We’re Making Good Money. I’m Not Sure How

[Music] hello everyone welcome to the 21 hats podcast I'm your host Lauren Feldman this week Jay GS Jennifer Karen and Liz picarazzi discuss their efforts to get a better grasp of what drives their profits they ask how much of their finances they should manage themselves and how much should they rely on an accountant or a fractional CFO when does delegation become abdication Jennifer says she's benefited from hiring a fractional CFO who has taken an active leadership role including setting up a database that helps Jennifer see in real time whether the fees she's charging cover the labor she's deploying whatever she's charging me says Jennifer of her CFO it's absolutely worth it Liz meanwhile thinks she should be doing more herself and Jay says he was paying big bucks for a full-time CFO until late last year and it was a complete waste of money he says which is why he's decided not to replace her Plus Liz reveals her secret strategy for marketing directly to municipal government officials some of whom have started to use the term City bin generically and the owners respond to a question from the head of a cost reduction service who wonders why she's struggling so much to get business owners to try her risk-free service 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 it owners know they are not alone in facing challenges same thing with our daily newsletter the 21 hats Morning Report which Inc 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 our regulars J go CEO of the gos group whose companies in Chicago include a picture frame business artist frame service and a home furniture store Jason home Jennifer Karen who is CEO of SB Expos and events an events management business based near Baltimore Maryland and Liz picarazzi who's CEO of City bin which is based in Brooklyn New York and makes trash enclosures and package bins the episode is titled we're making good money I'm not sure [Music] how welcome Jay Jennifer and Liz it's great to have you here I asked this with last week's group and got a surprise answer so I'm going to try again did any of you make New Year's resolutions this year anybody I made goals is that the same goals rather than resolutions it's related yeah part of my vistage group a couple days ago we had to do uh present our four top business goals and our four top personal goals and you had to do it in front of everybody with slides and accountability and it was an important part of my late December planning and present it so yeah can you give us a couple of those goals sure one is this year's focus is on management we have hired some amazing people but I need to develop our inexperienced managers into strong managers so focus on training and development of management second is Implement content marketing strategy we have an entire content marketing strategy this year my third one is to actually have a good format and be prepared for my monthly meetings with my CFO I have a fractional CFO not done a great job and my final one is to oh I don't remember my final one shoot I have the top three and then three personal goals yeah three personal goals one is my 30th wedding anniversary is this year and so we are taking a two we vacation to Spain so to plan that so we have a lovely time that's right up your alley yeah event planning absolutely and then uh redecorate my living room cuz my living room have hated it and ignored it for years and then my fin one is I'm not doing dieting I hate dieting goals I hate weight loss as a metric it's more of be more active so every day I'm committing to 15 minutes of activity whatever it is treadmill walking up the stairs I will commit to 15 minutes every single day for those people that are athletes they're probably being disgusted right now at this but for someone who sits in a chair 12 hours a day 15 minutes of solid activity is a big step for me there's a lot of good stuff in there I want to come back to some of that but but real quick Liz did you H set any resolutions this year I didn't set any formal resolutions but I kind of looked at you know things that I want to make sure have happened or do um one is uh I have a 17-year-old he's going to be going to college next year so I want to just spend as much time as possible with her definitely starting to feel worried about that um another one with it with work at least is to really be looking for people I might want to hire before um I do expect growth this year and I don't feel like I'm in a great place like I want to know who I'm going to hire once I need to and I feel like it's pretty vulnerable position that I'm not there yet and in terms of like personal exercise I don't I go on walks every once in a while so that's exercise I'll go on more walks but I'm not going to quantify it Jay how about you Liz if I can give you some weight I have to tell you as someone who sent three kids off to college and remember the moment where they're walking away from the car and you want to vomit and you think oh my god did I spend enough time with them blah blah blah I tell this to everyone that's been through that you need to smile and remind yourself there's lots of people that wish they were sending their kid off to college to what college they wanted to go to and we have to remember that because how fortunate are we and they that the kids grew up and they're okay and they're going to college right well and and also I need to not like catastrophize her going to college it's a natural thing but you know we were on vacation recently as a family and I'm you know walking the great wall with Frank and Lydia were having a great time and all I have in my head is like this is the last time I'm going to do something like this with her which is not true right but in the moment when I think am I ever going to do that with her again you know what I could if I make it happen but I definitely have