Balancing the Books: Kira Wiseman’s Guide to Agency Financial Health and Staff Engagement

Episode 104 January 19, 2024 00:50:54
Balancing the Books: Kira Wiseman’s Guide to Agency Financial Health and Staff Engagement
The Agency Hour
Balancing the Books: Kira Wiseman’s Guide to Agency Financial Health and Staff Engagement

Jan 19 2024 | 00:50:54

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Hosted By

Troy Dean Johnny Flash

Show Notes

Join Troy Dean in the latest Agency Hour podcast as we welcome operational & finance leader, Kira Wissman. Dive deep into the essentials of financial management, including tracking key metrics, categorising expenses, and common hiring mistakes.

Discover the art of creating a 12-month forecast and the pitfalls of neglecting numbers and explore the challenges of keeping staff engaged, the importance of employee engagement for productivity, and strategies for team growth. Kira brings invaluable insights for any agency looking to balance its books and its team dynamics effectively.

 

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Episode Transcript

[00:00:00] Speaker A: People form relationships in the office, and they'll, they'll naturally form, you know, clicks with friends and whatnot. And then you want to capitalize on that. You know, you want to care about whether somebody's dog is sick, whether somebody's grandma is dying, whether, you know, somebody's just having a terrible day. It's all part of the human experience. And you need to let these people know that they matter, that they're heard. Does that mean that, you know, we need to let somebody cry for a week and a half? But if you're treating people correctly and you're making them seem loved and cared for, you're not going to see that they're going to want to contribute to the team. [00:00:48] Speaker B: Folks, Troy Dean here. I'll be your host. You are listening to the agency hour podcast brought to you by agency Mavericks. We are on a mission to democratize abundance for web design, SEO and digital marketing agency owners so that they can create opportunities and wealth for themselves, their families, their communities, their teams, their clients. Why is this important to me and to us here as a company? Well, it all started, really when I was trying to articulate what the mission is that I'm on and why I love serving agencies. I love serving agencies because they're a distribution channel, because agencies have lots of business clients. So if I impact agencies, then those agencies can go in and have a positive impact to all of their business clients. And then those small business clients can have a positive impact on their teams and their families and so on and so forth. And I really crystallized my thinking around this while I was listening to an episode of the Masters of Scale podcast hosted by Reed Hoffman. And on that podcast episode, he was talking with an entrepreneur who works at the Mastercard center for inclusive growth. And what the Mastercard, who was the sponsor of the Masters of Scale podcast, and what the Mastercard Centre for inclusive growth does is it gets financial products into the hands of people who otherwise wouldn't have access to them. And the example they were talking about was the tuktuk drivers in India, who are in a very, very densely populated, crowded city full of tourists, spend a lot of time running around to each other getting change. Hey, have, you know, we've got some coins. Because these tourists come in with money, they pay the tuktuk drivers. The tuktuk drivers need to give change. And so they spend a lot of time running around trying to get change from each other, and they lose fares and they lose rides because they don't have change. So the Mastercard center for Inclusive Growth basically gave all of these tuktuk drivers, like a credit card swiping device where they could just go, hey, bang, tap your credit card, and the money goes straight into the bank. Great for Mastercard, because it helps them grow their banking business, but also great for the tuktuk drivers because now they can spend more time actually driving and less time worrying about their float or their change, if you like. Anyway, the details don't really matter. What Reed Hoffman said matters. He said that when he heard this story about what the Mastercard center for inclusive Growth were about, and he heard the people that work there, what their mission was, it was all about allowing people to arrive to a place in their world where they can make better decisions, because they're not making decisions based out of desperation or a need, worrying about how they're going to feed the family, put a roof over their head. And so when people's basic needs are taken care of, they generally make better decisions. And he said, I was walking to work this day, and he said, that's a future I can get out of bed for. And I stopped and I wept. I don't mind admitting it. I stopped in the middle of this busy street on the sidewalk, and tears just ran down my face. And I thought, wow, that is so powerful. And I realized that's the future that I get out of bed for. I get out of bed every day to empower agency owners to do a better job of running their business, so that their teams can do a better job for their clients, so that everyone can share in that abundance. And here I am playing with a hair tie that belongs to my daughter that she left in the office last time she was here. So that's why we do what we do. It's not just a tagline. We are genuinely passionate about creating abundance for agency owners and their teams and their clients and their communities and their families. And so, therefore, ladies and gentlemen, the guest that we are bringing you today is a little bit out of the box. It's not usually the type of guest that we have on the show, and some of you might think that this is a very boring topic. Today we are talking to an accountant about your numbers. Kira Wissman. Full transparency. We had a podcast booking agency reach out to us and propose Kira as a guest. She works at a large accounting firm based in Philadelphia. She's based in Virginia, but the firm is based in Philadelphia. And they're on the podcast roadshow, spreading the word about what it is they do and encouraging business owners to get in touch with them so that they can help you get clarity around your numbers. This is a really interesting episode, and it takes a bit of a left hand turn. We end up talking a lot about leadership and people, so stick around for that. And also, I will just say this. One of the things that we advocate and I've been talking about for a long time is if you are doing the book work in your agency, if you're invoicing, if you're chasing money, if you're reconciling your