up.
James Stevenson:
Cost to do that has gone up. And yet we’re still down here. So certain clients are going to accept it and they’re going to say, “You’re doing a great job. Yeah, that’s fine.” But then, there’s other people that are going to be looking at—the other thing that’s difficult about our businesses, a lot of our owners are remote. So they don’t necessarily touch and feel this product every day. It’s not like they get in their car and they go, “I realize the value of this car.”
Craig Willett:
They get a check from you once in a while.
James Stevenson:
Check or a bill, right. So they’re either going one or two ways, and I think that’s something that’s hard to sometimes sell is a remote service. And then you’ve got to believe in it and you’ve got to be transparent with the accounting and transparent with your services. But I would just say from a pricing standpoint, if you truly are offering a product that is superior to others, trust your pricing. Trust it and let your product speak for itself.
Craig Willett:
I love that because I think that’s one of the hardest parts in business is being able to price properly. So many people do feel as you originally did and then you get caught in a trap because the hardest thing to do is to raise prices. The easiest thing to do is to give a sale or a discount. You can still maintain that pricing. You can bring somebody in to try you for a year and say, “Hey, we have a special going. We’ll give you 20% off.” And if they like it the next year, then they know it’s going to reset back to that other price. You’re not raising it. Their discount expires. It’s a different mental process.
James Stevenson:
Absolutely. And we’re all suckers for those deals, right?
Craig Willett:
Right.
James Stevenson:
We’re all suckers for the “buy one, get one free” or whatever it is, and we know that’s human nature. So I completely agree with that. That’s something that’s a lot harder to ratchet up than it is to, you know discount down.
Craig Willett:
Great. One of the other things that you mentioned earlier is that you bought a business. I’m curious to know a little bit about that. How did you go about buying it? I know it was a homeowner’s association business and it opened a lot of doors for you, but how did you go about it and how did you finance it?
James Stevenson:
Yeah. So it was seller-financed and it was a really, really difficult transaction. When you look at a textbook of how to value a company, all of these different equations of business valuation that you learn in school, it was completely irrelevant. It was such a personal experience for the exiting owner. She’d built this business for 25 years. She’d built an amazing business.
Craig Willett:
It really was her baby.
James Stevenson:
That was her pride and joy.
Craig Willett:
So if you saw weaknesses in it, it would have been hard for you to point at those—
James Stevenson:
It’s so hard to translate that and say, “Hey, I like the way you’re doing this, but I’m going to do it this way.” So having that sensitivity around that transaction was more important than the dollars and cents on that. We worked out that because of the efficiencies that we’re going to recognize in the future, we were buying a business based on growth opportunity, not necessarily set it and forget it. It wasn’t that we could buy that business and sit back.
Craig Willett:
Right. You just continued to collect on cash flow. You knew there was expertise you had that could immediately improve the profitability.
James Stevenson:
But that thing, I think everybody thinks that a transaction is all an Excel document. It’s all about P&Ls and balance sheets and stuff like that. You asked what I experienced. It was like I wish I could have brought in a broker and then I probably needed a life coach more than I needed a broker. Because it was as much saying, “Hey, how do we navigate this situation? How do we navigate that friendship, that relationship, all those things?”
People think it’s sexy to buy and sell businesses. That was tough. There was tears. There was some awkward moments where we had to just be blunt with each other and say, “Hey, we’re not doing this” or “Sorry, I don’t like that way.” And that’s hard. That’s really difficult.
Craig Willett:
So how did you get through it? You eventually closed on it.
James Stevenson:
Yeah. After a while, I think it was—she was proud of what we were doing with her name and what we were running with and she’d created this legacy and she’d created this reputation. And I think she was worried that we were going to do it badly, right? So I think in a way, she was worried that her baby that she’d built was going to be mistreated.
Craig Willett:
Right.
James Stevenson:
So after a while and reshuffle employees and a few different things, we got through it. But it took a long time to be honest with you. It took probably almost two years for us to truly get through that.