this worry like this sort of style of spending time together as a family is going to change stop worrying that's New Year's resolution stop worrying write that one down is that your resolution Jay no I'm not a big worrier my New Year's resolution is after 45 years in business you'd think I figured it all out or maybe most of it but I've been through a tremendous transformation in the last 30 60 days that I need to make sure my managers are all getting good numbers so that they can manage the company better including getting the inventory under control and I wasn't paying enough attention if any attention to it so I've only got that one thing and if I get that not if when I get that going right everything will be glorious we look forward to that there's a lot to talk about there um Jennifer let's go back the hiring of a fractional uh CFO I think is a new thing for you right well I I've had her for years but to be honest it wasn't um she was more be not behind the scenes but she more took her direction from me and to be honest I would say up until about June of last year she played more of a role of like an accounting consultant she really wasn't what I would call fractional CFO and last spring I was talking to her and she said you know what Jennifer your growth is too fast too much for me to sit back and have you just ask me questions cuz that's really what she was more like a consultant where she would sit and I would um we'd meet I don't know once a quarter once every 2 and a half months and I'd ask her some questions she's like I'm going to take unless you say no I'm going to take a firmer and be the fractional CFO that I'm supposed to be and really be more involved make decisions obviously you have to approve them but rather than sitting back and being passive taking an active role in what this company needs from financial and I don't mean just reports but analysis and give me thoughts and since then it's been fantastic the things that she's done and so understanding I think that consultant versus fractional CFO the differences and how and I'm so thankful she took that leap to tell me that and what she's doing now for me and the company is tremendous I know exactly what she's talking about I know what you're talking about she's talking about putting in a dashboard that you can keep an eye on what's going on and as the company grows quickly you're going to have some different financial needs and it's about monitoring those and then about watching cash flow I I that all makes perfect sense it does Jay and the company's now at the size of she's like this isn't it's still small company but it's a company that needs to have that analysis that strategic oversight that dashboard like you said Jay on the finances and then she's saying here it is let's look at it do you understand this watch that she told me in the September same thing watch your receivables they're getting too far back I had $400,000 in receivables she's like get on top of this it's been a transformational time and a good one and you're also blazing a new Trail it's not like there's a quote unquote standard in the industry you can follow and I've been chasing that thing for 30 years cuz no one ever got to my size therefore I had no metric to look at oh your direct labor should be running X perc I I've had to figure it out on my own and it's it's costly to do that so I think you're in a similar situation that you need to figure out Jennifer how big a fraction is your fractional CFO so I would say she's now I would say 10% we used to meet um let's say every quarter and she would spend a couple hours of preparation we' talk but now she's probably working I don't know 10 hours a week maybe less maybe eight hours a week and has that been um a comfortable fit for you in terms of affording what you have to pay her yeah financially it's fine and it's not she doesn't work eight hours a week what she does is it's more Project based so she set up this dashboard one of the things she did in the fall is we created um our hours utilization data base she did it we've tracked hours for years but I stopped looking at them at 2019 because Co hit and I just couldn't I couldn't look so now she created this database so at a glance any manager can go in and they can look at ABC client and they can say for this year we scoped 200 hours and we are already at 150 let's break it down where are those hours at are we going over hours why did we go over hours oh well we had two inexperienced staff on it okay so this other person was training we have this database that she created with our admin that's fantastic so one it's going to have us have management oversight into what's happening in an easy way two did I under scope it right that what we do is I don't build by hour J so I can't I build by a scope so oh my god did I scope 40 hours and it took us 100 hours right did somebody we put on it scope creep did the client say to them and they just did it and they shouldn't have I mean all these things were or this isn't your fault maybe you figured it out and you just have a needy client that's calling you too much I mean you can't predict that you know you paint the house it cost you know you figure out it's going to take you know 73 hours to pay in a house you get a needy client they could be calling you every day about everything and you can't predict that no but this is giving us management oversight when we did in 2019 the CFO had set up a post event so let's say the conference was in September in November she would say okay you had scoped 100 hours you spent 98 you know well this time it's real time so to go back Lauren to your question it's not like I'm paying her eight hours a week we agreed on this project she took it on so she worked really hard for like a month and then she took off for you know 3 weeks at the holidays or whatever but now and she's introducing it and she's like all right