Do You Have the Stomach for This? 2025 in Review, Part 1
Introduction:
This week—and next week—we take a look back at the conversations we’ve had over the past year, highlighting some of our happiest, smartest, funniest, and most difficult exchanges, including Paul Downs on how he decided which employees to lay off, Jennifer Kerhin on asking ChatGPT to review her performance as CEO, Kate Morgan on why she’s been reluctant to raise her prices, Liz Picarazzi on her search for a domestic manufacturer for her trash enclosures, Ari Weinzweig on why Zingerman’s charges so much for a hamburger, and David C. Barnett on why your business is probably worth more to you owning it than selling it.
There aren’t many places where you can hear entrepreneurs talk about the real-life problems they are confronting right now, today, as they happen—with no guarantee of a happy ending. But those are the conversations I have every week with David Barnett of Business Buyer Advantage, Shawn Busse of Kinesis, Paul Downs of Paul Downs Cabinetmakers, Jay Goltz of Artists Frame Service, Mel Gravely of Triversity Construction, Channon Kennedy of The Morgan Square, Jennifer Kerhin of SB Expos & Events, Lena McGuire of Spóca Kitchen & Bath, Kate Morgan of Boston Human Capital Partners, Liz Picarazzi of Citibin, Jaci Russo of BrandRusso, Sarah Segal of Segal Communications, William Vanderbloemen of Vanderbloemen Search Group, Ted Wolf of Guidewise, and Laura Zander of Jimmy Beans Wool. We also had a couple of special guests appear on the podcast in 2025, including Juliann Rowe of CRI Simple Numbers and Ari Weinzweig of Zingerman’s Community of Businesses.
— Loren Feldman
Producer:
Jess Thoubboron is founder of Blank Word.
Full Episode Transcript:
In our first highlight, from Episode 232, which is titled, “Most People Don’t Have the Stomach for This,” Paul Downs told us that his custom conference table business had gotten off to such a poor start in 2025 that he’d stopped paying himself. Coming off his best year ever, Paul was at a loss to explain what was going wrong, but he knew he couldn’t just hope for things to get better on their own.
Loren Feldman:
Paul, are you sleeping at night?
Paul Downs:
I think I sleep for minutes at a time, less this week. No, I’ve not been sleeping. I mean, just picture it. I’m coming to the realization that I need to do something that involves reducing staff. And of course, that’s an incredibly unpleasant thing to do, and you have to, at some point, sit down with this person and say, “You’ve got to go.”
The terrible thing about it is that the impact of that on them is much worse than it’s going to be on me. I’m fixing my business so that it can survive, and I will survive. And I’m throwing them over the side of the boat, because that’s the only thing that can be done. But it doesn’t mean you like seeing them in the water there. It’s a horrible thing, and I’ve done it before. I’m gonna do it again. But it is awful.
Loren Feldman:
Does it get any easier?
Paul Downs:
No, it does not get any easier.
Loren Feldman:
Do you learn anything? Do you get any better at it?
Paul Downs:
Uh, I guess I’ll see in another week. But I think that as long as you have an explanation that actually makes sense, it’s a little bit easier.
Jay Goltz:
I’ll tell you one thing I’ve learned with that. The last thing you should do is tell them how sick you are about it and blah, blah, blah, because it’s almost insulting. They’re the ones who are out of a job now, and they don’t really want to hear about how upset you are, blah, blah, blah. So certainly, we should be sympathetic, empathetic, and say, “Listen, I’m really sorry this has come down to this, but, you know, I’ve got no choice.”
But on the other hand, I just have to tell you—because I am a little older than you are. We’re not killing anybody. I mean, you have to do what you have to do to keep the business afloat. And the point of the story is, you might not be sleeping at night, but you also paired that with, you’re not going out of business. Because that’s what we do.
Paul Downs:
Yeah, I think that that’s a good comment, and it’s definitely worth reminding everybody of that—particularly the saying, “Oh, this is going to hurt me more than it hurts you.” No. That’s not true. You don’t want to dwell on, “Oh, this is so hard for me.” No, it just has to happen. It’s just surgery that has to happen.
Jay Goltz:
Well, the reality is, though, we provide a nice workplace for people, as long as we can. And he’s got a nice reference. You’ll be happy to help him with that. We treat people nicely, and that’s worth something. So, yes, we have to lay off. In 46 years, very, very little have I had to lay people off. But I have, and the fact of the matter is—it also goes into the formula—while they were there, they had a nice job, and they learned some things, and they’re going to get a good reference. So it’s not like they’re not better off for working for you. That’s the point. They’re better off than they were when they got there. That’s all.
Paul Downs:
I agree. And the last time I had to do a big layoff was 2008, and I was struck by how many people came up afterwards and just thanked me for providing that good workplace experience. They knew that I didn’t do it lightly and that I didn’t not care that I was taking someone’s job away.
In Episode 233, “Everything Liz, Jaci, and Sarah Wanted to Know about Tax,” we brought in an expert, Juliann Rowe of CRI Simple Numbers, to answer a host of tax-related questions, including one Sarah Segal raised about her own compensation. When she takes a draw, Sarah asked, does the draw have to be run through payroll? Or can she just write herself a check?
Loren Feldman:
Sarah, can you tell us what brought this issue up?
Sarah Segal:
Yeah, so thanks for bringing in expertise here, because, yeah, my knowledge of tax code? Not so good. So toward the end of the year, every year, I look at my numbers. And I like to keep money in my accounts, because I have this constant fear that I won’t be able to make payroll. I think that that’s just ingrained in who I am. But at the end of the year, my bookkeeper was asking me whether or not I would be taking money to bonus myself, right?
And I’m used to bonusing my employees and this and that, and what I ended up doing is, I bonused myself through payroll, because just for my own benefit of being able to pay the taxes through my payroll was more desirable so I wouldn’t have to think about it and owe the government money. But could I have just done it through a draw instead? And I didn’t really know what I was supposed to do, if I did it correctly, or if there’s a benefit of doing it through payroll or just a draw in general. And I would love insights on best practices.
Loren Feldman Voiceover:
Okay, so at this point we got into the weeds a bit, so I’m going to summarize what you need to know. The first thing you need to know to answer Sarah’s question is that her corporate structure is an LLC, or limited liability company. Because LLCs are pass-through entities, Sarah pays taxes on all of her earnings whether she takes them out as compensation or whether she leaves them in the business. That means that when she ran her own bonus payment through payroll, she subjected it to an unnecessary additional round of taxation. She could and should have just pocketed the bonus without paying additional taxes.
