Cash, Trust, and the Kelly Roofing Rescue | Rob Santana & Ken Kelly

Bill Canady: Welcome to the Thousand Day CEO. I'm Bill Canady. Today we have two perspectives on the same story: the financial decisions behind a business rescue and the owner's decision to come back. Rob Santana, he's a CPA and an MBA, Joining him is Ken Kelly, the second generation leader of Kelly Roofing. Ken took over to family business at 17 after his father was injured and helped build it over decades. More recently, he returned to ownership through a buyback. Today we'll unpack what happened, how they worked together, and what another CEO should learn before facing the same decisions. Rob and Ken, welcome to the show.

Rob Santana: Thank you. Thank you.

Ken Kelly: Thank you.

Bill Canady: Rob, take

Rob Santana: All right.

Bill Canady: us through the moment you realize the assignment has changed. What did you see?

Rob Santana: What does it say? Yeah, about thirty days in. So I got there and it was time to update the forecast for the second half of the year and looked at the forecast, layered that into the thirteen week cash flow and that's when I had the my god moment. This is this is Going from a turnaround, fix the company situation, run of the mill to a insolve potential insolvency. So when I looked at that, checked the numbers, checked it again to make sure I was looking at what I was looking at, had a call with the PE sponsor who was great to work with and said, guys, this is not a fix, this is a rescue mission. it was the typical 911 call that you don't want to have, but you gotta have. You just gotta bubble up bad news quick. So we worked together, we looked at it, said, okay, is this right? They pushed on the numbers. Did we think of this? Did we think of that? Same, what you should do. Once we got to a place of wow, this is this is a rescue mission. What are we going to do here? We could go under. We looked at all the typical, we pulled on all the typical PE levers. Can we do a workout? Can we do a buyback? Can we do this? We went through all the iterations. We talked to our senior lender. Can we do a workout type situation there. And that was a tough situation. That didn't work out. We talked to our subordinated lender and really we were running out of options. We were running out of time. So one of the things as you always do when the numbers go sideways is you have that com tough conversation and you make some changes. So we released some people, had some layoffs. It was a tough situation the cut down on the cash strain. So we did that. That was one of the easy levers, the pull. But meanwhile we're still parallel pathing, talking to people, talking with the bank, trying to do a workout. And that didn't work out. Once that broke down, we were about seven days from just saying, you know what, let's just hand the keys back to the bank and we'll just shut the doors. We're we're out of cash. So about that time, Ken reaches out to the PE group. He's hearing what's going on. He's very connected with that community out there in Naples and the employees. They've been there a long time. They reach out to Ken. Ken has some conversations, and literally seven days before I thought we were going to just hand the keys back, Ken comes back in the pitcher. And that's where he kind of picks up the story.

Bill Canady: Wow. Ken, when did you learn what was happening and what was your first reaction?

Ken Kelly: I just gotten off the world cruise, you know, in retirement, these are the things you do, right? I've been to half the countries in the world now. And I was on a golf course. The things you do when you retired. I got a call from one of my more respected employees from back when I was there at the company three years prior. And she said, I think we're going under. And I said, Well, hang on a second, you know, that I'm sure that's not the case, and I'll be in town. So I flew into town the next day or day after. And a couple of people were interested to see me and they gathered around the conference room and I said, Tell me what you know. And the picture just didn't make sense. It's because that entity, the that specific location, my old company, was actually performing okay. I mean, they were doing well. and I said, Let me make a phone call. So I walked out of the room and I called the original chairman that I worked under, a really great guy back at the PE firm. And I said, you know, just tell me what it is. You know, we can handle it. We're all adults here. I just want to be able to communicate the message to the team. And he basically relayed what Rob had just said. We're we're going and solve it. The bank had frozen everything. There was some Craziness that the bank played. And at the end of the day, I said, Well, what are the opportunities? I want to save some jobs and I want to save the reputation. We got a good thing going here. And he said, It's out of our hands. You got to talk to the bank. So I started badgering the bank and finally got a hold of someone, throw in an offer. we put that offer in writing on Monday. Tuesday they signed it, and Friday we closed. Monday we were back in the office. Tuesday we were back on Rubs. So it was quick and it needed to be quick. in order to save their reputation and and try to mitigate the damage that had occurred from some of the last steps as we were you know as they were going through that that end transition. So it was

Bill Canady: Hmm.

