Kevin Carlson on Five Investor Exits, a Chapter 7 Bankruptcy, and What He Learned from Both

Anthony Codispoti (00:01)
Welcome to another edition of the inspired stories podcast where leaders share their experiences so we can learn from their successes and be inspired by how they’ve overcome adversity. As you listen today, let one idea shape what you do next. My name is Anthony Cotus Bodie and today’s guest is Kevin C. Carlson, director of strategic business development at top to bottom business solutions.

The firm is a family-owned partnership headquartered in Cornelius, North Carolina, with offices in Wilmington, Fort Mill, and Charleston. Top to bottom delivers bookkeeping, accounting, payroll, and consulting services that let business owners focus on what they love while experts handle the numbers. The company has grown from a one-person shop in 2016 to a team of more than 50 professionals and was a small business of the year finalist at the Lake Norman Chamber.

Clients praise its communication and the care it brings to every account. Now, Kevin draws on more than 20 years in strategy and operations. He began his career in consumer packaged goods, leading successful teams at Procter & Gamble, Coca-Cola, and SC Johnson. He then spent almost two decades in consecutive roles working with investors, resulting in five successful investor exits, the most recent in 2022.

He also serves as a volunteer mentoring, transitioning US military veterans via the Honor Foundation and the Special Operators Transition Foundation. Now, before we get into all that good stuff, today’s episode is brought to you by my company, Ad Back Benefits Agency. Listen, if you run a business, you’re likely stuck in a cycle of rising insurance premiums. You’re paying more, but your team is getting less. And many people can’t afford coverage at all. We do things differently.

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Results vary, but the consultation is free. Hey, imagine being the advisor that becomes a hero by introducing this to your clients. See if they qualify today at addbackbenefits.com. All right, back to our guest, the Director of Strategic Business Development at Top to Bottom Business Solutions, Kevin Carlson. Thanks for making the time to share your story today.

Kevin Carlson (02:44)
Anthony, thank you for so much for having me here and allowing me to participate.

Anthony Codispoti (02:49)
All right, let’s go have some fun. Shall we, Kevin? So I want to focus on just a little bit of what you were doing before you got to top to bottom. Lots of stops along the way. But I want to pick out a couple of some of your longer tenured places. ⁓ Tell us about the work that you were doing at Jefferson Wells International. And specifically, I’m interested in and how you came in as the 11th employee and helped to drive growth to fourteen hundred.

Kevin Carlson (02:51)
Sounds like a plan. ⁓

Okay.

Anthony Codispoti (03:17)
employees and $140 million in revenue per year in just four years.

Kevin Carlson (03:22)
Yeah, we had a lot of fun. ⁓ At the time, right before I joined Jefferson Wells, and by the way, the name of the company at that time was called Audit Force. I was working for SC Johnson and had been there for many years. And I just was sort of a fish out of water, the big company thing. And I was tired of hanging my brain at the door. And the general counsel for SC Johnson and I were neighbors. And I started talking to her about things.

She said, well, I can introduce you to somebody and maybe they’ve got an opportunity for you. And this gentleman was Mike Harris. And I met with Mike Harris and Mike Harris said, I want you to come join the company and lead sales and marketing. And Audit Force at the time was a investor backed startup. I was doing about $800,000 in sales. I had two offices, but we had big plans. And the whole positioning of Audit Force was an alternative to the big five.

at the time, ⁓ external audit accounting firms who were in that effect exposing their clients to a conflict of interest because they were auditing their own work. did consulting and they were also the external auditor.

Anthony Codispoti (04:30)
And we would

see later on how that come back to bite them. Yeah.

Kevin Carlson (04:35)
Absolutely

correct. This is pre Enron pre survey exactly. And so our positioning was that as a no conflict ⁓ of interest alternative. And we were where our strategy was office opening, we would put in a group of three or four people in Cleveland, Ohio, and say build a $2 million business. And when you end up with 25 locations, obviously, you’re doing, you know, 70 to $80 million. But anyway, I joined in sales and marketing as the 11th employee.

and executed the go-to-market ⁓ office opening strategy, the client acquisition strategy, the ⁓ market penetration strategy. And within a relatively short period of time, we went from what’s 800,000 to 140 million in sales, 1,400 employees, and we sold the company to Manpower Incorporated. And so when you go to the Manpower Incorporated website, you see Jefferson Wells, that is the company.

⁓ division of manpower that that we had started at Auditorium.

Anthony Codispoti (05:39)
So Manpower has a division of the company that is specifically offering these auditing services.

Kevin Carlson (05:45)
Well, the auditing expanded into other things in the financial services sector and what Manpower has done with it is probably different than what we did. But at the end of the day, that’s how it got started. 11th employee, I was the only non-CPA certified internal auditor in the company at the time. so trials and tribulations, ⁓ but a lot of success.

And I got the bug, Big company background. And now I’ve been in the investor-backed startup community. And that led to what I did after that. just think about, you know, I have this incredible need to learn. And the learning was incredible. Consumer packaged goods, professional services, office opening startup, investor-backed, going to, you know, I had never ⁓ presented at a board of directors meeting with all these, you know, private equity investor people. So.

The learning curve was very severe and there were a couple of times where, you know, it’s like, I thought I was going to get fired. But, uh, and, uh, you know, an anecdote, I had one board meeting, there was this gentleman, his name was Bruce Smith and he was a very, very intense, powerful, you know, arrogant guy. And, uh, he was appointed to the board really as the sales and marketing expert. I was on a road trip to Denver, I think, and I got back, it was like three in the morning and I sat in my car in the garage.

and finished my board report and emailed it to the secretary because the board meeting was at 10 a.m. and I was pushed, right? So anyway, we had to drive to Chicago for the board meeting from Milwaukee is where we were based. ⁓ And when I was sitting in the conference room at the investment firm and Bruce Smith walks in the door and he looks at me and he takes his board report, he takes my report and he tears it in half and throws it on the floor and he says,

Anthony Codispoti (07:36)
right in front of you.

