Now on the Small Business Community, listen to part two of Exploring Veteran Entrepreneurship. In addition to gaining insight on the entrepreneurial mindset of the men and women who have served their country, learn practical tactics for managing your business like a veteran. Did you miss part one? Tune in here.
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Marcus Flakes: I was deployed three times in my military career in the Navy. One thing I want to point out is that what I learned from these deployments. I learned sacrifice, mission, and core values.
Now, there were a whole lot of different things that I learned, but one of the few things that stuck with me was sacrifice, mission, and core values. I use these traits to develop an organizational culture within my company as well.
Gregg Stebben: I'm here with Marcus Flakes, the CEO of Commercial Sanitation Initiative. A company that, frankly, I think is on the cutting edge and doing some really exciting things, but rather than me talk about it, Marcus, welcome. I want you to tell us about your business and what you're doing.
Marcus Flakes: Thank you, Gregg. I appreciate it. Well, a little bit about my business. The umbrella company is CSI US Military Maintenance. We're a cleaning maintenance and remodeling company. We hire local veterans and their families as well as patriotic non-veterans with the mission of giving back to the community. We do this through industrial and military training for economic development projects, i.e., restoration of homes, cleaning, commercial cleaning, remodeling commercial buildings and things like that. Since our company's inception, which was February 2017, we've grown significantly with small business partnerships that have also enabled us to start a subsidiary venture known as Commercial Sanitation Initiative, CSI. CSI is a North American distributor of EnviroCleanse. This company is a combination of veteran entrepreneurs and small business owners distributing cleaning products and organic disinfectants nationwide.
Gregg Stebben: One thing you said, Marcus, that I'm a little unclear of—and I did not serve in the military—and that may be why, but there's lots of people like me who may not understand some terminology. Did you say that you use military training with your employees? If that's the case, explain how that works because it's not clear to me.
Marcus Flakes: Okay. Absolutely. The military training, as you well know, it's called Military Occupational Specialty, MOS. Within the military there's a myriad of knowledge, skills, and abilities that we acquire. One of the things I was focused on is how we can use the exact training from the military and transition that into civilian sector. I created this company around what the military actually does. Not in all facets, in a good piece, cleaning for instance. We learn that going into the military. I don't know a better cleaner than a military person.
Gregg Stebben: We all know the ability of soldiers to do things like make beds and shine shoes and things. It's legendary to all of us just through what we see on movies and on TV. I suspect there's a lot more to it than what we see and what you've done is, I think, is actually recognize that those are highly valuable skills, and that once people are out of the military, you are able to put those people and those veterans and those skills to work.
Marcus Flakes: That is absolutely correct. That's what we do.
Gregg Stebben: I want to hear about your military background, but before we do, I want to pick up on something you mentioned, which is a product called EnviroCleanse. I think you said you're the North American distributor?
Marcus Flakes: Correct.
Gregg Stebben: I want to know a little bit more about that including, this really caught my eye on your website, and by the way, Marcus' company is Commercial Sanitation Initiative, the website is commercialsanitationinitiative.com. One of the things that caught my eye on your website is that there's some relationship between your company, EnviroCleanse, and Warren Buffett, or Berkshire Hathaway. Can you just explain that because I find that very, very interesting?
Marcus Flakes: Yes, absolutely. EnviroCleanse LLC, it's a division of Charter Brokerage LLC, which is owned by Berkshire Hathaway.
Gregg Stebben: Which is owned by Warren Buffett.
Marcus Flakes: Yeah, which is owned by Warren Buffett. Yeah. Absolutely. I have not yet talked to Warren Buffett. Very large company. I'm just one of the smaller entities down here making the mission happen for EnviroCleanse. With all due respect to Warren Buffett, he is the man behind the scenes making a lot of things happen for EnviroCleanse. I consider CSI as having an intricate role to distributing these products on a national level. When I say on a national level, I'm talking about the many industries that this product intersects.
Gregg Stebben: Which are?
Marcus Flakes: Which are retail, commercial, and industrial. You think about population health, I have a master's in public health so I think very broadly on these topics, but I'll make it very, very simple, is that everybody is seeking organic and sustainable products. I'm sure whoever is listening to this call could actually agree with me on that.
Gregg Stebben: Yes.
