Scaling A Freight Brokerage | Episode 339

You can have authority, a license, and customers—but still not have a real brokerage, just a founder doing everything until growth turns into chaos. Scaling usually fails not from lack of freight, but because the operation can’t handle the volume without structure, clear roles, and strong leadership.

We break down how to build processes, avoid common hiring mistakes, and stop being the bottleneck so your business can actually grow.

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Transcript

SPEAKER_00 0:19

Growing a business. It's it's not all uh once you get that authority, that's not everything. It takes a lot more than getting your MC number to build a good, strong freight brokerage. Ben, we just wrapped up a good one here. We talked through a lot, man. We we went through, you know, having the right structure, hierarchy, processes, the right people in the right seats. What are your thoughts on on what we just wrapped up?

SPEAKER_01 0:43

Yeah, I think it's a really good conversation on like just what the common trajectory of businesses look like from one person to even like 50 or 100 million, what are the common, I don't want to say issues, but the common problems that need to be solved between taking a company that is a few people working together or one, and then what it looks like when you've got a company of 50 or 100 people, why they're different, and some things that you can consider and put in place long before you need to. Because if you start doing these things, and at the very least, even if you're not implementing them, considering them and thinking about how the things we talked about in this episode will impact you down the line, my guess is you'll probably want to start doing them sooner. And in my mind, like that saves you so much work and effort later. The more you prepare, the more you start to think about what this looks like down the line, the less issues you run into when you get there. Because, like, it's like cliche we talked about it once. Like, I always laugh. It's like most businesses die from indigestion, not starvation, meaning like there's too much to do and nobody can delegate it, and they don't know how to delegate, and everybody's so used to doing things that it's like almost impossible to change the habits, even when you put in an expensive system, an expensive tech system, whatever that is, hire a bunch of people, bring in money to the company, whatever it is, you still kind of run into the people behavioral things that need to change as the company gets larger and there's just more to do, and more people that need to be able to interact with each other.

Spring Weather And Catching Up

SPEAKER_00 2:12

Yeah. I mean, so if you're a if you're a brokerage owner, this is a great episode to listen all the way through the end. Um, as you, you know, grow your business and figure out which direction you want to go in. If you're an agent building out a team and your agency and maybe hiring some folks beneath you, this is a great one to understand um, you know, the steps you'll go through and how to delegate. And if you're just maybe you're an entry-level or lower level W-2 employee at a company, seeing the big picture at how things operate and understanding am I in the right business? Is it being operated the right way? So give it a listen all the way to the end. We appreciate you guys listening. Let's get into it. All right, another good episode we'll get into today. But uh, Ben, how's things going down in Florida as we're getting into the spring now? Warming up?

SPEAKER_01 2:58

Things, you know it's funny, actually, they were, but like the past two days, it was like kind of chilly. Like last night it was like 68 or 69 and super windy. So it's not like cold by any means, but like not like unbearably hot or seeming like it'll be that way any day now. Yeah. Well, we got up there next to you. You got snow. Yeah, I know Pittsburgh said they like snow like a couple days ago.

SPEAKER_00 3:20

Dude, it was this is what's so weird about April is uh last Friday, I think, it was just shy of 80 degrees, and then on Sunday it snowed. Like basically a a just a weather pattern move through. Like we got the talent of a warm front, and then a little cold front came through. Um, we're back up into like mid-60s today, is the forecasted high, sunny. Um, it's the time of year when like everyone's lawn care services start, so you're getting like all the, you know, we had like our fertilizer, whatever, like the true green type thing or whatever came yesterday, and I'm patching all the bare spots in my lawn that need new grass seed, and people are starting to cut their lawn for the first time. It's like just a little bit of optimism, you know? So after a cold, nasty winter.

SPEAKER_01 4:12

But it's like the best. I feel like one of my I don't know, like those like imprinted memories of spring is like the first smell of when people are cutting their grass. Like that's kind of like my it's like the same in the fall. It's like you smell the leaves and that like cold crisp air, but like on the other end, it's like when you start smelling grass being cut, you're like, huh, winter finally feels over.

Playoff Hockey Energy And Rivalries

SPEAKER_00 4:38

Yeah, yeah, for sure. For sure. So I try to hold off on cutting my grass just because once you start, like it's becomes a a long-standing task for the whole season. So I'll probably wait another week or so. But uh yeah, it would what was really wild is I went, I was telling you this before we hit record, is uh I went to the Sabres game last night, it was playoff game two against the Bruins. Uh Sabres lost, but um I haven't I don't think I've ever been to a playoff hockey game in my life. Like the Sabres hadn't made the playoffs in 15 years, and I don't think I ever went to a playoff game back when they were good previously. Um, but like typically when I go to a regular season game, like we're bundled up and like walking in wearing like a winter hat and gloves and a jacket and whatnot. I was like, just wearing just wearing regular spring clothes, walking in, like you know, they have a big party outside, and they call it like the party in the plaza, and like you get um shirtless dudes hanging out going nuts, and uh but it's just it's just a weird, it's a wild vibe. It's kind of like going to see going to a Bills game in September when it's like 75 degrees and I'm wearing shorts and a t-shirt. It's like very unusual.

SPEAKER_01 5:56

So plus playoff hockey is a very I just think it's a really distinctive event. Like it's different than playoff football. And like I went to a few in the 90s with Yager and Lemieux, and definitely a few when Crosby and Malkin in like the 2000s, probably like 08, 09. Very fun vibe, very high energy, very fast paced. And the funny is like it's not that the game moves much faster in the playoffs versus a regular season, but there's so much energy in the crowd. Oh, yeah, that like you are engaged the whole time. And to me, it's like also kind of like an NBA game, like because NBA games are like super fast and also really different because there's music playing all the time, which is very different than every other sport. But playoff hockey is probably some of my like favorite memories of like sporting events to attend.