Kevin Carlson (07:38)
That report is a piece of shit. What is going on with the business? And so the rest of the room was stunned and I just sat there and he and I went toe to toe for about 45 minutes. And ⁓ at the end, in all fairness to him, he said, OK. He said, I think you know what you’re doing and I’m pleased to what you got going on and go for it. And then the chairman said, well, that’s all the time we have. He turned the meeting and.

And that was it. So the whole board meeting was Bruce Smith and I, you know, dealing with each other across the table. But you think about in your career and in most business professions, you never prepare for that. You don’t trade for that. And so, you know, you have to be able to think on your feet and stick with it. But, you know, the test there wasn’t as much the specific knowledge of what was going on in the business. It was my behavior and how I reacted. And I think that was a big part of it.

And so the rest of the people, there was like eight other people at the board meeting. They just sat in their chairs and just watched and big and like, wow, you know, boom, boom, boom, boom, boom. And so then you think about, I came out of there a ⁓ much stronger, a much more articulate, a much more focused professional as a result of that discussion. So the learning there was incredible and benefited me a lot down the road.

Anthony Codispoti (09:04)
Do you think Bruce did this with other people? Did he have, maybe there’s a little bit of a different way to ask it, did he have knowledge of what your experience or expertise level was prior and he was doing this as an intentional test to see just how good you were?

Kevin Carlson (09:21)
Well, I think it was an intentional task. I don’t think it was as much to see how good I was. was to like, does this person know the business? Do they have a plan? And can they execute? And then the other part of it, I think was, does this person do under pressure? What can he take? Is he tough enough for this? And you think about when you go into investor backed startups, okay, and you’re underwater on cash.

Okay, every nickel matters. And so a lot of risk, know, the statistics on success on investors, you know, investing in companies like that, statistically, it’s not very good. So there’s a lot at stake. And so are you up to the task? And you know, they would fire and hire and change people out, you know, without hesitation. So at the end of the day, though, you know, it was like,

It was a very unique experience. I’ve never had anything like that happen before. After many years at a fairly high executive level and CPG companies, right? So it was a watershed experience for me and well served me very well relative to, you know, what I was able to do and qualify for in the future.

Anthony Codispoti (10:41)
Why do you think you held up so well in that moment?

Kevin Carlson (10:45)
Well, it’s almost like, you know, getting home at two in the morning, finishing my board report, emailing it at three thirty, getting three hours of sleep and getting in the car. It’s like, what else can they do to me? I mean, it’s sort of like. then on the other hand, you know, I’m respectful of the fact that, you know, there’s a lot at stake here. And so I don’t have any problem with somebody approaching things that way. And so what are my choices? You know?

And once again, you know, I could fold and look like Mickey the Mope. I could just walked out. I could have cried, you know, broke down emotionally, whatever. But no, this is, I wanted to play in the major leagues in business and this was it. And so then you start thinking about, ⁓ okay, can I measure up? You know, am I tough enough? Am I smart? Am I knowledgeable?

And here’s an example where my learning and my depth of knowledge learning about the business and the situation really was the differentiator, I think. Because if I was any less prepared or any less knowledgeable, he would just rip me up.

Anthony Codispoti (11:53)
up to that point in your life and your career. Had you done much personal development work?

Kevin Carlson (11:59)
a lot and I demanded it. well at at ⁓ at SC Johnson there’s this ⁓ thing called the Center for Creative Leadership there in Greensboro, North Carolina I think and in San Diego and SC Johnson for certain high potential individuals would spend 40 grand and send you to these events and I went to the one in San Diego and it was such a powerful beneficial experience. You know you have a one-to-one

Anthony Codispoti (12:02)
Say more about it. What did you do?

Kevin Carlson (12:29)
⁓ interaction with an industrial organizational psychologist PhD for a week. And then you’re doing a lot of these group events and tests and you work in teams and stuff like that. And it was a very rewarding, powerful, positive experience. And then three years later, they sent out a note and said, hey, we got two open slots at CCL in North Carolina. Is anybody interested? I said, I want it. And so what you think about

And you know, when I started my career at Procter & Gamble, you know, I want the feedback, right? So I go to the sales seminar and the salesperson says to me, the leader of the seminar says, you know, ⁓ hey, Kevin, you know, you just you talk too fast. And and your tone is too strict and you don’t you know, you don’t just communicate very well and you look like a train, you know, walking down the hallway with all your boxes and stuff. I said, OK, so

He said, you got to learn how to manage your tempo. So I went and bought a metronome. And then what I would do is I would make a presentation and I would record it. And then I would play it back and I would set the tempo on the metronome to like, what was my speed of speech? Right. And you’re, and I went, you’re right. I’m too fast. talked too fast. And so then what I would do is I would set the metronome to a lower speed.

and I would give the presentation against that lower speed. And so then Anthony, what I learned how to do is to manage the tempo of my speech and how to use inflection. And especially in high stress situations, you can really lower the threshold of the conversation, I’d say, the intensity by how you manage your speech.

Anthony Codispoti (14:26)
So how does that metronome help you change the pace of the speech? So metronome tick, tick.

Kevin Carlson (14:32)
Well, you there you, you develop sort of a temple of how you speak and how you pause and at what speed you actually operate. And so to me, you know, ⁓ I had heard from a friend that that was a good way to like understand what your speech temple is and then put it in a place where you would want it to be. And for me, it was a game changer.

because then I went to the next training seminar and I employed, you know, the differences and the same seminar leader was just astounded. He said, you really paid attention to the feedback. I said, yes, I did.

Anthony Codispoti (15:14)
What else did you learn from working with that organizational psychologist about yourself?

Kevin Carlson (15:18)
Well, you know, the thing is, ⁓ and I would play out as an example, one of the feedback things I received in a performance review was ⁓ I hadn’t failed enough.