bank account, reconciling your expenses and all that kind of stuff, stop. Please. Get a bookkeeper to do that. One, they're better at it. Two, it'll free up your time to do the more valuable things in your agency, which is go talk to clients, do paid discovery onboard them into growth plans, design strategy, build relationships, get the book work off your desk, and then at some point, make sure you've got a good accountant. As you grow, there are two people that you're going to need in your world. A good accountant and a good lawyer. Okay. There's been lots of chat in a Facebook group recently about a client who had a massive chargeback to the tune of about $15,000. And Quickbooks got involved and shut their account down. And now there's a legal suit, and it's all very ugly. But unfortunately, when you're an adult, you have to do adult things. So make sure you've got a good accountant and a good lawyer on your side. And I hope you learn a lot listening to this episode. And if you do learn anything or you just have any kind of gratitude for this episode and us bringing you this information, please reach out to Kira Wisman and say hello. We'll put the links under the show notes. You can get in contact with her at LinkedIn or on their website. So without further ado, let's go and meet Kira Wisman on the agency hour podcast. Ladies and gentlemen, without further ado, please welcome to the agency hour podcast, the Lovely Kira Wisserman. Hello, Kira. How are you? [00:07:02] Speaker A: I'm doing well. Thank you very much for having me. [00:07:05] Speaker B: Thank you for joining us here on the agency hour podcast. Now, you're a slight departure from our usual programming here on the podcast. People will understand this when you introduce yourself and what it is you do. Exactly. [00:07:19] Speaker A: Sure. Well, I am an accountant, and so I'm here to talk about all things accounting and numbers and why they are important for your business and why it's important to have the right professional working with you so that you don't have to have the stress of the numbers on you every day, and you can focus on running your business. [00:07:37] Speaker B: I love it. And I'm being genuine here. We talk about money. In fact, the first thing we do with our clients is we actually do a bit of an audit on their p l. When they first join us. We're not accountants, but we want to just open the closet and turn the headlights on and have a look at all the skeletons so that we can deal with them. And I love this topic. And the reason I love it is because I feel like if you don't know your numbers, you're flying blind. And it just gives you so much clarity. And people are so terrified of the numbers, they don't understand it, but also, I think they're just terrified of the reality. So let's debunk some of these myths today, and let's give people some actionable places to start and talk about what you guys do. Maybe if I start, I'll start with why. To quote the wonderful Simon Sinek, why accounting? Why the numbers? How did you end up in this profession? What is it about numbers that get you jazzed and get you out of bed? [00:08:33] Speaker A: Every know? I just love organization. I like having all my ducks in a row. It's, I guess, safety feeling. Originally, growing up, I wanted to be a horse trainer. So that would be as a huge departure. And in high school, I discovered accounting classes and really liked how everything kind of fit in a box, and it all made sense. And I've always liked reconciling bank statements and things like that as I was growing up. It's sort of a weird thing to enjoy, but as I came home one day and said, hey, mom and dad, I think I want to be an accountant and not a horse trainer. And they were certainly relieved. They were very relieved. I do have a little bit less like an accountant than some people might be. I find that you have value in knowing what you have, where your money is going, what the money coming in is, but also taking that knowledge and being able to translate it into actually operating a business. You don't want to spend too much time chasing $0.10 around. You kind of have to have a balance of, okay, is this a reasonable presentation of the numbers versus just going to have our heads in the sand while the business is passing you by? So it's a combination of knowing what you have, what you're bringing in, what's going out, what's important within that, and getting that as timely as possible to the people who need it. So that's kind of what excites me. It's not so much as just crunching numbers as it is getting the client a product that's valuable for them. [00:10:07] Speaker B: And I've experienced this and I've seen it happen in many of our clients, is that once you get clarity around the numbers, it actually gives you a confidence and it gives you a strength. And we've seen a lot of agencies grow very quickly because they know exactly. And that there are some very detailed spreadsheets that our agency client clients have started with our template and then developed and used. And I was on a call the other day with one of our agency clients, and I was like, man, I'm jealous of your spreadsheet now. Like, you started with ours, but this is epic. This is amazing. He has such clarity around these numbers. So if an agency comes to you and says, we have really no idea, we just go out and do good work, and clients pay us and we're happy and we know we're making money, but we don't really know what's going on with the numbers. Where should they start? What are the first hand? Because what I find is people get overwhelmed very quickly because there are so many things you can track. There are so many things you can look at. So what do you think are, like, the first handful of key numbers that people should be looking at and tracking that make the most difference? [00:11:04] Speaker A: Where is your money coming from? Are you really making money? So you kind of have to take a look at all of your transactions in your bank account and your credit cards, put them all kind of in a pot, if you will, and start categorizing them. Because not every expenditure is an actual expense. If you're buying equipment or inventory for things you might be selling or using, that's not going to be an actual expense. That might be something that you have use of over a period of time. So you kind of have to sort through it. What exactly is this? Is this a meal? Is this a rent payment? Once you get all of these things labeled and categorized, and I'm sure the spreadsheet that you're using does that. We also advocate the use of Quickbooks online or an accounting software package like sage intact for a larger organization. But that will help you use the same categories month over month, then you