Clients and Taxes and Bears, Oh My!

[Music] hello everyone welcome to the 21 hats podcast I'm your host Lauren Feldman this week Jackie Russo explains how she put an end to her 8-month drought of new clients Jennifer Karen takes us through the bureaucratic nightmare of managing remote workers based out of state that is a headache that I don't wish on my worst enemy says Jackie who has found a way to sidestep the problem and Liz picarazzi brings us up to date on her ongoing struggle to get her crash enclosures certified as be resistant the Common Thread to these challenges May lie in these two questions when is continuing to fight the good fight the definition of Entrepreneurship and when is it the definition of insanity plus why does it cost so much to exhibit at a trade show and did you know that as recently as 35 years ago there were still laws in the books requiring women to have a male relative co-sign on a business loan those laws are now gone thankfully but Jackie Jennifer and Liz can all attest that that kind of paternalism is very much alive and well even in Good Times owning and running a business can be a lonely Pursuit our hope is that these weekly conversations brought to you by our principal sponsor the great game of business will let owners know they are not alone in facing challenges same thing with our daily newsletter the 21 hats Morning Report Wii magazine named the best newsletter for business owners and which you can subscribe to for free at 21h hats.com where you can also find transcripts of our podcast episodes and lots of other articles and interviews joining me this week on the podcast of regulars Jennifer Karen who is CEO of SB Expos at events an events management business based near Baltimore Maryland Liz picarazzi who's CEO of City bin which is based in Brooklyn New York and makes trash enclosures and package bins and Jackie Russo CEO of brand Russo a marketing agency based in Lafayette Louisiana the episode is titled clients and taxes and bears oh my welcome Jennifer Liz and Jackie it's great to have you here Jackie let's start with you the last time you were here you told us that you'd gone 8 months in counting without signing up a new client uh and you were somewhat concerned about that anything new I think it's somewhat concerned is a very nice way of saying it Lauren um I think it was heart racing Palm sweating and really starting to freak the [ __ ] out so luckily while I was traveling uh at the beginning of October we signed not one but two new clients which is part for the course we average about one and a half uh per month and it's what I think it was which is bigger clients newer markets longer lead times stronger processes for approvals and and it's a little bit of my impatience matched with um some improvements to our process and now here we are back on track glad to hear it you mentioned last time you changed your process I think the way you do proposals a little bit and that you were going back to the way you did it before can you tell us more about what that was and is that what you're referring to oh yeah so well we we did a number of things differently you know I I'm fascinated by the line between the definition of insanity which is doing the same thing over and over again expecting a different result and the definition of entrepreneur which is to keep going even though sometimes all signs tell you to quit so I find those two things to be the same and in direct conflict with each other and that's the two hats I switch out every day so it's about making subtle changes that I think are improvements while still staying on the path to what I think is the right direction and you know I have a really great and I trust them to do their jobs my job is to help them support them encourage them and get out of their way so we changed our proposal process to something that we felt was a little softer a little more storytelling a little more um client focused less us focused and that fell flat and we went back to the thing that I think is the exact opposite of what it should be which is it's all about us it's all about how we work it's all about what we do and we're two for two how do you explain that well I can tell you that we're going to stick with our old proposal from now on and I'm not going to mess with that again uh I think it's a couple of things I think we weren't being uh detailed enough and so we've corrected that I do think there's still a place for the customer as the hero for the client as the subject of the story but they're hiring us and so we can't go so far with that pendulum swinging into one direction that we missed the opportunity you still give them a reason why we're the right choice I was interested in hearing what you said about the definition of insanity and continuing to plow on as an entrepreneur that's something that I've talked to a lot of business owners about nobody starts a business and builds a business without being really stubborn and ignoring all the people saying what are you thinking what are you doing go get a job everybody hears that kind of thing and you have to keep going but at some point you have to recognize when something not is isn't working you have to recognize when it is time to take advice from other people I'm I'm curious Liz or Jennifer have you confronted this issue I definitely have I know I'm insane and I am okay with that um I think a lot of it has to do with being an entrepreneur or maybe the entrepreneur is a symptom of being insane but I totally agree with Jackie that they go together with me I definitely have have a little bit of a rebellious streak if someone says something can't be done my reaction is going to be I'll show you which is not exactly a healthy thing but it has sort of worked