she's training my managers she's taking an active role in leadership so that she can figure out find finally how we're making profit cuz we don't have a firm handle on we're making good money how where it's coming from which clients we don't have a good handle on this yet no the key is this isn't like she's taking you don't have the background to do that I mean not at all right which is why it's so valuable to have someone like this because she's done this at you know hopefully 30 other companies and he has an idea on it well and this fractional concept is in the past she she said to me she goes Jen you've been treating me like a consult that comes in a quarter she goes I'm a fractional CFO I should be ingrained so we got her into all of our systems she's now on slack she now sees our files she's like I can help you make highlevel business decisions that you were just feeding me information she goes and now I have her talking to my leaders and she did a presentation in August to my senior leaders she's becoming an important aspect of the company just on a fractional basis cuz I couldn't afford her I my company's too small to afford her full-time nor does she want a full-time job but now I'm not treating her as like hey a couple hours um a month she's an important aspect on a part-time basis for the company's leadership and does she work for a firm or is she on her own it's her firm and she has three accountants that work for her who do like reconciliation and stuff and then she's the CFO fractional CFO and I looked into that just a month or two ago and my account goes oh maybe you should hire one and it was like $300 an hour which doesn't take long before my size that I might as well just have a full-time employee can you tell us what kind of what kind of what does that cost so let me pull it up she so a lot of the stuff that's like reports and stuff she goes to the I say accountants but they really they're bookkeepers she puts it to the much lower rate of the bookkeeper but let me pull up her I'll pull up her bill and tell you exactly how much I pay I don't really remember off the top of my head but it's been worth it um whatever she's charging me it's absolutely worth it while you're looking let's just at a baseline if you were to hire a full CFO it's a company your size maybe that's 150,000 divided by 2,000 hours so a full-time person would cost you $75 an hour all right so I would expect to pay although a company of Jennifer's size normally doesn't hire a CFO right no no for sure I'm just saying it just to use it as a baseline it's obviously going to cost more per hour but if for instance if she was hiring her for 20 hours a week she'd be better off just going to hire a full-time person but she doesn't need someone 20 hours a week so well and I think a CFO would be a lot more than 150 per year I would guess it would be up there more like 200 2 225 you know if you're not borrowing a lot of money I don't know that thatt because that is the world I meant if you're not borrowing a lot of money and there's not a lot of insurance stuff to oversee I don't know that you're right it certainly is in that range but Jay you recently you told us you parted ways with your CFO you were paying your CFO good money weren't you and it was a complete waste of money wow as it turns out yeah W was right I have now believe believe it or not well you told us you felt you hired the wrong person it wasn't a good fit did and she thought so too yes and the fact of the matter is I'm not replacing her it's $190 an hour and then her assistance charged me $85 an hour you know what that seems very reasonable and I'm telling you the transformation I've always valued her advice for years but what she has done since June but to become ingrained in the company for the amount of hours so for the past month she spent um in December she spent 10 hours and her assistant spent or bookkeeper spent six so he spent 16 it's worth every single penny I probably shouldn't admit this but I'm not familiar with the term utilization database it sounds like something that's transforming for you Jennifer is it just me is do lots of businesses have uh utilization databases anybody I took this term from a branding agency who's part of my vistage group she has and so I don't know if it's out there Lauren I just stole the term from her it was utilization rate so they say a standard employee should be working about 85% of the time on clients the other 15% and so I'm trying to figure out how much are my employees working on clients how much they're training right and that hours database that the CFO did so I can have insight into scope and pricing for clients but then also Staffing or Staffing spending I mean did I hire a new person and they're spending all this time on a client and and then half their time they're spending on training CU they don't know what they're doing so I don't even know if this is a business term I just stole it from somebody else in my vistage group you know it's funny you say that number because I just went through an analysis of my direct labor and I do classes at the frame show so I help people with their pricing so I did this partially to be able to tell them and the fact is between vacation time holiday pay sick days that's 10% right there and then I took another eight off just for breaks and meetings so it's funny my number and I came up with it myself was I've got about an 82% I'm arguing that you're getting 82% of out of every dollar so yours is right in line with mine so I do think that that's uh the yield is clearly not 100% I mean no not at all I can't be there's no way it could be right no um but understanding that too when you're pricing look you're you're not you have employees these aren't contractors like you said earlier that you're just marking up these are every dollar is not build to the client Jennifer it's not that you bought a piece