Delegation and Growth in Freight Brokerage | Episode 266

Freight 360

October 18, 2024

In this episode, we dive into the dynamics of leadership versus being a doer. Discover why leadership involves more responsibility and the importance of cultivating independence among your team members. Learn how to set clear expectations, invest in hands-on training, and embrace continuous learning in your professional journey. This episode is a treasure trove for industry professionals eager to refine their approach to business management, and for anyone intrigued by the transformative power of effective leadership.

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Show Transcript

See full episode transcriptTranscript is autogenerated by AI

Speaker 1: 0:20

Welcome back. It's another fantastic episode of the Freight360 podcast. We're up to 266. And if you're brand new, please make sure to check out all of our other content. The website Freight360.net is full of a searchable library. You've got blogs, you've got short length YouTube educational videos, full length podcasts, downloadable content, and you can even subscribe to our email newsletter, which goes out every Tuesday and Thursday. You can ask us a question, contact us and check out the Freight Broker Basics course for a full-length educational option. Ben, what's going on in Florida today, man?

Speaker 2: 0:59

Doing well. Transitioning into fall Weather's getting a little bit nice Storms at least missed us, so no complaints.

Speaker 1: 1:07

It's definitely fall up here in Western New York, so leaves are falling, it's getting cold, it's hoody season, it's 45 degrees right now, but that's what we deal with here in the Northeast.

Speaker 2: 1:21

My daughter's in kindergarten and she's learning about fall at school and they had, like you know, fall celebration. She has her first field trip next week to a pumpkin farm and we're walking around and she's like dad, like when do the leaves change? Like when's fall? I'm like, well, it's fall now, honey. She's like, but it isn't like all the leaves are green. When do they turn brown and fall off? And I'm like, well, honey, like they don't really turn brown here and fall off because, like our weather doesn't change that much. She looked at me like so confused and was like, okay, well, when can we travel to another country so that I can see fall? Because I really want to see these leaves, jane bring up to buffalo man, go to pittsburgh, right?

Speaker 1: 2:00

yeah, uh, good stuff. Speaking of, uh, speaking of buffalo, um, I'm to have to do a really quick change my background here, see if this will work. Does that work? It did All right. So the Bills got a nice little Monday night football win. It wasn't the prettiest but it was a win. So 23 to 20 Bills over the Jets Monday night, but Aaron Rodgers man throwing a Hail Mary at halftime I don't know if you guys saw that Fourth of his career Not something you want to see as a Bills fan when you're watching the game but they got away with the win. And yeah, also, devontae Adams. The Jets just picked up this week and the Bills picked up Amari Cooper. So big, big NFL moves there. I think the Steelers are playing the Jets in primetime this coming weekend.

Speaker 2: 2:57

They are. Russell Wilson is slated to start. I know I heard that Russ?

Speaker 1: 3:02

What are you guys? Four and one, or three and two, Three and two? I know I heard that Russ. What?

Speaker 2: 3:05

are you guys?

Speaker 1: 3:05

4-1? Or 3-2? 3-2 Baseball Playoffs moving real fast here. Yankees looking really good Right now against Cleveland, and you got the Mets. So two New York teams In the championship, or in the semifinals if you want to call it that. But you got the Dodgers and the Mets. I think it's going to be Dodgers Yankees. I think the Yankees take the whole thing. So the United States the Grand Prix in Austin this coming weekend too. It's been like a few If you're an F1 person. They've been off for about a month, but we don't really get a lot of races in on the, the western hemisphere, um, but we had miami earlier this year, down by you, and then it's in austin, uh, this weekend. So for all you, uh motorsports fans, check out, uh, the grand prix on sunday.

Speaker 2: 3:57

I'll take my way. I saw it's the only racing event I've ever actually seen. I saw the the F1 race at the Indy 500 track, the Brickyard. I was probably like 18 or 19, so this had to be like 20-some years ago, but it was one of the coolest sporting events I'd ever been to, especially for like a first time at one. I mean the speed, the sound, the power and like watching it on TV is nowhere close to seeing it in person.

Speaker 2: 4:25

I mean I've gotten to see like playoff games for nfl, nhl, baseball, but like and nba. But seeing an f1 race up close is like it's the farthest thing from what it looks like on tv is all the only thing I can say crazy.

Speaker 1: 4:43

Um anything else in sports. Got some news to get into here.

Speaker 2: 4:46

No, jump into it.

Speaker 1: 4:48

So I don't know if you saw this, but this week they had the inaugural um freight fraud awareness day. So gen logs was, uh, like one of the I think it was gen logs verified carrier and truck stop um. But basically, you know, freight fraud has been a big thing. We're like in year three of it being an intense issue in our industry, but there's officially a freight fraud awareness day that would happen this week. Genlogs, they're doing some good stuff and we're going to have them on the show here, I think, in the next couple of weeks, right, so stay tuned for that. Other news couple weeks, right, so stay tuned for that. Um. Other news um, aftermath of, like the hurricanes, the port strikes. Um, it doesn't feel like the freight market was disrupted or impacted as much as I would have expected with two hurricanes and port strikes. Have you seen anything different? I have not.

Speaker 2: 5:44

Not, I haven't seen it on the ground.

Speaker 1: 5:45

Kind of like your standard hurricane stuff like FEMA and whatnot going into Florida but outside of that and North Carolina obviously.

Speaker 2: 5:52

But yeah, and also I think that has a lot to do with the market being pretty loose, like there's quite a bit of capacity in it. So I think these events are getting absorbed without a huge significant impact on the rest of the country or even kind of the region in some areas. But again, anecdotal, but I haven't seen much or heard from any of our customers or people that I've talked to that they're getting much of an impact on capacity related.