As we’ll get to later, the situation is a little different for Liz. Her corporate structure is a subchapter S, which is also a pass-through entity, but with an important distinction. It requires owners to pay themselves a fair-market salary and to pay that salary through payroll, where the usual payroll taxes are deducted. That said, Liz can supplement her fair-market salary with bonus draws that should not go through payroll. Liz—just like Sarah—can take those draws without paying additional taxes because she’s already paid them on all of her pass-through income.
It’s worth noting that the reason the IRS requires Subchapter S owners to pay themselves fair-market salaries is to prevent them from avoiding paying payroll taxes on their own compensation. That means the goal for an owner with an S corp is to try to keep their salary as low as possible to minimize the payroll taxes paid but high enough to satisfy the IRS that its fair-market value.
All right, so now, back to Sarah and her question about whether she should run her bonus through payroll.
Sarah Segal:
Okay, so if I take a draw, you’re saying that that’s not taxed?
Juliann Rowe:
Correct.
Loren Feldman:
Let me ask a question: To use Sarah’s example, she asked if she took a draw, if that meant she didn’t have to pay taxes on it. And you said: Yes, that’s right, she does not. But it’s actually that she’s already paid taxes on it. She doesn’t have to pay taxes twice. She’s paid taxes on it because she pays taxes on all of her income as a passthrough. So she can take that draw and not pay additional taxes on it.
Juliann Rowe:
She is done with that distribution, because at the time the income is earned and it’s reported on the tax return, then the income tax, the self-employment tax, is all calculated and paid in at that point. So then, when you have the cash available to take out and to take that distribution, then that’s just you writing yourself a check. There’s no additional income tax or self-employment tax on that.
Sarah Segal:
Okay, but if I were to do that through my payroll system, and I put it in the column on my payroll system as a bonus, does it do the same thing? Does it recognize that?
Juliann Rowe:
If you show it through your payroll system and you call it a bonus, it will take out Social Security taxes, Medicare taxes, and the federal and state withholdings.
Loren Feldman:
So she will be paying twice, unnecessarily.
Juliann Rowe:
Yes.
Sarah Segal:
What about my employees? Like, if I give them a $5,000 bonus, should I be writing them a physical check? Or should I be doing it through payroll?
Juliann Rowe:
No, the bonus to employees should go through payroll. That is compensation to them, and it needs to run through the system to have the appropriate taxes taken out. It’s you as the owner that’s a little bit different. And if you are a single-member LLC reporting all of the income on your personal return, then you technically don’t qualify to even be on payroll. So you would not get a W2 because, again, all of the income is flowing through to you personally. And then you just take those distributions as you can.
In Episode 240, “At 5 O’Clock, I’m Going to Send Everybody an Email,” Paul Downs explained how he decided which employees to lay off and how he chose to inform the staff.
Loren Feldman:
Paul, the last time you were here, you told us that you’d had to lay off two people and you feared you might have to cut deeper. I’m almost afraid to ask, but how’s it going?
Paul Downs:
Cut deeper. We cut very deep. Here’s the problem in a nutshell. Last year, January to March, we sold $1.356 million. This year, January to March: $680,000. March is on track to be the worst month I’ve had since I started taking records. We’re at $73,000 for the month. So I did lay off another seven people. We’ve laid off nine in total.
Loren Feldman:
Out of?
Paul Downs:
Out of, I think we had 26 to start with, and we’re down to 18. Sorry, 27 to 18. And yeah, the only good news is that I’m glad I did it, because I’ve been able to kind of stabilize my cash position. And I now have enough money on hand to run through the end of the first week of June, because my feeling is that, hey, we are still getting calls. We’re getting a fair number of calls from people who have projects. So the demand has not entirely disappeared, but it usually takes time to turn calls into orders. And so what I’ve been trying to do is just manage keeping the runway, making sure we have money to operate for another… however long we can do it, so that we don’t have to cease operations.
And so we’ve laid off the nine people, and everybody else is taking a pay cut, and I’ve taken a complete pay cut. And we’re kind of readjusting our output to match what we suspect we’re going to be doing per month. So last year, we were trying to do $500,000 a month. I think that this year 320k to 350k a month would be a good result. And it’s not likely to happen immediately, but I think that we’re going to see some recovery as the year goes on. That’s my thought.
Sarah Segal:
I have a quick question. First, when I had to do this two years ago, it was terrible, but there’s this immense amount of relief I felt after I had done it—and all of a sudden I could sleep better at night. And I could think a little bit more clearly, like there was a mass amount of stress. So I’m wondering how you’re doing with your mental health. And then my second question is, do you have a rainy-day fund for these kinds of situations? Are you dipping into it, or does that not exist?
Paul Downs:
So mental health, I’m pretty mental healthy, because there really wasn’t an alternative. And when I decided to do the layoffs, I was like, “Okay, now what?” I actually put together a whole presentation for my company that explained the situation as clearly as I could. “Here’s the numbers, here’s where we’re at, here’s where we were at”—and the basic problem being that, coming off your best year ever, you have added staff, and you’ve added equipment, and you’ve done all this stuff to produce more, but you’re carrying a much higher cost. And if the amount of money coming in the door is not nearly enough to sustain that higher cost, then something has to be done.
So I laid that all out for them with numbers and graphs, and then said, “Yeah, and now we’re going to divide the company into two groups: those who are laid off and those who are not laid off.” And everybody was in this presentation. This was talking to everybody at once, and I did the meeting at two in the afternoon, and I said, “At five o’clock, I’m going to send everybody an email, and you’re going to be either in one group or the other.” Because what I did not want to do was give the ones who weren’t laid off the impression that they were just like, “Dodged a bullet, and everything’s fine.” No, you’re going to take a hit, too.
And then what I was trying to do also was not go out of my way to humiliate those who were going to be laid off and to present this not as a question of this being necessarily a result of their individual performance or anything. This is being done to us from outside forces, and the villain is not in the building. And so that seems to have worked pretty well. Well, I sent out the emails and asked people who were being laid off to actually come in the next day and told them, “We’re going to pay you for a couple of days till the next payroll. Here’s what’s going to happen.”
But I didn’t want to just be like, “Get out,” and then let them go home and not really feel part of the company anymore. Because my goal was to lay people off in such a way that I would have the option to bring them back—if we can get sales back where they need to be. Like, I hired all those people for a reason. They’re all good people, and if sales pick up, we’d need them back. So why do the layoffs in such a brutal way that it destroys people and makes them not want to come back?