can start to see a pattern. If we're labeling rent the same every month and all of a sudden the expense for rent is double, you're going to know to look for a problem. If you don't hash it out, categorize everything, know what it is and where it belongs. You won't know if there's a problem. [00:12:17] Speaker B: And so just for those listening, this is typically known as the chart of accounts, right. In a business, and the chart of accounts just to run people through, like the very sort of high level, the chart of accounts is really, you've got your revenue accounts, which is where all the money comes into the business. In a service based industry like ours, typically you would have what's called the cost of goods accounts. But in ours, we kind of call that direct costs. Right? Like, what are the direct costs related to delivering the service? What do you guys call that in the accounting world? Because you're a service based business as well. Do you categorize your staff that are working on client work? Do you categorize that as a cost of goods sold or a direct cost, or do you categorize that as an expense? [00:13:01] Speaker A: Right. Anybody that's directly working to produce your product, whether that's a tangible product or an intangible product, it can be a marketing campaign or it can be promotional goods that you're sending out. So anybody directly working on those items, or even somebody that might work part time on that item, in part time on an administrative task, but those are your direct costs. That's what's going in to directly generate your revenue. So those are the things that if you didn't do them, you wouldn't have any revenue. [00:13:31] Speaker B: Got it. [00:13:31] Speaker A: So that's an important bucket. And then you're going to have the bucket of ancillary costs below that. General and administrative can be called overhead. A combination of those things, depending on how complicated your business is or what you're looking to track. And those are the things that you need to run the business, but you can't tie that to any specific revenue stream. [00:13:51] Speaker B: Got it. [00:13:52] Speaker A: So that's important, and it's very important to denote the difference between the two because those direct costs or that cost of goods sold should vary based on your revenue. If your revenue is down, your cost of goods sold is hopefully down. [00:14:10] Speaker B: Otherwise you've got staff sitting around. [00:14:12] Speaker A: Right. [00:14:12] Speaker B: You might have staff sitting around twiddling their thumbs. Yeah. [00:14:15] Speaker A: Right. So if you're not segregating these costs properly and we just have all the wages in one bucket and you won't really be able to pinpoint changes, is this a new administrative person whose salary is going to stay the same all year regardless of the revenue we generate, or is this a cost of goods sold or direct cost person who is maybe twiddling their thumbs. And that's why it's important to label absolutely everything. And it doesn't have to be in fancy accounting terms. You don't have to start out. Sometimes I think people really are intimidated. When we say chart of accounts, we say balance sheet, we say income statement. You don't need to start there. Just start by knowing what's coming in and what it is. Is it all revenue or is some of this money that some of your partners are contributing to the business? So all of your deposits aren't necessarily revenue, and you need to understand what's what. And if you don't know how to do that, you really need to reach out to somebody to help you do that. [00:15:17] Speaker B: Totally. The reason I want to park here for a second is because one of the biggest mistakes I see agencies make is they hire a new team member. Whether it's remote or next door or in the same office, they hire a new team member and they massively underestimate the amount of new revenue they need to bring in to make that new hire profitable. And then typically what happens is they have this team and they don't have enough revenue and they have to lay people off. And so just for those listening, the way I sort of think about this, and I'm not an accountant, but I've spent a fair bit. I used to be a part time bookkeeper, actually, so I kind of know my way around a spreadsheet and a balance sheet. But the way I think about this is that your revenue comes in, then you pay the staff that are delivering that stuff to clients, and then you've got what's left over, which is your gross profit. And then out of that, you run all your operating expenses, your overhead, and then out of that, you've got left your net profit, which is what you make as a business owner. I wonder if you've seen any trends in percentages or ratios. Like, if I'm going to hire a developer in an emerging economy like the Philippines or South America, and I'm going to spend 30,000 or $40,000 a year on a salary, how much new revenue do I then need to be bringing in to make sure I'm maintaining my gross profit margins? I wonder if you've seen any kind of trends in service based industries that say, hey, if your cost of goods is this much, then your revenue needs to be three times as much or four times as much. I wonder if you can just kind of share a bit of your experience around that. [00:16:49] Speaker A: It's very business specific. There. It depends on exactly what you're offering. If we are just offering a true service, we don't have any hard goods going along with this. This is just an intangible item. I wouldn't say that there is a standard because you need to know one. What do you want your net profit to look like? I guess we're all looking to maximize it. So I'm not really saying that we need to know what our gross profit is and what the people who have been generating these services in this revenue for you are costing. Yes. And understand if your gross profit percentage is, let's say, 20%, that's very low. So our direct costs are 80% of our revenue. So now if we're going to hire another person, we need them to generate enough revenue to cover their salary, your employer costs. So let's say we're going to pay them $100,000. So they're going to have to generate, let's say that includes all the payroll taxes and all. I don't want to make this more complicated than it is. They just cost $100,000 a year. So you know that you need to generate 20% more revenue than that on that employee to keep your gross profit margin of 20%. [00:18:06] Speaker B: I think that's a good place to start, is to have a look at your existing team, have a look at your existing revenue and your existing team and work out how much revenue your existing team is driving and what they cost as a percentage of that revenue. And so when you hire someone, because I see