Imagine if you could clone yourself.
Think of how much more you could get done with your business. And how many drinks with pink umbrellas you could enjoy as your clone worked tirelessly in the background.
A pipe dream, obviously. But you can get close to this fantasy by hiring a business manager who can successfully manage, grow and run your business.
That’s exactly what Shakil Prasla has figured out how to do well.
And not just with one manager. He’s hired close to a dozen business managers that oversee his portfolio of businesses which allows him to focus on things he enjoys more, like finding and acquiring his next portfolio company.
(And, of course, crushing everyone at the last eCommerceFuel Live pickup basketball game. We’ll save that for another episode)
In today’s discussion you’ll learn:
- How to create compensation plans for managers to align their interests with yours
- What Shakil expects of them and how he manages them on an ongoing basis
- How much you need to pay to acquire the caliber of person needed to succeed
Andrew: Welcome to the eCommerceFuel podcast. The show dedicated to helping high six and seven-figure entrepreneurs build amazing online companies and incredible lives. I’m your host and fellow e-commerce entrepreneur, Andrew Youderian.
Hey, guys. Andrew here and welcome to the “eCommerceFuel” podcast. Appreciate you joining me on the show today. And on the program I’ve got Shakil Prasla, who is the owner of szventures.com, where he owns a portfolio of a dozen-ish e-commerce stores that he has purchased, acquired over the last five plus years. And originally, I was planning on just having this be a single episode about his experience and his thoughts and lessons learned, but so much good stuff came out of this discussion and I kept diving down at a rabbit hole after rabbit hole that I broke up into a couple episodes because there’s so many nuggets in there.
In the first episode, we’re gonna talk about how he effectively manages his portfolio, specifically by hiring effective business managers. And for a guy who tends to be a little bit obsessed with control, one of my faults, I was really curious to see how he did that, how he finds his managers, how he trains them, how he manages them, and incentivizes them. And he’s really been able to scale his abilities beyond just himself in a way that a few people, even given the broad scope of entrepreneurs in the community that eCommerceFuel have successful done. It’s a hard thing to do. But he’s been to do across a wide variety of business, and do it very effectively with very minimal turnover, which I thought was impressive.
So, next week, we’re gonna talk more about his process from a macro perspective, how he finds deals and finances them and his thoughts and which types of deals and business types he finds the most attractive and interesting. But today, we’re gonna focus really on his team management and particularly on hiring and managing great business managers. So, I hope you enjoy the discussion. I’m gonna go ahead and get us right into it.
For a long time I’ve thought like you’ve got a really cool story of…The model is interesting. You’re a great guy, just kinda in general, so I’m glad that we were able to make this happen. Thanks for being willing to do it, buddy.
Shakil: Cool. Cool. Yeah.
Shakil’s Company SZ Ventures
Andrew: Shakil, so what is SZ Ventures when you meet someone and they have no idea or they don’t know you and they ask what you do, what do you tell them?
Shakil: Well, I tell that SZ Ventures is a holding company I created that buys online companies. And I basically got the name by putting my first initial and my wife’s first initial and put that together to create the SZ. That’s the SZ Ventures.
Andrew: And how long have you been doing this for?
Shakil: About five years. I got started in e-commerce in 2012, and I made my first acquisition in 2013.
Andrew: And how many different companies do you own under the SZ umbrella?
Shakil: There’s 15 companies now underneath SZ Ventures.
Andrew: That’s amazing. And structurally, do you have it set up with…Probably we’ll do a whole different episode on this, but legally how do you have that set up? There’s advantages to having legal entities for all your different companies, there’s also some advantages remarkably on the simplicity side for having, you know, SZ as the parent and then having like a DBA for all of your individual businesses. How do you structure that legally?
The Structure of 15 Companies
Shakil: Yeah. So I’ve created them all individually as LLCs. And then whenever I acquire them, I don’t acquire them as individual known as Shakil. I purchased them through SZ Ventures. So SZ Ventures is an LLC that buys into the new LLC.
