Twelve Hours a Day, Six Days a Week

[Music] hello everyone welcome to the 21 hats podcast I'm your host Lauren Feldman this week we meet Jennifer Karen the newest addition to the 21 hats podcast team Jennifer's business SB Expos and events is an event management business that survived the shutdown in 2020 and has grown to more than $3 million a year in Revenue when Co first hit Jenifer tells Jay Golds she really thought it would put her out of business in the end she says it made her stronger even so she's very much stuck working in her business while looking for ways to extract herself from day-to-day tasks someone else could handle but how do you free yourself up enough so that you have the time to put the people and systems in place that you know you need and how long should that take I hate to tell you says Jay it took me 10 years but I'm going to help you here so it's going to take you 10 months even in Good Times owning and running a business can be a lonely Pursuit our hope is that these weekly conver ation 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 which 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 or regulars Jay goldz who's CEO of the cols group whose companies in Chicago include a picture frame business artist frame service and a home furnishing store at Jason home and Jennifer Karen who is CEO of s SP Expos and events an events management business based near Baltimore Maryland the episode is titled 12 hours a day 6 days a [Music] week welcome Jay and especially Jennifer it's great to have you here for your very first 21 hats podcast Jennifer thanks for joining us well thanks for the invitation I'm thrilled to be here so uh to get started tell us about SB Expos and events what do you guys do sure we are a uh comprehensive trade show sales and Convention management company for associations we only work with associations on their uh on their conventions and trade shows give us a little more idea of what exactly you you do for them what does event management mean for you sure and how do you get paid yeah absolutely and and that was my basic elevator speech in 10 seconds or less so I'll explain a little bit more thank you so probably all of your listeners have been to a convention or trade show sometime right and there's all sorts of ones out there the ones that we work with are run by associations either professional membership or trade associations where they have a trade show or convention throughout the year the difference for your listeners a trade show is predominantly where there's an exhibit hall and not much education a convention is a combination so when you go to conference where there's a combination of education keynote speakers breakouts concurrence workshops things like that with an exhibit hall that's more of a convention what we do is comprehensive services so we started off um the company's been around since 2009 but in the last couple years we've added aeral amount of services we started off just in the trade show world we do exhibit and sponsorship sales and management so an association outsources that to us we contact companies research companies um who might be interested in exhibiting or sponsoring at their meeting when Co hit you know the events industry did just an amazing job during Co right we were shut down I remember that yes yes yes yes we honestly I thought we were going to go out of business at the time we had been working on an event Tech platform the events industry started I would say 10 years ago but really five years really getting into event technology we were already in it and we switched very quickly to doing virtual conventions and trade shows because of that you know they they often say adversity can make you stronger out of that became what I saw a need in the market for not just our trade show salesmanship that add-on additional services so now we do wraparound we do registration so when you go register and get your badge we handle that we do speaker management so should this um event be in Nashville or should it be in Omaha or should it be in Seattle we'll do site selection we do all meetings management Logistics food and beverage session where they should be the event schedule handling all of that um hotel room block management how many people are supposed to stay in this hotel how many versus that hotel we do something called lead retrieval so uh any of you all the listeners I'm sure have been into where you've taken your badge and you've walked into the exhibit hall an exhibitor wants to scan your badge right that's called lead retrieval we handle that and then we handle which came all of these came out of the adversity we faced during covid we also handle um event Tech Consulting so associations can hire us to figure out how to take their event management and simplify it through technology can you give us an example of that what does that mean so imagine um I heard this phrase years ago that Excel spreadsheets are the duct tape for Meeting Planners and that Excel spreadsheets are wonderful but they're not databases and we work with a specific technology platform so if you have some of our shows have 350 exhibitors and all of those exhibitors need to upload their logo and they need to um figure out a Certificate of Insurance they need to fill that out they need to pay they need to fill in their description that's not done by Google forms or Excel spreadsheet anymore it's by a specific technology platform that we work on that's a whole another story that I can get into but we picked one and so now we um we we only work on one event technology platform because we've become experts on it it's called the cadmium event Tech platform but that way