I Expect to Grow This Year. Should I Hire Now?

Introduction:

Things are suddenly moving fast at Sarah Segal’s San Francisco PR firm. Several new clients look likely to sign on, and for the first time in a while, growth feels real. Which leaves Sarah with a familiar, nerve-racking question: Do you hire before the work arrives—or wait until the revenue is actually in the door? If she hires now, she may have to cut her own pay until the new business materializes. And there’s no guarantee it will. She still remembers the last downturn, when she had to lay off people she cared about—and she’s determined not to repeat that experience. But if she waits and the clients do sign, she risks something else: overloading her existing team, burning people out, and falling behind before she can recruit and train new hires. The pressure is even higher because Sarah has already set an aggressive revenue goal for 2026.

Plus: Jaci Russo explains why she’s adopted a different approach to planning and budgeting. Instead of guessing how much she can afford to spend, Jaci is changing the order of the math. After revisiting Mike Michalowicz’s Profit First—prompted by a story highlighted in the 21 Hats Morning Report—she’s begun setting profit targets first and forcing every other decision, including hiring, to fit around them. It’s only been a few weeks, but Jaci says the shift is already changing how she thinks about risk, growth, and what she can actually afford.

— Loren Feldman

Guests:

Channon Kennedy is CEO of Kiwi Vision.

Jaci Russo is CEO of BrandRusso.

Sarah Segal is CEO of Segal Communications.

Producer:

Jess Thoubboron is founder of Blank Word.

Full Episode Transcript:

Loren Feldman:
Welcome Channon, Jaci, and Sarah. It’s great to have all of you here. So Sarah, I gather business is pretty good, but you’re feeling some anxiety over what to do next. In the emails we exchanged before this session, you indicated you think you probably should be hiring, but you’re a little hesitant. What are you thinking?

Sarah Segal:
Well, I love that you call this a session, first of all, because it is kind of like therapy, and I talk through everything that’s going on. [Laughter] But for your listeners, most of them have heard about the reset that I had to do in 2023, with some clients leaving for various reasons—and not for our own lack of skill-set. It was mostly their funding issues.

Loren Feldman:
It happens.

Sarah Segal:
It happens. And I let people go who I really liked and I valued and who I thought were great members of the team. But I just couldn’t support their payroll anymore. And so, several years later, things are going well. Randomly, one of those people who I had to lay off actually just came back this fall, which was amazing to me, and I’m so happy to have her back. But I’m in this phase where I’m definitely pulling out of the weeds. I’m not managing day-to-day, except for a couple special clients.

But I’m also in this place where I have to hire people, and having the burden and the responsibility of so many paychecks, it’s a little bit anxiety driving. And I think I mentioned this briefly, but our office is a fine little office, but at some point we’re gonna have to get a bigger office because we have too many people. So, I don’t know. I’m in this, and I know I need to hire people, and I’m just waiting for that other shoe to drop.

Loren Feldman:
Which shoe is that?

Sarah Segal:
I don’t know. I’m waiting for—like, everything is going well. Something’s got to go wrong, right?

Loren Feldman:
Not necessarily. Tell me about the pressure. You say it sounds like it’s pretty clear to you that you have to hire. Describe why that’s clear.

Sarah Segal:
Well, I mean, we have too many clients, and it’s just, if I don’t hire people, then I’m going to risk burnout for my team, and I appreciate that. At an agency, we try to have no one person on more than six to eight clients, because it impacts their ability to focus on each of their clients, if they have too many. And so we do have some people that are managing close to that, if not a couple more than that. And it’s like, do I wait until I have enough clients to hire the next person? Or I’m probably going to have to just do an investment hire.

Loren Feldman:
Wait, what does that mean? What’s an investment hire?

Sarah Segal:
Well, I don’t have enough business to legitimize that hire, but I hire that person knowing that once I get them in place, I can get enough clients to offset their salary. One option is to burn my team out and have them have too many clients and risk impacting the deliverables to our clients, which I don’t want to do. Or what I’ve done in the past is reduce my own salary, hire somebody, and then work toward getting myself whole again. I would be really curious to see how Jaci approaches this. Do you fill the position before you have the work, or you have the work, then fill the position—and risk burning out the people who are filling in the gaps?

Jaci Russo:
I think I’ve done both, and I don’t think there’s a right or a wrong. My tendency is to stretch—not burn out, but stretch. So we’ve got the gig, we’ve got the work, and so much of it is in the startup and getting set up and making the plans and doing the relationship building and making sure everybody’s on the same page. The execution is kind of just making sure people can stay on task and communicate. And so, if we can stretch a little, then I know we’ve got that solid retainer income, then I’m comfortable hiring to keep going.