this happen all the time, people hire, they grow their team. They just have taken their eye off the sales and marketing ball and then they haven't got the revenue coming in and end up with this team sitting around twiddling their thumbs and they have to lay people off, which is damaging for the culture of the existing team. You have new team members come in, then they leave, and it's damaging for the business owner because no one wants to lay people off because you've kind of underestimated how much revenue you need to make. The other thing is I also see this, is that team members, and you touched on it a minute ago, some team members will be working on producing stuff for clients, but they might spend half their time. Marketing coordinators are a great example. They spend half their week doing marketing campaigns for clients and the other half of the week working on internal marketing stuff for the business to help grow the business and do marketing activities for the business. And so is the idea there. We just kind of do a rough time tracking, and we allocate half of their salary into that cost of goods and the other half into operating expenses so that we get an accurate picture of where our margins are. [00:19:26] Speaker A: Right. I guess it depends on if you have a salaried employee or an hourly employee. And that's very similar to how the business that I'm in, public accounting works. We obviously are offering something of an Intangible Product. So it's our time that we are selling traditionally. So we bill our time, we track our time very specifically, just like an attorney would. So I have internal responsibilities, obviously, I'm here right now, and this is one of my internal responsibilities. This isn't chargeable to a client. So understanding that you can do it a number of ways, somebody can specifically track their time. You can have a time tracking system where people say, I spent 3 hours on this and 4 hours on that, so that you can very specifically allocate it, or you can come up with a ratio over the course of time as this person is 50% administrative and 50% direct cost related. So it is all in how granular you want to get, how comfortable you want to get. The more granular you get, the more you need a specific software to kind of help you with that. You might be additional investment needed. But yeah, it's very important to know that, to know what an employee cost and to know when you're going to need to hire somebody else. Like you said, I think all too people put the cart ahead of the horse too often with, oh my goodness, we've had three great months. We have a ton of extra revenue coming in. We think this is going to continue for the next year and a half. Okay, hiring bench. And it doesn't often work like that. You need to reflect a little bit more. And again, that's where the accounting professionals or finance professionals of any kind can help you. We can do a forecast, we can take a look at the past year, the past three months, the past one month, and talk through what that's going to look like and what that employee of whatever type you think you might need actually costs you. And then factor that into the next twelve to 24 months of your business, so that you'll make better educated decisions and eliminate the hurting that employee morale that is often so hard to keep these days. [00:21:28] Speaker B: Yes, and also, this is why we are such big advocates here of recurring revenue, ladies and gentlemen, because recurring revenue is the holy grail if you can get it dialed in. And a lot of our agency clients are at 90 95% recurring revenue. So they have predict. Now, of course, clients churn, we lose clients. But by and large, they have predictable cash flow, predictable profitability. They also have recruitment pipelines built out because they know that by March next year, there's this much cash flow, this much profit, they can afford to hire someone, their margins are in place, their labor efficiency ratios are not going to be damaged because they have that recurring revenue. And if you don't have recurring revenue, it's really difficult to manage that kind of forecasting. I do want to talk about forecasting because in my experience, most accountants and our current accountant is pretty good. But most. Sorry, JC, for listening to this. No, he's good. He's actually very good. I really like JC. He's my favorite accountant to date, and I've been through a few. Most accountants I've worked with are really good at telling you what's happened and doing a bit of a post mortem and then telling you that you shouldn't spend so much money in the future because we're not doing so well. Right. Which is fine, but I think most small business owners know what happened last month. What they want is they want a plan for how I can change my behavior and my habits and my business strategy now, so that in twelve months time, we have a very different outcome. There's no point telling me in twelve months time that we didn't have a great year. I want to plan now. I want to plan to have a great year. So forecasting is difficult, especially if you don't have a recurring revenue business model. Right. So what are some of the things? If I came to you and said, hey, Kira, let's put together a forecast for the next twelve months, just ask me some of the questions or get me in the audience thinking about some of the things we need to think about in order to put a forecast together. That's not just a pipe dream. [00:23:29] Speaker A: Sure. Well, you got to start that pipe dream, I think, a little bit. You need to have a dream because as a business owner or manager, you need to have an idea of where you want to go. So, hey, I want to increase sales. I want to increase subscription revenue by 20%. I would like to increase it by 60. I think realistically we could do 20. And how can you help me get there? And you're right. With the accounting has that stigma attached to it, but with the AI taking off like it has in the past year or two and all of these advanced tools at our fingertips, we're able to get that historical data cemented in stone a lot more quickly, and we can use that to assist in making these decisions and forecasting the future. The past is an indicator of where we're going to go. So we need to know how do we want to grow this business? Do we want to do something new? Do we want to get rid of something? Is what we want to do? Is that going to take more labor? Are we able to expand upon our existing revenue set by creating efficiencies within the business? Or do we need to invest in equipment, people, whatever that might be? So you really just sit down and you have a regular conversation. There doesn't need to be any fancy ratio talk or anything at first. Let's paint