A lifetime in and around small business
JEREMY RIVERA
I am here with Peter Bergeron, an author leading the charge on some challenges that small businesses and operators are facing right now. Tell us what it is that you do.
PETER S. BERGERON
I have had a lifetime in and around small business. It started when my father launched his business when I was four years old. I grew up with it as another entity in the household. At six it was go to work and play around with packing lists, because it was not Game Boys and it was not iPads, so that was the entertainment. I learned a little bit of inventory that way.
I got fired from the place when I was fourteen. I got brought back by the time I was twenty-nine, when per my dad I was finally smart enough to come work for him, and I did go back and join the family business after spending years working in other small businesses.
Then I had the misfortune of being the one who had to close the family business in 2020, after my dad passed in 2019. That led me to some soul searching about what went wrong. Eventually, at age fifty, I decided to go back and pursue my doctorate and start looking at what went wrong on the small family business side.
What I found was that our ending was more the norm than the exception. That led to other questions, and to finding out that small business continuation as a whole is even worse than small family business. That added more questions, and eventually led me to the book and the framework I introduced, which is a different way of looking at small business. It is about the business of running a small business, and about the job that arrives when someone launches a company that they do not know is coming, and that eventually traps them inside their own organization.
The trap is not the business. It is the structure around it.
JEREMY RIVERA
I come from an entrepreneurial background. When I got trapped in a corporate job, it crushed my soul. I saw the soul-crushing decisions, the labeling of employees as the biggest expense. It seems to me entrepreneurship is a better route for a lot of people than being stuck in a corporate entity. But you are pointing out that there are ways for it to suck worse.
PETER S. BERGERON
It definitely can. Although one of the things I did not recognize until a recent walk with a friend, who happens to be my wife, is that in a corporate role, when you are leading departments and doing that same thing, that leadership, that mentality, that type of person can also get trapped there.
The type of person who ends up getting trapped is usually that small-business-minded person, because they think beyond the employee as the biggest expense. They think of the employee as part of the team, part of who they are leaning on for their own success. They have a close relationship to it. You get that in tight-knit corporate teams too. It is that great team lead who says make sure you take your weekend, I will step in and cover it. That type of leader is the one who ends up in trapped mode.
So as we build, we have to make sure we are structuring things correctly around us, so that the business of the business does not become something we dislike. Because small business owners will go out of their way to avoid bringing that corporate feeling into their company, and in essence then go and wear all of it themselves.
Most of us were not business trained. The majority of small business owners came from a different field. You step in, you think of how it is done elsewhere, and you loosely put it together, the way we all run a household a little differently. All of those pieces come along with it.
Education, experience, and which one you can hire
JEREMY RIVERA
I skipped college. My scholarship ran out and I grabbed a job. Somebody I was in class with went on and got his four-year degree, and I ended up hiring him during the Great Recession. So I have some intrinsic skepticism about higher education. But I have also seen people with MBAs sweep in and create very successful companies. Where is your opinion on that balance of education versus experience?
PETER S. BERGERON
My undergrad degree did not prepare me for anything, because I was not actively learning in it. There was zero value in it. There was more value in what I knew about business from all my years at the kitchen table, being around to talk to my mother and father, living inside that small business.
Knowing it from the gut side, being okay with being uncomfortable, knowing I am not going to know everything when I launch and I will figure it out at the next step, that is not education. That is a person. That is a type of personality, a type of risk tolerance. That is an entrepreneur.
The skill side, most of that we can actually hire if we are really good at it. You go get the four-year degree, and when I need a four-year-degree SEO person in my company, I can pull them in. But I do not need you in that company while I am writing the intellectual property and bringing forward the new idea that nobody else can think of.
Look at the Fortune 500. Those CEOs jump from industry to industry. One day they are leading Ford, the next day Pepsi, the next day IBM. There is no industry standard between them. They know how to run that successful portion of it, and somebody else is handling the product or the service line. In small business we are that same person. You are the product driver, but you own the business too. That is the complexity that starts adding up right away.
