OWEN: Hi, my guest today is Frank Lanzkron-Tamarazo, and he is the managing partner and founder of Chazzano Coffee Roasters. Correct, right?
FRANK: That’s correct. Thank you.
OWEN: Frank, thanks and welcome to the show. This show is all about getting entrepreneurs like yourself who have been able to systematize your business and have it run without you successfully. And not only will we get to share the results of what you experience as a result of doing that but we’ll also share what you exactly did to do that. Let’s get the listener excited to stay all the way to the end of the interview. Let’s start by talking about what are some mind blowing results that you now experience as a result of going through the process of systematizing and automating your business?
FRANK: The main thing is that I have so much free time to grow my business to sell and to really look into different ways to grow my business and my life. I have more time to spend with my family, I have date nights with my wife, and I could do things like playing classical guitar, sing, and writing books. I love writing books.
OWEN: That’s awesome. Let’s go in talking about how has your company been transformed as a result of systematizing your business?
FRANK: It’s a stronger business because it doesn’t need me anymore for the day-to-day. A couple of things have happened recently that would even help more. One is closing on a large bank loan that just happened. But if I’m not spending the whole day roasting coffee or making beverages I could spend the day on looking at our different target market, how to grow revenue on different parts of the company. And it’s a stronger business when the employees have greater control of what happens from day-to-day. So one of my greatest… It’s a small thing but greatest achievement is a regular customer came in and said, “I have this extra refrigerator that I don’t need,” on top of the counter. And my employees said, “Hey, we’ll give you $100 credit for it and it’ll put a couple of bucks in your pocket and we’ll have this new refrigerator.” And that’s how it happened. They didn’t call me at all. The greatest thing is that it’s been transformed because I don’t have to be called for the small things. They call me for the big decisions.
OWEN: And that’s just a concrete example of how your employees now can make decisions without you having to even be there, so that’s great. How will you say your personal life has been transformed as a result of systematizing and automating your business?
FRANK: Well, I’m able to go on vacations. I just went on a Passover vacation for about a week and a half, and the business did not call me at all. No one called me. It was as if I did not exist. But I came back and everything was great as when I left it. There was no change except the positive change that we did, numbers that were similar to Christmas numbers, and I have more time for family time. I don’t have to think about the business, whether or not I can go on vacation or not. It always has to do with financial but I could take off whenever I want to.
OWEN: And since you have systems in place in your business I’m wondering what will you say is the longest time you’ve actually been away from the business, just a test to see how strong it can be without you have to be there.
FRANK: The longest has been three weeks, and one of those weeks was in Hamburg, Germany, out of the country, different time zone. And the company was actually stronger than if I was there, because I was not doing sales calls, my employees had already set-up three sales calls for me for my return. I taught them what they needed to know. I gave them the strength to make decisions, and I benefited greatly and the business benefited greatly for my being away for three weeks. This summer I’m going to be away for seven full weeks on the East Coast, and it’ll be the same. The business does not need me as much as it did when I first started.
OWEN: That’s awesome. Let’s give the listeners some context as to what your business is all about. What exactly does your company do and what big pain or problem do you solve for your customers?
FRANK: We’re a coffee roaster. We roast coffee fresh to order, single origin specialty coffee, the highest level of coffee you can get for over 220 wholesale accounts, restaurants, cafes, offices, specialty stores like wholefoods, Lufthansa, all of those different accounts. We also have an upscale cafe. People can have a coffee beverage. We have tea, we have hot cocoa. And the biggest pain is that people who love coffee having my coffee enriches their life. That’s what it’s really about. And it’s solving the customer pain when you go through an awesome restaurant that has great food, great customer service, and the last taste on your tongue of the coffee should be as awesome too. And so that’s the customer pain that we truly solve.
OWEN: How many full-time employees do you have and even part-time as well?
FRANK: We have five full-time right now, two part-time, and one part-time delivery person.
OWEN: And is the company profitable? What was last year’s revenue and probably what do you expect to do this year?
FRANK: Yes, very profitable. And we’ve been growing by 20%-25% over the last three years, from year-to-year. And so there’s incredible growth. And with that incredible growth comes incredible pain.
OWEN: Can you share a range of what the revenue is? I’m just curious.
FRANK: A couple of years ago it was at 400 grand, and then it went up to 525 grand, to 625 grand. And this year we expect 750 to 800 grand.
OWEN: That’s awesome. Good growth. Take us back… The thing is we’ve shared the results you’re enjoying right now is the result of systematizing and automating your business, but I’m sure it wasn’t always like this. Take us back to when the business was not systematized and automated like it is now. What was wrong with it?
