The Right Way For Entrepreneurs To Approach Stretch Goals

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Photo courtesy of Shelly Sun

[The following is the full raw transcript for a LEADx Podcast interview, which has been lightly edited for clarity.]

Kevin Kruse: Hey there everyone. Kevin Kruse here. Welcome to the LEADx Show, which is just one of the ways we are sparking intentional leadership in 100 million people over the next 10 years. If you want to stand out, and to get ahead in your career, visit leadx.org for the free course of the day, and for dozens of training programs in the LEADx Academy that I've personally curated for you.

Today in the show you're going to hear from an entrepreneur who's leading one of the most successful franchise organizations in the world. We talk about challenges of delegation, stretch goals, and how her company has become the only ones that do what they do, even though they have 28,000 competitors.

A lot to learn from this. Our challenge of the day, based on my conversation, is what are your key metrics? Pause today, whether you're running a company, a team, or you're a team of one. What are the few key numbers that show the health, and predict the future growth, of your organization, of your department, of your team?

If you automatically think, “Duh, Kevin, it's sales, or it's profits, or it's just getting all our work done on time this quarter,” think harder. What is the activity behind those sales, profits, or getting the work done? What are the key metrics that you can monitor and watch on a weekly basis that's going to show whether you're reaching those goals or not?

Our quote of the day. “I choose to make the rest of my life the best of my life.” That comes from Louise Hay, who's the founder of the publishing company, Hay House. Our guest today is the CEO and founder of BrightStar Group and BrightStar Care, which is a home care and medical staffing company.

She built it into a $400 million a year company in just 10 years, while also balancing work and family. She's been named Entrepreneur of the Year, and she's even starred in an episode of Undercover Boss. Our guest is Shelly Sun. Shelly, welcome to the show.

Shelly Sun: My pleasure.

Kruse: I have a tradition where I always start with the same first question with all of my guests, which is because I feel that failures are just stepping stones to something greater, we don't always know what that's going to be, I want to de-stigmatize failure a little bit for our listeners, so I'm hoping you'll tell me a story about one of your best failures, and what did you learn from it?

Sun: One thing, as an entrepreneur, one of my best failures was starting to delegate responsibility to members of my senior team for my Franchise Advisory Council, and I really lost my pulse of what my franchisee's day was like on a day-to-day basis, and how the economy was affecting them.

At that point in time, everything felt great in the franchisor level because we were growing, and didn't realize how a down economy was affecting clients, decreasing services, or going away altogether, and it was really hard time for my franchisees.

I had really become out of touch, so I took my dose of humble pie, and apologized to my franchisees, and asked my co-chair, the Franchise Advisory Council, to help me repair the damage that had been done, and get the brand for franchisees and their profitability headed back in the right direction.

It was my lowest point as a leader, but I think it really set some of the best times for us as a brand because it caused me to make commitments that I might not have made to franchisees that I have been able to keep up with, even though the economy has come back. Part of that was saying that we would allow the Franchise Advisory Council to take 10 to 15,000 of our labor hours every year, and prioritize what the franchisor would work on that the franchisees cared about.

We've done that every single year, so my learning moment was in 2008, so this many number of years later, we're still continuing to allow our Franchise Advisory Council to take 10 to 15,000 hours every year, and prioritize initiatives that we work on, on their behalf, to improve their top line and their bottom line, and that's really great for the relationship.

I've learned I will never delegate the accountability for my Franchise Advisory Council to any member of my team, no matter how big we get.

Kruse: Wow, I mean that's a great story, very honest. Thanks for that. It does make me wonder about, like I've known a lot of managers and leaders who the problem is they're micromanaging, right? They want to do it themselves, or are really looking too closely. And yet, if we step too far back, we can lose touch with what's going on out in the real world. Tell me more. What do you think about this topic of delegation? How do you know what to delegate? How do you know what not to delegate, or how do you balance it?

Sun: Yeah, you know me, it's something that's been a pendulum swing for me, in terms of, and I'm an accountant by background. I founded the business. I was the branch manager. I interacted with every customer, every employee in the first few years, and so I knew the business so well, the hard thing can be you feel like no one else is going to do it like you would do it, so you tend to micromanage for a period of time.

Then you realize you can't scale, and so starting to work on new responsibilities. I think I found myself delegating too much without good controls and place. I think I found the happy balance now. I read a book back in 2013 called Traction by Gino Wickman that has the entrepreneurial operating system in it, and really used that as a guide as to how do you delegate to a great team, but have checks and balances in terms of score cards and quarterly responsibilities to make sure that what I need the business to deliver, the team is on track.