for me as an entrepreneur and I think there is almost an aspect of um gambling an addiction even in being an entrepreneur that's not to say that we're all we're all like you know addicts but you know there's some similarity with you know doing something over and over and not having it like be right for you and kind of being on the line that even though while we're in it it feels really uncomfortable when we get through that discomfort it almost always feels worth it and that's what you're going for is that feeling of I've prevailed I've made it and a little bit of I've proved them wrong so there's some righteousness in it but that's how I would explain like my experience with the entrepreneurship being related to being insane have you figured out a way that works for you Liz to decide when it's time to just keep plowing ahead and when it's time to change direction I would say I definitely don't have it totally figured out but as I get older I just realize that I'm more exhausted when I'm very willful about things and when I'm very like pushy and insistent so that's definitely a big part of who I am but if I notice that I'm super fatigued by you know often times it's it's trying to like push a boulder you know up a mountain and and um as I get older that's feeling a lot more tiring how about you Jennifer have you confronted this as well I think every entrepreneur every CEO has I think I have a different approach than Liz I have been more of a reluctant entrepreneur I I embrace it now fully but in the beginning for a long time I was a little bit more reluctant very reluctant I think what I see in myself is I am not afraid of failure and to be an entrepreneur you have to embrace the fact that you will fail in something in many things in lots of things and it doesn't even matter actually if your business fails cuz you can get another business right oh it matters if you're businesss well I get it but you know there are so many people out there that start a company go forward and realize there's just not enough return on the investment on the equity and the and and The Sweat Equity or the time spent so they close the business down I don't mean that it fails but they close it and they start a different one those entrepreneurs that are serial entreprene who've had multiple companies and they say okay this was good but it's not enough for me I'm going to close it down and and move somewhere else I think if you can Embrace failure and not take it personally embrace it and say look it's it's just not the right fit the Market's decided and to move on that to me is is how you can keep your head above water you're not a failure personally the business failed or if you're going to try something how many times have all of us tried something it didn't work you just got to plow forward so to me it's less insanity and more except the fact I'm going to fail and how I'm going to get out of it have you figured out how to decide when it is in fact a failure and time to do something different and when it's worth hanging in there and keep pushing I mean I think the two metrics for me are the Market's pretty good at deciding if if if what you're trying to do doesn't sell or if people start resigning so your culture is not working or something's not working internally those two are the the standard metrics that I think about and as long as things are selling there's some healthy profit and people are staying they were're doing something right Jackie when you uh told us last time uh about your drought we had a conversation and and you indicated that you wondered a little bit if as to whether your move to a 4-day week uh with people working 20% less might have had an impact and had some role in creating that drought did you end up thinking that that was a factor oh Lauren I think you are the wisest man I know but I have to correct you on this one point I didn't think that Jay said that um and Jay doesn't think it I think Jay is going to die on that sword swearing by it I strongly disagree with him Jackie you're absolutely right that Jay brought that up but I maybe I'm wrong I thought you had said that the thought had occurred to you as well well if I said something to indicate that then I misspoke I did say then and do still know now that we will be a less profitable company bottom line by the 4-day week because I'm going to end up hiring more people to fill that 20% Gap I mean it's just inevitable I cannot get 40 hours of work out of somebody who's only working 32 hours I mean that's just the way it is but that's something that I am comfortable with and committed to and happy about because I'd rather be a little bit less profitable and have the culture that we have right now and have the happy team that I have right now Jackie I was thinking about when you were talking about uh worrisome about clients coming in and then then of course they came in how long is uh work with you do they come and work for a month six months a year is it recurring what does that look like we are probably about 80% total revenue 80% retainer and 20% project our average client life right now is 5 years8 months okay so you keep a lot of your clients so when you get a new one it's great we do Jennifer let's talk about you we we haven't seen you in a while CU you've been traveling a lot during your trade show busy season have you made it through that busy season and how's it going uh October is the month for trade shows we have 11 of them starting from the end of September to to the mid November it's a crazy time for us but it's been an exciting time trade shows are happening there's great attendance across all of our client meetings exhibitors are really happy The postco Surge which people weren't sure if it was going to be temporary or