Anthony Codispoti (15:31)
Poor you. ⁓

Kevin Carlson (15:32)
And and you know

and at SC Johnson, know to some extent they didn’t know what to do with me So like when they sent me to Denver, I was in corporate for a couple years and I went to Denver and ⁓ And there was this big account there one of the first warehouse club type entities it was called warehouse club and they ultimately got bought out by Costco I think but but ⁓ you know, they had fired SC Johnson and we weren’t doing any business there and and ⁓

And so I had worked on the warehouse club program at corporate and I made a pitch to this guy, you I know you’re mad and all that. I wrote him a letter and said, I’ll call you. So I went in there and we started doing business again while the budget was based on, you know, no business there, right? So within like four months of the start of the fiscal year, I had 100 % of my quota for the year.

knocked down. So then it was like the life or mentality takes over. You know, you don’t want to put too much on there or they’ll give you a bigger nut next year, right? But at the end of the day, you know, I haven’t failed enough. And so I asked the psychologist, you know, help me understand this. You know, I mean, is failure a prescription for self-development? And the psychologist said, no, you know, don’t. How would you get, you know, so you try to fail to learn? You know, it’s ridiculous.

You will fail and there will be things that you could have done better that you’ll learn from. But it’s not a prescription for success to encourage or, or go after failure. I mean, that’s just ridiculous and stupid. I’ve never heard that. So that’s the kind of discussions I had because, you know, I’m open to the feedback. If this is what somebody felt, I accept it because then it’s a matter of what you do about it and what you gain from it.

Anthony Codispoti (17:18)
you want to learn.

Kevin Carlson (17:26)
and then how you can advance and grow and develop as a result of doing better with what you now know.

Anthony Codispoti (17:33)
So we’ve got to go back to the warehouse club example there. What did you say to get your foot back in the door? And then how in four months did you win back all that business?

Kevin Carlson (17:44)
Well, I had a sort of an inside track because, you know, warehouse club at the time, you know, if you went into a grocery store and bought, you know, shout laundry, soil and state remover, it came in a 22 ounce jug. Well, warehouse club wanted larger sizes. So I’ve been part of the development in corporate of the gallon shout. Okay. I had been part of the development of the two 18 ounce pack pledge furniture pouch. So it was 14 ounce in one can at a Kroger.

warehouse club, wanted larger sizes and bigger packs, right? So I’ve been part of that program. But I wrote the head buyer there a letter and I just said, you know, I understand that there’s been problems and they were way before my time. I said, I don’t think it’s good that ⁓ companies like ours are not doing business in some way, or form. I can’t really rectify

the emotional things that, or the things that you might feel that we did wrong or didn’t pay attention to. But I was a core part of the team that developed these new warehouse club packs. I have really high depth of knowledge on what these programs are. And I think it behooves both of us to at least take a step back from maybe what the problems were and have a discussion about maybe what the future could be. And I said, I will call you.

at 10 a.m. on Tuesday, da da da da da, and in order to request an appointment with me. Okay. And I made sure I sent the letter, I gave him like a week and a half. And then at 10 a.m. on Tuesday, I called him. He picked the phone up. Hey, this is, I think his name is Steve Schwartz. Steve Schwartz. I said, Hi, this is Kevin Carlson with SC Johnson. Steve, did you receive my letter? Yes, I did.

I want you to come in here this Thursday at 10 a.m. Okay, Steve, I will be there. Thank you so much. I’m so glad that we can have this opportunity.” He said, you’re very welcome, Clint. That was it. you know, if things are at the absolute worst, the distance you can gain in terms of accomplishment is substantially greater, right? And I’m just not afraid. And so…

Anthony Codispoti (20:05)
Where does that lack of

fear come from?

Kevin Carlson (20:07)
Well, there’s a Native American saying, says, the significance of the accomplishment is a measure of the magnitude of the challenges one overcomes. Okay. And so then you start thinking about, you know, I want the biggest problems. So, ⁓ and that I could take you back to Coca-Cola, where I took a job that nobody else wanted and turned, you know, ⁓ lemons into lemonade. But at the end of the day,

I want the big challenges. I always wanted the biggest problems and I had opportunities to do that. So then you start thinking about, there was a lot at stake there. You know, we have this huge investment in warehouse club programs and we’ve got a major player that doesn’t stock the products. I think we should, we should fix that. And if I’m really ⁓ as good at this job as people said I was because they appointed me to it.

then I should be able to take on these issues and resolve them. And then the people that set the quotas were the ones that were singing the blues, because what we should have set as quota higher.

Anthony Codispoti (21:09)
Okay, so we got a.

⁓ Okay, so we’ve got to hear about what you did at Coke, the problem that you solved there. And then I want to get into present day what you’re doing with top.

Kevin Carlson (21:26)
Sure. Well, at Coca-Cola, ⁓ I was at P &G for like two years and I was recruiting, my customers all recommended me to Coca-Cola and I was in Fargo, North Dakota calling on retail grocery stores, selling P &G paper products. And Coca-Cola said, hey, we want you to join our company, come to work in St. Louis, Missouri, which is like, St. Louis, Missouri? Big city.

Anthony Codispoti (21:52)
City.

Kevin Carlson (21:54)
and run our college recruiting program and do some special assignment type things in preparation to be a first level sales manager with our company. And I was just a sales rep and I went, oh, sounds good. So I did that for six months in St. Louis. Then I got promoted to be the district manager in Memphis, Tennessee. And I was the district manager there for like four months. And then on Christmas day, and I forget what the year was, I’m at my parents’ house, right?

And I’m what, 23, 24 years old. The phone rings. And my mom picks it up and she says, Kevin, it’s a Mr. Haas from Coca-Cola. And he wants to speak with you. And Tim Haas, who was the EVP of Intergalactic, you know, sales and marketing at the foods division of Coca-Cola, which was Minute Maid butternut Minute Maid chilled in frozen juices.

