In this episode, we have our guest Randy Johnston from K2 Enterprises, who discusses why process documentation is essential to manage growth. He also touches on different manufacturing organizations and how process changes in those organizations with straightforward examples that anyone could understand without an accounting or manufacturing background. Finally, he touches on some of his secrets on what makes Randy so efficient to be influential in the accounting and ERP community.
- [0:00] Intro
- [3:57] Personal journey and current focus
- [11:17] Perspective on growth
- [14:41] How to start mapping business processes?
- [19:52] Advice for businesses with no documented processes
- [25:12] Different manufacturing types based on products and geography
- [35:05] Closing thoughts
- [38:12] Outro
- If you say you’re going to do something, your word should be your bond. You don’t need a contract for that. If you say it, so it should be so.
- You can talk through a process by simply asking questions. What do you do first? What’s next? What comes after that? And then what happens? And if there are exceptions, you can say, Okay, if that happens, then what do you do? All right, then what happens and, and so realistically, your process maps are single steps with decision blocks.
- If it’s not in writing, it doesn’t exist. If you think you’ve got a process, and it’s not documented, you probably don’t have a process. Further, you can’t teach a process to somebody else if it isn’t documented in some form.
- If you want to simplify your lifestyle business, that’s when you document your processes, because you realize that you have to work a lot less hard.
- Most experts claim that there are seven different styles. And that ranges all the way from discrete manufacturing on one end to continuous processing or continuous manufacturing on the other end. If you back up just a little bit, batch processing would be a more limited style of continuous. And if you step through from discrete, you’re going to find made-to-order and make-a-stock and so on.
- In some areas of the country, you have very legalistic contract compliance that has to be done. And in other areas, it’s much more of a handshake style of business, a relationship style of business.
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Randy Johnston, MCS has been a top-rated speaker in the technology industry for over 40 years. Inducted into the Accounting Hall of Fame in 2011, Randy is listed as a Top 25 Thought Leader in Accounting from 2011-2020. His influence throughout the accounting profession is highlighted once again this year by being a recipient of the 2020 Accounting Today Top 100 Most Influential People in Accounting award for the seventeenth consecutive year.
Among his many other awards, he holds the honor of being one of nine technology stars in the U.S. by Accounting Technology Magazine. Randy writes a monthly column for The CPA Practice Advisor, features for the Journal of Accountancy, and creates articles for both accounting and technology publications, and the author of numerous books.
He has started and owns multiple businesses, including K2 Enterprises in Hammond, Louisiana, and Network Management Group, Inc. in Hutchinson, Kansas. NMGI has supported CPA firms for 30+ years and is the largest managed service provider serving the CPA profession in North America.
His wife and four children enjoy many experiences together, including theatre, music, travel, golf, skiing, snorkeling, and model trains. His experience as a college instructor, management and technology consultant, and advisor to the profession will be evident to you in today’s presentation.
- Connect with Randy
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Randy Johnston 0:00
If you’re interested in success, and if you’re interested in growth, you’ll find that process is actually freeing, not limiting. So many of the entrepreneurial types and lifestyle businesses think that not having processes freeing, and frankly, I’m pretty sure the opposite is true.
Growing a business requires a holistic approach that extends beyond sales and marketing. This approach needs alignment among people, processes, and technologies. So if you’re a business owner, operations, or finance leader looking to learn growth strategies from your peers and competitors, you’re tuned in to the right podcast. Welcome to the WBS podcast, where scalable growth using business systems is our number one priority.
Now, here is your host, Sam Gupta.
Sam Gupta 0:55
Hey everyone, welcome back to another episode of The WBS podcast. I’m Sam Gupta, your host, and principal consultant at a digital transformation consulting firm, ElevatIQ.
Without adequate planning, growth could fire back with chaos and confusion. As you navigate each stage of growth or inflection points, you will have an enhanced need to document your processes to discover bottlenecks and find areas for improvement. The accounting processes may also differ among manufacturing organizations and across geographies. Understanding these nuances and the need for process documentation will help manage your growth.
