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Today, on Hubstaff’s Agency Advantage Podcast, I’m talking with Jason Blumer of Blumer and Associates, who shares how you can leverage your agency’s most valuable resource, your time.

Jason is a CPA who provides his clients, agency owners, with bookkeeping services, but that doesn’t begin to cover all of the ways Jason and his team can help turn creative business owners into mature business owners.

In our chat, we cover everything from why bookkeeping should be seen as an investment to when you can afford to hire an employee, and while he shares some great tactical advice, it is hard to generalize the advice across all agencies. So Jason covers how you should think about these decisions so that you can choose the paths that make the most sense for your agency.

Ultimately though, you won’t be able to focus on these decisions if you’re stuck in the day-to-day of running your business, so Jason shares his strategies for helping agency owners focus on what really matters and get the most from their limited time.

If your business is growing, but you don’t feel like your processes have matured at the same pace, then this is the episode for you.

Grab the transcript of the interview here.

Key Takeaways

Why bookkeeping is an investment

Jason argues that people need to change the way they think about bookkeeping and accounting. Most agency owners think of running the numbers as just another drag on their time or another business expense. However, Jason says these owners are getting too bogged down in details.

He urges clients who can afford it to outsource their accounting activities because a good accountant can run the numbers and produce a number of key metrics which can really tell you about the health of your business. At the end of the day, the exact amount you spent on office supplies is not going to tell you if the new marketing campaign you launched worked.

However, your profit and loss trends can tell you if something worked or failed. Yes, financial metrics lag behind the business, but they allow you to zoom out and see the forest rather than the trees.

Why the agency owner shouldn’t be doing this themselves

Jason points out that agency owners often start doing their own accounting since they don’t have the money to hire someone else to do it. But an agency owner’s greatest resource is their time, and accounting is a time suck, especially for someone whose talents don’t lie in that field.

When an agency owner hires an accountant to take care of the financial details, all of a sudden there’s a hole in their schedule, and that hole can be filled with things only the agency owner can do, like thinking of new marketing campaigns or deciding the future of the company.

Where agency owners need to focus instead

According to Jason, business owners need to get comfortable with the idea of not focusing on their raw financial statements. Again, it won’t help them. What will help them is looking at trends from month to month and quarter to quarter and year to year, seeing where the profits came in and where the losses came in.

By letting a professional focus on the raw numbers, an agency owner can then ask themselves, “What financial metric is most important to me? And what do these metrics tell me about my business?” Financial information can then become part of your business’s strategy.

You can look at your numbers and say, “I want to reach X financial goal, and here’s how I’m going to do it based on past trends.” Are you doing well, or do you need to scale something back? Are you in a good place to take a financial risk, like a new investment or a new hire? Only focusing on bigger picture metrics will tell you.


Andy Baldacci: Jason, thanks so much for coming on the show today.


Jason Blumer: Hey Andy, how are you doing man? It’s good to be here, thank you so much for having me.


Andy Baldacci: I’m doing great. I was actually telling you before we started that I’m weirdly excited to talk about the ins and outs of agency bookkeeping. I never thought I would say that but here I am.


Jason Blumer: Listen, finances and money, that’s what everybody wants to talk about as long as they have a lot of it, right?


Andy Baldacci:


Exactly, exactly. You’re the founder and CEO of Blumer and Associates where turn agency owners into mature business owners. How do you do that?


Jason Blumer:





Good question. Since we’re solely focused on the agency market, that’s our niche, that’s who we serve, we’ve been able to wrap some traditional financial services like accounting, controllership tax, payroll, with some other more transformative things that do mature agency owners. It’s things like business coaching, and consulting to grow agencies. We’re a virtual firm so technology is always a part of that. We’re not just a traditional firm that just does accounting and tax, we kind of wrap that around with some transformative things that are more of our high value services like the coaching and consulting that really mature the business owner.


Andy Baldacci:




When a lot of people think of bookkeeping and they think of accounting, they think of it as a cost center. They think of, “All right, to get my books in order, to get these things once a year or monthly or however I want to handle it, I’m going to have to pay someone else to deal with this just to get it out of my hair. The way you have your business set up, it seems like it’s more of an investment. How did you come about this different business model?


Jason Blumer:











Years and years of trying a bunch of different things. I think that’s how you come about a valuable business model typically, any business does it that way. Well, I guess we don’t want people to perceive things like accounting and tax as a cost center, we want them to think about it as an investment. If you don’t know a lot of those things in your business then you can’t know other things like the metrics and the KPI’s that drive a healthy business. Maybe it’s hard for people that are doing the accounting internally to see its value because for them, maybe the agency owner, it’s not a value to them and it’s probably because they don’t fully understand it. That’s why our goal with the firm is to mature agency owners, we want to help them understand what does it mean to even run a business and what does it mean to look at financials?








