YOU DON'T KNOW WHAT YOU DON'T KNOW

Podcast Interview - Richard Terry, Accolade Kitchen & Bath on How to Run a Successful Service Business

June 23, 2022 Steve Denny/ Richard Terry
YOU DON'T KNOW WHAT YOU DON'T KNOW
Podcast Interview - Richard Terry, Accolade Kitchen & Bath on How to Run a Successful Service Business
Show Notes Transcript

We engage in conversations with successful business owners to learn the little things that made the journey of building their companies special. Then we discuss how they plan to hand off their business to the next generation of leadership. 

This episode is with special guest Richard Terry, Owner of Accolade Kitchen & Bath. 

Accolade Kitchen & Bath owner and principal designer for 15 years, Richard Terry serves his clients so well that they become friends, repeat clients and/or referral generators. He partners with homeowners in St. Louis West County to design luxurious and family-friendly solutions. 

You can contact Richard at: 
Accolade Kitchen & Bath 
Phone: 314-991-2284 
Website: http://accoladekb.com 
Facebook: https://www.facebook.com/richardterry65 
LinkedIn: https://www.linkedin.com/in/richardtterry/ 
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If you would like to be a guest on the You Don’t Know What You Don’t Know™ Podcast, or know someone who would make a great guest, let us know at: https://innovativeba.com/contact/ 

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About Steven Denny: Steven Denny co-founded Innovative Business Advisors in 2018 and serves as a Managing Member of the firm. Steve has been actively engaged in M/A activities in a wide variety of industries for the last 14 years and has developed specific products to assist clients in growing their profitability and enterprise value. His specialty is working with established private companies in the lower middle market with annual revenues from $1 – 50 million. 

00:02

Welcome to the You Don't Know What You Don't Know podcast, by Innovative Business Advisors, successful business owners who have started, grown and led businesses share their journey and direction for the benefit of those traveling the same path.

 

00:18

I'm pleased to have with me today, Richard Terry of Accolade Kitchen and Bath. Richard’s the owner, principal designer, has had the business for over 15 years. And Richard is known for serving his clients so well that they become his friends and the source of all of his repeat business and referrals. So

 

00:39

quick question, is your home a sanctuary that reflects your personality? You deserve a kitchen, bath or storage area that functions effectively. Richard partners with homeowners in St. Louis West County to design luxurious and family the solution for that. So Richard, honored to have you today. It's nice to be here. Yeah. Tell me. How did you, how did you first get into this business? What What drove you to get into this business? Well, in my former life, I built swimming pools and spas in Key Largo, Florida for 28 years. Paradise. Yes, paradise.

 

01:14

And then our kids were born in Baptist Hospital Miami, and

 

01:19

in the early 90s, they the policemen were patrolling the grade schools for drugs. So we moved to St. Louis then I commuted for 14 years. Back and forth to. Yes, to Key Largo. Wow. Yeah. And then 02, I sold my business and was looking for opportunities up here. And I came across a cabinet company out in St. Clair, Missouri. Family owned, a mom and pop business. And was going to buy that, I interviewed all their employees, and we're ready to sign on the dotted line. And they had about 200 or $200,000 worth of business that was going through some stage of production. And so I asked them, I said, tell them, you know how much you got in there for materials, labor and your profit. And we'll work out a system to divvy up what's involved.

 

02:09

Well they came back a day later and said,

 

02:12

We can't do that. I said, why? And they said, because sometimes we don't know what our costs are until we get the invoice from the vendor. 

 

02:21

Being a small mom and pop business, that scared the crap out of me. Yeah. I figured what other landmines have been involved, so I bailed out of that. I went to work for a small kitchen and bath company at an office in St. Louis and one

 

02:40

over in Illinois, just across the river. And I worked for them for about a year and a half and they went broke and so then I started this business. And so, had a partner for a while. I was the designer. And so in 06 we started this business. She left me about in 08 when the crash hit because there wasn't enough business for let alone me and trying to support both of us. So and I struggled through that. And finally, the rest of the calls.