Sarah Segal:
Do you hire straight out? Do you hire people full-time? Like, we’ve hired people temp to perm, where we have a little more flexibility in that, where we can say, “Hey, listen, we don’t have the full client list for you to justify hiring you full-time, but we can do temp to perm.” And we’ve done that more for junior-level people, but—we’re definitely hiring two junior-level people already. That’s done. That’s in the budget. That’s fine. They’re relatively inexpensive. I think I need another manager-level person just to be the overseer of some big clients.

Loren Feldman:
What’s the market like for those people, Sarah?

Sarah Segal:
That’s a hard market, Loren, because what happens in my industry—and I’m sure Jaci can probably relate to this—is that people, when they get to a certain level, sometimes will leave agency life, or leave being in-house and go independent, and then just do the work as a solo person. Because they don’t want to work for an agency, and so you have less people to choose from in the job market. But that said, the job market is pretty tough for people, at least in our area, and so I feel like I would have luck at finding some people. I don’t know. I don’t know.

Loren Feldman:
I want to come back to some of that. But first, Channon, you’re in a slightly different situation, in that you have a full-time job and the business you’re running is still something of a side hustle—although I gather it’s doing quite well and you have lots of opportunity ahead of you. How do you think about hiring people, and has this been an issue for you as well?

Channon Kennedy:
Yes, and this is such perfect timing, because even though I’m a startup, it’s moving now. I’ve left the ground. And I’m in this thought process—even an admin. I don’t know if I need one. It’s to the point, in order for me to get to the next level, there’s so many things going on. The company’s definitely in growth, so it’s something that is on my mind.

It’s kind of like, I’m not necessarily bringing in the funds to pay for the needs that my business has, and so I still need to pour into it a little bit, but with the expectation that it’s going to take me to that next level where I can then be a bit more profitable. So both of the insights from Sarah and Jaci are definitely helpful. But that’s where I am right now. I need to let go of day-to-day tasks to be able to manage people relationships, be out there marketing, and do the other things to get me there.

Sarah Segal:
Yeah, it’s figuring out the things that you shouldn’t be doing anymore. I think it’s funny that you talk about an admin. I don’t have an admin. I’ve always thought about one. My biggest challenge is I think that I wouldn’t be very good at giving them things to do, because everything lives in my head. Jaci, do you have an admin?

Jaci Russo:
I do, and it’s a stretch position. I’m going to use that word a lot today, I guess. So we set it up as, it’s an entry-level position in the sense that it’s the best way in the door for somebody who wants to have a very long career here, because they work directly with me. They get to be the marketing manager for Brand State U and for BrandRusso. So they learn how to handle two complicated, difficult clients. They go through our entire system of planning, calendar, execution, all the things that we do for our clients. And when they do that well for three, four, five, six months, then they get promoted to handling real clients. And the next one comes in, which means I am the turnstile of new people coming in all the time, but it’s how we train them to be really good client managers.

Sarah Segal:
Oh, that sounds like a headache. [Laughter]

Jaci Russo:
I don’t love it, but you know what? It works.

Loren Feldman:
Why does it sound like a headache, Sarah?

Sarah Segal:
Well, I mean, when I’ve got a team that could train the new people—I mean, you’re constantly training people. I mean, you’re a natural teacher, I guess.

Jaci Russo:
Oh, no. I think people learn by osmosis and just proximity. “Figure it out. Figure it out.”

Sarah Segal:
You’ve gotta have that. You’ve gotta have that.

Loren Feldman:
Jaci, what percentage of your admins actually stick?

Jaci Russo:
I’ve got four still here.

Loren Feldman:
Wow.

Sarah Segal:
I don’t have an admin. I have an operations manager, and she’s one of the people who came back. I feel bad asking her to do anything small. So I wouldn’t mind having somebody just on the admin side, but I feel like that’s a luxury. That’s like getting a Louis Vuitton bag, for me. [Laughter] I’m not there yet. Maybe if I hit some of my financial goals, I’ll do that.

Loren Feldman:
Jaci, do you think of it as a luxury?

Jaci Russo:
I don’t. I think of it as a necessity. And we’ve had years without and years with, and no, I’m not able to do twice as much with me and our coordinator, but it’s probably one and three-quarters. And Sarah, I know you’re like this too—this is a fast-paced business. There’s a lot of pressure. You’re got a lot of balls in the air. You’ve got a lot of spinning plates. And so, somebody needs to be really good at managing that level of chaos and not breaking a sweat. And I can’t put them on a client desk and handle clients if I don’t know they can handle that.

So if they can handle me, and these two clients, and running the office, and the Downtown Workspace, all those different little things—because no one of those is really a full-time job. They’re all a 10-percent job. And so you’ve got 12 10-percent jobs. And so if you can manage all of that, then you’re going to be really good at handling our clients.

Sarah Segal:
When they come in, and they learn through osmosis, what kinds of things are they doing?