On the outset, a lot of agency owners may look at accounting and go, “That’s not really strategic in any way, it doesn’t help me look forward into the future to see how well I’m doing.” That’s true, that’s not the purpose of accounting, it actually a lagging indicator of your value basically, that’s what it is. If you look at your financials last month and you see profit, then what that’s telling you basically in the short term that what you’re doing that is the business model that you’re selling and offering to clients online that you’re getting paid for actually has some value because you have leftover profit that you can retain in the business. Then when you have accounting, we like to look at accounting in kind of a trend. We want to put month, to month, to month so we can see a trend now of profitability. Is it trending up? Is it trending down? What time of the year does it trend up? What time of the year does it trend down?









Now we have long term history, and even though it’s in the past it is still a lagging indicator of the value of what you’re offering does have value because you are producing profit. Of course, on the flip-side, if you are consistently producing losses there is a problem with your business model. You’re not getting something basically right and it could be a lot of things. It could be you’re paying people too much, could be that you’re not getting the right types of clients, and it could be that you’re not pricing correctly for the value that you’re delivering. There’s so much tied up in basic financials that typical owners don’t understand so if we help them mature and understand those things, then we can help them start to see the value that come out of basic financials.


Andy Baldacci: What does this maturation process typically look like? Who are your average customers? What sort of position are they in when they come to you?



Jason Blumer:







Oh, all kinds. We can serve just a designer that’s on their own, or agencies probably in the one to two million dollar range or the 500,000 to two million dollar range are kind of our bread and butter. Agencies up to 20 people with three or four million can be helped too. I think a lot of our goal, with the technology that we offer and things like that, we really want to take the heavy lifting of the financial piece of the agency off the shoulders of the owner. That’s one goal of ours. That one way to mature an agency owner. A lot of times if they’re embedded in their own financials and tax, and not even that, even if they’ve hired their own internal bookkeeper that works for their agency, they’re still so embedded in a detail that’s really not going to move their business forward.










If we can come in and that agency owner’s ready to give over the control of the financial management to us, then now there’s a hole in their job description, which is basically filled with more strategy, and visioning, and looking forward and trying to determine how to price, how to build a more healthy business model, build team culture, these things that add a lot of value to an agency that you can then price for. Part of the maturing process is taking the load of the financial management off of their shoulders and then kind of coaching them and sometimes doing consulting through how to use that time to build a company and scale it.


Andy Baldacci: Obviously, coaching can valuable at almost any stage of business, but for your clients in particular, at what point does it make sense for them to really start looking at more of outsourcing their accounting and their bookkeeping, and the financial side of things?



Jason Blumer:








Yeah. I think you do want to get to some level. If you start reaching 250, 300,000 dollars a year, you’re going to be hiring people anyway at that point. It’s a good time to start thinking about outsourcing some of your accounting and financial management to somebody else. We’re a perfect firm to do that because not only you can grow with our firm, you can start small at that accounting … We can do compliance packages, like accounting and tax, but we can move into these higher maturity things too like virtual controllership where we can help you manage really the controllership phase of your agency. Pay your bills, manage your cash, send your invoices, and then I can coach people and me and my partner can do consulting. We’re just a firm people can grow with, they can start small, if they do 250,000 dollars in revenue it’s time to start thinking about offloading some of that. Doing that to a firm like us means you can grow in our services with us.



Andy Baldacci:








I like how earlier you were talking about, that often times agency owners can get embedded in details that they just don’t need, that don’t help them move the agency forward. I think this a clear area where that happens. Obviously, at a certain point when you’re just starting out, you need to do as much as possible for cash reasons but also that’s just what it’s like in the early stages of agency. Once they are at this point where they’re able to hand over a lot of these responsibilities to you or to any other partner, what should the agency owner be paying attention to in terms of their finances? I’m guessing its not just they let you handle everything and they don’t look at another number for the rest of their life. There has to be some insight that they have, so how do you recommend that they keep a finger on the pulse from that point going forward?


Jason Blumer:









Yeah. What we don’t want people looking at is just really raw financial statements. I mean, sometimes we still do that, some people are interested in looking at their financial statements. A lot of times if we do higher level work with an agency, we might also work into our packages monthly review meetings or quarterly review meetings where we’re showing them their financials, we’re showing them the trending of their financials and things like that. More than anything, really what we want agency owners to do is to look at summarized information, that’s a real key to knowing how well your business is doing. You get that when you start developing metrics and KPI’s, whatever you want to call it. That’s basically just getting financial statements and just kind of summarizing it into big buckets, coming up with some goal percentages, comparing your percentages to the goal percentages, developing things that we have like salary cap metrics, labor efficiency metrics.