FRANK: The problem is when you first start out, you can read every book, you can talk to every business advisor, but you really don’t know what you need until you need it. The problem was before we were able to systemize, before we knew what to do we were growing tremendously. We went one year from three wholesale accounts to over 50 the next year, over a hundred. And so it kept growing in some ways too fast but fast enough. And there’s so many different moving parts in your business. So dealing with all those different parts not knowing what’s the best system until you do it and then you fail it’s impossible to put those systems in place when you first start in the beginning.
OWEN: So you mentioned during the pre-interview that no one could tell you how to run a coffee rotisserie. Talk about that.
FRANK: No one could teach you that because every business is completely different. We roast coffee fresh to order. We give away our coffee after three weeks to homeless shelters. No one else does that. We ship our coffee all across the country. We have a Carefree Coffee Club. We don’t know how customers are going to react to our coffee until they do. When the company is growing at such a quick clip that’s when you have to say you’re not going to be able to sustain this unless you systemize things.
OWEN: You capture that process to deliver the experience I guess. And then you also mentioned something about you can’t know the cycle of the business, this was during the pre-interview, something about the cycle of the business where you said your first customers in 2009 was fantastic, but what happened in December?
FRANK: The December of 2009 was phenomenal. And Christmas is always great for a business like mine that has wholesale, retail, give boxes, all of that. And so we had such a phenomenal Christmas, and then January is like a ghost town. No one’s there. We’re only opened about two and a half months at that point. So people knew about us but not enough. And so my goal was to systemize my business so well. The problem, the pain that we had was that January and February in retail in historically very low and poor in business. How do I change that? And so I had to do things to systemize my business so that every January and February the fall off from December would not be so bad.
OWEN: So more predictable flow of customers regardless of the month you’re in. Okay.
FRANK: I work in August and plan on what new business I would do in January and February. Would I do special events like coffee company parties, or doing more demos, or push myself out and do sales calls in November so that by January we have more business.
OWEN: Another issue you mentioned during the pre-interview is something about having an issue with shipping coffee around the country. Talk about that.
FRANK: When you first started out everyone ships coffee across the country. It’s a huge business now and almost everybody all across the across the country, so how do you do it, how do you carve out market share when you first started out? Part of it is giving out free shipping. But there’s no booklet about how you want to do that. How do you solve customer complaints when something is shipped out and it doesn’t get there? How do you solve that, and that is really particular to your business. We had to spend years really of reinventing ourselves with shipping across the country to figure out what really works with our flow.
OWEN: You also mentioned about the issues with inventory where someone bought the inventory online but then in the shop you don’t have enough to deliver.
FRANK: Yes. The problem is that we sell coffee so fast, we have such explosive growth. And our inventory wasn’t systemized because I’d put it online on my shopping cart that we had a certain coffee, and it would sell out at one day and then I have all these orders for coffee that they wanted that particular coffee and we already sold out, it was a day. So we had to systemize that, put only certain coffees on there, coffees that we knew would last at least a week before we put it online.
OWEN: Okay. What were some of the lowest points that you had then and something that everyone was the breaking point, they’ll be like “Hey, I have to change around my business,” just stuff that comes to mind?
FRANK: The biggest problem is my wife and I were sitting down during a sumptuous holiday, and we’re closed on Jewish holidays, the business. I’m an observant Jew. We realized we were lamenting where we have the best business around, people love us, we have so many wholesale accounts, we’re winning best coffee shop in Detroit online every year. We are the rock stars in the area but we weren’t making money. We’re losing money. And so that was really the turning point where we said, “We must change things.” Because it’s not enough that the customers are happy, the owner, us, we need to be happy and living happy lives.
OWEN: I totally understand that. Let’s jump to the first steps. I want to know the specific steps. You figured out you had to change things around and you had to systematize the operation. But what was the specific first step you took towards systematizing the business?
FRANK: It really had to do with looking at what I did for the business, and what my wife did for the business, and slowly chipping away from that. I first looked at what my wife Lisa did. She was opening up the shop at 7 o’clock in the morning. She was delivering coffee sometimes from 6-7 am to 7-8 o’clock at night all over the area. And so chipping away slowly, getting to a point where she’s no longer doing any delivery at all. The answer to your question really is looking at the totality of what we did and slowly chipping away at all of those different pieces, until we can kill ourself off from our business.