Draft Talk And Team Name Origins

SPEAKER_00 6:44

Yeah, very different from football for sure, because it's not like single elimination, you know. I mean, it's their best of seven series, so you'll you'll be playing the same team for like upwards of two weeks straight, and like rivalries just you know go wild. Like people start tired, like dudes start targeting other dudes in the fights, and yeah, it's a high energy, it's good stuff. So haven't been a big hockey guy in a while because the Sabres have just been trash. Um, but I'm gonna ride this bandwagon as long as it'll go. So the draft starts this week, so this drops on Friday. So by this point, if you're listening, um, the first round will have been completed. So first round draft picks. Um the let's see, the number one prospect is Fernando Mendoza. He's from Illinois. They won the um they won the championship this past season. So we'll see. Carson Beck's up there, a couple of quarterbacks. So yeah, we'll see. We'll see who gets drafted early, and then I feel like once you get past that first and second round, it's kind of like a crapshoot. You don't know who's gonna go where and who's gonna trade, you know, draft pegs to other teams to try and move up and whatnot. Um Josh Allen was at the Sabres game last night, though. He banged the like drum to like like the Let's Go Buffalo. They do like a big like they have a usually if someone like relevant or famous like bangs the drum to start the game, and he was there. Like pretty much the whole team, the coach, a bunch of the players were up in a suite like right above us. So that was cool.

SPEAKER_01 8:22

But uh Can I ask you a question like super random, but kind of related to that? Is I think I looked this up at some point, but what is a Buffalo Bill? I kind of feel like it's related to the old cowboy, Buffalo Bill, who like used to do like the circ, not the circus, but the you know, arena shows 150 years ago. Is that where the name originated?

SPEAKER_00 8:43

Yeah. Yep. Um, but our like they what's interesting is it's the Buffalo Bills, but our like logo is a Buffalo, like a bison. Right.

SPEAKER_01 8:55

Not like the cowboy.

SPEAKER_00 8:57

Not the cowboy that would like shoot out of a train or whatever. Like, I feel like that would be kind of off-color if you had like him as the mascot, but yeah. Um, but yeah, I don't know. That's a that's a good question. He was uh I think he used to like didn't he like hunt buffaloes or something like that?

SPEAKER_01 9:17

Yeah, I mean I'm pretty sure like he made his name literally helping curb like the buffalo population.

SPEAKER_00 9:24

And then later I think he was like our if our mascot was a guy that would kill buffaloes, probably not a good mascot.

SPEAKER_01 9:31

And I'm I'm pretty sure, like if I remember, he like made his name like pre-Barnaman Bailey circuses, where he would go around and they would do like shows, they were like exhibitions of shooting and horse riding and roping, where like people would go like a carnival to attend, and they would do like cool trick shots and stuff where he became famous. And I think Annie Oakley was associated with that, if I remember. I don't know, it's been a very long time since I dug into that or read about it, but I'm pretty sure that was. Yeah, interesting. And then like our mascot is this Buffalo Bill Cody, I think was his name.

SPEAKER_00 10:05

Yeah, Bill Cody. Yep. Um our mascot for like the Bills is Billy Buffalo.

SPEAKER_01 10:13

So he's like this like blue bite thing Bill shot at.

SPEAKER_00 10:19

Yeah, yeah, exactly. There's actually a really funny um I saw a funny like video on YouTube or Instagram that was like reenacting like the thought process behind naming the Bills, the Buffalo Bills, and they went through like all that. They're like, oh, our mascot is gonna be uh a buffalo, the same animal that that the teams named after the biggest. Yeah, that he used to kill.

unknown 10:45

Yeah.

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MC Number Versus Real Business

Shortcuts That Break Scaling Later

SPEAKER_00 10:46

Oh man. Like, at least, like you know, you're from Pittsburgh, like the pirates, the it's our pirates, right? The um penguins are penguins, right? The Steelers, because of Steel, Steel City, yes, right? Makes sense. So interesting. Team uh professional sports team names and all that good stuff. All right. Well, this episode is brought to you by a Send TMS. So if you are looking for a new TMS, a Send TMS is a great option. We definitely recommend it. It's really good for the small to medium-sized brokers that are looking to either just get started or to grow. Um, you got all of the access um to the tools and features of a top-tier TMS without the price aid that goes with it. And you can get three months for free, no card needed. Um, you have to have a referral code if you're gonna do that. Uh, we do have one. It's we do have it listed down in the show notes or description box, depending on where you're listening or watching this. So check that out. Um anything else in the sports realm? I got nothing. All right. Well, we uh we're we'll get into it today here. Um we were kind of talking off air beforehand about topics and what we're both kind of seeing and dealing with, and the whole idea of um, you know, we'll see where this goes, but like this, you know, having a motor carrier authority does not mean you have a true business, right? Getting your brokerage license um is a step and a requirement to legally operate, but there's a whole lot more that goes into it. And, you know, we've seen over time businesses evolve with, and I'll just kind of rattle off a few different concepts here, but like, you know, hiring new positions and splitting up the workload of certain tasks that are involved in day-to-day operations and having visions for what's next and what steps you have to take in order to, you know, set yourself up to head in that direction and moving individuals around from one position to another or creating new positions that maybe need to exist. Um, and then there's the other business concepts of like having legal operating agreements in place. And um, you know, we were talking with Jordan from Togo yesterday, um, in a in a little discussion about, you know, processes, and we're gonna do an episode with them um next month, which I'm really excited for. But having SOPs, like I remember going through with with Pierce Roll Wide in the last like year, as we started to like have this vision for what's the next step and of where the company's gonna go and where do we want to emphasize things, I started to realize that like a lot of people, you know, if you remove them, it makes it very difficult to seamlessly operate without knowing what their job is that they're doing. Um, so we created all these SOPs, right? Standard operating procedures so that you can plug and play people and easily train a new person. So if you're going to hire somebody new or someone quits and you got to cross-train somebody, you've got clear-cut described processes that are easy for anyone else to just look at, absorb that information, and then implement those processes themselves. So yeah.