you don't use Excel spreadsheets you don't use a Google form it's a a database or speakers let's say you have 250 speakers speakers have to upload their bio they have to upload their credentials they have to give us their demands for honorarium or if it's being free what they're what they're speaking about sometimes they have slides often times we have to get financial disclosures depending on the type of meeting that is being run we we have a big department that handles Medical Association meetings which has a whole list of regulations that the government's been involved on and different accrediting uh organizations have been involved and speakers have to fill out Financial disclosure forms so that you know if that speaker being paid by a pharmaceutical company or medical device company so managing speakers again you could do it in an Excel spreadsheet but we don't want to work in duct tape anymore we want to work in 21st century technology and so we've moved out of that realm and moved into the next level of managing an event simplify it so that associations can think about sort of the next generation of experiences for their attendance and not worry about the consider amount of administrative work that goes into it can you give us a sense of how big the business is sure so we um are I think we're going to do 3.4 million this year we were on track from a budget to do 3.2 we managed to get some additional sales in so I'm looking at about 3.38 I think right now I will say my vistage group of my manager V will be super happy that I can say that metric off the top of my head when I started I wasn't the best at that so I've gotten better no CEO knows everything as obviously the name of the 21 hats one of my hats that I did not like to put on was the financial metrics I'm going to give myself a little pet on the back that I I can say that out loud yeah and how many employees do you have have two starting this week so full-time equivalent I'm going to say 26 I think we have 30 full-time employees right now but we have several parttime one of the things that's interesting again at the beginning of Co I thought I thought this company's going to be out of business soon and yet it made us stronger one of the other ways it made us stronger besides the technology was we went to a fully virtual company we no longer have an office we used to and I was 2 weeks away from buying a building we were supposed to settle March 22 oh you're breaking Jay's heart no she might be breaking her own heart long term so not my heart I I wonder longterm whether you're not going to look back and go oops I should have bought the building not sure yet well we'll see J still out J still out we'll see we um we're supposed to buy March 22nd and I walked away from that because of Co and then what I decided is to go a fully Virtual Office so now we're in 12 different states so the two people that started on Monday are in two different states I'm based in Maryland but they're based in other states so we'll see J um we we'll see yeah I'm not sure I'm just saying I think when you've got a lot of new employees I have a hard time figuring out how you're going to train and and develop things and I not just for you for lots of other companies in America I think it's still early in the game to figure out long term whether that's going to work I will tell you every single thing you say because I'm heavily involved with the framing industry and I totally get everything you're talking about it makes perfect sense to me because I I'm out there on the you know involved with it let me ask you an interesting question I think we figured out in the framing industry only 15% of picture framers go to the National trade show what do you think it is in a lot of other Industries that's yeah it's a a strange statistic because sometimes I've seen with really smaller associations they're getting 25 to 35% of attendance based on membership a percentage of me membership but those are small associations the really big associations where you have a lot of members they don't get a high percentage so I don't think that that's that bad Jay what I found is that associations will then come up with other types of meetings to try to get other groups so for yours maybe are there other like what they call in the association where like special interest groups do you have other smaller conferences no our problem is that the industry has shrunk considerably since the hey day because it's a whole story but a lot of it is just the Baby Boomers are getting out of Framing and their kids aren't framing pictures like they used to so and then there's big chain stores now that have eaten up a lot of the market so the the Custom Framing industry for retail picture framers that own their own store clearly is down by by probably half but still healthy still enough business around but the part that I find interesting is whatever industry the ones you just talked about the one I'm in it blows my mind that people would not go to a national trade show for the industry they're in and I just don't think it's smart I think the fact that only whatever the number 15 20 2530 it's hard for me to imagine how you could be in an industry and go to a trade show or a convention and not leave there with enough value that it paid for itself 10 times over and that I that's just surprising I think the average person might think oh well National Convention I'm sure 80% of the people go and that's simply not the case no and and I agree I am surprised that um if you're joining now let's say your dues are $225 right to the association how you haven't figured out that the return on the investment of going to the annual meeting