Now, there’s been a fair amount of discussion in the podcast over the last few weeks of the idea that I would take into account things beyond just job performance in deciding who gets laid off. And my comment, after having heard a lot of criticism about the idea that you would take into account who bought a house or who had a baby, is that in a company my size, I would take all information that I have into account, and that I would never set aside any type of information and say, “Oh, that’s not relevant.” Because all information is relevant. And then I would invite those who feel differently to start their own company and get in trouble and figure out how to do your layoffs yourself.
And that’s your prerogative, but this is how I run my company, which is: I try to get to know my employees, understand who they are, understand what their situation is. I’m very clear on what they do at work, but I just want to know. And so at the end of the day, when I was deciding who was on the layoff list, primarily it was: Are they doing something that we don’t need as much of anymore? And that’s one type of labor. Or are they doing something that we need but we can get the remaining people to do? In other words, can we take one person’s job and eliminate that position, but spread the functions out to other people. Would that work?
And then the third thing would be: Can I get this person back if I lay them off? And that would be a question that would lead me to not lay off someone who I suspect that I would not be able to get back. And so if you were someone who I felt had been around a long time and understood the value of working for me, as opposed to somebody else, I might be more inclined to lay you off, because I feel like I could get you back. And then the last thing would be all of the personal: Who’s got a baby? Who’s got a house? It’s not irrelevant. It’s part of the discussion, but it wasn’t the main thing for me. So, I just want to lay that out there for everybody.
In Episode 243, “I’d Love to Manufacture in the U.S.,” Liz Picarazzi brought us up to date on her tariff situation—including her renewed optimism that after years of trying, she just might be able to find a domestic manufacturer for her trash enclosures.
Loren Feldman:
Liz, can you give us a quick update on your tariff situation? Last time you were here, I can’t even remember what the numbers were for Vietnam and China—and I know they’ve gone back and forth several times since then. What do they look like today?
Liz Picarazzi:
So, I never thought that I would say that I felt lucky to have paid a 52-percent tariff. But I think it, because today the China tariff is 140 percent, so—
Loren Feldman:
Did you say 104 or 140?
Liz Picarazzi:
140 percent.
Loren Feldman:
Wow.
Liz Picarazzi:
Yes. And yesterday, it was 125 percent. We could use the whole show to talk about the number of tariff changes. But to sort of update you on where I am, I had my last two containers from China in March, and those were tariffed at 52 percent. Prior to the Trump presidency, I was at 7.5 percent. So had these two containers arrived on January 20, I would have been paying a 7.5 percent tariff. So it subsequently went up, and as it went up over and over and over up to now, today it’s 140 percent. I am really glad that I moved the Vietnam plan ahead.
It was a high priority in 2024 to diversify our supply chain. We moved it to Vietnam. Now, everybody who heard the reciprocal tariff announcement last week probably remembers that Vietnam’s reciprocal tariff is 46 percent, which for a couple of hours, before I got clarification from my customs broker, I thought that would be applied in addition to the 25 percent tariff that I already pay. But then I did find out later that day that there’s an exclusion on the Section 232 aluminum and steel tariffs of 25 percent, which were implemented in early February. So, long story short, I’m in Vietnam. I have three containers coming over, and all of them are going to be tariffed at 25 percent, unless something changes.
Loren Feldman:
That could never happen. Why 25 percent? We’re talking, I should say, on Thursday, April 10. Two days ago, the reciprocal tariffs went into effect. One day ago, they were lifted for most countries, but not for China. It was put at 10 percent, I believe, for most other countries. Why are you at 25 percent for Vietnam?
Liz Picarazzi:
Because I manufacture in aluminum. Aluminum is subject to what’s called Section 232 tariffs, which I believe are a carry-over from the first Trump administration. And that’s a tariff on those materials coming into the U.S. It can actually be from any country now. So like going to Malaysia or Indonesia or many other Asian countries people are moving to, it doesn’t really matter. I mean, if I manufactured in Canada, I’d be paying a minimum of a 25 percent tariff, because that’s aluminum and steel.
But right now, I am feeling relatively safe in Vietnam. But that’s because I’m comparing the 25 percent to the 145 percent. Last year, when I was moving the Vietnam plan ahead, at times I thought, “Am I being impulsive? Are we spending all this money and time going to Vietnam and then it’s not going to be beneficial?” So at several points along the way recently, there was a point when Vietnam and China were really close in what the tariff amount would have been, and that would have allowed me to have manufacturing in both countries. But as of right now, today, we’re focused on Vietnam while looking for U.S. options.
Loren Feldman:
So you’ve just received a number of shipments. Do you know when you’ll have to place another order?
Liz Picarazzi:
We are definitely going to need to be placing an order in the next four to eight weeks. We have sold a lot of some of our items due to great market demand in New York City. That’s been something that’s really helped us. The New York City trash can law changed in November, and now New Yorkers need to containerize their trash—not in a Citibin, but in a trash can—which means people have big trash cans in front of their homes now. And they’re looking for Citibins to enclose them. So we are almost sold out of one of our main components, but that’s also even more reason for us to look for a U.S. option.
Loren Feldman:
So tell us about this. I mean, you’ve spent years looking for a U.S. option. You now think you might have some options?
Liz Picarazzi:
I think I do. However, I haven’t gotten pricing yet. So last Wednesday, there was the reciprocal tariff announcement, and for a couple of hours, I thought I was going to be tariffed at 71 percent. I was actually on an airplane at the time. I watched the tariff announcement from the plane, and I immediately drafted an email to send to fabricators in the U.S. And these are five that I hadn’t spoken with before, based on a conversation I had from a fellow in EO who manufactures, actually, aluminum and steel cabinets, lockers, and other things. And I finally put two and two together and realized I know someone in the U.S. who manufactures lockers for packages, which is actually also a product I do.
I reached out to him, and he gave me a list of five metal fabricators to contact that he has worked with in the past. So I didn’t wake up as panicked on Thursday morning as I would have been if I hadn’t done that reach out. Because even though this reciprocal tariff, luckily, is not applying to me because of the aluminum, the instability that those reciprocal tariffs caused really shook me into realizing: I am going to give this U.S. option one more try. And I’m going to be even more deliberate and highly involved. I’m not just having my assistant run this process. I’m hands-on, talking to people, meeting with people, doing the NDAs. And I’m feeling optimistic about it.
In Episode 244, “Dear ChatGPT: What Are My Blind Spots?” Jennifer Kerhin told Jaci Russo and Sarah Segal how she’s been using ChatGPT and specifically what happened when she asked it to rate her performance as a CEO.
Loren Feldman:
Jennifer, you recently had a really interesting conversation with ChatGPT, and you’ve shared that conversation with us. You started it by asking, and I quote: “Now that you have learned a lot about me and my company, please think of my top five blind spots as a CEO.” Before we talk about the responses you got, could you just tell us a little bit about your relationship with ChatGPT? How did you— [Laughter]
Jennifer Kerhin:
I like how you call it a relationship.