Tactical Pauses And Weekly Syncs

SPEAKER_01 15:07

And I think I I'm gonna like rephrase exactly what you said, like just really simply on what happens with across almost every industry, kind of the same thing happens. Like somebody works for a company and they're like, I want to go do this on my own, I'll be better off. I don't want to work for somebody, I want to keep more of what I'm building for myself. The motivation is, and I don't want to report to people. So they leave and then they start growing their customer base, either through what they've already known or already have, and then they start building. And then as soon as they start having to do the things they didn't have to do, invoicing, right? Reviewing documents, um, checking accounts receivable, accounts payable, the things they got to do to make sure like they pay their bills and actually get a check. Because you're not just checking out and making sure you got your commission statement and then you get paid the next week. You like literally have to make sure the invoices get sent out and the bills are getting paid, or like you don't survive. So then what happens is you run out of time because you're trying to grow the business and make more money to get it enough to pay yourself what you should be making. So then you start finding, and again, I I don't think this is a negative thing, but like shortcuts. Like, what don't I need to do so I can get this other thing done that absolutely is vital so that I can keep paying my bills? So little by little, you find shorthands and shortcuts to eliminate and slim down other things so that you can make time to make sure you can eat and pay your bills. And then little by little you get a little bit bigger, and then more and more shortcuts to where you're like barely using some of the systems you definitely were required to do at the bigger company. And you start thinking, even when I was at the bigger companies, I would think so. I'm like, this is silly. Like, why are you making me do all these steps? Like, this should be good enough. I'm spending so much percentage of my day doing unnecessary things because like you're just telling me to when I was at a big company. And then you start your own company and you're like, oh, I don't need to do a lot of these things. I get all this done, still get my invoices out, still pay the bills. Everything's going well. You're growing, you're growing. And now you run out of you, whatever that is. 60 hours a week, 70 hours a week, you're working six days a week to catch up on all this. And you're like, I need help. But then I think the thing that people think of, and again, this is commonly referred to as like what gets you to a million dollars doesn't get you to five, doesn't get you to 20, whatever that is in whatever industry. It's kind of the same thing because then when you go to bring somebody in, you're just trying to fill a gap. You're like, I just need help with this. So then that helps you and you grow a little more. Now that person has the same habits and shortcuts as you do. Then you add three, four. Now you got five people and you like pretty much have a company, but it's still probably a job and less of a standalone business because like if you aren't there, it like all just collapses on itself. Yeah, and why? Is because like everybody needs to be talking to each other because there's no centralized consistency. And then the next thing is like, well, I'm gonna hire an accountant, and then the accountant is like, I can't catch up with this because the accountant is calling all of the people or in the office asking them all day what they could have seen in the system. And then you're like, Well, I need another accountant. Now you got two accountants and they're just slowing you down because you got to stop doing what you're doing to tell them what you did. They're making mistakes, and you're like, this is just a giant mess. Well, the thing that is interesting is like this is the reason why big companies make you do things that seem unnecessary to keep it all running, because all this stuff moves up or downstream all the time. And if everybody's not consistent in getting information into one place, someone downstream in our world, brokerage or trucking, like the accounting person doesn't have everything they need to just like pay bills, right? Or just send an invoice. It's like, well, this kind of looks right, but like the rates are different. This system doesn't show this. And the broker's like, oh yeah, I updated that. There's detention, just add that. You you figure it out. And they're like, the accounting person's like, figure it out. Like, I don't know what I should bill your customer. Am I billing them all of this, some of it, the same thing on everyone? Now they're working twice as much. You hire two of them, and you're still slowed down because you didn't go back a few steps, slow down and go, okay, I know I've gotten into the habit of not doing things I didn't think were necessary, but they are now necessary because other people need to rely on the place that I should have been putting it in the first place, right? And then that's where, like, even these companies said 20 million, they go, like, we just can't scale. And you look at it, and it's like, now you need to change everybody's behavior. They've been doing this for three or four years. Nobody wants to go back to doing it the hard way, or they were trained on a way that isn't consistent. Now you got to bring in consultants and trainers and go into office, and you basically got to recons consistent? Re I don't even know what word I'm looking for, but like you basically got to put all the processes back in place you left when you were at a bigger company to get your new company up to a size and allow it to grow, right?