Butternut coffee, high C, it was a drink box. It wasn’t bottles and cans, it was food. And I picked up the phone and he said, Kevin, we’ve got a developing situation in Indianapolis, Indiana. And I mean, I would like you to go there and set up a new sales team and take ownership of the situation and make it happen. And I said, well, what’s going on there? Well, Proctor and Gamble, ⁓ Minute Maid was by far and away the market leader.

and had a very profitable ⁓ enterprise with about a 30 share. Most of the FCOJ and chill orange juice frankly was private label, but Minamade was the established brand. Well, P &G had bought a company called Ben Hill Griffin and was planning on spending $100 million in Indianapolis, Indiana and Atlanta, Georgia to launch their Citrus Hill brand. So P &G was coming into Coca-Cola’s backyard and their profitable business.

And they were scared to death because in the reason they chose Atlanta and the Indianapolis was the category development index of orange juice consumption. There was a low. So there was a marketplace category expansion opportunity, and then they were going to spend a lot of money. then, you know, minute maids go on, man, we’re screwed. If they get a, a foothold, we’ve got to stop. And Coca-Cola foods had used brokers to represent them in those markets.

And what they decided to do in Indianapolis as part of the defense plan is put in a direct sales force. And so Tim Haas wanted me to go up there. They had recruited three new salespeople right out of college. And so we were all supposed to come together in Indianapolis, put together a plan and rebut the Ben Hill Griffin Citrus Hill P &G launch in the face of like huge spending. I mean, it’s just at that moment in time was a…

lot more money than it even sounds today. So he said, do you want to do it? I said, well sure. He says, well do you know what you’re getting into? I said, maybe it’s better that I don’t, Tim. I said, what I really need to know is what does success look like? So if you and I are having this conversation in 18 months or two years or whatever the length of your assignment is, what’s going to define success?

And he says, you know, I really don’t know. What I need though, is something better and different than what we’ve had up there. And I think you’re the guy to do it. So, okay, I’ll go. And I, you know, kissed my mom and shook hands with my dad. And I said, you know, I need to go back to Memphis and get packed up because I’m going to Indianapolis. And they’re going, wow. So anyway, the team we brought together.

you know, three people, ⁓ two, three recent college grads. And, you know, the starting point though is we didn’t even know where the accounts were. We had no records because the broker had all that. And, you know, the way the brokerage works is they submit a bill to Coca-Cola every month and Coca-Cola pays it. So I got a map of the whole area and we put it up on the board. And then we said, okay, here’s a Kroger store. put a blue pin in it. And then a Mars store is a red pin.

And then a Momalia’s was a green pin. And we plotted out where all the accounts were. And then we figured out who is the direct buying accounts, you know, who were buying products direct from us. And then the retail accounts were where we needed to make sure we had distribution and pricing and all that kind of thing. And then I took a marker and I said, okay, Susan, this is your territory. Steve, this is yours. Steve too. Yeah. And

Anthony Codispoti (26:42)
This is before Google Maps,

Kevin Carlson (26:46)
And then it was like, okay, you know, something ⁓ very fundamental approach to the business, distribution, pricing, promotion, okay. And shelf space and position. So are we in distribution? Yes or no. Are we priced correctly? Yes or no. Do we got promotions going on? Okay. And so on. And we just went to work. And then every Friday afternoon, this is where I sort of developed the concept of what I call operational tempo.

So we would run stop, start, continue exercises every Friday afternoon in a little pizza place called Ale Emporium and drink beer. And what I mean by stop, start, continue, this is working so we’re going to continue to do it. This is not working so we’re going to stop it. And this is what we’re going to start doing that we think will work. And we were wildly successful. When I took over the market and was like we were like 30 % of plan on rev.

I mean, they were just eating our lunch because they were giving the stuff away, right? And we’d go to stores and there’s no minute made chilled orange juice, right? Because, and you know, at that time, the chilled orange juice had a 30 day code life. So anyway, long story short, we were wildly successful.

Anthony Codispoti (28:03)
Good, good. That’s a great story. I just want to make sure we leave enough time for what’s going on at top to bottom. How did this opportunity come about? What are you guys doing there? Why have you grown so quickly? Take us through this story.

Kevin Carlson (28:08)
Well.

Yeah.

Yeah. Well, you know, Chris and I got in the boat together sometime ago, 2019. And so I’ve been part of top to bottom on a, in many different ways over the course of time. And so, ⁓ about three years ago, he decided that, he wanted to acquire companies and because other bookkeeping payroll companies, because I had done a lot of am and away work and had been down that path.

He engaged me to come in and help him specifically with that. Well, that didn’t go well. We did a few deals and, and, ⁓ you know, the problem with bookkeeping firms, mom and pops, it’s like when you know, you would buy it, but only half the clients would come over. So then you got into a problem with the previous owners who wanted to speak payout. So that really didn’t work out. But, then he approached me and said, okay, ⁓ I want to be in position.

to increase the value of top to bottom longer term because I think it’s in our interest to have a plan that we can either stay in the business and be more profitable, we can partner with somebody else, or we can exit and sell it. And so I’ve been helping him with those things for about the last year and a half. And he considers me his trusted advisor, and I consider him like a really good operator and business friend.

And so we just understand each other and so on. But where we’re trying to go is last year we grew the business over a million dollars in one year. So we went from, you know, three and a half million to almost five million. We’re expecting to approach six million this year. And then we’ve also got initiatives going on with new launches. One, we sell bookkeeping and payroll services.

But we’re getting into tax services. We’re also getting into higher end advisory control ship type services. And so our longer term plan is to get to about a 10 million revenue company. And then what are our choices and options? That’s our plan.