Speaker 1: 6:15

yeah, wild man wild. Well, cool, let's get into it. Today we're going to talk about so last week we talked about you know if we what?

Speaker 2: 6:23

we? What do you? Got One news article I wanted to point out. This was in Freight Caviar, it was from Arrive Logistics and they did a 2025.

Speaker 2: 6:29

Oh is it a prediction? Yeah, freight forecast Again. I always like to share some positive news, but here's what the forecast indicates. I'll just give you the punchlines Van spot rates will reach a peak year over year growth rate of 12% Q3 2025. Van contract rates will peak year over year growth rate 5%. Reefer spot rates 12% growth. Reefer contract 4% growth. So I mean they are predicting moving back to a very favorable market, I think for carriers as well as the whole industry seeing come back up and I think the big takeaway I read through the whole thing was mostly like they don't see a one significant event creating the change like it has in the past. It's going to be more a steady increase, more than likely, you know, related to, like interest rates coming down. Companies keeping a little more inventory spending on growth, people spending a little bit more money as interest rates come down and it just steadily inclining as time passes seem to be the big takeaway.

Speaker 1: 7:34

Oh man, I had to hold back my giggles when you're reading that off, because not to say that they're wrong or it's not credible. But if you go back literally a year ago, we had an episode with Ken Adamo from DAT and he was like. He basically said like yeah, you know it's. He's like. Everyone thinks it's going to turn faster than it will, he's like. But I'm telling you, it's not going to, it's not going to flip until Q4 of 2024. And here we are, in Q4 2024. And here we are still Well.

Speaker 1: 8:03

I do want to point out it's not as bad, in my opinion, as it was previously, but it's just been soft for a very long time.

Speaker 2: 8:07

I want to point out, these things take tremendously long times to work themselves out. This was unprecedented in the amount of shutdowns around the globe, government spending around the globe and reconfiguring of every supply chain almost in the entire globe, of companies switching where they bought products to where they were selling them. Lanes, suppliers like you basically reconfigured the entire worldwide logistics industry over a short period of time and then you had a bunch of money coming in to try to smooth that out and then you got to fight inflation on the other end. So you retracted it like that takes a long time to work itself out. In a normal cycle.

Speaker 2: 8:51

This was an extreme cycle, like to the factor of 10 or 20 or 50 times what we've ever seen in the economy, and that was a national economy. We've never experienced this in the modern day economy where we were globally connected, where we shut everything down and turned it back on. So I mean, I don't really hold it against people for, you know, anticipating things to come a little sooner than they probably were going to, because there's nothing to compare it to. It's literally you'd have to go back to like 1913 and like the flu epidemic or what it was, and even then we didn't have a worldwide yeah, 1918, I think right, yeah.

Speaker 2: 9:25

And we, like, didn't have the global economy the way we do now, so like there really isn't even a comparison. So I think we learned a lot and I think a lot of the ports, especially the West coast, have made improvements to, you know, help us be more flexible when these things do come up. Hopefully never to that extreme again, but it makes sense.

Speaker 1: 9:42

Yeah, I just pulled up national rates from RateView so I'm going to give you without fuel, because fuel has come down in the last year. So I'll give you line haul only. So if you go back to October of last year, van line haul without fuel was $1.55 a mile. It's $1.63 right now. So not a whole lot of movement there. Reefer a year ago $1.86. It's $1.95 now, flatbed without fuel again $1.85 last year, $1.96 now.

Speaker 1: 10:21

So you've seen what would you call it? It seems like it was about it was single digit year-over-year growth, maybe five percent up, um. So I mean it's trending the right way. And if you look at the graph, I mean they all, they're all going up in that that very slow. You know two degree or one degree elevation or whatever you want to call, but it's, it's. It's not going down and it's not. It looks flat but it's not. It's not going down and it's not. It looks flat but it's not. It's actually gone up a little bit. When you factor in fuel it's actually a little bit cheaper in some instances, or actually in all instances, because fuel is just cheaper right now than it was a year ago. So you're looking at like van with fuel, 202 a mile. It was 209 a year ago. Flatbed 242 a mile it was 209 a year ago. Flatbed 243 a mile it was 250 a year ago. And reefer 238 a mile. It was 245 a year ago. So line haul rates are slightly up. Fuel is down, so your net carrier pay is slightly down year over year. So we'll see what happens.

Speaker 1: 11:23

Everyone I mean here's the thing too is like we're a margin-based business. Year over year, we'll see what happens. Here's the thing too. We're a margin-based business. When rates are up, brokers are happy. Obviously, when rates are up, carriers are happy because a lot of their fixed costs stay fixed. Naturally, their margin is going to go way up as well if rates go up. But if rates go up, who's paying the price ultimately? It's the end consumer, right? So there's a happy medium in there. We're just not there right now, right? That's that equilibrium that we talk about when supply and demand meet each other, and I think Kevin Hill's latest BrushPass email I think it was today or yesterday came out. Still, we have a net exiting of brokerages as well as carriers in the market. So it's going to continue to happen until we meet that equilibrium. So there's your economics of freight for the week, econ 101. Yeah, so anyway, today's.

Speaker 1: 13:33

So anyway, today's main topic um, last week we talked about some lessons learned and if we could, if we were to start all over, what will we do differently?

Speaker 1: 13:42

What will we, you know, sustain?

Speaker 1: 13:44

We kind of wanted to uh take that conversation and pivoted into, uh, leadership management.

Speaker 1: 13:57

That conversation and pivoted into leadership management, basically the role of being a leader within your brokerage.