Hiring Extremes That Kill Growth

SPEAKER_00 19:59

Yeah, I think, and there is a, you know, people oftentimes are like, if we tell them, like, hey, you need to take some time and do X, Y, and Z, and they're like, well, I don't have time to do that. And the reality is you don't have, you don't, you can't afford not to do it, right? Like there is a, there's a very beneficial thing with like taking, we call it in the in the army a tactical pause, like take a knee, you know, hypothetically, and um get everybody on the same page, even if that means a temporary slowdown in growth or in business, it's very necessary. Um, it's kind of like going to the doctor, you know, periodically. You have to go get a checkup, get make sure you understand how everything's operating um in your body and and whatnot, but like in your business. Like we we've done this um more and more on the peer side lately as we've kind of started to put new new people in new positions and adjust processes, is just have that communication, right? Like I know we're all busy and I know we all have a lot on our plate, but what you end up finding is that when you all feel overloaded and you know busting at the seams, by taking that hour to just sync up and get everyone on the same page and start to realize that, like, oh, I don't need to be doing this because someone else is already doing that. Um, or oh my gosh, I just learned X, Y, and Z. And because of that, like that just changes everything about how I'm looking at this. So having kind of like everybody on the same page. This is why I'm I'm a big fan of like regularly scheduled um leadership or just departmental meetings. And if you find that, like, hey, we don't need it this week, then skip it. But you always have something kind of like reserved on the books for that. Um like we we used to do sales, we got we kind of like as a previous company, we used to like laugh about it, but we would have a sales meeting on Friday and on a Monday, but they were scheduled for Friday afternoon and Monday morning. We're like, what's gonna change between Friday afternoon and Monday morning? Um, and oftentimes we would just skip one of the meetings, right? Yeah. But then there was other times that like stuff that we didn't get through on in a Friday meeting and more happened over the weekend, that we had that dedicated time to kind of all get together at the beginning of the week and kind of lay out where we're at, um, you know, what was our you know, to-do list or our do outs list when we closed out the meeting on Friday, and you know, what are the new items for this week? So um I really think that like as a business owner or like if if you're going from that solopreneur broker to building a true business, if you don't build out, you know, the processes and the the structure that we're kind of outlining here, um, you're gonna hit that wall, right? You're gonna feel like I have to do everything myself. And you know, you will you will run out of there's a finite amount of time in the day and like brain capacity and all that stuff.

SPEAKER_01 23:50

So and then you know what else happens after that? Here's the other thing that tends to follow that is like, well, I'll hire somebody, and then they hire somebody at a lower cost because that's what they can afford. And then they go, Well, this person doesn't help. I can't find good help. And like, I can't tell you, I can't find good help. Like, I need to find somebody that's as good as me, that is close, that could just sit next to me. Well, it's like, well, that's true, but why is that true? It's true because you don't want to slow down enough to put it into a place where you can train somebody and have somebody learn what you're doing, but you don't want to slow down enough to do it. So now you gotta hire a more expensive person to sit next to you to talk to instead of just slowing down enough to putting into one place where someone else could see it and actually do the job with you and to help you.

Founder Bottlenecks And Delegation Rules

SPEAKER_00 24:37

Yeah I'll give you two examples of uh what uh they're kind of two ends of the spectrum that are the opposite and then the the middle where we found the actual solution. So like this these are like things that I've actually seen happen in the this is like years past. But like we we have an office in Florida and we had this emphasis many years back of hey we want to get some more we want to build up the brokerage operation down there and get more more brokers in seats and we hired a a guy who his job was to bring in new business and um ultimately try to get more people in seats and really build out that office over time. And what I found that he was doing is he came in and instead of him trying to bring in you know new customers and old contacts of his from from previous um work history and whatnot his first goal was just like oh I'm just gonna hire like I don't I don't remember how many, but like let's say like six like five or six brokers off the street and we're just gonna, you know, because we just hire a bunch of them we're gonna get business. Like he just went from zero to like oh I'll just hire a bunch of sales reps and it's gonna work right and then he quickly realized that like none of them were trained properly. He wasn't doing any business development himself. He essentially just became like an HR like recruiter trying to like hire people and then yelled at them go make more money. And then like a year goes by and you know it we kind of decided like hey this didn't work out like we haven't grown and we've actually like with all the overhead of the salaries and everything versus the money that's come in like we're this is running at a loss. Like we can't it's not working we're gonna we're not gonna do this anymore. And I remember the guy like and I'll get to the other spectrum in a second but I remember the guy like he called me and he's like man he's like I don't understand it. Like I thought things were going well the market's tough right now and I asked him I was like like you know did you guys grow year over year from when you started to like this point that we're deciding it's not a good fit anymore. And he's like he's like well we business was kind of flat from you know but that's market related and I'm like I'm like well hey I'm like you have to realize objectively that like even if business stayed flat we've added all the expense of all these employees like it's just clearly not a good business move. Right. And then I told him I was like if you look at my side of the business which is totally unrelated and separate with agents like I'm like we we grew I think we had grown like 35% that year and had not added a single additional um like W-2 expense to it. Like we had all the support in place and um our we had new agents we had agents growing and agents getting new customers and all the all the things um so that's like you know one side of the spectrum is like this dude just comes in and tries to hire a bunch of bodies and not really do anything with them. On the other end of the spectrum I saw another office where for years um actually really good quality uh brokers were hired and I would just see like constant turnover like someone would come in and they'd be there like six months, nine months whatever and then like they'd leave. And the turnover was I there's probably like 10 or 12 different brokers that had worked in that office over a course of three or four years. And the one common thing I saw is that like they didn't have any leadership. Like they were good. They had customers but they weren't given goals as far as um you know how many calls to make a day or they didn't have any coaching or feedback from a uh you know a team leader or boss whatever you want to call it supervisor and eventually they're just like all right I guess this you know I can go do this anywhere I want and what's the difference right so like on one end you had a boss who just was like I'm gonna hire a bunch of people and not really train them um and expect them to perform and then on the other end you had quality brokers that had no boss and now like kind of the um the thing that we've done recently and this is like fast forward multiple years now is um we have a uh a pretty solid brokerage operation in the one office with a you know a very distinctive team leader who um they do very well and they have a they're a kind of a smaller you know team size but they perform very well they have a very good operation that runs they don't have too many bodies trying to make too many calls to too many customers they're just really focusing on what they're good at. And then in a separate office um the one that had you know no leadership we have you know now brought in a very well seasoned um leader to focus solely on the business development for that branch right so it's it's his role to make sure that the brokers that are in seats there have a mentor have KPIs that they're expected to hit that they have um he can also do some you know hiring and screening of new brokers if they if they want to add another seat in there um but really work through you know all the all the things that a a true young broker needs to succeed which is having someone to guide them in the right direction and tell them hey here's what you said on that call that you could have said differently or here are some questions that the the prospect asked you that you could have answered differently like having that kind of general feedback um and then we have a separate new person that was brought in that is strictly managing operations and leadership for our everything from accounting to um carrier compliance to the credit department like having very distinct roles for different positions where it's not very murky because like in the past you might have like you know let's say it's you build a brokerage from scratch right and you're just like all right I'm gonna hire accounting people I'm gonna hire brokers and I'm like let's say over time you build all this up and you're the owner of the company but now like your brokers want your time of day to help with sales and business development. Your accounting reps want your time of day to meet to talk about processes and cash flow and all of that. Your credit team wants to meet with you about credit vetting and credit lines and all this and then your care compliance team wants to meet with you. You know you you start to see like you you get run very thin if you don't start to build out a true hierarchy and structure over time. And as I clearly outlined earlier there's a way to fail because you don't do it and there's a way to fail because you try to just do it too fast by just putting like you don't you don't get like three customers and you're doing two million a year and all of a sudden you're like, all right, I need a sales team leader, I need an accounting director and I need an operations manager. Like no, this stuff all happens excuse me step by step by step gradually over time. And you're gonna have to tweak things you know as business changes, as the direction of your business changes, as your business volumes adjust, etc. But I know I kind of spewed a lot out there, but um that is like the five minute version of what scaling a company properly looks like. And a lot of times it comes with making mistakes and having to to readjust and you know course correct until you get yourself into the next you know right direction. So yeah.