The accidental business owner
JEREMY RIVERA
I interview a lot of entrepreneurs, roofers, contractors. Is there something different about the local services niche, where their first love is swinging a hammer and the actual business of business is not their forte?
PETER S. BERGERON
That is the accidental business owner. That is the top framing crew leader for somebody else who finally gets annoyed, looks at the numbers, does it in his head and goes: wait, you are making this much off me and I am wearing all the stress. And he blows up and says I am done.
That describes my brother-in-law, and how his father and his partners started their foundation company. They got annoyed with who they were working for and said we can do this on our own, everyone knows us, we will get customers, no big deal.
It starts off great. It is a truck or two. Then you expand and you have four trucks, and suddenly you are no longer out doing the hammer swinging. You are no longer on site doing the stuff you love. You are back dealing with the bank on a ratio. You are back at the home office dealing with the insurance renewal. That was not what you got into business to do.
So the question becomes: as it grows, how do we get you out of that? How do we build systems that let you keep your control and your visibility, because these are your own personal guarantees? How do we match your risk tolerance with doing what you actually wanted to do when you started, rather than becoming the CEO of the business, which is never what you really wanted?
The vocabulary that bushwhacks owners
JEREMY RIVERA
There are a lot of times in business where not knowing terminology means you get bushwhacked by something you did not have a word for. What are your top vocabulary words?
PETER S. BERGERON
What happens to small business owners is they get things thrown at them like SG&A, or gross margin versus gross profit versus gross revenue, rather than talking about the business as they manage it. So we decided to make the language about the business of running the small business, and simplify it.
Instead of customer ratios and clientele, it is just customer concentration. You do not want more than thirty percent. You do not want more than forty percent. We want something simple to look at first.
I was teaching a business finance course at a community college in Southwest Florida, and the topic was international finance. The people I was working with were going to be small business owners. I thought, we are talking about topics that are not going to matter to you. Here is what is going to matter to your lending officer. They want your debt service ratio: your total debt payments versus your income. You are not going to have a fancy portfolio line of credit. You are a small business. Your line of credit is going to be your receivables and your inventory, fifty percent of inventory, seventy or eighty percent of receivables. That is your line of credit.
Instead they start talking rate swaps. That is not what the small business world deals with.
A message for the trapped operator
JEREMY RIVERA
If you could talk to somebody you would define as a trapped operator, what is the message of hope? How do they get out of the box?
PETER S. BERGERON
It is first identifying it. We came up with something simple in form: a quick six-question snapshot someone takes that tells them where they think they are in their business. We look at that profile, at what they think their weaknesses are, and we start talking about why you built what you built. The reason we build what we build is for our own comfort, our own risk tolerances. That is how you get entrapped.
Then we turn and say: you are talking as though you are operating in survival mode, finances do not feel secure, all of those pieces. But when we look at the metrics, you are actually doing quite well. I have clients like this. Why do you feel like this? It steps back and it is just a personal feel. Getting them to understand that they truly are in comfort, that they are meeting their goals, sometimes just requires a dashboard that shows them green.
The simplest version, if someone says I am not really sure, is this: keep a tally next to your desk throughout the day. What questions are you answering? Then ask what hat you say you wear, and what you would expect somebody replacing you in that role to be answering. If you say your role is chief marketing officer and you are answering questions about production orders, accounting ratios and HR issues, that is not fitting your structure.
It may be that you have nobody else to wear that hat right now. Fine. Can we name it later, so that as we grow we bring that person in and it loosens what is pulling us away from what we got into the business to do? Because if we are not doing that, you start to dread going into your own company. It is a really bad situation to be in, and it happens.
Fire prevention, not firefighting
JEREMY RIVERA
Some of my conversations are with solopreneurs. They were developers or builders, they understand SaaS, they have an idea and they launch it. All the hats are stacked on one head. What is your advice for correctly offloading those hats?
PETER S. BERGERON
As you are building, and even with the book, we talk about bonus material. During that whole discussion it is always: what if this is the ultimate success? How can this scale? We cannot say here is a bonus that only works for us if in the first thirty days we have very limited success. Then we already know we have a problem ahead of us.