If you’re doing that, now what you’re doing is you’re looking at very high level trends because metrics and KPI’s are really not about the money, it’s really about the movement and the information you’re gaining, and the trends you’re seeing over time. We want to move people away from details because there’s no transformation in details. I mean if you’re looking at office supplies trying to figure out where that 30 dollar charge came from, that’s ultimately not going to really move your company forward in any way. We almost want to take the details away from the owner and kind of squish it into these summarized agency metric spreadsheets that we build and let them just look at four or five lines of their profit and loss statement and say, “It doesn’t matter really what’s in there. Just look at the trends big picture. Is it telling you you’re headed in the right direction or is it telling you overall, here’s the area where things are broken? Let’s go fix that area.” We just want to summarize and give less details, and start looking at trends and metrics, and bigger picture views of financial numbers.



Andy Baldacci:














This makes me think a lot of another conversation I had with actually a software founder, Patrick Campbell who runs a software startup called ProfitWell. What they do is they hook into Stripe, BrainTree, whatever payment processing you’re using, and they’ll pull in all of the data to give you a dashboard view into your metrics. What they found out was that ultimately while founders love getting that quick view into things, ultimately those metrics don’t mean a ton on their own. You need to understand what they’re showing you and the bigger picture of things. It’s interesting the way you have your business set up because bookkeeping, if I know I’m spending X percent on something, or if I know my profits are growing at Y percent, or whatever. If I know these things, they don’t really tell me much. They might paint a picture but I can’t act on them without getting deeper insights. It seems like a lot of what you do is help agency owners get those insights into what the numbers are painting as a picture. Does that make sense?


Jason Blumer:





Yeah, yeah. That’s what we want to do. I mean anybody can pull up their profit and loss statement in their accounting package and that tells you something but you always want to add to it. Let’s add some trends to other months. You want to compare what you’ve got to other months, to other years, to other agencies, to some kind of goal, to some target. You want to know, “What do I think I should be doing? And compare what I am doing to what I think I should be doing.” That’s what gives you some insight to say, “I’m not in line with what I thought I should be, and why not?” Then you can start asking the questions.






If you just look at a raw set of financial statements, a profit and loss statement, revenue minus expense, you don’t know if it’s right or wrong unless it’s a loss. If you’re generating losses every month then something’s wrong and you got to fix something in your business model. It doesn’t tell you much until you start creating summarized information, comparing it to other pieces of information, comparing it to goal percentages and coming up with other metrics and things like that. That’s when the value of financial information really starts to kick in.


Andy Baldacci:



Yeah, and when you talk about that, just looking at the overall profit and loss, when you just look at the big numbers they don’t tell you a ton right away but if you dig into them and see where money’s coming in, where it’s going out and look at trying to identify different trends it can start to paint more of a picture. I know that you’ve personally seen inside dozens of agencies and you have a really good idea of what the cost of a thriving agency looks like compared to those of one that’s struggling. When you’re looking at a struggling agencies numbers, what usually jumps out at you? Where are they typically missing the mark?



Jason Blumer:








When we do business coaching, there are some key places when we see an agency struggling. Labor is a big issue. That’s the biggest expense in a professional services company and that’s what an agency is, it’s basically you’re selling the knowledge and the abilities of people so labor is going to be your biggest expense. That’s why in our agency financial metrics spreadsheet we figure out some salary cap metrics, which is basically, “How much should you be spending on salaries?” We want to know that number, and what is a labor efficiency metric? What is the efficiency and productivity of the people? The dollar amount of people you’ve hired and things like that? Labor is a key issue that you always want to look at. The top line is also an issue. When I say the top line I mean the revenue, the money coming from your clients.








A lot of times there’s a lot of fear based in how people price or bill by the hour. We’re kind of a value pricing proponent firm, not that everybody does it or has to do it that’s a client of ours, and that’s fine, but sometimes they get pricing wrong. They’re not pricing their value. If they can get their labor under control, they can actually price appropriately, the third really biggest thing is the client intake is really a big issue. A lot of times, as agencies grow, they keep the same types of clients that they’ve always had because they feel bad when they out-mature their clients, which is common for a growing professional services company. You typically get better and better and you kind of need to start shedding a certain type of client.











At some point if you don’t on a regular basis remove clients from your client base and replace them with different types of clients, then that legacy client base can actually hold an agency back, can actually keep it from growing because their maturity is not growing with the maturity of the agency. As the agency owner and the teams that they’re hiring get better, and better, and better at things and start adding strategy and whatever to their work, they now have a base of clients that can’t buy those things. Now they have to go find the right clients that can buy the things they’re now able to sell and that actually come with a higher price. Those are three big ones, it’s the labor, and it’s how you price and are you pricing appropriately according to you value? Really, who’s on your client list? You know there are people that probably shouldn’t be there and you should be replacing them with more mature clients.