Craig Willett:
So how was that? I mean, you probably have your own philosophy on employees and somebody else who’s been doing it for 25 years may have a totally different philosophy on employees. How did you take two organizations and bring them together and still manage cohesively your employee philosophy?
James Stevenson:
That was rough to be honest with you and I think that from an age standpoint, I had—the business that Lindsay and I had built was very young from an employee age standpoint. And their business had some people that had been in it for 20 years and that was the way they did it. I always use this example. They had these carbon paper for work orders.
Craig Willett:
Oh, yeah.
James Stevenson:
And I said, “Well, what do we do with these work orders?” They said, “Well, I write this down and then I send an email off to the maintenance guys that tells them that I’ve—” I was like, “So then what happens with the carbon copy?” She’s like, “Well, I store this in a filing cabinet.” I said, “Well, what happens if I do this?” And this was one of my mean ways of a transition. I was like, “What happens if I do this?” And I grabbed all the carbon copies and threw them in the garbage. I was like, “Are we still going to get those maintenance requests out?” And she was like, “Yeah.” I was like, “Okay. Well, let’s lose the paper. Let’s use the email, and we’ve got this.”
Craig Willett:
Do it electronically.
James Stevenson:
Even that was awkward, right? You’re telling someone that the way they’ve done something for so long could be improved.
Craig Willett:
It’s duplicative and arcane.
James Stevenson:
It’s hard. That’s really, really hard. So that was tough. We lost employees during that transition. But the good ones hung with us and they’re still with us today and it’s been good. Overall, it’s been really good.
Craig Willett:
I like the fact that you did seller financing. Here’s one thing. Sometimes people always worry that they’re going to overpay for a business and sometimes to entice a seller to sell to you, you have to pay a little more than maybe what you think it’s worth. And I think that’s the signature of a good deal. Usually, the seller feels like they’re selling it for less than they really wanted and the buyer feels like they’re paying more than they really want, but sometimes you have to but you have to have a greater vision than that. But I think it’s a great equalizer on seller financing, because if there are things, big accounts or major weaknesses in the business or the representations that they made that aren’t right, you have the ability to renegotiate the price. Did you end up having to renegotiate or was everything—
James Stevenson:
No, but some of the flexibility that she offered from the financing standpoint helped and I used that. It probably was—the only piece from a negotiation standpoint was the cash flow side of things and that was something that, versus a bank or somebody like that, we would have been in default, but because we were able to explain this is kind of the situation that you handed over, this is where we’re at.
Craig Willett:
Right. They’ll make the payment but it’s going to come later.
James Stevenson:
But having that human person-to-person touch was hugely valuable in that sense versus calling up your bank and saying, “I haven’t got the money.” It was an easier conversation to explain why I don’t have the money. So that was important.
Craig Willett:
I think that’s great. I mean, we did a three-part series on starting a business and one of the areas is financing the business and I think if you acquire one, seller financing is a great way. You don’t have to involve the banks in that.
James Stevenson:
Absolutely.
Craig Willett:
Well, do you have any talents that you have that make your company unique or the way you run your company unique that makes you stand out above the competition?
James Stevenson:
I think being present. I think that often—one of our hardest struggles at the moment is we offer a very customized product and everybody has unique needs from what they want from their second home or something like that. As an entrepreneur, you’re always wanting to automate that, right? You’re always wanting to scale, scale, scale and how can I take this across the whole country? How can I make a robot do that? How can I do this?
I think just accepting sometimes that we’re in a service. We’re in a labor-intensive business. There’s nothing sexy about having—if you’re in private equity and you’re looking at a labor-intensive business, it’s probably a red flag, right? It’s harder to scale. You’ve got a lot of issues.
Craig Willett:
It’s hard to leverage a margin.
James Stevenson:
Yeah. So you look at that and then you say to yourself, “Okay. Well, is it a weakness, or is that our strength?” And I think that for me, I could spend thousands of bucks on SEO, right? Instead, I like to invest it in the staff. Pay well and going back to that kind of what’s the best referral. You don’t want the random Google search of hoping that it’s the right client.