Andrew: So everyone in your company has its own LLC. Do you have individual bank accounts set up for all of those businesses as well?
Shakil: Yeah, that’s correct. I have different bank accounts, different credit cards, different tax returns. Definitely every quarters gets a little messy sometimes, but I have a good accountant that helps me out.
Andrew: So you file 15 different tax returns for each business every year?
Shakil: Yeah, that’s correct.
Shakil: It just sounds a lot, but I’m so used to it now with the whole process of creating LLCs, bank accounts, and credit cards that, you know, it doesn’t scare me.
Andrew: And when you have it set up, we’ll get into maybe the details more about how you structure things, if you bring people on the equity side. But do you have for that structure? Are you the sole owner of most of these? Do you have investors? Do you have people running the business also have an equity stake? Kind of at a high level, what does that look like?
Shakil: When I first started acquiring companies I was buying them individually just by myself, but recently I’ve been having partners join me as well. So the last four companies I’ve had a partner going with me.
Andrew: And when you say partner, are they usually on the operational side or they’re usually just as a financial-limited partner, where they provide the cash and you manage everything else. The mix of the two?
Shakil: They’re active partners, so they help manage the company. They help, you know, with the day-to-day activities.
Andrew: Great. And when you bring those partners in, do you require them to bring a capital as well as being somebody who runs the business? Or, have you at times just brought someone and give them an equity stake just for running the day-to-day?
Shakil: Yes. So I’ve tried both. I’ve tried it to where they don’t have to bring any cash upfront or minimal amount, and they get equal equity stake. In return, I ask that they do the day-to-day operations. I stay a silent partner. And I’ve also tried it where we both bring equal amounts and we both have equal partners with, you know, equal say and equal time, you know, going into the business.
Andrew: And do you have a preference for which one of those works better or a little bit down the line you prefer if you…Is it situational where it works both ways or is there one that you have a strong preference for?
Shakil: Well, it depends on the business, too. But if I’m investing most of the time, there’s more risk on me. The upside to that is I don’t have to put much time into the business. It could pretty much become a passive business model which one of them has become. The other side, you know, we’re both putting an equal amounts of money, so we both have equal risk, or we have equal say. That has its pros and cons as well, too.
Andrew: You mentioned you have 15 different properties or businesses over the course of about 5 years. Obviously, you kinda went through all of them, but can you give people listening maybe the examples of a couple different types of businesses that you run and own in that portfolio?
A Diverse Store Portfolio
Shakil: Yeah. Well, I’ll start from the most recent one. I purchased a greeting cards company in July and we pretty much make custom greeting cards. You could pick your verse and it goes on the inside. You could pick your design on the outside. I make custom socks. So, you know, for baseball teams, for corporate companies. We make also custom paddles, ping-pong balls. I sell cuff links and tie clips, leather jackets to fitness gear. And then, you know, my custom metal promotional products is a big one, too. I guess I’m everywhere.
Andrew: Very well diversified across verticals. What does your team look like right now? Maybe at a high level, can you give me a sense of your headcount and the split on the headcount between the people that are payroll and people that are contractors?
Shakil: So, overall, I think, I have about 40 people now, 40 employees. And the way I’ve structured it is that the smaller ones have a business manager so that, you know, for the smaller ones the business manager may manage three or four companies. For the large ones, I have one business manager for each of the larger companies. And then underneath them is customer service team. And, you know, some maybe contractors and some maybe employees. For Facebook ads, for Google ad, for SEO, I used agencies for those.
Andrew: So outsourced on the advertising side. But your customer service and the people that are, kind of, your point man or point woman for each business, those are people that are on your payroll?
Shakil: Correct. And most of them aren’t based in the U.S.
Andrew: Wow. So, how much of your time is spent dealing with people, HR issues, management, people quitting and bringing new people on? All the stuff you have to deal with when you have 40 people on your team, in my world, that’s a big team, versus the other things that you do. Is that just a tremendous amount of work or have you figured out a way to manage that fairly streamlined manner?