Jaci Russo:
I’ll tell you the things Mary did this week, and we are three and a half days into this week. This week, Mary was one of the leads at putting on the Brand Break conference, which we did on Tuesday. So that was working with our PR team for this massive event. Then she set up two new members of the Downtown Workspace.

Loren Feldman:
The Downtown Workspace is your own—

Jaci Russo:
Co-working.

Loren Feldman:
Right, in your office.

Jaci Russo:
Yeah, our co-working. I mean, we have offices and desks, and so there’s members, and they’re coming in. She’s got to coordinate, because we are the virtual mail office for people. So when we get mail for people, she’s got to let them know. It’s a bunch of little things, but you’ve got to keep all that straight, just like a client. So, planning the February content for BrandRusso and for BSU.

Now, Mary’s not writing BrandRusso’s client content—Michael is—but somebody’s got to wrangle him. And so if you know how to get him to pay attention to his tasks and stay on deadline—because like all creatives, he’s got a lot to do, and he’s going to push to the last minute until he gets inspired. And so, she’s got to go push for an answer without being pushy. She coordinated on an email campaign for a new client, which is onboarded, that I was kind of setting up. So she got to learn that. It’s a lot of things.

Sarah Segal:
That’s kind of cool. I mean, remember the old term, “My Girl Friday”? She’s kind of like that.

Jaci Russo:
Yes, it’s exactly like that. Oh, and we started our new intern class. So we have, I think, six interns from the university, or seven, and so she had to get them all set up. So they’ve got to have log-ins and computers, and where are they sitting, and what projects are they working on, or who do they answer to?

Loren Feldman:
How long is one of these admins typically in that role?

Jaci Russo:
Three to six months.

Sarah Segal:
And then they get to work on the client?

Jaci Russo:
Yep.

Loren Feldman:
Channon or Sarah, have either of you ever thought of hiring a virtual admin?

Sarah Segal:
I’ve interviewed many organizations that offer virtual, and I’ve talked to people about virtual admins all the time. I’m not a virtual person. I have to just tell you that. I don’t think that I would be successful with a virtual admin. I think I’d have to have the person in my office.

Loren Feldman:
How about you, Channon?

Channon Kennedy:
I’ve thought about it. Like you said, figuring out what I need help with, for me, I’ve talked to a couple people, but I can still handle it. I’m okay with virtual, it being in the technological space. And plus with my business, it’s more product-driven. Things could be set up online. You know, thinking about marketplaces and things such as that. So it’s not necessarily that I need someone in front of me, but that’s where I’m thinking about it. But I don’t know that I have enough to give them, at this point.

Sarah Segal:
What’s interesting, I’ve started a list many times of like, “All the things I would have an admin do.” [Laughter]

Channon Kennedy:
I’ve been doing that. I’ve been doing that.

Loren Feldman:
And you’re still not impressed enough with your own list?

Sarah Segal:
No, I feel, I don’t know. Maybe it’s my Boston-ness in me, but it seems indulgent to me. And I like the way that Jaci is doing it, where it’s an admin, but it’s really a launching pad. And I think that’s cool. It’s something that I could see here, too, where you get somebody who, for example, has absolutely—like, they didn’t go to school for PR or journalism, which is fine for me. Because I didn’t go to school, undergrad, for PR, journalism. I went to school for international relations. So you’re looking for that first employer that saw something in you and goes, “Okay, you can do this.” My mom was a French history major in undergrad. She ended up being a tax accountant.

So your undergrad doesn’t necessarily define your career. I feel like you find that as you go through your first and second and third jobs. But yeah, it might be a great way to find somebody who you’re like: I like how they conduct themselves. They’re a good communicator. They’re somebody I could eventually put in front of a client. They’re somebody who could actually lead a client someday, but they don’t have any of the check boxes that I need, in terms of: They know how to use this system and that system, and they know how to put a campaign together. But I see something in them. So, hey, you know what? You can be my right-hand person and learn that way, and then you’ll eventually move on to accounts. I like that. That’s really smart, Jaci.

Jaci Russo:
Thanks.

Channon Kennedy:
No, definitely. And you know what I was thinking when Jaci said that? I was like, “That’s, in a way, succession planning.” And that’s something that I foresee that I’m going to need. I have a few people on my team, but having someone who does what I do is a whole different game. And that’s where I’m like, “Okay, well, how do I do this?”

And they’re not going to have the experiences. I’m pretty much building this plane while flying it, you know. But that was a great point. I think it’s cool, Jaci, you do that. And, like I said, I was like, “Oh, succession plan.” And that’s something to consider too, down the line as I grow. I don’t want to do this forever. I’d like to do it for now, but you want to keep it going. And that’s the part you need to think about.