Loren Feldman:
How did you get so close?
Jennifer Kerhin:
Yeah, with ChatGPT, I feel like I’m cheating on my husband a little bit. But I’m part of a business group, Vistage, my CEO group, and my chair, for the last 18 months, has been on us to embrace AI. And so he’s made us sort of have a goal that we do it once a day. Very basic, very basic. So I started off 18 months ago and instantly bought the $20 a month one.
And over the past time period, I think I probably submit, I don’t know… four or five times a day about problems. And then I’ll go back. So I’ll have an issue on Monday, and you can go back to that discussion thread and add more details to it. So not only am I opening multiple discussion threads to ask for thoughts, advice, comments, whatever. Then I can go back to the one—like on Friday, I’m trying to go back on Monday and add some more details, and it spits out even more information. So I’m a heavy, heavy user.
Loren Feldman:
It sounds like you’re not just using it as a search engine, which some people do. You’re using it as a sounding board.
Jennifer Kerhin:
Oh, yes. Sounding board, analysis. I’ve uploaded spreadsheets and had it give me analysis. I’ve had it make sample business plans. I’ve done some imagery. I wrote a LinkedIn post and created an image from Dali on it that I used that looked amazing—so quite a bit, not beyond the basic level.
Loren Feldman:
So you turned to it and asked it if it could identify for you what your blind spots are. And I’ll just list the five quickly, at least the headline on each of the five. They were, number one, “over reliance on personal stamina.” Two, “loyalty to underperforming staff.” Three, “innovation bottleneck,” meaning you’re the innovation bottleneck. Four, “avoidance of formalized systems.” And five, “delayed exit-strategy planning.” What was your reaction? Did you feel seen by that?
Jennifer Kerhin:
It was right on. I mean, it was totally, absolutely true. I asked a lot of questions about systems over a year and a half ago, but we have fixed that. So the avoidance of formalized systems was due to it seeing me track the first six months of a lot of questions. And then I never went back to it and said, “Oh, we fixed this. Oh, we did this now.” So I think that one was true, but it’s gotten fixed.
But the other ones, oh my gosh. And I didn’t realize how tones and how you talk to it—ChatGPT wants to make you feel good. It wants to spit out stuff like, “Oh, you’re the best CEO in the world.” So lots of times when you’re asking for advice, it comes back to you like, “Oh, you’re so great.” By forcing it to come back with my negatives, I was like, “Wow, how did they get the ‘over reliance on personal stamina?’” That was absolutely true.
Loren Feldman:
You know what I thought about that? You talked about that a good bit on the podcast.
Jennifer Kerhin:
Did I?
Loren Feldman:
And it made me wonder if ChatGPT listens to the 21 Hats Podcast. [Laughter]
Jennifer Kerhin:
I don’t know!
Sarah Segal:
Question for you: So you got this response immediately after that entry? Because I did the same thing based on what you shared, and it came back asking me for additional information.
Jennifer Kerhin:
So I asked it, “Please tell me my five blind spots.” And within five seconds, it brought those instantly.
Sarah Segal:
It didn’t ask you for additional information?
Jennifer Kerhin:
No, not at all. What you see is exactly what I asked, and then it instantly came back.
Sarah Segal:
Because mine, it asked me for additional details on my biggest challenges, team structure, where I feel like I’m crushing it. It asked me for additional input.
Jennifer Kerhin:
Nope, nope. This was it. So, with my five blind spots, it then wrote about three to four sentences under it. And then it said what to watch out for, and three bullet points. So it formatted it in a very easy to understand, easy to read—and then, at the end of it, it said, “Do you want me to help you come up with ideas to fix this?” basically. But my first glance: Oh my gosh, it’s perfect. This is exactly true. This is something that I need to—these are my blind spots I need to fix.
Loren Feldman:
Jaci, you, too, were inspired by what Jennifer sent us to ask the same question.
Jaci Russo:
Immediately. [Laughter]
Loren Feldman:
Did you get answers? And did you agree with those answers?
Jaci Russo:
I did, and I don’t, but I do. So it did not immediately have an answer for me. So I used the same prompt she did because I wanted to be lined up. I said, “Do you have enough information?” And it said, “No.” And so it gave me some questions.
Sarah Segal:
Yeah, that’s what I got.
Jaci Russo:
Yeah, and so it gave me some great questions that really started an excellent conversation. It wanted to know daily and weekly responsibilities, what fills my time, executive team structure, who handles what in the company, and am I wearing multiple hats, current revenue goals and blockers, feedback from employees or customers that I’ve recently received (good and bad), and then my growth goals. And so I said, “I’ll answer those. I want to see your first pass, and then I’ll answer those.”
So it gave me what I think was probably a pretty sound answer: delegating versus owning too much, over-investing in new initiatives without a sunset plan. That is not wrong, because, you know, Loren, I’m always starting new things. Underestimating sales infrastructure, not fully leveraging brand equity I already have, and measuring success through activity and not outcomes. And I was like, “Well, I feel like fighting, so that must resonate.”
But then I gave it a bunch of information. So I gave it the answers to all of its questions about what fills my time, my executive team structure, my revenue goals. You know, in 2020, we grew 6 percent, 3 percent, 43 percent, 13 percent, 1 percent. Our goals for this year—which is a big jump because of our new salesperson. And so, then it gave me a refined answer that was very accurate. It was really good.
Jennifer Kerhin:
What was the big difference?
Jaci Russo:
Well, it took my actual answers and gave me real insight. And so it talked about scaling, execution, and making sure I’m not scaling my own bandwidth. You know, the fact that we were over-dependent on relationship-based sales, but that now we have the salesperson. And it even says, “Robyn’s hire is a big step. Good job.” I’m like, “I love when you talk to me like you’re my best friend.” And it even spells Robyn’s name correctly.
It’s like, “energy-dilution across brands,” and it’s not wrong. You know, I am technically running three companies, and I don’t do it as well as I think other people that try to do it, because all of them are still growing. And so it’s hard to scale three things at the same time. It gave an antidote to every challenge it presented. It gave a solution.
In Episode 245, “Maybe Earnouts Aren’t as Bad as You Think,” David Barnett answered a question from William Vanderbloemen about what owners should think about if they want to have the option of selling their business one day.
William Vanderbloemen:
All of us are interim owners, at one level or another. So what should business owners that are sitting here—I’m 55. I’m not tired. I don’t have to move or retire. We’re in great shape. So what should I be doing over the—let’s call it the next 10 years—to position my small business to be highly appealing?