Sam Gupta 1:34
In today’s episode, we have a guest Randy Johnston from K2 Enterprises, who discusses why process documentation is essential to manage growth. He also touches on different manufacturing organizations and how process changes in these organizations with straightforward examples that anyone could understand without an accounting or manufacturing background. Finally, he touches on some of his secrets on what makes them be so efficient to be influential in the accounting and ERP community.
Let me introduce Randy to you.
Randy Johnston, MCS, has been a top-rated speaker in the technology industry for over 40 years. Inducted into the accounting Hall of Fame in 2011, Randy is listed as a top 25 thought leader in accounting from 2011 to 2020. His influence throughout the accounting profession is highlighted once again this year by being a recipient of the 2020 Accounting Today, top 100 Most Influential People in the accounting world for the 17th consecutive year. Among his many other words, he holds the honor of being one of the nine technology stars in the US by Accounting Technology Magazine.
Randy writes a monthly column for the CPA Practice Advisor, features for the Journal of Accountancy, and creates articles for both accounting and technology publications and the author of numerous books. He has started and owns multiple businesses, including K2 Enterprises in Hammond, Louisiana, and a Network Management Group Inc. (NMGI) in Hutchinson, Kansas. NMGI has supported CPA firms for over 30 years and is the largest managed service provider serving the CPA profession in North America.
His wife and four children enjoy many experiences together, including theater, music, travel, golf, skiing, snorkeling, and model trains. His experience as a college instructor, management and technology consultant, and advisor to the profession will be evident to you in today’s presentation.
With that, let’s get to the conversation.
Hey Randy, welcome to the show.
Randy Johnston 3:53
Well, thank you very much, Sam, and Good day to you and all your listeners.
Sam Gupta 3:57
It’s my pleasure to have you, and I’m super excited to have this conversation. Because of the kind of depth and insight you are going to bring, it’s going to be super helpful for our audience. Just to start off, can we start with your personal story and what you’re focusing on these days, Randy?
Randy Johnston 4:12
All right, happy to do that. And probably Sam, because I’ve been around a long time, the story will get a little long. And I’m gonna leave out a lot of details. But as it turns out, I’ve been doing technical work for over 50 years. So I’ve started programming in the early 60s. And that led to covering a lot of the big computers, mainframes, and minicomputers as I used to refer to it, IBM in the Seven Dwarfs, so it was IBM and digital and Burroughs and I’ve written code on all those platforms. And that led me down from mini computers into personal computers when they were first being created.
Randy Johnston 4:50
So a lot of the people that made the earliest of the personal computers, so Morrow Micro Decision and Osbourne, and all those guys who have known him for a long time, we wound up doing that and also wound up participating in the evolution of DOS and Windows. And then a lot of accounting software. So I had the good fortune of helping design, number of accounting software products used in North America and around the world today.
That really led me over to paperless. And then finally into CPA firms’ software. So today, I normally will tell people that I have infrastructure expertise, including the internet in the local area network, and then all these applications. And, frankly, because of the relationships, I know most of the CEOs, VP of development, and VP of Marketing, and most technology companies that you can name.
And in that light, it’s been a very interesting life. I do a lot of consulting on a regular basis around dominantly North America but have done work in Dubai, in India, and in Europe, as well. And our primary business is really twofold. I have a business called K2, where we produce continuing professional education in the US and PD in Canada for CPAs. And then, the NMGI business is consulting and managed services supporting CPA firms, banks, and healthcare entities 24X7 from Boston. So that’s a kind of a short version of what could be a very long story, Sam.