Jaci Russo:
Well, my theory is our clients are our most valuable asset. They’re our resource. They’re everything. And I can’t just put somebody on a client project or account without knowing that they’re going to handle it the right way. And so, how do you know, unless you work with them? And I am their client for six months.

Sarah Segal:
Yeah, but you don’t do that with everybody. You hire senior people right out the gate, don’t you?

Jaci Russo:
I’m racking my brains of 25 years of brand developers, and I can think of one who we hired that did not go through this process.

Sarah Segal:
Really? Wow.

Jaci Russo:
Yep, and she came from an agency in Dallas, and she had an amazing reputation. She was awesome. She was with us for years and years and years, and is now at a different agency across town. And I still have great respect for her and admiration. We like each other, which I cannot say about everybody who’s left here. So yeah, that’s it. I’ve got one, and I may be missing a second one, but I don’t think I am.

Sarah Segal:
We do that for the most part, but it’s not a perfect science. My agency happens to be majority women. It’s not on purpose. It just happens. PR and communications tend to be very dominated by women. But we hired a young man and literally threw him into the fire week one. We’re like, “You’re on client calls. Here you go.” But his resume and his background was, he had six years at a previous agency, basically doing everything that we do.

So we like to hire junior people, and bring them in. But we also find that, because we have such a diversity of clients, some of those people stay for a while, and then they move on into a specialty. Like last year, we had one of our team members—she went from us to starting to work in biotech, because she was very interested in that space and had a little bit of exposure through one of our clients.

And then this December, we had one of our team members who had come on as an intern leave and go to a tech agency, because she was exposed to that through some of our clients, and really wanted to hone that skill instead. So we also are a little bit of a learning platform for them to find what their specialty is, because what we do is not for everybody. And I get that.

Loren Feldman:
Did the guy you threw into the fire succeed?

Sarah Segal:
Oh my God, he’s so great. We’re so happy.

Loren Feldman:
That’s the exact opposite of what Jaci was describing. It sounds like she would never throw somebody into the fire like that unless absolutely necessary, I suppose.

Sarah Segal:
We also put our interns on client calls right away. But we tell our clients, “Hey, we have interns who are going to be on the call, and that’s because we want them to hear what you’re saying and learn the business.” And most of them are fine with that. I don’t think I’ve ever had anybody say, “Oh, that’s not something we want.”

Jaci Russo:
Oh, ours will audit, but they’re not taking the lead.

Sarah Segal:
No, we give them projects, though. What we’ll tend to do is, like, we have a big Monday morning meeting where we go through our clients, and everybody talks about the projects they’re working on. And usually, when it’s like an intern or a new person, the first couple of weeks, they’re quiet. But then I will tell their manager, “Okay, they have to own something that they’re updating and talking to the team about.” And it just gets them used to having to go through for an audience. And then once they’re comfortable doing that, then we’ll have them own something small on a client agenda, like, say the back and forth with a reporter. We’ll have them give the update. And so they’re usually so nervous, though. It’s really cute, because they want to do well. They care.

Loren Feldman:
Sarah, you mentioned your tight quarters. You like your office, but it’s smallish. Would hiring the manager that you’re talking about possibly hiring, would that throw you over the limit, where you would have to get more space?

Sarah Segal:
No, but we started on one floor, and then the people in the office upstairs from us left, and it was empty for a while. So I negotiated with our landlord, who owns the building and owns the retail shop downstairs. It’s like a funky, old San Francisco building in Chinatown. And so we took over the second floor.

And our lease runs out, not this May, but next May. And if we continue to build as we are going, we’re going to be too many people. We just don’t have enough private spaces for conference calls and stuff. I don’t think people will be happy, and it sucks, because I really love this office. I love the location, and I love the price. And with all these AI companies coming into San Francisco, I’m getting worried that I won’t be able to afford something different when our lease runs out.

Loren Feldman:
Which is leading you to think about maybe moving sooner?

Sarah Segal:
I don’t know. I don’t even know how you do that. You have to finish your lease, I assume. I’ve never tried to get out of—this is the first commercial space I’ve ever had, Loren. I don’t know if I can do that. I’m sure that there’s a possibility, but I also don’t want to pay a year and a half of rent just to move.

Jaci Russo:
Any chance that your landlord has a bigger space you could just switch to?

Sarah Segal:
No, they don’t.

Jaci Russo:
Okay. Then my vote would be not to do that. A, you don’t know what a year and a half from now is going to look like. So you have a couple of options. One, create some sort of an optional work from home, or two, create a rotating system so the whole team is together for team meetings once a week, and then it’s a shared workspace, and not everybody works from the desk all the time.

Sarah Segal:
I’ll think about those. I’m not so into the second option. I just think that the logistics of something like that—

Loren Feldman:
Are your people coming in mostly five days a week?