of software called the utilization database and you know started filling it up it's that she is now keeping track I guess your employees all fill out uh some kind of form that uh indicates how they're spending their time and then she compiles it and analyzes it yeah so my employees put their hours into ADP and they assign it by client and by year and then by department so if you work in the sales department you worked on the client for 202 4 and then if you're in the operations Department your Department's operations and the client the year and so she made a pivot table it's not even like it's not like a access database it's a pivot table in Excel she downloads the data from ADP and she made this incredible interface so quickly within two buttons I can see on a client how many hours have they spent that month who worked on I mean it's just fantastic so when you quote a client a price do you put some parameters do you say to them okay um we're figuring this is based upon giving you uh 300 hours a year I mean so that you can call them later and go listen you've used up all your retainer or whatever or is it open-ended it's not ours we do it by tasks so we have let's say for tra operations there's probably 20 different tasks and we'll say okay this task we're going to do these four bullet points for this to accomplish this outcome we expect it'll take 50 hours I don't go back and say at 52 hours but I say look you're asking us do something outside of scope we're not going to do it or hey what you're asking for is so far past what we thought um it's a little Loosey Goosey too much so J but what we do there is a large component of independent Meeting Planners that just charge by hour and what I say is you're getting a company with a lot of backup with different people and skill sets and we're going to do it by scope I don't know if it's the right way I mean my only question is if they turn out to be somebody who's just using way too much time I mean how do you address that this has taking more time than we I mean I'm trying to we send change orders we do send a lot of change orders oh good Liz I'm curious have you uh I guess two questions one have you hired fractionally uh at City bin at all and two have you done this kind of uh analysis of your finances and your work that Jennifer is describing so in 2024 definitely everything with financial literacy and being on top of things is a huge priority for me and Frank both of us are really be behind on where we need to be and that ended up coming into focus at the end of last year because if I can interrupt Frank being your husband and CEO Frank is my husband and CEO and he's a little bit more financially illiterate than me um but but he's not a fractional husband or well J you never know that's my private life so so we definitely need someone like that as I listen to Jennifer I I think that this is something we can look for I have a lot of other business owner friends that have fractional CFOs so I think if I put it out to like my EO group I could get some recommendations I think that I also would be looking for someone that would have an eye on valuation um I think I've mentioned I don't plan on selling anytime soon but now from now on I want to know my value and I want to just have regular valuations done so if I can find someone that kind of has a an eye on that and also has Connections in those communities I think that might be two different people Liz yeah I thought it might be I did hear that one person I know has that person that does both but what's your perspective on it so I um wanted to do evaluation and we I talked about it with with my fractional CFO and she's like that is a very special Niche thing because takes into account so many factors she goes I'm looking at actual numbers and giving you analysis and how to build for the future the valuation it's like Art and Science so she pointed me in the direction of other people to do it I I don't I think it's it would be hard to have both I think the problem is those people it's like having a dog watch your butcher shop I don't think you're going to have one of those people come in and not start salivating out oo I think I can find you a buyer and then they do the math in their head they're going to get a $300,000 Commission on I I don't think they can stop themselves so Liz were you thinking that the fractional CFO would actually do the valuation his or herself or were you thinking that that would be the person that would lead the project and find the right person like lead the project no what did these finances need to look like to be ready to get evaluation oh I think they could do that actually then Liz I thought you were saying do the valuation I misunderstood I think they could do that yeah I think so and you know one thing if if I look back on this past year while I don't have you know these great financial skills and we don't have a fractional CFO there were some huge expenses mid year that we really realized that were there one of them was warehousing one of them was Labor which relates to Jennifer and we made pretty immediate changes on both and that saved us a ton of money like if that's the sort of thing that a fractional CFO would do I don't know if I'd want to pay for that because that's really us being like where is all this money going and let's look deeper into the financials and like with us at least we were kind of benchmarking our installers against what installers did a couple of years ago like their speed and realized that we were paying two and a half times what we used to pay for the same work and that was kind of due to a sort of cultural shift that I think that happened little bit of management thing but you know if we can be smarter I probably would want to do that before I hired a fractional CFO you just hit on the heart of what my situation is I delegated it all away and I shouldn't have it was my