Anthony Codispoti (30:24)
So from three and a half to $5 million in one year, you think you’ll go from five to six this year. So up until this point, what are the big growth levers that you’ve been pulling?

Kevin Carlson (30:35)
One is there’s huge client dissatisfaction with current providers, and we’re able to leverage that because our clients are happy. Our CSI is well over 95%. Two is we really narrowed our focus and targeting our efforts against places where we know we create the most value. So as an example, we’re in the franchise or franchisee market. OK.

And the one thing aside from the fact that we’ve established very nice equity presence there, we’re viewed as a dependable provider. And then it’s also a center of gravity market in that, you know, a franchise or that has 200 locations. Guess what happens if the franchise or writes an umbrella agreement says, Hey, we prefer that you use these guys. You know, the growth is exponential in January. We acquired 36 new clients in January.

Anthony Codispoti (31:30)
in one month.

Kevin Carlson (31:31)
one month. And the most significant thing, and this is a result of our work on the whole &A front, is Chris only delivered one of those deals. So our business development team, with our focused strategy, our client service satisfaction, most of our ⁓ business, really, we’re not in the cold call.

top of the funnel type thing because we get a lot of referrals and recommendations and things that come to us because we have happy, satisfied customers. And that’s hard to do in bookkeeping. It’s exceptionally difficult to do in payroll because payroll has become, there’s a little bit of a downward spiral going on in payroll and low cost provider wins. But bookkeeping has really been our growth engine.

and then ⁓ benefiting from the fact that we really work well with clients.

Anthony Codispoti (32:33)
So why do you think your customer satisfaction scores are so high on the bookkeeping side of things?

Kevin Carlson (32:39)
Well, when they call us, we pick up the phone.

So it starts there. And then we’ve got, we understand the importance of our staff and how they feel and how they approach things with clients. And so everybody is coached and supported relative to delivering client service satisfaction. And then, you know, we are very, we pay attention to our clients in a lot of ways, even to the point, well,

you know, are we priced right with them and that kind of thing. But you know, the whole idea, and you’ll see this in a lot of our literature, it’s all about creating value, right? And so how do we ensure that we’re creating value for our clients and putting them in a position to succeed? And so that’s really the motivation. But at the end of the day, hide the satisfaction with current providers, which is a help to us.

We’re good at client service satisfaction, so we get a lot of referrals. The best sales and marketing strategy in the world is to take great care of the people that already choose you. then, now we’re our focus broadening our appeal relative to centers of gravity, franchise or franchisee type stuff.

Anthony Codispoti (33:59)
Kevin, I’ve talked to, I’m gonna say hundreds of companies about their payroll providers. I don’t know that I’ve come across somebody yet who’s like, ⁓ we love our payroll company. Why is that? Why is this such a hard area to check the customer satisfaction boxes?

Kevin Carlson (34:18)
Well, the thing is, it’s like everybody tries to automate to make money. And then, you know, it’s fraught with errors and emissions and problems. So it’s like sort of garbage in, garbage out. But there’s, you know, the and people like ADP and Paychex give it away. You know, you think about if you look at the ⁓

for ADP and paychecks where they make their money. It’s on interest gained on flow because they’re like one of the biggest banks in the world. So then you start thinking about well how do you make money in payroll because it’s all you you you get sold down to another provider for like five dollars a month on cost. So nobody loves their payroll provider yet.

they’re really not interested in paying what it would take for the payroll provider to be perfect. So that’s the run.

Anthony Codispoti (35:16)
So let me see if I understand this. You’re saying that the big names like ADP out there, they’re charging very little because in fact, where they’re making the bulk of their money is the float of holding your payroll. So you may cut paychecks on Friday, but you’ve got to submit your payroll by Tuesday or Wednesday. And so ADP is taking that money, your money, and earning interest on it for a handful of days.

Kevin Carlson (35:43)
that’s correct. In fact, I think at one point in time ADP was never considered a bank but relative to asset size, it’s one of the biggest banks in the United States.

Anthony Codispoti (35:54)
And so they’ve set the bar in terms of price very low, where if you’re going to provide a level of customer service that’s going to make people happy, the price has to be higher than that because there’s got to be a level of human support and interaction that goes into

Kevin Carlson (36:11)
That’s

correct. And so then you think about, well, the future of payroll services is not very bright if that’s all you do. And so even if you look at the big players, they’ve got all these other add-ons and they’re doing benefits and HR now. They’re one step away from being like a PEO. But that’s not what their core business was and where they got started.

Anthony Codispoti (36:37)
So where do you see payroll going for top to bottom?

Kevin Carlson (36:41)
Well, we are expecting from a strategic standpoint that if all we do for somebody is payroll, we’re probably at risk. And, and, know, then you think about, what is the problem we need to solve there? It’s like, Hey, we’re not going to go underwater just to keep somebody in the opera. And so we don’t have a lot of real major focus on payroll other than

where we’re also doing bookkeeping, we’re trying to be rock solid in terms of service level and all that because the anchor really is the bookkeeping. And then you start thinking about controllership and tax and all that stuff we would do down the road.

where it’s not an area where as a standalone you would invest in and nobody is really. I was just at a ⁓ webinar conference and we’re talking about payroll and it’s like, hey man, nobody’s investing in it and it’s a race to the bottom on price and so it’s sort of like the Model T, it’s just the business opportunity is really going away.

Anthony Codispoti (37:48)
And so some of the new business initiatives that you’re working on, you mentioned tax. What tax services will you provide and how do you grow into a related but a new area like?

Kevin Carlson (38:03)
Well, we’re fortunate in we have a large number of existing clients that are already happy with us. So the plan is not to like put a website out and cast a wide net and say, hey, we do taxing. It’s more of a measured step growth opportunity within our existing client base.