Sarah Segal:
No. Required to come in Tuesday, Thursday, and then Wednesday, we have a bribery thing where if they come in, they get extra stuff. [Laughter] And they like to, because, think about it: When you’re young, your network of people, your community, is built on the people that you work with.

Like, I’m still friends with people who I worked with in a tiny newsroom in Binghamton, New York, you know? I still know those people well, because I was in the trenches with them. We’ve definitely hired people who had previous jobs that they were working from home, and then they’ve been like: It’s so nice to come in and talk to people and have those little side conversations. And you just get so much more out of your day.

Loren Feldman:
Sarah, you mentioned that you’re at ground zero for the AI revolution. And I know you’re interested in adopting AI where possible. You’ve talked about that here before. Has it changed anything for you? I mean, are you able to do more with less, and could that provide something of a solution here?

Sarah Segal:
We were working a lot on it in the fall, more so than this year. This year, I’ve been a little bit sidetracked on new business. I swear to God, people are coming out of—I don’t know about Jaci in her space, but people are coming out of the corners, people I talked to for two years, they’re like, “Hey, I know we talked two years ago. I’m ready to get going now.”

Jaci Russo:
I’m in my 15th day of drowning this year.

Sarah Segal:
Yeah, yeah. It’s been kinda crazy.

Loren Feldman:
Are you both talking about drowning in potential clients?

Sarah Segal:
Yes.

Loren Feldman:
That’s a good thing.

Jaci Russo:
Yes, no, it’s great, but they’re not all going to pan out. But you’ve got to go through the process with every one of them, and then there’s all the other things I already had in process. So, drowning.

Sarah Segal:
I’m right there with you, Jaci. I don’t know what’s in the water, but everybody, all of a sudden—I think that part of it, with us, there’s this realization, maybe, that the value of what we do, in terms of visibility—specifically, social media—young people don’t read anymore. I’m sorry. I love newspapers, I love magazines, but people don’t read anymore. They certainly don’t watch local news and TV and commercials anymore.

Their decision-making comes through their digital exploration. So whether or not that’s social media or ChatGPT or AI-driven recommendations, that’s where people go. And so people, I think, are finding a reason to invest in that, and it’s experiences as well. We have a lot of clients who are like, “Oh, well, we want to do more things in person, so people can come and experience it.” But yeah, it’s been busy, busy.

Loren Feldman:
So AI hasn’t really created the productivity gain that would make a difference for you?

Sarah Segal:
I wonder if Jaci and Channon have the same experience, but everything is an AI thing now. You know, it’s like you’re being saturated with all of these different tools and solutions and ways to do things with the new AI. But what has long-lasting value for you?

Loren Feldman:
I think you’ve talked about it. You love doing that. You like trying new things.

Sarah Segal:
I do. I tried one this week. It was a really cool one. It was a tool that—the big problem with social media is tracking when an influencer posts on behalf of your client, right? Stories on Instagram are fleeting, so they only stay up for a certain period of time. So your team is having to kind of watch and see when it posts, so that when it posts, they can screen grab it and get the metrics, all that kind of stuff. There’s this new AI company that figured that all out, does this automatic screen grab of everything that an influencer does. So I certainly go through all of those things, but they are all doing a dog-and-pony show. And really, if I have a budget of X number of dollars, where is going to be the most valuable for me to spend that money?

Loren Feldman:
Channon, is AI changing your life at all?

Channon Kennedy:
Well, I’m using it a little bit. I don’t know about changing it, but I would say maybe enhancing it. So for me, since I have a physical tool, and I am not as experienced in the trades as a regular tradesperson would be, there are some things that I utilize AI for to either make sure that it makes sense, or that when I’m writing something or I need to reply to something, that I can utilize AI to do research about construction, just things that I don’t have experience doing. But I’m able to gather the data.

Sarah Segal:
I was wondering, you can obviously purchase the product on your website. Have you ever thought about having a chatbot on your site, where if people had questions about it, you could use AI to make that chatbot an expert on construction, framing, and all that kind of stuff, so it’s able to speak the language of your potential customers?

Channon Kennedy:
Yeah, no, that’s a great idea. I have thought about that, and that’s part of some changes that I’d like to implement. So, yes, I guess it’s changing the business.

Loren Feldman:
Channon, I know you’ve made a lot of progress getting your product on store shelves and on websites. I think you’re hopeful that you’re going to wind up in some of those big box stores like Walmart and Home Depot. I guess you are in some Home Depots. What have you learned about getting in the door in those kinds of places?

Channon Kennedy:
So getting in the door, literally, I think, in this age for me with a product, I’d rather be in their online store. So I am on homedepot.com. I’m also on walmart.com. What I’ve learned is, to put it in the store itself, it’s going to cost me a lot more money.

Loren Feldman:
What’s the expense?