is worth it I think um the smartest associations have figured out that Roi and how to convince their members but it is a problem across the board for all trade shows you know um a member doesn't mind writing a check for $225 and to be honest sometimes it's not even budget sometimes it's just time out of the office they're like ah do I really want to go it's going to be three days no right no I'm too busy to go I mean it doesn't make any but that's the nature of small business that is interesting because in our industry there's no big accreditation so they you know the question becomes this is absolutely a chicken and egg people don't go say I can't afford it and my argument is can you afford not to go and do the people that go there go there because it pays for itself or is is it the fact that the people that don't go to it can't afford it it's like it's it's self-defeating I mean they need I think people need to go needs the right word if you want to grow your business I believe going to a convention or a trade show is clearly worth the time commitment even if you got to close the business for a day or two because Jay you're going to see how other people are running their businesses is that the idea no three reasons a there's vendors there you might find a vendor that no one else knows about and you're I mean there's it's it's hard to cover the country with reps there's new vendors that come up that don't necessarily have rep coverage around the country a b the classes you could find one in sight from one class that just can change your whole world and three you could be standing in line getting lunch and start talking to the person next to you and get some tremendous Insight from someone else who's not in your Market that's the key to this you can finally let your hair down and have an honest conversation with somebody that's across the country that you wouldn't want to have with somebody whose business is two miles from your so it's just I like I said I can't imagine how this doesn't pay for itself 10 times over all right you've written enough ad copy for Jennifer J well and that's just one side right that's like if you're a business and you're going to a trade Association to learn about your business but imagine a small business where their clients are at right um whether they decide to exhibit or not if all of their clients or many of their clients go to a specific trade show they should be there right besides them going to learn about what they should do better in their company learning what the clients are doing what are the trends that their clients are seeing what does the future look like for their clients the only way they're going to have all of their clients in one room possibly is at a convention or trade show right and so every small business out there should look at their top 10 clients and what trade shows they go to and figure out how to go to at least one of them every year I can also tell you I got a couple of cronies that I've been friends with for 30 40 years that I get tremendous insights from them one comment to me 30 years ago oh you should go to this trade show it it changed my business and then started importing molding and stuff so it could be just one comment from one person you developed a relationship with over the years that you would have never had exposure to that person if you don't go to the convention or the trade show so I've been to hundreds of them over the years literally we saw this in Chicago uh Jay and I met you Jennifer at the the first 21 hats inperson event and I know you talk to people around the room and some of them really it seemed hadn't given a whole lot of thought to whether there even was an associate for their industry yeah absolutely longtime listener and so when Lauren decided to have this meeting I was one of the first people to email him and and and ask how to sign up because I I know the value of meeting face to face in in that kind of environment and I just wanted to meet other business owners I was sitting next to Steve KW and we were talking about um different trade associations and so I started he's like I I don't think I'm member of that many and we typed in one and he was like well that's not the quite fit and then we found another one he's like whoa and we looked at the board of directors and it was a lot of his competitors and so he's like absolutely I need to be a part of this I'm hoping I'm not throwing him under the bus a little bit I think you're giving him some good publicity so Steve joined uh I talked to him I emailed him afterwards and I was like so did you join he's like yeah it was a um a trade Association that was perfectly it was a niche one but perfectly fit for his type of of uh company digital marketing yeah digital and a very specific type of digital marketing so he he was thrilled to see it I think people sometimes think that trade associations are sort of very early 20th century but if they look a new trade Association seems to be born once a week right because the really the world of Commerce and trade is changing so fast there weren't any um artificial intelligence associations I'm sure 20 years ago sure I could probably find 10 right now right so I think for every business owner out there they should find the trade Association that fits for their company and find the ones that are good for their clients with that being said many of them you know better than me are struggling terribly the associations yeah there's there's lots of trade ass listen the picture we Haven had a picture framing trade show for two or three years because of covid and like it's getting started up again in February but I know of other they've had Co