HR Falls on Business Manager’s Lap
Shakil: Well, I don’t think I figured it out, but, I think, I’ve had good employees where my turnover has been very low. Usually, with the hiring and firing, I let the business manager deal with that one. And if the business manager needs any help, I deal with that. But I try to stay away from, kind of, the hiring and firing of the employees. I let the business manager deal with that.
Andrew: So when you have the business manager on that, they deal with a lot of the personnel issues. How do you structure managing? Because, let’s say, I’m guessing you probably 8 to 10 business managers, either that are managing multiple properties or one. That’s a lot of people to manage in addition to all the other things you have to do. What is your process for dealing with that? And what kind of maybe rules or heuristics or framework do you have in place to be able to manage that team well?
Is it do you have set calls and you only talk to them in that time or you’re pretty much available throughout? Is there a task manager project that religiously you use to make that easy? How do you bring order to that? Because it sounds like it could get chaotic pretty quickly, even when you had the people managing the individual businesses.
Task Managing For A Big Team
Shakil: Oh, absolutely. If it’s not organized, if it’s not streamlined, it could definitely get crazy. For most of these employees, I use Hubstaff to monitor their performance, to see how they’re doing, to see what they’re doing. That’s a good way to see what they’re doing day-to-day. For communication, we use Slack often. So if there’s any questions, any comments, any disgruntled customers, they will post them in Slack for me.
As far as, like, goals, and I’ve very goal-oriented for weekly, monthly, and yearly goals, I basically come up with three to four goals and that’s it. You know, so we work on those three to four goals. Let’s just say we wanna get to X amount of revenue, so now I work backwards. How do I get there? Which keyword should we focus on? Where should we improve on? Should we list it on Amazon? How do we optimize?
And we keep working backwards until we get actionable items. And I basically create a Google Docs of these action items and with due dates. And I have a weekly call with my business managers on the process or the progress of where they stand. And we’ll fine-tune it to see, you know, how it’s going, to see what’s the update, what else we can do to reach those goals. But, ultimately, it just comes back to, you know, getting to those few three to four goals, you know, implementing on that and executing on that.
Andrew: What was the tool you said you used to kind of monitor the performance of your managers?
Andrew: Hubstaff. And so for people that are familiar with that, can you talk about what that does and how you implemented it?
Shakil: Yes. So if people have used AppWork as well, it’s basically a tool where you could pay your employees as well. It monitors their key strokes, how much they’re typing every 10 minutes, their mouse movements, you could also see their screenshots on what they’re working on. That’s basically what I use it for, is to see how efficient they’re being. I also use HelpScout which is a email system where you could check how quickly my customer service reps are answering, how many emails they’re answering a day. So it’s a pretty good tool, really, to just see how efficient they’re being, how quickly they’re answering, and really what my customers thing about my customer’s service reps.
Andrew: So just to clarify, you use Hubstaff to kinda manage and kinda monitor the progress of the managers for your individual companies as well, not just like the customer service and people below that. Correct?
Shakil: That’s correct. I use it for my business managers as well as my customer service reps.
The Hands-Off Tradeoff
Andrew: You know, that’s something that’s been tricky at all because you always have…We’ve had some interesting discussions in the community about that tradeoff between managing your team and providing freedom for people not, you know, being too much of authoritarian, big brother boss, and kind of the tradeoffs there. Is that something that works pretty well? Do you feel like sometimes your managers, especially those that maybe have a profit share and equity stake, they resent that? Has that caused problems or have you found overall it’s been something that’s been invaluable? Have you wrestled with that at all?
Shakil: I haven’t had a problem with it because I also don’t look at it very closely either. They’re able to do what they want to do freely. I’ll only step in when I see a decline in our customer reviews or decline in the way we’re answering. Other than that, they’re pretty much free to do what they want to do.