Speaker 1: 14:00

Because to kind of set the stage here, day one, if you open a brokerage by yourself, you are literally the owner of the company and the lowest level worker inside that company. And as you build your business out and you grow it, your role and what you're going to do in the trenches, versus what kind of leadership and managerial tasks that you'll take on, is going to evolve until eventually you're no longer working in the business at all. You're working on the business exclusively. And that's how I would argue to say that a successful brokerage owner should eventually get to a point where they're not working in the business at all. They should be able to basically pass off a lot of the tasks and responsibilities to other team members to solely work on the business. Because if you have someone, that will never get away from that. That's what you call a micromanager, right, and you kind of restrict your growth potential as a company and you don't retain a lot of good talent if you're a micromanager. So that's kind of-.

Speaker 2: 15:03

So here's I wanted to find those two for what you were saying, like what is in the business and what is working on the business. In the business, you're covering loads, you're check calling, you're invoicing your customers, you're going through and splitting BOLs.

Speaker 2: 15:17

Day-to-day tasks yeah, rate cons, the stuff that needs to happen, the tasks really that generate the revenue making the calls, developing relationships to prospects that turn them into customers. Having more conversations with your existing customers to get more business. Talking with more of your carriers to utilize them on more of your customers. Freight matching the lanes they need with what your customers maybe need. Or finding new prospects that have the lanes that your carriers need to be able to get them more of the business they need.

Speaker 2: 15:45

Right Building that out day to day is in the business, right On the business tasks. Right are being able to spend the time to look at how your team is operating. Are they operating efficiently? Are there redundancies? Do you have many people trying to do the same things and fighting over them and creating chaos? Do you have too many emails going back and forth about the same topic that are confusing everybody? What does your funding look like? Are you paying too much in factoring? Are you maybe not moving quickly enough and processing your invoices? What are your days to pay as an organization right? What does the cashflow need? What do your expenses look like? Are you spending too much? Are you not spending enough for some tools? Do you have tools that people aren't using but you thought, use myself is when you're very task-oriented.

Speaker 2: 16:46

You get into that habit and this is the hardest thing for me to work on when I switch between the two, because I'm doing both in a lot of scenarios. Right, I'll jump into a bid. I've got to work something, I got to move a lane, I got to reorganize a schedule for some tankers, but then the next hour I got to jump out and do high-level things. Well, the thing with switching we talked about this in other episodes is your brain is not meant to multitask. In fact, like modern now psychology will tell you like you literally don't even do that. You think you do it and you convince yourself you're multitasking. But every time you switch tasks, your brain has to. It doesn't start where you left off, it has to go back and get momentum to pick up. So like it literally slows you down and makes it harder, creates more effort, you burn more calories and you're more tired. So, like when you are switching tasks, it's tremendously taxing and it is difficult for anybody.

Speaker 2: 17:36

I don't care what everybody tells themselves. That fallacy that lived for like 30 or 40 years is bullshit and the thing that I've noticed is the habit that is the hardest is like it's this impulsiveness to constantly be on my email and to be looking for any changes related to my customer, my carrier or an issue, but then I can't sit still with myself and my thoughts to think through something that is more complex. To be working on the business, like the financial side, like going through invoices and really looking at what are we paying in fees here, what are we paying when we do this? Are we using this tool Like you really need sometimes it's funny, like my coach tells me this like you need to block out time, sometimes for boredom, like literally block out like 20 minutes or half an hour, do nothing and just sit there with your thoughts, because that's what initiates creativity, that's how you connect and come up with new thoughts.

Speaker 2: 18:32

Like that's really where we create these things. But when you're constantly doing things, you never create the space for your mind to be still and actually come up with some of the solutions or to think through the things that you need to which is for me like a big challenge.

Speaker 1: 18:46

I can't. I mean I'm, I'm just going to be honest. I'm not going to sit around for 20 minutes and do nothing but try to think creatively. That's. But my mind goes there when I'm at the gym. So it could be hey, I'm, I'm on the treadmill or on the elliptical or, um, um, you know doing some, you know resistance training or weights and whatnot, but that's my mind. My mind will go creative mode there and what's crazy is the same thing, but I have to use, like I'll have my phone and like I'll have an idea.

Speaker 1: 19:11

I'm like, boom, I got to email myself a note, so I'll read it when I get back to my computer or I'll add a note to my phone. But you're right, Like I try to stay out of my email when I'm there and just listen to music, podcasts, whatever, and just get into thought mode.

Speaker 2: 19:26

So here's something interesting and I wish I could remember this off the top of my head but like, your brain literally creates a chemical that they're now finding out helps you like grow brain cells or creates more neuroplasticity. When you're moving, it's not at like super high heart rates, like high impact cardio, but it's like walking or like a jog, and what happens is is your brain create, your body creates more of this chemical and it actually helps you think better. And that's why they say when you're trying to solve a problem, you shouldn't really just sit still, you should walk and that helps you do those things. That's why and it's funny, like I didn't realize that, but I do that I used to do it on my bike all the time. I would take like two hour long bike rides a week or an hour and a half, and I would just literally stop and use voice notes to remind myself and I'm like I get more thoughts in that hour and a half than the entire week, because you're just putting yourself in the right state.

Speaker 1: 20:16

That's good. So I want to go back to working on the business and I'll kind of share something that I'm working on right now and then we will kind of talk through the different stages of managerial tasks and leadership and whatnot. So I've been building out a division for Pierce Worldwide for going on five years now and it's been great. It's a lot of fun. It's a lot of fun, it's a lot of work. But one of the things that we didn't do until recently is really look at the granular level of where are the profitable areas and where are the non-profitable areas. I don't just mean like, oh yeah, look at the gross profit. No, we went as far and we're working on this now. We're going as far as, let's say, we're looking at one branch or one agency, we're looking at load count, all the normal metrics, right, and then we're taking all of our costs and we're including back office salaries, et cetera, pro rata.