Sam Gupta 6:33
Well, that’s a very humble introduction. In fact, I was actually going to move to the next question. But before that, I want to bring one topic that is really important for your intro. So obviously, when I look at your bio and introduction, I cannot see anyone accomplishing what you have done, even though you have had a long journey. So let’s talk about some of those awards. Okay, so top 25 accounting influencers for straight-up ten years. How many awards do you have? Please tell me more about the awards. And how can one accomplish this much in one life? Please tell me.
Randy Johnston 7:11
Well, my wife points out to me, particularly since I’ve been home during the pandemic, that I don’t seem to meet a need as much sleep as she thought I did. I’m fortunate to really operate effectively on three or five hours of sleep. I know that’s not healthy, people tell me, but I’ve done it for years and years and years.
Frankly, from an award perspective, I really go into almost any situation, assuming that everybody around me knows more than I do. And I try to listen carefully and then make suggestions based on the experience. So you are correct. I’m in the top 25 thought leaders since 2011. I’ve been on the Accounting Today top 100 influencers in accounting since 2004 and nominated again this year. So we’ll know shortly if I’m included on that list. Again, I have outstanding technologists in the United States. And I could keep going on and on and on.
But the fact of the matter is, I am honored and humbled by the awards. But it’s not like I’m striving to achieve them either. So the bottom line is quite simple, Sam, you always go in just trying to do the best you can to help everybody around you. And recognize that what goes around comes around. And I very rarely ask for a favor. But when I do, the people that I’ve helped in the past are usually more than happy to jump in and assist when I make a request.
Sam Gupta 8:40
Oh, my goodness, I would love to help you. I mean, I don’t think you have ever asked. I was asking Randy. Could you tell me what your CTA is for this show? And you’re like, you know what, I don’t really have anything because I know so many people, I don’t need a CTA.
Randy Johnston 8:57
Yeah, well, and you know, I enjoy it, because I enjoy meeting people enjoy helping them solve problems. If I go back to my personal mission statement, which I wrote in the late 70s, as it turns out, I haven’t modified it much either. It’s to help as many people as I can use technology in the way that benefits them the most. That’s pretty simple. And you know, basically, I can listen to a situation and say, Alright, based on what you’re trying to do, here are the best solutions. I know, here are the best people I know, do an introduction and party on and you’ll have a pretty good living doing that.
So, you know, along the way, those types of philosophies have served me well. Because again, you get the opportunity to hang with a lot of really smart people that way, you learn from them. And the next day, you can act like you’ve known it for 40 years, and everybody thinks, wow, you know so much stuff. And it’s just because I am kind of like an elephant. I have a pretty good memory. And I never burned a bridge. Again, I’ll do anything I can to help people that are legal or moral. I tend to avoid things that I consider to be illegal. And I’m not the moral judge. But I don’t really try to assist people very strongly if they’re doing things that I would consider unethical.
Sam Gupta 10:19
Yeah. In fact, to me, when I talk to people who are on the top 100 influencer list, I get very different energy. To be completely honest, when I approached you, obviously, our podcast was not even live. And you responded to me right away. You were ready to do the interview, which was phenomenal.
I mean, for some people, it might be frightening to approach somebody like Randy. Obviously, you have a humongous accomplishment there, the new podcasters who are maybe starting. It could be a frightening experience for them to talk to people like you, people like Sarah Barnes-Humphrey, and I don’t know if you’re connected with her. She is a top 100 influencer in the supply chain space. We did an interview with her. There’s a lot to learn from her too. So I would highly encourage you to check out her episode. And I’m gonna include the link to our episode as part of this one.
Randy Johnston 11:12
Yeah, that sounds great. And so you know, everyday part I’m very, very, very pleased with.
Sam Gupta 11:17
Yeah, there’s so much to learn from you guys. And I’m blessed that I’m so lucky to have you guys as my guest. So now let’s move to the next question about the growth that I really wanted to cover, Randy. So tell me, what is your perspective on growth?
Randy Johnston 11:32
Well, clearly, I’m a bigger Pie Guy. So I believe that it’s not a matter of beating the competition, I think it’s a matter of doing the best you can possibly do yourself. And out of that will come new opportunities to serve more.