Ken Kelly: fun.

Bill Canady: Ken, what made Kelly Roofing work when you were running?

Ken Kelly: Yeah, it's a good question. you know, in the early days you realize that you just do whatever you have to do to make it work, right? You big, borrow, steal, lie, cheat, whatever it takes. And that doesn't get you very far. You know, you get smacked once or twice and you realize that's not the right way to to run a business, but you still have that mentality of I have to succeed. In my case, I had a father who was injured, a mother who was sick, and I needed to make payments to medical bills. So it very much had that drive early on to where I wasn't going to put money in my pocket. Instead, I was going to build a business to create revenue that I could use to pay other bills. And that continued all the way through from 1993 to 2003. That period of time was my develop the systems. And I think it's in I think it's critical that entrepreneurs wear every hat. You cannot manage a business effectively that you don't know. Yes, business is business and it carries from different type of widget to different widget. But not necessarily. specifically when you're in high-risk organizations like Roofing, where if you make a mistake, it's destroying the inside of buildings and costing thousands and thousands of dollars. So when you to build your system, your way of doing business, the best thing to do is to get into that role, whatever it happens to be, accounting, sales, marketing, operations, whatever it happens to be, jump into that role. Run it yourself for a while. Realize the struggle and always look for easier, softer, faster ways of doing things. That becomes your way. Once you have that, now you have something to turn over to somebody else. Now I understand

Bill Canady: Mm-hmm.

Ken Kelly: there's benefit in bringing in people who are smarter than you, and you can learn from that for sure. But it needs to be a side by side where partners in this position, because I'm gonna put my touch on things, my energy, my my understanding of the other areas of the company. So that we're making this the best it could possibly be. And then now here you go. Here is your top five duties and responsibilities, which we call DR five, that we give to every employee of the company. The and those are ranked one through five. This is the one critical thing you have to do every day, even if you're under the weather and not coming in. This is the one thing you need to do, or else the business doesn't succeed. And other people aren't able to do their job because of it. And then as you develop that system and you get people in their roles, well then now you can start to grow it. I don't want to see anyone create an organization that's not profitable and try to expand. As a matter of fact, that's exactly what happened probably in this case. They probably tried to grow too fast. And when you grow quick and you don't have the cash and you don't have the people to execute properly, well, you end up growing into debt and growing out of business. And that's something a lot of people don't understand. Like we we as entrepreneurs, we always want to do better. We always want more, right? That's not greed. That's just the spirit that we we produce, that we that we're born with, essentially, or we're bred with. And that can sometimes lead us astray. So I'm a big fan of managing by the KPIs. A lot of people call them key performance indicators. I call them keeping people informed. You don't have to ask me how you're doing. Right. I'm a very low pressure type person, even though I'm high energy behind the scenes. But to your consumers, to your vendors, to your customers, they should all see a nice, smooth, level company that's just operating as it should. So that's the way I built it 30 years in the industry, sold it 27 years in, went into a point where I was helping do the transition for three years. We did one acquisition, and then decided, okay. I doubled the size of the company exactly like I said I was going to do. I thought it was going to take five years. We did it in three. So I feel as though I can go into retirement. My wife and I started traveling the world. So here we are back. And it's it's actually really fun being back because I love the team that we get to work with, people like Rob, for instance. some things have changed, but not a not a lot. And it's really been fun working with them again.

Bill Canady: Wow, what a great story. Rob, what did you see in the operating business that made you think it was worth saving?

Rob Santana: The Kelly brand, it w it's got such a reputation over in the Naples area. They've been around since seventy two, believe it is, and they were making money. The three tuck that was our platform company. And they had three tuck ins that were didn't do well. So I knew that company, if you strip it down and do exactly what Ken's talking about doing, just get back to basics, I I knew it'd do well. I I knew the reputation, I saw the quality of the work, I saw the numbers. So I I just knew that was that was the right decision to do going forward.

