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“You Can’t Do It Yourself” – External Board of Advisors and Internal Leadership Team Make a Difference
Posted on: 2/17/2022
This is dialog from a Peer Talk episode between Dan Crowley, President of Peer Executive Groups and Kurt Barney, Owner of Vandalia Rental.
Dan Crowley: Welcome to peer talk. Today we have a very special podcast for you. We have Kurt Barney with us from Vandalia Rental. Kurt and I will be discussing his company, his origins with this company, as well the board of advisors that he has in place. He may have a different name for that but we have a number of members who are currently in the process of this. I know that Vandalia has had success. Just as a little background, Kurt has been a member of peer groups for a number of years. When he joined, I believe he had one location and you have five locations now with Lima, Ohio. I just want to start by asking you a little bit about your background. If you could just speak to us about when you started with the industry rental and how you grew up in the Vandalia system.
Kurt Barney: My father is a second generation. My grandfather started our company in 1961. I could make the argument that when I was born in 1981, is when I started in the industry because a lot of the projects around the house is where I became initially familiar with the equipment. Unofficially, I worked the majority of the summers growing up in the business. Starting with mowing the grass, cleaning the ashtrays, and then ultimately working on the on/off rent team, inside sales, then as a mechanic driver, learning the different facets of the business. Then I was not allowed to come back to the business until certain criteria were met. One of which is to attain a four year degree. So I shipped off to college, worked some of the summers in between and then graduated. I was still not invited back until I’d worked somewhere else for a period of time. Did that and rejoined the company officially in late 2004 full-time. He had a core group of individuals that were his strategy team. If you will, that helps guide him and coach him through some of the decisions that need to be made within the business. I would say that he still had the dominant decision-making capacity.
DC: So in 2004, you came back and at this time, who’s running the company? Is your father running it? Did he have lieutenants as well, or was it more his show and they had a bunch of employees who reported to him.
KB: You evolved in your role in the company, I believe. You took the lead in 2011. Why don’t you tell us about those seven years? What was that like? What were some of the things you were doing?
KB: When I was first invited back, I had to wait until an open position was posted that I could apply for and a purchasing role became available. So I was hired in, had one of the more awkward interviews in my life with my father and ultimately was offered a position. I started purchasing in 2004. We had just built an addition where we were looking to move into the supply side of the business. We built that up a little bit up until about 2007, until a desk showed up one day and it got moved into my old man’s office. We basically started playing Battleship. For the next three years, he told me that, “you need to learn to ask the questions, cause I’m not a hundred percent sure how to teach it, but this is the best way I know to do it”. So we’ve transitioned slowly and incrementally over time. He started allowing me to do more coaching and mentoring me through the journey until 2008, when things got a little choppier in the waters, which was really the best learning and transition environment you could have asked for in hindsight. I definitely mean that. Then in 2009, we started our successional process early. I was still in my twenties at the time. Then in 2011, we finalized that and I moved into the president’s role.
DC: In 2011, as you’re coming into the president’s role, why don’t you tell our members and listeners what that was like in terms of introducing? Why don’t you introduce us to the concept of your board and how that was introduced to you?
KB: As I mentioned a second ago, I was in my twenties when this was taking place, which is atypical. I think at least in our industry, from a succession one transition time. One of the concerns that was shared from my father and his bankers was just my youth and inexperience within a leadership role within this industry. My father made the decision that there would be additional criteria that would have to take place, to hold myself accountable, and to make sure that we were strategic to this. One of the things through our succession that was recommended to us was to set up a board of advisors so that I had a structured set of accountability, but we didn’t move into a director’s role because that’s not what we wanted to do from the business at that stage.
DC: There are some legalities around having a board of directors versus a board of advisors. There is more liability with directors. I think that it is important for everybody to understand that and research that part of it. So, when that happened did you end up walking into a room one day and there were ten people, or how did that evolve?
KB: This board of advisors is certainly a crawl before you sprint. That was a journey and a load by itself. Through our transitional process, we enlisted the help of an organization named airline. And one of the services that they provided was how to set up a board of advisors. We really had a coach through that process that was incredibly valuable and those early stages, because you really don’t know how to do it. There’s at least an RN. There was a lot of intimidation about doing it. How would you find these caliber individuals that would be willing to work at that level? For little old us in that capacity. So we enlisted their services, they handheld us through the beginning and they taught us how to put together a marketing brochure, a SWAT analysis, tell our story, a three-year plan, and basically a small brochure about how to attract and retain these individuals and what the expectation should be on both sides. I would say they were incredibly valuable. They also taught us some of the structure that needed to be there. The legal ease of the whole armless non-disclosures, non-competes, confidentiality, that stuff. How does established term limits and moratorium, which is compensation for the meeting and just the overall infrastructure so that you didn’t feel like you were flying blind.