As long as they're on track, I can step back, but if they get off track, I know when to kind of come back in a little bit more, and make sure that I'm moving the business forward. That's been a real great ability for us to find a right balance for me personally, as a leader, of how do I set the vision, and step down into the weeds if I need to, but only if I need to, that's been real important.

Then I think the lesson learned that I gave is while I think I've found the right balance with my team, the blind spot I could still have is that I don't get bad news, or don't get the early warning indicators that teams don't necessarily want to tell their boss about, particularly a founder that owns 100% of the stock, right?

Everything's riding on a given day, so that's where I think the combination of delegating to a great team, utilizing a great program that's like from the book Traction, entrepreneurial operating system with a good score card. Then keeping the pulse of the day-to-day through managing my Franchise Advisory Council, and being close to that group of franchisees, I think has been a good balance for me as a franchisor.

Kruse: That's great. It's actually the second time this week someone's recommended that book Traction. That's great. This is similar to what we're already talking about, but what advice, you've been a leader of small teams, now leader of a very large team, what advice would you give to a young first-time manager who, she really want to excel as a leader, but it's like right out from individual contributor to first time manager. What's like a fundamental piece of advice?

Sun: Well, I think honest feedback that's timely is really important. I learned this probably as an early manager myself, from coaching from one of my managers, is it's always important to give feedback as timely and as specific as it can be, but people don't always love getting constructive criticism, so being able to do it in an Oreo, give positive as the chocolate.

Give the icing in the middle, which this is the constructive feedback, and sometimes it's a Double Stuff, and end with something positive that shows your belief in them being able to make the changes necessary to excel individually and for the business with the chocolate cookie on the bottom.

That Oreo approach has served me well, and it's very simplistic, but as I'm giving constructive feedback, I make myself kind of think through that, whether that's in writing in an email, I try to start positive and end positive, and my constructive criticism might be in the middle, or an issue that I'm addressing might be in the middle, and that's with a member of my team, that might be a franchisee, and it might be with a vendor, so I try to handle my written and verbal feedback that way.

Kruse: Again, I think you touched on it when you talk about these sort of dashboards and metrics from the book Traction, but I'm curious about how important has goal-setting been for you, and how important is it in the organization, in terms of specific managers using specific goals and measures to keep people on track?

Sun: I think it's an absolute must for any business. I think that the balance is what's the amount of stretch that is going to move the business forward. As an entrepreneur, you know, we always think we can do everything, so making sure that it's realistic while still a stretch, I think is always my challenge. I think specific goals are really important, so the team can all get on the same page about what are the most important things that the business, and individually, we need to accomplish.

It's really the only way to hold people accountable, and be able to develop, is if people know exactly what is expected of them, and it can't be subjective, it has to be objective. Hopefully, compensation programs are aligned with that.

Kruse: Do you have a rules of thumb on that stretch goal? I always struggle with that too. You stretch too high, it's demotivating because you don't hit it, or people don't think you can, but you don't want it to be a slam dunk either.

Sun: Yeah, I think what we've gone to in the last 12 to 18 months is we still kind of do the stretch that might be 10 to 15% above maybe what we accomplish of everything if all the stars don't align, but we set a floor on bonus potential where, as long as we're at 80% of our EBITDA target, there's a sliding scale for payout.

Anything above 80% is paid out, and as we get to 100%, and above 100%, bonuses could actually be higher. If they're offer letter is up to 20%, it could be 25% if we blew the budget, on the positive side, out of the water. That seems like it does the fair thing versus a lot of bonus plans like we used to have, is if we don't hit EBITDA, no bonuses get paid.

Kruse: Right.

Sun: Then, if I'm an entrepreneur, and I'm stretching the organization to be as good or better than any of my competitors, which I want to do so we continue moving forward and capturing market share, it can be demotivating if you don't feel like they can accomplish it. It felt like the getting on the northside of 80%, most of the time we're at 95. I think we're 97, we're tracking to 97% right now. As long as we're above 80%, there's still pretty sizable bonuses that are being paid out.

I think the difficulty with stretch goals is when compensation is aligned to the stretch goals, and decoupling, and making it fair, where every week our score cards are about looking at the stretch and only the stretch, but when we get to the year, and we worked really hard, and we know we gave it our all, and we came up a few percentage points short, but if I gave the slam dunk number, and it might be 20% less, or 15% less, I'd rather have the higher number and miss it by three points, than have set 15% down.

I don't know that I would have made up that difference on the positive side, so that's been how we've tried to solve for the employee morale issues, while not giving up on our opportunity to continue to grow.

