Lois Sonstegard:

Welcome everybody to Building My Legacy podcast. Today I have with me again Chad Peterson. He is considered the number one business broker by a number of sources. He’s been talked about in Forbes magazine, Ink magazine. He buys and sells companies. He has written two books. One is, “Swinging Doors”, which is about buying and selling businesses. The other talks about “From Blue to White: A Working Man’s Guide to Self-Employment.” He’s done a lot of thinking about business, and what the structure is of our business.

Lois Sonstegard:

Today what we’d like to focus on is what’s happening to our companies and to our employees with what’s happened with COVID? I think we are all changing as people. We’re learning new skillsets. We’re looking at life differently perhaps. Relationships are shifting. Expectations are shifting. I’d like to talk about that. What will the workplace be like when we come back? How will it be different? Chad, you have done so much thinking about business. What is your perspective?

Chad Peterson:

Well, thank you for having me on again. I’m glad to be with you. My perspective is… There’s a lot to my perspective on this. I have given it a lot of thought. I think let’s start with the obvious. The obvious is, is that this world’s in panic. In my lifetime, I don’t know when I’ve actually seen this much panic. We had a lot of panic when it came to the Swine Flu. We had it with Bird Flu. But nothing like this. I believe that if you really look at the numbers, it can be scary no doubt about it. These numbers that you look at as far as the death rate are pretty staggering with just how contagious this disease is.

Chad Peterson:

The reality of it is that the vast majority of people are going to survive this. There will be a lot of deaths. It’s a very scary time for all of us. I do believe that while we need to respect the disease and we need to respect the consequences of transmitting it, and we need to be vigilant in not transmitting it carelessly, we cannot let this economy flat line like it has. I think that points to your question is, how is this changing things? Right before I got on with you, I had a telehealth session with my doctor. It was only 15 minutes long because he was late getting on. I asked him, “Are you scared of this?” He said, “A little bit.” He said, “You know, it can kill younger people. They don’t really understand why it is killing some people and it’s not others,” he said, “But underlying health issues are a concern.”

Chad Peterson:

So, when your own doctor says, “Yes, be careful of this,” and he’s not a guy that would cast fear out there for no reason. He’s trying to let me know definitely, “Respect this thing.” What’s happening is, maybe one percent or two percent of people will die, but about 95% of this economy is already dead. We’re at a 35% unemployment rate in a lot of areas. That’s staggering. I think that we need to be looking at what the consequences of this are. I think that we were already in a position where face to face was kind of dying. One of the reasons that I do so well is because I haven’t given that up.

Chad Peterson:

I have no problem putting a suit on and driving up to a business and shaking a guy’s hand and saying, “Hey, I’m here. I’m here to do business.” And there’s something to that. While the Internet and Facebook and LinkedIn, and Instagram all these kinds of things have sent most people hiding behind a screen, well it’s not very effective marketing. If you want to go out there and you want to really be successful in business. It’s a contact sport. You’ve got hundreds of millions of people hiding behind a computer screen, trying to acquire business in some fashion.

Chad Peterson:

It’s not really effective. Now here we are, and this disease is forcing us all to go further into that technology. How do we perform with this technology and how do you maintain in business and stay relevant, and stay in front of your customers and still create commerce by going further behind the computer screen. I think that’s where we’re at. The solutions are a different situation, but I think we all need to be facing the fact that we have to do business differently. Again, like my doctor, I’ve got two appointments today and we have to do it by video.

Chad Peterson:

I think that if video was important, it’s become 100 times more important now. I think you’re doing well, Lois. You’re doing these videos and you’re bringing it to the audience, and you’re staying in front of the screen bringing real time information to your audience. I think that’s a good example of what we should be doing.

Lois Sonstegard:

Back to what you were saying relative to being connected to people, one of the challenges I think is it is a different way of building relationships when you’re doing it on screen. I think you have to put yourself out there even more perhaps. You learn to read people more quickly. I don’t know. What’s your thought? There’s something about… Meeting people was essential because we wanted them to be real. We wanted to connect. The issue is, can we do that digitally? If so, how do we do it?

Chad Peterson:

One of the things that I do to connect with people is again showing up face to face, handing them my business card, giving them a less than one minute explanation of who I am, what I am, and what I do, and how I can help them. That old 30 elevator speech, which is never 30 seconds. It’s probably a minute. I sit with them. I invite them to go to lunch. We talk about not only business, but their life, their family, what they’re into. That’s what I do, because I’m helping people move their family and their businesses to the next level. I can’t just be transactional, otherwise I don’t get close enough to them in order to earn their business.

Chad Peterson:

You can’t go to lunch with anybody anymore. You can’t shake hands. You can’t be face to face. So, how do you do that? I think those that are already doing podcasts like you are, people that are familiar with the technology, they’ve got a Zoom account, they’re using Zoom or Skype. They’re reaching out to people, getting people in front of them and able to make that connection. However, you can make it through a computer screen. It’s interesting, if you talk to any photographer or if you talk to anybody who plays around with video or even if you’ve talked to a movie producer, they’ll tell you that people act differently whenever a screen’s on them. It’s almost impossible not to.