the picture, and then we can build that model to meet that picture and a forecast. There shouldn't just be one forecast. In this day and age, with all the modeling tools available, you should be able to build several scenarios. And I like the fact that you're using the term forecasting and we're not using the term budget, because the day you put a budget in place, the next day, it's pretty much garbage. A forecast is something that you need to address every month. You need to continually be going back and looking at it and thinking, okay, well, we're totally missing the benchmark on this forecast. Why? And what can we do to adjust our expectations up or down accordingly? So it's having that conversation. Obviously, every month we're going to be getting that data and pinging our success against where we thought we were. So it's having the conversations. You said before we started talking officially that people are afraid of the numbers and you can't be, because if you're afraid, more than likely something's happening that you shouldn't be happening. If you're really afraid to look. [00:26:01] Speaker B: That's right. [00:26:02] Speaker A: To never be afraid to look and have that conversation. [00:26:04] Speaker B: Yeah, I think it takes, it's like having a health issue that, you know, is just kind of niggling away at you and you're sort of in denial about it and you're not going to go and deal with it because you're afraid that it might be something more sinister. And then if you don't go and get it looked at and it's too late. Right. For me, it's about taking personal responsibility of saying, well, I have a responsibility to myself, to the company, to my team, I have a responsibility to my customers to run a profitable business so that we can continue to serve our clients and grow and employ people. And that means I'm going to have to look at these numbers, I'm going to have to take the blinkers off, turn the lights on, have a look at the good, bad, the ugly, deal with it, and know that we can put a plan together to move forward if things are bad. And we can also put contingencies in place when things are good, we can build contingencies so that when things do go bad, we've got some buffer there. And talking to a professional is the first advice that we give. Because for a number of reasons, one, not only, it's kind of the reason I think small business should talk to agencies, because as agencies, we see inside hundreds of businesses throughout the year, right. So we know what's working, we know what's not. Same with you guys as accountants and lawyers also, and financial planners. It's like they see inside so many different scenarios and situations that you can borrow what's working with a client in a completely different industry and bring it to an agency client. Right. So the first thing we advocate is delegate your bookkeeping to a professional bookkeeper so that your books are in order and up to date. The amount of agencies we talk to who are afraid of invoicing, who haven't done their tax for three years, come on, get your books up to date. Put your big boy panties on, get your books up to date and get that accurate data. And then go and talk to an accountant about, well, here it is. What's good, what's bad, what's ugly, what do we need to fix and work with someone like you guys to actually build a plan and a forecast? [00:27:56] Speaker A: Right. Your accounting and finance person is as much a business partner as another owner. They're going to have a finger on the pulse of all sorts of things going on within your business, and they're going to see these trends. While you might feel industry trends or you might feel some of these results, because maybe the phone isn't ringing as much, or maybe that cash account, maybe that cash balance is dwindling a little bit. You're not going to really have a good idea why the finance professional can come in and say, hey, I've noticed x, Y and z, and x is great. Y and z, not so great. So you've come to me and you say you want to build your sales by 80% over the next year. Well, if we look at where we've been trending, we've been trending down. And if we want to do that, we're going to have to get creative. We're going to have to take things in a different direction, too. Often I think people treat an accountant as somebody that does just churn out historical data. And while that is true, that needs to be done. I think that people don't engage with their accountant enough on a level and ask for that insight. I can say, personality wise, accountants aren't always the most extroverted people in the world. We're often relegated to the back room with the green shade and with the ten key turnout numbers. And so sometimes you got to be willing to reach out to that person and ask for that financial help. Some of us are a little bit more engaging than others, and some are less shy. Doesn't mean anybody's doing less of a job, but it is a two way street. So it's very important to treat your accounting and finance person as a business. [00:29:43] Speaker B: Partner because, as I said, I'm not an accountant. I'm a coach, really. We coach a lot of agencies. I also have a handful of private clients who are not agencies. And the first thing I do with any of our clients is I want to look at the numbers, and if they don't have their numbers up to date, I can't work with them. It's one of the criteria is you got to have your numbers up to date. I find it frustrating when business coaches don't talk about the numbers and they just kind of give these pie in the sky ideas and go and do this and go and do this, but they have no understanding of the numbers in the business. I'm curious, how much do you work with coaches? Because you guys kind of play in that space, right? If you're advising on the numbers and you're giving business advice, strategic business advice, based on the numbers, you're almost kind of playing in that business coaching space. Do you have partnerships? This is just. I'm completely curious, by the way, this is completely off topic, but do you have partnerships with business coaches or do you provide that kind of service in house? [00:30:42] Speaker A: We provide that service in house. We actually have at KWC, a business services group, all of us in our client accounting services, all of our managers in our department also have that coaching ability. I think that we're all at the point in our careers, we all come from various industries and private public backgrounds, that we are able to give a very well rounded look at your business. So we can coach to specific operational tendencies, we can coach to the numbers. We can bridge the gap between all of that. I think you're going to find that a lot in professional services firms