Andy Baldacci:




I love how you laid it out like that because there are so many times in any sort of business but especially the service business where you can look at just the numbers and get an idea of, “All right, things should be different.” Without having benchmarks, without having certain metrics that you know where they should be at, it’s really hard to diagnose and actually improve. You laid out a few great areas to look into for any agency owner to make sure they’re on the right track. I want to dig into the labor costs a little bit. Not necessarily salaries but in terms of expanding. When you’re talking to agencies that are growing quickly, how do you typically advise them on when to make the decision on, “When am I ready to bring on the next employee?”



Jason Blumer:







Yeah, that is really hard. In the coaching I’ve done for eight, nine years, there is really no formula for when do you hire? A lot of times it really depends on what the agency’s doing, what risk profile they have. There are times when you need to hire before you have the clients and obviously that can get you in trouble because you can hire and not have the money to pay those people, but you would look at your agency and go, “We really have some history now of growth. We have strong business development, and we have really good pricing. I think we’re ready to take the risk to go ahead and hire this next investment that’s going to let us continue to grow.” Or there may be times when you’re a smaller agency and you’re like, “You know what? We can’t afford to take that kind of risk so we’re going to go get some clients and we’re going to kind of overwork ourselves a little bit.” The agency owner will typically be the one to carry that burden.









Then they go hire because they actually have the money to hire. It is really hard to know when to hire. I’ve heard people say different things like, “Hire right before you need it,” but nobody knows what that point is. “Is now right before when I need it?” You kind of don’t know. You just want to assess the overall health of your agency and go, “If we make an investment now, that is, do we have the cash to make an investment now? And will that pay off with the influx of clients we typically see come at this time of year in our agency?” If not, it may not be the right time to make that investment. Other labor investments you can make are producing team members and non-producing team members. It may be that it’s time to hire, I don’t know, a creative director or somebody that’s going to work directly with the client. Then what you can do is you can match up their salaries matched up to the revenue from a client.









Sometimes at certain areas, especially when you start reaching five to eight people, you’re going to have to start building an infrastructure of people who help run the company. It could be administrative people, project managers that don’t really have revenue tied directly to their payroll. You have to make those investments too and those are really risky because you’re just hiring people and actually no new revenue is created from the hire, but it might actually improve customer service. Because now, the team’s not overworked, you’ve got support now from project managers whereas the owner may have been providing that support before. Now customer service can improve, and over time service can improve, pricing can go up as the value increases and you can start getting a different type of client who has money to pay different amounts. It’s tricky, that’s hard.


Andy Baldacci:









It’s a very tricky problem because it’s something where you hear people lament, “Oh, I should have hired this person a lot earlier,” but they don’t know really when. You’ve heard people on the other side of it say, “We hired before we were ready and we had to let people go,” or, “I had to not get paid for a little bit until we could get ramped up.” There’s not a set answer to it, but one thing I think that would be helpful is for a lot of agencies, especially when they’re smaller, work heavily with contractors. The shift from a contractor to a W-2 employee si something that they know is going to be more expensive because they know there’s other costs that they have to absorb. It’s hard to really get a better picture on how much extra, how much they should be preparing to spend. If you haven’t hired someone as a W-2 employee before, how much should you be willing or prepared to budget above their salary?


Jason Blumer:



Yeah, so you’re kind of talking about fixed costs versus variable costs, right? If you pay somebody as a salary then that’s a fixed cost, which means the cost is the same all the time whether you have revenue or not. A variable cost is really, man, that’s the best kind of cost, right? It goes up as revenue goes up and then that variable cost goes down as revenue goes down. A lot of people get tripped up a lot of times when they move their cost from a variable cost to a fixed cost and you’re doing that when you’re basically saying, “All right, I’m a small agency. I’ve built this small agency on contractors,” which is a good way to start your agency.









But then what you don’t have is you don’t have the full focus of that contractor so you might start seeing the need to really have a person fully dedicated to your vision and your purpose, and that’s when you want to start thinking about making the commitment to bringing that fixed cost on. What you don’t get from a contractor is you don’t get their full commitment. They’re running a business, they can’t be part of your culture, they can’t fully dedicate themselves to you. You may want them, they may say, “No.” You may say, “Hey, let’s hurry and do this project because it’s going to give us more money.” They may say, “I don’t have that ability, I’m working with other clients.” If you want to control that, then it might be a good time to move them to a fixed cost.






What you get really is you get a new type of team member that’s fully committed to you. You may not pay them as much as you paid them as far as the rates you would pay a contractor, but you get their full commitment. Now what you can do is you can leverage that team member and you can actually grow a company by leveraging the labor dollars you’re spending. You can really only scale and build a big company when you build a team that’s fully committed to your agency internally. Contractors can just take you only so far and that’s okay it’s just the model you got to choose.