OWEN: So it’s kind of like looking at the entire thing and keeping track of… You can’t even know what to kill until you keep track of what you did in the first place. Now you have that full list, then you can…
FRANK: It has to be small steps. It doesn’t happen overnight. It would be awesome if it happened overnight. But there are so many different aspects to it. So we worried about delivery, if we give that to someone else, it’s almost like sales calls. They are the face of the business, whoever’s delivering coffee, who find someone that was as responsible as my wife Lisa who could deliver the coffee and that the wholesale customers would be happy about that. And then there’s the financial considerations that you have to think about. You don’t pay yourself the right amount when you’re the owner. And so now you have to pay an employee to do something and you have to treat them well. You can treat yourself poorly but you can’t treat employees poorly. So that’s a major consideration as you’re chipping away. So you can’t chip away everything or you’ll be in financial ruin.
OWEN: And so what was the second step you took to systematize the business? I think during the pre-interview you mentioned something about… How did writing job descriptions play a role in this?
FRANK: The first thing is writing the job description, but it’s also really, truly understand what do you do for your business. What are the necessary things that you do that no one else will do? And being honest with yourself, because we all think that we’re irreplaceable and we’re 99% wrong that there are a very few things that at a certain point if it’s a really healthy business, very few points that you really need to take care of yourself if you’re doing the business right. So also taking care of the financial responsibility of the business. It’s funny to say that because you would expect a business owner to do that. But we often dig a hole in the ground, and put our head and stick our head in there and hide from that because when the business is not systematized then there are so many bills to pay, our cash flow is poor. And so we don’t want to open up all those envelopes for all these different bills that are coming in all the time. So one of the biggest thing is to sit calmly and start looking at the financials, looking at your PNL, profit and loss statement, and your balance statement and saying is this a healthy business.
OWEN: And you also mentioned during the pre-interview about how getting your employees involved, you said something about every time there was an issue that they had a standard operating procedure. Talk about that.
FRANK: Now when an employee says we had a problem, or my operations manager says we had a problem there’s no one to blame except for management. It’s management’s fault, you have to take that responsibility. And so the way to solve that is through a standard operating procedure for everything. If employees are not doing a certain action well or correctly you need to make sure you write that SOP, make sure everyone signs it, talk about it, and help them through that process. The thing is that education is really eternal. It doesn’t stop. You can’t put the systems in place and not keep working on it, because something else will pop up. It’s like whack-a-mole.
OWEN: What’s the importance of actually having the employees sign the updates to the procedures that you’re creating, I’m just curious.
FRANK: It’s nothing to do with reward or punishment at all. It’s just that there are so many aspects… If you’re an employee of a healthy business there’s so many aspects of that business that are so complex that if someone hands you something and says read it you’re not going to really read it unless you sign it, and now you’re taking responsibility and ownership of that. And so we need our employees to take ownership of those issues to grow the business. And it makes life easier for them if they take ownership of it and do a job that will help our customers better.
OWEN: Back then when you were creating standard procedures for the work you’re doing and trying to systematize the operations that your employees had to handle so it was getting done predictably without you I’m wondering how did you even prioritize what order of steps to take that make come into the making decision of what to focus on and creating system for, what was the priority, the order you use in making a decision on which one to do first and next?
FRANK: It was a two pronged approach. One aspect is personal and family wise is what things were important for us to kill off first for us. For me personally there’s a saying a happy wife is a happy life, and it’s very true. And so my wife wanted to spend more time with the kids. And so one of my first aspects were how to kill her off of the business, systematize what she’s doing first, and that was the first thing. The other aspect of it is what makes you the most money. That’s the thing. Roasting coffee is 70% of my business. Seventy percent of Chazzano Coffee Roasters is people buying whole bean or ground fresh roasted coffee for me. So whatever is around that is most important. What is least important, still important but least important at the time is the beverage making, the brewing of the coffee because that’s a small part of my business and so systematizing that had to happen eventually. But making sure that there’s system in place for the roasting, bagging, labeling coffee bags, delivering, and shipping, that was the first thing because that’s what makes us money.
OWEN: I like how you broke it down for us, the decision making factor that you used. I’m also wondering how exactly then did you even document these procedures and processes for the business. What tools did you even use to do that?
FRANK: So the biggest tool is the QuickBooks and making sure that I understand the expenses and the revenue that we’re making, where we’re making revenue that changed my decision about what to systematize immediately. But first thing is just writing those standard operating procedures and then passing them around to employees.
OWEN: So writing down word documents or something like that?