So when I look at growth, I’m looking at how we can serve clients best. And usually, I frame it with that thinking in mind, what’s services or products that our customers need? Or want, how can I provide that to them in the most seamless, easiest way possible, then the next thing that I’m looking at is how I can make the work environment of all my team members the most optimum, the most favorable, in other words, make it a great place to work. Then, I will look at the impact on the bottom line.
And what I’ve found through the years is the bottom line tight tends to take care of itself pretty well when you’re taking care of the customers. I typically will ask customers where I’ve got installation work done, if they know of other people that I can help with a common referral technique. In some cases, they say, Oh, no, in other cases, they say I’ve got a couple here. And so I’m very consistent about follow-up.
Randy Johnston 12:49
And I asked my team to be very consistent about follow-up. If you say you’re going to do something, your word should be your bond. You don’t need a contract for that if you say it, so it should be so, and so that’s another element of growth. Now, I probably can give even more formula along that line. But if you think about your, your listeners and how they are, they’re focusing on their own operations if they turn outward-facing rather than inward-facing, I think they’ll find the opportunity to grow as natural. On the other hand, when it comes time for working internally if you can optimize your processes, that’s a big deal, too.
Randy Johnston 13:28
I know that a lot of your listeners might be in manufacturing. For example, it is clear that process optimization through six sigma has changed the way the manufacturing world works. But I’m kind of a process thinker in general. So I use processes in all segments of my personal life and business life. And if you’re doing and following really good processes, it makes jobs easier, more repeatable, more scalable, and so forth.
So again, we could have another whole conversation about process optimization. And you know, I’ve been helping businesses with process automation for 30 years. In fact, that is an area now that I’m enjoying very much with robotic process automation, a technology to really make things happen with less human intervention. So the good news is most accounting software products today, most ERPs have processes in the systems. And when you’re going to buy a new system, one of the best things you can do is map your processes and use that gap analysis to select the systems that you’re going to implement for the next few years.
Sam Gupta 14:41
Okay, so what would be advisable for someone who is trying to map their processes for the first time, and they don’t know how to be organized, because mapping the processes sounds easy, but it can be difficult, especially if you don’t know how to go from point A to point B.
Randy Johnston 15:00
Well, through the years, I’ve evolved a process of teaching process mapping that takes about 20 to 30 minutes, maybe 50 minutes max, and enables people to do this. So I’ll describe it verbally for your listeners. And for you, Sam, and I’m going to talk about it in terms of levels.
Because if you think about airplanes that are flying at 30 or 40,000 feet, you have this super high view, the 40,000-foot view, basically is very broad statements about your processes level, you know, the next level down, the 30,000-foot view gets you a little closer. And then, as we go to level three mapping, we start getting into more specific processes. And then, at level four, we get very specific around.
Now, that probably a simple way that you can picture that is all of us deal with processes. I don’t know if you’re a big breakfast eater or not, or Sam, but most of us know something about how to make breakfast, even if we don’t like the meal. There’s several of us that will have cold cereal, or we’ll have oatmeal, or we’ll have eggs or whatever. And if you picture, you know, a level 1-2-3-4 mapping process of making breakfast, you would have inputs of, let’s say, eggs, and Canadian bacon and potatoes and so forth.
Randy Johnston 16:18
And maybe your level one map has just a simple statement, make breakfast, and the output might be scrambled eggs, or omelets, or fried potatoes or cooked bacon, for example. Now the level two map may be preparing ingredients, cook ingredients and serve ingredients. And so that’s still pretty high level. But if I take you down another level, notice that we could have something about each of the steps of making breakfast, for example, how to make toast or how to cook bacon, or how to make eggs.
And we could lay in a line out the steps on that. So perhaps for making eggs, it might be that you combine the ingredients and prepare them you stir the ingredients while cooking. And you serve the ingredients on the plate. And I could give you a lot more steps.