Marcus Flakes: We provide just that. We provide a product that is an organic disinfectant and we provide green cleaning, de-greasing formulas within another product. We've had a lot of traction from retailers and commercial and industrial. We're on the growth side at this point.
Gregg Stebben: I think when you pick a product like EnviroCleanse and it has essentially not just the endorsement of Warren Buffet, but the fact that he owns that company and the product that the company makes, I think that for a lot of people is a level of validation that's untouchable. It's the gold standard. You know that if Warren Buffett has put his name on it essentially, it must be a great product and you're now the distributor for North America and I assume using it in your cleaning for your clients yourself at CSI.
Marcus Flakes: That is absolutely correct. We've seen nothing but success when we talk to our clients about cleaning contracts. Not only do we offer our services with a good work ethic, but we also offer this product in conjunction to the contract. It gives them a double-edged view of what they're getting from us.
Gregg Stebben: I'm talking with Marcus Flakes, the CEO of Commercial Sanitation Initiative. It's commercialsanitationinitiative.com. Tell us about your military background because it's a very big part of your story.
Marcus Flakes: Okay. Well, I'm a 22-year veteran. I have a very wide background. My experience is within the Navy, Army, as well as full-time employment with the Texas Air National Guard. I was also a food program manager for the state of California Army National Guard as well. I was deployed three times in my military career in the Navy. One thing I want to point out is that what I learned from these deployments. I learned sacrifice, mission, and core values. Now, there were a whole lot of different things that I learned, but one of the few things that stuck with me is sacrifice, mission, and core values. I use these traits to develop the organizational culture within my company as well.
Gregg Stebben: Would you say that as a business owner if you hadn't had that military training your business would be running very differently and would you actually look at your military training and say, you know, if I hadn't got those years of training in my 22 years of service to my country, I might not actually know how to be successful at running a business or starting a business?
Marcus Flakes: You know, there's a true and false to that. The truth is that I gained the confidence from the military. Some of the things that they teach us, they teach us resiliency. They teach us leadership. They teach us sacrifice. Not being all about yourself. It's that selfless service that comes into play. It really brings on your ability to mentor others, which I do on a daily basis for other business owners that seek me out and want to know what I'm doing and how I can help them. But, as far as false, I would say if I never had gone to the military, I had interest prior to enlisting in the military and it was business and health. Looking in hindsight, I think I would've gone to school a lot earlier than I did and picked up a lot of knowledge, skills, and abilities and perhaps just like every other small business owner who doesn't have a military background, they're very successful as well. I really can't take that credit away.
Gregg Stebben: What you're pointing to is that by serving that time in the military, in a sense, you sacrificed something else that was of interest to you for a long, long time, for 22 years, which was your interest in business and health. It's just interesting hearing your perspective on this because I think frankly for many of us, if we haven't served, we don't think about the idea ... We know that veterans come out of the military and then most of us in business know that they make great employees, particularly in the areas where they have trained, but I think most people today don't yet have the idea of what great entrepreneurs veterans make. Did you find in starting your business, and I don't know if this was your first business or you've started others, but in your time as a veteran starting businesses, have you found that there are certain hurdles that have been bigger hurdles for you because you were a veteran?
Marcus Flakes: I have. I have. Starting out with employment. Usually when a veteran comes off active duty or gets out of the National Guard, they're taking on a new journey so to speak. We close that chapter and we start a new chapter here. One of the first attempts is getting a job. Not just any job, but a higher-paying job using the skillsets that they have acquired from the military. Now, when they get that, this is where the problem starts. Either you're over-qualified or you just don't have what that company is looking for. It's been a question for a long time as to why is it like that.
Now, what happens to that veteran after they get so many No’s it becomes very frustrating and they start to ... their resilience, their resilience training starts to kick in because they're not gonna give up. They have no quit in them. They turn to entrepreneurship. There's groups out there. I'm a member of several groups with over a million veterans involved sharing information with one another, trying to make it easier on their comrades because quite frankly one veteran has more experience than the other. It's a beautiful thing because they're able to share that.
