From skill to system: Turning services into scalable companies with Brad Sugars

Most businesses don’t fail because the owner lacks talent. They stall because the owner becomes the product, the manager, the decision desk, and the emergency contact all at once. That’s when growth turns into stress, customers feel delays, and the company becomes impossible to sell. We’re joined by Brad Sugars, founder of ActionCOACH and author of "Pulling Profits Out of a Hat," to get brutally practical about what separates a skill-based job from a scalable, sellable business asset.

Sugars and The Dead Pixels Society Podcast host Gary Pageau talk profit margins over vanity revenue, and why you should know exactly what it costs to keep the doors open per hour. Sugars breaks down the mindset shift from “I’m great at my craft” to “I’m building a machine that delivers outcomes,” including the trap of owner dependency and how systems, documentation, and packaging make a business transferable. If you’re in a creative or service industry like photography, printing, or local retail, the conversation on recurring revenue hits hard: one-off customers create volatility, while the right customer model can create month-in, month-out stability.

Sugars also digs into leadership stages and hiring: Why early growth needs doers, why the next stage needs managers, and why real scale demands thinkers and an executive team. He lays out the clearest signs you’ve become the bottleneck, how to set goals that actually force growth, and why hiring people better than you is the only way to stop limiting your company. 

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Transcript

Welcome And Guest Introduction

Erin Manning 0:09

Welcome to The Dead Pixels Society podcast, the photo imaging industry's leading news source. Here's your host, Gary Pageau

Gary Pageau 0:17

Hello again and welcome to The Dead Pixels Society podcast. I'm your host, Gary Pageau, and today we're joined by a pioneer of the business coaching industry, the founder of ActionCOACH, and the author of Pulling Profits Out of a Hat, Brad Sugars. How are you today, my friend?

Brad Sugars 0:34

G'day, Gary. Good to be here.

Brad’s Path Into Business

Gary Pageau 0:36

So Brad, tell us firstly about your journey in the business world. So you've been in the industry, business for 30-some years. What was that like?

Brad Sugars 0:47

The interesting thing about business is it's not age-related. It's idea related. It's skill set related. So we can get into business at any age in your lifetime, and I think a lot of us wait way too long. We spend too long developing our skill and not enough time developing the business behind our skill, if that makes sense. And so

Gary Pageau 1:07

our skill is-

Brad Sugars 1:07

Absolutely we get our skill paid for by someone else, and they make the capital value, and then eventually we realize, "Hey, I've been doing this for someone else long enough. It's probably time I did it for myself." I started in business, my first business, I had employees at 15 years of age. So- Yeah Obviously I'm most known for ActionCOACH, 'cause it's what now, we're just under 1,100 offices in 85 countries around the world. So- that one we're fairly well known for 'cause we've done billions in revenue. But, o- other than that, I have very boring company, catering companies, commercial cleaning companies. I've owned all of them sort of thing. But I do have some exciting ones too, restaurants, bars-

Gary Pageau 1:44

Yeah.

Brad Sugars 1:44

B- a brewery, gaming business here in my hometown of Las Vegas. So yeah, all sorts of different things. And I think my passion though, where I get to live my legacy, is

Profit First: Margin And Sellability

Brad Sugars 1:54

by teaching.

Gary Pageau 1:54

So let's talk a little bit about those boring businesses, 'cause a lot of the businesses I've been reading now about, people starting businesses, it are typically businesses where, you know, there maybe not'll be a lot of technological innovation happening, right? I s- talk a lot about with people about AI and imaging and all this other stuff. But, the reality is most businesses have a great process down, and just execute the process and be able to kinda hone that down. What has been your experience with that sort of viewpoint? That it's maybe not the greatest of high-profile ideas, but if you wanna build a profitable business, cleaning gutters can be a great thing.