Jaci Russo:
All that shelf space.

Channon Kennedy:
Well, the shelf space and the profit margin. They’re wanting at least a 50 percent margin to be in the store. And then I’ve heard stories, I’m not sure yet, but some of the bigger box stores, if they buy a large amount and it doesn’t turn over within a certain amount of time, you may be responsible for buying it back. I don’t know. I haven’t looked at that detail, but—

Loren Feldman:
I’m sure that’s true.

Channon Kennedy:
So people are shopping from their phones or shopping from their laptops. People go to trade shows because there is a lot to see in one place, versus, if you’re looking for a framing tool, you can just type in “framing tool,” and you’ll get a list of them. They want to feel and touch the new things, which is why we go to the trade shows.

And that’s what is getting me to these stores, but staying online, it seems to work. People don’t want to go into places to buy what they need. So, if you can get the order in a day and send it out that day, instead of someone going to wherever they need to go get it—getting out of their cars, waiting in line—some people still love it—but there’s not as many people doing it as they used to.

Loren Feldman:
Jaci, I think this is somewhat relevant to the discussion we’ve been having about deciding when you hire people. You changed your budgeting process this year. First, tell us what that is, and then tell us whether that’s had an impact on how you think about spending the money that you do spend.

Jaci Russo:
It does. And, you know, I just think sometimes the universe sends you signals, and everything aligns. So I bought the book Profit First years ago. I’d read Pumpkin Plan—the same author—and I think he’s brilliant. I was excited. I read it, and it kind of made sense, but I wasn’t, obviously, at a time to hear it. And then, I don’t know, what was it? Maybe two weeks ago in 21 Hats, you mentioned it. You talked about it. You had a recap of somebody who had talked about it. I was like, “Oh, I need to pick that back up again.”

And boy, all of a sudden, everything was clicking. I was like, “Oh my gosh”—and then I remember thinking, “Boy, I wish I’d had this five years ago.” And I was like, “Well, dummy, you did. You just chose to ignore it five years ago.” [Laughter] And so, yeah, I’ve sat down, and it’s how we live our personal lives. You know, we’re quote-unquote envelope people. And so Michael gets an envelope of money, allowance every week, and that’s his to spend: no bills, no responsibilities, just yours.

Loren Feldman:
You literally hand him his cash?

Jaci Russo:
I literally do, Loren. Like an allowance. [Laughter] Luckily, he is confident enough in his masculinity that he does not feel like I’m treating him like a child. He has requested it, just to be clear, but that way, it’s broken up by week and it’s easy for him to get his head around it. He has expensive hobbies, so we’ve got to keep him wrangled in. And he will tell you that he absolutely married me because I had more money in my bank account than he did. And I knew how much I had, and I knew how to keep it, and so he just thought those were the coolest things.

Loren Feldman:
Well, you’ve told us that he doesn’t know how much he gets paid or how much money the business makes.

Jaci Russo:
No. Both of those things are true, and no one needs to tell him. That is not information he needs. We are on a need-to-know basis. And actually, funny enough, he and I were at a luncheon with a group of female entrepreneurs, and he was telling them this story. I was sitting at a different table, and I joined them, like for dessert, and they looked at me with—I don’t know if it was fear, horror, awe. I don’t really know what the expression was. And they said to him, “If another woman was telling us this, we would be rescuing her.” [Laughter] And I was like, “No, he’s happy. Leave him alone. The system works”

But so, I believe in that. You know, I think you’re supposed to pay yourself first. I think you’ve got to prioritize your long-term savings, short-term savings. You’ve got to have your emergency account. I do believe the psychology that time is going to expand to fit the space you give it, and expenses are going to expand to fit the account it’s coming from. And so, when you mentally see you have X dollars in an account, well, then, that’s money you can go spend.

Loren Feldman:
Well, the first step is you have to have the discipline to actually do this. How do you mechanically do it? How do you make it happen and make sure that you don’t slip?

Jaci Russo:
I followed every step of directions. I built out the—actually, he recommends five accounts.

Loren Feldman:
Mike Michalowicz is the name of the author, I believe.

Jaci Russo:
Yes. Thank you. I was not even going to pretend to pronounce his last name correctly. So you have your operating expense account, you have your tax account, you have your profit account, you have your owner-compensation accounts. You have all of these set accounts, and two times a month—and I want to say it’s the 5th and the 25th—you sweep into these structured accounts. You pay your bills. You do certain things at certain times. It’s a very time-structured setup, which works for me. I like it. And then you have another set of accounts that are long-term at a totally different bank: no ATM card, no easy access transfer. Like, it is bury in the backyard in a bucket and forget it’s there kind of stuff.