Andrew: Because it sounds like for you it’s a safeguard to check on stuff and you have really good feedback systems in place that will trigger you when they issue those reviews. Is that kinda how you operate?
Shakil: Not exactly. That’s how it is set up.
Feedback Systems for Employees
Andrew: Talk to me about how that works. So you mentioned customer reviews, could you maybe give me, at a high sense, what are some of those feedback loops, and maybe dive into those a little bit? You mentioned customer reviews, you mentioned the goals that you’re working toward. Are there any other ones that you use, any other really KPIs or feedback loops that are super important? What are the top ones that you look at?
Shakil: Yes. So my main ones are really how quickly they’re responding to customers. So on Help Scout, you’re able to see how quickly, when an email comes in, how quickly they’re answering those emails. The customer themselves could rate, you know, “Was I happy with this response? Was I not?” We’re able to see that as well. So I look at that feedback.
Besides, those two things I also look at Hubstaff here and just to see if, you know, how efficient they’re being every 10 minutes. Are they, you know, are surfing the internet? Or, are they actually answering emails? That’s a good way to really see if my customer service staff even my business managers are doing what they’re supposed to be doing.
Andrew: So is most of your team…I’m sure that customer service staff is probably on an hourly basis. Are most of managers on a hourly basis as well?
Shakil: Most of them are actually salary with some type of bonus or equity tied to incentives.
Andrew: When you hire someone, and maybe it’s a good transition to talk about how you hire those people, what is your mindset with that? Are you thinking, “I’m gonna bring someone as someone who can be….if they’re not in equity partner, at least they’re gonna have some kind of incentive in the growth of the business.” And do you expect them to come in and meaningfully grow the business over time? Or do you see your role really as someone to come out, acquire the business, fix some of the systems, streamline it, and then put someone in place who can really manage it well from a day-to-day, but not necessarily grow it?
How many growth expectations or what are your realistic growth expectations for bringing somebody on in that kind of role? Because that’s how hard finding someone who can meaningfully grow the business, you know, that is not someone who has a huge equity stake or that is highly, highly managed. That sounds like that’s a trick thing, at least in my experience, to find.
How to Hire Great Managers
Shakil: Yeah. Well, the type of managers I try to look for are people that already have some type of management experience. They come with some type of leadership experience. They come with some type of marketing experience or some kind of developer experience, and they’ve had, you know, this position before. I try to leverage their experience and put that into the business, right?
So when I buy a business, I usually keep the old owner on, at least, you know, 60 to 90 days, learn from them, transfer that knowledge to this business manager, and see what we can keep as a strategy as a strategy and what new strategies we could implement. It’s really the first six months where we really work together, come up with manuals, processes, and just procedures on what we can implement going forward. So it’s really, I rely on the business manager on how to grow the business and how to execute on it. Really, I have full trust on them. And if things don’t work out, I’ll move on to the next manager.
Andrew: So do you make them an integral part of that transition process? Let’s say, you buy a new business, you mentioned of course having the owner involved from, let’s say, I just make it easy 90-day period. Do you have a manage in place before you close on acquisition so that they can be a part of all of the calls, all the processes to see what’s going and you mentor them in that and they kind of push them off on their own? Or is it much more often you acquire, you learn it, you bring someone on it to tail into to that, you train them, and then off the races you go?
Shakil: Yeah, o I usually bring them on during due diligence, right? So due diligence usually is about 30 days. Two weeks into it, I’ll definitely know I want to move forward, I want it at the asking price. At which point, I will ask one of my business managers if they know anyone that’s looking for a job, or I’ll post it on Indeed, or I’ll ask a agency here in Huston to help me look for someone. And usually right after I acquire the company, I’ll also have a business manager in place that’ll learn side by side with me from the old owner on the basis.