Bill Canady: Hm. Let's connect what was happening in the business to what the cash was telling you, Rob. Why don't you if

Rob Santana: Yeah.

Bill Canady: you can walk us through the first seventy two hours? What'd you stop, start,

Rob Santana: So

Bill Canady: and measure?

Rob Santana: it's up start measure. So like I said, the first thing was, hey, let's update the forecast for the second half of the year. The sponsor needs to know where we're going. And when I saw a pretty significant drop in revenues, that's where you know alarm bells start to go off. And you said, okay, how does that layer into a 13 week cash flow? And you look at that and all the heavy debt payments from the s three tuck in acquisitions and some other things, start to look at okay, this is not gonna make it. So that's really where all all the alarm bells went off and the conversations that need to be had started happening.

Bill Canady: Yeah, how did you build a for a cash forecast that people could trust at that point?

Rob Santana: People try. backed it up with the forecast that we received and we pushed on that, got that granular customer by customer, and and took a deep dive into there. Our numbers are pretty consistent. O overhead was pretty consistent. We know what our margin is, so you can kind of test it from there. We knew what our debt was. So we were testing it from every angle. That was the P sponsor. That was the first question. Is this right? Because if it's right, we we gotta act pretty quick. So We spend a lot of time just pushing on numbers, checking things and just tying it out from different directions.

Bill Canady: Rob, what did Ken show you that made you so confident you could do it that you did this deal really in a matter of hours once you showed back?

Rob Santana: just listen to what he's talked. I've seen some of his other speeches, how he helps other entrepreneurs, the philosophy. He ties in, he reads a lot and connects to a lot of the big leaders that everybody studies in business school. And I saw a lot of it there. I saw it in his people, even though we left, a l a lot of those processes were still in place and people were doing the right things, the KPIs every morning. those kind of things. So I knew if you if you bring that back in, you know, your legacies if you leave and or you know, with what's a business, if you leave and the business still runs, that that's a business. You know, otherwise if it needs you, it's a job. And I saw that this was a real business. All the processes he plant put in place over the twenty years were still happening. So I I definitely had a lot of good feeling about it. When I heard he was buying it back, I said, wow, now you now you're gonna pour like gasoline on a fire, re-re energize what's good, make them even great. So I was very excited when when Ken's coming back into work with him. I knew him by reputation only. So it's it's been a really good partnership since then. We no we

Bill Canady: So you guys didn't even know each other when you first started

Rob Santana: met after the deal closed that or the weekend before. Ken called

Ken Kelly: Yeah.

Rob Santana: me on a Sunday. He's like hey Rob I'm buying a cup and I

Bill Canady: Hey

Rob Santana: need this this this this this and by the way I'm Ken Kelly. Okay, let's go. He said he's got a lot of energy. Like let's go.

Bill Canady: That's awesome. Ken, was there anything that Rob showed you that gave you confidence at jumping back in? Or was it just, hey, my dad started this company and I'm coming? Yeah.