But the fact the matter is combining the ingredients probably requires a level four map. Because in that particular case, if someone’s never cooked eggs before, perhaps they have to have instruction, as you know, obtain a bowl. So you can crack the eggs. And, you need to have X number of eggs per person and what you put in there. They might not know that you put in salt and pepper. And in our household, we tend to do cream cheese.
Randy Johnston 17:36
And you know, so it’s all those detailed steps that we sometimes take for granted. Process maps are the same type of thing. There’s high-level level one, and then a little lower level two. Again, I call those the 40,000-foot view and the 30,000-foot view. Then you get down to level three, which typically does have a process map more like a flow chart. And then, in level four, you typically will use deployment maps, sometimes called swim lane charts, which really have a similar take, but it talks more about who does it, when they do it, how they do it, and so forth.
So the fact of the matter is you can talk through a process by simply asking questions. What do you do first? What’s next? What comes after that? And then what happens? And if there are exceptions, you can say, Okay, if that happens, then what do you do? All right, then what happens and, and so realistically, your process maps are single steps with decision blocks. If the ends are true, false is only binary are two answers, if you will.
Randy Johnston 18:38
And by the time you map that out, you will have your existing process. If you’re trying to improve it, then you might do a To-Be chart and define what the new process should be. Now, just simple guidance for your listeners. You know, my NMGI business, by the way, we’ve had for a few years. But I reduced and simplified my processes this past year down to about 181 processes. In the prior year, I think I was running off of 212 processes. And through the years, we’ve worked on different things to optimize our processes along the way for small businesses. It’s not unusual to have as many as 150 processes.
For manufacturers that I’ve worked with. We’ve mapped out nearly 500 processes 425 and one client case I’m thinking about, and we simplified their processes down to 350. That’s still that’s a lot of process maps, a lot of things to maintain it but when we optimize the process maps, exceptions, fault errors were reduced. And the processes were simplified. And we could implement those inside the accounting software too.
Sam Gupta 19:52
Interesting perspective. And I’m curious now because I don’t know how many manufacturers or distributors, especially in the lifestyle business ( some of the guests have defined the lifestyle businesses, anything below $25 million. Guests like Jim Gitney talk about this. He talks about the inflection points. There is another guest who’s coming to the show. His name is Nick Jackson. He talks about lifestyle business as well).
So I don’t know how many lifestyle businesses would actually have their process documented. And I can see so much value in documenting that because that’s how you, you will get to know if you have an opportunity for improvement. So what would be your advice to businesses that don’t document their processes at all?
Randy Johnston 20:39
Yeah, this is a very simple piece of advice, Sam. If it’s not in writing, it doesn’t exist. If you think you’ve got a process, and it’s not documented, you probably don’t have a process. Further, you can’t teach a process to somebody else if it isn’t documented in some form. So on lifestyle businesses, you know, a lot of times people think, Well, you know, we just kind of are loose and respond, and so forth. And again, I know a lot of lifestyle businesses.
But if you want to simplify your lifestyle business, that’s when you document your processes, because you realize that you have to work a lot less hard. So maybe this would be another way to say. If you want to work hard, don’t document your processes. If you want to work easier, document your processes. And I have learned in process mapping over the last few decades that the fact that matters is if you’re delivering a great client deliverable, there’s a lot of process behind it. And the laziest person often will find the easiest way to get the job done. So don’t criticize people that look like they’re lazy. They’re probably just being super efficient, as long as they’re always delivering a consistent product or service.
Randy Johnston 21:48
And if you think about shipping companies and the logistics of moving products, and we’ll just pick on the big boys here, the FedEx, the Airborne, the UPS. Those types of package delivery companies all over the globe, their processes are very tight and very optimized. And if we take another big distributor like Amazon, you know, they’ve refined the processes in their warehouses, the last report, I know 21 times, and today, they’re trying to use more robotic, more robotics in those warehouses.