Andrew: When you think about finding someone that has the experience and the hustle to be able to execute on what you’re asking, which is really to…Sometimes it’s a lot of autonomy past that introductory and training period. What’s the realistic compensation for someone on this? Is it something that you’re able to find someone where you can get someone who does a really good job for 40K a year, 50K a year or you can have to offer them significantly more of equity upside? And, obviously, this is gonna vary based on, you know, the complexity of the business or if they’re managing three or four versus much bigger one. But on average, what do you need to give to find someone who can be a success in that role?
Shakil: Yeah. I mean, I offer them at least $60,000 a year, and that’s just salary. And then there’s other incentives, too, right? So if I buy a business that’s doing, you know, a million dollars in revenue prior to my acquisition, we’ll come up with something saying, “Okay, if the business goes to $1.2 million in revenue, you’ll get a X percentage of that, and that’s your the incentive.” So it’s now their drive to grow the business because they’ll be paid even more now.
Andrew: Incentives are always tricky to set up, to do it right in the way that benefits everybody. Do you set those up purely based on top line revenue, which can helpful for growth, but perhaps maybe people would choose the revenue at the expense of profitability? How do you set up those incentives so that they work well for both you guys in the long term?
Shakil: Yeah. I would say it’s a combination, really, of revenue and profitability. So if it does $1.2 million in sales, you’ll get this X percentage, but if it also profits this much, you’ll get even more of that percentage. So I kinda keep it in conjunction with each other. It works out.
Andrew: What percent of managers that you bring on work out, let’s say, a year down the road? Is this something you circle through a lot of people to find the people that really fit, or have you gotten down to the point where you are pretty good at people that work out well?
8 Out of 9 Are Good Odds
Shakil: I have nine managers. Out of the nine, I would say, only one has not worked out. The other eight are stellar. They’re amazing. They do a great job. The one that didn’t work out, you know, when I hired them, you know, their resume looked great, their experience looked great. Their goals were not aligned with what I wanted to do. So, you know, we butted heads a lot. That showed in the way things were being executed. And so, I think, when goals are not aligned that creates a lot of problems. So, I think, you know, from the get-go that has to be established that, “Hey, let’s work together on this. You’re not my employee, you’re my partner. Let’s go. Let’s get this done.”
Andrew: Maybe unpack that a little bit more because 9 out of 10 or 8 out 9 batting successfully for a role like this, which is much more sophisticated and far-reaching than just a customer service rep. That seems really impressive to me. I would have imagined there’ll be a lot more turnover. So, dive into that a little more, if you will. How do you, maybe starting with the goals that you mentioned, what kind of questions do you ask about goals? What kind of red flags do you see about goals to make sure you’re on the same page and your long-term visions are aligned, and what you want are aligned? Because obviously it’s working well for you. Talk to me a little bit more about that.
Shakil: Well, I make the goals with feedback from the business manager, right? So when they come on board, day one of acquisition, we learn the business, we look at growth opportunities and we say, “Okay, we could achieve this. We could get to X amount of revenue. We can target that keyboard. We can upsell this product, then we could get to this.” We really work together for the first 60 to 90 days. Come up with those goals, and then from then one we break it down on what to do next. You know, I definitely, definitely give freedom to these business managers, and I try to empower them as much as I can.
You know, initially, they’ll come to me with a lot of questions, and I’ll say, “Look, answer it the way you want to. Run it the way you want to. Execute it the way you want to. If there’s any feedback you wanna bounce off me, let’s do that. But this is your boat to go to and you do it the way you want to.” So I definitely give them a lot of freedom to do that and, luckily, it’s worked out pretty well for me.
Screening and Training Periods
Andrew: What about…maybe not, the goal sounds like it’s something once you’ve brought somebody on or maybe laid in the hiring process. So you identify a good lead that you talk about to make sure you’re on the same page. What do you do early on to screen candidates? You mentioned looking for people with marketing experience or development experience. But do you have any tricks on processes for things that you put in the job listings, ways that you write it, really important questions you ask during the interview process to help you find these managers that can be very autonomous with a little training period?