permanent uh is continuing and we are very into doing hybrid events and those continue strong as as my Association clients are trying to figure out the right mix between in-person versus virtual so everything is moving full steam ahead and I'm pretty excited when we last spoke to you you were also excited about your new website which I think you were completing in stages you you weren't completely through with it but you'd made some big progress how's that going also fantastic I need to knock on wood it sounds like uh the website's gone great we've gotten a lot of people commenting on it our case studies are continuing they haven't been published yet but they're being written and and produced we also did a lot of b-roll footage cuz we're creating some videos so the videos will be out January 1st so when we were on show site and conventions uh we had someone go around and film so we're firing on all cylinders I've um hired a couple new leaders for my team pretty excited about that uh I think a lot of things are going really well it's been a very tough couple years and I feel like like I'm seeing what is that sailboat reference where you're the headwinds right we're just making incredible progress with the headwinds in the past uh Jennifer we've talked about you working 12-hour days six days a week trying to keep up um happy to hear about those hires has has that helped not yet not yet it should it should I'm still working ridiculous hours but it's our busy season as we get through it these leaders are going to be taking a lot of stuff off my plate I also it's interesting as you go through stages we hired an incredible amount staff but getting to the next stage of management and Leadership is the stage we now so they've just started and then automating a lot of our finances so I spent a lot of time the last four to six months automated finances and this past month was the first time someone else sent out invoices someone else did the accounts payables it's been fantastic I just oversee it so I think soon I'm still working crazy hours but soon we're going to get there do you feel like the stuff you're doing during those crazy hours is mostly stuff that you should be doing or are you still doing some chores that you you really need to offload I think it's a combination some of the work on backfilling we took on um clients where the the complexity levels higher than our typical ones and so I'm backfilling support to help some people who can do the day-to-day but need a little bit more support to get to that higher level and I'm doing some tasks that I shouldn't be any to offload and then I'm doing some tests cuz you build you just somebody's got to do it right someone's got to take a hold of the marketing team and do it there's Vision stuff I just can't get rid of but for the first time I feel that the things I should be doing as CEO take up more time than things that I shouldn't be doing which is good balance of power is back to me being a CEO rather than just a worker be can you tell us what those positions were that you hired for sure we hired a direct of trade show sales sales is my love and I had been trying to do that job over a team because that's where we started it's a typical typical story of a CEO holding on tightly for something for too long hired a new director of trade show sales she just started fantastic the team likes her I look forward to getting off of this more and more I think it's going to make a big difference with us and you work fully remote right is this somebody that you found in your neighborhood or around the world uh around the country not world yet we're not quite Global we found someone in the midwest we're in 13 states I think now which I still cannot I we need to do another podcast of how complicated state taxes State fees local taxes local fees and the whole process with the federal government it is a nightmare no one has caught up yet to remote workers from a tax standpoint but you you can automate that no can't I've tried I called companies called ADP ADP is my payroll processor no I haven't found away yet it is still very very very timec consuming and complicated Jackie I think you have people working around the country are you facing this issue too uh the people that we have that are not based in Louisiana are all independent contractors for exactly that reason y it's complicated it's not easy it's very complicated it's easier to handle if they're an independent contractor as opposed to an actual employee yeah she's not paying taxes right but so you have to be they have to really be independent contractors because you don't want to run the risk of coding them that way and violating the rules so we have gone through and checked and double checked and they are absolutely independent contractors so we're able to do it that way are you able to manage them the way you would like to while avoiding doing things that would make them count as an employee well I I don't manage them like an employee CU they're not employees and so they don't attend our staff meetings they're not a part of our team the way that our teammates are but they have a specific project and they do that specific project and they're paid a specific amount of money for that project and they do projects for other people so they are true independent contractors but to take on the cross state payroll taxes that is a headache that I don't wish on my worst enemy it's been a big headache and and the government the local state and the federal government was not prepared for the mass amount of remote workers postco on one of the earlier podcast we talked about I had an argument with Jay about commercial buildings you will start to see a lot more commercial buildings are being converted to residential