Speaker 1: 21:24

Pro rata, figuring out how much is you know goes to their, to them, based off their load count. And then you know, you figure out that net at the end of the day, are they really making you money or are they a headache for you? And that is the kind of stuff that's working on the business versus in the business. But if you can identify that kind of stuff, those are the things that you need to have as a leader and have some kind of thought process behind to be successful long term. I mean, I go through financials every single month as well. Right, I want to see, at the end of the day, what is my division net, the company after everybody's been paid right, and how does it compare to last month? How about last year? What's different? What's that percentage look like versus the top line? And those are things that if you don't pay attention to, you can really get your company in a bad position and not even notice it.

Speaker 2: 22:16

Correct, and I want to go through that one like really simply for everyone to be able to take. Get some takeaways from that, because I think for some newer owners, like we, you brushed through that really quick and I want to like yeah, kind of destruct construct that.

Speaker 2: 22:30

So okay, so let's just do back office. Say you've got two or three people doing invoicing and say you also have a brokerage that works out of an office. Okay, well, those folks are doing invoicing for the people in the office. Say there's 15 people in your office, okay, now you have an agent division that you started two years ago and you've got two or three agents and you're like well, you know, those agents are just being invoiced by the same two or three people we had invoicing the office. So like, do you include the cost of paying those people and associate it with the agents? Because again, I think for some business owners they're like well, I got to pay them anyway and they're just doing a little more work.

Speaker 2: 23:08

So is the cost for the small agent division associated with the back office that already exists? And I think what I'm hearing you say, what you guys do when you say pro rata, what that really means is you look at a person and break down the percentage of their cost and what they do to allocate it correctly to that small division. So, for instance, if you have two people that you're paying, just say, 50 grand a year and they invoice 200 loads a week for your office. Okay, break down the 200 divided by what you pay them per week to figure out what it costs to process each invoice. Then you look at how many hours a day they're working to do that work and then you look at how much it costs to pay those people just to invoice for your agent division. And then you take that number per load to invoice cost and you associate it with just the agent division. So you don't take their whole salary of a hundred grand of these two people and say, oh, the agent division has to cover all that. They need to cover the hourly cost of paying those two people to invoice their work.

Speaker 2: 25:27

Now you have a better understanding of the other, which is really a fixed expense associated with the small division. Now you're right, like those people would exist no matter what. But where it starts to come into play, if you don't do something like this, is when your team in your office grows to 300 loads a week or 400, you're probably going to have to hire more people quicker, because the agent is probably going to grow a little too. So you're going to have to hire two into three, into four faster. And that's where you need to be able to understand how much each side of your company is using in resources, even if you're paying those people salaries company is using in resources, even if you're paying those people salaries.

Speaker 1: 26:13

Yeah, we, we broke it down to. We wanted to figure out the cost per load for for salaries, and I don't have it right in front of me, but it was like something around 10 bucks a load is basically what it came out to be. But then what you realize is like, if you have a if you have, and I won't, I'll just speak generically here If you have a, if you have a broker that does 100 loads a week and another one that only does 10 loads a week, Well, one of those brokers is using 10x the amount of resources as the other one, right? So you should attribute those expenses accordingly.

Speaker 1: 26:46

So, if the 100 loads is bringing in a decent amount of profit, but they're using up 90% of your resources and your 10 loads a week is way more profitable per load and using less resources, maybe you want to lean into more of that style of business, right?

Speaker 1: 27:07

So it's that I mean again, I'm just kind of spitballing making this stuff up, but this is the kind of stuff you need to think about as a leader within your company and, like you could, you could even like zoom this in and go to a smaller scale, like if you're an agent and you're growing an agency and you've got sub-agents or employees. The same concept applies on the smaller scale. You might be running your own book of business still, but you also still need to be the manager of those within your agency. So if you've got a team of three or a team of four or five, don't let these people just do business and be like oh, they're making money, it's all good. You need to have some sort of system where you're paying attention to the profitability of it. It doesn't matter if you're a team of three or a team of a hundred or a team of a thousand. These same basic principles apply.

Speaker 2: 27:52

Well, and here's an easy way too, I think, for somebody just starting to do this take all of your fixed expenses. Every bill you have to pay every month, that doesn't change. There's your fixed expenses. Add those all up, right? Then divide that number by the number of loads you move that month. Whatever that dollar amount is, that's your fixed cost to move each load. It's what it was last month, right? Then you take all your variable costs and you do the same thing, and then you have a variable cost per load. Right Now you have a dollar amount for your fixed cost per loads and variable cost per loads. Add them together, that's your total cost to move one load. Right.

Speaker 2: 28:31

And I don't think many brokerage owners even just do the simple aspect of that, because I think they'd be shocked at how many loads they probably move that are even at losses that they think are profits. And I think this is really prevalent in the agency division. And the reason is on the agency side an agent is motivated If you want to know what somebody's going to do, show me their incentives, I'll tell you where they're going to focus. And an agent they get 70% of every load they move. They don't have fixed costs, other than maybe some things, but they're much lower than when you run a W brokerage.

Speaker 2: 29:02

So, like you'll see, agents that we've brought on that are moving loads for like $50 profits Cause to them they're like, well, I'm getting 70% of the 50 bucks, I'm at least getting 30 bucks, I'll move the load, but to the company they're paying a lot of fixed costs to support that and like their breakeven is probably like $55 a load. So it's like for the company that's a loss, for an agent it's a win. And you need to be able to see how these things factor into how you're managing and trying to grow your company, because you could, to your point, grow the wrong side. That is actually losing you money, because on the surface it looks like it's making more but in reality it's costing you the most.