Andy Baldacci:


Right, and so once you have made that transition, once you have decided you’re at a point where you’re really invested in building up something bigger than just kind of a conglomeration of freelancers. You want something that people are committed, to have this culture, you have your own brand. What are some of those extra costs that are associated? If I’m going from just hiring on Upwork to actually hiring someone, I don’t even know the first thing about say payroll taxes, and benefits. What are the things I need to be considering?


Jason Blumer:












Yeah, so typically we tell people when you move somebody from a contract labor, which is a variable cost to a salary or something like that. Or if you pay them hourly, that’s still considered a fixed cost. You just add 9% to their salary and that’s a rough guess as to what the payroll taxes are going to cost you. You can make it 10%, whatever, just to make it easy. That’s going to be the cost to you. I think a lot of smaller agencies also, they add in benefits too soon. Benefits are extremely expensive, extremely expensive and most small agencies in the five to eight people range are not even ready to add any benefits because you’re going to be adding five to nine thousand dollars in costs a month to give benefits to all these people. Most agencies just can’t afford that so that’s a big agency commitment. We’ve seen people add benefits when they really have no business offering healthcare and things like that. When you’re up to five to eight people, and it totally depends, you really should just be adding people and then bearing that 9% payroll tax. Really, benefits come when you’re a much larger agency.


Andy Baldacci:





Okay. What do you think needs to happen for the benefits to make sense, other than just being bigger? Do these smaller agencies, I’m sure some of them are thinking, “All right, I might not necessarily be able to truly afford this comfortably, but if I don’t give benefits, if I don’t give these things I’m going to have a hard time attracting talent.” How do you have that balance of being more numbers minded about when the timing is right for it versus getting the right people in?


Jason Blumer:




Yeah. Well, so I would say you want to start offering benefits when you have to hire team members that are such experts that your clients require it. It really is, at some point your agency’s becoming known for an expertise or whatever, it’s getting really good at the thing that it does. When that becomes true, or you’re focused on some kind of healthcare niche or something like that, when that’s true, you need a particular type of team and you have to have that particular type of team. Like just a standard agency might have designer, developer, or even outsource the development at first when they’re smaller.










But if you’re a full-on development shop, sometimes the engineers you’re required to have, you might pay them 100, 120,000 dollars a year depending on what part of the country you’re in. Now your clients require such an expert service that you’re required to have expert team members and now those are the people you can’t lose, and those are the people often that will require that you implement benefits. That’s why I’m saying, when you’re younger, a lot of people implement benefits too soon because the benefits is such a heavy cost, you really should only do it when you’re trying to keep the highest based people. If you’ve got still younger designers and contractors, you kind of don’t need to offer that to them. Even if the risk of them leaving, that risk is pretty low because you could replace them probably somewhat easier than you could replace 120,000 dollar technology star I guess.


Andy Baldacci:



Right. It seems like it almost comes out of supply and demand. If the market for what you’re hiring for is strong and you can hire very fast and there’s plenty of talent out there, then you don’t need to worry about this as much. As you start moving upmarket, as you start selling the expertise and skill of your team as part of your selling point, then you’re going to have to … There’s only going to be so many people that can fit that criteria and often the market will just demand that you have to pay them more.


Jason Blumer:


Yeah, sometimes the market will do that. One thing we add, we do business coaching and that’s where I might meet once a quarter with the business owner. You’re asking a lot of great questions, but a lot of them, the answer is it depends on a lot of these things. It depends on where you’re going, what’s your vision? How fast are you moving? Do you have a niche? What kind of services do you offer? Business coaching can really … It’s a trusted, private relationship with an agency owner that really is asking them the hard questions and asking them, “Why are you assuming it’s time to add benefits? Why now? Why not later? Why do you need to hire that position?”


[00:28:00] Or even challenge them to hire, stop paying contractors, it looks like you’re valuable enough to commit to a team and the benefit you’re going to get from that team is worth the investment you’re going to make in them. The business coaching wraps up these basic questions that agency owners have and really challenge them to make decisions that are really going to be good for their particular agency.


Andy Baldacci:


Yeah, I mean I think you hit it head on. It’s just the value of personalized advice from an expert, from someone who understands the nuance, who goes beyond the best practices and say, “While this might work for these other agencies, in your case this is what you need to focus on.” I think that’s the value of business coaching, that’s the value of training from experts, that’s the value of even just having a mastermind of other agency owners who are in a similar place as you.