DC: From an organization standpoint, first off, amazing that a consultant is available to have that kind of conversation with an owner. I wasn’t actually aware that could happen, but that obviously makes sense on the strategic consultant level. You had brought up a couple of interesting comments. You said the word term limits and REMUNERATION. Is that a merit? Tell us about what that means. Why are term limits important?
KB: REMUNERATION is a fancy word for compensation. I believe over time, most people will form relationships. What was articulated to us was, if you can’t get what you need out of these individuals in three years, you have gotten all you’re going to get. What we have found having a board that has turned over a couple of times now is that you do develop these relationships and there becomes a comfortability with those relationships. Also you extend your board because these people are always available to you because of that relationship. So the advantage of moving forward and pivoting your competencies that you may need in these positions along your journey is as those needs change within the business as well.
DC: I love the idea of turning over the board, meaning you have these influencers/relationships of alumni who have rolled off the board. That has to have some benefit.
KB: Absolutely, it’s been awesome. To be honest, because you may not need or know what you’re going to need in the future. The part I never gave the value to is these individuals because of their high caliber, also come with a strong Rolodex that can point you in directions, even if they don’t have the competency they need and having the breadth and depth of that Rolodex and those individuals in your corner help you when you’re trying to solve complex problems. It’s a straight flat rate per meeting plus expenses.
DC: There’s something that pulls them to this, not just compensation. Is it an hourly or is it just a stipend per meeting or something like that? What’s your frequency? How often do you have the board gather?
KB: We started quarterly but that was a little too frequent for what we needed, so we moved to three times a year. I think the first meeting was that awkward first date you would go on. There was a lot of fumbling through it. You really just rehashed your story. You spent half your meeting, making introductions to the different individuals in the room, telling their stories, and then you lay out one to three talking points. That first meeting, our talking points we’re; what should our talking points be moving forward? What questions do you have? But then as you get to batch your third meeting, and you’re six months quarterly, it really starts to gel a little bit. You’ve communicated between the meetings and you’re starting to see what’s percolating up with the business. You’re feeling more comfortable, opening up about what your genuine needs are and your vulnerabilities are. Then you start to get to that high level conversation.
DC: That makes sense. I can see that once you’ve established now, how did you grow into the agenda for that board meeting? What does that look like? And tell me a little bit about the story of how that has changed. It does evolve, so it’s not like you’re still using the exact same agenda that you had the first time.
KB: Our agenda has changed every meeting on whatever we believe our strategic talking points need to be for that meeting. We put that all together in advance, we send it out, and they’ve got two weeks to digest it. Then they come with the questions, and you rehash for maybe the first half hour. Our meetings are four hours long, half days. Then I would say for about three hours, we get into the core talking points. Typically you rarely exceed three.
DC: I think a number of our members over the years that I’ve known have spoken about how they like to do a board of advisors, but I think they’re hesitant because they’re so intimidated by what their responsibility is. Do you run the meeting? Are you in a leadership role on that? What do they expect you to be bringing to the table?
KB: I do run the meetings and I put out the talking points. I send out the agenda in advance with all the supporting information about the business that’s necessary for that meeting, that they do their pre-work. When we get to the meeting, we do our best to follow the agenda, but I would say only half the time we actually accomplished that. I’m probably the driving force and they are there from an experience sharing, a fact-finding, and an advisory capacity. So if they have questions or see something that I did not add to the agenda, they’re certainly adding that. The majority of the time, it’s me using them as my sounding board to become those advisors.
DC: So experience sharing, fact finding, and then from that they then provide advisement. That’s actually a good blueprint for an introductory email to someone to say, “hey, I’d like to talk to you about our board”. Tell us about the makeup and the different people you’ve had on the board through the years and where their backgrounds are.
KB: Absolutely, when we started this, it was certainly a journey that had a couple of speed bumps. And I too was intimidated about the whole thing. Through our coaching, we determined that we really needed a couple of competencies on our board. We boiled that down to finance, banking, cash flow management at a high level, sales and marketing leadership, family business leadership in a growth based organization that was three to five times our size in revenues. Then we wanted a high level rental experience that had a wide breadth and theft that could advise us because we all like to pretend that the rental industry is totally unique from any other business. The reality of that is it’s true and false, or at least that we’ve come to believe there’s a lot of love, but there is some uniqueness.