Shakil: Well, it’s funny you should look in. My job listings are very basic. I’ll say, “The roles and responsibilities, this is what we do, this is what I expect out of this business manager.” Just those three things. You know, and the follow-up question I’ll ask them in the first round is, you know, “What do you think is it that we do? How do you think you can grow the business?” And this is before I’ve even, you know, interviewed them or anything. With the resume, I also ask for the cover letter which asks these question of, you know, “How can you grow business? What value can you add to my business? Based on your experience what can you do for my company?” Just based on those five, six question I’ll see if I want to bring them on for interview. And if they’re not in Huston, I’ll Skype them and get to know them a little bit better, talk about my company more, talk about some high level goals I have and see if they resonate with those goals as well.
Andrew: What do you have…I mean, you mentioned people that are developers and people who have marketing experience work well. But to be an entrepreneur, I mean, if you were in e-commerce business there’s so many different facets to that. There’s the marketing side, there’s the technical side, graphic design. I mean, we could probably sit here and brainstorm a dozen different hats that you need to have. And to be honest, few people will have all those hats. As an owner, the one thing that, you know, drives you to learn all of them or at least to be able to get knowledgeable enough with them or outsource them well is that you own the business. How do you deal with that with…let’s say you bring someone who is a phenomenal developer but they know nothing about marketing, do you have any roles and what roles do you have at your, you know, under SZ that are shared across all of your companies? Like do you have a graphic designer that’s on staff that everyone has access to, or do you have a Shopify to have that everyone has access to? What roles or responsibilities do you find have been important to institutionalized or have a contractor that everyone can tap into? You don’t expect them to have coming on board.
Shakil: Yes. So as for a lot of my custom products we use my graphic designer and they work across the board. But as far business managers or customer service reps, they pretty much work on those individual companies themselves. I do have developers that we share across the board as well. That’s basically about it.
Andrew: Yeah. So the big ones that you share are graphic design and developers. Also the two big areas that you kind of have everyone gets access to and some core people at the team.
Shakil: Yeah. Exactly.
To Be Continued…!
Andrew: Hey, it’s Andrew here jumping here outside of that discussion. Like I mentioned at the top, we’re gonna go ahead and continue this discussion next weekend and move from…really focusing on how you hire good business managers to discussing more of Shakil’s experience with a process of identifying, finding, and bringing new companies into the folds of his portfolio. And that’s something we’re gonna in depth next week on the show. So make sure to tune in if this was something that interested you.
That will do it for this week. But if you’re not a member of the eCommerceFuel private community and you’re a store owner with at least a quarter million dollars in sales or have really deep experience in e-commerce space, come join us inside our private community. We’ll love to have you. We’re a community of a thousand experienced in the trenches entrepreneurs and professionals that are doing this stuff on a daily basis. We vet all new members to make sure they are highly qualified and a great fit. And it’s a great place to talk and connect with people like Shakil, people that really know this stuff inside and out.
So, if that sounds interesting to you, if coming to some of our live private events sounds interesting to you, or you just want to be able to tap into our very deep achieves of years and years and years of discussions and content on topics just as like we talked about today, you can learn more and apply for membership in the community at eCommerceFuel.com.
That’s gonna do for this week. Thanks so much for listening. I’m looking forward to chatting with you and picking up the discussion next Friday. Have a great week.
Want to connect with and learn from other approving e-commerce entrepreneurs? Join us in the eCommerceFuel private community. It’s our tight net vetted group for store owners with at least a quarter million dollars in annual sales. You can learn more and apply for membership at ecommercefuel.com. Thanks so much for listening, and I’m looking forward to seeing you again next time.
What Was Mentioned
- Andrew Youderian: Blog | Twitter | Facebook | LinkedIn
- Shakil Prasla: Website | Twitter | Facebook | LinkedIn
- eCommercefuel Live 2016 Keynote and Breakout Videos
Flickr: Harold Maduro