was brutal to them and um it's it's been a problem so while there's some new 's coming along you tell us some of them have dropped out yes no have some just gone out of business I think it just depends on the industry Jay I I haven't seen that across the board we work with a wide variety of associations and I think it depends on what's happening with the industry there's some associations that are growing Gang Busters and even dramatically through covid think about the industries that did really well in covid there were quite a few those associations did well too I think the bigger question if you look at which ones are struggling is how much of their budget depends on the event or how much depends on dues right if it depends on the event then sure covid was rough in our industry really rough do you have competition Jennifer I do I would say um honestly there's other third party companies out there like us but the majority of our competition is more staff for associations it's um does the association want to Outsource this to a third party or do they want to hire staff to do it internally that's usually I mean there's competitors out there but I feel like lotss of times I compete with the concept of hiring staff to do it you know you described a broad range of services that you offer and how those Services those offerings expanded uh after covid as you were describing them it occurred to me that each one of those represents a pricing decision it seemed pretty complicated how do you approach that so I vastly underestimated the level of complexity that I walked myself into when I decided to add these services yeah Lauren you're absolutely right uh about two years ago I decided to add all these other services I understood the concept of them I had been part of the events industry for 25 years knew the different vendors that were out there the different ways it was done but underestimated we operate on a scope of work based on um a fee based service so over the whole year if you want to do registration for 5,000 people it's going to cost x amount of dollars usually a 12 um month planning cycle and that's what you pay us um based on the scope of work which makes it a little bit easier for cash flow definitely makes a little bit easier for invoicing but vastly underestimates how much time you have to spend to really Define the scope of work and you need people who really understand it to make sure the scope of work is done so I've been learning a lot there's a couple other ways we do fees that we're playing with um Hotel commissions is part of it lead retrieval fees is another part of it hour rele Tech supports another one but I am working a lot of hours to figure that part out I got to tell you I went through the exact same thing with every one of my businesses because I didn't understand the business model quote unquote like when I went to the wholesale side I didn't know the volume and paying sales reps so I've been through the whole thing with trying to figure out what you got to charge and what the expenses are so you're you're I won't even say you're Reinventing the wheel because in some ways you're probably are inventing the wheel you're coming up with a whole new thing to some ree so that's normal and you are going to figure it out and as soon as you figure it out life gets easier because then you start charging properly and then all of a sudden you can afford better staff and life gets easier Jay how long do you think that took I'm still in the midst of it well I it depends which I hate to tell you it took me 10 years but I'm GNA help you here so it's going to take you 10 months so that's the from I'm at the 18mon Mark and uh I I feel like I had no to talk to I'm telling you I had no one to talk to and my framing business got so much bigger than anybody else's it's not like I could go find someone to talk to about what do you do with a million-dollar year frame shop or I just and I had to figure it out and I you know it talk took a while in your case you're gonna figure it out much quicker Jennifer you you talked in Chicago a little bit about your your struggle with the hours uh a day that you're working and the number of days a week can you tell us a little bit about that why are you personally putting in such long hours and how are you hoping to address that sure I think I mentioned um in Chicago that I was working about 6 days a week 12h hour days since Co I would say before Co end of 2019 our company was just trade show sales and management we were a staff of I think January 2020 I was a staff of nine and um we had our workflow and our processes on our invoicing we'd have everything down very very good at that point I was training leadership and I wasn't working as hard Co hit obviously I had to put all the hands on deck to try to get us through it when I decided to add the services I didn't realize it was exponentially more difficult to Jay's point I'm inventing the wheel for some of these other services we offer I know what to do I've hired good staff but you can't expect staff to create your financial structure of how to do invoicing and deal with cash flow because that service has a different way to collect fees right you can't expect staff to figure out how to create the structure of the Department of hey we have a director manager coordinator and how often we're going to meet things like that you have to sort of put it in place and hire the people to do it now I was hiring people so fast that I didn't think through the the structure of each department which is based on a service line or how they talk to each other how does the director of registration talk to the director of meeting planning and what are