 

03:11

Wow. Well going from outside doing pools, outside, the Key Largo, paradise, right, to doing kitchens and baths on the inside in wonderful St. Louis that that that's quite a transition. So was it just the cabinet company that originally attracted you to it or? No I was looking, I had a business broker was trying to find me a business. Okay. We went from

 

03:36

all sorts of things. You know, I just didn't want retail.

 

03:41

So I was looking for something that I could manage and that was

 

03:46

reasonable price wise that I can afford. Yeah. Yeah.

 

03:50

Awesome. So you're you're the accidental, accidental business startup guy. That’s right.

 

03:56

You're looking to get into it by buying.

 

03:59

Yeah. So startups a lot different than than buying an existing business. Yes. Yes it is. Well I started my pool business from scratch. So I you know, you when you start out, you almost do anything. Yeah. To get the business, to get some business and get it going. So with this, it wasn't a whole lot different but we did a lot of jobs that I probably wouldn't take now. Yeah, yeah. You do what you got to do to get it going. It's fascinating when you think about that, and it is the. I think every business is a little bit of a journey, somebody that starts with an idea and they end up doing that business exactly probably they don't last very long. You’ve got to be willing to pivot.

 

04:39

Well, the biggest I'm gonna say not shock but eye opener was the fact that in my pool business, I had recurring revenue. We had monthly service, 450 pools a week and we built about 30 pools a year. So that's a nice, generating a nice income. Wonderful. And with this business if I didn't kill I wouldn't eat so.

 

05:00

There is no recurring revenue. There is no recurring although now,

 

05:03

recurring from my previous clients, they decide we did their kitchen now we do their bathroom. But other than that, it was tough. Yeah, we were talking a little bit about that off camera in terms of building value in your business. Right? And, and that, really people don't, if you have a business with recurring revenue, I mean, there's a substantial amount of value that's already there. But you do have to look at your referral sources and if you've got a relationship with your client base where you've got continual referrals from them, that is a source of referral, or excuse me recurring revenue. Right? Yes. Because you can, you know, one one job begets another job begets another job. Yeah. Yeah, that's fascinating. When you, when you originally got into the kitchen and bath side, and you said you started working for somebody else and then that kind of led you guys to start your own business, right? What were some of the early challenges you had in that business? Well, first of all, learning a whole new different industry.

 

06:04

I was, we had a gal that was a CAD, she did all our 2020 which is a CAD version,

 

06:12

to be able to do prospectives and blueprints and stuff. And I tried to do it, and it's just beyond me. So that was probably my biggest challenge. I can do a floorplan, love to do it in two dimensions, but when you get to, get it layer upon layer upon layer, it's just

 

06:33

a little beyond me so. And then going through 08 where we had the, you know, we started off as 06 08 was, was a tough business couple years, just struggling to get through in the non credit cards and.

 

06:48

Keep the business open, right? The only thing that kept me going was the fact that I knew if I could get through this, I'd be okay. Yeah. And I did so it’s just

 

06:59

believing in yourself. Yeah, believing in yourself and you had a little bit of advantage of having probably been through some recessions before in the pool business, right? Tighten up.

 

07:09

Yeah, tighten up, tie a knot and hang on.

 

07:13

Yeah, we're the same way. I mean, we had to pivot completely in 08 and 09 to to keep the business afloat as well. It was a challenging time. We've had so many good years, a lot of, a lot of people have forgotten and the pandemic. Take it for granted

 

07:27

or if they don't, they weren't around when we had the bad years they think Oh, this is just wonderful. So,

 

07:34

you know, in your, in your industry, there are a lot of people that profess to do what you do. And we probably all as homeowners get in the mail, we get these little postcards, and we get these little, little sale flyers that come in all the time, various companies. What distinguishes Accolade Kitchen and Bathroom from others in the market? What makes you guys different, better than anybody else? Well, I'm gonna say probably three things. One is,

 

08:01

when we finish a kitchen or a bathroom, most of our clients become friends. Yeah. And we're probably, our industry is probably the number one complaint industry for the Better Business Bureau. So if we can do that, we must be doing something. I had a birthday party, we had 60 people that showed up. 40 of them are clients.