Chad Peterson:

I think with that being said, it’s kind of like if somebody has a camera, all of a sudden somebody will do something goofy in front a camera. They don’t even mean to do it. It’s something with the human psychology of once you’re being watched and you think something’s going to be snapped, you do something silly. I think now above all, it’s how do you be authentic, transparent, and how do you connect when we are hundreds, if not thousands, of miles away somehow talking to each other through cords and mics. I think the more authentic you can be, the more deliberate about your intentions and the more human connection that you can create is going to allow you to impart trust that otherwise would be met in a face to face meeting if we were able to do so.

Lois Sonstegard:

Right. You know, that is so interesting that you talk about that because authenticity, we’ve talked a lot about that. You read about it. Practicing it is not as easy to do, is it? And so… Go ahead.

Chad Peterson:

Yeah, well I think that there’s one thing to play the part. I think that some people have discernment to see through it and some people don’t. I do. I have discernment. Something tells me what’s real and what isn’t. Call it an internal compass, or discernment, or whatever you want to say it. I know when I’m talking to somebody if they’re being genuine or not most of the time. There’s always somebody that can slip by you. Those that are really dedicated to what they do, like I am, and like you are, real dedicated to it… I can’t wash it off of me. I’m not here to put on my business hat just to get something done, just to say I’m here, to show up or whatever.

Chad Peterson:

This is what I do. This is who I am. It’s kind of like somebody who doesn’t wear a suit and tie. As soon as they put one on you’re like, “Man, what are you doing? You don’t look right. You don’t look right in that.” It’s because they’re not really owning who they are. You have to own who you are. You have to wear it. You have to be it. If people are in the business world faking authenticity, it’s not going to work anymore because anybody can put on their corporate face for 30 minutes or an hour to show up and do something, but that’s not going to work, especially now being on video. You really have to shine through this camera as somebody who’s a subject matter expert, somebody who knows what he or she is doing, you’re committed, you’re authentic, you’re trustworthy. That’s the biggest thing, is trust.

Chad Peterson:

Why would I do business with you? That’s really the question, isn’t it? Why would I work with you? So, you have to own all those values, you just can’t pretend them. You have to be who you are.

Lois Sonstegard:

Chad, when you think about some of this… Right now I think companies, as they come back to work, they’re going to be sorting. Where will I put my money? Resources will be perhaps a little bit more scarce. Will they put it into the traditional lease? Will they put it into employees? Will they put it elsewhere? Do you think that how those decisions are made, will the brick and mortar be as important? Will our workplaces change? What are your thoughts on that?

Chad Peterson:

I think that it depends on the industry, for sure, but I think you’re going to see a lot of restaurants go out of business. I think they’re just not going to be able to survive it. They’re operating on too low of a profit margin as it is. If a restaurant makes 12-15% margin, they’re doing well, but that’s over a year’s time. That’s also over several months being real low. So, a lot of their cash flow during their higher season gets them through their lower season. If this thing keeps on going too much longer, they’re not going to be able to survive those things. They’re going to be going out of business.

Chad Peterson:

You’re going to have your main staples. You’re going to have big box hardware stores. You’re going to have car dealerships. You’re going to have the Walmarts. All those things will survive, but all this retail that you see right now that was already… Let’s face it, retail was already really struggling. Amazon, eBay, they’ve taken over retail. Why wouldn’t they? I mean, you click a button, it’s on your doorstep in five hours or whatever they do. It was already dying, and now that human contact is a risk I think retail is all but over. I really do. I think the restaurants that are supplying us food will still remain, but again, they’re going to be at a lower margin.

Chad Peterson:

A lot of people don’t know this, whenever you contact a restaurant to order-in food, if you order through Grub hub, or you order through any number of services, that restaurant pays up to 30% of that in order to send that food to you. You’ve got to figure, if they’re only making a 12-15% margin, with a lot of their items they have to do better on their profit margin on some of their items because the actual service to deliver the food is costly. I’m not encouraging people not to call Grub hub or order on Grub hub, but I am encouraging people if you want to support your local businesses and people that you use, cut out the vendor and go direct to them because you’re going to give them 20 or 30% back in their pocket by ordering them. So whether it’s a pizza or whether it’s a sandwich, or whatever it is you order from, as far as business goes money will be tight.

Chad Peterson:

I think the ones who survive this, depending on how long it goes, this could only be a 45 day longer deal. Everybody will be bruised by it. Everybody will be scared and nervous. But if they can make it through to the other side, they can be one of the last men standing so to speak because a lot of competition will go out. That’s the positive side of this. Yeah, some people will perish in business. Those who survive, such as say Rockefeller, the reason Rockefeller did so well is because he survived The Great Downturn. Other people didn’t. So, people in my industry, in MNA, a lot of people will perish and I believe that I will come through this just fine. I’m just fine. A lot of people will have fallen off and not been able to survive this disruption.

