The Year So Far? It’s Difficult Out There
Introduction:
This week, we get updates from Laura Zander, Sarah Segal, and Jay Goltz. Laura wonders whether the time she’s put into integrating her latest acquisition might have been better spent focusing on her core businesses. Sarah, who has shifted to pursuing smaller clients, asks Laura and Jay to articulate the PR pitch that would interest them. But how do you evaluate the effectiveness of a PR campaign? Does it have to generate sales? Plus: Jay explains why he views confronting his current business challenges as a matter of triage. He also says that if he could write a check for $200,000 and solve his technology problems, he would do it in a heartbeat. Any takers out there?
— Loren Feldman
Guests:
Laura Zander is CEO of Jimmy Beans Wool.
Sarah Segal is CEO of Segal Communications.
Jay Goltz is CEO of The Goltz Group.
Producer:
Jess Thoubboron is founder of Blank Word.
Full Episode Transcript:
Loren Feldman:
Welcome Jay, Sarah, and Laura. It’s great to have you here. It seems like every day, we’re confronted by conflicting messages about how the economy is doing, how businesses are doing. And as I did with a different group here a couple of weeks ago, I’d like to start by just checking in with you guys. We haven’t spoken to you in a while, Laura. What’s going on with you? Have you bought any more businesses lately?
Laura Zander:
No, I’m on a diet. Things are good. You know, we bought those two businesses, integrated them. It was rough. And we hit the tipping point about a month ago, three weeks ago or so. So I actually haven’t traveled in about three weeks. We’re starting to—
Loren Feldman:
What’s the tipping point? What do you mean by that?
Laura Zander:
I mean that we’re through the worst part. We’re at the top of the hill. So, all the pain and suffering—not all, but the majority of the pain and the suffering from the integration—is behind us. So we’re starting to gain traction. We’re starting to get more orders again. We’re able to process them. We’ve got fewer errors. Things have stabilized.
So we’re on the upswing. We’re kind of at the bottom of the hockey stick, I think, of growth. But now, with that comes the exhaustion. The adrenaline’s worn off. Jay calls it “battle fatigue.” So the battle fatigue has just set in. I’m trying to figure out how to handle that: Do you take a week off? Do you take two weeks off? I did take a little bit of time off, but I’m spread a little thin. So just trying to recenter, now that the fires are out, and get back into kind of a regular, everyday cadence and figure out what that looks like for the next year or two before we do something else to create another battle.
Jay Goltz:
When you say all the hard stuff’s over, the bottom line I’d like to know is: You integrated these companies. What does that mean? Did you fire some people that were working with the other companies who just didn’t fit? What was the pain? Give us the pain.
Laura Zander:
The pain was, we moved locations. And so one of the companies that we brought on was in Arizona, and we moved production to Texas. They didn’t have anybody who wanted to come to Texas, so we had to train our staff. There was some pain in that. Originally, the deal was, the owners would operate the business in Arizona for two to three months, as we were training, and as we were able to catch up and learn. And we were going to do a transition, and one of the owners just couldn’t do it. So we ended up having to transition—there was almost zero transition, about one week’s worth of transition. So we were really thrown into the fire very quickly.
And, our staff—yes, we hired some people. We fired some people. It’s taken us five months to find the right team to be able to do the things that we need done, to dye the yarn in the way it needs to be dyed. The former owners, one of them has all the skills. She was really the dye master. So she had all the technical skills and was the craftsman and knew how to do everything. But she lives in Arizona. So we brought her to Texas a couple of times. She would train. And it just gets messy. Communication gets messy. Yeah, it was just messy.
Sarah Segal:
When you buy a company, the higher-ups are looking for their golden parachute. They’re gonna walk away with a bunch of cash or whatever the deal is, right? How realistic is it to expect that they’ll be in it 100 percent during the transition?
Laura Zander:
I can’t speak to tech, or office jobs, or whatever, but in our experience—and we’re working with small businesses—most of the businesses that we’ve acquired have 10 employees, five employees. So it’s a much different world.