Kruse: Sounds like a good solution. Did I hear you actually track the metrics weekly? Is that right?

Sun: We do. We check many metrics weekly, and then some that are just monthly or quarterly, but the key metrics that are going to influence whether we're going to hit our numbers like our system-wide sales, and how much our franchisees are growing year over year, what are franchisee's margin is, how many deals we're getting closed, those things we're looking on at a weekly basis.

Kruse: Fantastic. You've obviously had incredible success since launching the company in 2002. What do you think are the secrets behind the incredible run you've had so far?

Sun: Well, I think for me as a … I've grown a lot through the franchising business model, so I'm a big believer in franchising. Taking something that is successful, and being able to have it be locally applied, because someone in my industry who's wanting to make a decision for home care for their mom, or dad, or grandma, or grandpa wants to deal with some who is in their own community.

Kruse: Right.

Sun: And likely that has their own savings invested to do it the right ways, and they probably got a calling like I did because of a personal family experience to give great care, and treat family like it was our own family.

I think the franchise model, for me, is the best way to do it. I find many franchisors will franchise something they've never done, which I don't understand. For me, I think the reason for our success, a couple of reasons.

One, I think it's because we were willing to have a company on location, grow it to a second and third to make sure we could replicate the model, and the success we had had in the first, a second or third time to make sure everything was well documented before we started franchising. That's one.

I think that's the having the company-owned store, so you really truly know what you're going to have people have faith in you that you can teach them how to do it because you've done it yourself is one. The second is the selection of franchisees.

For us it was never just about how quick could we grow, but we wanted to grow with the right people that really could do the right thing by the families, and in their marketplace that they're taking care of. I think that's really kind of key to some of our success. Then the third is really looking at, as a brand, what are the competitive advantages that we need to have for our franchisees to grow and our families to receive absolutely the best care.

Some of those have been very large investments, and very strategic investments to do the full continuum of care. Most companies in our industry only do non-medical. We do non-medical and medical. Then what is the way that I'm going to make sure that I can sleep well at night knowing that my franchisees are living up to a very high standard when they're 1,000 miles away from me was committing our brand to having all of our locations have to have an outside third party accreditation through the joint commission.

That was a big undertaking. Hundreds of thousands of dollars because we funded all of the programs and protocols in the beginning stages, and took our first few franchisees through a certification initially. We're the only private-pay home care company who requires joint commission.

It's not required for our customers, but it is something that we volunteered for. Out of 28,000 agencies, that provide home care in the United States, there's only one brand, BrightStar, that's achieved that Enterprise Champion for Quality designation, which is the highest level that you can get on quality with the joint commission.

Cleveland Clinic has it, Mayo has it, and BrightStar has it. I think it was a willingness to invest, to have clear competitive advantages, and be willing to say we're willing not to grow as quickly, but we're going to grow the right way with the highest standards possible. That's a niche that I believe not all families may be able to afford, but every family aspires to give their loved ones the absolute best. If they can afford it, it would be BrightStar.

Kruse: You said so much great stuff in there. First of all, I can't believe there's 28,000 home care agencies. That, again, puts into perspective the success you've had even more. This is a show about leadership management career success, but often in my entrepreneurial work, I talk about, I recommend to people that they figure out their positioning, their value proposition, in a way that they are the only ones who can do what they do.

People look at me like I'm crazy because like, “There's 28,000 of them out there. How can I be the only,” or “It's too expensive to go do this thing to make me the only,” or “This is putting up barriers.” A year of great case study of this, no one forced you to do this.

You put up all kinds of money, and time, and pain to go through this, and yet now, you are the only. When you're the only, it doesn't mean you're for everybody. That's good. You're not for everybody. You've defined that segment, so there's a lot that we can learn from that. When it comes to today, when it comes to BrightStar, what are you most excited about?

Sun: I think we're starting to get into new lines of business. Just like we were kind of leading edge in the home care space, I think there's always adjacent opportunities. For us, we've started a pilot of a senior living and memory care community. We've recognized that some families might not be safe still in their home, particularly if there's a dementia issue that develops, and wanting to be a part of that family's journey, as they need to progress from home to an assisted living setting.

We're opening our own assisted living community so that those families can progress with us. I think that's really exciting. We're starting to look at international expansion, and that's really exciting. Then continuing just to look at how technology might impact our industry, as it will so many others, with artificial intelligence, and remote monitoring capabilities.