KB: Having that second individual in the room that understood those dynamics has really helped us articulate the business. So we were able to find a former president of one of the top 10 largest equipment rental companies in North America, an individual that owned and operated one of the top 25 highest ranked sales and marketing leadership training companies in the United States and a former CFO controller of a publicly traded company. As well as a president of a family business that grew to a nine figure business and was part of a non-family leadership role at a strategic level for them.
DC: For people out there, obviously finance is important. Someone who might be from the banking financing industry, someone who may have some understanding of how to build sales systems and how to go out and help grow the business family business, as well as rental experience is good. What about human resources and organizational behavior? Did you ever have anybody on your board who had those types of skill sets?
KB: We are not in an official high level capacity, but one that was unique in our transition was the first strategic hires that we added to our team which was a high level HR individual. So we felt that we were in a pretty strong position for that internally. We currently maintain a four to five. The one that I omitted earlier on is we have a legacy position and that role does not have a term limit, that is my father’s role. He is deselecting at this stage of the game because his confidence has grown but we have three board members, myself and my father are in the room.
DC: That makes sense. How many actually are in the room with you when you do this? Three times a year event? What are the skill sets of those three additional individuals right now in your current board? Do you still have the rental person or they rolled off?
KB: No, we still have the high level rental. We still have the sales and marketing leadership. We’re actually on our second individual in that sales and marketing leadership. We have the family business. We’ve identified another individual that had a strong growth excavation company that was sold about four years ago. That has been highly recommended to us to succeed that person in the coming term.
DC: Let’s talk briefly about how you use this board. Let’s say it’s 2015, you’re four years into leadership. You’ve been running the main store and you start to think about expansion into a multi-site. As you start to introduce your theory on multi-site and the value of it, talk us through how that evolved and tell us a little bit about that group, whether it be the number of employees or total rental sales revenue, anything like that. How did the board give you feedback as you presented your case?
KB: I’ve assumed the role of president for a few years. You start to look at it and you start to figure out where the gaps may be in your SWOT and how you want to fill those gaps. So we had some meetings that our board meetings associated with those. One of the things that we determined was we didn’t have the scale that we were likely going to need to protect our revenue streams, ensure our stability continues in a succession that we wanted to on and henceforth. We talked about what that needs to look like from a predictable, profitable, sustainable standpoint and not a cavalier, we need to go get it done. What does the cash flow management look like? What are the metrics needed to be? How are we going to accomplish it?
KB: What’s the timeline? It’s interesting because I remember the frustration and concern and borderline fear that my father had as part of that. I think it helped mitigate that because we had those conversations in those board meetings. That sounding board for him to be able to hear, and those metrics have been established to say, “here’s what needs to be accomplished on both party’s ends for this to be successful”. We define what is successful. When we got to the point where we knew what we thought was the best idea, then we started to put the brick and mortar in place and execute that plan. In some capacity we’re still executing that plan, but the board was very influential in making sure that we knew what it needed to look like at each rung of the ladder.
KB: Instead of just trying to think that we were going to springboard to the second level, we made the decision that we wanted to start our growth journey in a contiguous network of where we’re at. We started to tax our system, query, and our ERP to figure out where our revenue was coming from. We backed into where our profitability was coming from. Then we started to look at what the market would support. Then we identified where that location was that we thought you’d be next. We think the process worked reasonably well. What we did was refine it a little and rinse and repeat, and that’s a big part of our current growth strategy today is to see where the opportunities are, in the marketplace. Where do we believe we can support that market from a continuous network so that we’re not just flying solo in that space, but we’ve got a contingency plan with another nearby branch to support it, but not close enough that it’s going to cannibalize existing sales at the same time.
DC: What physically changed your operation outside of Vandalia, then what happened to the company? Where did you go next? So you had identified Franklin first, correct? Then you also have two other footprints, correct?