Speaker 1: 29:38

So that I mean great point, and so I used to work for a company that had a minimum, like you had to. You had to have X amount of profit per load, otherwise commission would be impacted by it. And the reason was, I mean, just even. I just gave you the example of like salary attributed to like cost per load, and I think it was like 10 bucks was the example I gave. That's just salary, right, we're not including insurance, load boards, any other software. But if you do the backwards math on it, let's say your cost per load is 20 bucks total. Well, that's how much you have to retain after you've paid commissions. So, depending on how much you're paying your agent, right, you could have a minimum of like, all right. Well, if it's 20 and we're paying 70, 30 or whatever the case might be, do the backwards math. Now you're like okay, well, it's more than $50 a load in profit before we break even then. So that's the stuff you have to pay attention to.

Speaker 1: 30:40

And, like you mentioned, or we talked about salary, and I don't want to. I didn't want this discussion to be purely financial, but to give you an idea of the stuff that we track. Um, it's you know, obviously your carrier pays like your biggest line item and your your payables, but it's the commission that goes to the agent, it's the salary, it's um, insurance, uh, costs that are associated with these brokers and these agents. It's and I mean like literally the insurance that you're paying as a brokerage, not like health insurance, but I'm talking like your broker liability insurance. I'm just going through my list of things on an income statement here Auto contingent, auto liability, general liability, umbrella policies, claims write-offs, bad debt write-offs these are the things that you need to.

Speaker 1: 31:31

Oh, here you go. Meals right, travel expenses those all are. Every penny that is spent in your company needs to be attributed somewhere. So if you have somebody that is all about in-person meetings and they want to go to conferences, that's great, but those things cost money and if they're not going to turn a profit for you, you need to set a limit to that. So, again, I didn't want to go too much down a rabbit hole of the finance side, but that is part of working on the business is understanding. At the end of the day, business is. It's a business right. It's about making money and I hate to say it that way because it's also If it doesn't make money, it doesn't exist.

Speaker 2: 32:11

And let's just look at it simply right. Like it's not the greed aspect, like you can't any business can't continue to employ people and pay them so that they can make a living if it's not generating a profit. Right and again, I'm not going to get into like crazy economics, but just keep it that simple. Like if it's not generating profits, like at some point it will cease to exist or it will be acquired and those people will lose their jobs.

Speaker 1: 32:32

The only exception to that rule is the federal government, because they can apparently operate at a loss consistently every single year, correct?

Speaker 2: 32:40

But I think that's a really good point and some good takeaways. The other thing that I really wanted to talk about, too are, like, some of the common issues I really wanted to talk about too are, like some of the common issues. There's one that is, I think, the biggest reason why owners are never really able to transition out of the business to working on the business, and it is a fear of delegating responsibility. And I think everybody that has ever moved from producer to manager has probably experienced this to some degree. And as a broker, even hiring your first assistant, you run into this. Right, it's hard doing this, it's super hard. But why is it hard? It's hard for one reason because we're scared. We're scared that somebody else is going to make a mistake and that we're going to be held responsible for it. So we keep doing it our way, and then you know what happens you never get the benefit of the person you hired because they don't get an opportunity to make mistakes and learn, and that's what we're scared of, ironically, but that is how people learn, so you have to allow them to do that, otherwise they don't learn. And two, you never free up the time which was the intention of hiring the person in the first place, right.

Speaker 2: 33:43

But I see this more than any other reason why owners can't get out of it and to work in it. And, like I see this even in other industries people that I work with that own insurance agencies, financial agencies that do financial advisory, that do insurance, that do real estate, like they've just done it this way. They know their customer, they can do it faster and that's how they justify it in their head Well, I can do it faster than them, so shouldn't I just do it? But guess what? Now you're in groundhog day because you wake up every day just doing the thing because you do it faster, and the person you paid is just sitting there watching you, right? So what are your thoughts and how and what you've seen for people to like overcome this, to be able to actually get out of their own way and let the people they've hired help them get more done?

Speaker 1: 34:27

Yeah, I think it's a. It's a great question. I think a lot of it comes down to um, expectation management and having a reality check on what to expect. So, um, when I look at when I had, when I hired, an assistant, and so I've got two people underneath me that help run our division now, and so these are non-brokers, right, just helping run and manage the 2,000 loads a month or whatever that we're pushing through this division, all the issues, all the questions, all the advice that's needed, strategy stuff.

Speaker 1: 35:06

But it was originally just me. So when I hired the first person, I literally dragged my feet for like a year because I wasn't ready. And eventually my boss, the owner of the company, is like we're doing this, like this is happening, which is good. I needed like a little, you know, kick in the ass to. You know, basically give up some responsibility and trust that someone else could help me out. And if you fast forward, it's allowed us to grow, because I had more time available to work on the business in other ways that I wasn't able to before. So I guess what ended up working out is when we finally got to this point. We're going to hire somebody.

Speaker 1: 35:44

I set very clear expectations up front with him, with myself, and it was hey, this first six months it's going to be a learning curve Like we're.

Speaker 1: 35:54

I'm not expecting, within two weeks, to be, you know, for you to be doing everything X, y and Z Perfect. It's no, you're going to learn, you're going to be learning a lot. You'll be learning always, but for the first six months, expect to have a ton of questions and be very confused. And you know, don six months, expect to have a ton of questions and be very confused, and don't be afraid to ask me anything. Anytime there's a learning opportunity, we're going to stop, take a knee and we're going to talk about it and explain what that issue was and help you grow and develop. So that was the expectation I set with him and internally, my expectation was I'm going to be working a lot the next six months and I'm going to be having less free time to work on the business like I used to, and I'm going to be shifting that focus on developing somebody so that six months down the road, 12 months down the road, we'll be in a much better spot than we are now.