FRANK: Word documents, putting it on Google Drive, and having everyone have a chance to look at it. And I would put it on the side of the cash register, so that whenever there was a quiet time that they were to pick it up and to reread it, and to see if I missed something. I also used the software called Coggle. It truly produces diagrams and mind maps.
OWEN: Like flow charts, right?
FRANK: Flow charts, mind maps, we can call it different things. And for example I had a mind map at Coggle of different things that we did. Roasting coffee, another one was wholesale coffee, another one was retail coffee, another brewing beverages, putting invoices, shipping coffee, and all the different things that came to mind for each of those different categories.
OWEN: And I have a quick question. So was it kind of like you’re using the flow charts for the very tasks to show the top level view of how it works. But then you were also documenting with the word document the step-by-step details of that very task as well. So given the top level and then the detailed level as well.
FRANK: Yes, so macro and micro. We were doing both, and the important thing, the funny thing about all this is that when you do mind numbing work like that and you write every SOP down, down to how to answer the telephone in my new details, you are truly understanding what’s most important in your business. And so you are forcing yourself to educate yourself on what’s really important, what’s your mission statement, what’s your vision statement, it’s all tied up in that SOP. And while you’re doing that you’re creating a better life for yourself.
OWEN: You also mentioned that when you were doing this any time an SOP would break, meaning there’s something that went wrong with, what did that trigger to you guys to do?
FRANK: To look at that and what’s broken in it, and to fix that step, there’s very small things that happen all the time, but you should fix that step immediately and then pass it around again. Say, “You think this fixes it?” Keep it in the pipeline for a while and see if that works. And if that problem doesn’t pop up again then everyone signs it and we start again, and we look for the next problem that pops up.
OWEN: That was kind of like involving your employees and getting feedback from them regarding the changes as well.
FRANK: Yes. They are central to this because there are things that are very important to me that will not change. How you answer the phone, how to interact with customers, how to talk about the different coffees. But there’s a lot of wiggle room in terms of how we do things, and I’m the owner. I’ll work 90 hours a week if I have to for my business. This is my passion, but how does the well-paid employee who doesn’t own the business feel about a certain task? So I really need their input on what makes their life easier, because it’s not just about me. I’m also teaching my operations manager to kill themselves off. How does everyone delegate everything and systematize things so that they’re living happy, lovely lives.
OWEN: And so at the time when you’re working on systematizing and automating the business I’m always curious to know the books and influence that in your situation what books and mentors had the most influence on you and why?
FRANK: I can’t really say there are any mentors. There’s an awesome local guy, real sweet man, a brilliant businessman, Jack Aronson [Unintelligible 00:27:17] of Garden Fresh Gourmet. Their fantastic salsa, and humus, and tortilla chip maker locally. And the greatest thing is that I always saw him, he grew his business from nothing to $120 million business, and a business that was just sold to Campbell soup for 231 billion. But the greatest thing about him is that he hired his children, they worked for him, but he spent time, he made time for himself to live a happy life. He spent time with his wife, with his children, with his grandchildren. He would follow all the passions that he had. In terms of books the E-Myth books were fantastic because it talks about that…
OWEN: Yeah, Michael Gerber, right?
FRANK: I never wanted to be that person, that baker who five years later is still baking cupcakes at 5 o’clock in the morning. That is not a happy life. And so I wanted to make sure that I was never the characters in those books. There’s another book that I always made fun of because it’s ludicrous in some way.
OWEN: Let me guess, The 4-Hour Workweek?
FRANK: Exactly. I always laughed at it. I read the whole thing and I had business friends who shared it with me. But I said, that’s where technology… but he’s right. The thing is will you be able to do a 4-hour workweek? Probably not. Most business you can’t. But your goal should be that you should be completely useless in the business. And that is going to create a happier life for you, and a better, stronger business.
OWEN: I guess that book is basically trying to say do the least amount of work as possible and get as much results out of it. But that’s based on having systems, or [Unintelligible 00:29:32] what the systems you have to do to create to do that. But that’s essentially what the book is doing.
OWEN: More results with less effort basically.
FRANK: I don’t laugh at it as much now.
OWEN: Yeah. Moving forward if we only talk about all the things you did and the successes and results you got as a result of trying to systematize and automate the business and don’t talk about the actual challenges you faced then I don’t think we’re doing this podcast episode justice because obviously you had to have challenges. So what will you say back then was the biggest challenge you had experienced when you initially tried to create systems to systematize and as well as automate your business.