Making The Business Decision

SPEAKER_01 32:00

I agree right and I think that's pretty common across honestly like most if not all industries right where you have founder grows a big business does really well maybe raises capital on the tech world right like even the movies like the Facebooks the Ubers and all that and then hire a CEO. Then the founder and the CEO argue because the founder is emotionally and invested differently and is so used to making all the decisions that even when they hire the person to take that off their plate, they feel like they want to be involved in every decision. But the reason they hired that person is because they're already spread too thin. And the the thing that I'll usually say or when I'm like even just talking with somebody about these situations is like, look, it's it's not really it's like defining the questions or the thoughts better. Like yes you could and yes you probably should but then the question is what aren't you getting to that you feel like you should be doing more of and they're like oh well I'd be talking to more customers and we'd make more money. Okay. So you hired this person because you wanted to do more business development because you've got more demand than time. And in your analogy you are the direct report of every department. So every single sign off like Tim Ferris talks about this a lot. He's like literally every single decision in his first company he had to say yes or no to so every invoice discrepancy, every customer service discrepancy, every manufacturing discrepancy, he's like I was just overwhelmed because everybody needed me to say yes or no on everything that I became my bottleneck. So like I think in the four hour work week his example was any decision less than a dollar amount didn't need his approval and that eliminated like half of his work. If it's less than$250, you can you get the green light to say yes or no, I trust you. And he's like my volume of just emails and questions was like chopped in half just by setting that limit, right? And again, what you do with people or processes, it's really about not what you should do or could do as you grow. It's like what aren't you doing because you're doing these things and yeah somebody else probably won't do it as well as you as fast at first for sure, but there's a trade-off and if you can go bring in more customers and they're gonna make a little bit less mistakes or a little bit more mistakes than you would, like that's probably a good trade-off, right? I'm bringing in more business, yeah they're gonna miss one or two things until they get better at it, but like that's a good trade-off and most people emotionally have a difficulty weighing the trade-offs. It's I'm just gonna do everything all the time, no matter what. And then it's like they're killing themselves and they're in their prison of their own making that they can't get out of, they don't know why.