like accounting firms and consulting advisory financial firms, because in this day, and age. You need that to have an edge with your clients. The competition is fierce out there. So there are a lot of firms that just offer that bookkeeping service and that static transactional level service. But if you partner with the right financial people, you'll be able to get that service. If that's all you really want and that's what you're looking for, you can certainly get that. But you'll be able to also access that upper level echelon of advisory coaching, which is similar. I'm kind of equating coaching to that advisory component so that you get financial and operational assistance when you need it. [00:32:08] Speaker B: Yeah, well, I want to talk about people in a second because we were talking about this before we hit record. Before I do that, I just want to make a quick mention of our sponsor here who have. And the reason I'm mentioning this right now, because we're going to talk about how much it costs to replace good people and why you should invest in keeping good people. Our sponsor is a company called E two M Solutions. They're based in India. They're a white label development and SEO agency. They have 180 staff, which blows my mind. I know the owner, Manish, very well. He's been to our events, we've hung out. I've had dinner with him. I've said to him, I lose sleep on your behalf, mate. I wake up in the middle of the night and go, how is Manish managing 180 people? He is huge on culture. They're all in the one building in a world where Covid has meant that we're all working from home and we're all working remotely and people are quietly quitting at work and there's all these trends and things happening. He's built this incredible culture and he's been very intentional about it. And by the way, if you are listening to this and you need help with development ICO, check out etomsolutions.com agency mavericks. They'll give you a great deal. But I want to talk about. People don't realize that leadership is. And I also just plugged my favorite leadership book. It's called good Authority by Jonathan Raymond. It is required reading. It is fantastic. Yes, good authority by Jonathan Raymond is probably one of the best books I've ever read on leading a team and leadership in general. I'm trying to get him on the podcast, but he's playing hard to get. So we were talking off camera about this. Why? It's a rhetorical question, but I want to tee you up to teach on this. Why should people invest in leadership? Especially a lot of developers, designers, creatives? We kind of come from this background where we spend a lot of time in front of the computer, designing beautiful things, building things, running marketing campaigns. Now all of a sudden we have a team of 814, 25 people, and they're all looking to us for leadership. They've all got their own needs, they've all got their own demands. There's health issues, the relationships are breaking up. We're trying to keep everyone moving in the right direction. It's expensive to replace these people, and it costs time to replace good people. What are some of the things that we can be thinking about to keep everyone moving in the same direction and keep them inspired and engaged in their roles? [00:34:35] Speaker A: Yeah, you couldn't be more right. I just read an article on, you might have an employee that comes to you and asks for a $5,000 raise, and you say it's not in the budget, and that person quits. And now you're out there using a recruiter. You're going to have to pay $20,000 to replace that person. So you really do need to keep the good people today in this world. It's extremely difficult. People have the attention span of a nat. We all do at this point. We're watching ten second TikToks and thinking, those are too long. Half the time, TikTok has been way too long. I can't watch this. Leadership is a word that is thrown around to me just willy nilly, and it is a trait that is innate in some, and some people have to work on it. But like you said, you might have your head in a computer and all of a sudden you pick it up and you've got a team of eight people who are looking to you for motivation and guidance, and so you're going to panic a little. Oh, my goodness, these people are really reliant on me. I kind of moved into a leadership role slowly and naturally, and I ask myself every day is, how do I want to be treated? How do I want somebody to communicate with me? How often do I want them to communicate with me? And your own personal preferences aren't necessarily an indicator of how everybody else is going to work. But having that emotional intelligence about how something makes you feel or how you maybe look to other people is the most important aspect of a leader. It isn't necessarily being the best technical person at your craft, because there are a lot of people out there who are really good at coding, who can be really good at accountants, who can be really good at whatever they do, and they're not good leaders because you can't translate to these people. So you got to know your team. You might have two introverts and three extroverts on your team, so those introverts are going to take a little bit more time. You have to develop that emotional intelligence to be able to read these people. And it's not always easy in a remote environment. If these people are scattered across time zones and cultures now, you're going to have to work extra hard to understand these cultures, their traditions. I think it starts with knowing and caring about people. And we don't all care about everybody, and we all can't care about everybody. But if you're going to be a good leader, you have to be able to do that. That's step one to me, is get to know your team. You're not better than anybody else. Talk to everybody. Touch base with everybody. Touch base with the people who won't touch base with you first more often. Those are the sorts of things, I think, that will get you, that buy in and get people to follow you and want to work for you. [00:37:29] Speaker B: Yeah, totally. I couldn't agree more. And I hear a lot of people refer to their team as human resources. People are an asset, and my experience is. I don't gel with those terms, because my experience is that if you provide a great environment for people to thrive and flourish and be the best version of themselves, I mean, what is a company? A company is a collection of people, right? It's all very well. I know we have these legal entities now to protect us from. Back in the day when it was just the barter system, we would just trade a potato for a sheep. And then we built legal entities to protect us, so we had someone to sue. But a company is a collection of people. And if you look at high