Jason Blumer:








Yeah, definitely. A lot of something business coaching will often tap into is really the personality of that agency. Sometimes they’re very fearful people, they might not be growing because they’re fearful of leadership. There’s a lot of things that individual agency owner could be going through and a coach can really pinpoint some of that. Where they may think, “Oh my gosh, I’m overwhelmed, I need to hire somebody,” when really maybe that’s not it. Through a series of questioning we might find out, “Okay, you’ve got five key clients that you shouldn’t have because they’re overwhelming you, they’re actually creating losses, they’re not profitable, so get rid of them. Then you probably don’t need to hire somebody maybe.






Then let’s price your services, let’s seek to double your price if in fact your value is much higher than you think it is.” We can do some things that are actually more right for that agency that are maybe fearful, and they can be challenged in a way that help them to grow. It might not be a financial issue, it might look like a financial issue like, “Can I hire? Do I have the money?” When really it might be the persona of that agency owner that needs to be pushed and challenged.


Andy Baldacci: Where did you get this domain expertise? How did you develop your knowledge in the agency world?


Jason Blumer:








I think it comes from where a lot of expertise comes from, it just comes from doing it a lot. We were a traditional firm, I’ve been leading the firm for 13 and a half years but it started in ’97. My dad started it in ’97 and it was a traditional firm. We started getting some agencies really around the country when we were just still a brick and mortar office here in our South Carolina office in Greenville, South Carolina. Then we noticed agencies start to come to our firm just because other people referred them to us and they were just probably smaller design shops really, is kind of what we were getting in. Then we started targeting them and saying, “Well we kind of like to deliver services digitally in a way that they like to consume these professional services, so let’s go after them.”












Then just over time, a series of six to seven years, you start narrowing your niche and committing to a narrower group of clients. Then you start adding coaching and you stink at it at first for a while, you keep doing it, and coaching is something I’m really, really good at, it’s just one of my strengths. I read a lot about coaching, there’s a lot of psychology to that. Over time, it just becomes something you enjoy. Then if you can build trusted relationship with these agency owners, they let you push them. Then just over time you see a lot of different scenarios, you meet a lot of different types of people, you become a better coach, you stop doing things the way you used to, you challenge yourself with your own coach. It’s a commitment over time, you get good at it by doing it just one coaching session at a time really.


Andy Baldacci: Obviously we got into this by saying that every situation is different, but typically speaking, generalizing a bit, do you often push your agency clients to develop some expertise like this?



Jason Blumer:








It really depends. I mean I think if you read any kind of positioning or marketing book they’re going to say that developing a niche is a great way to become an expert, increase your value, and then increase your price. I agree, but there’s a lot of ways to stumble along the way. You can go really narrow in your niche, but sometimes you can narrow too quickly, and some people do that. They go, “All right, nobody … ” We’ve done that, we’ve even stumbled over that just cutting everybody off and saying, “Only this niche.” Well, you’ve shrunken your market so fast and so quickly, a lot of times the marketing you do as an agency and how you reach out in business development has to be so sophisticated to match the narrowness of your niche.






Anytime you’re trying to narrow, what you’re basically saying is, “I’m an expert. I get to narrow because we have a certain expertise.” If you don’t really have an expertise, narrowing may not give you what you want it to give you. It may just give you a pool of a lot smaller clients to try to find and that’s only valuable if you actually have the expertise where those clients are reaching out and trying to find you. There’s a lot of components to niching in a narrow way. It is very valuable but you can also mess it up and it can hurt your cash flow pretty immediately if you’re not careful.


Andy Baldacci:









Yeah, it’s a bit of the chicken and the egg situation because if you don’t narrow, if you keep taking anybody with an open checkbook as your client, then it’s going to be really hard to get expertise in a specific field. If you narrow too quickly, you might not get enough clients in that niche to actually teach you the expertise and to learn from them. It’s a fine balance but I’m glad you hit on that because a lot of people assume, when they hear these experts on positioning, who honest to God, I agree with them in a lot of cases. I think there is real value there. A lot of people think that’s like, “All right, overnight I’m now going to be an expert for this new niche and everyone else that doesn’t fit it, you got to go.” It doesn’t need to be the case, it can be a much slower transition. It even can be so much as so, “All right, I’m going to try to get a few more of these agency clients,” or, “I’m going to try to get a few more of these dentists,” or whatever it is you’re going after and just slowly kind of ease your way into it.


Jason Blumer:








Yeah, and there’s some other components too that I think trip people up. You can position narrowly, that is, you can redo your brand and redo your website and position yourself to a new market and say, “We are experts at healthcare.” A lot of owners think, “Well that means I can only do healthcare.” Well that’s not true, all you’ve done is you’ve redone your positioning, you’ve started crafting a specific message to a certain target market and that’s good. Your internal client list doesn’t necessarily have to reflect that. You can have all dentists and then you can say, “We’re going to only start working with chiropractors or something like that.” You can build your site and say, “We are for chiropractors, we help them grow,” and just keep your dentists, it’s okay.