You want the friend of a friend in that situation and that for me—we’ve had employees for a long time now. We try to keep them because they’re expensive to train. It’s the same thing with owners. If you’ve got a homeowner, it’s expensive to learn the house. It’s expensive to go through and get acquainted with it. For me, I’d say accepting that we can’t automate this whole process and just saying we want to be transparent about what we’re doing has really been a difficult struggle, but I think now realizing that struggle has actually become one of our strengths. We are a service, labor-intensive business and we want to make our employees happy. And then as a result, if our employees are happy then our clients are going to be happy.
Craig Willett:
Right, because they’re the touchstone to the clients.
James Stevenson:
Yeah, absolutely.
Craig Willett:
They either interact or are the beneficiary of their services.
James Stevenson:
Absolutely. If someone is having a bad day, they’re going to wear it on their sleeve. So going back to one of the first things I spoke about, the communication piece, if someone’s walking around with their shoulders heavy in their body language, you’ve got to pick up on that because they’re going to go out and they’re your billboard to sell and you’ve got the worst salesman ever. He’s in a bad mood, right?
Craig Willett:
Right.
James Stevenson:
So that’s something that’s hugely important is like, “Why is he in a bad mood?” So that’s the sort of stuff that being a present owner is hugely important.
Craig Willett:
I think that’s great. Well, there’s one question that no one can escape in the Sherpa’s Cave and that is, What’s your greatest failure and what did you learn from it?
James Stevenson:
Yeah. That’s a tough question and I think you can pinpoint individual moments. For me, I think it was a span of a work-life balance issue for me. We left New York because we didn’t have that. We came out here. We were skiing. We were having—
Craig Willett:
Having a good time.
James Stevenson:
We were having a good time, and then all of a sudden it was like, “Oh my goodness. We’ve got employees. We’ve got responsibilities. We’ve got this, we’ve got that.” Both Lindsay and I, my wife, was completely involved. We worked right next to each other the whole time. We had a small office to start with. We both realized—
Craig Willett:
I love that image. Carol worked with me for a little while. She said she’d never come to work for me again. But I think Lindsay might be more compassionate.
James Stevenson:
It’s tough. That was our baby for a while and just having that crazy kind of moment where you go home from work and we both leave and then you go home and you talk about work again. And we messed up. We couldn’t get away from it. We didn’t travel enough. We didn’t see family enough. We neglected our health. I was 20, 30 pounds overweight. It’s just things that you believe are true core values to you, you disregard because—
Craig Willett:
Because you immerse yourself in the business because you want the success and you give it your all.
James Stevenson:
Yeah, absolutely.
Craig Willett:
So how did you reverse that. What did you learn and how did you apply that?
James Stevenson:
Yeah, it was funny because it was actually last winter, Lindsay was just all in and we’ve talked about how we—as much as we pretend to be not micromanagers, a lot of entrepreneurs are still micromanagers, and they’re going to—
Craig Willett:
I think it’s in the DNA.
James Stevenson:
It is. And they’re going to hear a conversation over there and they’re going to be like, “That’s not how I would do it. That’s not how—I’m going to go and tell them how I do that.” And that just takes it out of you because now you’re involved in everything. You’re involved in linens, toilet paper, fires, and the real stuff that you should be involved in, acquisition, all those things. And you just can’t get away.
This winter we had a moment and I sat down with Lindsay and I said, “What happens if you don’t go in tomorrow?” She was like, “What do you mean? I’ve got to do this, this, and this.” And I said, “What happens if that doesn’t happen, right?” And she goes, da, da, da, da. So we went down the negative spiral of what could happen if Lindsay didn’t do what she was doing. We both came to the conclusion that realistically the worst-case scenario was we might lose a client.
We thought about it and we were like, “The reason that we might lose that client is not based on anything that we’re doing, it was based on the client’s expectations, et cetera, et cetera.” So Lindsay didn’t go in the next day and we went for it. We just tried it and we ripped that band-aid and we said, “Don’t come in. All right? You’re not coming into the office. You’re going to stay home.”
Craig Willett:
You’re not going to call in.