performing sporting teams, or you look at high performing circus ensembles or theater ensembles, or you look at great films that are made. Anything that is achieved at that level is because a group of people came together with a common vision, a shared set of values. They got on with the job, they championed each other, and they produced something that is greater than the sum of the parts. They produced something magical. I'm just reminded of Zen and the art of motorcycle maintenance is that the concept of quality is when there is care put into the production of something, and it's very difficult to do that when you're afraid of your job or you're in a toxic work environment or there's bullying or there's competition or politics. So I don't think of my team as well. First of all, I don't think of them as my team, and I don't think of them as human resources or assets. I think of us as a collection of people who are trying to work towards an outcome that we've all agreed on. And my job is just to kind of clear their path, get all the obstacles out of their way, make sure they've got everything they need to be the best version of themselves to bring their full self to work. Right. One of the things that Jonathan talks about in good authority is we go to work for 40, 50, 60 hours a week, but we all have our own professional and personal. Sorry, our own personal development journeys that we're going on, right? So we might go to a weekend seminar, we might watch something at night on Netflix to help us evolve and develop personally. But then we go to work and we don't use that 40, 50, 60 hours a week for our personal development journey, which seems ridiculous because we spend most of our time at work and yet we're not allowed to do our personal development at work. So the thing that he talks a lot about is leaning into your team and finding out who they want to become personally and professionally, and providing support and structure and encouragement and environment where they can do that. If that means you allocate two or 3 hours a week where someone can go and explore a different project or learn a new skill, then for me, I just think it's the right thing to do. I don't even think of it as a retention strategy. I just think that's the way. I don't want to go to work and have to put myself on the coat hanger for 8 hours a day, five days a week. I want to be myself at work and bring my full self to work. [00:40:45] Speaker A: I think you can see the results of that with the boomer generation. I'm Gen X, so somewhere in the middle and I started my career, that's exactly what work was. You came in every day and you left your life at the door. And God forbid you even take a call from somebody on your desk phone, from your house. What did that lead to? That led to rebellion. It's not productive, it's not sustainable. It doesn't get the best out of everybody. And you're also right in. People are people and should be treated as such. When people form relationships in the office and they'll naturally form clicks with friends and whatnot, and then you want to capitalize on that. You want to care about whether somebody's dog is sick, whether somebody's grandma is dying, whether somebody's just having a terrible day. It's all part of the human experience. And you need to let these people know that they matter, that they're heard. Does that mean that we need to let somebody cry for a week and a half? No, but if you're treating people correctly and you're making them seem loved and cared for, you're not going to see that they're going to want to contribute to the team. They're going to want to lift everybody else up. The sports team was a great example. Everybody comes together for a common goal, and if we all feel like we're valuable and we matter, we're going to want to work towards that goal with everybody else. And you're going to also want to come to work every day because it's not going to feel like work. Not every minute of every day. [00:42:15] Speaker B: That's right. [00:42:15] Speaker A: We're going to have some times that are uncomfortable. But that's the biggest part, is just people. It's just overlooked too frequently in all industries everywhere. [00:42:26] Speaker B: Absolutely. I mean, the biggest tragedy, the whole quiet quitting movement is the biggest tragedy right now. I have friends who work jobs, and I've had a couple of friends recently tell me I've just decided to care less at work. And that's the only way I can get through because these people are very conscientious, they're great workers. They're very talented at what they do, and they just get no validation, they get no appreciation. They're working with other team members who just don't give a shit. They feel like they can't realize their full potential because they're trapped in this environment that doesn't value them. And so they're like, well, I'm just going to turn up and do the minimum. What a tragedy. What a tragedy for the company. What a tragedy for the employees, and what a tragedy for the product or the service that they're producing. There's no love, there's no quality there. And it doesn't have to be that way. And all it takes is management. The problem with these two situations is that management are just dinosaurs. They're just so stuck in their ways that they're never going to change. And I'm Gen X as well, and I grew up watching my parents go to work and thinking, I'm not doing that. Whatever it is you do, that's not what I'm doing. And so I've built this amazing life for myself, where I get to hang out with people like you and make podcasts and I can do what I want because I don't want anyone to. I said to my wife when I first met her, the reason I work for myself is because I never want to ask anyone for permission to go to school in the morning and watch my kids at a sports carnival. I'm not going to ask permission for that. I'm just going to do it because that's what I want to do. And I want that flexibility. Also, there's a commercial outcome here too, because people think that productive employees are happy employees and engaged employees. I actually think engaged employees are productive. Right. I think the two things go hand in hand. People want to be productive. They do like genuinely people want to come to work and give their best and give their all. [00:44:20] Speaker A: Nobody wants to come to work and twiddle their thumbs for 8 hours. [00:44:22] Speaker B: It's a horrible experience. [00:44:23] Speaker A: Feel very valuable. It feels very pointless. So you're right. You want to feel wanted, productive, and you want to be contributing. And the manager thing is all too true. I think that there is a terrible precedent for just promoting people to manager level because they've been