Speaker 2: 36:41

So I want to point something out too that you said there is. I think a lot of people approach that and they think I'll just tell them what to do and then I'll go do my own thing and then they're going to know how to do it. Like human beings don't learn this way. You don't learn by being told something once and all of a sudden, internalizing it and being able to repeat it. Right. You've got to do something over and over again until you're good at it and learn it and practice it like everything else in life. And you need that person to do what you said you just did, which is you've got to sit and spend time with them. And that is the other reason why I think people fail at hiring and delegating is because, like, they don't allocate the time to spend and sit with a person while they're learning to go through it, because they get frustrated and they go, and it's that anxiety that we get kind of as brokers.

Speaker 2: 37:27

I think that are good brokers Like it's like you always feel like you've got to do the next thing because time is so valuable.

Speaker 2: 37:32

If you don't keep doing more than you don't grow or you start to shrink and it becomes such a part of you that it's really hard to slow down, to be at a pace where somebody is coming in because they're new, they are moving very slow or not at all and you've got to be very patient, and that was something I was horrible at probably 15 years ago. It was why I was a terrible manager. When I first started in my late twenties, I had zero patience and I got very frustrated and I thought I could just hire the perfect person to make that go away in myself. And the reality was, just like everything else, the solution was in me, not in the person I was talking to. I had to look at myself and what I wasn't doing, and that was being present, being patient and working on it, and that's really what you needed to do and that's why your guys worked out for you, I would assume.

Speaker 1: 38:18

Yeah. So I mean, if you fast forward, I mean, it's two and a half years later since he started and still to this day, like almost every day, we spend between 30 and 30 minutes and an hour on the phone, and some of it's just BSing, but a lot of times it's like we we had, like this morning we had an issue and somebody did something that they weren't supposed to do and I was like, all right, well, what do you, you know what? What do you want me to do? And he's like, well, I just thought you should be aware of it. And I was like, well, that's okay, awesome, so.

Speaker 1: 38:49

But then we went into here's what the issue was, here's how we could have prevented it, here's what we're going to do next. And it was a coaching opportunity. Um, and you know, that's a small example, but there's like big things that happen, like we've had stolen loads, we've had double brokerage, we've had our, we've had people try to steal our identity, um, and everything in between. And every time there's a coachable moment. If I have the time, I'm going to take as much time as I have possible to help him learn, because otherwise he's just going to be super confused and be like oh, that's a Nate thing, because I have no idea, correct. I want to make him a force multiplier, an extension of me, not just. Oh, nate has to answer that question.

Speaker 2: 39:33

So the interesting thing that you said there, right, which was and it's something that comes up in like they call it open door policy and like physical offices, right, it's where the manager says you know any question, you have just come and see me. Right, and it seems like it comes from a genuine place to help and it usually does Right. But here's the issue with that If I have Steven and he's a new hire, I go, steven, anytime you have a question, come in and just walk in and ask me. Steven is now being trained to literally come to me with anything he doesn't know, all right. But what happens is is, if I just give him the answer and go do this, steven now starts to establish the habit of every time he doesn't know, to come to me, which isn't teaching Steven or coaching him and being able to make his decisions. In order for me to actually delegate the thing to Stephen, I need him to be able to think through things and make the best decision based on the information available, right, so the open door policy, if you will, right, it literally makes somebody stay where they're at, meaning like they rely on you. And why do they rely on you? They rely on you because, like they don't want to take the risk, they're so worried they're going to make the wrong decision by not asking you, that you're going to be upset with them and they're going to lose their job. So they keep coming back to you, which means you, as the manager, never get to work on the business. You're stuck in the business, even with the person you hire. What the business? Even with the person you hire.

Speaker 2: 40:46

What you need to do is what you outline, which is, when you bring somebody on and they come to you with a question, you need to be able to slow down and go, okay. And you have to ask questions, not tell them what to do and say, hey, what are your options here, in this situation? What do we know? Make them tell you, okay, what don't you know? This, this and this. What options do we have? Make them list four or five, okay. Out of these five, what are the worst? Two or three. Make them eliminate the worst ones Okay. That leaves you with two options left.

Speaker 2: 41:16

Which do you think, based on what you know now, is the best decision to make in this circumstance right now? And then you have to support them in their decision and say, hey, make the decision, make the call. This is your decision, not mine, and if it doesn't go the way we hope, like that's okay, I'll have your back and support you. That is what support looks like Not giving them the answer and then yelling at them if it doesn't go the way it should. Because now that person is learning to think on their own, evaluate choices, evaluate options, make decisions and, most importantly, that's where they gain the confidence to make decisions in the first place is knowing you have their back for them to make decisions on their own, that you will help support them if it doesn't go the way they hope, because not everything does. Even when you know as much as you can and have experience, shit still doesn't go the way you would hope, even with the best plan.

Speaker 1: 42:09

Yeah, and I think it's to take it a step further. As you grow your business and you're going to, you will I mean hopefully, if you grow it to this to this extent, you're going to have multiple levels of leaders, right. You might have sales team leader, you might have a manager and then you might have directors or you know whatever. You're going to have multiple layers. When you can teach and train your lowest level team members to be problem solvers, they can become really, really great leaders in the future and help echo that same mentality down, because here's the reality.