Gregg Stebben: You know it's interesting. There was a study published by the Department of Veteran Affairs in 2017 last year that said that veterans are nearly twice as likely to be self-employed compared to non-veterans. I looked at that and on one hand I was surprised and on the other hand I wasn't. I could see a case being made either way. But that's the statistic. It never occurred to me that the process might be as you're describing that veterans get out of the service and then actually have a hard time getting an appropriate and better paying job given their skill level. They might be over-qualified. That only after that experience do they turn to entrepreneurship. I just assumed that a lot of veterans got out and when surveying the landscape of opportunity might think, oh, I can get a job, I can go into this kind of industry, or I can start my own business. Do you have a sense of how many veterans go through that process of having a hard time getting a job because they're over-qualified and turning to entrepreneurship versus taking that on as their first thing directly out of coming out of the service?
Marcus Flakes: I think the percentile is pretty high having a problem finding a job initially. I think that percentage is somewhere around 40%. Then after that is when different veterans will think about different opportunities. Some start in the civilian sector and start looking for a private-owned company and want to work for them. Maybe a food distributing company or something like that. If they don't have any luck there, they usually turn to federal employment. Now, there's a lot of veterans looking for federal employment. Unfortunately, these federal agencies can't hire everybody. They can't hire everybody. They get very, very picky and selective about which veteran they’re going to hire. That's why they have those preferences. If you're service disabled, 50% or 100%, those go to the top. The people who don't have a disability, they're competing with the rest of the applicants with only a five point preference or so.
Other than that, when they exhaust those opportunities, then they start looking at, okay, what can I do. It's usually entrepreneurship. They start thinking about what did I do in the military. Maybe I can start up a security company because I was a military police. Maybe I can start up a restaurant because I was a culinary specialist. You see the correlation of why they select different industries to start a business in.
Gregg Stebben: I'm wondering if you have ideas ... I'm gonna ask this question in three levels. I'm wondering if you have ideas for things we as the individuals listening can do to help veterans either overcome the hump of getting a job because of what you said among other things being over-qualified, or more quickly move to the idea of being an entrepreneur. What can we as individuals do because we all have family and friends who are veterans and many of them are returning veterans or veterans looking for different career opportunities? I'm also wondering beyond us as individuals, and some people listening to this own small businesses or would consider starting another small business or another division as in a sense you've done, but I'm also wondering if you think there's things that government should be doing like Veteran's Affairs, and if there's things the federal government should be doing to make this process better for veterans who are no longer serving.
Marcus Flakes: That's a really good question, Gregg. Not sure if I can fully answer that, but I'm gonna definitely give you my take on it. Whether it's government, nonprofit, or corporate entities, personally I'd like to see them as stakeholders such as theSBAand investors taking interest in business plans that are developed by veterans. The reason I say that is because I think that idea funding is more accessible than credit-based funding.
Gregg Stebben: Really good point. Was access to capital an issue for you?
Marcus Flakes: Access to capital is an issue for everybody. I don't know a business owner who doesn't need capital. When you're out there looking, where are you supposed to be looking? You could be a part of groups. You can put it in there. You can go on LinkedIn. You can say it there. There's just so many places you can say it, but that's social media. You're not having that conversation with that investor who gets the opportunity to sit at the dinner table and actually spell out what you want done for your business with the intention of that investor potentially wanting to help you. That opportunity doesn't come often.
Gregg Stebben: I'm really interested in what you just said, Marcus. I'm talking with Marcus Flakes. He's the CEO of Commercial Sanitation Initiative. It's commercialsanitationinitiative.com. I'm really interested in what you said about idea-based funding versus credit-based funding for veterans. Are there programs like that that exist that veterans know about? I know, for instance, right here on Bank of America's “The Heartbeat of Main Street” that we do here with ForbesBooks with Bank of America, and they've rolled out a $20 million program for lending to US military veteran entrepreneurs. I know those kinds of programs exist, but I'm wondering to veterans know they exist and could part of the job here be just to do a better job of making them aware of it?
Marcus Flakes: Yes. I've been doing my part as far as spreading the word out about this funding that's available to veterans for starting businesses. But I think this, they're hesitant because this is what they're thinking, is this just another hype about supporting veterans? Because to be honest with you, they're not really looking for a handout. I'm gonna give you a scenario. If you told me that I can give you money and you pay me back versus I can give you this account and we'll utilize your services and we'll benefit from your services while you earn money, I probably wouldn't go for the loan. I'd probably go where I'm earning revenue. I'm actually working for that capital.
