We spoke with Ryan Niddel, CEO of MIT45, about his entrepreneurial journey, his views on how inflation can be a very useful tool for a well-run business, how it affects businesses that grow during economic expansions, and the tools he uses to scale MIT45 not just during periods of high inflation but also to contribute to its growth. He also offered some possible solutions for businesses to become inflation-proof.
Ryan Niddel is a CEO, Board Member and Entrepreneur. He is also the leading authority on improving revenue of companies by improving EBITDA through increased operational efficiency, lean manufacturing principles and more. He has helped with the acquisition or exit of more than 11 companies while seeing their collective revenue surpass more than $237M. Niddel has successfully tripled the revenue of more than 5 companies in under 2 1/2 years adding an extra $950M in valuation to these companies.
Niddel began his entrepreneurial journey at the age of 10 with a local lawn mowing operation which led to being taken under the wing of a local businessman while being mentored starting at the age of 14. He currently is a principle in a private equity group, the CEO of two 8-figure companies, and sits on the board of directors for several other companies. He has built a reputation as Ohio’s top business growth specialist, and as someone able to rapidly improve the profitability of a company in order to achieve a higher valuation and sell for significantly more revenue. Ryan Niddel contributes to multiple charities including Big Brother Big Sister, Operation Underground Railroad, The Buckeye Ranch, and other causes he cares about. He is in the process of launching a foundation focused on the education of the youth of today to help with practical application on business, entrepreneurism, and capitalism.
When did you begin your entrepreneurial journey? And how will you describe your experience as the leading authority on improving the revenue of companies, building a reputation as Ohio’s top business growth specialist, and as someone able to rapidly improve the profitability of a company?
The beginning of my entrepreneurial journey was at the age of 10 years old. I grew up in a middle-class household in the middle of the state of Ohio and found great value in Air Jordan tennis shoes and Tommy Hilfiger cologne. But my parents did not, so they suggested that if I wanted those two items, that I should figure out a way to earn money myself. To acquire them, I printed off sheets of paper, which I would call flyers, that offered my lawn mowing services. I went door to door, mailbox to mailbox, in the neighborhood in which I lived, passing out flyers asking people if I could mow their lawns for $10 a piece. I would provide my own lawn mower and my own gas, and I would set up a recurring billing model where I would come once a week to mow their lawn for $10. I was able to secure somewhere between 7 to 10 lawns and that afforded me the luxury of making $70-100 a week as a 10-year-old during the summer and allowed me to buy the shoes that I coveted as well as the cologne.
That’s where my journey began, but the official beginning of my entrepreneurial journey was actually a startup web-hosting company based out of Akron, Ohio. I hadn’t been around a startup environment or small business entrepreneurs before and while I came on as an affiliate manager for this company, within six months, I was able to take over as president and CEO and began running the operation. That’s really the first time that I got to experience what the entrepreneurial world is all about, as this company scaled to 35 to 40 million a year in annualized revenue with virtual staff as well as in-office staff of upwards of 150 plus employees. There’s a lot of management going on of various items inside the business.
My experience as the leading authority on improving revenue and companies is a simple synopsis of the track record of successes and shortcomings that I’ve had.
I studied mechanical engineering as a field of study, which gave me a solution-oriented thought process starting with the desired end result in mind and working backward into the present-day state. I was able to use that as I grew automotive dealerships that I started with the outside of college, took over the internet sales department of a local dealership, and rapidly ramped up to 20 to 30 vehicles per month which then afforded me the luxury of coming to Columbus, Ohio to run the largest collection of European brands under one roof. This, in turn, helped me begin to focus more on sales and marketing which led me into the web hosting world, where we came on board with 10,000 clients to then in two years, ramped it up to 580,000 clients. This not only catapulted my understanding of sales and marketing, but it then also forced me to get more clear on finance and operations and how there’s an inner correlation between all four aspects of the business. We sold that company to a subsidiary of GoDaddy and from there I jumped into merchant processing – processing credit cards for other vendors I realized pretty rapidly that I didn’t know a lot and that business did not succeed. I had to write multiple six-figure checks to shut down that business, which eventually led me into the world of custom clothing. I learned how to be a haberdasher – measuring people, understanding the differences in wool, and understanding the differences in manufacturing. As I helped grow the company that I worked for, and eventually went out and started my own company, it was a fascinating experience in understanding the unique ways of opening doors for possibilities, getting in front of the right type of client, and then really taking customer service to a different level. That experience eventually led me to a CBD company that I founded in 2016 and sold to a private equity group in 2018. I then went into a series of consulting engagements in which I eventually came on board a company called MIT45 and have taken over as CEO. I helped grow its revenue from 5 million annually to 75 million annually in just four years.
And so I would describe this experience as transcending and including the previous level. Each level of my business understanding has been catapulted by the previous level. Engineering helped me look at sales as a systematic process. That systematic process of looking at sales led to success inside of sales, and my creating my own sales formula, but then it allowed me to step into a managerial role where I was forced to understand people and processes, understanding how the sales drivers impacted the bottom line. From there that pushed me into having to understand marketing because marketing was a byproduct of generating more leads, which would create more sales, which forced me to pay attention to those variables. As I eventually stepped into the web hosting world, it was a combination of both of those worlds. I was selling to bring on new affiliates. I was working on direct response marketing to optimize conversions on pages and I was now starting to work on customer support to minimize refunds in the environment from customers having a bad experience. All of these skills have converged in this moment of time coupled with 1000s of hours of reading and studying over the same duration on my own, as I’m a voracious learner. I’m incredibly inquisitive and it’s part of my makeup.