David Barnett:
The value of the small business is always tied to the cash flow. So you want to try to have the highest possible earnings that you can. And when a buyer looks at the business, they’re going to say, “What’s this cash flow, and what’s the cash flow worth to me, given the risks of this industry?” And then the next question they will ask is, “What is the likelihood that the cash flow will continue under my stewardship?” And that’s when they start to look at things like the goodwill question that we talked about earlier. You know: Where are the relationships? Are they with a series of sales people that are employees of the company? Or are they with the owner, for example? And what are the processes? Am I going to be able to run this business?
We think of processes and procedures like the manual that someone gets when they buy a McDonald’s franchise—which I’ve never seen in person but purportedly tells you everything from how to mop the floor to how to make the hamburgers to how to sponsor the Little League baseball team. Well, it doesn’t necessarily have to be as detailed as that, but you have to be able to say to someone, “Here’s our plan every year for our marketing. This is how we advertise. And here’s the folders that have all the ads we’ve run for the last 10 years. And this is the person who we go to when we need design work done.” And you actually have it documented where different things can be found. And if that buyer sees that you are organized in such a way that it’s not just all in your head, that’s going to cover a lot of distance in answering this question.
And then the last part is that the buyer knows that the connection to a lot of the history is with you, the seller. And so, they’re probably going to propose a deal structure that gives you a good reason to continue to be available for them well into the future. And that often means a deal structure that has some kind of earn out, or seller finance note, or something like that, so that you will be receiving payments from the buyer for quite some time into the future, which gives you a reason to want them to succeed.
So this is an alignment of interests. So this causes you to pick the right buyer that you think is going to be successful. But it also gives you a reason to pick up the phone when they call eight months after the sale and say, “Hey, I’m having an issue with that big customer that we have. And these are the things that are going on. I’m wondering if I could talk with you for a little bit about how you used to deal with that customer?”
And you’re going to be happy to take that call, because you know that if they lose that customer, then the business will be in jeopardy, and so will the balance of your payments. And so that’s the big advantage for buying a business, is that you’ve got that resource available in the experience and history of the seller.
In Episode 247, “We Get Paid to Judge People,” Kate Morgan told Jay Goltz and Paul Downs about her business, which provides recruiting and HR services, mostly to tech startups. After a very difficult stretch caused by the pandemic, Kate’s business has been growing again of late—but Paul and Jay came to the conclusion that she’s leaving money on the table. They think she needs to raise her prices.
Paul Downs:
I’ve got a question for you. So you said, I thought I heard, $1.4 million in revenues?
Kate Morgan:
Yes.
Paul Downs:
And nine people?
Kate Morgan:
Nine this year, yes.
Paul Downs:
Is that nine full-time?
Kate Morgan:
No, the HR folks right now are more on a fractional basis to us.
Paul Downs:
How many full time equivalents?
Kate Morgan:
Then it’s the six beyond that.
Paul Downs:
Okay, because the ratio of revenue per person is on the low side, particularly if it’s nine into $1.4 million. But on the other hand, you don’t have an office, you don’t have to buy materials or anything, so maybe it works. But I’m just wondering whether you’re underpricing. Because $102-an-hour in the trades barely gets you a plumber’s apprentice.
Jay Goltz:
I charge that for pretty much hanging pictures. No, you’re right, that’s just not a lot of money these days.
Paul Downs:
Yeah. I mean, when you come in with such a price and performance difference between your competitors, do you ever think, “Maybe I’m leaving money on the table here?”
Kate Morgan:
Every single day.
Jay Goltz:
If you would have told me $150/hour, I would have thought, “Oh, that’s a really good price,” because I’m telling you, I just paid two and a quarter and got terrible results.
Kate Morgan:
Yeah, the point is that we want to be able to—yeah, this is the problem. Like, I will tell you, and my team will tell you, probably: I don’t pay great. You know, I’m not off the charts. I’m kind of mid-ground, if you will. And, actually, we are struggling with profitability, looking at our profit margins right now. But in the same vein, I mean, we’re growing in an industry that we’re seeing shrinking right now, and so it’s one of these things: Do I want to scare the squirrels and jump up our prices? That’s where I’ve been struggling.
Jay Goltz:
And if you ask me, “Jay, what’s the biggest mistake you’ve made in business?” I would tell you—and I always say this—I was always afraid to charge more, and it cost me millions of dollars over the years. And I’m totally with Paul. I think you could easily get $130 to $140 and get over the emotional part, which certainly I know what it means. It’s just you are under market.
Paul Downs:
Yeah, that’s why you’re growing at the moment. I mean, it may also be other things, but clearly you’re cheaper than all the alternatives. So it’s not: What does it cost me? Or: What do I feel about it? It’s: What’s plan B if they decide not to go with me? And if the next choice for them is 40, 50, 60 percent higher, you’ve got some room to raise your prices, honestly.
Kate Morgan:
Yeah, well, that’s where we’re kind of at this strange point where, if they don’t go with us, they go with nothing on the software side.
Jay Goltz:
That makes sense.
Kate Morgan:
They’ll post and pray and hope, because nobody has the pockets that they used to have to move forward.
In Episode 249, “Mom, I’m Not Taking the LSAT,” which we recorded at our 21 Hats Live event in Ann Arbor, Michigan, Ari Weinzweig, co-founder of Zingerman’s Community of Businesses, talked about the company’s pricing strategy.
Loren Feldman:
Coming out of the pandemic, which you told us the other night was very tough on your business, there was a lot of talk about how the basic restaurant model just doesn’t work. The margins are too thin. People don’t want to pay what it costs.
Ari Weinzweig:
Those are beliefs. [Laughter]
Loren Feldman:
Employees don’t get paid enough.
Ari Weinzweig:
No, they’re self-fulfilling beliefs. We opened when people said—they said nobody would pay for what we were selling.
Loren Feldman:
Do you have a better business model? Or do you just charge what it takes to make the model work?
Ari Weinzweig:
We just try to charge what it takes to make it work. And I’m like, “If people don’t want to pay, then we’ll go out of business. But I’d rather go out of business charging what we need to charge than go out of business under-charging and never knowing whether they would pay what we need to charge.” [Applause]
Ari Weinzweig:
So, I mean, here’s another story from there from 10 years ago. The beauty of pouring water is you have these conversations that nobody would have with you. So I’m pouring water, and I don’t know, there’s a guy at that first little table—everybody in restaurants can remember exactly where you sat seven years later and what you had for dinner. I don’t know why, but anyway, so they’re at that first little table, and I’m pouring water, and I’m like, “Can I get you anything? How’s it going?” And the guy’s like, “Oh, it’s really good, but the burger’s too pricey”—like that, you know, kind of dismissive. And I’m like, “I’m sorry. Is it good?” He goes, “Oh, it’s awesome.” [Laughter] I was like, “Well, I feel bad, but that’s what it costs for that burger.” And he goes, “Yeah, but it’s way too pricey.” And I’m like, “Well, here’s how it works.”