The data we have is people are coming to us and saying, hey, I want you to do my taxes. And then you think about in the infrequent time that we do lose a client, one of the highest reasons is I’m going somewhere where they can do my taxes. So the opportunity for the market is pretty much right there and which also enables us since we’re not spending a lot of money on marketing and all that kind of thing. ⁓

You know, we could do it very cost effectively and at a very nice ⁓ margin. but we’re, we’ll miss this year’s tax season basically. But to us, the big idea is like with our bookkeeping, it’s a month in recurring revenue model where we.

give a monthly report based on their results. It says, tax wise, here’s three things that you should look at. And then when you get to the end of the tax season and you process the return, you know, it’s sort of like it’s we’re prepared, right? There’s none of this last minute scramble. So we can give our clients a lot more predictability around their tax planning and their tax situation. And over the course of the year and then, of course, at the end of the year, it’s a lot easier.

Anthony Codispoti (39:43)
So in addition to providing a service where you’ll help them file their taxes, are you going to layer in additional advisory services on top of that?

Kevin Carlson (39:52)
Yes. And so you think about, okay.

you just have QuickBooks and you do everything yourself and then you get an accounting manager and then you outsource it to somebody like us and we do your bookkeeping for you and then you grow and then you need an accounting manager and then ultimately you get to the point where, hey, controller type person would be an advantage. So a step up from just doing the blocking and tackling bookkeeping and we do a little bit of off the cuff advisory and suggestions and recommendations as part

of our value proposition. But there’s another level in terms of control environment, data integrity, reporting, know, month and close ⁓ risk management, you know, those kinds of things. And then above that component, then you’ve got, you know, CFO type stuff. And we’re probably a ways away from that. But there’s a very much undeveloped market. There’s this big misconception in the market. Everybody think it’s fashionable to have a CFO.

how many small businesses are reporting to shareholders, accessing capital markets, running a treasury function, Trying to plan for an IPO, all that. That’s CFO stuff. It’s externally focused stuff, Yet it seems to be fashionable to have a fractional CFO. Well, we are going to…

focus on control environment, data integrity, reporting, risk management, those kinds of things, and making sure that the risks around the accounting function, especially if somebody grows, are proactively managed effectively.

Anthony Codispoti (41:41)
Kevin, I want to switch gears on you for a moment. behind every success story, there’s usually a chapter that almost broke somebody. I’d be interested in exploring a time in your life where you had a really serious challenge to overcome and how you got through that.

Kevin Carlson (41:57)
Yeah.

Yeah. Well, I went through chapter seven liquidation with my own company.

So if you look at my background, had this organization called SDC. And after Jefferson Wells and after several adventures past that, took my capital and decided I was going to own and operate my own business. And so I bought a company.

I left, I was at a human resource consulting firm. was EVP of worldwide sales and marketing. And I, you know, went and bought my own company, left there and bought my own company. It was a commercial HVAC contractor. And it had some specialty engineering type things though, regarding building, energy management, ⁓ pressurized buildings for

ventilation purposes, energy efficiency in ⁓ cold climates. And then we also had quite an ⁓ interesting spray finish ⁓ application technology where we built spray booths for people and did finishing lines for people. And we went great guns. And so, you know, when I…

took over the business or bought it, was like a million three and we had a pretty good pipeline and I built it up to like six or seven million. And then the tsunami was the 2008, 2009 financial crisis, which destroyed capital expenditure pipeline. So my business project pipeline went from like a million five to like 200,000 overnight.

And the only people that wanted to work with me were in the government because they were the only one, know, like Texas schools that wanted a new paybooth, stuff like that. The other thing that happened is the bank that I worked with failed. And so, and then I was a union shop. had 14 sheet metal worker, union people.

the sheet metal, the National Sheet Metal Workers Union filed a class action lawsuit on like 500 contractors alleging pension fund contribution violations. And so all of these things came together and then the bank failure, the regulators come in, you know, they had special powers, right? And so they reconciled my cash account with, I had a couple of loans there and wiped out my cash account.

and reconcile against the loans. so no business, no cash, okay, lawsuit from the union, know, economic crisis. It was like, this is over. And so, you know, it all sort of came crashing down and, and ⁓ like it did for a lot of people. I mean, ⁓ General Motors went bankrupt, right? So I

I felt so when this all came down, I woke up one morning and I looked at my checking account and I had like 30 cents in and that was it. And I had gas in the cars and all this kind of stuff. And it sort of like, okay, what are my choices? I could go cower in the corner and just, you know, hide out. I could, you know, do something drastic. I could, or what am I going to do about it?

So it’s not, know, then my learning and my training and so on was like, wait a minute, you know, it’s not what happens to you. It’s how you handle it. So I just said, I felt sorry for myself for about 15 seconds. And then I said, all right, what is the way back?

And I started, went and saw a counselor with a bankruptcy attorney and he told me what I could and couldn’t do and all this kind of stuff. And so I had a plan and we exited the bankruptcy as a chapter seven liquidation. And you think about where you find success, right? So all my employees got paid, at least for all their work days and their vacation and stuff like that.

And then at the conclusion of the whole bankruptcy process, and my attorney was also a bankruptcy judge, right? So he knew the other judges and he, the judge that adjudicated my case, pulled me aside and said, you know, I just want to commend you for how you handle things. Because people in your situation would be trying to hide assets and do things outside the rules and all that kind of junk. And you handled everything exemplary.

and made my life, my decision making much easier. So I really wanted to make sure you knew that. So, and then from that, I found an opportunity to run a company ⁓ for a private equity firm in Minneapolis, St. Paul called Platinum Group. And so I had a job, right? And, ⁓ and you know, we just started the path back.