Ken Kelly: I I had some confidence, but I also had some fears because when I left the industry, I left on a high. We had just won Contractor of the Year. I won the Visionary Award with Microsoft. I'd won all the industry awards, right? So that's how I was being remembered. And I had spent my retirement kind of as a side hustle running around the country for a major manufacturer called Owens Corning, teaching other roofing contractors how to build a successful business. And I it was very fun and rewarding for me to get the feedback and to hear the turnaround stories. So I had the confidence, but I also knew that I was putting that reputation on the line because if this doesn't succeed, I'll be remembered as a failure. So I wanted to make sure it was right. And some of the first couple questions I had for Rob was, hey, tell me about our debt. What type of debt are we looking at? Who do we owe? Because we we structured the buyback in a very strange way. We didn't actually buy the company or the assets, we bought the debt. So we went to the primary and mes lender. And we bought the debt from them and we became the debt service agent. Everything else was subordinate to us. So it put us in a pretty positive position when it came to negotiations. And although I can't share real numbers because of NDAs, I can tell you that it's the kind of money that it would take probably 10 years for an organization to have ever been able to finally pay back, right? If not longer. So what I needed to do immediately was have confidence in the ability for us to pay that off or negotiate it out. So I went and put my reputation on the line, went to some of our key vendors and said, I know we owe you a lot of money from the old company. The old company is now insolvent. I end up having I own the debt on top of it. The assets are out of it through foreclosure. There's nothing left. I know we owe you millions, but I need to start operating again. could we come up with a negotiated amount? When a lot of times that was split in half, even more than half. Some people just waived it completely. And I said, for those balances that are remaining, I need 24 months to pay it off because obviously cash is king and I needed to make sure that we could continue to ride this. The overarching issue on top of that, once I had the confidence that we could work those negotiations out, was how did the company perform in the three years that I was gone? Were they continuing to do high quality work, or was I about to be a nothing but a callback or warranty service company? And when we met, we looked at had the callbacks that were coming in and they were actually very low. They they were on par with what it was like before I left. And so I had confidence that we weren't walking into a situation. And then the last thing that I had a concern for concern with was open litigation. And it turned out that I think almost all of the litigation had to do with the other brands. So the decision was made very quickly. We're going to even though we're essentially acquiring all the other brands because we're buying the debt on the holding company on all of them, we were going to close the other three down because we we couldn't resurrect that. They they had such big problems b you know, d after acquisition, before the acquisition, I'm not sure when, but there there wasn't enough bandwidth or time. to resurrect them all. So we were gonna put all of our focus on Kelly, the brand that I was intimately knowledgeable of, and see if we can make that work. And that's exactly what happened. We had a 90-day action plan. we completely executed on that 90-day action plan in 60 days. And it was really just letting the team do their thing. We had under we had only one person coming back from the old leadership team. It was actually my longest running employee. So if you think about it, we took tier two And made them tier one and gave everyone the opportunity to spread their wings. And they surprised me at every step of the way. one quick story I have for you is I'm walking around the office for the first time, being there in a in three years, and I look and I said, we have two copy machines now. You know, we're not an organization that uses a lot of paper. We're pretty much mostly digital, like a lot of companies are. Why do we need two of these? And it turns out we acquired one because We had a leak in a business that we were working on and some of it leaked on the machine and they they thought the machine was damaged. So we're like, all right, well, we'll we'll take that machine off your hand and give you a credit for it. And now we we own one, but we still had our leased machine. And so I was I was like, hey, what are we gonna do about this machine? She goes, they're coming to pick up the one that's under lease. Don't worry about it, we already got it taken care of. And I'm like, wow, that's great. This is decisions that someone who used to be in charge of customer service is now making as if they own the company. Because we gave them kind of the plan, the direction. We said, this is what we need to do. We need to cut our cost. Because a business can only grow to the size the market will allow them to grow. And we knew

Bill Canady: Mm-hmm.

Ken Kelly: with this hit in reputation and the market being a little depressed at the moment that we needed to be a smaller organization in order to be profitable. And they just took it and ran with it. So I'm super proud of the team and what they've been able to accomplish.

Bill Canady: Teams always makes the difference. Rob, where was the closest the deal come to failing at?

Rob Santana: Closest really. When Ken got inv involved. As far as with the bank, you mean the lenders or w

Bill Canady: Well, as you go through this, there's a lot going on. You know, Ken's talking about his cash and everything's he's right on with it. But you're looking at the books, right? So where where does this thing almost come apart?

Rob Santana: Yep. And what comes apart? once the conversations broke down of trying to work something out with a senior lender, Nemez lender, and we were running out of cash, we were When Ken came in, we were about seven days from just being done. I mean, it was really the wheels were starting to come off. Like I said, we released some people about 30 days before Ken came in. I I did a round of had those tough conversations and eliminated some positions. Some were redundant, some needed to be done. But probably 30 days, it was looking pretty bleak. The 30 days before Ken came in, and then like I said, Ken was about seven days of just we were just gonna shut the doors and just be done. So it was pretty close. We were we were on life serious life support, as they say, two two feet in the Grave and one arm, you know. On

Bill Canady: And another one on a banana pill. So

Rob Santana: a banana. Yeah, that was on a banana peel. Exactly. Exactly. That's where we were.

Bill Canady: Well Amazing. Wow, what a great story on this. Go ahead.