James Stevenson:
You’re not going to call in. You’re not going to do anything. You’re truly not working, right? And it worked. I came home and she—
Craig Willett:
Now, she never wants to come in.
James Stevenson:
Now, she doesn’t want to come in. But it’s brilliant because now when she does come in, she’s involved in the stuff that she wants to be involved in. She’s involved in the bigger picture of things and she’s not getting herself stuck in the weeds. I was fortunate when we did the HOA acquisition that I didn’t go and jump into the weeds on that. I tried to be a little more macro on that one. So I was able to—
Craig Willett:
So you had key management that you brought in so you didn’t have to immerse yourself.
James Stevenson:
And that was hugely beneficial because Lindsay was still running the vacation rentals, but she was in the weeds. So until we said, “All right. You’re out.” And we both made that decision together, it was just amazing. Recently in the last couple of months, I’ve moved my office to try and do the same thing to say, “I’m not getting in the weeds. I’m not going to make that random decision.”
Craig Willett:
I like what you said you found another office across the hallway from the office.
James Stevenson:
Literally. Right across.
Craig Willett:
I like that because you know what I found in business is it’s easy as a business owner. When it’s your baby, you care so much that you just want to give your all to it. And when you’re giving your all to that business, you tend to be involved in all of the details. And what we did is we would go to Europe for three weeks and it would be nine hour time zone difference away from Arizona, and so while we were—while they were sleeping in Arizona, I was out having fun. And when they were working, I was sleeping there.
So it gave myself a chance to be away, let them manage on their own, which they were capable of. I didn’t have to hover and it helped me mature as a manager. And I think sometimes it takes stepping back and operating at the highest impact level what you can do that makes the greatest difference in the business.
James Stevenson:
I would say that where the stabilizers—or what do you guys call them, the wheels on the side of the stabilizers?
Craig Willett:
Stabilizers, yeah.
James Stevenson:
With those wheels on the side of a bike and realistically—
Craig Willett:
Training wheels.
James Stevenson:
Training wheels. That’s it, yeah.
Craig Willett:
There we go.
James Stevenson:
But unfortunately, a lot of the employees can ride without them. We’re actually the problem.
Craig Willett:
We’re slowing them down.
James Stevenson:
We’re slowing them down. If they didn’t have those two wheels, they’d be a lot faster. So I think sometimes it’s up to the owner to realize, take that leap of faith and realize yes, if you did it yourself, it would be 100%. And if an employee does it, maybe it’s going to be 90%. You know what, 90%. Now, you’ve got 190% production because you’re not sitting there managing that other 90%.
So that for me was one of those moments where I’m like, “Okay, I could probably do this better, but they’re going to get it. They’re going to work it out.” So there’s a few of those like training wheel moments where you just have to embrace it and I would say that’s a really tough thing especially for a young entrepreneur to try and just be like, “Are you going to be okay? Are you going to crash that bike?”
Craig Willett:
Right. “Are you going to ruin my business?”
James Stevenson:
Yeah. “Are you going to ruin that business, because that’s an expensive bike. I’ve put a lot of blood, sweat, and tears into that one.” Then sure enough, they’re flying. They’re flying quicker and then you can go and get another bike.
Craig Willett:
Oh, I think that’s great. Well, I have one more question because this just keeps haunting my mind and that is, I want to understand what you think the greatest sale or the greatest transaction or deal you ever closed?” Maybe you can describe it in terms of money or not. I don’t really care about the finance, but what was it about the deal that made you feel good and why was it so monumental to you?
James Stevenson:
Yeah. You got a lot of those little deals and I think when you think about finance and you go back and you close a deal and the old school like ding the bell and it’s done. I think for me, one of the interesting parts was that, “I can’t do that.” When I come back and I’ve closed something, I’ve closed it and yes, I’ve done my sales bit. But then you’ve got to do the ops part, right?
So one of the transactions that we’ve done this year, we’ve acquired a group of houses. And I think the reason it was our best deal was because we analyzed it truthfully, very honestly, and decided is it the right fit for us. And I thought that we were going to mess it up because I thought us being that brutally honest was going to make them realize they wanted to go somewhere else.