Incentives And Comp Plan Behavior

SPEAKER_00 34:39

And it's usually that you had a boss at a previous company and like I I still use this phrase the phrase is just like business decision like make a make the business decision. And the way that he explained it to me is that like when it comes to like when like when you want to train somebody like and it's like what do you do in XYZ situation um and there's not always a manual that says all right here's the situation and here's what you're supposed to do in that situation right what it comes down to is having the intuition and the like uh problem solving capability to make a business decision on what to do and it's not like it's prescribed in a SOP somewhere it's like put all the facts on the table right consider them all and then make a decision that you think is best for the company overall. You might have some losses in that decision but overall it's the best for the business right and sometimes that comes down to like if you look at it objectively sometimes it doesn't make sense like um there are there have been instances where we have taken a a broker or an agent who is a high producer and we have said either we're gonna get rid of them for whatever reason um or we're going to tell them no on a certain customer what's going to inhibit them to produce that business. And on you know paper it's like well why would you decide to pass on profits? And then you look at well because of this this business that this person brings in it's adding um 20 hours a week of extra work over here in accounting because the person keeps messing up it's adding internal frustration on the team because they don't they don't like working with this person because they're a pain in the butt or whatever the case might be. And this customer um maybe is so disorganized that every time we invoice them they you know are they tell us they're missing a PO number what I'm just making it up on the flyer but like those are real examples of what that would look like. And then there's other times when it's like all right why would we spend X amount of money on this insurance policy if you know we don't normally do that. And it's like well that's it's a business decision because by doing this it's going to allow us to bring in in the future all this additional additional business and revenue and profits and whatnot. So it's just you make the business decision. Like one of the things I love how he it's phrased is so Kevin Pierce who owns Pierce Worldwide he always says to me he's like if it's legal and ethical we will try to find a way to bend to make it happen without breaking um meaning that like you know a lot of companies are you know square peg and a square opening round peg and a round hole right and if you don't fit that mold um you don't fit in the in the organization. There's a lot of companies like that. And I think that's where good companies differentiate themselves they're like, no, we can get creative right just because you know like a lot of it is like you can look at like comp packages for example right like yeah we normally pay our brokers you know 45 grand a year salary and 15% commission on profit once they hit whatever number like for example and let's say you get a great broker who wants to come in and says well I would you know be willing to go um lower salary if I can get the chance at a higher commission percentage and it's like well we don't that's not how our structure is and it's like yeah but why not? Why can't we consider doing that for this person if that's what means more to them or or you get somebody who they're like my spouse and I have decided that we are you know more comfortable having a higher salary and lesser commission which ultimately can make us less money in the long term but that's just what we're most comfortable with. Um and it's just you know having having the flexibility to not try to treat every single person or situation the exact same but to be creative with it and you know make a business decision like I said um that's gonna benefit the company and everybody um overall the most. So and I think that's where like when you are hiring leadership right because I've seen people in different companies that I'm like I'm like they're never going to be they're they're I shouldn't say never like they're they're not the best fit to be in a position that is a decision making position higher than what they are right now. And someone's like well why do you say that? I'm like because they don't have the critical thinking skills to analyze a situation and make a decision that is outside of a standard operating procedure. Right they they just say oh well you know the rules are if it's this then here's the decision. It's like well yeah that's the rule and that's a monkey can do that right they can read the rule and goo hoo here's what we do right versus like a true leader who's got a creative mindset will say well hey here's a uh exception to the rule and here's why right I think that's the the difference between what I would call like an operator and a true like visionary leader if that makes sense.

Right People In The Right Seats

SPEAKER_01 39:53

It does right and the funny thing is too like this is why I have such a what affinity or enjoyment working with mid and small companies because when you get to a certain size the trade-off to exactly what you said is it would make sense to have different commission and different incentives. But once you're so big the ability to keep track of and pay those accurately becomes the trade-off to weigh against it. So they go, we can't be flexible because the support and systems it would take to do a different comp system for 5,000 people isn't worth the trade off of the upside of giving the unique opportunity to the unique individual and the unique individual's contribution is a much smaller percentage back into the big hole, right? But when you're in a smaller company like that makes a lot more sense. And like that is literally the first thing I say when every client that has come to me and you that is probably mid to smaller company like 50 million and less is like what comp gets me the best salesperson? I'm like I think the carts before the horse. And they're like what do you mean? I'm like you want to talk to the potential candidate, find out what is important to them and see if what they want and what they bring to you you can accommodate and adds value to your business, right? Because yours is the perfect example I use all the time. It's like you might have a great salesperson that just had a kid and is very risk averse but has a lot of relationships, a lot of hustle and wants to grow, but needs a higher floor just because he has a newborn and his expenses went up and that might be temporary. Maybe that's like three to five years and then he maybe wants a bigger commission, lower salary, but like that guy can add a lot of value or girl can add a lot of value in that role just because of the unique situation and time in their life arc, right? Where like that same person two years before would have like I want all commission no salary, they've got a lower monthly nut they've got to make right and to me like that always makes the most sense because when you align the incentives and values hope of gain and fear of loss with the employee with what the business is trying to achieve right both work better together when they're aligned, not trying to force each other into what the other one wants. Now everybody wins, right? Because at the end of the day, an incentive should just be aligned with the business and the individual meaning like both want the same thing and want to maximize for it. The more those are aligned just in behavioral economics and finance like the more people produce. Like there's a famous saying from Charlie Munger, Warren Buffett's part and always said he's like, show me the incentive and I'll show you their behavior. Like I don't even need to meet the people just tell me the comp plan and what you're incentivizing and I can almost guarantee you what is working well and where your unintended consequences are. And like you just look at it that simply like you can identify 95% of these just looking at how the company's trying to do this and where their issues are is almost always related to the incentives and then the guardrails or the SOPs around the person and then the support underneath them and above them to help them move along that growth journey.