Ken Kelly: You you know, if I if I could comment on that, that's to me, that was an opportunity because there was that short period of time between me submitting an LOI to the bank and us closing, right? The Monday to Friday. And I was actually traveling. I was on a family trip, locked up in the hotel room going to going crazy with the computer and multiple cell phones and about four hundred thousand dollars in legal fees in one week. You know, it's like it was a lot going on.

Bill Canady: A lot.

Ken Kelly: but it was also a test to see who we were gonna invite back into the company.

Bill Canady: Mm-hmm.

Ken Kelly: you know, we had 130 to choose from, we invited 55 back. And what we've learned since is that those 55 are capable of producing what 130 were from a revenue and profit standpoint. And what was the test? What was the litmus test? I don't I didn't own the company yet, right? I was just in negotiations. So they had no reason to listen to me. But while the bank is instructing them to wind things down, I'm on the other side saying, no, no, no, no, we're gonna need that. Please don't shut that down. Please don't close it. Please don't shut down our website, our email system, our CRM system, all the things we were gonna need. And the ones that believed in me, in that vision, they could see past the trees that they were standing right in front of, and they could see like the whole forest. Those are the ones that I knew had the mentality, had the wherewithal, had the vision, could see it, could own it. that were going to be good team members. And so it was it was a great opportunity to see what people are made of and it made that decision kind of easy actually.

Bill Canady: Hm. Ken, what was the hardest commitment you had to make at that time?

Ken Kelly: My wife and I were were on this this trip to see the world and we had seven really good trips planned. I mean, some of them major, three, four months at a time. And we had to cancel four of the seven just because you know, I needed to be there. I canceled through the end of the year. This was all happening the end of July, beginning of August, and I canceled through the end of the year. Here we sit now recording this in October and I'm not even going to the office in the next two weeks. Right. I'm going I I have a commitment to the manufacturer to do a certain number of trainings per year. They were already on the schedule. I'm gonna be continuing that. And the team is just executing without me. They know they don't need me. I'm I'm there as like their little security blanket or easy button, you know. Hey, what would Ken do type thing?

Bill Canady: yeah.

Ken Kelly: but you know, I monitor the numbers occasionally. I shoot an email off or make a phone call or send a text, but for the most part they don't need me. I mean, they've got good leadership.

Bill Canady: Good leadership makes a big difference. So closing was one milestone. What happened when you had to run the business again? Maybe Ken, you could talk about what your first operating priority was after you're taking control again.

Ken Kelly: Yeah. So the first priority was to stabilize. You know, we had a a very bad reputation in the market. What had happened was the bank had frozen everything. And this was right on the eve of deposits being returned for jobs that weren't going to be profitable. The idea was let's finish out the jobs that are in progress and let's only take on jobs that were profitable. The other I think there were seventy-seven jobs with a deposit total of about two hundred and eighty thousand dollars. It's all publicly known. It's been news reports and about this. And there was a news article that has some poor gentleman talking about how his whole six whole social security check for for months we went into fixing this roof. And now he's got this bounce check and the roofers going out of business. I mean, it was that that was on the nightly news regul, you know, back to back to back, night night after night. And so I knew I needed to go in and salvage that. So the first thing we wanted to do was make customers whole. we went to a hundred and fifty three active customers, seventy-seven of them with the bounce deposit checks. And we said, listen, we're back in business and we understand why you would not trust us, but here's what we'd like to do. If you would allow us, we'd like to honor the contract and just finish the job. Whether we had already started or would we have not started yet,

Bill Canady: Mm-hmm.

Ken Kelly: we want to start. Out of those 153, there were eight customers who'd already had the work done by another business. Completely understandable. We just simply gave them their money back and made them whole. There were five of them who said, We don't trust you. So we're gonna use someone else. Understood. Gave them their money back. There the rest of them allowed us to finish or continue or do the work. So it we got in front of it quickly. And I think speed was critical here because if that continued, if there were more news reports talking about the negativity, how many people were affected, it would have probably been unrecoverable. But the

Bill Canady: Mm.

