Clients and Taxes and Bears, Oh My!

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Loren Feldman:
Welcome Jennifer, Liz, and Jaci. It’s great to have you here. Jaci, let’s start with you. The last time you were here, you told us that you’d gone eight months and counting without signing up a new client, and you were somewhat concerned about that. Anything new?

Jaci Russo:
I think “somewhat concerned” is a very nice way of saying it, Loren. I think it was heart-racing and palm-sweating, and I was really starting to freak the fuck out. So luckily, while I was traveling at the beginning of October, we signed not one, but two new clients, which is par for the course. We average about one and a half per month. And it’s what I think it was, which is: bigger clients, newer markets, longer lead times, stronger processes for approvals. And it’s a little bit of my impatience matched with some improvements to our process. And now, here we are back on track.

Loren Feldman:
Glad to hear it. You mentioned last time that you’d 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? Is that what you’re referring to?

Jaci Russo:
Oh, yeah. We did a number of things differently. 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 those are 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 team, 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, more storytelling, a little more 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.

Loren Feldman:
How do you explain that?

Jaci Russo:
Well, I can tell you that we’re gonna stick with our old proposal from now on, and I’m not gonna mess with that again. I think it’s a couple of things. I think we weren’t being 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 pendulum-swinging into one direction that we miss the opportunity to still give them reason why we’re the right choice.

Loren Feldman:
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 nuts isn’t working. You have to recognize when it is time to take advice from other people. I’m curious, Liz or Jennifer, have you confronted this issue?

Liz Picarazzi:
I definitely have. I know I’m insane, and I am okay with that. 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 Jaci that they go together. With me, I definitely 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 gambling and addiction, even, in being an entrepreneur. That’s not to say that we’re all addicts, but there’s some similarity with doing something over and over and not having it be right for you and kind of being on the line. 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 my experience with entrepreneurship being related to being insane.

Loren Feldman:
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?

Liz Picarazzi:
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 pushy and insistent. So that’s definitely a big part of who I am. But if I notice that I’m super fatigued—you know, oftentimes, it’s trying to push a boulder up a mountain. And as I get older, that’s feeling a lot more tiring.

Loren Feldman:
How about you, Jennifer? Have you confronted this as well?

Jennifer Kerhin:
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 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’m 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, because you can get another business, right?

Loren Feldman:
Oh, it matters if your business fails!

Jennifer Kerhin:
Well, I get it. But there are so many people out there who start a company, go forward, and realize there’s just not enough return on the investment, on the equity, 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 who are serial entrepreneurs, who have had multiple companies, they say, “Okay, this was good, but it’s not enough for me. I’m going to close it down and move somewhere else.”

I think if you can embrace failure, and not take it personally, and say, “Look, it’s just not the right fit, the market’s decided,” and move on, that, to me, is how you can keep your head above water. And 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’ve just got to plow forward. So to me, it’s less insanity and more: accept the fact I’m going to fail and how I’m gonna get out of it.

Loren Feldman:
Have you figured out how to decide when it is in fact a failure in time to do something different? And when it’s worth hanging in there and keep pushing?

Jennifer Kerhin:
I think the two metrics for me are: the market’s pretty good at deciding 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 standard metrics that I think about. As long as things are selling, there’s some healthy profit, and people are staying, then we’re doing something right.

Loren Feldman:
Jaci, when you told us last time about your drought, we had a conversation and you indicated that you’d wondered a little bit as to whether your move to a four-day week 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?

Jaci Russo:
Oh, Loren, 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. And Jay doesn’t think it. I think Jay is gonna die on that sword, swearing by it. I absolutely disagree with him.

Loren Feldman:
Jaci, you’re absolutely right that Jay brought that up. Maybe I’m wrong. I thought you had said that the thought had occurred to you as well.

Jaci Russo:
If I said something to indicate that, then I misspoke. I did say then, and do still know now, that we will be a profitable company, bottom line, by the four-day week because I’m going to end up hiring more people to fill that 20-percent gap. I mean, it’s just inevitable. I cannot get 40 hours work out of somebody who’s only working 32 hours.