job it was my job I should have been looking at pricing for the last 20 years and I just had the same person here who was doing a good job for 20 some years and I just gave it up and says a lot of what you're talking about is the job of the CEO I believe that's what our job is we can't go hire someone from the outside and have them start they certainly can help get some numbers but part of this is what the CEO is supposed to be doing figuring out you know what the charge and costs and the one number you're missing in between the valuation and just doing the accounting what I've learned is in the beginning it's growth then you figure it's profits then you figure out his cash flow ultimately return on investment everybody should know and I didn't do it myself what your Roi is and the fact is I have way too much inventory and as a result my return on investment's not great and I'm going to fix it this year and if your return on investments is good then your valuation is going to be good and most people that own businesses their return on investment should be 20 30 to 40% some it certainly shouldn't be 14% it doesn't make any sense to run a business and have a a 12 14% return on investment with all the grief that we put up with you're better off Jay I'm going to push back though Jay a little bit on you go ahead I think the CEO's job is setting the vision and the strategy when you're a small business person you're doing everything right that's the obvious name that Lauren came up with the 21 hats and the concept of taking them off but I don't think if you look at Fortune 100 companies I don't think those CEOs are setting prices no those people have CFOs that are making $3 million year but Jay you're you're at a different stage Jay you obviously your company is much more mature than Jennifer's or lizz's no but I'm saying to Jay earlier you said you didn't have your eye on it I think the difference is delegating versus abating if I'm hearing correctly you didn't delegate you abdicated absolutely absolutely what I'm say should be able to a fractional or regular CFO should help you and then you just need to have your eyes on it or be involved with it for sure I'm not suggesting you you should be doing all the CFO work I'm just suggesting I was not involved all it would have taken is a few hours uh you know an hour a month any I could have had reg should have had regular meetings going over the numbers seeing where the margins are slipping and I didn't I absolutely abdicated that's what I do I mean that's partly how I ended up with this size business cuz I'm the opposite of the control freak not to a bad degree I've gone too far to the other side you know a control freak will never grow because they can't let it go I completely Let It Go but I'm paying the price for it now a little bit so I'm taking a little bit back my big theme this year is about management and I said in some areas I have abdicated oversight and that wasn't good I sort of trusted them to set up structure and what I realized is the managers I hired are really good techn expert but they don't know how to set up the structure of a new service they don't know how to do this and I abdicated my role to them and I shouldn't have so I'm in the same boat Jay on a smaller scale and I told them I'm taking the range back of oversight and helping you set up structure your job is going to be managing the daytoday and I need to get you training to help so that in 2 years you can manage for tomorrow set up structure and things like that but uh I've advocated a lot too so Liz hear hearing all this do you still feel as though you should be the one to dig in and figure out what what was happening with those cost issues as opposed to getting a fractional CFO to help you with it so I think that I do need to get involved more involved partly because of some of the confusion with our finances at the end of last year and they were actually positive changes but were some that we found unexpected but I did interesting about 30 seconds before you just ask me that question I put on my to-do list research finding a fractional CFO so even though you guys have said you know there are some downsides to it I think it would be at least a good to inquire this is the sort of thing I probably would be very thorough about because if I hired someone and they didn't do a good job which I have kind of a history of doing I'm going to be really pissed start slow Liz I started six years ago meeting quarterly for like 2 hours that's all I did is I said what about this what I I was more like an advisor consultant that I ran ideas off of who understood finances so I started really slow very slow and then she's only taken an active R 6 months ago I think a fractional CFO can mean it's a 2% fraction or it's a 98 right like I I think you can decide how much and go slow well just to be clear it'll never be more than 40% because at that point you're better off just hiring a person fulltime it'd be cheaper there is a point to where the M doesn't work yes but I would say this for sure this is why we do 21 heads one of the great fallacies of business is oh you start a business and you're good at whatever you're doing and oh hire a good CPA firm most C most many whatever number you want to use they do tax returns I I I got a 45 year history of dealing with three or four different accounting firms over the year and I and some of them are big time paying big money I can't can't tell you that they came into my business and hey Jay wait you better pay more attention to this they haven't done anything through the tax return so there is a difference between a fractional CFO and hiring your accounting firm they're not the same thing they could be the same thing absolutely agree I went to my CPA a couple years ago well my previous CPA and um this was before Co I think in 2019 and I said hey it says on your website and that you