Ken Kelly: fact that I was able to call up that news re this news anchor directly and say, Listen, come put me on camera. I'll tell you everything you want to know behind the scenes, exactly what happened and what we plan to do about it. There were supplier liens on people's homes that they were going to start foreclosure proceeding. I mean, this isn't roofing is expensive, right? It's not a small amount. It's not buying a refrigerator. It's you know $30,000, $50,000 in liens that were placed on customers' homes. So I needed to very quickly negotiate with that supplier. And part of that negotiation is, listen, I'm gonna give you business in the future. And you know my reputation, I run a good organization, but I need you to release all of those liens right now, or else there's no way I could continue to operate and I don't have enough cash to pay them all. it's millions of dollars worth of of this potential lien. And fortunately they did. So the first two weeks were very stressful because I needed to get all those negotiations done and

Bill Canady: Mm-hmm.

Ken Kelly: give us the wiggle room and then turn it over to Rob and say, Okay, here you go, here's what it really looks like. Let's do that cash flow forecast, which you know, in times like this are more critical than ever. And then we started to see the numbers actually looked really positive and and we weren't going to be stressed. And then I could start to relieve that that stress a little bit. Then it wasn't five days a week, then it was only three. And the team just giving everyone their little role. You might have to wear more than one hat, but you're certainly capable. And and then I started focusing on some of the things that needed to transition over licenses, the back end, right? All of the business entities, the foreclosure proceedings, all of that stuff. So that's where where my I kind of brought to the table. It was just the vision. These are the things need to get done. Who wants to do them? Who's in the best position to do And that's it. Let's go go execute. And then we had the daily, we had the daily call we called the huddle. 3 30 in the afternoon, the leadership team, all five of us, got on a quick call and here's what I did today. Here's what I'm gonna be struggling with tomorrow. And everyone kind of jumped in and helped each other out to cover and get it done.

Bill Canady: Impressive. Rob, what kind of controls and reporting had to remain in place while you're going through this?

Rob Santana: was interesting 'cause we switched ERPs on top of all this fun stuff. Yeah.

Bill Canady: Good. Brain surgery and open heart surgery.

Rob Santana: Yes, exactly. So in the middle of all this, we had put a new ERP in and we just you know, typical conversions easy. You run an AP aging at night, you cut off, you import it in and go about your business. This was what do we even owe people? Because Ken's cutting deals left and right. So yeah, conversion was a little interesting and so we got all that in. We we're cleaning it up. We still got some more cleanup work to do and you know, building a thirty week cash flow. Again, what do we owe? Who we owe, where are these customers at? So it was challenging on on all the fronts, but we we moved fast, we communicated, and just figured out as we were, you know, building a plane as we were flying it. So it's been interesting, but it's starting to stabilize, we're starting to level out. So it's it's been fun. I enjoy a challenge. So it's it's definitely I got two challenges that I got a two-for-one deal here, so it's been good.

Bill Canady: It really has been. Ken, what would you do differently next time?

Ken Kelly: probably sell to the employees, right? Rather than private equity. I think private equity has its place in the world. it certainly was a great learning experience, and I I know for a fact that they've made industries better. next time around, I think I think having a small single location, profitable organization has value. If you're the hometown hero, that's a good place to be, right? I was a little younger, probably a little more energetic. And I wanted to have coverage all over the state, all maybe even over the nation. So I realize now that some of the best run companies in the world are probably the mom and pops that you never even hear of. You just you go to them, you you go to your favorite restaurant on a Saturday night with your family, and it's the local family-run business that is just always consistent that runs the best businesses. And there's there's value in that. in especially in today's day and age where everything has become very corporate and not as personalized. So I I think next round we'll probably look to do an employee buyback.

Bill Canady: Nice. Rob, same question to you. What would you do differently next time?