How do you help families remain safe with an augmentation of home care one-on-one and technology that helps their dollars go farther, so more people can have access to home care services, and remain safely at home instead of having to move out to a nursing home at some point in time. I think people thrive being in the home, so I think we're trying to embrace technology, look at market expansions, and look at geographic expansions as kind of where we are spending a lot of time, in terms of the future, for the business.

Then, on a personal front, I've been honored to serve as chair for the International Franchise Association this year. Franchising is very near and dear to my heart. I didn't envision, when I first started BrightStar Care, being able to expand it to the level I have. Franchising has enabled me to do that.

Many of you are followers, have that same opportunity, where they've got a great business, and they can't imagine having the capital to expand it coast to coast. Franchising can be a great way to do that. That's what really has formed so much of my success that I wanted to give back to an industry that's given me so much. I've been honored to serve as their chair, which will end in February of '18, but it's been a near full-time job for a year.

Kruse: How do you fit it all in?

Sun: You know, I don't need to sleep much fortunately, but you know, when you have something that's making you feel so good about making a difference, I mentor probably 50 to 75 small businesses that are thinking about franchising or have recently started franchising.

That, to me, is a thrill. I'll usually do it for them for 6 to 12 months, when they really need it, and can help them get that right path. Then hopefully, they'll form a board of advisors or board of directors and help that forward. Giving back to small businesses and help them, I'm sure like you, seeing them kind of start to take off …

Kruse: Yeah, that's great.

Sun: … and be successful, gives me a lot of good will back, and so even though it's a lot of hours, it feels so good to do it, you just put sleep off for a year, and I'll sleep in March.

Kruse: I'm curious, the way you're describing your business and your success, it comes off as very humble, first of all, but also very strategic. I'm wondering where do you go, or where have you gone for your business education? I mean is it books, is it mentors, is it official programs? How have you learned all of this?

Sun: I think it's a combination. I'm a YPO or Young Presidents Organization, so I tap into that network. I'm actually cramming right now for all my case studies because I'm there in January. I go for a week at Harvard every year as part of the YPO Harvard Alliance. I learn a lot in that one week period. I spend two months preparing for it. That's one way.

I'm in a forum so I have eight other business owners, kind of getting their ideas and helping me kind of expand my own. I'm at a lot of health care franchising and technology conferences per year, so I can see what's coming, think about how that might apply for my business, decide how much of my budget I'm going to allocate towards R&D for continuing to evolve forward.

Then I've been a big believer in a board of advisors since the very beginning. I've reformed it four times because at some point, I'll be challenged by a board. I'm a big learner, and I have big accountability, and I will get to a level where I'm peers with my board, and then we part as friends, and I reform my board, so I always have a board that's hopefully kicking me in the butt, and helping me push for the next level.

That helps me be a better entrepreneur. I'm getting advice and input that I haven't yet seen in what their experience is. I've had my same board for four years, and I'm still getting my butt kicked every quarter, but that means I have a great board. I've got a franchise industry executive that's from a finance background, former chairman of the IFA that acquired a large franchisor. I'm very heavy in marketing.

Then a Harvard professor that's really big on employee engagement and client met promoter score. I have three great advisors that I get what's going on in the marketplace based on all the board they sit on, but also challenging me to push myself and my organization to reach its potential. I think it's reading. I think it's being in industries. I think it's being part of peer groups like YPO, and I think it's also important to have a board of advisors, even if that's informal through mentors in the early stages.

Kruse: Just for our listeners, you're referring to … Listeners, Shelly's referring to YPO, Young Presidents Organization, which is a great organization. You do have to have already had a certain amount of success to get into YPO, but there's also YEO, Young Entrepreneurs Organization, which has much more modest thresholds for membership. The Forum is like a peer network group. You have Forum and then a separate board of advisors.

Sun: Correct.

Kruse: A follow-up on your board, I'm curious, did you already know your board members at the time you approached them about, “Hey, can you more officially mentor me, and join my board?” Or do you just kind of, “Hey, that's someone I want because they're great on workplace culture,” and you cold email them?

Sun: Yeah, so in each of the three. The first one, David Barr, who is a finance guru, and serves on many franchise boards. I knew him casually through us being both in the franchising sector, both sitting on the International Franchise Association board of directors, but it wasn't getting formal mentoring from him, and took a chance and asked.

Sid Feltenstein I had seen at IFA meetings, knew he had a real amazing marketing mind, and that's not a way that my brain thinks, so we were starting to get into TV advertising, which was a big investment, $5 million a year.