offer business strategy and fractional CFO stuff can you help me and I met with her once it was a disaster she's looking at it from accounting and tax issues not from business strategy and I heard a term recently that talked about um Financial Accounting versus management accounting and the financial accounting is what she was doing in terms of making sure your books are good according to the government compliance and tax what my CFO helps me a lot with is the accounting so it helps you make management decisions completely different so yeah completely different and so it the CPA was not a good fit for me at all I think I agree with you Jay totally different fractional CFO versus CPA I paid a lot of money to learn that lesson I was doubling in size for several years in a row I was completely out of control I hired my accounting firm to do a management audit $122,000 back in the day everything was $112,000 so they send the 23y old in to go do a little analysis they give me the report and they tell me your receivables are out of control now keep in mind I mostly retail so I didn't have that many receivables I go really and I'm embarrassed to say this that I didn't know this so I said to him well how many receivables do I have and he said quote unquote that's beyond the scope of this audit $122,000 and they couldn't when and they made the saveing your receivables are out of control but it was being outrageous for me to ask really how many receive couldn't tell the answer I didn't pay the bill they wiped the B and I changed the accounting fir it sounds crazy but this is still going on out there just because they say they do advisory doesn't mean they do advisory so you know be warned um you got to check them out as you did with the woman you had the meeting with some of them are helpful and some aren't Jennifer I think when you told us your goals early on did was one of them about marketing it was we have for years just relied like a lot of small businesses on Word of Mouth and last year one of my big goals was to get a brand new website and this year it's on content marketing so we've always had had you know references and we've done a really poor job of turning those into case studies um and we've never had videos and we've done H I would say a C+ job on LinkedIn for putting some information so we've hired a firm to um come up well I came up with a strategy they're executing it of a Content marketing strategy between blog posts LinkedIn eight videos case studies and an ebook so we have a pretty aggressive content mark plan this year and I'm pretty excited about it how did you come up with the strategy I have a very niche market of working um with associations uh trade or professional ones so I don't need a broad audience so I don't need that type of marketing that does leads or eblast what I need is to showcase our incredible work in very specific storytelling and get that out there in front of them and I we've not done a great job on it on a larger scale and as you grow in a business you have to feed the beast right so when you're smaller the word of mouth marketing it's okay but as you get bigger you're like oh I got a lot of salaries on my payroll now um to constantly keep up with it so our best marketing is when we tell the story of how we solve the problems or we executed um incredible convention management for for our clients so I knew that but it worked on small scale before it's not going to work on that so we're we're doing a big push pretty significant dollars for this year and you're spending those dollars with a firm that will actually produce the content the videos the blogs absolutely yeah can you give us a hint how much that costs sure I'm spending $58,000 and I um speak a lot I'm speaking in two weeks at a um a meeting in Fort Lauderdale they've having me this on a panel with the closing keynote and I've never tied that in with a case study and then communicated that right so one of the things we're going to talk about is the monetization of hybrid conventions and they're creating a case study right now they're writing it I've given them sort of the hook but they're writing it they're getting the quote from the client they're going to put in a photograph we'll have a blog post on LinkedIn the day before like Hey we're speak you know Jen's speaking blah blah blah and afterwards I'm like co- hear this case study more about what I spoke we've never done that we've never tied in that type of content across different communication platforms I don't need I'm not a b Toc and I'm not a B2B that has a lot I have a very small market so my potential clients they'll when they see this it's going to it's going to Res well I hope it resonates I I don't know I think the key to the 58,000 which sounds like a lot is that's not really for the year I mean you can get life out of that for two three years probably absolutely so it's really when you think about it it's 20 grand a year for three years which well and they're creating eight videos oh yeah and an ebook right so eight videos we're creating corporate video and eight videos of each of our services so there's a minute video and then eight 15 to 30 second videos of our services then there's an ebook and the cas studies and like there's a lot to it lizard you doing anything differently this year in marketing so a couple of things that I'm going to do a little bit differently so our focus in terms of targets has been kind of all over the map but it became very clear last year that our biggest growth area is going to be in Municipal and with government and so I'm going to be focusing a lot more on that and we're going to put residential kind of in the back seat um we are in a good position to be able to do that because we have pretty strong brand recognition especially in New York city so with residential you know when people are walking through neighborhoods and they see a nice