FRANK: There are really two problems. One is that if you have a family-run business that’s very family-oriented, when you first start to systematize things to speed things up you get whispers of getting too corporate, whatever that means. But people were resistant to change. Any kind of change bothered them. So letting them know, that was a huge part of it. And in any business… My time grandmother said this to me before I even had the coffee roasting business. But she said to me growing up, she’d say, “Frank, better they cry than you cry.” And so when employees are resistant to change, if they’re so resistant that they become toxic you have to fire them. You have to terminate them. And so that is happened over the years where we hit a certain point, we realize we needed to systematize something, and they’re resistant to that. And they can’t really feel comfortable in this new system. And you say, “I care about you deeply, but have a nice life.”
OWEN: And so what was the second biggest challenge you experienced when you initially tried to systematize the business. How do you solve it?
FRANK: There’s a ton of paperwork that’s involved with systematizing the business because all these SOP’s, that’s a lot of paperwork. Even explaining how to answer the phone, how to input something, how to take an online order from a customer is a lot of words. And so tons of paperwork, needed to educate, and then with each system you need to have different forms with different pieces of information for employees. And those have to change constantly. So all the paperwork takes time, and it never ends. But I have taught my operations manager how to delegate that to other employees.
OWEN: So the solution with that is you initially studied yourself but also getting leverage your employees with the creation as well as update of procedures so that it takes the workload off creating and updating them from entirely being on you.
FRANK: Yes. This is never an overnight happening. This is over many, many years that this happens. When you first open the business, and you open that door, and you turn the lights on this is what you should be thinking about, “How do I kill myself off?” And so all these different challenges will happen but you have to go forward and constantly figure out how to solve this problem.
OWEN: And so given all these challenges that you faced, and you even explained how you even solved some of them I’m wondering why did you even stay committed to the goal of systematizing the business?
FRANK: Its simple answer is that the alternatives is to do it all by myself to manage employees, roast coffee until 3 o’clock in the morning, and to do nothing else except run my business which is not a lovely life. It’s not about the money, when you start a business it’s about creating an awesome life for you and your family. And so there is no alternative to doing that. The alternative is being depressed all the time, being worried about money, and you might as well work for someone else if you’re going to do that.
OWEN: Yeah. Let’s take the story and bring it more into recent times. At what point in time did you feel that you had systematized the entire business and it could actually run without you successfully?
FRANK: It happened about two or three years ago. There were two things happening. One was that in my quest to systematize the business I had an awesome coffee roaster who roasted coffee for me all the time. I didn’t have to be there are 3 o’clock in the morning, doing really well with that but only had one person who did that. And she told me that she was going away to Colorado to live there permanently. And so the whole summer I would be without a coffee roaster except for myself. And so I’d be slipping back. That was one aspect. The other aspect is that my wife and ??I and kids, we’re going away for three weeks. That trip that I talked about to Hamburg, Germany, and I needed to get things in place a couple of months beforehand so that I was confident that the business wouldn’t be damaged by my three-week vacation.
OWEN: So you got the chance to put it to test then?
FRANK: I got a chance to test it and they passed with flying colors. It was awesome. And that other employee who is a coffee roaster who left me kind of suddenly, I then said, just like I said when I had a problem with December going into January. I said, “You know what I really need to systematize this? I need two or three coffee roasters other than myself to be on-hand.” That was my next goal that I worked towards the next 6 months.
OWEN: That’s awesome. I always give the listener a behind-the-scenes of the business as it is today so they can see the different parts and different systems you have behind-the-scenes that make it work. Let’s use this analogy. Imagine your business like a conveyor belt. On one end is somebody who loves coffee and is looking for a new place to go and experience a new coffee experience. And on the other end of this conveyor belt is the person who have tried you guys out, loved you guys, and is raving about you guys, even referring you guys new customers. But in order for that transformation to happen there are things behind the business making that happen. So feel free to start from how you acquire such a person and what goes through the different parts that are making this transformation for this person happen in your business.
FRANK: You’re looking for how do I find that person to… say the question again.
OWEN: The conveyor belt on one end is the person who has this desire to always have this coffee… they love coffee. They’re coffee enthusiasts, and they’re looking for a new place to go to, or whatever need you’re trying to meet by drinking coffee, right? And on the other end of this conveyor belt is that same person. They’ve loved [Unintelligible 00:37:50] experience, they’ve tried you guys out, and they’re a customer and they’re raving about you guys. But in order for that to happen there are a bunch of different things behind-the-scenes within the different parts of your company making that experience happen. And feel free to start from the part of how you find them in the first place because I’m assuming there’s also a system for getting them through the door in the first place.