And I kind of knew him. Now it’s more, but at the time, it was like a $16 burger. I’m like, “I could get you a $14 burger, and it won’t be quite as good. And I can get you a $12 burger, and it’ll be a little less good. And I can get you a $10 burger, and it’ll be less good still.” And I go all the way down to a $4 burger. He goes, “No, I want this burger.” I’m like, “Well, if you want that burger, that’s what it costs.” And that’s what it is.
In Episode 252, “Why Don’t You Just Sell the Business?” David Barnett, Mel Gravely, and Kate Morgan discussed why businesses tend to be worth less than their owners want to believe. As David points out, it’s important to remember that the business you sell really isn’t the same business someone else buys—especially if they have to borrow money to buy it. The sale itself changes the business.
Loren Feldman:
Kate, when you were on the last time you told us that there was a period, I think a couple years ago, where you thought about selling your business.
Kate Morgan:
I got right to the altar. Yeah, we were supposed to close April 10 of 2020. So we all know what happened in March of 2020. And so it was all dialed in. We had the date all signed and everything. And you know, when Covid hit, I just didn’t know what my company was going to look like at the end of it, and I really didn’t want to leave any money on the table with my earnout. And so I pulled back. I don’t know, it was just an amazing opportunity to get to the point of jumping off, and then just having some clarity. So when I pulled back, on some levels, I was like, “Well, it would have been fine.” I would have had my earnout. Everything was fantastic.
But in the bigger picture, I really did the math on it, and—Dave, I’d love to get your impression of this—but I’ve always been told, and this was kind of what the the numbers were aligning at, is you’re really at like, one- to one-and-a-half times Ebitda for a professional services company. And when I started thinking about it, I was like, “Well, okay, I’m on the wrong side of 50 now,” but at the time, I was still feeling like, “Okay, well, what am I going to do after this?” I was working on another company, and I was like, “Okay, well, I’ll exit that one and focus on this new company.” That new company had to roll up because of Covid.
So now I’m doing a little bit of what, Mel, you’re talking about. And I love how you phrased it, taking it from ownership to leadership. I’m actually grooming my senior team members because my exit now is, “Well, just hold on to it.” And then kind of move myself to chairman of the board and let it operate on its own, and just give them the opportunity to step into those shoes.
Mel Gravely:
I’m interested in the insight on that question, because I get a lot of people saying, “Why don’t you just exit?” You know, in our business, our multiple will be a little higher than one and a half times, but it probably won’t get to four times. People are pressing: “Why don’t you just sell?” And this business, if we can incent the executive team to lead it, I believe, even financially, it’s worth more to my family as an asset than it is to sell it. But I realize, David, you’re in the business of helping people buy and sell. What’s your take on that?
David Barnett:
So with respect to what Kate said about the multiple, one-and-a-half times Ebitda sounds like a low multiple, but I’m wondering if you really mean one-and-a-half-times seller’s discretionary earnings. And this is the kind of can of worms that people often get into when they’re in business, operating a business, and they’re kind of part-time engaged in this world. And they’ll read articles or listen to interviews, and they’ll be hearing conversations people are having about different aspects of businesses, or what they’re worth, or what they sell for. And one of the key pitfalls of this for entrepreneurs is really understanding what kind of businesses the conversations are about that you’re tuning into.
Larger businesses, sort of in the mid-market—what I would describe as businesses with tens of millions of sales, and Ebitdas over a million dollars—those businesses can easily sell for four or five or more times Ebitda. But small little businesses—you know, a service business heavily dependent on the owner, with very little in the way of a barrier to entry for new competitors—could easily sell for less than two times seller’s discretionary earnings. And those two numbers, Ebitda and SDE, are very different calculations, and when you confuse the multipliers with the actual cash flow level, that’s when people end up mispricing either too high or too low. And then, if they go to market that way, they get frustrated when they can’t meet someone who’s willing to come to do a deal with them. And so it can be very complex.
What I would say, as far as Mel’s comment about keeping the business, just imagine this: Right now—and I haven’t seen Mel’s financial statements, but—if you’ve owned the business for a long time, the balance sheet is probably pretty strong. You’ve had time to earn money, pay down debts. You’ve got a good equity position. This makes the business strong, and it makes it better able to weather storms. If I were to come along and buy Mel’s business, I would come together on a price, and I would pay Mel. But a good chunk of that money would probably be borrowed. Now, I would have a much weaker balance sheet than what Mel enjoys today. And a big chunk of the cash flow that he currently enjoys, I would end up giving to my bank. And so I would be in a more fragile position. And this is one of the reasons why a business may be worth more to its current owners than to a buyer, because the business they end up with after they buy is not the same business.
And so from Mel’s point of view, even if he steps back, and, let’s say, the business becomes less efficient because Mel’s not there every day running it, he may be able to withstand that decrease in efficiency and profitability and still end up further ahead than somebody who borrows money to buy the business. And so it creates a unique scenario or situation. Did something like that enter into your reasoning at all, Mel, when you were thinking about this, that sort of turning the business into an annuity that would just kind of pay you for being the owner, like owning stock in a big company?
Mel Gravely:
You made me sound really, really smart right there. [Laughter] So the business has 130 people and a solid management team. The new CEO is, quite frankly, better at this than I was. He knows our business better. And so they’re not just positioned to idle, they’re positioned to grow. And what was really going into my mind was the ability to have it as a family asset.
I saw it as a way to bring our family together, to educate our children on stewardship of an asset, how to be good philanthropists and also to be good, caring, loving people of the employees who work there—just a way to live out a family legacy. And we’re in the first two percent of going down that road. So part of it was financial, but the most part was not. The value was bigger than the dollar to me. The value was the legacy of what it could mean as a family asset.
Loren Feldman:
It wasn’t really an assessment of what you could sell the business for, compared to what you would perhaps earn if you maintain ownership?
Mel Gravely:
That wasn’t the reason for it, but as I’m talking to advisors, they’re saying to me, “Hey, this is worth more to you owning it, than selling it—unless you’re worried about its ability to be successful down the road. And if so, then you should absolutely sell it. If you’re not going to be able to sleep at night, if you can’t walk away and not be the person who runs it. If you’re worried about day-to-day management, you should sell it.”