Chad Peterson:

I think survival is key. You asked another question, where will the money go? That’s a good question. I’m not so sure I really know the answer. If I had to guess, I think money is going to be going to their staff to keep them open. Everybody is going to have to chip in. If you were making $15.00 an hour working for a company, you might be hired back at that initially, but at least you have a job. I think you’re going to see a lot of that. You’re going to see a lot of employees that say, “You know what, I was making X amount of dollars. I was making $20.00 an hour,” and I think the employers are going to say, “Hey, for a while I got to put you at $12.00 an hour. We just have to survive together.”

Chad Peterson:

I think you’re going to see business owners that say, “Hey, when we get back on top I’ll make it back to you.” I think there’s going to be a reverse pecking order here, where the employees are showing loyalty to their employer to get through this. I think you’re going to see people come together in that way, if they want to keep their job. If they really like the people and love the people that they work with, you’re going to see a lot of that.

Lois Sonstegard:

Chad, to me what that says is the companies that are going to do well are the ones that have already established a trust relationship with their employees because you’re banking the employee, thinking that what you’re doing is credible, knowing that you’re credible because they’ve experienced that in the past.

Chad Peterson:

Yes. Yeah, I’ve got a friend of mine who owns a jewelry company. I won’t mention the name because maybe he doesn’t want me to. Actually, he made this ring. A beautiful ring. I just got that two weeks ago, and couldn’t be more proud of it. He’s had people for years. He’s had people working for him for 15, 16 years and he pays them really well. A jewelry salesmen making $100,000.00 a year. He’s a guy who really knows how to cultivate loyalty. Two of his main guys came to him and said, “Gene, I’ve pack ratted my money and I’m fine. If somebody else can’t pay their bills, give them my paycheck.” That was two people that did that.

Lois Sonstegard:

Oh, wow. Wow.

Chad Peterson:

If you have a tight knit group where you’ve had a culture, and back to authenticity, not inauthentic culture but a real culture where you guys are a company and you’re a team, and you care about each other, I think you’re going to see that really pan out for those people. I myself am in that position. I’ve got people that work for me that they’re not going to anywhere, and I’m going to do my best to take care of them during these hard times. I was surprised by JP and I shouldn’t be mentioning their names, but they came to him and said, “I’ll just give the other employees my paychecks,” and that was pretty profound I think.

Chad Peterson:

What they’re doing is they’re… He had to let his employees go, and they are going to get unemployment. Whatever the difference was while they’re on unemployment, and what it takes for them to pay their bills, Gene is going to take care of them whenever this gets back to normal. Whatever the disparity between what the state will help with, which will ultimately have to come from the top of the government, because the government’s going to have to step in and supply the states with the amount of money to keep people going, otherwise everything is going to fall flat. Then Gene is going to make up the difference between what they pay and what their bills cost.

Chad Peterson:

So, if in the meantime your $2,000.00 of a difference between your paycheck and what your bills are met, he’s paying that until it comes back online and we’re good. I think creativeness and loyalty are just as important as anything else throughout this time, with the culture of companies.

Lois Sonstegard:

Right. You had also said something about we’ve hit kind of two ways of looking at employees in the past. One has been really building those relationships. The other has been more of a burn and churn, a sense that I can keep people more on their toes, I can keep a fresher, stronger environment if I just keep churning. What’s your sense in terms of what’s going to happen there?

Chad Peterson:

I think those companies that are turn and burn, I think they’re going to fail epically. I think that necessary jobs are going to be, at least in the short term, swallowed up by those that are willing to get back to work even after the imminent threat of this disease is over, which I think the imminent threat… My prediction is 45 days or so. This thing has really slowed down. We’ve done a really good job as a nation. I think the medical staff has really stepped it up. They’re working tireless hours and they’re helping people survive through this thing.

Chad Peterson:

I think as a country, even though we’re pretty infected right now, we’re more prepared for it. I think part of Italy’s problem is they just weren’t prepared. They didn’t even know what the hell was going on. People were just dying. So, we got it. We were third or fourth in line to get it, and by that time we were a little more prepared. I think even after the imminent threat is over, I think you’re going to see a lot of people going, “I’ve got to work.” Those who are willing to go to work are going to take up the jobs of those who are still hiding from the virus.

Chad Peterson:

I think there could be a change of hands with the jobs if people aren’t ready and willing to go back to work and risk getting infected, but I don’t think those turn and burn companies can rely on that. I mean, think how long it takes to hire people and train them, and get them doing exactly what you need them to do. It’s not easy. It’s hard. It’s hard to not be able to pay your bills because things have gone so far down in this virus, and then go down to a skeleton staff, if not no staff, and then rehire everybody and get everybody marching at the same tun. That’s almost impossible.

Chad Peterson:

Those who have cultivated loyalty and trust, and integrity, and a family-based type business, I think they’ll be fine. The turn and burns, I don’t think they’re going to make it.

Lois Sonstegard:

Interesting. Chad, I want to [inaudible 00:23:39] and here, and then come back and talk about… So, the economy will be changed. Money supply, access to money is probably the more accurate way of saying it, will perhaps be different. We’re going to come back in the next segment to talk about that. Thank you so much for sharing your thoughts about what will happen to our workplaces and our businesses as we come through this. Thank you so much, Chad.

Chad Peterson:

Thank you.