I mean, it’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 less profitable and have the culture that we have right now and have the happy team that I have right now.

Jennifer Kerhin:
Jaci, I was thinking about, when you were worried about clients coming in, and then, of course, they came in, how long do they work with you? Do they come and work for a month, six months, a year? Is it recurring? What does that look like?

Jaci Russo:
We are probably about 80 percent of total revenue retainer and 20 percent project. Our average client lifetime right now is five years, eight months.

Jennifer Kerhin:
Okay. You keep a lot of your clients, so when you get a new, one it’s great.

Jaci Russo:
We do.

Loren Feldman:
Jennifer, let’s talk about you. We haven’t seen you in a while because 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?

Jennifer Kerhin:
Yeah, October is the month for trade shows. We have 11 of them starting from the end of September to mid November. It’s a crazy time for us. But it’s been an exciting time. Trade shows are happening. There is great attendance across all of our client meetings. Exhibitors are really happy. The post-COVID surge, which people weren’t sure if it was going to be temporary or permanent, is continuing. And we are very into doing hybrid events. And those continue strong, 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.

Loren Feldman:
When we last spoke to you, you were also excited about your new website, which I think you were completing in stages. You weren’t completely through with it, but you’d made some big progress. How’s that going?

Jennifer Kerhin:
Also fantastic. I need to knock on wood, it sounds like. 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 produced.

We also did a lot of B-roll footage because we’re creating some videos. So the videos will be out January 1st. So when we were on show sites and conventions, we had someone go around them and film. So we’re firing on all cylinders.

I’ve hired a couple new leaders for my team. Pretty excited about that. I think a lot of things are going really well. It’s been a very tough couple of years. And I feel like I’m seeing—what is that sailboat reference—the headwinds, right? We’re just making incredible progress with the headwinds.

Loren Feldman:
In the past, Jennifer, we’ve talked about you working 12 hour days, six days a week, trying to keep up. I’m happy to hear about those hires. Has that helped?

Jennifer Kerhin:
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. It’s interesting, as you go through stages, we hired an incredible amount of staff, but getting to the next stage of management and leadership is the stage we’re in right now. So they’ve just started.

And then automating all of our finances. So I spent a lot of time the last four to six months on automating 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. I’m still working crazy hours, but we’re gonna get there.

Loren Feldman:
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 really need to offload?

Jennifer Kerhin:
I think it’s a combination. Some of the work I’m backfilling. We took on clients where the complexity level is 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. I need to offload.

And then I’m doing some tasks because 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. The balance of power’s back to me being a CEO, rather than just a worker bee.

Loren Feldman:
Can you tell us what those positions were that you hired for?

Jennifer Kerhin:
Sure. We hired a director 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. That’s a typical story of a CEO holding on tightly for something for too long. I 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 gonna make a big difference with us.

Loren Feldman:
And you work fully remote, right? Is this somebody that you found in your neighborhood or around the world?

Jennifer Kerhin:
Around the country. Not the world yet. We’re not quite global. We found someone in the Midwest. We’re in 13 states, I think, now. We need to do another podcast on 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—

Loren Feldman:
You can’t automate that?

Jennifer Kerhin:
No, you can’t. I’ve tried. I’ve called companies. I called ADP. ADP is my payroll processor. No. I haven’t found a way yet. It’s still very, very, very time consuming and complicated.

Loren Feldman:
Jaci, I think you have people working around the country. Are you facing this issue, too?

Jaci Russo:
The people who we have that are not based in Louisiana are all independent contractors for exactly that reason.

Jennifer Kerhin:
Yep. It’s complicated. It’s not easy.

Jaci Russo:
It’s very complicated.

Loren Feldman:
So it’s easier to handle if they’re an independent contractor, as opposed to an actual employee?

Jennifer Kerhin:
Yeah, she’s not paying taxes.

Jaci Russo:
Right. But 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.

Loren Feldman:
Are you able to manage them the way you would like to, while avoiding doing things that would make them count as an employee?

Jaci Russo:
Well, I don’t manage them like an employee, because 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.

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