Titles Versus Real Career Progress

SPEAKER_00 42:56

Yeah. Yeah we did I remember we did an episode of it might have been four years ago at this point where we talked about not all comp packages are created equally and like what's valuable to one person might mean literally nothing to somebody else. Like um like I I'll give you an example like uh a guy I used to work with he was the kind of guy that like if it if let's say it was eight to five was like the out the office hours and you get an hour lunch like the dude was there at eight o'clock he was out of his office at five o'clock and from 12 to 1 every single day he was at lunch right and he wouldn't answer an email after work he um he took every single vacation day that he had you know available to him like that was for him it was like work is I will be there when I'm scheduled to be there and I won't be there when I'm not scheduled to be there and I'm gonna take every day off. And then like there's like I'm like on the opposite end of that. Like with with my uh role with Pierce um I don't have a defined like PTO plan. Right there's not like a set amount of days off um because to me that's what's more important to me than days off is flexibility, right? The ability to work remote for example, right? And um you know I don't wait until eight o'clock to start working and I don't punch out at five o'clock and I don't ignore my emails on weekends because I'm the kind of person that I like to be very involved in the the work that I do. And honestly like I have taken maybe once or twice in the last like six years I've taken like a full week off and I like sometimes I get like anxiety like what's going on like what am I what am I gonna come back to that's you know gonna make me go crazy. So oftentimes like even when I'm traveling I'm still you know keeping tune on what's going on you know any fires that need to get put out and all that. And I trust that people are getting the job done and all that. But um yeah different people have different things that are important to them and um yeah just I think uh just a big thing here is we kind of started off with you know just because you have an MC number doesn't mean you have a company and I think the the bigger discussion here is that building a business and it doesn't have to be just freight brokerage. It could be trucking it could be it could be any industry really for that matter is that um as you go from being that sole I call it it like the solopreneur earlier like the solo operator as you scroll out and scale it um it I do think it's very important to have the right people in the right seat doing the right job. And I I don't think that anybody ever gets that 100% right and that's why I think it's important to always you know tweak and adjust because you're gonna have employees that you know a salesperson might be really good at sales and you're like oh you know we want to promote you to X, Y, and Z. And they might just be like, I don't I just I like what I do. I just want to be I I'll be a 60 year old like entry level sales guy that just produces well and I'm happy with that. You get someone else that like might be young and has a really good visionary mindset and would make for a great leader in the company that's less of an operator and more of a um you know process driven how do we make things better type of person. So I it's kind of funny like oftentimes I'll see like Teams where you have like really old, I don't want to say really old, uh, but like you have like older sales guys and like younger leaders. And it's because what's important to one versus the other is it's just different, right? Like some people they have the mindset of they want to climb the ladder, and others are like, nah, I just want to just want to do what I'm doing. And I think if you take somebody out of a role that they enjoy doing, or if you put someone into a role that they either don't enjoy doing or won't excel at, um, it's a mistake.

SPEAKER_01 46:53

So which is interesting, right? There's another pretty large client I'm working with, right? And they are trying to identify who the leaders are gonna be, and they're creating this structure. And they've got some external consultants going on site that I'm working with and trying to identify who this individual is. We're discussing the trade-offs of like bringing somebody in from outside and promoting from within. Pros and cons, right? You can get somebody with experience from the outside that might be have more experience and might actually be more capable day one. But the downside is they don't have the trust, they don't understand the culture, and it's gonna take them time to get up to speed. Plus, there's an effect on morale if everybody's working towards growing in the company and getting a, you know, progress title, whatever that is, and they see somebody come in out of nowhere, and it's like, well, okay, like why am I working so hard now? Like, if they're just gonna bring somebody in out of nowhere above me, like I'm just gonna kind of do whatever's necessary and that's it. And you can like literally move that in other directions, right? Where when you're trying to identify it within, the part the thing that I've asked a lot of the individuals that are literally going through like the vetting and training for management, which you see at bigger companies and this company's transitioning into that, is I'm asking every one of them. I'm like, they're like, Yeah, because everybody voluntarily that is in this training, that's doing on the weekends, like, you know, one weekend a quarter, whatever it is, is like, yeah, I put my name in the hat. And my first question is like, why did you want to be in management? And most of them said, like, what do you mean? And I went, that's interesting. I'm like, what I mean by that is like, what is important to you, or what do you value, or why do you desire to have a role in management? And most of them were like, Oh, well, you know, like that's moving up. And I'm like, okay.

SPEAKER_00 48:40

So they just see it as a promotion, more money, right?

Interviewing For Motivation And Fit

SPEAKER_01 48:43

Right. And I think, but a lot of them, when I've asked more questions, they're answering because they think that's what they're supposed to answer, and that's what society around them and their family and culture has shown them, like this is what progress is. And when I ask in follow-up questions, is like, okay, but like, how do you define progress? And I'll usually like give them two extreme examples to see which one seems to resonate more. Like, okay, if you made had the same job title, but made two or three times the amount of money, option A. Option B, you make 20% more, but it never goes up, and you get a title that everyone else is impressed with. Which one would you define as growth more? And when they have to think and compare, they're like, wait a minute, four times the amount of money I'm making now, but the same title? Or the title and a little bit more money, but everyone thinks I've made progress. I'm like, which one do you value? And you can tell because then they're like, oh, wait a minute. So what you're really asking me is, do I define growth by how I'm doing and what I'm producing, or by how other people look at me and how they define growth? And some people, and it's okay, neither's right or wrong, but I'm like, that's the question that like you kind of want to think through because growing to impress everybody else, whoever that is, maybe it's your mom, maybe it's your dad, maybe it's your significant other, maybe it's your circle, maybe it's culture. Who knows if you've thought through that? Maybe you haven't, maybe you don't need to, but like, is that really growth? Because I've seen so many people that chase titles, even friends and family and colleagues that have chased titles in other industries, and then they get it and they're like, that's what I thought I wanted. And then a quarter later, they're like, like, this isn't really what I thought I wanted. And honestly, like, I thought everybody cared and thought about me and realized, like, no, like, nobody's really thinking about my job title. And it wasn't that important to me to begin with. And I actually like that job better. And then they go back and they become like a producer who did the other job. And it's like, well, you can kind of at least start to understand what is important to you prior to making the leap and saving yourself the effort and just working towards the thing that is actually important to you. And I think that is a really important thing for like kind of everybody, because it also changes. Like what I thought I wanted at 25 was not 30, and 35 and 40, and even four years ago, and even probably six months ago, like they change. And I think it's important to ask yourself these questions, no matter what it is you're trying to do. As the owner, as somebody that is working up in a company, maybe you're a producer and you want to get into management, you want to put these procedures in place and you want to work with the management or the owner. Like, not everybody, I was talking to an investor about this like two days ago. He's like, kind of like the whole country or the entire West just makes this assumption that everybody wants to produce more, make more money, and ultimately be the decision maker or CEO. And like, that's just like patently not true, right?