 

08:22

That's really cool. So that's one thing. I mean, we're I mean, we're in their home for six, eight weeks. And we're there in the morning. And I check the jobs every day, sometimes twice a day. So we, I mean, we have what we call concierge shopping service, I take my clients to the slab shop, and we'll pick out the granite and quartz for the countertops. We'll go to the plumbing, wholesale pick out toilets and faucets and showerheads.

 

08:48

We'll go to the tile shop to pick out tile together. So it gets me more bonding time with my clients as well. And they realize that, you know, I'm a human being as well. And you know, we just bond and so

 

09:01

that's kind of how it works for me. So that’s the one thing, that's critical. Yeah. Yeah. And then well the concierge service was the second thing. And the third thing is is I do, I visit the jobs every day. So I am on the job every day. I just don't, I meet every delivery. I can't tell you how many companies I know where the they call and they say well, the counters are going to be delivered Tuesday and I'll be there Wednesday to start working. They don't, I meet every delivery to the home, make sure it's right first of all. So those are the three things that I do, customer service, just bending over backwards for my client isn’t done out there. Or at least everybody isn’t. Yeah, it is, that is a big difference because you're right I mean, most people

 

09:48

I can't tell you how many, I think we went through three painters in our existing house and now we got his number. The last painter we found was really good and we got his number and you know, we refer him to everybody we know and and by

 

10:00

God if we ever have our house painted again, which I'm sure will happen, he'll be the guy. We need a painter in our BNI group so.

 

10:08

Oh.

 

10:10

Painters are hard guys. 

 

10:14

The trades are tough.

 

10:16

We have a lunch meeting and so

 

10:19

for me it works fine because I check jobs in the morning, I go have lunch, and gotta eat lunch anyway so. We have it catered by the lendees, it's awesome. Yeah. So, but it's

 

10:32

we just works. It's all I can say. It's just nice to have

 

10:38

be able to do that. So. Yeah. So as you were, as you were first starting the business, I mean, outside of the recession, what were some of the challenges and successes and give us a little sense of, you know, what started you on your journey and and did that change over time? I mean, you’ve been in it 15 years now. So do your, your challenges and your successes, have they changed over time? Yeah, they have checked in the beginning, like I said earlier, it was an eye opener, really, that if I didn't kill I didn’t eat, there was no recurring income, so I had to sell all the time.

 

11:14

And then, you know, I had to get the subcontractors there. Because they’re, you know.

 

11:18

Order the materials, make sure that it was right.

 

11:22

Time flag or time frames or are coexisting so we can get it all in there. So that was probably the most challenging thing in the beginning and then just getting, getting the word out, you know, finding new clients.

 

11:36

Belong to Service Magic, which now changed hands about three times, which was a

 

11:42

company and paid them $50 for a lead.

 

11:47

It was. So I did that. And I paid about $450 budget per month. And that's what got me started. Got some nice jobs. Now some of them were crap.

 

11:58

And I

 

12:01

didn't get them. Because what they ended up doing is they said they only send it out to three people. But the key is you got to call right away once you get it and make the appointment and then hopefully, you'll get the business. But there's getting other people getting other bids. So it's one time the guy says, Well, I've already had four people come so I really don't need you. So then I realized that Service Magic was screwing us saying they only gave it to three people and so, but they did one out of 10. So, you know, I spent $500 to get a $25,000 kitchen, wasn’t a bad trade off. So pretty good cost to acquisition rate. Yeah. So that was how I started. And eventually I got into BNI, 15 years ago, a good way to. And I realized that people don't do or need what I have every day. So if I got one or two deals a year paid for my dues, plus all the people at BNI became a resource for my clients that go, Hey, do you know a plumber, do you know a painter or electrician,

 

13:03

or an IT guy. Pest control guy. Whatever the case may be, I had somebody that, so I became a resource for them. And so that's how I built my clientele and built my clients.