it's it's a painful process it's expensive but I don't think these downtowns are coming back to PE people love to work remote and so a lot of commercial buildings versus residentials they're behind they just haven't caught up to what's happening out there and the tax situation is the same way those two pillars of people coming into office we're just not going back I have to admit I thought the tax issue was more easily handled it's just it's baffling to me that their that ADP hasn't solved that problem it's a purely side effect of the amount of people working remote and the companies like mine small companies that could take advantage of this and so I'm getting the benefit of incredible employees throughout the states but the complication is high the compliance issues are severe and there's certain states that I'm not even going to hire from because they're just going to make my life way more difficult it's just so hard to believe that I mean this is such a big issue there's so many companies doing this well there's big companies giant companies with 10,000 employees so they have an entire HR compliance Department there's small companies that go the way Jackie did with the 1099 route they hired just you know contractors and then the rest of us in this are trying to figure out what's best and then states are fighting with each other over tax issues right so who gets the tax on it it's not easy Jennifer while you were in your busy season we had an a trade show issue come up here oh okay let's let's hear it Liz had a trade show in Chicago where she ran into an issue Liz tell uh tell Jennifer it was an issue that's Universal for trade shows so I pretty much knew it would happen there and that's that if you bring a lot of things for your booth as an exhibitor particularly if they're heavy and large like my enclosures are the bill for me to send it from Brooklyn to Chicago and back not only shipping but actually even more importantly the handling on site is ridiculously expensive like $4,000 like if I would have let things in Chicago go as they were intended to by using the presumably Union people there to move my things I mean it would easily have been 3 to 4,000 so you know we came up with this scheme where we shipped it to Jay at his warehouse and then we used his minivan to take it to um God I forgot the name of the place in downtown Chicago um we kind of brought it up the side door and even though we have such a big Booth we just like kind of snuck it all in there was it the McCormick Center no Palmer House OH in a hotel okay yeah it was at the Palmer House it was really nice and you know I kind of feel bad doing that but what I don't love is that if you're a small business and you're attending and you're exhibiting there's often expenses that you totally don't account for which pop up the drage is one of them and then the second thing is with the scanners so scanning people that come into your booth some trade shows let you have that as part of your you know your payment some of them make you pay you know if you have two or three people there it can get pretty expensive and you know I know that everybody needs to make their money a certain way but I wish that there was more transparency with what your additional cost would be to be an exhibitor well there's there's two things the first one is uh Material Handling and drage when you hold a convention there is significant cost to it right exhibitors are subsidizing the cost of getting all those people there so the benefit to you as an exhibitor is that you may have the opportunity to get 500 to 10,000 of your potential clients in one place but that's pretty expensive to do right in in creating it and so they pass those costs on the exhibitors in different ways and one of those your booth is just a small part of the way you're paying for access to it and I think what happens is small companies think well the booth is the most of it and then maybe hotel and travel really the booth is just one part of cuz what happens and especially not at hotel ones as much as but in convention centers there are union labor calls and the UN you couldn't do a convention without Union lab or without labor they you are so needed sometimes we have for some of our Trad shows a call for 300 people they're absolutely nothing to do but the host organization is not paying for that labor exhibitors are and the way it's being paid is by distribution across it based on Material Handling or the table that you wanted to rent for two days is $450 or the TV that you wanted to rent is $600 for two days right because they're taking all those costs for the labor that's needed for the entire convention center and they're basically dividing it up because the host organizer whether it's a for-profit company a consumer show or the association they're not usually paying that it's being divided into small you know into chunks for the exhibitors to pay so small companies do get hit especially Liz if you have heavy stuff absolutely Material Handling and and drage is done based on weight there's very little ways to get around it you were able to to find the small door at the Palmer House you'd never be able to do that in a Convention Center the other one the scanning it's interesting you talk about that because it's called lead retrieval that's the technical term we sell lead retrieval $200 is pretty cheap we normally sell it anywhere from $350 to $500 sure my bet you could use business cards right but to be able to scan it to get them into their phone that is I love it cuz we sell it so I think it's fantastic um it's just easier and better to scan their badge and the association or the organizer whoever is they don't want to give up their most prized possession is their list