And so I set up my separate account over there in very high-interest savings accounts. And I started last week. I, shockingly, in six days, have not seen a complete overhaul of our entire system yet, but I am seeing that the process is pretty easy to follow if you just put all the steps in place. And it makes sense to me, which makes it easy for me to follow it. If it didn’t make sense, I would struggle.

In our 25 years of existence, we’ve had three different CPA firms, which some people may think that’s a lot, or some not enough. The first two, I was not super thrilled with, but they were each around for about, well, cumulatively 22 years. The one we have now that we’re in our second full year with, I am thrilled with. They explain things to me in a way my little entrepreneur mind can get its head around. I have never understood it. Then, I could have written the first chapter of the book. Because in the first chapter, he says, he’s talking to these entrepreneurs, and they say they go to their CPA, and their CPA is like, “Look at all this profit.” And he’s like, “Where is the money? Why isn’t it in my account?” And they’re like, “Well, no, you have profit on paper.”

I’ve had those exact conversations with all three CPAs. But the third one was like, “No, dummy, here’s where you spent your profit.” I’m like, “Oh, okay, now it makes sense.” And so the accounting system of sales minus expenses equals profit doesn’t make sense to me. This system of actual operating capital, so you take out things that are not yours, which in our case would be media. That’s not my money. That’s my clients’ money, and the media outlet’s money. I’m just the go-between. So I’ve got to get that out of my mind. That’s not mine. And then I take out tax money, because that belongs to the government, and owners’ compensation, which—we’re fairly compensated. I don’t have that kind of problem that other entrepreneurs do. I’ve had a paycheck since day one, but I want to keep it properly accounted for by the percentage that he suggests. I like that. And then profit right there comes off the top, and then what’s left is my operating money. And that is the smartest thing ever. I love it.

Loren Feldman:
Well, that’s leaving you with less money to spend, though.

Jaci Russo:
Yes, which is the whole point, Loren! That’s the whole point, because you’re going to spend as much as you have, so you need to have less in that account that you look at every day.

Loren Feldman:
Has that forced you to make some difficult decisions?

Jaci Russo:
Well, I was already making them. I just wasn’t sure how deeply to cut. And so this has given me really good insight on what I need to get to. And so, I have a lot of clarity now on how to get to it. And yeah, it’s gonna kind of suck in the short-term, but I’m excited about it.

Loren Feldman:
What’s gonna be the most painful cut?

Jaci Russo:
Oh, that’s a good question. The most painful cut, actually, is gonna be the time that I have to invest to go and track down all the stupid things that we don’t use anymore or don’t need anymore or don’t have any more that no one—and by no one, I mean me—was properly babysitting and keeping track of. And then I’m going to be really mad that I should have canceled it six months ago, 24 months ago. I don’t want to say 36 months ago. And I’m going to add up that amount that I have wasted. And then I’m going to be angry. And then I’m going to be glad that I’m finally doing it.

Loren Feldman:
These are software subscriptions you’re talking about, I’m guessing.

Jaci Russo:
Well, it’s software subscriptions. It’s things we do for clients. It’s a lot of stuff.

Sarah Segal:
Can I ask a silly question? When you do media buys for your clients, I’ve heard that some agencies do it on a credit card. And that way, you get all these benefits and perks back from it, and then you’re just constantly paying that off. Is that how you guys operate?

Jaci Russo:
Oh, let me tell you: The last time I gave Delta U.S. dollars was 2016. And I fly a lot, and I pay off the Amex every Friday.

Sarah Segal:
Okay, so you do do it with all points?

Jaci Russo:
I probably have a balance of about 2 million Delta miles.

Sarah Segal:
Because you pay for it all on your card. I was wondering, because you two travel a lot, and I was like, “I need to do what she does.” But that’s really smart, in terms of doing your budget. My CFO—I have a fractional CFO—and my operations person put an hour on my calendar for today to go through my books and my budget, because I put together a pretty big, audacious goal, in terms of what revenue numbers I want to hit by the end of the year. And they’re like, “All right, if you want to do that, we’re going to do math, and you’ve got to listen to it.”

So I’m a little anxious, but I’m pretty good about maintaining profitability, in that I did a session with this guy, who’s fantastic. I pay for my team, like their salary and stuff like that, but their rates are based on their cost to me. I add in profitability into their rate, so their hourly rate is encompassing of that, plus all the benefits and stuff. And then when they track hours, their hours are tracked based on that overall expense, so we’re able to price out projects pretty well and are able to have that profit. The challenge is, as we grow, I’m having to hire more people that are not billable, and I’m becoming less billable, right? So it’s, how do I subsidize that? I don’t know.

Loren Feldman:
Are you comfortable sharing what your audacious revenue percentage growth is?

Sarah Segal:
Well, I want to hit $2 million by the end of the year. And I’m not at $2 million. So like, I want to hit $2 million by the end of the year.

Loren Feldman:
Do you know what percentage growth that would require?