 

13:16

Well, sounds like you had to do two things. First off, you had to kind of figure out what the marketing side was and you and you developed a process whereby you had people that were out marketing for you as well. So you were, you were buying key leads, and then you are going through fulfillments. And then the second thing what I heard you say is that you kind of had to develop a process around all of your vendors as well, right? How do you get things ordered? Who can you rely on all that stuff?

 

13:44

So as you've gotten in as, as the years have gone by, I would imagine you've probably got those processes pretty well, pretty well laid down. Yes, I do have a process and it works very well. The thing that throws a wrench into the works is when you have supply chain problems like we have now. Yeah.

 

14:06

My cabinetry I used to get six to eight weeks, now we’re at 12 to 15 weeks out. Some of the plumbing wholesalers used to be

 

14:16

three to four weeks, now they’re six to 12 weeks.

 

14:20

Appliances,

 

14:22

which is kitchen, we had to wait seven months to get appliances. Wow. So it's crazy I mean, that's that's what we're dealing with today. Is that, in your 15 years, is that a new problem today? Is that unique or have there been times in the past where you've had to face that? I think it's unique in the 15 years that I've been in business and even the 18 year I've been in the swimming pool industry. We wanted something, we called, it got delivered. There was no problem.

 

14:50

Everything was either in stock or we had to wait a week or two weeks, I mean it was nothing like seven months.

 

14:58

Yeah, it really is an

 

15:00

unusual situation, I think so too, I’m hearing that as well. It’s a unique challenge, but that's what we do as business owners, right? We, we figure out what.

 

15:10

And when it's beyond your control, you're kind of limited in what you really can do. I mean, you can ask them to make another selection or whatever and some do. Something that I’ll

 

15:21

stay in the course, you know. Yeah. Just we’re doing a bathroom now and we just found out the freestanding tub is 120 days out. Holy cow. Yeah, I'm working with an interior designer and I said, What do you want to do?

 

15:36

She says, I don't want to change anything because then I would have to change the sink design, the faucet design, you know, it all works together. And so they're just going away. This is a kind of unusual situation, because she lives in St. Albans, she bought a house. It's Chesterfield and 

 

15:56

she’s not going to move in until it’s done. So now you’ve probably got 

 

16:01

realtors and everybody else come under to allowing.

 

16:09

And we redid our kitchen. It's 90% finished. We’re waiting for the countertops so we can do the backsplash. But

 

16:16

But that's an unusual situation and all of our

 

16:20

problems there. And we're wondering when are you going to finish the job and all that. Living in the construction? Right? Yeah, living in the construction. Yeah. And that's a challenge in and of itself. That's probably why there's so many complaints in your industry. Yeah. Well, you have to manage their expectations. And we had a gentleman that was a client and we did his, full gut of his kitchen, kind of a half gut to the master bathroom and guest bath. And we were at, it took, he was one of the first guys I signed a contract with, with 17 weeks knowing that the cabinets wouldn't be there for 17 weeks.

 

16:59

So he waited in from whatever that signing period was, I can't remember the date. Months. Months, waited months. And so it's finally there and we're doing the kitchen and we're into about six weeks. And he's calling me he's gone though and meanwhile, we've been six weeks, we

 

17:21

installed the vanity in the guest bathroom and kind of templated for countertops, we installed the vanity in the master bath. Had the countertop on, the mirror is done. So basically what we're supposed to do was completed, kitchen is about three quarters of the way finished, and he’s going, when you going to finish this.

 

17:41

And he was a little abrupt over the phone, whatever. So the next day when I was over there, I got a chance to see him. And I said, Look, I said, I apologize, I did not manage your expectations. I said, first, what I said, initially, I told you that your kitchen would take six to eight weeks. We're in the sixth week right now. We've already completed your master bathroom. We've already 75% completed your guest bathroom.

 

18:08

And 75% finished in the kitchen. And I said, we did that in six weeks where normally a kitchen would be six to eight weeks. So he kind of cooled down and realized that,

 

18:21

he understood, let's put it that way.