Unfortunately, in warehouses where they’re using robotics, the injury rates are higher because the people have to work faster to keep up with the robots. And so yeah, they’re reflecting on those processes. But now, let’s take it all the way back down to the smallest of small. If you’re running a little home Etsy business, for example, you’re gonna receive orders, and you’re gonna have to ship orders. How do you optimize your shipping processes? How do you package things so they’re not damaged?
I mean, if you just start thinking about it, you’re gonna realize pretty quickly, you’ve got processes. And I know, this is really a business podcast. But the fact of the matter is, think about your personal life, you have processes that you do every day, and you do those processes over and over again. And if you begin to become a process thinker, and you optimize your processes, you can realize life’s a lot easier when I have an optimized process, and I waste a lot less time.
Sam Gupta 23:20
Yeah, I could not agree more with that assessment. To be honest, I mean, documenting does help because that actually helps with reflection. If you don’t know what is going on in your processes. And if you’re never going to document, it’s going to be tough. And especially if you have multiple people in the team who are collaborating on the same process, they are probably going to define the process the way it feels comfortable for them. So you are never going to have a sort of decentralized process overview. And because of that, there could be a lot of issues,
Randy Johnston 23:51
A lot of issues, you’ll have dropped balls, you’ll have contingencies, you won’t have a team effort. You’ll have a bunch of individuals. I don’t know if you’re much of a sports fan but just think about the concept of a team versus individuals. And you know, in most team sports, if there’s no superstar unless they know how to play as a team. That team is going to be successful. So, this business is, in that light, a bit of a team sport.
And yes, you can have individual sports. Let’s just pick on Golf as an example. But the fact of the matter is that even for an individual sport, like Golf, there’s a lot of team players that make it possible. It’s not like you go out. I mean, how many of you manufacture your own balls for any sport? They cannot. You might make your own arrows if you’re an archer. You might make your own darts if you throw darts. But most of us don’t manufacture our own soccer balls, for example. It’s just not what we do. So that’s a little bit of stretch there.
But I do believe if you’re interested in success, and if you’re interested in growth, you’ll find that process is actually freeing, not limiting so many of the entrepreneurial types and lifestyle businesses think that not having processes freeing. And frankly, I’m pretty sure the opposite is true.
Sam Gupta 25:12
Okay, amazing. And I actually wanted to talk in a bit more detail there with the examples that you gave. They’re so exciting. I wish I could talk for much longer on that topic. But we want to make sure we are covering the other important topics as well that we wanted to cover.
So I know that we wanted to cover the different manufacturing types and how the process is going to vary in those manufacturing sales. And also, you mentioned that geography is also important from the process perspective. So how North East is going to be different from the West. So would you like to talk about those two topics?
Randy Johnston 25:48
Yes, Sam. So let’s pick that up for manufacturing businesses. There’s a spectrum of manufacturing styles. Most experts claim that there are seven different styles. And that ranges all the way from discrete manufacturing on one end to continuous processing or continuous manufacturing on the other end. If you back up just a little bit, batch processing would be a more limited style of continuous. And if you step through from discrete, you’re going to find made-to-order and make-a-stock and so on.
Now, it turns out that there are products that are made to satisfy these different segments. So there are products whose original design basis was for discrete manufacturing, there were some that were made for batch manufacturing, there were some that were truly made for continuous or process manufacturing. And, if you’re going to buy products, you need to match the product to the style of manufacturing that you have.
Randy Johnston 26:57
So let’s use as an example, the Milwaukee area or down into Indiana or Ohio or up into Toronto, you kind of the center part of Canada in the US this traditional heavy manufacturing of some people called the Rust Belt, because it’s been around so long, and some of the manufacturing facilities have deteriorated. There’s a lot of capability that’s been done there. And a lot of very innovative work in manufacturing has occurred there.