Sarah Segal:
I will know by the end of the day. [Laughter]

Loren Feldman:
And this is why you’re thinking about hiring people, because you want to hit that goal?

Sarah Segal:
Yeah, I mean, we’re already 20 percent into it. We’re moving quickly, and that’s where I’m like—

Loren Feldman:
Wait, 20 percent into what?

Sarah Segal:
The $2 million. Like making that number, and we’re not even halfway through January.

Jaci Russo:
That’s awesome.

Loren Feldman:
20 percent of the additional revenue that you would need to hit 2 million, right? Got it.

Sarah Segal:
Yes, which is why I have anxiety, because I’m like: Is this sustainable? And it is sustainable. I know it is. I just need to make sure that there are systems and people in place, because I don’t ever want a client to turn around and be like, “Well, what have you done for me lately?”

Loren Feldman:
I remember talking to you and what it was like when you had to let people go. And I’ve been in and around situations like that. I know how painful it is, but you did survive it. And here you are, a couple years later, doing really well. If you hired and something happened, the economy turned, whatever, and you had to back off again—

Sarah Segal:
It’d be much easier this time, because I had never had to do it before.

Loren Feldman:
So then, you do view that, I suspect, as something that’s survivable?

Sarah Segal:
It is. It’s survivable. The first time you have to do that, I think it’s just awful. It’s a terrible experience.

Loren Feldman:
Well, it’s always going to be awful.

Sarah Segal:
I’d never let anybody go before. Or not, I mean, I let people go for cause, but not because—I felt like a failure. I felt like I failed in running a business. And they were the—

Loren Feldman:
Collateral damage.

Sarah Segal:
Yeah, exactly. And once I did it, I mean, the very next day after I did it, there was this mass amount of relief I felt, because all of a sudden I’m not having to, like, rub two sticks together to make payroll. And so, I’m glad I did it, but I certainly don’t want to do a step and repeat. The people who I hire, I like the people, and I want them to flourish. And I want them just to grow. And also, the vibe that happens when you let people go, it’s terrible. It takes a while to get people feeling good again.

Loren Feldman:
Although you did hire some of those people back, so clearly they took it the way you wanted them to take it.

Sarah Segal:
They did. And it was funny, though. The woman I hired back, she texted me, and she’s like, “Hey, I’m leaving my position because of X, Y, and Z. I’m going to be starting to look for stuff. Would you be a reference?” Of course. I was like, “Do you want to come back and work for me, just temporarily, while you’re finding stuff? I mean, I definitely have work for you to do, because there’s a lot of things that you created that I haven’t touched since you left.” And she was like, “Yeah, absolutely.” And she came back and she said that she’d worked at a lot of different places, but it was interesting, because she really appreciated the value of the workplace that I created by experiencing other ones. I felt flattered by it.

Jaci Russo:
That is very flattering.

Sarah Segal:
So I’m so delighted that she’s back. She was the first person I ever hired, Loren. So she knows where all the dead bodies are. [Laughter]

Loren Feldman:
So what’s keeping you from pulling the trigger? What’s the main thing? Is it the fear of having to lay people off again? Is it the real estate? What’s the main issue that keeps you from pushing that button?

Sarah Segal:
I just want to make sure I’m doing the right math. I think there’s no guarantee on it, but things happen. Things happen. You know, there might be a client that we’ve had for a long time that goes, “You know, what? We need to go in a different direction.” Or, “We ran out of money.” I can’t control things that I can’t control. And I think that it’s more mental than not mental, but I think I do need to pull the trigger and get that going, because I sense my team is going to implode if I don’t hire an additional manager. Or they’re gonna come back, and they’re gonna come at me with pitchforks, at least. They get it, though. I’m very transparent with everything. They have visibility to everything that I do.

Loren Feldman:
Jaci or Channon, do either of you have any words of encouragement for Sarah, what she should do?

Sarah Segal:
Because this was a session, my therapy. [Laughter]

Loren Feldman:
That’s what you asked for, right?

Sarah Segal:
It is, it is.

Channon Kennedy:
Go for it. Go for it. Go for it. It seems like everything is lined up. You don’t necessarily have to move now, I understand that, but you’re gonna need that help. And why not be prepared for it than be halfway down and go, “Shoot,” and then try to hire people when you need them? Start it now, get ready. You deserve it. You’ve been working hard for this. So why not jump? Go for it.

Sarah Segal:
I know. I will probably reduce my own salary for the first couple months, just because I like to have a little bit of padding in the bank, just to make sure that I can do this. But it also motivates me to make sure that I am getting them enough business to justify their existence. I’ll get paid at the end of the year.

Loren Feldman:
All right, my thanks to Channon Kennedy, Jaci Russo, and Sarah Segal. Thanks for sharing, everybody.