 

18:24

So those are the things we got to deal with. So that's where, you know, you just got to manage their expectations where they’ll know what's going to happen. Communicating every day and saying, hey, you know, we're not going to get this material till such and such, you know,

 

18:38

either. We got one job where they sent

 

18:41

totally different color cabinet, somebody else's job. And then it took three weeks to get the other cabinet back. Mistakes happen. Yeah.

 

18:51

You know, I think that's, I think that's so key. I’d really love to have you speak more to that. I think, I see that a lot in particularly for in our business when somebody buys a business, right. And they, they think they come into it with a particular superpower and they figure out that they may miss something. So for example, and let me see if I can make this relevant to your business. You know, they may understand construction work and how to and how to actually build kitchens and baths. But to come in and have an under appreciation for the fact that you might be a technical expert, you know, I might be able to build you whatever you want but that to have to be a psychologist and manage the expectations of the client and deal with all the problems that come about, the owners role is different, isn't it? Yes, absolutely there, and that's why you're way ahead of the game if you, you’re ahead, you're not playing catch up. You know, he's complaining so you react. Yeah. And so let's say, Hey, this is what's going to happen today. This isn't gonna happen because of this, this and this. So if you do that 

 

19:53

it's just a lot better. It's not always easy to deliver bad news when you've got supply chain issues. No, it's not

 

20:00

I've had two regular ones. You know, one was clients who signed a contract in December of 2020. Appliances, seven months out that he ordered. He was willing to wait.

 

20:11

Had another gal was really funny. She was willing to pay a 10% upcharge to save four weeks in her cabinetry. So yeah, supply chain issues really can be a problem. You know, you just got learn how to deal with them.

 

20:27

Yeah, yeah. And in many regards, you know, there, I'm sure there are some times where you have alternatives and sometimes where you don't. Yes. Sometimes people want to change their mind and other times, this is what I want. 

 

20:41

Their choice. Yeah.

 

20:44

So you've been doing this successfully for 15 years. Yes. This is your second business. You've had second success. Haven't had, you know, any, any areas where you failed in business, or do you have any that you feel where maybe I tried this, and it didn't work, either in your existing business or in a different business? Well, I can't think of anything I fail. I mean, the only time you fail is when you stop trying. Exactly. So

 

21:15

Are there things that I probably could have been better? Sure. But, you know, sometimes you learn things the hard way, but you never forget them so. Were there things you tried in the kitchen and bath business that didn't work for you that you had to quit doing or change?

 

21:31

Anything come to mind that you can think of?

 

21:34

You know, I think trying to get,

 

21:38

you know, inexpensive stuff for people to try to meet their budgets. And I've learned over the time that sometimes it's not impossible, but I know that it's not something I want to put my name on when I'm finished either. So I, those are the ones that I say, I don't think it’s going to fit.

 

21:58

I've learned initially though, I want to take

 

22:04

Okay, I want you to do something for me.

 

22:07

Right. I've learned that that it's, it saves them time and saves me time and just being honest with people. I mean, that's what I've done now with this COVID stuff with the, it's just with the time constraints. With materials and stuff you’ve just got to say, this is what's happening, it’s beyond my control. Yeah, yeah, I can imagine and, and I imagine that people don't really have an understanding of what the costs are to do what you do, either. I mean, they just say they may say, I know what it costs me to buy a sink at Lowe’s or whatever. But you know, some do and you know, depending on what fields they’re in, industries, etc. Most of my clients are, just been super nice and you know, they’re a

 

22:54

pleasure to do business.

 

22:58

Yeah, awesome. Well,

 

23:01

as you think about, you've been doing this 15 years, right?

 

23:05

You told me earlier you're, you're, at some point in the future, you're going to transition your business. What's your thought process? Have you given much, have you given much thought to how you you potentially would either hand over or exit your business?

 

23:19

Very little, to be honest.

 

23:22

You know, I don't have any family members that I could leave it to. And my father was an entrepreneur so that's kind of I was brought up.