So the point is, it’s like, not much bothers me. You know, it was like the Bruce Smith thing and the, you know, getting in the boardroom and tearing up my board report or, or, you know, the bankruptcy and coming out of that and all that. It’s like, what are they going to

You know, there’s a movie, Jeremiah Johnson, I don’t know if you’ve ever seen it, and Robert Redford’s in it. And you know, it’s a whole story of this mountain man, and know, everybody’s trying to kill him, you know, for like 20 years. They’ve been trying to kill the Robert Redford character. And the guy that taught him how to survive in the mountains at the beginning of this whole thing. ⁓ So 20 years later, you know, here’s Jeremiah cooking a rabbit or something. Here comes this guy that taught him how to survive, right? And so the… ⁓

Will Gere was the character and he said, so Pilgrim, was it much trouble? And Jeremiah goes, what trouble? So I look at that from the standpoint of this is nothing. And like find me a bigger problem. Make my accomplishment greater because of the low point where it started.

And so it just didn’t, ultimately just didn’t faze me. And now I look at what happened post since that and companies that I’ve been involved with and the Jefferson Wells team, we got the band back together and did another one called Patina Solutions. And so the relationships and performance that we all in respect, we all have for each other. We got together and did it a second time, which is the exit in 2022, by the way.

Anthony Codispoti (49:07)
So.

Kevin Carlson (49:08)
And so I just don’t let things like that bother me.

Anthony Codispoti (49:12)
Do you not let things like that bother you now because you developed thick skin going through things like the bankruptcy years ago? Or did you have that thick skin already heading into it?

Kevin Carlson (49:22)
Well…

Well, you know, and we probably don’t have time for this, but I could look back at some problems with Coca-Cola that, you know, most people would not survive or handle and stuff like that. I think it really, it’s always, I feel like I have a choice. You know, I mean, I can choose to do this or that or this, and then it’s not what happens to me, it’s how I handle it. And so what’s the upside?

you know, and what are my choices and what’s the upside? And I always want to go for the upside. And so thick skin, yes, but you know, patience is a virtue, self-control is a skill in very, very difficult, volatile situations. I’m able to manage myself. I rarely blow up, although I do. ⁓

But at the end of the day too, and I think it comes with the lessons of experience. If you’re faced with a very challenging situation for maybe the fifth time, your ability to handle it, I think, is a lot better than the first time. And so did you pay attention and did you learn and grow and develop over the course from first one to fifth one? And then.

And then, you know, to me, it’s always a long-term vision. You know, what does success look like in three to five years? You know, if I’m sitting here three years from now, what outcomes, if I achieve them, would mean I was successful? So that also helps in terms of thinking this is nothing.

Anthony Codispoti (50:59)
So I think a lot of people, you they hit a rough patch and it turns into an opportunity for a downward spiral for them. They don’t have that mindset or that belief to say that I’ve got a choice in this moment. It’s I feel like a victim to my circumstances. And when is when are things going to actually turn around and go my way? But you’re wired differently.

Do you think you were wired that way from the start? Like you popped out of the womb that way or did you have some good teachers early on that set your mindset on the right path?

Kevin Carlson (51:36)
Well, I think there’s sort of an environmental affinity of my family that I grew up in. My dad was a Chevrolet car dealer. So when he was out of high school, he was a farm laborer. And then he decides to get married to my mom, and they moved to the big city of Mankato, Minnesota. And he goes to work at Sears and selling appliances.

And after five weeks, you know, when the commission checks came out, he went to his boss and said, Hey, where’s my commission check? And the boss said, well, I get your commission for your first year here. And my dad, I’m out of here. And then he went to work selling cars at a Chevrolet dealership. And after being there and being like the top salesperson for 13 years,

He, the zone manager for Chevrolet said, you should have your own dealership. And so a friend of our families that he had sold cars to for years, mortgaged his house and a huge amount of Ford stock, Ford.

automobile stock to enable him to get the loan from the SBA so he could buy this dealership and then the Chevrolet’s own people helped him and he went into business. And this is in like 1967. I grew up in that environment and I worked at that dealership working with my dad shoulder to shoulder from fourth grade on. And in 1974 when the big oil crisis hit, okay.

The bank called my dad up one day and said, we’re pulling the plug, man. And my dad said, come get all the cars. I don’t care. Because all the car dealerships were going out of business. Yet he got past it. And so then you start thinking about I saw that was part of it was there and and that helped me. So I had sort of an advantage, I think, based on that experience. So when I get into, you know, doing my own thing. ⁓

I had the benefit of that learning and that experience. And my dad was always very, very focused on the positive. And he built an incredibly successful business. And I had a part in that with this parts business that he did and stuff like that. But I never went into business with him in the dealership anyway. But at the end of the day, I think that was part of my grounding that helped me deal with those things in later life.

Anthony Codispoti (54:08)
What would you say is your superpower, Kevin?

Kevin Carlson (54:11)
I have an incredible need to learn. And I just, I need to know. And I, and if I’m in a situation where, you know, and I do my homework. And so I read, I mean, I’ve read hundreds of books and you know, not that I’m looking for an answer, but I’m looking for perspective. You know, help me understand this better. And

And then I really gravitated to a couple of authors early on that helped me a lot and were clearly differentiators in terms of me adapting their ideas relative to my ability to contribute in great value in my professional life. And that’s Peter Drucker and then W. Edwards Deming. So Drucker’s, well, Drucker’s book, The Effective Executive, I reread that every year.

Anthony Codispoti (55:00)
And tell us what you got from those. ⁓

What do you get from it?

Kevin Carlson (55:11)
Well, what do I get from it is method and attitude. Yeah, it’s like, you know, the true measure of any true executive leader is they always ask the question, how can I contribute? How can I create value? And then the other part of it, deming, you know, in terms of the cost of quality versus the cost of rework, which, know, you don’t need to know much more than that. But it’s like make the investments on the front end and, you know, in that. But

Anthony Codispoti (55:13)
What’s your takeaway?

Kevin Carlson (55:39)
The other part of it too is then you practice it. So then you think about, to me, leadership is results. That’s a Drucker statement, right? And, know, culture eats strategy for breakfast. He never said that. But how can I contribute? You know, I always look at it from the standpoint of where can I maximize my contribution? And then when you move past where you’re an individual contributor, and then you have to learn how to be effective working through others, okay?