The nice thing is that while you are the only one thinking about it, you have time. It is not like you have forty hours of work at that moment. So you should be game planning, and you should be putting yourself in the idea of fire prevention rather than firefighting. We get into firefighting mode in our businesses. It feels busy, it feels like we are needed and important, and those are the same type of traps. But we do not think about the fire prevention.
The best time to build the fire prevention is before you even start anything. You think about it in mergers and acquisitions. You talk about the operating agreement at the very beginning. You talk about how you dissolve it before you start. We want to be doing that as we step into our business.
My father used to talk about people jumping in a car and starting down the road on a trip without knowing where they are going, and then getting to a stop sign and making a decision to turn left or right. We do that with our businesses. I am starting my business. Okay, how do you want to get out? What do you mean, how do I get out? I am just starting. But you are heading somewhere, and the where has to be getting out.
Step into your W-2 world and you sit with HR. Here is your 401(k), here is your career path. Each year you sit with your manager: what is your three-year, five-year goal? Nobody is doing that with a small business owner. You are doing the opposite. What are you growing next? What are you building next? The whole time in the W-2 world you are heading toward retirement. The whole time in your business, you are heading toward more. We forget that at some point we have to hand it to somebody else.
JEREMY RIVERA
I had a great conversation with Brandon Moon, who defines what he does as end-of-business consulting the way you might think of end-of-life planning. How do you want to work it out at the end? Do you want to pass it on to your kids? If you were disabled tomorrow, would it live on, and would you want it to live on as it is? Or is this just the proxy for owning your own job, and hopefully it does not end up owning you, which I am guessing is the premise of the book.
PETER S. BERGERON
One hundred percent. It is that whole question of what is your journey, what is your life balance, what is your exit.
I have a friend who took the assessment, who I knew would answer that he is in complete survival mode. In his mind that is all he ever is. He has done everything right from the day he started, every piece he said he was going to do, setting it up to pay off the notes at this time. He always said, I know I am not building a practice that sells for big money, I am building a practice that goes for pennies on the dollar, because I bought it for pennies on the dollar and I have earned a great living my whole life.
Even with that plan being exactly how he wants it, he still looks at it and wonders: did I leave something on the table? Somebody else did it this way. Am I wrong? He had complete and total success and still carries that doubt. That is the personal side. That is the emotional side. As we get toward the end of our stage we think, my career is not forever, what did I not do? We see people hold on. We see it in sports, in the performing arts, and we see it in business too.
What actually changes when you add a second location
JEREMY RIVERA
I consulted for a company in Florida making precast concrete walls, and they were looking at nationwide reach. They start in Florida, but to get there they really have to stand up a second location and a hub in Houston. When small business owners look at going multi-location, what are the implications of that choice?
PETER S. BERGERON
I was listening to one of your other guests talking about growth stages, and it was funny because he was talking about complexity, and I have a complexity index in my own model. But he talked about employee count as being the be-all and end-all, and it is not, because we just go to that next thing of location.
Now you have added a second location. Is it a second location in a region you can drive to, so it is one regional driving manager? Or is it a whole other facility, like Houston? Houston is a different area for getting raw materials. It seems like it is the exact same thing, but the costs are really going to be different. So our financial controls and how we evaluate them change.
Now we have complexity in deciding where to ship from. It might be cheaper to ship from Houston at that moment, but then we are not using the overhead we are already spending in Florida, and we already have staff there. Do we take the more expensive option for the time being because it keeps the employees consistent? We just added a whole other level of complexity that is like a second company.
I worked for a company that had a Houston component and a New Hampshire component. Same product line. We could run faster up north, and the cost per unit ended up cheaper because of heating and other factors. But they did not use the exact same material, because they got it from a different regional supplier. So now our product is not as good. Is that a problem?
Then add customer type on top. Is it a cash customer? A credit customer? A government customer, which adds a whole other thing? An international customer who wants to pay with a letter of credit when it lands on their dock? These are the complexities behind what sounds like a small step. I just want to go from regional to national. I want to ship a little more. That is not bad. I want to add a contract in another country. That is not bad. But all of it is complexity the solo operator never had to deal with before.