trash container and they see The Branding plate City bin on that like that's my best advertising we're all over New York city so people see the brand all over they see our trucks I would say it's passive marketing and luckily we're able to have that I mean I don't want to call it residual like income but there is some part where it's not as much effort to get that revenue and then with regard to Municipal it's about scaling um what we've learned to work well so you know since launching in New York City now we're in about 10 other cities most of those other cities are pilots that could roll out and so we're working really hard on making those successful um but the sort of Playbook we have for getting into a city and everything from you know direct mail email phone calls social media and even trade shows that is a Playbook that we kind of developed starting in New York and one thing they always say about New York if you can make it there you can make it anywhere I've heard that well the sanitation situation in New York I think is definitely the most complicated in the whole country and the most um bureaucratic and that means that the other cities that we've worked with have felt a lot easier they just they moved faster they were less less bureaucracy um so that kind of ties into also like okay New York is where we got our start but if we focus too much on getting restaurants the ability to put trash enclosures in the street which was my obsession over the summer like I'm not going to spend a second on that anymore because it's completely up to City on how they want to handle the trash and restaurants and if you know restaurants need trash enclosures I'm here but I'm not actively going to try to like fight with the city on behalf of restaurants which is one of the things I was doing before Liz are so your your focus now is B to G right on the government yeah I would say B to G then B to B and then B to C the lowest um the B2B we still have great potential especially with property managers and with archit Tex um especially as we go more Nationwide like in in Aspen a lot of our connections are more of a B2B do you have case studies so it's funny you say case studies because we have a ton of before and after kind of little stories okay but what I do is so visual that the more text I have the less people are going to look at the trash Transformations where we can show trash on a street corner that completely goes away a minute a city bin is there with then you know a public official saying how much it's benefited you know the beautification of you know her his neighborhood even a couple weeks ago we did a great installation in Brooklyn Heights in Brooklyn and the local council member came out and praised the bins and he used the word City bin instead of the term trash enclosure W which is very similar to Kleenex you know kex yes so and it's happened a couple of times there was another one it was at a very well- attended press conference and the politician said the word City bin repeatedly which I was like over the moon about and then a couple weeks later I heard from one of my contacts within government that one of my competitors had called and like officially complained about these politicians saying the word City bin yeah I was just thinking like if would you do a case study with a picture and then that quote then then that little quote from the the politician we already do that oh see so you do do them they're just not long written ones got it how do you Market B tog how do you reach a government official all right I'm glad you asked this question it's part of my secret sauce but I'm going to reveal it anyways thank you I have someone that works full-time just hand creating lists he's a a fractural assistant he's a he's a virtual assistant and he does other things but all of the government lists that we have were hand created by him and so some of the great success we've had with our direct mail and with our email is because I'm not purchasing a list like I've done in the past I mean I've been in business for 12 years I've purchased thousands of dollars in lists that never yield a thing but he manually goes and he creates them and he's done it for a bunch of other segments as well so um you know that's in terms of targeting that's been incredibly effective and that's one of the things that like we're going to continue doing if we have a new segment that we want to get into we handb build those lists but then in terms of like the direct mail we have some really great they call it like a booklet it's a 12-page booklet it's square and all it has is pictures of our trash enclosures in various cities and just little small quotes So not like a testimonial or a case study but this is just short and sweet we mail that out and that like gives government people a potential answer to the difficulties that they're having with trash recycling rats you have it um so that's kind of how we Target and it's not just in like the obvious departments like sanitation it's also in Parks libraries other places where they're dealing with trash and we know that they probably have budget to take care of the trash problem Liz how are a trade shows for you for the b2g market um they're really good and I have to say the Ida one that I went to in Chicago in October was amazing and we definitely got a very positive Roi on that including in the city of Chicago so while we were there we did an estimate visit and then we were able to sell some to them but yeah there's a bunch of trade shows that are in that space I think there's also some that are like generally for like facilities management or they're sometimes called Public Works departments there's procurement officers that are looking for great Solutions and you know we usually Target them first by email but we look at things like are they opening it or not so God forbid cityin sends you an email and you open it 