But I was not worried about day-to-day management, at least, I haven’t been yet. And so they confirmed my thinking more than created my thinking, Loren, but it was the multi-generational legacy, family-wealth creation that drove it. And I bought this business later in life. I bought it in 2009, and so I didn’t own it for a super long time. And our family really hadn’t reaped the benefits of the growth of this business. I shouldn’t say that. We’ve reached some benefits, but not significant, and I just thought we needed a little more time.”
In Episode 253, “Something’s Happening in the Job Market,” I threw Paul Downs, Liz Picarazzi, and Kate Morgan a question I’d seen posted on the small business subreddit. The question came from a former owner who was thinking he might want to be an owner again. In his post, he basically asked the question: Is this an okay time to start a business, or am I crazy? I started by reading the post:
Loren Feldman:
“I’m a bit paranoid about the economic implications of our current administration. I don’t know what to expect, and things feel very uncertain regarding the future/everything. Am I being overly paranoid? I want to start a food service business. I ran the numbers on the conservative side, and they look great. I’m passionate about the concept, and it feeds into a longer term goal I have. I had a successful small business for about seven years until Covid hit. The summer before Covid, I went all in to scale that business and, well, everything went to shit. It was a business that heavily correlated with the travel industry. I lost it all. So now I’m a bit trigger shy. My new idea is much safer to try, and I plan to scale it slowly and responsibly. But am I an idiot to go at it now, or am I just overthinking it, looking for problems?”
Anybody?
Paul Downs:
Oof. Yeah, don’t do it. [Laughter]
Loren Feldman:
Why, Paul?
Paul Downs:
When he tried to scale a business before Covid came, it sounded like it didn’t go well. And if you make up a bunch of numbers that show your business is going to be a huge success, and then take that as an indication you should go all in, that’s also a bad idea. I think that what would have made me more confident that this person could succeed would be maybe a little bit more information about what the local market is, what the business is.
I mean, it’s not like food service is a known winner. That’s a very difficult industry with an enormous amount of competition. So maybe, “No, don’t do it,” is a little harsh. But I would want to know a whole lot more before I was putting my own money into something like that.
Liz Picarazzi:
Yeah, I would also run the business plan by someone who has started restaurant businesses, because what I’ve found with them is, often, they’re not good business people. He doesn’t sound like he’s a chef, but there’s often people who are chefs who want to start a restaurant business because they like to cook, but then they don’t cook. We all know, if you’re not going to cook, if you’re in the restaurant business, you’re going to be doing everything else, so assessing your ability to function in that role. And then also, it’s all about location. You know, if one has a very good location and can see that there are other food service places that are killing it, then that’s pretty good evidence. But it’s highly risky.
Kate Morgan:
So I actually had a food service idea before I launched Boston Human Capital Partners, and I took it to a CEO who I really respected. I had crunched all my numbers and everything, and I will tell you it was 2010, so we’re still in the recession. And he looked at me, he goes, “Well, this is interesting.” He goes, “But don’t be dumb. Don’t ever start a business you don’t know anything about.” And I said, “Good point.” I ripped up that business plan, wrote my business plan for Boston HCP, and within two and a half years, I was over $2 million. So, yeah, I think now is actually a great time to start a business, as long as you really understand it.
Loren Feldman:
That was the question I was going to ask next: If you take aside the specifics to this business—and obviously, as you’ve all pointed out, that’s tremendously important—but the other aspect of this question is just, right now, assuming he had all his ducks in a row, would this be a good or a terrible or it doesn’t matter time to start a business?
Paul Downs:
Bad time, and I’ll tell you why. When I was writing for you, Loren, I would get all kinds of emails from people who were failing, because that was sort of what I was talking about. And I came to think that there were three ways to fail. And the first one is: You just do dumb things. You don’t understand the business. You make bad decisions, hire bad people, whatever things that you are in control of that you do poorly: number one. Number two: vast forces. In other words, you launch your business. It’s like throwing a little, tiny boat in a big river, and if the river is raging or the river is drying up due to nothing that you’re in control of—like tariffs, like interest rates—that can kill you pretty thoroughly. And then the third thing is just bad luck. You could be in a great position, be running your business great, times are fantastic, and you get cancer.
And those three things are what you should think about. How would I survive any or all of them? And everybody’s convinced they’re going to make the right decisions, and sometimes they do. There’s really nothing to be said about that, other than if we knew more about this person and had some idea of: Are they a sensible person who you know can execute a plan, or do they suffer from manic depression, and this is just the manic phase? These are real things.
But I mean, the guy’s already been through this with Covid. He was doing whatever he was doing, and then Covid just comes and wipes him out. That can happen, and we’re in the most unstable government situation I’ve seen in my entire life. And so I just think that this is a bad moment to be betting the farm. And leaving aside bad luck, because good luck and bad luck happen at random, and they can help you and they can hurt you. But they do cause damage when it’s bad luck, so that’s how I think about that. And I think this is not a great time to start a business.
Kate Morgan:
See, I’m in a very different boat because I coach founders, and I particularly like student entrepreneurs that are graduating, that are running on their business ideas. I look at it from the perspective of: Yeah, the moment is testing the souls of founders across the board. But the very things that make this time so damn hard—the ambiguity, chaos, and the fear—are also the things that can push us onto the other side. So if you’re trying to build a company that’s going to be competing, there’s a lot of founders out there that are just fatigued. And if you’re bringing a new perspective, a new different light to how they approach the business and their customers and clients, there’s actually a huge opportunity to get sharehold.
Paul Downs:
Maybe. Let me just throw out a different path for this person. If they have such a great idea, then, first of all, talking to someone who’s operating the same business is a pretty good idea. And you’re correct that there are a lot of businesses with very tired owners, but those businesses are up and running. They have a premise, they have customers, they have a business model that’s been successful. Why isn’t this person looking at acquiring an existing business with an owner ready to retire?
That, to me, strikes as a much higher percentage successfully, because you’ve got someone who’s motivated to show you how the business works. And if you’re a nice person, maybe you could get them to hang around and show you the ropes a little bit. When you just start going off your own faith, it can work. It worked for me, but it was a very, very difficult journey, and I would have been much better off if I had worked for someone in the industry for a few years and figured out what was actually going on.
Liz Picarazzi:
I would also say to talk to people who have been successful at it, like in food service, like in your own neighborhood. But just as importantly, talk to some people who have failed at it. So we all know which restaurants are in the neighborhood that come and go. If there’s a way to get in touch with anybody who had something fail and find out it had to do with the landlord. It had to do with the cost of goods going up. I wasn’t able to hire the right people. Whatever the reasons are, they’re going to get a taste of what can go wrong, rather than just talking to people about what can go right and how they were successful.