And really all it did was solidify the relationship because what we did was we went through going back to the—go through some of those negatives. What happens if we don’t do this? What happens if this happens? We went through hundreds, well, 10, 20, scenarios of situations that could occur and Lindsay and I, we had a final Zoom call with them and Lindsay sat off to my side and we both said, “All right. Based on this phone call, we’re going to decide whether or not we’re in or not. We are. Not the client.”
Craig Willett:
Right. It’s yours to lose.
James Stevenson:
It was ours to lose and we said, “Do we want to do this, right?” I remember about 15 minutes in the clients were great and they were saying all the right things. They were realizing it was a relationship. They were speaking the language that we wanted them to speak. And I remember, Lindsay write on a post-it note, “Let’s do it.” And she just wrote it on the post-it note next to me. And going back to transparency, I said, “Okay, guys. Well, here’s Lindsay’s opinion.” So I picked up the post-it note and I said, “Let’s do it.”
I showed it on the Zoom and they were like, “All right. That’s brilliant. We’re all in.” That was for me, it wasn’t the biggest financial gain. It wasn’t the hardest, most analytical transaction I’ve ever done, but it was just the emotional involvement of it going back to, “Do we need this? Do we want this?” And we navigated that. So that was really, really fulfilling to close that knowing that we’ve actually done a weird due diligence. Not your typical due diligence. It was an emotional due diligence and that was really, really—we were proud of that one.
Craig Willett:
I think that’s good because often I say people start a business to make money, and I think that’s that’s an honorable objective and the business should make money and be profitable and you need to learn to manage it effectively and efficiently. But if that’s the sole objective, then you’re not going to get the satisfaction. So I’m glad to hear that you derived an emotional satisfaction from that because that’s one of the key principles I emphasize often in The Biz Sherpa podcast is that you have to derive something more than dollars and cents or you’re not going to come back, then you’ll burn out.
You start to do business with people you want to do business with. They become your friends. You’re able to interact with them and derive something that wakes you up in the morning that’s more than, “Hey, what am I going to make this month? What can I buy with that?” It’s going to become, “Boy, I can achieve and there’s people I can relate to and they can relate to me.”
James Stevenson:
And I think your scorecard resonates fully with me, and I think that that was something that when we looked at it, and you made that comment in one of the earlier podcasts about how Carol said, “We’re not going to lose everything. We’ve got each other, we’ve got this.” And it allows you to get grounded. It allows you to realize what is your emotional currency. What is it that’s driving you. I thought about that and I was thinking, “Well, Lindsay said to me multiple times like, ‘We’re good, okay? We’re okay.’” And that wasn’t based on numbers, that was based on our love for each other, the situation that we had.
That was something that then empowers you to go and take a risk. It empowers you to go and be honest with yourself and not just be beating your head against the wall. So those for me from an emotional currency standpoint. If you can’t reconnect to why you’re doing it, you’re going to burn out for sure.
Craig Willett:
Exactly. It’s just the same old thing. You’re not sharpening the saw. Well, I’m grateful that you would agree to be a guest on our podcast today. I think the principles that you’ve experienced and that you apply in your business every day are symbolic of what makes businesses successful. So I’m grateful you’re willing to share your secrets with us.
James Stevenson:
Thank you. Our secret is just a lot of bruises and learning from as you go through it. So I appreciate it. Thank you very much.
Craig Willett:
It is the School of Hard Knocks being an entrepreneur and being a business owner, but it’s well worth it, not only financially, but also emotionally. I’m grateful that you’d come and participate with us today, but I’m also grateful for our recurring listeners and viewers. I think that the principles that we discuss here can add to and enhance success, but also enhance the satisfaction you get in life. And I think James has done a great job of sharing with us some of the successes that he’s experienced and the way he’s able to reset his life in a way that he is able to achieve some emotional satisfaction from his business. I’m grateful you joined me today in the Sherpa’s Cave. This is Craig Willett, the Biz Sherpa.
Speaker 1:
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