somewhere for so long and you're not necessarily promoting on merit. You might be afraid of losing somebody again that is very good in a given role, but might not be meant for leadership. I don't think it's an easily fixed problem, but it is something that if you're putting somebody in a manager's position and you know they don't really have those soft skills or that leadership, innate leadership ability, you better send them somewhere and invest in that. Because letting them just flail around as a poor manager is going to create a toxic situation within your organization. It's very important to acknowledge one more. [00:45:17] Speaker B: Book recommendation for you if you haven't read it. I think it's called help them grow or watch them go. I think that's what it's called. If you google that, you'll find it. Help them grow or watch them go. In other words, help your team, help your people develop. Otherwise they'll leave. I overheard a conversation at a cafe recently. Two girls, and one was talking to her girlfriend about the fact that she was going to leave her job even though the pay was really good because there was no pathway for her to develop, there was no professional pathway for her to get better, and she was going to go and work for another organization that had more opportunity for her to evolve, get better skill up, become a better version of herself. Right? I was ordering coffee, listening to this going, I wish I'd recorded that conversation, because these are two employees, and I want to play that to business owners around the world and go, these conversations are happening right under your nose every day of the week. Open your ears, pay attention. And if you have engaged employees and you look after them, everything gets better. Your numbers get better. Right? Your revenue grows, your profit grows, your employee NPS grows. Everything grows. [00:46:17] Speaker A: It does. [00:46:18] Speaker B: Yeah. We could talk about this for a long time. [00:46:22] Speaker A: My biggest passion is people. I get the greatest satisfaction out of seeing the people I work with do well. Maybe not when I was 25. [00:46:32] Speaker B: No, that's right. [00:46:33] Speaker A: When I was 25 was that I wanted to do well. But now when I coach somebody and I talk to somebody at work, or I communicate a new task, how to do something new to somebody, and I see them grasp it and that light bulb go off and see them get a little bit excited, there's no better feeling than being able to help somebody like, you know, helping somebody with their finances is also very rewarding, but helping people grow within your own organization is just as rewarding. [00:47:01] Speaker B: Totally love it. Hey, Kira Wisman, this has been fascinating. Thank you so much for connecting with us however that happened. And thank you so much for spending some time with us here on the agency hour podcast. If people want to reach out and get in touch with you, what's the best way to reach out and connect? [00:47:15] Speaker A: You can find me on my LinkedIn page under Kira Wissman. Or you can visit our firm's website at ww kwccpa.com. There are links to our bios on there and a link to reach out and contact any of us at KWC. [00:47:33] Speaker B: Great. We will put links to all of those in the show notes underneath this episode. So go and stalk Kira on LinkedIn. Reach out. Say hi. And also, if anyone feels like their finances are a bit of a mess, they can just reach out and have a chat with you guys and you'll have a look at them, no obligation, and just say, hey, this is where you're at. This is what we think you should do to try and get them moving in the right direction. [00:47:55] Speaker A: Free business assessment. We'll be happy to chat with you, spend an hour with you, take a look at your books, and give you guys some ideas on where you might want to go or what you might need to do. [00:48:05] Speaker B: Excellent. Well, guys, it's time to open your eyes and look at the numbers and get to know them. And it's also time to get professional help. If you are still trying to do this yourself, then don't. Unless you're an accountant, of course. Get some professional help to do this. It's one of the best things that we ever did. And it's not all rainbows and unicorns. I'd say business is like spaghetti. It's delicious, but it's a mess. And so you need professionals around you to help you try and contain the mess a little bit. [00:48:32] Speaker A: It's a great analogy. [00:48:34] Speaker B: Thank you so much for spending some time with us on the agency hour podcast. I really appreciate it. [00:48:39] Speaker A: Thank you. [00:48:41] Speaker B: Thanks for listening to the agency hour podcast. I hope you enjoyed that episode with Kira as much as I did. I could sit here and talk about leadership with Kira until the cows come home, which you might think is not an obvious conversation to have with an accountant. But I hope we've made the case that finding good talent and keeping them is an expensive exercise. If you lose them, you have to start again, right? So the great analogy that she made was it might be worth giving someone that pay rise. I know one of our mastermind clients last year alone spent $50,000 on recruitment fees. This is a multiple seven figure a year agency. They spent $50,000 on recruiting fees to find good talent. I'm not sure any of the talent they found during that $50,000 spend is still with the agency because they might not have been a good fit. It's bloody hard and expensive to find. Recruit onboard, manage, keep, and develop good talent. When you find them, lean into them. Don't let them go because it just costs more to replace them. Anyway, I hope you found that episode useful and interesting and inspirational, and I hope it's encouraged you to take some action. Just fix one thing. Look at one number in your business. Reach out to Kira, say hello, thank her for her time and her contribution here, and I look forward to speaking with you again next week on the podcast. In the meantime, please subscribe. Share this with anyone you think may benefit from it. Anyone you know who is running an agency or thinking about starting an agency. And if you want to work with us, just get in touch. Go to go agencymaverics.com. That's the best place to start. Go agencymaverics.com. We've got a great offer at the moment where we will work with you for 90 days and we guarantee that you will get a return on investment of working with us. If you don't, we'll just continue working with you for free until you do. I look forward to speaking with you again next week on the agency our podcast. Until then, I'm Troy Dean. And remember, Australia is wider than the moon.

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