FRANK: Right now from our reputation. We have 220 wholesale accounts now. That’s the wholesale aspect. And so we’re reaching people. Brand new people go to those restaurants, have a phenomenal cup of coffee and say, “Where do you get that coffee from?” And they say Chazzano Coffee. It’s in Ferndale.” And then they become our retail customers at the cafe. And then those customers become often our wholesale customers because they have offices or they have other businesses that need specialty coffee in their business. It’s a constant loop of new customers. There are some customers who become or cafe customers. They get a cappuccino every morning, and then they realize why are the buying bad coffee from big supermarkets that’s old and stale. Why don’t they get right out of the roster at my shop. And then they go to their favorite restaurant and look for great coffee and they don’t get it. And so they often will tell the wholesale account, the restaurant, “You should use Chazzano.” There’s another way through online shipping. They buy my coffee online. There’s a Carefree Coffee Club where we deliver a pound of coffee on the first and the 15 every month automatically to you when you become a member. And there are occasional sales calls when I find a new place in town and they have great food and great service, and they need some great coffee.
OWEN: Thanks for sharing how you’re finding them in the first place. Let’s put layers into it within the company now.
FRANK: Right now it’s really is a conveyor belt. It depends, so there are all these different points of entry in my business. And so there are so many different part to the business and different systems for each part. But just wholesale, every week we call all of our wholesale accounts, ask them how much coffee they need for the next week and a half. Remember after three weeks it’s not fresh enough for us, so we only want them for that. And so labeling the bags correctly, filling the order, roasting the coffee, shipping it on the right date. We used to ship coffee whenever the order came in. We would deliver it. We drive 30 miles away to drive two pounds of coffee. Now we systematize all of our delivery schedule. All of that, even when we’re shipping out to Carefree Coffee Club, there is a process that goes on three or four days before we even ship it out of who’s doing what, and who’s responsible for what responsibility.
OWEN: Okay. And so you’ve talked about the sales, you’ve talked about the roasting systems you have in place to roast the coffee. You talked about brewing the coffee. What is that?
FRANK: It’s an interesting thing. It’s not that tough with brewing coffee. We have about 10 or 15 different ways they can brew coffee, as a French Press, pour over, Turkish, there’s an Ethiopian way, the Jebena. We have stove type espresso, espresso cappuccino, latte, all of these different ways. And there’s a little story that I have that I went away for a couple of days, maybe a weekend, and employees took it upon themselves and they created their own drink. Which is awesome in one way because they’re so passionate about the business they came up with a new drink. But here’s the problem. So the drink was taking some iced coffee and then taking an espresso shot in the class and dropping it in that cup.
OWEN: Okay, like a shot kind of thing?
FRANK: And then the customer was instructed to drink it quickly. It was delicious, it’s awesome, it is a great drink, but does it fit the vision statement of the business? There were two problems. One is what if that cup broke? And there we would have great liability issues. And unless you’re the owner you don’t really think about that. One big liability issue like that and we’re done. That’s one aspect. The other aspect it was too much like a college town drink. And so that is not our clientele. They’re mostly business owners, families, and so I don’t want people coming to the bar and asking for this. I think it was called the depth charge. They even came up with a name. It was great. I loved it. But it’s one of those things that that’s where a system need to be put in place to make sure…
OWEN: …for your customer, so that you don’t veer from that.
FRANK: Exactly. I love that story.
OWEN: And you also mentioned that you also have a system for shipping and packaging the coffees. I it’s also worth mentioning that you have a system for hiring new employees and training them. Just talk about that a little bit.
FRANK: Hiring employees, I have taught my operations manager how to talk. You need to have a system in place there because there is no one except the business owner has to be all knowing, and has to be HR, the CFO, the CEO, everything. And so you need to share your knowledge with them on how to hire people, and also my specific techniques. I have a funny technique. I want my employees to have great interpersonal skills, huge part of the business. They have to be smiling, be able to talk to anyone of any walk of life. And so teaching my manager… This is what I do when I’m hiring someone. When I’m interviewing them I let them stay… I set an appointment, let’s say 10 am where the new perspective hire comes in. They come in 10 minutes beforehand. I say I’ll be right with you. I let them sit there for like 15 minutes, even if I’m late with them, even if I have nothing else to do. I let them sit there because I want to see if they talk to people. Do they sit on their phone the whole time or do they have conversations with other customers they’ve never met before? Big tests, small things like that. But employee training one of the most important things for new employees to have. And so we have different systems for that. How do we brew espresso products? Espresso, sometimes with the weather changing and the barometric pressure and the humidity you are playing around with the espresso machine to make the perfect shot. For them to know that it’s okay to throw away shots of espresso that are not good, not perfect is at a point training tool. So you have to impress. As the owner you have to think about all these different aspects because no one else is going to think about that except for you.