Gregg Stebben: I may be wrong about this, but I'm speculating you may actually be describing something that doesn't exist today, which is you mentioned idea-based funding. There's credit-based funding. But you're really describing a scenario where it's a work for funding. Does that exist or is this something that you have conceived of yourself?
Marcus Flakes: This is something that I conceived of myself. You sit here and brainstorm about how do you access capital. There's no rule to how you access capital as far as I'm concerned. Accessing capital, I do it every day. The reason I say that is because I opened up another business so that it can be funded by the umbrella business. Listen, for instance, if I go out and get a $50,000 contract and it lasts for maybe two months or something like that, remodeling a home, what happens is that I take that revenue from a founder's perspective, I take my percent and I reinvest that back into the company. That's not capital. What I've done is I'm also increasing my percentage of injections into my asset ability of my company. Now I'm able to go to the bank and say, hey, look what I've been doing
Gregg Stebben: A scenario where someone is just starting out, I think what you're suggesting is if there was a program that said you're going to get the $50,000 contract and the $50,000 access to the $50,000 today so that you can tool up to get the job done. You've just reverse-engineered the process you just said. It just involves having access to the capital upfront instead of at the end when the job has been complete.
Marcus Flakes: Exactly. Because when you think about it, if an opportunity were to be presented to any veteran, or any small business owner for that matter, if it were to be presented that way, now you know you have revenue. Planned revenue. What do you do? You take that and now you can use invoice factorization to make sure you're able to take care of your employees. Now you're managing a business and you're not just looking for funding.
Gregg Stebben: I want to ask you one other thing, Marcus, because this is really a fascinating conversation. As you're talking with other veterans, do you find that there are similar things that they say that prevents them from doing what you've done, which is starting a business that we as friends and family of veterans could hear? You might've already said this in a way, but I want to drill into it very specifically. As you're talking with veterans and they're thinking about starting a small business, are there certain things that stop them that you think we as friends and family should hear so that we know how to give the best encouragement to those veterans who are perhaps the next best greatest entrepreneurs?
Marcus Flakes: I have not met a veteran that I've talked to that just stopped in their tracks because maybe it was something they read or something that they heard. They usually go into the startup. They have X amount of dollars to start. It's not very much usually, but they're all in. They're all in. What happens is that when they start, without the right mentor letting them know where those forks in the road are gonna be, that's when the confusion starts for them. There's this thing called business lifecycle stages. I don't think that veterans ... This is not to discredit any veterans. There are some great veterans out there that are doing some great things better than myself, but business lifecycle is an education in itself. It'll teach you a lot about startup, the growth maturity, and the acceptance and renewal by consumers. This is where you're able to understand where your business sits in the marketplace.
Gregg Stebben: Yeah. Really what you're saying is for a veteran who wants to start a business, grit is not the problem. Getting started is not the problem. At some point though, they just may not know what's coming next or what they need to prepare for. That's where something like a mentor and business lifecycle, as you're describing it, can really make a difference.
Marcus Flakes: Absolutely because they'll go from startup and skip growth to maturity. You miss the growth. This happens a lot. This happens a lot. They're good companies. They're solid. They're making connections. They've got leads and they're making money. Money is not really being invested back into the business, so you're not growing.
Gregg Stebben: Yes. Yes. They have all the pieces, they just need a road map or help creating the appropriate road map to keep going forward and continue to build on that success.
Marcus Flakes: Absolutely. Here's a gem. If they miss the investment, the injection back into their company, when they go to the table for a loan, they will be denied because there's a certain amount of injection percentage that the banks must see from your business. If it's not there, you don't have the tools to generate these financial statements, PNL statements, balance sheets, and all of that. If you don't have the tools to generate that, then you're gonna get overlooked anyway.
Gregg Stebben: By skipping a step, there's downstream consequences you might not even understand until somebody stamps denied on your application.
Marcus Flakes: Exactly.
Gregg Stebben: That's a lot to think about. He is Marcus Flakes. He's the CEO of Commercial Sanitation Initiative. Commercialsanitationinitiative.com. Making a really great case for why veterans make such great business leaders and entrepreneurs and things they need to know about to ensure their success even if they're at the point where they started a business and it's doing well, being able to look forward. I think mentorship is a really great point you make. I want to thank you, Marcus, for joining us here on the Heartbeat of Main Street.