Nobody’s going to find out you’re a fraud or anything like that, you’re just being smart in how you run a business. You’ve started speaking to the people you ultimately want to serve while you’re still serving the older focus, or a more traditional, or a broader base of clients that you had before. Sometimes a broader base of clients that are less focused is a way to spread risk too. Sometimes if you’re niched, well maybe that should be a 25% … Like 25% of your revenue would be safe to keep inside of a niche, and then your broader base are just a bunch of other clients. They’re just healthy businesses that pay you and that’s fine to keep those clients because you really do have to protect your cash.


[00:36:30] Cash is so important, I mean it’s like oxygen to a business. If you don’t have cash, I mean it just sucks the life out of the owner, it’s a very fearful thing. I’ve done that, I’ve made those mistakes. When you do have cash, it makes you think differently, you act differently, you invest in different ways, you invest more quickly. Whatever you do, however you position, however you narrow, however you market, protect your cash at all costs. That’s really, really important for a healthy business.



Andy Baldacci:


Do you have general rules of thumbs for at least like a minimum of … Say and agency that’s doing all right, they’re growing, they have five to eight people on board. How much cash in terms of monthly expenses should they be keeping on hand?


Jason Blumer:







Yeah, and a lot of times … I say that depends to everything, right? I’m sorry, that’s really the way financials are. You could take three to six months worth of expenses as a great thing to save. You should be saving some kind of level of, “This much in monthly expenses is what I want to save.” It depends on the risk profile of the owner too. Some of them may be very fearful and so if the agency owner is very fearful, they may want six months in the bank. Then a coach might come and say, “You need to release some of that money because you’re now failing to invest. We see signs of you being able to grow, but to grow often takes investment. You got to take a little more risk if you want to scale your business, and start investing in this new type of service that you think could be profitable, you need to test that.” To somebody who’s ready to take risk, we might say, “Release some of that cash and bring your savings down to three to four months worth of monthly expenses in the bank to keep you safe.”



Andy Baldacci:







I think that’s great because obviously every answer has a qualification of it depends on X, Y, and Z, but at the end of the day there are still just minimums, there are ranges that you can share. I’m glad that you did share those just so people can have that in mind because at a certain point, like you said, depending on your risk profile, if you’re ultra conserve, if you’re going to want to save more than others, but you’re then sacrificing potential growth for peace of mind. There is a balance there. On the other end of the equation, if you’re just all about growth and say, “Oh, well hit it out of the park every time. We’ll get the business when we need it.” That’s okay, but you’re sacrificing stability, you’re sacrificing the long term prospects of your company by cutting it narrow. By keeping in a reasonable range I think that was really helpful advice.


Jason Blumer:








Yeah. I have a lot of coaching sayings I guess, but I like to tell my coaching clients, “You’re always saying a yes and you’re always saying a no.” If you’re saying yes to something like, “I’m going to go hire somebody. I’m going to take a risk, hire this new position.” You’re actually at the same time saying no to something else. We don’t always know what that is, right? We can’t vet out, “What is the no we’re saying?” A coach can help you figure out, “Well here’s what you don’t get to do with that money.” Similar to when you say no to something or somebody, or a client, you’re probably saying yes to something else. It’s hard because we don’t know what those nos and yess are, but it’s important to understand when you’re running a business, you’re always saying yes and no at the same time, and just vetting that out is super important.


Andy Baldacci:





I think that’s great advice. Before we start wrapping up, I’ve got one question about just offering advice, some actionable advice for the listeners. Say someone’s at about the 500K mark and they’ve gotten there primarily through word of mouth and all of that, they’re doing okay, they’re growing, they maybe have a few employees on staff as well as a few contractors leftover, but they haven’t really taken the numbers that seriously. They’re doing what they’re supposed to, the bare minimum. They’re paying their taxes on time, they’re using QuickBooks to stay on top of things, they’re ready to get a bit more deliberate and serious about the process. What advice would you have for them to make that first step?


Jason Blumer:








At that level, 500,000 dollars in revenue, that agency owner really needs to start moving away from the details. Not only the financial details but they need to move away from the technical, creative service details in some way. Or at least take a creative director position or something like that in their own agency. I would say it’s time to start giving up the creation of your numbers, which is you’re either doing your invoicing, you’re doing your bookkeeping. Start thinking about outsourcing that in a small way so that the agency owner has time to look at summarized financials and say, “What is this telling me?” They really need to start looking at trends, they need to know, “Am I returning the right kind of labor metrics on the money I’m spending on labor? If not, who’s my weakest link?” Or, “Are my prices right?