Speaker 1: 42:44

There are certain people that may never be a good leader, but they'll be a great doer, right, and that's fine. And there are people that might be a maybe they're, they're a modest doer, but they can become a great leader because of the way that they operate and that they think. But oftentimes your best doer isn't going to be your best leader, like your best sales rep isn't always going to be your best leader. So you might have someone that's just killing it at sales. They're very good at cultivating relationships, but maybe they suck at problem solving right, and no matter how much you've trained them, there's a limit to how much they're comfortable with trying to think creatively and solve problems Probably not someone that you want to have in a leadership position. Have you ever seen, have you ever run into that, where you get the boss tries to promote the top producer as the new team leader?

Speaker 2: 43:40

Yeah, and I think that's probably the most common thing we see in our industry is whoever the top producer is, after a couple of years they get rewarded by becoming the manager, and I think that is probably one of the worst things you can do. And I don't say the worst thing you can do is to promote somebody that is successful into a management role. What I'm saying is, if you're only looking at the criteria of closing sales and generating revenue as why they should be manager, I don't think that is the most important piece, because most producers are really good at producing because of what we were talking about earlier. They're kind of anxious, they're always driven, they're always moving very quickly and that drive keeps them moving fast. They're prospecting quicker, they're moving loads, they can negotiate faster. Right Keeps them moving fast, they're prospecting quicker, they're moving loads, they can negotiate faster.

Speaker 2: 44:34

But that personality doesn't usually fit well with somebody that can slow down and be patient and present with somebody that is new. That is a very different skill set. It took me a very long time for me to develop with a lot of practice, because I couldn't sit still long enough to be patient enough with somebody when they were at the beginning stage at first Not when I was moving at that speed as a broker I'm like it's like night and day. It's like driving a race car to sitting on a bus. You're like wait a minute, you just want to get up and run around. It's frustrating.

Speaker 1: 45:00

So I think back to what I was saying originally with being a problem solver and not necessarily being the top producer. If I go back, like seven, eight years, I was on a team of like eight people and, um, so I mean there was times when I was a top producer, but I wasn't ever like always the number one producer, um, but I think I did a very good job being coached by my boss on how to how to help the team overall, and there's a lot of different strategies and things that we looked at outside the box and everyone there was always common feedback Like, yeah, like Nate is really the reason that we had our goals this year, you know, not single handedly, but a lot of what he did is the reason that got us to, you know, to that benchmark. So, like I said, not necessarily top producer all the time, but if you can create people that become good problem solvers and good thinkers, they can develop into good leaders. And now I run a division at a different company, but I enjoy working on the business a lot more now than in the business as previously done. It is a lot different, it's a lot harder.

Speaker 1: 46:13

I think a lot of people think and I don't want to go too far down a rabbit hole here, but I think the difference between being a leader and a doer is people oftentimes think oh, it's just so, you're, you're.

Speaker 1: 46:22

You're the leader. Now it's so easy, you can just do whatever you want. You don't have to. It's like no, it's actually like it, so easy you can do whatever you want, you don't have to. It's like no, it's actually like it's way harder. It's way more rewarding though, um, if you get the job done right. But it is way harder. You have a lot. You have a way more risk, um, a lot more at stake, and you, you are now responsible in some way, shape or form, for the success or failure of the people underneath you. They rely on you to to lead in a way and to manage in a way that's going to help them be successful and not have it all come crumbling down. So I think it takes a certain mentality and it is a lot more work, because you know you are no longer responsible for just your problems. You are responsible for a hundred people's potential problems.

Speaker 1: 47:09

So I look at it right now, like today, today alone, um, this morning, outside of the one example I gave earlier, I have, uh, two people that really need my help with um customer issues and I will help them out today with with those things. But it's no longer just me, and who's my customer? It's everybody. You know you become an escalation point. You try to help and coach people through these situations but it's a lot of weight you carry. But with that added risk comes added reward and there's obviously you have like, if you're confident in a certain way, there's a financial reward to being in leadership, but for me it's like the reward of seeing people succeed and seeing them develop and seeing them create, you know, a future that they never otherwise would have thought they'd have. So and that is that's the biggest reward in my, you know, in my opinion, when it comes to that I agree.

Speaker 2: 48:01

It's funny. I was thinking about this because I was sick the past couple of days. And it's funny because, like I think my daughter somebody said like, oh well, like, if you're the boss, I'm like can't you just like kind of just take off when you need to? And it was funny because I thought about it for a second. I was like yeah, I was like that's the irony is because when you're a producer, you have to ask permission to take a day off.

Speaker 2: 48:20

But when you take a day off piece because you know nobody's relying on you and you go back to work and you just clean up whatever you need to, when everyone else is responsible for you you have dozens of people in different departments and divisions that have different needs To your point. Those needs don't disappear If you're sick all day. Guess what you have to do tomorrow Two days worth of work to catch up with what everybody else needs, because everyone's depending on you. And it's funny. It's like once you finally get to the place where you can actually have the freedom to make the choice to either go to work or not go to work, you kind of lose the desire or the ability to, because you want to make sure everybody has what they need and you almost never want to not be at work because you know people are depending on you.

Speaker 2: 49:04

And that's where it's like I get why from the outside and again, people use examples of like super high paid CEOs of huge companies are like this is ridiculous. They get paid so much. Why are they getting paid so much more than like other people? And it's like it is a very different kind of stress when you have somebody that's responsible for thousands of jobs and needs to keep in their head every different division department who needs what, making sure everybody's getting what they need so that everybody can still work together. It is tremendously more stressful and very different than when you are producing or doing tasks that you need to get done on a daily basis, and I'm not saying one is worse than the other, I'm just saying they're very, very different and most people, as they transition upward, sometimes overlook how much different it is, how stressful it is and how much is actually going to be on your plate.