KB: Yes, we were gained. Vandalia is located in the Southern part of north Dayton, Ohio. We thought before we studied the data that we would be going north to Lima, where we just recently opened. We found out through the data and the analysis that we needed to go to the south side of Dayton, which is where Franklin Ohio is, approximately a 30 minutes travel radius from Vandalia. I believe we opened the Southern of Northern Cincinnati in 2018 that gave us another 30 minute travel radius ballpark from our Franklin location. Then in 2019, we were presented with an opportunity to assist another locally owned rental company that was transitioning out. We were able to acquire that company in Northern Kentucky and absorb them into our system. That was I believe a healthy acquisition for both parties and allowed us to solidify a Southern Cincinnati Northern Kentucky location again, approximately 30 minutes away. What we found was based on the population density and our model was that 30 minute travel radius in densely populated MSA really gave us contiguous capacity and support, but also new and fresh revenue streams at the same time. Now, if there was more ruralness in between, we knew that we needed to widen that gap. Then ultimately we decided to go to Lima, Ohio, which is approximately an hour away from us because we built some of the infrastructure and know how to support some of those ancillary branches better.
KB: I believe that in 2011, we were probably close to 30 folks on the team. I would anticipate that we’re going to be born just shy of a hundred here in the coming months.
KB: There’s honestly a number of things. The reality is they are a completely impartial jury and they will give you their gods honest feedback. Sometimes you have to be careful what you wish for and ask for. I can tell you that we had evaluated other acquisitions. When we ran around the room, there’s some that I probably would have moved forward with. Ultimately, the decision was made that this wasn’t the right time or the right one. I know that I had wrestled with years over my personal feelings on environmental fees, within the industry and the value they provided some of our downstream customer base. Ultimately it was a push from our board of advisors that it was a single question. I remember to this day where I was asked, are you selling what your customers are willing to buy? Or are you selling what you want to sell? I had to answer it honestly. And I said, “well, I think by not moving forward, I’m selling what I want to sell”. And the follow up question, “So if I hear you, right, you’re making a strategic decision to disadvantage your team and their growth”.
DC: I love it. It’s like a business conscience that you have. It’s awesome. There’s so many people out there who are the owner operators of the business. Maybe they have one coach or somebody who’s providing some help to them. Obviously, we promote peer groups. We want you to have a peer group as an informal board of directors, but unfortunately, it’s not at this level. So you get to meet them twice a year and you can communicate throughout the year. It’s just amazing to hear you talk about this advisory group and how you guys keep growing as a company. Any last words for our members regarding advisory boards?
KB: We find it invaluable to have that peer group and advisory board bounce because you get two different things out of both. Our peer group, which we belong to an incredibly strong and beneficial peer group allows us to seek that high-level industry knowledge and we can fare it through there. Sometimes we find things out that we didn’t even ask about just through observation and what takes place in the room. In our board of advisory meetings, we come in with a blank slate and a breadth and depth of experiences that allow us to blend those thoughts, observations, and opinions that we feel helps the cream rise and the best decisions to be made from a clarifying standpoint. I think that both have tremendous value. The value of both together is the sweet spot for us.
KB: I would tell anyone that’s considering it, if you do your pre-work and you put together a good solid presentation, your SWOT, marketing analysis, history, plans, and story to go out there and really identify those roles that would help you grow and succeed. Once you do that and you feel confident that those are the roles, then look externally at who and how those individuals might be. What I was flabbergasted about honestly, is the absolute willingness of these high caliber individuals to take your appointments, to listen to your story, and have a genuine desire to help. Our compensation for our board meetings is very minimal. It is not what these folks do it for. Some will ask you to donate the money to a charity. Frankly, a lot of them don’t need the money, but what they do get satisfaction out of is watching individuals grow and succeed. Helping put their fingerprints on that next level, the next layer, and next of business that they can share that knowledge that they have.
KB: It’s been amazing to me, even the folks that we’ve reached out to and said, “you’re not our guy after we talked”, I would’ve thought that would’ve been something that they would have taken offense to. I’ve been shocked how much it isn’t and they continue to be an advocate for you just because you asked them to do so. Once you do the pre-work and you go out there and just ask the questions, just be honest and tell them you’re going to fumble through it a little bit and accept that you will. Just like you asked them to do, they’ll guide you through it and you’ll come out stronger for having done it. It’s been a phenomenal experience that had it not been recommended to us as part of a requirement of succession plan that we had to do. I’m not certain we would have bid it off because of that intimidation. I am incredibly thankful that we did.
DC: We know your time is valuable. We appreciate your 30 minutes today. We appreciate you and the peer groups, the years you’ve been involved, as well as your leadership team, which participates in some of our leader groups. Again, just tremendous information today. That was Kurt Barney from Vandalia rental.
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