Rob Santana: What do I do differently next time? you know, really, I don't know if I what I would do. If I was here before I got I was just here months before all this happened, always only on the job, but ninety days before the whole sale happens. If I here a year ago, really you start seeing the numbers slide. you need to start having those tough conversations with people. I mean, that that's always whenever you see a turnaround, it's always people and they always let people go later than they should. So to me that's something it's not it's unfortunate, it's people, it's families, I I understand, but Salvage the company. Definitely would look at the people and the layers of management we in installed and and may started making I would have made chang if I was here a year before this, I would have made changes ahead time and started working with the lender ahead of time. I think they could have worked it out if there was a longer runway and we had some honest conversations and the sponsor was brought in. It's like I told the sponsors, if I was here a year ago, I we could have turned this around and would this this ending would have been something different. But you know, ninety days, there's there's very little you can do. So really it gets the same old, same old it's communication, reaction. Dealing with real numbers, being honest with yourself, being honest with your lenders, and and reacting and taking swift action that needs to be taken.

Bill Canady: Yeah, you know, the communication is really critical. And you let it get away from yourself. It's hard to get it, get it back. You lose a lot of things, including trust.

Rob Santana: Right.

Bill Canady: you know, if a if a leader has a thousand days, three years, if you will, to build enterprise value, what must be done by day thirty, fixed by day a hundred, and institutionalized by the time you get to the thousand days? Ken, you want to take that one?

Ken Kelly: take it. first 30 days you have to have a vision. This is where we're going. You know, you take that anchor, you throw it out, and you start pulling towards it. By a hundred days in, you have to have all of your systems, processes, and people in place. And then I'll throw product in there too. And I'm a big fan of less is more. You don't want

Bill Canady: Mm-hmm.

Ken Kelly: to be everything to everyone. You really want to hone that in and be an expert in the field or product that makes you the most profitable and unique. And then it's just execute, right? Throttle back lean it out and and just let the people perform. And that's the stage we're in now, day sixty-eight. so we we got there quickly. But that's how business should run. The great coach Bill Parcells said, we are the team, our score the score reflects. And in my mind, the only number, the one KPI that every business owner should have tattooed right on their brain is EBITDA as a percentage of revenue. Because businesses are always affected by forces, whether it's competition, product changes, pricing levels, the economy, whatever it happens to be. And so we grow and sometimes contract. And it's very important that that EBITDA percentage, whatever it is for your organization, stays the same, whether you're smaller or larger. you know, that profit can never waver. And so that's what we have to build around. And and you have to build a company that the market will allow you to be. And You never go want more than one month in the red without making immediate, drastic changes. You know, we have to respond very, very quickly. And and there are a lot of times level 10 decisions where both potential outcomes are bad, right? There's no good decision here. It's just bad or worse. but you have to make that decision, you have to do it quickly. By the time you have all the information to make a good decision, it's too late. So it it's acting quickly. But yeah, that's that's kind of what I would think.

Bill Canady: That's well said. So Rob, same question to you. You got a thousand days to go build enterprise value. What are you gonna have done by day thirty, fixed by a hundred and institutionalized by a day thousand?

Rob Santana: Day thirty, I I want to build a team. I want to be build trust, I believe, with a good team. And I saw I saw it as we went through the challenges at Kelly. When you got a good team and culture, that that could carry you through it. When people believe in the mission and and the people and the leadership. So to me in day thirty, I want to build a team and culture, collaboration and trust on day thirty. One hundred I w I want the financials locked down, the processes locked down, controls in place. And those kind of things and then long term, just really it's people, process, product. And a lot of people say that, but I'm a true believer in that. It's three legged stool. You gotta have good processes, you gotta have good people, and you have to have a good product. And you need all three together. You need to review Every three to five years your company's gonna evolve and change. And you gotta you can't just get to the end state of day a thousand and Whew, we're done. Put my feet up. It's day thousand one, we start all over again and who are we, where are we, what are we doing, what's going on in the marketplace.

Bill Canady: Absolutely. Ken, what should an owner who's listening to this do tomorrow?