57 times I'm going to see that we're almost out of time before we go I want to real quick deal with a letter I got from a business owner this is a business owner who's trying to sell something a service to other business owners and not having success with it and trying to figure out why I'll read the letter real quick I own a schoolie Mitchell franchise we help businesses reduce their expenses in 15 categories we negotiate with vendors check for errors and basically become an outsourced procurement team our average savings is about 30% we don't charge anything up front it takes 30 to$ 45 minutes call meeting to see if it makes sense for each uh business if it does we then sign an agreement we do this for 3 or 4 years and share in the savings all the clients that sign up and find savings are very happy but it's is so hard to get people to take the 30 to 45 minutes to see if it makes sense even though there is no cost and no risk anybody have any suggestions one why aren't business owners interested and two how should this person go about marketing to business owners this one's too easy she doesn't doesn't understand what entrepreneurs deal with every single day I get emails about how they're going to make me more money and they're going to save me money and they're blah blah blah blah blah and like it question is is believable so my first question is does it really take 40 minutes to find out whether this is a good match it seems to me five minutes should do it do you do a lot of shipping do you you know it shouldn't take because you see 40 minutes who wants to sit down and have a meeting for 40 minutes that's one two it would be very helpful to say we have the advantage of seeing what thousands of companies are buying we can use economies of scale and trans and we can help you find the lowest that makes perfect sense but they don't say that and the website you go to is a cartoon that's insulting one thing I would tell this person is when I'm thinking about costs I mean I agree with Jay 40 minutes is a long time of my time but also the cost of something is not the only thing I have to consider it's training staff on a whole new workflow and process and I I'll give an example we use Salesforce I know there's other crms that are a lot cheaper than Salesforce but the amount of time to train my staff on something new and to move them over that whole workflow that's considerable and so I I think sometimes when you think about procurement it's not just the cost of the item or the service it's the cost of getting your company to do that and and that's pretty significant yeah well I've got some thoughts too you know if I had a business where I was saving people significant money that's all I would talk about that's all or I'd have my customers talk about it that is a quantifiable benefit that people that don't have an easily quantifiable business can say so I don't know how long they've been in business but if let's say they've only been in business for two to five years if you work on this full-time you probably have dozens or hundreds of clients that you've saved Mill millions of dollars that's all you need to say don't tell me that I can you know have a 30 to 45 minute meeting with you that's not going to make me meet with you saving me a million dollars or $10,000 whatever it may be that will make me meet with them and also sending you know me to a website that isn't that effective for one minute video that's not motivating it's very simple I mean they've got the ultimate customer type of testimonial because it's a hard number oh yeah testimonial you're right Liz like a case study if they sent me hey Jen someone in your industry saved $42,000 a year by doing X um do you have 10 minutes to talk about it that would grab my attention it certainly should not take more than 10 minutes really this just isn't brain surgery to to tell someone upfront I want 40 minutes of your time is like talk about a turn off and the fact of the matter is it makes sense what they're doing have any of you tried a service like this no no I had someone come out somebody I went to high school with actually came out here and he bit it and I don't know what he never went anywhere but I I got to tell you after thinking about it I use a ton of shipping I mean I spend six 700,000 year on shipping between that do they do things like the charge card interchange thing like I always wonder I spent hundreds of thousands of dollars a year with the Visa Mastercard expense I always wonder do I have the best place for that if they did that stuff I'm probably a prime candidate for that so Jay if they sent you an email that said we worked with um a Furniture retailer in San Francisco and we were able to save them you know $100,000 on shipping can I have 10 minutes of your time to talk how we might be able to help you would that be of interest yes but let me tell you the fun part because I get these emails every day that's not what they do you know what they say they go we worked with um IBM uh apple and like really irrelevant right irrelevant and I I say to myself is no one thinking there like do they think a small business owner is going to go oh well if they're working with apple that's who I want to be working with I mean no you hit it on the head we worked with a small furniture manufacturer I think a schoolie Mitchell franchisee just got some very valuable information from a very good focus group my thanks to Jay goz Jennifer Karen Liz picarazzi and to our sponsor the great game of business which helps businesses using an open book management system to build healthier companies you can learn more at GRE 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 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 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 Jess thubron founder of blank word Productions okay now you can leave thanks for listening everyone [Music]