It’s 50-50. In this case, there were two founders, two owners, one of them is still completely dedicated to doing whatever it takes to make sure that things move forward and are successful. And the other one tapped out after about a week. So it just depends.
Jay Goltz:
So how many employees were there in Arizona who have been laid off? How many people were there?
Laura Zander:
Um, maybe eight.
Jay Goltz:
So my question is: That goes on their unemployment? Did you take over the corporate entity?
Laura Zander:
No.
Jay Goltz:
So that’s good. The unemployment is going to come out of the old company, not from your company.
Laura Zander:
Correct. Yes.
Loren Feldman:
And that’s because you just bought the assets.
Laura Zander:
We just bought the assets. Yeah, we always just do an asset.
Jay Goltz:
That way, anybody who goes to sue you down the road—
Laura Zander:
Correct.
Jay Goltz:
I think that’s a critical distinction, buying the assets versus buying the company.
Laura Zander:
One hundred percent.
Sarah Segal:
So, buying the asset, you’re buying the technique and the product and the inventory and the—
Laura Zander:
The URL. The trademark, the products, the patents.
Loren Feldman:
The intellectual property.
Sarah Segal:
How do you negotiate a deal like that? How do you put a dollar value on it?
Laura Zander:
Me, personally? Because I probably do it a little differently than other people do, I take a look at just their P&L and their balance sheet. So I take a look at their P&L. I see on average over the —depending on if there were big bumps or not—what their profitability is. And then I try to offer something, it’s usually about two to three times what their profitability is. Because then I assume it’ll take us two to three years to pay it off. And then I add inventory on top of that.
Jay Goltz:
Well, that’s interesting, because the normal number in small businesses—and I just happened to go to a seminar last week, and it was the same thing—people usually get three to four times earnings. But in your case, you said two, but then you’re paying for the inventory, which probably makes up—
Laura Zander:
Correct, yeah. It’s probably about the same. Yeah, exactly.
Jay Goltz:
So were you surprised after you bought it? If you could talk to yourself the day before you closed, what would you have told yourself?
Laura Zander:
That’s a really good question. That’s funny. I was thinking this morning, “Fuck”—excuse me—“Doggone it! Was this the right decision? Was it worth it?” I mean, the distraction cost has been the biggest cost for us. So, should we have been spending this time on our core business? The upside is there are some intangible, unpredictable benefits that we have gotten out of buying this particular company that I didn’t see coming. And so it has actually paid for itself in some really weird, interesting, unexpected ways.
In other words, as an example, we got a sales rep that they had who we would have never gotten, who would have never been on our radar. And he has managed to generate $50,000 just in one week on another brand that we carry that we weren’t even planning to wholesale. And he has taught us some things that we didn’t realize we didn’t know. So it’s almost like we got an employee, in some ways, who we weren’t expecting who has been just irreplaceable. I mean, the knowledge that I’ve gotten and that will help us grow all of our businesses over the next few years, I don’t know how to put a number on it. I mean, I’m sure I could.
Jay Goltz:
Well, you said intangible. It kind of is tangible. In this case, it’s unforeseen benefits. That is tangible. You know how much business he brought in. That’s worth a lot.
Laura Zander:
Yes, and though he’s a really good product developer, there’s a business development side of this that I didn’t see coming. So, there’s that. And then some of the benefits that we’ve gotten from the founder, who was the craftsman, the dye master. Some things that she taught us have saved us $50,000 to $100,000 just in the first year. Like, we had some product that we thought was bad. She was able to fix it. I don’t know that we would have ever been able to fix it. We would have either thrown it away, or blah, blah, blah. And then, we’re not creating more bad product because of the techniques that she’s taught us.
So there’s some little stuff like that. And then, again, more IP stuff. The mill that she works with—or that she worked with that now we’re working with—that’s opening up this whole other potential line of business that we probably won’t see the benefits of for two to three years. But I can see already that there are going to be benefits there.