Brad Sugars 2:38

Look I look at it from several perspectives. Number one, where is the margin? Because a business is not about sales, it's about where's the bottom line, and I think too many of us get too focused on the top line and not enough focus on the bottom line sort of thing. I know in our system we actually show people how much does it cost you to be open per hour in your business sort of thing. And it's like some people sit there and go, "Hang on, I've gotta work until 2:30 or 4:00 before I start making a profit each day." It's the- that's a not a fun thing to look at. So yeah, number one, where's the margin? Number two, what can I sell at some point? So when you think about creating a business, there's really only one reason to start a business, and that is to build something that you can eventually sell. So it's great to have the cash flow and the profits and the salary from your own business, but ultimately- it's the capital value that adds real value to a business. So- we wanna make sure that we're looking at something that sells. And you know what doesn't sell? Businesses that are owner-dependent. Businesses that are dependent upon that genius, and it's very hard to scale chaos, and it's very hard to scale genius. And so w- when I'm looking at what I can sell, I'm looking for something that I can scale in most cases. So that's a big part of it. And the third thing I'm looking for is something that I can take international or at least national- in, in that particular se- in that particular business. So in a lot of cases, Gary, technology becomes a part of the business, but it isn't the business. I like the example of, say, Pizza Hut versus Domino's. They're both in the pizza business, but Pizza Hut is a business that sells pizza and uses technology. Domino's is a technology company that sells pizza. So that to me is where I think slight difference in the way we look at things.

Gary Pageau 4:28

You raise

Escaping Owner Dependency With Systems

Gary Pageau 4:29

an interesting point about getting out of the business, 'cause I've run into that a lot in spe- specifically the photo industry, where you have people who may... got into the business because they love photography, they love printing, they love customers or whatever, and they haven't really developed a business that's sellable. 'Cause like you said it's... the knowledge base is in the owner's head, and they haven't really put together processes to capture that information to, to even start documenting processes or coming into this place. How typical is that for what your people are running into?

Brad Sugars 5:04

Owner dependency is one of the biggest contributing factors to business challenges, because the bigger the business gets, the more pressure on you, the more that runs, and it goes from you being in control to you becoming the bottleneck. So that's the thing. Now, if you look at the industry, the biggest challenge with the industry is that it doesn't create recurring revenue streams. The success in the business is, okay, let's... How do we create a recurring revenue stream? How do we get customers that keep buying month in, month out sort of thing? And so a lot of the time, those two single factors are the things that with the industry I start looking at. Building a team that can run the business, handing off the skills, all of those sort of things can be done. My business is similar to that in some ways in that we have to have that level of ability to transfer the knowledge and transfer- the ability to do it. And then you got to create a package that you can sell- that's a package that's consistent, i'll give you one example. So a young lady who was, when she started out, she was the photographer for me and my family just doing the photos for us as a family.

Gary Pageau 6:12

Yeah.

Brad Sugars 6:12

And over time, as I got to know her and I would ask her business questions and we would chat about things, and I said what if instead of families were your customer, schools became your customer?" How do you, instead of getting one family be your customer, get one school to be your customer? And the school needs you every week for a different project, a different thing, a different whatever type stuff. And so she changed the model of her business, and all of a sudden now she has a dozen schools that are her customers. She has a dozen photographers that are alloc- one allocated to each school. Does that make sense? It's like- yeah it's a different way of thinking of the business. I use the music business as an example a lot, because you can be in the music business as a drummer in a band or you can be Spotify. There's elevated levels to every part of every business. Sure. And just because you're in the pixel business, it doesn't mean you need to be the g- the gal or the guy behind the camera all the time. It could mean you develop something that every photographer uses. It could mean you develop So there's a lot of ways to look at it as a business more than a job where you're self-employed.

Gary Pageau 7:16

And I think that's important because, you need to be in touch with what the customers are actually coming to you for, right? I think there's certain people who have assumptions that just because I am opening a restaurant or I have a photo studio or whatever, that people are coming to me for those specific things without really understanding really what need are you fulfilling, identifying what the actual need is. Like you said, you mentioned earlier, Pizza Hut and Domino's. Those are actually same product, different use cases. You may wanna sit with, in a Domino's be or sit in a Pizza Hut because you're having a family event. You may, you just need pizza, so you get it delivered from Domino's.

Brad Sugars 7:58

And so every time we look at an industry, it, there's those in the industry and you know this, buddy, you've seen it for many years, where same economy, same industry, same thing, you got one gal doing great, one gal doing bad. It's it's how you approach it at that point in time, which I think is the really interesting aspect behind it. When I come back to what we're looking at, and this is a big part of, I think, why your podcast is successful, we're not just thinking about the business as it is today. We're thinking about what we can create in the future. What is the next phase of the industry? What's the next phase of my business? And I think that's- an important aspect.