 

23:31

He just said, I don’t care if you own a gas station, just be your own boss. And that was, that was our manta, the Terry family but. Great advice. But as far as, you know, I wonder what I have to offer to sell. Now in my pool business you know, I had recurring income.

 

23:49

You know, income that was there.

 

23:52

My business now, it's goodwill,

 

23:55

probably a client base and vendor base. You know, wonder how much that's worth so. I haven’t really,  to be honest, to answer your question. But your phone does ring. I mean, you're getting a lot of referrals now, I'm sure you're probably still spending some money on marketing and outreach. Yes.

 

24:11

Just to be out there. Yeah. Most of our stuff is warm referrals. They’re clients that we did their master bathroom, somebody wants a kitchen done or did their hall bath and now they want their master bath.

 

24:26

That's that's pretty amazing in and of itself. So you have a history of doing multiple jobs for the same people. Yes. Yeah. One job we finished his, we did his master bathroom so he could sell his house. Sold his house and moved into this bigger house and then he had this huge kitchen to

 

24:43

Roll

 

24:44

from one to the other. Yeah, that is nice.

 

24:50

That is nice. So yeah, that's, there's there's definitely a huge amount of value in that. I mean, that's particularly in the contractor world right?

 

25:00

As you mentioned, it's the number one industry of consumer consumer complaint. And you know, Better Business Bureaus are made for contractors, I guess.

 

25:11

I think so. Right.

 

25:14

But if you've got it, so if you have a good reputation in that field where you've got a lot of referral business, you got an unusually valuable entity in that regard, because the skill sets are the skill sets, right? Installing cabinets is installing cabinets. Right. It's all the other things that add value that are very, very difficult to duplicate. Yeah.

 

25:37

Well, it's, it's good, I think, you know, as, as you begin to think about that, I mean, that's, we work with business owners all the time. Generally speaking, a well planned exit

 

25:51

is something that takes a lot of time. So you do have to begin to begin to think about that. And I think in a situation like yours, where you've got some unusual assets in your company, there's some value there that is enduring. So, it's very much like your pool business where you had recurring revenue, because you had people that needed to get their, their pool, skimmed and cleaned every week. You’ve got a phone that rings every day now with clients that have a level of expectation, and, and a desire to get things done, you know, from quality contractors, and you've built that reputation. I hadn't really thought of it from that perspective but that does make sense. Yeah, yeah. And it's, it's a process, just takes time. I mean, there's, there's no, there's no one, one definitive

 

26:40

answer in terms of how to exit to you, you’ve got multiple paths.

 

26:45

Well, really cool. Well, it's the outstanding work that you do in the community. I know you're an outstanding member of e4e, and you've got a huge giver’s heart. You always bring the goods in terms of some things that can add value to all of our businesses. We just, we just heard from you this past Wednesday, where you talked about how to make lemonade, which I thought was really fascinating and such great advice for other business owners. I gotta give Cynthia credit for that. She was the one that came up with that mantra. But it pulled off very well. And so I was glad. Well, there's another entrepreneur that's out there helping all the time as well. Absolutely. So we'll we'll hear from Cynthia at some point in the future. Well, awesome. Well, Richard, it's a, it's an honor to know you. Thank you very much for spending time with us. What, any particular advice that you would have for people that are just starting out on the path of

 

27:35

opening a business and moving into entrepreneurship of their own? Well, first, I'd say do something that you love to do. Because then it's not work. Yeah. And then just never give up. I mean,

 

27:49

there are times when you say, Hey, I can't make payroll, I can’t do whatever and you wake up the next day and sometimes you’ll find a way to do it so never give up. Thank you for listening to the You Don't Know What You Don't Know podcast. We invite you to visit www.youdontknowwhatyoudontknow.com and sign up to receive updates on upcoming episodes. You can also let us know if you'd like to be a guest or recommend a business owner to be interviewed. Find us on LinkedIn, Facebook and YouTube, where you can like, follow, share and join our efforts. Thanks for listening. We hope you join us again.