Loren Feldman:
I’ve had numerous conversations with business owners who started a business during a difficult time, like the Great Recession, and ended up thinking that that actually had been an advantage—that if the economy had been stronger, they might not have been ready to handle an additional flow of business. It was good for them to have the opportunity during a difficult time to try different things, get their feet on the ground, and then when the economy picked up, they were prepared and ready to run with it.
Kate Morgan:
When I started in 2011 the recession was winding down, but the job market actually didn’t come back until 2014. And so there were a lot of people who were too timid to be doing what I was doing, so I used it as a competitive advantage.
Loren Feldman:
That’s what I’m talking about.
Paul Downs:
All right, good for you. I’m glad you succeeded. [Laughter]
Loren Feldman:
It sounds like you’re biting your tongue, Paul.
Paul Downs:
Well, we’re not talking to the one who started at the same time and failed, and they’re out there. We have no idea, right? And I mean, this is just a constant problem with business communication. You only hear from the winners, you don’t hear from the losers, and so it’s difficult to to really evaluate what happens when you just are missing half the story.
Loren Feldman:
That’s a great point, but that’s one of the things I admire about you guys. You guys have all had your ups and downs. You’ve survived difficult times, and best of all, you’ve been willing to discuss them so that other people can learn from your mistakes.
In Episode 256, “How Many Clients Did that Post Bring You?” David Barnett, Kate Morgan, and Sarah Segal compared notes on how they market themselves—and their businesses—online. All three are active on LinkedIn, but their strategies and goals are quite different. Are they seeking likes? Credibility? Clients? All three? “Sales and revenue are ultimately the metric we have to look at,” says David. “Likes and shares don’t pay any bills.”
Sarah Segal:
I can tell you exactly which one of my posts did the best, and I know exactly why, because it was that behind-the-scenes honesty. I posted a photograph of my high school transcript for my freshman year in high school, and it blew up, because I did terribly my freshman year in high school. So, it was that, “Hey, you know what, we’re all human.” We’re all trying to figure this shit out as we go. And you know, maybe being a lifeguard is not the coolest job in the world, but it is a job. I mean, you get to be outside. You know, there’s a lot of benefits to it, but I don’t know. I like this stuff.
David Barnett:
Hang on, hang on. You said the post was successful. How many new clients did that post bring you?
Sarah Segal:
But I’m not getting clients from LinkedIn.
David Barnett:
Well, and this is the issue that I have with a lot of people. I’ve actually given a talk about this at a conference in the past. It’s that the metrics we see on social media—things like the likes, the shares, the subscribes, the comments—they’re vanity metrics. They don’t actually have a business purpose. It’s a metric that helps the social media platform and its algorithm.
Because basically, these social media platforms are trying to replace television. They want people’s attention. And in the talk that I gave a couple years ago, I said, “Look, if you were trying to sell something back in 1985, and you had an opportunity to stand in front of a room of 30 qualified people, would you go to that event and give that talk?” And of course you would. And so, if you put up any kind of social media content that only gets 35 views, but it gets viewed by 35 people who are ideal prospects who can use your product or service, to me, that’s a very successful piece of content.
But you’re not going to be rewarded by the algorithm or anything like that for putting that out there, and that’s the difference. I get contacted all the time by people who want to offer to edit my videos and make them shinier and happier and more alluring for people to watch. But I don’t want to put out content that’s going to be alluring to 13-year-olds. I put out content that answers an entrepreneur’s question, who may have a need to hire me.
And this is the tightrope I think people have to walk, because I talk to people all the time who will say, “I started to create online content, but nobody ever watched, and I didn’t get any followers, so I quit.” But if somebody’s looking up, for example, “How do I get a window replaced in Bangor, Maine?” and you’re a window guy in Bangor, and you have a video that says, “Four different ways to replace a window in Bangor Maine,” and you’re going to be the guy who comes up every time that is searched, you don’t need a lot of views because you’re getting the right views.
Kate Morgan:
Well, I think you’re looking at this like, there’s got to be a direct correlation to the effort put out, because it doesn’t cost anything, really, to put content out, unless you want to pay for boosting. I’m in Boston, and we only trust people that we know. I have to be out there, I have to be talking, because that’s how they’re going to remember me. I think that’s the big critical piece.
Loren Feldman:
It does cost something, though, I mean, at least in terms of time. Have you thought, Kate, about how much time you devote to not just hanging out on LinkedIn but actually creating content for it?
Kate Morgan:
Well, I’m a prolific content creator. I think stuff, I write stuff, and then I post stuff. And I’m using it sort of multi-channel. We have our newsletter that we’re putting out, so I’ll kind of replicate it there. On a DISC profile, I’m dominant and high “I.” I’m out there, I’m chatting, I’m gregarious that way. So I’m going to put stuff out. And yeah, maybe there’s a little bit of a dopamine surge when I see that I got 7,000 instances.
So, I like it. It doesn’t bother me. And I really like to follow who’s actually engaging, because here’s the thing: I don’t want to deal with HR people. I want to deal with entrepreneurs. And so everything I talk about is going to be more about entrepreneurship than anything else. And I think entrepreneurs—because that’s the client I’m servicing—they’re looking for the beacon in the storm. And so when I’m posting relatable things, it helps them feel more connected to me, even before having that conversation.
Loren Feldman:
David, are there metrics that you do follow that you think do show the true value of the content you’re creating?
David Barnett:
Yeah, so on our engagement agreements, there’s a space people have to fill in that says, “Where did you hear about us and our services?” And so when people sign up to hire us, they have to fill that in. And so a lot of people will fill it in, like “YouTube.” Or they’ll fill in, “I read one of your books.” Or they’ll say, “Someone shared something of yours on LinkedIn.” So to me, that’s the ultimate validation, because it’s like, where did the effort get invested to deliver this person to come and do business with us?
And it’s really difficult because you look at the subscriber count, for example, on a YouTube channel, and you’re like, “Oh, I want it to go up. I want it to go up.” And my kids look at my channel and go, “Dad, you don’t even have a million followers,” and so it’s not very impressive for them. But when I see the number of engagements increase every year, and the number of those engagements that say YouTube on them, that’s what validates that the strategy and the effort that I’m employing there is working for us.
And that’s the end of part one of our look back at 2025. We’ll be here next week with part two and another round of highlights. And if you enjoy this podcast, don’t forget you can meet many of the podcast regulars at the 21 Hats Live event in Cincinnati. You can get more information at 21hats.com—or by emailing me at loren@21hats.com.