I didn't necessarily have the talent internally to help make sure I spent that money effectively, so I needed someone marketing. Sid told me, “No,” when I asked him to join my board. I didn't have a real relationship with him. David Barr had served on boards with Sid, so David went and asked Sid, and so Sid said, “Yes,” to David.

Kruse: Love that.

Sun: He eventually said, “Yes,” to me. Then, Boris Groysberg is a Harvard professor that has been in the program as one of my favorite professors. Francis Frey and Boris Groysberg, always my two favorite professors. Boris said, “Yes,” when I asked him if he'd consider being a board member. He said he'd think about it, and then I brought in David to talk to Boris, and Boris said, “Yes,” to David.

David helped me get Sid and Boris on the board, but all three really function together very well. I have someone really great in financing strategy, someone really great on marketing, and somebody really great on people, and customer, and research, and access to a ton of data with Harvard as well, so the three of them are amazing.

Now, I pay them a lot. Obviously, your listeners that are first starting out, when I first started out, I still had a great board for what I needed at the time, and I paid a great dinner, and I didn't have any money to pay them in the first couple years. Once I could, I paid them $500 a meeting. Then once I could, I paid them $1,000 per meeting. That lasted me through my first five years, and then I changed my board.

It didn't take a lot of money to still get good talent who were willing to help an entrepreneur. They didn't want to take the risk, and work the hours to be an entrepreneur, but they were willing to live vicariously through someone who was willing to take that chance if they could give back by helping someone be successful that was willing to take that risk.

Kruse: Yeah, and I'm glad you talked about that. It doesn't have to take a lot of money. LEADx family, I want to make sure you hear what Shelly's saying. Certainly, if you are a business owner, this is great to have an advisory board, great way to put one together, but even if you're young and wanting to advance in your career in a big company, you should have a career board of advisors.

I always say it's not just yeah I can call Uncle Bob when I want for some advice. You should reach out to two, three, four, five people that have agreed to come together over dinner a couple times a year, or once a quarter, to hear how it's going, and to give you advice.

In those early days, I think, a conversation at a nice steak house or something is often all it takes, especially if you have some kind of relationship, but as you go on, the other thing that I'm hearing is a lot of people want to give back. The most busy, successful people still make time to give back and to mentor others.

You'll get people who just want to help you, but you'll also get advisors who want to get a relationship with the other advisors. Once you get one on or two on, it becomes easier because now it's like, “Oh, I'm going to have dinner, I can be helpful, and I'm going to get to know this professor.” All of a sudden, there's some extra incentives. We don't need to wait until we're running 100 person, 1,000 person company to do this. We could do this just for our own career, our own company of one.

Sun: Yep, absolutely agree.

Kruse: Shelly, what is the best way for our listeners to find out more about you and BrightStar? Whether they're interested in your services for a family member, or they're interested in franchise opportunities?

Sun: Thank you for that. The best way to find out about services for a loved one, or anything about our organization is brightstarcare.com. Then anything having to do with researching franchise opportunities, brightstarfranchise.com. Then for those that might just be thinking about franchising as a way to scale, or some of the things that we talked about in terms of ways to lead, or form a board of advisors, or things like that.

For me, I was on Undercover Boss a few years ago, and I knew that I would get a lot of business owners, or those in corporate America, wanting to reach out and have me mentor, and I knew I would have the bandwidth to say, “Yes,” so I self-published a book, and put $100,000 of my way of giving back to those who might aspire to take their business and scale it through franchising.

Grow Smart, Risk Less is also a book with all of my management and leadership philosophies, and a way to evaluate whether your business could scale through franchising. Easily searchable on amazon.com. All of that money goes back to the franchising industry as we don't keep any of that.

It was my way, again, to kind of continue to give back to an industry that's given me so much, but also help those, like your listeners, that might be thinking about, “I've got an amazing, $50,000 a year business, but could it be so much bigger through the scale and power of franchising?”

I've seen that many businesses can be, and it was my way to help people research it. That could be a way to grow for themselves.

Kruse: I love that, and when I read you onto the show with your bio, I mentioned the Undercover Boss in the book. I wasn't asking about the book because I thought it might be too franchise-specific, but hearing, now that we've had this conversation, I'm going to read the book, and then have you back on, so we could talk about the advice inside the book.

Sun: Happy to. A lot of it is leadership related, so I'm happy to. I think it's applicable for everybody.

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Kevin Kruse
NY Times bestselling author, Inc 500 entrepreneur, and keynote speaker on Wholehearted Leadership and Extreme Productivity. Download 'How Millionaires Plan Their Day: A 1-Page Tool' at http://kevinkruse.leadpages.co/1page/