Maybe my labor’s right? I’ve got all good people, they’re very caring and I pay them decent wage but they do a lot of good work. Well maybe they’re more valuable than I think? Maybe I need to be pricing my services higher?” I would say it’s time to move away from details. There’s really not going to be any transformation, or scaling, or growth in those details. Now, they’re important, they’re very important, I’m just saying somebody else can do that. It’s really not hard for accountants to do the numbers. If you’re an agency owner I would say please don’t go take a QuickBooks class, that’s not a good use of your time. We hear some people want to do that and that’s just not going to transform you, or change you, or grow you in any way.



Andy Baldacci:









Right. Just being penny wise and pound foolish. The biggest asset you have is not going to be spending a few hours a week putting your books together when you’re the agency owner. There’s a lot of higher value tasks that you can attend to. The small but growing agencies that’s one of the biggest issues is the owners distancing themselves from the day-to-day work and getting in the big picture. I think that advice was great and I want to thank you for that. Before I finally say goodbye, I like to ask all of my guests a few just quick, rapid fire questions. The questions will be pretty short but your responses don’t have to be. Just whatever direction you want to go is fine.


Jason Blumer: Awesome.


Andy Baldacci: The first one is just, what do you spend too much time doing?


Jason Blumer: What do I spend too much time doing? Wow, that is a good question.


Andy Baldacci: If you were to look at your day-to-day and say, “These are the lower value tasks that I still find myself doing.” Do you have any idea of what those would be?



Jason Blumer:


Yeah, it’s probably, we do podcasting too and it’s probably things around the administrative tasks of running podcasts and publishing those podcasts. That’s something my partner and I are thinking about moving off my plate. I’m not really delivering a lot of huge value to anybody putting podcasts out. Not delivering the content, I mean packaging it, doing the technical side.


Andy Baldacci: Literally putting it all together.


Jason Blumer: Yep, mm-hmm (affirmative), yep.



Andy Baldacci:


What do you not spend enough time doing? What are some of those higher value tasks that you could put more effort and time into?


Jason Blumer:





I think at the pace of our growth and the things we’re working on, I really need to be focusing on my knowledge and increasing my knowledge. Reading is probably something I don’t spend enough time on. I’ve got four good books that I’m trying to read and I just don’t seem to have enough time to do it, so that’s probably a good thing I need to spend a lot more time on.


Andy Baldacci: Other than reading those four books, what are you hoping to accomplish in the next quarter?


Jason Blumer:










We want to get a stronger base of a team, so we’re in the middle of hiring. We want to have a good tax season because we’re in the middle of a tax season, so that’s something. We improve that every year, my partner helps me improve these processes and make them much stronger. We want to add to our team, really get through a pretty solid process of a tax season, which is a new process we’ve built. We’re trying to build out a safer, broader base of client too. We’ve served some larger agencies in the past and we’re looking to serve some of those 500,000 dollar agencies because they’re a great client, they really trust you and a lot of those clients can really reduce some of the risk we have in our firm. It’s switching up our client mix a little bit is what we’re interested in doing. That kind of thing takes a year or two to build that out. That’s kind of the marketing we’re doing over this next year, or this next quarter is really focused on those types of clients.


Andy Baldacci: Do you see any potential obstacles that could get in the way and prevent you from getting there?


Jason Blumer:







Oh yeah. Sometimes you want to make an investment in a team member and you might not have the cash or you might not want to invest that cash right now. It’s really just considering our own risk profile as to what do we want to invest our money in. Probably time, I do the pricing, I do the marketing, so just devoting the time to the marketing, the coffee meetings, and the networking that have to do. We’re doing a good bit of that now, but that needs to continue and it’s hard to continue that during busier seasons like a tax season for a firm like us.


Andy Baldacci: Absolutely. Honestly Jason, you gave us so much today and I want to say thanks a ton for coming on the show. Thee last thing I want to ask is that if listeners want to hear more from you, if they enjoyed listening to you talk, if they think maybe you could help them out with some of their finances, what are the best places for them to go to check you out, to check out your company?


Jason Blumer:






Yeah, so they can go to BlumerCPAs.com and that’s B-L-U-M-E-R, B-L-U-M-E-R C-P-A-S, BlumerCPAs.com, or you can email our firm at [email protected] You can follow me on Twitter @JasonMBlumer, and I do a good bit of writing and content creation that people can use to consider growth, and that’s kind of the things I write about. We have a podcast called the Businessology Show and that’s a great podcast. We try to put one of those out per month. Those are probably the best places to find me, yep.


Andy Baldacci: Awesome, I’ll make sure to get all that linked up in the show notes, and again I just want to say thank you so much for your time today, I was a lot of fun chatting.


Jason Blumer: Thanks Andy for having me man, this is a great chat.


Want to learn more?

Go to BlumerCPAs.com, or email Jason’s firm at [email protected] Follow Jason on Twitter @JasonMBlumer. He also has a podcast called the Businessology Show, which he puts out once a month.

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