AI as a force multiplier, not a hammer
JEREMY RIVERA
Talking about complexity, my friend Matt Brooks of SEOteric says AI is your least trained customer support representative. So now you have staffing that is not inside your organization helping with your marketing, and I use helping loosely. You can do more faster with AI, but there are more strange offshoots to worry about. It used to be: am I ranking in Google? Now it is fifty platforms, AI answers, AI overviews. What is your framework for entrepreneurs understanding what AI can actually do? Is it just a production of AI slop, or is there real firepower there if it is understood properly?
PETER S. BERGERON
I think there is real firepower that can be leveraged. It is a force multiplier. It really is first about people, and about finding the kind of people who can take a small idea and grow it into a big idea, people who can see the logic train and watch the logic train. For them the tool is going to be powerful.
It is similar to switching from hand-drawn designs to CAD. It shifted what we were focusing on. The uniqueness is that productivity itself did not shift. The type of productivity shifted. We made better products, not more rapid ones. Think about how much better all our technology is, but a car is still four wheels, some type of engine and some type of brake system. We shifted from a person pulling it, to a horse pulling it, to something non-living pulling it.
But the underlying knowledge, the how-to, still has to be there. I teach an entrepreneurial mindset class, and when we do some work with AI I walk them through it: you are always presenting to a person, so you still have to communicate. This can help you do it, but you still have to personalize it yourself. It is like teaching longhand, then the calculator, then Excel. You need the logic behind it. The logic will never change.
The downside with AI is that you can so rapidly create something that may have nothing behind it. Even the term framework loses some of its luster, because you can type in create my framework and it will create something, and it is really nothing. So it goes back to the logic, the thinking behind it, and the experience behind it. That is what I think will be the difference for the entrepreneur: showing people how to use the tool by showing authentic utilization of yourself. How you think, how you live, why you think like that. Then I will follow the tools you use to make that happen.
JEREMY RIVERA
It is also about picking targets rather than using AI as a hammer for everything. The Ignitvio lead response study looked at 1,824 businesses and found 68 percent never responded within 24 hours. That seems like a good use case. It does not sleep, I need to sleep, I cannot always answer right away. Maybe there is something there. Versus deciding everything in my business model needs to flow through AI.
PETER S. BERGERON
Correct. It is looking for the places where you are doing repetitive work that has no value to it. There is value in your thinking. That is what you want the AI doing: the repetitive, administrative work, so that you have the opportunity for deeper thinking about a strategic problem, or a customer retention problem.
Say I want to revamp our standard operating procedures. I need the time to think about that. Then, okay, how do I use AI to make this better? Here is my standard, here is the right way it gets the message across in a good cultural way. Now make sure all of our procedures and policies follow that same tone. That is a great use, getting that best practice across your whole company quickly. But finding the best practice, that is still inside us.
If they remember one thing
JEREMY RIVERA
If they remember one thing from this conversation, what should it be?
PETER S. BERGERON
They are not alone. That is one of the things I actually hear more often than I expected: a loneliness of business ownership. It is because so many of the problems end up sitting on just you, and it is inevitable that they do. You have that balancing act of wanting to keep the team motivated, so you do not share everything bad and you wear it personally.
When there is a slow time in the company you wear it. You say I will take the sacrifice, I will work the extra hours, I will not deposit my check this week, I can push that personal payment out. You are not the only one who has done that. Others have done it. We do not need to be doing that. Let us step back, figure out why we are doing it, and reset. But that is really the biggest thing. They are not alone, because I think there is a feeling that they are.
Where to find Peter S. Bergeron
The book is at thetrappedoperator.com, which is where the bonus materials live.
The diagnostics, free articles, next-level articles, playbooks, webinars and online courses are at 12fatalissues.com – the ecosystem for understanding the second job you did not realise you were getting when you started a business.
The overall IP library is wrestlingagainsttime.com.
This conversation was recorded for the Unscripted Small Business Podcast with host Jeremy Rivera.
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