Building For The Next Phase

Gary Pageau 8:38

Yeah, because you can't really sit on, your past successes, right? When you talk about business sales earlier, as people who've listened to the podcast before, they know I teach a little entrepreneurship in the prison system, and one of the things I talk about when I talk about valuing a business for sale is whoever's selling a business is buying the future potential. Yeah. They're not rewarding you for the past, and most people don't think of it like that.

Brad Sugars 9:00

A current success just means you know what used to work. So let's be clear

Hiring By Stage: Doers To Leaders

Brad Sugars 9:04

about that,

Gary Pageau 9:04

so let's talk a little bit about, s- when you're putting together your staff, how important is it, your team if you will, to have people who are going to push back or challenge things, or do you just want people who are just gonna unquestionably follow you?

Brad Sugars 9:20

It really depends on what phase of business you're in. If you're in that early phase, growing to your first million, you really want people who just get the job done. You don't want high-level thinkers getting to your first million. You want... You're the thinker, and you're surrounded by helpers, if that makes sense. So getting to your first million, you don't want the pushback. You don't want all of that stuff. You just want people who will get the job done. You don't need a marketing manager. You just need a marketing person. You just need someone to do it. It could be a VA, and these days it could be an AI agent sort of thing- getting to your first million. Now, getting to 10 million, now what you want is a group of managers. Again, not necessarily pushback people that can get the job done whether you're there or not. People that will get the work done. You can still be the thinker. You're the leader, and you have a team of managers to get to your 10 million. Where you want people that are the thinkers is once you've hit that- A seven, 10 million plus range- where now you're building, you become the CEO and you build a C-level executive team. So you're building a team of thinkers, not a team of doers at that point in time. So big difference between the groups.

Gary Pageau 10:33

That's interesting. I guess I hadn't really thought about that, 'cause so many of my folks are in the, quote, a million, two million, three million range, right? And when they do get pushback for, "Hey, why are we buying this piece of equipment? Why are we doing it this way?" That may not be the right person in that p- position.

Brad Sugars 10:49

It's also that they're not explaining it properly to their team and enrolling their team in what they're doing. That's often the case as well. You've got to get better at communication as you build the size of your team. When... You got to remember, you're building the business, but the business is building you. And that's really important to understand, is that tough customer is teaching you how to do customer relationships better. That team member that didn't work out is teaching you how to do recruitment better or leadership or management better sort of thing. And I find in today's world, unfortunately, Gary, that the... Once you get into that million to three million range, if you don't build managers and a management system, then your business is gonna be bottlenecked basically with you. You become the bottleneck. What was control getting to a million becomes a bottleneck getting to 10.

Gary Pageau 11:39

So

Signs You Became The Bottleneck

Gary Pageau 11:40

what are the types of things people can experience when they realize they're becoming the bottleneck? What are some of the things that are happening within the business that it's like, "Oh my gosh, I realize I'm the problem," or, "I need to adjust what I'm doing"?

Brad Sugars 11:55

Yeah. Yeah. I think first thing and foremost is that you're getting your team come to you for, let's just say, stupid questions. And the problem is you're answering those questions over and over again thing, so that they have to come back and ask you the next time. So when you get those questions, those small questions keeping coming to you type thing, when decisions are put off because it has to come to you type thing, when you're starting to see customers getting upset because things are moving too slow, when you're starting to lose deals because you're not involved in the process, someone has to speak to you before they're willing to move ahead with the deal, you recognize you've become the bottleneck. I always joke, if I look in the mirror, Gary, and I say, "Do I look fat in this outfit?" It's probably too late by that point. The moment you ask the question of- "Am I the bottleneck?" is the moment you realize, holy heck, the fact that I'm asking the question means I am the bottleneck at this point.

Gary Pageau 12:53

So after you've identified your bottleneck and you've worked on that, what do you do then, right? 'Cause now you've got people who are, maybe enjoyed building the business up to that point and maybe either are reluctant to mo- to bring people on or change their mindset. What are they gonna do all day?