OWEN: And so you mentioned earlier you created standard operating procedures for the different processes of your company. And in some cases you say you even leave some of them at the cash registers and so on and so forth for people to actually [Unintelligible 00:46:47]. I’m wondering are there any other systems you have in place that actually enable your employees besides the standard operating procedures to know exactly what they need to do?
FRANK: There are really the SOP’s but it’s also I used social media marketing to focus what we’re trying to sell and what we’re doing. And also to solidify what we believe in. And teaching the employees how to use that and communications… I send emails all of the time when there’s something I have to change. And often now it’s getting so easy to do this that I’ll call my cafe and say, “I think we need to change X, Y, and Z.” And so my employee will send an email to the whole staff and say please sign this. So they’ve taken it out of my hands. All I need to do is give them a little bit and they take care of themselves.
OWEN: And how do you track and verify the results that your employees are delivering to your customers?
FRANK: Although I’m not in the shop all the time like I used to be but my customers in many different ways, social media, email, or in person let me know if things are working well. That’s one aspect. Another way is that I’m not consulted on things. When there are big problems of course they let me know. There’s no way that they can’t let me know because I’ll find out. But the way that I can really verify that it’s working is that I’m rarely consulted about the day-to-day.
OWEN: Okay. And then if you’re really concerned about the day-to-day from your employees, that said there’s no issue. But then you also verify that with seeing what are the customer’s experience. If the customers also don’t have any issues then it means everything is all what it needs to be. But if the employees are not consulting and then the customers are having issues then it means something is wrong somewhere.
FRANK: Yes. And also I send them in person email, text message. I’m constantly in conversation with my employees and I ask them targeted questions about different aspects of the business. “How is this product selling? How is this happening? Please send me reports about this event.” And things like that that I can properly assess how things are going, with the health of the company is.
OWEN: So now that you have more free time I’m wondering which areas of the business you focus on now and why.
FRANK: The huge part is the easy part for me is social media marketing because I do it well, and it’s a way to grow our sales considerably without spending any money, just spending time. Time is money. But it’s fun time, social media marketing. The biggest thing for me with all this time is managing our cash flow. It sounds simple but anyone who owns a small business especially commodities like coffee or baked goods, it is a problem. It’s a problem not when you’re doing poorly, when you’re doing really well. Because you have to put up a lot of money in order to…
OWEN: Inventory and stuff like that, yeah.
FRANK: Inventory… But now that we’re more mature systems in place what are really our 5-year financial projections? What does that really look like? Where do we want to be? Because if I went from a $600,000 a year business to a $6 million business in 5 years. That would be both fantastic and terrible, unless the systems were in place. So where do I want to be, where’s my goal, where’s the goal post, and how do I get there? And is it worth getting there as quickly as that, so the financial projections, continuing education. As an owner no matter how bright you are, how brilliant you have to learn constantly. I read one or two business books from front to back, cover to cover every week just to force myself. I look at every blog I can possibly look, and listen about business, about different aspects of the world. That’s the thing. And the other thing is I love writing books. I’ve written two books, one, God Cries and An Angel Loses its Wings, about how to create community in your business. And the second one was You Don’t Want Dessert, Do You?, about creating excellent customer service through entertainment and education. And I’m writing a book, it’s apropos of this interview. I’ve been working on it for a while. I hope to finish it during the summer is How to Kill Yourself Off from Your Business because I’m living a lovely life. And the fourth book that I’m trying to write, almost finished is What Do You Want to Be When You Grow Up? And it sort of has to do with the third book, because you have these crazy dreams and how do you realize them. But how do you balance that with the dreams of your family, or your kids, your wife? It’s great if I’ll be able to dream to have $50 million in the pocket but is that going to make the rest of your life suffer?
OWEN: What is the next stage of growth for your business? What do you plan to achieve next and why?
FRANK: Now that we’re stable with this loan and the maturity of the business is how to make intelligent decisions about whether all growth is healthy. And it’s definitely true that all growth is not healthy. You can explode in growth and fail the next day. It’s trying to make those [Unintelligible 00:53:31] and thinking 5 years down the road. The next biggest advantage would be to buy a second coffee roaster. We have a small coffee roaster that only roasts 12 pounds every 20 minutes, half hour. And the next roaster will roast three times that amount per hour and make us more efficient. And the next part is to find a place to put that coffee roaster and just have a coffee roasting production facility within two miles of my cafe roastery that will take all of the wholesale accounts, roasting, and put it there. The last thing is growing the coffee soda. We came up with two innovative products that no one else has in the whole country.