Ken Kelly: Well, that's a great question. You know, what I've learned through this private equity introduction is that there's a certain level of assertiveness that comes from real leaders. And it helped me grow. And that decisiveness is key. So I call it what would Ken do. If I was from private equity and I recently acquired your company and I walked in and I started looking at your people and your processes, what waste What overpaying, what people aren't performing right, Pareto's 8020 rule, what stack ranking could we do to lean this organization out and focus more on profitability? Because if you make a promise to a customer by putting a guarantee on the side of the box or the service that you provide, if you want to hire great talent, train them and get them on board and into your organization, if you want to replace equipment as it ages, you need to be profitable. Like that's all that that all of that profit goes towards. sustaining building an organization. If you're not profitable, you're not going to be able to. You're either growing or you're dying, as the great Tommy boy once said, right? So I would say, what would Ken do? If I came in your organization, we walked the halls or we went out on the factory floor or out to the customers' job sites. And I said, well, you know, why why do we have this? Why do we still do that? Why are you hiring your cousin and they're on the payroll and they're not performing at all? Everyone hates them and they're cancer in the organization, right? why don't you just get rid of them? Right? A lot of people are afraid to make those those decisions. But in the end, when you do, it's like an elephant stepping off your chest. You'll realize that it's actually much better to run an organization where people are happy, where you're profitable, where you're lean, where your customers love you. You know, those, that's the way to be. And it it I know it's tough decisions, but it's just a problem to solve. And entrepreneurs are really good at solving problems because we're super hard workers. So go through your organization as if you had me watching over your shoulder and just make those tough decisions do it quickly.

Bill Canady: Rob, what financial warnings should that CEO be listening to?

Rob Santana: cash, cash is king, 13 week cash flow. You know, you go to bankruptcy, you gotta do a 13 week cash flow. But really, if you're doing one when times are good, you shouldn't end up in in bankruptcy. So to me, that's that that should be something every CEO is getting in understanding. Did understand the mechanics and how to put it together? No, but w they need to understand what is it telling me? And what what direction we are where are we going? That's that's your warning sign. You can have beautiful EBITDA. And if your customers aren't paying you and your all your money's tied up in inventory, that doesn't show up on your P and L. What shows up is the thirteen week cash flow of, hey, Houston, ten weeks out, we got a problem. So to me that should be if you're not getting one, any CEOs listen to this, you need to get one tomorrow. And just begin to begin. And and the first one I did was a mess and you kind of it's forecasting, it's not a reconciliation, it's an estimate, but it tells you directionally where you're going. And that's what you need to know as soon as you know. As soon as you as soon as you can find out there's a problem, you need to know and start taking action. Getting rid of inventory, taking a hard look at receivables. Is there some old stuff that we need to collect today? 'Cause we have a problem in two weeks from now or whatever it is. But that's definitely the first thing I as every entrepreneur or CEO, they need to live and die by that.

Bill Canady: Yeah, that's a critical one. Well, yeah, look, take a couple of moments and and tell the listeners where they could follow or find each of you if they want to contact you. Ken, you wanna kick us off with that?

Ken Kelly: Sure, I'd be happy to. I've got a personal website. It's mrkenkelly.com. feel free to reach out to me. on the side, I love helping people. So I'm happy to answer any individual questions. You can also see me at trainings coming up. You can go to Owenscorning.com. There's a link of upcoming events. And I'm speaking also at major trade related organizational trade shows and so forth, like the International Roofing Expo, the best of success, and and those types. So I'd love to connect. feel free to reach out.

Bill Canady: Ken Ken's very modest. He's an extraordinarily gifted coach. So he'd be happy to help anyone. And Rob, how about you?

Rob Santana: Yes. easiest way to get a hold of me is through LinkedIn. I'm Robert Santana CPA. He's my handle on LinkedIn. Just look me up. Happy to connect. And if you got a question, happy to answer them. And same I I just enjoy helping people. So I'm happy to answer a question to LinkedIn.

Bill Canady: Rob's an outstanding financial partner and is always looking to help people. And if you're looking for someone like that, Rob can come in and make a difference inside of your company. And he'll he'll keep your cash under control, which is what we all need for sure. Well, listen, guys, Rob and Kenneth, thank you so much for taking time to help us understand the decisions that you made, what you went through with it, and showing us the same situation from two different seats. For the CEOs listening, take one action from this conversation and put an owner and a date against it. I think this is. Clear, you gotta go, you gotta go fast. If it gets away from you, hard to get that back. You'll find both guest links in the show notes. I'll make sure they're in there and how to contact them. Follow the Thousand Day CEO for more conversations about the decisions that build enterprise value. I'm Bill Canady and let's make every day count. Thanks everyone.