Brad Sugars 13:14

Let's be clear. Not only do you have to grow with the business, so does your team. And if they're not willing to learn and grow, then they need to either be allowed to move on or they need to step to the side so that someone who can handle that next business level can come in. I'll give you an example. In one of my companies, the CMO, phenomenal CMO when we were doing maybe 30 grand a month in marketing spend, but at 200 grand a month in marketing spend, just out of their league. A team of four marketing people, great. Team of 32 marketing people, just not there, if that makes sense. So you've got to understand that as the business scales, either the team scales with it or you bring on people who are capable at that next level.

Gary Pageau 14:02

But getting to the question of, once you've built your team, what should you be doing, right? What should you be, positioning yourself as a leader?

Technician To Owner And Big Goals

Brad Sugars 14:12

So your job continues to grow. So you move from, let's start right at the beginning. Technician, operator, manager, leader, CEO, owner. So you move up those scales as you grow, where in the beginning your job was to do the work, then your job became managing other people do the work. And then gradually your job becomes leading people who think of the work. And then eventually your job becomes coach of your own business. Yeah. For my businesses, I run my companies in one hour a week, Gary. Yeah. I am the coach of my CEOs. I don't actually operate the business, run the business. I step up to that next phase. And so every one of us has to go through those phases. And really it comes back to your goal too, Gary. I think at some point your job is to challenge the team. At some point your job is to create new ideas and- and do all that sort of stuff and lead the way. I mean- even guys like Elon Musk eventually stepped out of being CEO of Tesla and put someone in to run the thing, and-

Gary Pageau 15:18

Yeah So is everyone capable of that, I guess is my question? Because, I think that's one of the challenges that people run into is maybe there's the Peter principle at work.

Brad Sugars 15:30

You're capable of growing into it, doesn't mean you're capable of it today. See, most people set, and I'll be blunt here, buddy, most people set really wimpy goals. They set a goal of last year plus 10%, or, and here's the truth about a goal. If you know how to do it, it's not a goal, it's a to-do list item. If you know how to achieve it already- it's not a goal. You must set goals that stretch you, challenge you, goals you have to grow into, goals you have to learn, goals you have to become better. If you don't have to grow, change, innovate, even disrupt your industry- that's not a goal. That's just doing the same stuff a little bit more. And a little bit more actually psychologically ruins your brain because, what's worse than a business that fails is a business that just scrapes by and you stay in it for 20 years, that's worse. I'd rather kill a business and go and do something else- than keep in a business that's just getting by. Yeah, we've had a couple of businesses over the years, we've had to kill them off 'cause the market shifted. I remember one, I was in the motor home and RV business when 2010, when the... Do you remember when gas prices went through the roof and- Sure No one was lending money back in that 20- 2008, 2010 crisis?

Gary Pageau 16:47

Yeah.

Brad Sugars 16:48

Can you imagine trying to sell a million- trying to sell a million dollar RV when gas was $4 billion a gallon? And gosh damn, we had to shut that thing down. It just... Sometimes the tide turns against you, and you just gotta recognize that, holy shit, if I swim against this tide, I'm just gonna drown. We've gotta do that. But on the flip side of it, be willing to set a goal that challenges you- to grow. When you ask the question, is everyone capable of it, everyone's capable of growing into it. But whether you're willing to learn, and willing to grow, and willing to hire people who are better than you- that's a totally different question. If you're not willing to hire people who are better than you, then get out of the way, you're just gonna limit your business type thing, I look at my CMO knows more about marketing than I ever will. My CFO is so much better at finances than I could ever be. It's holy heck, I don't know how he does that shit. And I don't wanna know how. 'Cause if I know how, I'm gonna try and do it, and I don't wanna know that. I wanna stay focused on the stuff I'm good at. I get to do this teaching and be in the face of the company. I love doing that stuff, Gary. I don't wanna be sitting there reading legal documents. That's why I got a legal officer, not my f- not fun for me.

Gary Pageau 18:02

But at one point you, you kinda had to do some of that stuff- Oh because when you were

Brad Sugars 18:05

small. Not had to. It, we didn't have money to pay anyone to do that stuff in the beginning.