the transitions of work between and the handoffs I I vastly underestimated this so I am working especially in a remote environment right has that been a challenge uh remote's not it's funny cuz I was not on board with hybrid work I was the first CEO to say no you have to be in the office you can't work at home one day a week and then I get fully virtual so I've done a 180 on that because we're in the events industry and because we meet on show sites so often we can have dinners we can um be a part of it we see each other I see our employees a couple times every year it doesn't seem to be as difficult but I also know that if you're a coordinator and you're right out of college and you're not quite sure what to do it's much harder than I had anticipate than sitting next to somebody at a desk and figure out how to work so in that case yeah I I agree with you Lauren it's it's harder I I I would say the key part to this is and I fully accept you're going around the country so you do see them so that certainly helps the key part to this is hiring staff to I I you know I talk to people oh I want to hire someone to do what I do so I can just go out and sell and I go you know what they call those people they're called entrepreneurs they don't need you so um I think in your case and everyone else's case at your stage you have to find three very capable people and I used to always hear CEOs go oh I hire people smarter than myself and I used to laugh it's true people that are better than you at the financial piece the marketing piece the management piece and those people exist and you're just going through the learning curve now of figuring out what you need and finding them but you will figure it out what makes us successful is the same thing that drags us down torturing ourself we're really good at torturing oursel you said I didn't think of through that really isn't the case you just did a note I mean you could have it through all you want it you haven't been in the situation some of this is simply the learning curve there was nothing to think through so I hope today I can give you the gift of stop torturing yourself you're doing extremely well thanks for the pep talk no I mean it you're not no one's going to come into a situational yours and figure it all out on the front end that just that's just not how it works so you will figure it out you need three key people and I don't think you have them at this stage I think I have one and I'm trying to train the others and then I have a fractional CF who has said to me for the past year Jen you really need some internal you need an internal I don't know if it's a controller right cuz I do all the bookkeeping and the invoicing okay that's okay that's crazy so yes you clearly need that person and they will pay for themsel you're not a $800,000 year business so it's your stage how do you mean they'll pay for themselves they're not they're not going to drive Revenue but you mean by freeing Jennifer up they're going to free her up and they're going to catch stuff that she's not in accountant they're they're going to they're going to have some skill set to be able to do stuff she's not used to doing there's a good example of hiring someone that's better at something than you are you're not an accountant so you clearly need the financial person at your stage so the part that would be harder is if you told me you were doing a million too that's a problem you can't truly it's hard to get the math to work to go hire a financial person for a million to business but you're big enough now that shouldn't be a problem so you get the financial person the person that to to do this the marketing SL sales perhaps and then the operations and then you do the entrepreneur stuff which is spending a lot of time on 21 hats and talking to Laur and I well that's the part you know the oversight is you're wearing so many hats at a million dollars yeah and as you grow you're trying to take them the hats and put them on other people right the financial side at a million dollars I could send out our monthly invoices and and manage it sure to give you an example we travel a lot so our MX bill is pretty high but it's also a lot of transactions so before after every show I would have to go into QuickBooks and and manually do the transactions for all of the MX ones and put them in the proper GL code well now every Sunday I'm spending four to six hours doing stupid $515 and Dunkin Donuts at the airport and putting that in the g code ouch like I'm like how did I miss that this needs to get off my plate no that's I can tell you cuz I live in that world that's a $50,000 year job oh God I'd pay it tomorrow no that's what that's what you pay people that's called a payable person for $50,000 probably in whatever Market you get a very competent person that's very good at it and is totally into it and does a good job and totally take it off your your hands I think that's what I'm goingon to post the job tomorrow because I would like my Sunday nights back yeah Jennifer let me ask you this you mentioned that you went through a period where you were hiring very fast did that go well for you overall pretty good we started hiring uh last year so January of 2022 I started with 11 staff and now we're at 30 so we've hired you know 28 no maybe we started at 14 we've hired 20 people in the past year and uh two of them didn't work out so the rest of them did last year if everybody remembers the summer of the great Labor migration I think you had a seate podcast a panelist who sort of predicted this we saw it William yeah we saw it a lot everybody saw it right last summer because the virtual you could work from home the remote aspect