of people names and emails and phone numbers and so problem is small businesses think that the exhibit Booth price and the travel is all they're going to spend and really that could be maybe just half of the cost at a trade show yeah what that's what it feels like and it is unexpected I think it's not clear I think to your point sometimes it's not very clear but your booth cost may be the cheapest part of the entire aspect of a trade experience you just have to hope and and Market or think of the marketing is that the business you'll get will far exceed the costs of marketing at a trade show right yes but my I'll think of it in terms of profit my margin on the trade show is going to be a lot lower if I pay the drage so that's why I get in there and I'm like do you know what is this really going to pay off for me with a gigantic and very heavy I don't really like the idea of me subsidizing everybody else because my stuff is heavy well that's I mean Liz that's just the way it's set up that's the business model when you are an exhibitor your boot Booth is just one part of the overall cost of everything the material hindering is is an important aspect of it so I hear you but that's not going to change I think for you with the hotel you're you have better luck with the hotel than you would with a Convention Center well actually we've done it in both places I'll be honest okay okay you've obviously found the right trade show to go to and to make sure that it just fits your the investment fits for your marketing plan it's not going to change though the material handling is something it's always discussed but it's a critical component of being successful that we couldn't hold a trade show without labor and most of the time it's Junior labor we couldn't do it and so somehow that's got to get paid yep I see the math y I hear you it's you know we get those questions and calls all the time all the time Liz the last time you were here you told us uh that you hadn't been able to do your be test uh of your trash and closures the way you hoped to but then you had an appointment to try again has that happened if so how did it go so it did happen and um this Center is in Montana and they let us know that they would be testing the enclosure with the Bears it was a couple of weeks ago and that we could watch it from the bear cam which they have there so a lot of what I would have seen if I was actually out there I was able to see with the bear Cam and I also had a videographer there to video the whole thing and for those who didn't hear that previous episode you actually were there and unfortunately were not able to do the test while you were there because there was a problem with setting up the enclosure which you thought you would be able to set up but they insisted on setting up and it didn't go correctly do I have that right yes you got that right how frustrating too I'll cut to the chase so there's lots of grizzly bears there there's you know going to be as I think multiple shifts with the Bears throughout the day usually one to two bears over 5 to six hours and then that that you know is that going to give them time to break into it well the Bears tipped over the bin after like 2 and a half minutes which was totally surprising to us not broke into it they tipped it over they yes they tipped it over but then they were able to get in from the top so the doors that are normally on the side once the Bears tipped it over were then on the top and then they were able to get on top of it and like break into it but the tip is what the real issue is is that all trash enclosures particularly bare resistant need to be anchored to the ground it's like a guideline and anything you'll see it's a guideline with the grizzly bear inter agency committee they did not fasten the enclosure to the ground and it seemed that they also didn't level it so I guess what I could say about this is that I I failed the test but I'm not sure if I really failed it I really wish that I failed the test and I knew I failed it that like feeling of I don't really know if this was a legitimate test is really has gotten to me because that leveling part and the the anchoring is so important it's what we do it's what all of the other enclosures that they've tested do so I'm at a point right now where I need to decide am I going to test this again if it can't I can't be assured that it won't be anchored so I I'm I'm thinking that if they can't assure me that it will be anchored I don't know if I'm going to test it and particularly not at that place and I guess the the real issue here is who is setting it up I mean if they let you set it up you know on your own you would be able to do it precisely the way you want to you know I'm I'm moving past it honestly there's another place called The Wildlife Management Institute where you can you can test with black and brown bears and it's actually in Florida at a zoo and we're going to work to have it tested there but I am going to make sure in advance that it can be anchored because if it can't mimic the true situation as it would be you know in a residence then you know I'm going to fail again I mean I don't know for sure because Grizzlies are a lot bigger and stronger than like black and brown bears but you can still Market these products as be resistant I think you told us is that right yes we can we just cannot put the igbc certified kind of label on it so we I mean we continue to sell be resistant trash enclosures we've been selling them for about 3 years now I would never say be proof and I would never say certified bare resistance but yes we are still in the process of getting certified we are just about out of time but I want to hit one more thing before I let you go I recently highlighted