So then you start thinking about, well, what people do when you’re not around is way more important than what they do when you’re there. So what do you leave them with? Do you leave them with tools and training and direction and confidence and authority? And so the other thing that Drucker, I learned from Drucker is how do you get scale?

So if you ask people scale, well, we’ve got our organizational structure. We’re going to restructure this. And because we want to improve our scalability, we want to align, you know, that kind of junk. It’s like, man, that’s nuts. It’s crazy. That’s just like, you know, Mackenzie Gobble speak to me. Where you get scale is, is the person that’s at the scene, either with the project, the product, the component, the customer.

the situation. Okay. Are they confident, competent, trained, direction, and do they have authority and can they decide? Can they decide in the best interest of both the client and the company? And so when you have that and you build on that, and people make mistakes and all that kind of stuff, but and then you want to see people grow in advance and develop on their own.

put them in a situation where they can operate that way. And then you really see the difference. But scalability to me, speed and flexibility and go to market is that. The person at the lowest level of the organization is equipped to decide and choose and make a good decision. And they have the authority and can do it.

Anthony Codispoti (57:51)
It’s not this internal, like, we have to rework, you know, who reports to who kind of a thing.

Kevin Carlson (57:57)
Well, think about when that happens and all of sudden they’re going to lay off 1,800 people. Who goes? What happens to their model and scale then? Nothing. So why even think about it? But that’s also a reason I want to stay in SMB, small business companies, because you can have that. Because the thing you need to think about, especially as the companies get substantially larger.

is you have to be able to get it done with the people you have. So all this A player and upgrading, top grading and all that kind of stuff to me is just a mistake. You can’t afford it and then you you know you’re you’re hanging your head because you’re not successful all the time. So you have to take a step back and say hey I’ve got 300 people and I or 400 or a thousand whatever it is how do I get the job done and meet the objectives?

with the staff that we have first before you start thinking about it, especially coming into a new situation. I had a private equity firm call me up once and he said, hey, Kevin, we got this developing situation and we want you to go in there and take ownership of it. I said, OK, what is it? They said, well, it’s a 200-person company and they’re doing this and this and this and da, da, da, da. I said, OK, so when do you want me to go? And we worked out the deal and all that. And then.

the head partner called me up and he says, well, the first thing we want to do is we’ve got to cut costs. We want you to lay off 75 people. Really? He said, well, who goes? Well, we don’t really care. just, because we got to cut the expenditure. I said, well, know something? Wouldn’t it make sense that we pay attention a little bit to what people do before we just arbitrarily go in there and do this? And then I said, know something? You don’t need me to do that.

That’s not what I do. If my job is to win and like fire 75 people, I’m not going to do this. Because the statistical fact is that if you get a 10 % or greater productivity lift from the people that are there, your turnaround will be successful. It doesn’t take much. And then you don’t want to, your speed to market and your speed to a turnaround.

is based on lift and growth and advancement of the people and what they can accomplish day in and day out, especially when you think about the scale of a company that’s that large. Now, not everybody will sign up for the new regime. And so if there’s an attitude problem or a willingness problem or a confidence problem or a credibility problem, they go. And I’m very quick, know, you know, insensitivity to one person becomes insensitivity to the rest of group.

I’m ahead of the curve on that, can tell you right now, because I’m not going to poison the pot for those that are doing the job by somebody that’s not carrying their fair share. But at the end of the day, you’ve got to be on the scene and make those decisions. But at the end of the day, you think about the opportunity to grow 10 to 12 % productivity and make the turnaround. That’s what I do.

Anthony Codispoti (1:01:09)
Love it. Kevin, I’ve just got one more question for you today. But before I ask it, I want to do three quick things for the audience. First of all, you want to learn more about what they’re doing at top to bottom. Their website is the letter T, the number two, bbsolutions.com. T2BBSolutions.com. We’ll have that in the show notes for everybody. But one more time, it’s T2BBSolutions.com. Also, if you’re enjoying the show,

please take a moment to subscribe wherever you’re listening. It sends a signal that helps others discover our podcast. So thank you for taking a quick moment to do that right now. And as a reminder, you can be the hero advisor that helps clients give their employees access to therapists, doctors, and prescription meds while paradoxically increasing their net profits, real gains that can change how a business is valued. Contact us today at addbackbenefits.com.

So last question for you, Kevin, a year from now, what is one very specific thing that you hope to be celebrating?

Kevin Carlson (1:02:11)
Hmm. Well…

personally or professionally.

Anthony Codispoti (1:02:18)
Give me both.

Kevin Carlson (1:02:20)
Well, professionally, it’s I want top to bottom to be further along the path to success that we’ve laid out three to five years out. And I’ve got some very clear measures in place to see where that’s at. And ⁓ the other thing is I just, you know, I look at every day, excuse me, one day at a time, especially at my age, right? And I just… ⁓

I’m glad if I’m still here. I feel very fortunate about my life and what’s happened. And to a large extent, my wife and I and our grandkids and kids and all that are living the dream out here in coastal North Carolina. And it’s like, I’m very, very, I feel very fortunate to have that. And so I’m very thankful.

Anthony Codispoti (1:03:11)
Kevin Carlson from Top to Bottom Business Solutions. I want to be the first to thank you for sharing both your time and your story with us today. I really appreciate you being here.

Kevin Carlson (1:03:20)
Anthony, this has just been a ⁓ real privilege and benefit for me. I really enjoyed our conversation. Hopefully, I didn’t get too far off the path for you. if I can help create value for you and your clients, I’m certainly glad to do it.

Anthony Codispoti (1:03:34)
Folks, that’s a wrap on another episode of the Inspired Stories podcast. Thanks for learning with us. And if one thing stood out, put that into action today.