So, if you think about car manufacturers and isn’t as an example, and your listeners may not know, but I’m from Kansas, which is the center part of the US over in Wichita. Most of the general aircraft companies have bases there. So Learjet and Boeing and beach, and Cessna, and so on.
So there’s a lot of aircraft manufacturing. And in Wichita alone, there’s a little over 200 machine shops that support the Boeing operation, the 737 fuselage operation there. The same thing has happened over in Charleston with the 787 Dreamliner. In Charleston, there were not that many machine shops to support aircraft. But once Boeing set their plan up there, again, there are 200 plus job shops.
Well, across the Midwest, if you will, there are hundreds, I would probably venture to say 1000s of job shops that do particular functions for these various large-scale manufacturing operations.
Randy Johnston 28:31
And each of those job shops actually does most likely make-to-order or other types of operations. And so the scale that’s involved here also determines the size or type of manufacturing software you might buy.
So on my website, which is accountingsoftwareworld.com. I had maintained that accounting software site for 35 plus years at this point because I actually created it before the internet was very popular. Then it got a lot easier by the time we hit the 90s. And we started seeing a lot more of the web browsers and things like that.
But no, I have a model of a pyramid that describes five tiers of accounting software. I like a number of tier one through tier five. So tier one is enterprise. Tier two is large SMEs, and tier three, four, and five, the same type of deal. And my rule of thumb is, if you’re smaller, you’re probably going to use a tier five product that’ll probably handle you up to one, maybe as much as $5 million in revenue. A tier four product is likely to get you from one may be up to $50 million, maybe as little as $10 million.
Randy Johnston 29:47
The Tier three products will tend to do $10 to $100 million, and the tier two products will tend to do $100 million up to a billion and then a billion-plus. So it is quite normal that we could look at products that fit different tiers. I will call a few by name, Exact or Acumatica or Epicor or Open Systems or Macola or Job Boss or Deltec or Syspro. Each of these different types of products has different capabilities. And when you get up into upper-tier two and tier one, that’s where you get your Infor, and your SAP, and Oracle’s.
So the real question is, how big are you today? How big would you like to be? How big do you think you’ll get over the next ten years? Because generally, if you implement them in manufacturing or an accounting software product correctly, you’ll be able to use them for upwards of 10 years. And frankly, the only reason I switched at the end of 10 years is for technology advancements if the accounting vendor does not keep up.
Randy Johnston 30:52
Now, Sam, I think the second part of your question was about style differences. So in that particular case, notice that the way we do business in the Midwest versus the way we do it in the East, or the West, or for that matter, the South, North, in other words, the various areas, there’s a bit of culture around that.
And in some areas of the country, you have very legalistic contract compliance that has to be done. In other areas, it’s much more of a handshake style of business, a relationship style of business. Now, business is competitive. And I don’t know that some of the relationships are honored as much as they may have been in the past.
But the fact of the matter is, if you’re trying to grow your business, you should be able to make a relationship. And remember that if you meet or exceed what you say you’re going to do, you’re more likely to be invited back. So the way I usually talk about that is I like to underpromise and overperform.
Randy Johnston 31:54
So you want to go beyond what the client expected. And some would argue, well, that means you’ve got excess costs, and you’re throwing extra labor or material in a way that you shouldn’t. And I would argue the opposite. What you’re doing is you’re delivering a higher value product or a higher value service, and you’re less likely to be offset by your competition.
So if, in fact, it’s an all-out bidding war, perhaps you’re not in the right segment. Because if you have the very specialized capability, or you can evolve and develop that, you’ll wind up with a niche market. And I’d like for you to think about what’s your specialty? What do you like to do? Is it something you’re passionate about? How do you grow that?
So I’m actually picturing three different manufacturers for our conversation. I’m not going to name them. But I can see that your listeners use all three of these manufacturers’ products because they dominate their market share. And I believe it would be impossible for your listeners not to be using their products. But you probably don’t even know that they exist because they’re large-scale manufacturing that fits in the supply chain in products that I think all of us use. That’s kind of interesting because when I start, if I’d start naming them, you would most likely never have heard of them. But how did they get there?