Speaker 1: 49:53

Yeah, and one of the things to kind of get to the tail end of the discussion here. One of the things I want to point out is oftentimes when somebody is young in business, young in brokerage, young in sales, their whole goal is like oh, I want to be the manager one day. I want to be the boss. I would encourage you to embrace, wherever you are, in that journey, because you will not be a good, successful boss or manager if you don't learn enough things the right way, at the right speed along your journey. If you try to fast I don't know shortcut your way into leadership, you're going to be an ineffective leader in most cases, because you don't have that experience under your belt, you don't have the number of repetitions of dealing with something. And the other thing too is when you become, if you get to a leadership position, your journey of learning is not done. It's in fact it's. It has just pivoted to a whole new level.

Speaker 1: 50:55

Yeah, my boss is the owner of our company for over 40 years in the business and he's still to this day. He'll say, like learn something new every day. Right, there's always, whether it's a change in the industry or something that we've never experienced before, or just a little niche thing that just never was part of what we've done in the past. You have to embrace that and I think if you don't, you're limiting yourself. So that's my take on it. I'm a big fan of developing and encouraging people to be groomed into successful leaders down the road, and you know it's hard, but you have to give up some of your duties and pass them off to somebody else to create that next generation of leaders within your company. Otherwise you're going to stunt your own growth. So that's my take.

Speaker 2: 51:46

Well said, you're going to stunt your own growth. So that's my take. Well said, I mean hell.

Speaker 2: 51:52

The reason I got into coaching was because I stuck to this before I got into this. I was absolutely terrible at it. I wasn't very good at managing people or coaching them because I couldn't see their perspectives very well. I was very independent. I'm very good at problem solving my own problems, but I was very poor at understanding the perspective of other people and integrating people together.

Speaker 2: 52:10

It was just something I didn't practice a lot, and one of the reasons I got into coaching was it's like if you want to get better at something, start teaching it, start learning it to your point, because if you're learning and you're enjoying it, like it should make the journey fun, right, like and I've learned a ton in the past six years that I've been doing it and I just don't get to learn every day Like that's one of the reasons why I love doing the show with you. It's like every week there's probably a half a dozen things that I've learned, or learned that I wasn't doing well enough or not correct at all, and like, as soon as I stopped doing that, then I kind of don't want to do that anymore, like just that whole position, that industry, and it's like that's one of the reasons why I love this industry is that like I've never hit a place where I felt like there wasn't something I could benefit from learning or understanding better.

Speaker 1: 52:53

Yep, Good stuff. I'll add in Stephen's comments in the chat here. Producer Stephen said always know one level up and one level down of your position and if you're the smartest person in the room, find another room.

Speaker 1: 53:06

I love both of those so me in the Army they always say well, this is the way I was taught when I was a junior officer and I still feel great officer now. I still use this with some of my lieutenants and captains is, you should understand. I always say two to three echelons up and then all the way down, echelons up and then all the way down. So meaning like, if we're at a battalion level, you should understand our brigade and our division, which are the two levels above us. And if you're a, you know, let's say you're a. I don't want to use military jargon that people understand, but if you're a company commander, so you're the boss of the company, you should understand all the way down to the bottom.

Speaker 1: 53:46

With the lowest level person does you don't have to be an expert at what they do, but you should understand it.

Speaker 1: 53:50

So in brokerage, right, if you are a sales director, um, I would suggest you understand your boss and your boss's boss, and maybe it caps, maybe your boss is the owner of whatever. Um, I would go up a couple levels and understand what they do, what they're dealing with, what are their pressures and metrics that they're reported or judged on, and then I would say definitely, like Steven said no down, one level down, but you should at least, I would say, understand all the way down but be well-versed in at least one down. Yes, because, like, for example, if you don't understand what your billing team deals with and your AR team when it's collecting on invoices and you don't understand the struggles that they're having with customers and you know PO numbers being missing or how they're billing it, they're slow paying and you know. If you don't understand that, like you're just you're totally blind in one area and you're, you know you don't don't push your guys to go sell more to a company that's, you know, causing headaches throughout the rest of your organization.

Speaker 1: 54:54

So, smartest in the room, find another room. I love that too. Always be around people that you can learn and develop from.

Speaker 2: 54:59

I wanted to add. I was listening to a recent interview with Elon and I think he really exemplifies this because in every business he's built, he first learns everything he can from first principle point of view, not all of the features and everything, but like, fundamentally, what does the business do and how does it work all the way up, right, and they asked him, like what do you think went wrong with Boeing? And he was like, well, like the former CEO of Boeing was an accountant and he knew nothing about airplanes. He's like that would be like a general of the cavalry that never rode a horse, like he doesn't know what the business is and it was funny, but it's like, so true, like one of the things that I think made him so successful.

Speaker 2: 55:38

When, like, the biographies are read, like whether it's SpaceX or Tesla, is like he literally learned how to build a rocket. Fundamentally, like how does this work? What are the physics behind it? What is necessary fundamentally, like how does this work? What are the physics behind it? What is necessary, what isn't, from like a first person, first principle point of view, right, and again, you don't need to learn every single thing that happens in the company, but you really should understand, if you're leading an organization, what everybody's role is and what the impact they have is, because otherwise, like, you're not really making informed decisions at all, and to me, I think that is one of the most important things for leaders.

Speaker 1: 56:11

It's huge, huge. Well good discussion, man. We could go on for hours about this stuff, but that's, that'll put a bow on it. So good stuff. We'll see you guys next week on the next episode. Final thoughts.

Speaker 2: 56:23

Ben, whether you believe you can or believe you can't, you're right and until next time.

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