SPEAKER_00 51:33

I would say I like the minority of people are like that, right?

SPEAKER_01 51:36

Yeah, and even if you gave them the job and they could excel at it, like kind of just don't want that, don't enjoy that, and value other aspects of life. Because it's not like work is in a bubble from your life. Because just like you said, you and I, like, we really enjoy building businesses. So, like, I'm thinking about this in my free time because like it makes me happy and I like doing this and it's enjoyable. Where like my dad, for example, like did not want to do that at all. Like, wanted to go to work, wanted to be able to perform and make money for his family and get better at his profession, but never wanted the responsibility of running a company. And when I was 20, I remember literally asking, like, I just don't, I literally couldn't understand that because he's my dad, obviously. And you're just like, how am I your son? And I'm looking at this literally in the other direction that you are. And I'm like, I just couldn't understand it. And then as you get older, you're like, oh, like people just value different things. Like, neither is right or wrong, better or worse. It's more unique to the individual. And I think this goes all the way back to what we started talking about is like, that's also important in identifying who's responsible for these roles as you structure these SOPs. Like, who is the fit to be able to do this? Who is the fit to stay where they're at and to add value there? And you shouldn't just assume that everybody is going at the same thing for the same reason. Cause like that's just absolutely not true.

Final Thought And Sign Off

SPEAKER_00 52:54

Yeah, agreed. And these are things, uh, kind of to to wrap it up here is I think when you're when you're interviewing for a position, because I was mentioning earlier how you know, when you're building like even with Pierce, like we're putting people in the right spots for the next, you know, whatever the next chapter is going to look like. Um, to ask those questions and have those conversations during the interview process, yes. Um you know, understanding like not just um what their skill set is and their experience is, but what do they like, where do they want to be a year from now, right? Where would they want to be, you know, five, ten years from now, et cetera? Like, what is the long-term plan for them look like? And also what motivates them, what's important to them? I think I said this on a previous episode, but when I first started in brokerage, when I went from trucking to 3PL side, the guy who ended up becoming my boss, he had asked me, he said, out of these three things, how would you rank their importance? And he said, power and what was it? Money, power, and oh, recognition. We're like the three. Like because some, you know, some people like the recognition goes back to like, oh, you give someone a cool title, or you tell them like attaboy, or like, you know, you whatever. Like, there's different ways to recognize people. Power is like they want to have the ability to make decisions, right? And to control how things work. And then money is like, obviously, like how much can you earn and what what's your commission? And for different people, how they would rank those three is gonna be very different, right? You might have somebody who um like they like the guy I mentioned who like in at eight, out at five, takes his hour lunch. Um money probably not the top of his list. It was probably recognition. Like he just he just wants to be told he did a good job, and when he leaves, he knows, all right, awesome, I had a good day at work. And you know, money's maybe somewhere in the middle there, and um, he just wants to make sure he's getting paid the same amount every check, and then uh power and probably not really that important to him. He doesn't want to be a decision maker. And then you get other people who like power and money is way up top and they don't really care to get recognized. Like I I think that was how I answered that question. I was like, I was like, when it comes to recognition, I said I don't I don't need to be told that I did a good job. Um, you know, that will reflect in my commission checks, right? And that, you know, that's is what it is, right? And just everyone kind of falls different in that spectrum. And you could probably interchange those three with uh, you know, with different things depending on what the job is. But yeah, have those conversations and discussions early on when you're evaluating a candidate for a position, um, you won't be surprised by it down the road.

SPEAKER_01 55:42

So or end up with somebody that genuinely believed they wanted something and then they realize once they're in it, it isn't, and then you got to do a lot of work to do that all over again, right? So, like this isn't even just to find the right person, it's also to avoid putting a person that believes they want something and probably don't once they're there, which is super common to take salespeople into managers. And the other thing, too, there's this great question I'll kind of like end on. My cousin told me this is a long time ago. I think a recruiter asked him this when he was switching between like accounting roles and CFO roles. And a recruiter said, he's like basically a very simple question is like, do you want another position or another role because it's something you're working towards or because you're moving away from something? And like to me, that is a really good way to frame personally the motivation. It's like, do you really want this or are you taking this job because you really don't want to do the thing you were doing anymore? Yeah. Because if you're only taking it because you didn't want to do the thing before, it might be the right fit, but it might just be the only thing that is available to avoid the thing you don't want to do anymore. And it's probably not that likely you'll love doing it yet because you haven't really thought it out. You're just like, I just don't want to make sales calls. I just don't want to talk to drivers anymore. I just don't want to deal with the stress of my phone ringing 20 hours a day. I want to be a manager. And it's like, then you got to ask some follow-up questions like, what does a manager mean to you? And why do you think that would be more enjoyable or fulfilling than what you were doing? Because you at least want them to consider it before they decide to, even if you think that'd be a good fit. It's a very, very good point.

SPEAKER_00 57:24

Very, very good point. All right, good discussion. We we got we went through a lot there. Final thoughts, Ben.

SPEAKER_01 57:31

Whether you believe you can or believe you can't, you're right.

SPEAKER_00 57:35

And until next time, I guess go savers. Keep going with that one.