a story in the morning report that that reported that up until 35 years ago there were still laws on the books requiring women entrepreneurs to have a male relative co-sign on a business loan I hate to admit it but that took me by surprise is that just my ignorance or are any of you surprised by that as well I am not surprised one bit I have a great story to tell you my husband and I we've been married 29 years he is a very Charming person and he loves to go in person to the bank I've never gone I hate going in person anywhere I'd like to do everything by email on phone if I could and he goes to the bank I don't know a couple times a week and I think it wasn't that long it was postco he went in and transferred money from my um bank account for my company into our personal account and they just let him do it and I came I said what did you do did you have a check by me he goes no I just told him I needed to move money over cuz we needed a partner distribution I said how are you able to you're not on my bank account for my business you're not on my business I'm 100% owner this was not a little bit money money this was like a couple thousand dollars how did you do it oh I know the ladies at the bank I walked into that bank I said how do you know we weren't we're happily mad how do you know we weren't in the middle of a divorce proceedings how do you know that this was why did you let anyone take money out of my well he's your husband these are women bank managers themselves I about had a fit to do it that that was allowed and I don't think it was allowed it was just you know small town he was a nice guy Charming I think if I tried to take money out of my husband's bank account nobody would have let me but it was certainly fine that he was able to do it uh I've got another one for you how about I'm getting a whole home generator installed so when our electricity goes out we won't lose power and the sales person who very much wants this five figure check from me tells me that in order for me for him to come over to the house to walk me through how the process is going to work give me the proposal so I can sign it so they can install it that I'll need to make sure my husband is there so that he can sign the contract and I said excuse me um I can sign a contract and he said well we just find it better if the gentleman of the house is there to finally approve it in case you don't explain it properly to him of how he works and I was like okay you don't know me and my husband but he's a graphic designer who couldn't figure out how to get through TSA pre-check today because he's flying by himself and had call me five times I know that I I hear that he is a brilliant man in his area of expertise but let me assure you signing a contract is not his area of expertise I'll be picking a different generator company thanks yeah yeah I mean I think with with business I am a little bit surprised like you Lauren that it was it was so like not that long ago I would have thought that something like that with the required signature from the man would be more like 40 years ago but we all have examples of this I know when my husband and I were buying our house you know I handled 90% of the work from you know checking out the listings to calling the Brokers to going all around negotiating and then we are in the final stretch the real estate guy was like can I speak with your husband and I was like why well I want to make sure that he's like on the same page with with everything and I was like my husband knows nothing about what's going on with this and we're both okay with it so when it comes time to sign something yes he'll be there but in order to have a conversation related to the sale of this house no he doesn't need to be here and I made it very clear and I was really irritated that was yeah it was a while ago that was almost 20 years ago but still I found that surprising I felt like really who does that like he was like a 25-year-old guy maybe it was cuz he was young but you would think he would be more Progressive since he was younger so yeah it's still happens you know we started with the bank example um on a somewhat related note I'm just curious Liz or Jackie have either of you had issues with you know there we've been reading a lot of stories about a credit crunch are either of you having trouble with lines of credit or loans or anything along those lines so I have not but I just got my line increased like about two months ago and I think that if it had been later than that I might have had more trouble um but for us it was increasing our line and it was based on our 2022 tax returns we built up a savings account over the past 23 years that I treat like a line of credit and so I am still continuing to loan to myself I like that do you give yourself a good rate I have a great rate all right my thanks to Jennifer Karen Liz picarazzi and Jackie Russo and to our sponsor the great game of business which helps businesses use an open book management system to build healthier companies you can learn more at Great game.com thanks everybody wait wait don't leave yet if you have a question or a comment that you'd like the 21 hats owners to address send it to me by replying to your Morning Report or by email at Lauren 21h hats.com that's L Ren at 21h hats.com do it now before you forget and don't be afraid to tell Jay what you really think you can take it and if you got something out of this conversation help us reach more business owners tell a friend subscribe and review us wherever you get your podcast follow us on Twitter subscribe to the morning report at 21h hats.com this episode was produced by just through Baron founder of blank word Productions okay now you can leave thanks for listening everyone [Music]