Gary Pageau 18:10

Yeah.

Brad Sugars 18:10

And so you've gotta learn it. But here's the thing that I know. I had to learn enough of it so that I could employ someone to do it that could do it better than me. Yeah. Okay? And yeah, you have to do it for a period until you learn enough- I think if you don't learn marketing, how are you going to even ask a marketing manager the right questions to know- if they're any good or not type thing. So-

Gary Pageau 18:31

Yeah

Brad Sugars 18:31

that to me is an important aspect of that learning. Y-

Gary Pageau 18:34

yeah, in, in, in a prior life at a previous company I worked at, the management philosophy was hire your replacement 'Cause the idea was is you couldn't be advanced or promoted in the company if you didn't have somebody who could do your job.

Brad Sugars 18:50

Yeah. It's hire your replacement or build your replacement even. I like the idea of building a replacement because, when you think of that, but it- it's not just building a replacement, buddy, it's building someone who can outperform you. Building someone who can do it better than you, building someone who can take it to another level that you couldn't thing. And sometimes that's recruiting someone, not just hiring someone- Yeah it's going and there's a difference between recruiting and hiring. Most people do hiring. I like to think of recruiting like a sporting team. You go and find the best person for that position, and you go and recruit them to come work in your company.

Choosing Coaching And Getting Started

Gary Pageau 19:29

So w- When people are getting advice on their company, what are some of the two or three things that they should listen to as opposed to the things that, you know, 'cause there's a lot of bad advice out there, right? There's just, you the business articles out there are just filled with it. Follow your passion, and that's enough. That's all you need, and all those kind of things.

Brad Sugars 19:48

Good.

Gary Pageau 19:49

So-

Brad Sugars 19:49

Follow what you're damn good at. Don't follow your passion. If you follow your passion, you end up hating your passion and failing at whatever it is you did. Follow what, the old Japanese ikigai of, what you're good at, what you're passionate about, what the market is willing to pay for. Like you gotta get into that sort of thing. Look I know this. If, as a business coach, I think that there's three things I would say to someone. Number one, look for someone who's results focused more than anything. If they're results focused first, then there's a very good chance you'll get amazing results. Second thing is look at someone who's helping you build systemic approach to it, so they're installing systems with you, not just talking to you about how to do it type thing. I think it's important that we look at it from that perspective. And number three, look at someone you can get along with long-term. A good coach is gonna be with you for a period of time. They're not just gonna be with you for a day, a week, a month. If you've got a good coach, like your favorite sporting team, how long do you want them to have a great coach? That would be forever. When you see great, when a great sporting team has a great coach- they get great results. If they don't have a great coach, they don't get great results, so great relationship focused on results. We at ActionCOACH teach, our coaching works in four areas, care, community, accountability, results, education. So we want you to join a community of other business people. If there's not a community we find that business owners learn better when they're part of a group of business owners. Second, accountability. If there's not someone who's gonna actually hold you accountable to the numbers, 'cause as a business owner, if you're the owner and the CEO of your own company, you suck at both jobs. I'll be blunt about it. 'Cause you go home, and you lie to yourself, "Hey, CEO, you did good." "Yes, owner, I did great." No, you didn't. You're both telling a story right there. Third is a results focus. Measure the numbers. Don't come to me with story. Come to me with actual numbers of actual results and not how hard you worked. Come and show me what numbers you actually achieved in that thing. And then fourth is the education. They've gotta bring new knowledge to you at all points in time. That's a big part of the success of it.

Gary Pageau 21:57

So people wanted more information about ActionCOACH and things you guys do. How do people reach out and learn more about it?

Brad Sugars 22:05

You can either jump on Instagram, follow me on Instagram and t- DM me the word playbook. I'll send you the playbook on it, or jump on actioncoach.com and just hit the two weeks coaching for free button. We coach every business in the world for two weeks for free. We only do five per week per coach, so there's a limited number obviously, but we do it that way 'cause you find out if coaching's for you, and we find out if coaching works with you. So it's a two-way street.

Gary Pageau 22:31

Great. Listen, Brad, it's been great, talking with you and feeling your energy. Thank you so much.

Brad Sugars 22:36

Cheers, buddy. Great to be here.