we were able to get better employees than I would have expected because they they valued the stay at home the remote work and they we could hire in different states so overall um I think what the hiring part was okay the training I mean to Jay's point when you're remote you have to have a more established training program than when you're in person and that's another thing I underestimated and now we have a better training program the first week they just stay with our um we have a uh office manager who spends the first week with them just introducing their systems they don't even meet the rest of us except for one full staff Call just taking that off of our individual director's plates has been dramatic so overall I've got a lot to learn about training hiring I felt like okay but I'll tell you another thing that I need to get off my plate boy oh boy state tax like when when you hire a new employee in and they're let's say in Nebraska holy moly if I could find a company that could say look I'll set up your your company Nebraska and I'll figure out the the code to give ADP wait wait wait wait not using yeah are you not using an outside peoll service I use ADP ADP won't do this I still have to okay you need to get away from ADP there's there's 10 other companies out there that that the ADP was for Gigantic companies and and I was with them years ago there are companies as Lauren just said this already exists for sure it does oh my gosh do you know how much time I was on the phone yeah I do know because I've got several people that work out of state I absolutely know crazy of like hey Tennessee could you please send me the unemployment insurance number so I can take it out or no I get the mail and I see oh there's a mail from Colorado I got somebody in Colorado I got somebody in Oregon I yeah I know and like there's something that you should be putting zero time into because there's companies that do that Jay send me those companies again that's kind going to you can Google it the this is a very common problem there are a lot of services is it absolutely and this is a problem with growth right you just miss things you miss the things that you can take off of your plate that's all the fact of the matter is your biggest problem as mine was You Are by yourself I got this Theory and it usually pays off that one human being can run about a $3 million business by themselves now match that with a husband wife match that with a father son mother daughter whatever now all of a sudden you see some of these companies are doing there's three siblings working together you're by yourself with that being said I have people working for me now that is every bit if not more competent than a relative would be I mean it's not a matter of trusting them they're totally trustworthy but you just haven't found those people yet maybe you found one you said one once you find those three people life gets very much much much much simpler but a lot of these companies have enough family in there that they can handy they basically can get away with it because they've got enough family there to cover it well let me ask you this Jake because I have three other um I think burgeoning leaders they're getting there they're new right they they've been hired in the last 6 eight months and and one of the things I always hear is that a business owner needs to spend at this point a lot of time and and investment on training the next level of leaders so I have one that has a skill set but I have three to five who I think are the next generation of Le like they're they're strong and I just need to get them leadership development would you agree with that uh to here's here's an interesting twist you keep calling them leaders there's a difference between management and Leadership ah at this stage you're the leader you're not that big that you need a bunch of leaders at my on my level with 130 people I absolutely need leaders and I have them it's your stage first start with getting them management and then they become leaders but that's right people use that phrase all the time oh I've got my leadership team I go what are you talking about a leadership team they're not leaders they're they're manager so that's perfect yes people do yeah and I will also tell you this is the biggest problem in entrepreneurship we figure stuff out that's why we're successful if we didn't figure it out we wouldn't be around you wouldn't be on here today if you didn't figure it out you'd still be running a $600,000 business we figure stuff out everyone else doesn't figure it out they need to be trained and once they're trained they're just as valuable as we would be we have to understand stuff that we figure out that people oh well that's common sense no it's not common sense that's the point it isn't common sense for whatever reason we figure stuff out and other people who especially if they're younger we can save them maybe they would figure it out too 15 years from now we can take someone who's 30 and get him to be as smart as a 50-year-old within a year or two um you and I are out there trying to figure it out on our own and it takes a long time oh that's so timely Jay because I think that's yet another mistake I made in the past sort of two years is that I thought if I hired people with good skill set that they could create and solve those problems and create that structure and to your point I've realized once I set it up they're amazing right right yeah but uh I expected I think just too much of them to do it and and the reason you expected is cuz you figured it out so exactly it right that's why I'm saying you're an entrepreneur they're not it's just different and I like I said