OWEN: What is coffee soda, because I was wondering what that was.
FRANK: One of them is called Brooklyn Born Coffee Soda. It is carbonated, cold brew coffee. Just ice coffee, carbonated, but what’s interesting about this is that it taste’s great, it tastes chocolaty, it has the mouth feel of a craft beer, and there’s no sugar, or preservatives, or additives at all.
OWEN: Does it feel like a [Unintelligible 00:54:55]?
FRANK: It feels like a [Unintelligible 00:54:58] in many ways. And the second coffee soda is called Fruit of the Bean Cascara Soda. The coffee bean is covered by a tight fruit. And most of the time farmers take that fruit, separate it from the two coffee beans in the fruit and just use it for compost. But farmers in Bolivia in Yemen traditionally use that as tea. And so I took that. I have it from Gold Mountain Coffee Growers, the coffee growers there, pick the fruit for me, and dry it out, and sort it out, and then send it to me and I make it into a tea and then carbonate it. Again, very low in caffeine and tastes like a lighter soda. It has no sugar, no preservatives or additives. Two fantastic, refreshing products.
OWEN: That’s nice. And so as we come to the end of the interview, so the listener who’s been listening so far. If they take the very next step to try to move their business towards the point where they systematized and can run without them. Is there a summary that you want to leave with them or maybe the specific next step that you want them to take? I’m just curious what you want to share at this point.
FRANK: The greatest step, the first before you do anything is system placed quiet and have a notepad or whatever you’re most comfortable, typing or writing, and look at every aspect of your business, everything that is done in your business, and write down your job description. If you die tomorrow what do you do? Because you’re the only one who knows all of that. There are so many things that you’ve hidden from them because you haven’t given the keys to how to do that. That’s the first part, write your own job description no matter how ugly that is, that’s the first step. The next part of that is once you do that that’s a working document because there are a lot of thing that you haven’t even thought about. So work in your business like you usually do and keep that list really close by and edit it.
OWEN: That’s good. So at least they have the first two steps and they can take it from there to the next stage. I’m wondering, is there a question that you’re wishing I would’ve asked you during this interview that I did not ask you yet that you feel would help to round out the interview even more. If that’s the case go ahead, ask the question and post the answer.
FRANK: There really isn’t a question. There’s an answer that I can add to this and that I thought about thinking about this interview. The other challenges that you experienced when you try to use systems are not just external, a lot of them are internal. It’s the self-doubt. When you own a business, sometimes this good, healthy middle class mentality is that you really deserve to have an easier life. You feel a little guilty when…
OWEN: Hope not having to work that hard now that you’ve systematized?
FRANK: Exactly. And it’s a silly thing but it’s a natural human response that, “Should I be working hard or harder than my employees? It’s my business,” kind of thing. That’s really what I remembered is that feeling that guilt. And I still feel that guilt a little bit when I don’t go into the shop for two or three days and I’m working from home in my computer and everything’s fine, everything’s great, there’s no issues at all. But I still feel guilty, “Should I be there, should I roasted coffee all day long?” The answer is no, but internally you often feel that guilt.
OWEN: And I’m glad I asked that question because this is why we always ask the question because you get to hear things that you couldn’t have thought about. We’ve done this interview for quite a while and no one has brought up that guilt, and I like that you did bring it up so that’s a new point for the listener to have in mind as they listen to the interview. Now, speaking to you the listener, if you’ve enjoyed this interview so far I want you to do us a favor and leave us a 5-star review as well as an honest review on iTunes. And to get to iTunes use this link, sweetprocess.com/iTunes. It will take you to the iTunes channel where you can leave your review. And hopefully a positive one. The reason is because the more positive reviews that we have the more other people like yourself who are browsing iTunes podcast who check out our podcast. And the more exposure we have to it and the more excited we are to go out and bring more guests like Frank on the show to talk about how they systematize their business. Finally, if you’re at that stage in your business where you’re tired of being the bottleneck and you want to get everything out of your head so your employees know step by step how you get tasks done and you can actually track their progress through each task that you’ve assigned to them, well, sign up for a free 14-day trial of SweetProcess. Frank, thanks for doing the interview.
FRANK: Thank you Owen, appreciate it greatly.
OWEN: And we’re done.