They focused on a single area. They got better and better at it. And they continue to just dominate the market. In a few cases, they’ve made acquisitions of competitors. But in most cases, they’ve grown their businesses organically, and they do not have significant competitors. And they just continue to fly under the radar, making exceptionally good profits running a very interesting, we’ll use your earlier words, lifestyle business, it just happens to be a big lifestyle business.
Sam Gupta 33:50
That’s an amazing story. And I wish I could check them. To be honest, that’s going to be so inspiring to know about a company that we do know, but we are using their products on a daily basis.
Randy Johnston 34:02
As a matter of fact, I can guarantee it. And it’ll be an interesting conversation. But even I was just describing that I’m actually picturing another three or four or five providers that are in different parts of the US market, that I got the privilege of meeting them because I taught their CFO, continuing professional education.
And then they pulled me in to introduce me to the business and to help optimize it. It’s like, wow, this is a really fascinating business. I didn’t know you guys existed. And then when I realized what their sales volumes are, and their margins are, it’s like, wow, it’s a very interesting business. And, again, I would just say for, for one example, in Texas, I can almost guarantee every one of you are using products that have been handled by that particular business. But it’s a relatively small operation and a very interesting setup, and because it’s nondisclosure, I can’t tell you what all it is, but it’s like this is very, very cool. I didn’t even know such a thing existed until I was invited indoors.
Sam Gupta 35:05
Yeah. And the beauty of, you know, podcasting is that we get to know a lot of businesses and a lot of guests, and I would not have known them if it were not for podcasting. So I love this. On that note, I think, you know, it’s about the time right now. Do you have any last closing thoughts?
Randy Johnston 35:24
Well, I know a lot of your listeners are interested in growth. And with that in mind, I would suggest that you be very clear about setting your goals. That’s very common advice. But when you set your goals to make sure that you’re very passionate about what you’re choosing to do. Some can take a hobby and turn it into a business. And the fact of the matter is, the goal is not to make tons and tons of money.
In my mind, the goal is to do something that you love so dearly. You would do it without getting paid for it and that you do it so well that people are glad to pay you for your expertise, products, and offerings. And so be thoughtful about it may take you a while to come up with that. But listen to your potential customers. Listen to your gut or heart, depending on which way you want to say that.
I think you’ll find a new opportunity because new products are being developed all the time. The opportunity is great, whether it’s local, national, or global. And you may be one of the next big players in the market, even though today it’s just a sparkle in your eye and an idea in your mind. Just create it and share it with others.
Sam Gupta 36:44
Okay, amazing. That is such beautiful advice. And I’m so lucky to have you, Randy, on our show. Thank you so much for your time.
Randy Johnston 36:52
Pleased to do it, Sam and I wish you and all of your listeners’ ongoing success and good health.
Sam Gupta 36:59
I cannot think of guests enough to come to the show to share their knowledge and journey. I always pick up learnings from our guests, and hopefully, you learned something new today. If you want to learn more about Randy, please visit randyjohnston.com, accountingsoftwareworld.com, nmgi.com, or K2e.com. Links and more information will also be available in the show notes.
If anything in this podcast resonated with you and your business. You might want to check other related episodes, including the interview with Brian Goffenburg from VitalHub, who touches on the differences between accounting in a public and private company and why auditing is essential for most companies. Also, the interview with Wayne Sadin, who brings a unique perspective on why business processes are more important for growth than individual business systems.
Also, don’t forget to subscribe and spread the word among folks with similar backgrounds. If you have any questions or comments about the show, please review and rate us on your favorite podcasting platform or DM me on any social channels. I’ll try my best to respond personally and make sure you get help.
Thank you, and I hope to catch you on the next episode.
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