I've got key people here that are way better at stuff that they correct me plenty of times I'll have a meeting Jay we shouldn't do that here yeah you're right they're extremely smart and insightful they've also been here for 20 years you know you don't have 20 years to get this straightened out so I'm I'm hoping that I can help you listen I wish I could have gotten my own advice 30 years ago oh my God I would be my business would be twice the size or three or twice as profitable I just the world's changed there was no one to talk to for me 20 well I didn't try that hard but I did try so we're running short on time here but before we go Jay I want to I want to check in on your business a little bit you you've talked here uh about having inventory coming out of your ears I think the last time we talked about it on the podcast you told us that you were still out there buying stuff even though you were storing it all over Chicago yes but you were still buying because that's what your home store does you need the current stuff uh have you made any progress with that where do you stand well I'll tell you having my son here who I've made him the chief uh profitability officer he rides me like a typical employee wouldn't because he's my kid and he's not wrong and he'll Dad look at the inventory we have and it made me sit down and do the math and I showed it to him the fact of the matter is my business is big enough now that I figured out we're going to use up x amount of you know of cost of goods sold and that by the end of the year if half of what we sell for instance in the home store okay but you told us that six months ago have you made no for sure for sure I mean the fact of the matter is my business is a little seasonal the first half isn't as isn't as busy as the second half my point is ask me December 31st I think I'm gonna tell you we in good I'm gonna ask you before that if whatever I sell half of it comes out of inventory we're good so I think that's where we're at it also illustrates on the entrepreneurial level you better have lines to credit thank you for mentioning that because yeah I think we we haven't really covered the what what this does to the economics of your business and why having too much inventory can be the financial problem that it that it presents can you walk us through the accounting of that a little bit and how it can get you into a cash crunch because buying stuff is very easy I literally send people around the world to find cool and interesting stuff and 20 years ago I might have knee-jerk and said stop buying stuff well you know what that doesn't work because because my customer's Jason home is based upon having cool and interesting stuff and I can't just shut off the spigot on top of which the collateral damage from that to tell your people who are totally into the mission to tell them stop doing your job for a few months is not a good thing so the math of it is I literally have millions of dollars of too much inventory but I'm going to go through it by the end of the year but you mentioned the lines of credit and how important they are why do you need lines of credit because I'm buying inventory the first half of the year or the first five months of the year I lose money just because of seasonality so that uses up cash and then it's very easy to buy a million dollars worth of stuff you go to a few trade shows you go to some things and all of a sudden your inventory goes up and it's coming right out of your cash and in some businesses it depends what business you're in what sucks up cash inventory receivables could be a killer in my case not terrible because a lot of my stuff is you know I you know you buy it and you pay for right away and in some businesses it's buying expensive Machinery which you should be able to lease so that shouldn't be a problem but inventory kills a lot of companies but but there's a difference there right like if you had bought equipment last year you would have been able to deduct that yes a lot of people don't understand inventory is not a tax deduction you just instead of having cash you've got inventory it's it's you can't deduct the cost of inventory so it doesn't even help you tax-wise at the end of the year now in some cases you want to get rid of inventory that's not selling because you can then take the loss and it does help your tax bill but the key thing there is that if you bought the inventory last year you can't write it off until you actually sell it exactly and the issue for me versus if you've been reading about Target's got all this problem with too much inventory I'm not in the fashion business our stuff doesn't have a shelf life like oh my God last season this was hot and now this so so I'm not running the risk much of getting stuck with stuff whereas some companies they got in trouble I mean they bought too much inventory now they got to dump it cuz the Fashion's changed so quick Jennifer are you glad this is one problem you don't have I was thinking the same thing as inventory is not a problem I have and considering the financial part maybe not my specialty I'm happy I don't my thanks to Jay gz and Jennifer Karen and of course you're our sponsor the great game of business which helps businesses use an open book management system to build healthier companies you can learn more atre game.com thanks for listening 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 r n21 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 podcasts follow us us on Twitter subscribe to the morning report at 21h hats.com this episode was produced by Jess thubron founder of blank word Productions okay now you can leave thanks for listening everyone [Music]