Why do you think inflation is an incredibly beneficial tool for a well-run organization? How is it going to benefit them?
Inflation is an incredibly beneficial tool for a well-run organization because it’s going to thin the herd. And what I mean by that is that businesses that have been efficiently optimized to run lean and to make good decisions without economic vulnerabilities are going to be in a position, as inflation rises, they’ll be able to consume market share. They’ll be able to do this by not raising their price in the same capacity as other individuals and they’ll be able to do this by buying a market share of businesses that weren’t running so tight and weren’t running so lean.
Inflation to me is the great equalizer, the great reset that exists inside businesses. You have the boom and the bust cycles that are now hundreds of years old and at least 100 years old in economic trends and every time on the backside of low-interest rates and of low inflation, there are corrections and consolidations that happen because businesses get, as I refer to it, fat and happy. They spend recklessly and they don’t stock up their war chest. They don’t go out and raise debt when the debt was inexpensive. They don’t consider that eventually this cycle of growth is going to come to an end and when it does come to an end, those of us that have been maximizing operational efficiency, paying tight attention to the cash conversion cycle inside of our business, and consistently focusing on the variables that create success inside of a business, will be ready to benefit from their recklessness.
What effect does inflation have on organizations that thrive during economic expansions despite inefficiency and poor management? And what factors contribute to its occurrence?
The effect that inflation has on organizations that thrive during economic expansion despite inefficiencies and poor management is frustration. As a consultant, this is typically where I get called in. A business has been successful. They’re growing their market share, there’s revenue, and profitability is flying through the doors. One day, the owners will wake up and realize that the music has stopped but they haven’t quite heard it stop yet. They’re still playing in their mind and that music is a sweet sign of success, but the success isn’t there. They’ve convinced themselves that this is just a momentary blip.
We have confirmation bias as entrepreneurs – where we see confirmation for our thought process and lagging indicators of shortcomings, but we will fight against that tooth and nail. What that basically means is when there’s a month of slow sales, we put it back on something else other than internal operations. It’s almost always an external factor. Well, as we become more and more focused, that frustration starts to show. Owners now are multiple months behind the curve and the competitors that they have in their segment, the ones that are early adopters of the new shift in economic variances, are now starting to reclaim market share.
And I caution against a race to the bottom where we focus on price intently. During economic contractions, people want to know that there is a certainty. They want to know that their supplier is in it for the long run. They want to know there’s a path and a plan to be a supporter, almost a partner, in the objectives of the business they are selling to and if there are not candid based conversations with the vendors but also customers then there comes an inflection point where businesses start to grind to an energetic halt. The frustration of how difficult it is to acquire a sale or how difficult it is to maintain margins starts to erode the competence of the owner and the employees. That’s a cascading effect that impacts the entire business.
What tools did you implement to scale MIT45 not only during times of high inflation but also to contribute to its growth?
The tools that I’ve implemented to scale MIT45 during times of high inflation are the same that I will have implemented during low inflation. These tools include a forecasting and budget cycle that supports the growth initiatives of the company, effective communication platforms with clear goal tracking and accountability, and automation where possible, not to eradicate staff, but to support the initiatives of the staff. We implemented different structures in our buying process for supplies where instead of a just-in-time manufacturing environment, we switched to a days-on-shelf manufacturing environment. Because of this shift, we’re actually in a very positive position as the cost of various goods is increasing. We have a surplus of goods that we have stockpiled at a lower entry point, so we’ve extended our cash conversion cycle, but have brought down the overall cost of goods to increase that margin. Really what we’re doing is supporting our partners and supporting our clients by helping them market our product. We’re helping them by showing up and supporting them through educating them in sales. We’re doubling down on our efforts to become a more value-added strategic partner instead of focusing solely on price.
What potential solutions would you recommend to help businesses become inflation-proof?
The potential solutions I would recommend to a business that wants to become recession-proof are to keep good amounts of cash on hand as well as structured debt when you don’t need it. The best time to go after debt in a business is when you don’t need it. So structuring the business around having access to capital and keeping a fair amount of capital in the bank allows for some inflation-proof thought processes and decisions. And in order to do that, we have to make certain that our books are tight and following GAAP compliance. I would even go as far as recommending a third-party audit on your books to add additional comfort to a lending institution.
To summarize, in order to become more recession-proof, you should get your books in order and be in a position where there is excess capital and access to that excess capital to go after strategic acquisitions. There are so many things that can be done and all it takes is a shift in perspective. And if your business is running at less than a 10% net margin during the boom cycles of the economy, I would encourage you to batten down the hatches. Fighters, choose your partner to sell to and retool. As inflation comes, if your business has less than a 10% net margin, you’re in a precarious situation where finding additional net margin is going to be challenging.