So the sales side of things is not what we thought they would be. And I never expect them to be what we think they’re going to be. You know, you can say, “Yeah, I think we’re going to do a million dollars, because that’s what they did,” or whatever, pick a number. But you’re just guessing. You don’t know how many customers you’re going to lose. You don’t know how long it’s going to take to pick up the techniques. We’ve never done this before. So the sales aren’t where we had forecasted that they would be, but they’re not horrible, either.
Jay Goltz:
I would think of the channel conflict and that somebody says, “I’m not buying from her. She’s my competitor.”
Laura Zander:
One hundred percent. Yep, absolutely. But I mean, we’ve had that for years. So we still have that. At the same time, the flip side of that is, she knows how to do this. And she understands what it’s like to be a local yarn shop owner. And she’s been able to do it with these other brands. So I trust her.
And by buying this business and forming a distribution group, what we didn’t realize was going to happen was that people—like sales reps—all kinds of people have been flocking to us. It’s almost like they see us as the future. So I don’t know, I think we’re positioning ourselves in our industry as a player in the wholesale market, which we hadn’t really been [in] before. So it’s just very interesting. I mean, we’re evolving. So this was a big, huge part of evolution.
Loren Feldman:
Just to be clear, the channel conflict that you’re referring to is that you have a company, Jimmy Beans Wool, that sells to yarn enthusiasts over the internet, but you also sell wholesale to yarn shops around the country that theoretically could be selling to the same customer. Correct?
Laura Zander:
Correct. Yes.
Jay Goltz:
You know, I’m a retailer from birth. So I never was used to this, and you just brought up something that I’ve had. The whole dynamic of sales reps is an important part of the business. And as a retailer, I never had any sales reps. So what I’ve learned is, we started out my wholesale business, Bella—it’s been 20 years already—and we were just selling cool, interesting stuff you couldn’t get anywhere. And I never really appreciated the dynamics of the rep thing.
And what I’ve learned is, lately, our line started to become a major line for our reps. Whereas in the beginning, it was a nice, cool, interesting line, now all of a sudden—because of the shift in the industry and we’ve got better suppliers than a lot of people—we’re becoming important. And I look at the checks that I write every month to the reps. They used to be, you know, two grand a month. I was paying their gas money or their hotel bills. Now, all of a sudden, I’m writing some $5,000 checks to the reps, and it’s exactly what you’re talking about. The rep thing is an important part of the dynamic of being in the wholesale business. And you also came from the same side I did. You were selling retail. It’s a whole new game when you’re dealing wholesale. It’s about the reps.
Laura Zander:
Yep, that’s really interesting. And that’s part of the, I don’t know, I guess maybe the light bulb is that, you know, it’s a small industry. So there are some really good reps. There’s a handful of A-listers, and they’re coming to us. We’ve asked them for years if they would rep for us, and they’ve said no. And now they’re saying yes.
Jay Goltz:
We have the best reps in the industry now, because I’m big enough that we can be half their business now, versus just a sideline.
Loren Feldman:
Laura, you said before that you’ve kind of questioned yourself, whether all the time and energy that went into this acquisition might have been better spent on your core business. How are your businesses doing overall? Are you meeting revenue expectations?
Laura Zander:
Um, no, I’m not meeting the forecast, but I’m exceeding what we’ve done in previous years. So, you know…
Loren Feldman:
How do you feel about that?
Laura Zander:
I mean, that’s how I always feel. I want to go faster. But at the same time, I have to recognize and be proud of what we’ve done, and then recognize that we are doing more than we were. And the traction that I talked about, I mean, the first three months, there was a lot of distraction. There was a lot of learning. We weren’t producing as much. And I mean, it just is what it is.
So if I actually take the first three months of the year out, then I think we are meeting our goals. We’re getting very, very, very close. I’m just a jerk. I’m always going to want us to hit the forecast. And I’m always going to want us to hit that top line. And so, I’m always going to be a little disappointed, but I’m trying to practice being really positive and recognizing the wins.
And there are some unexpected wins. As I mentioned, there are some things that I didn’t see coming that have just surpassed my expectations. And today’s probably a hard day to ask, because I am coming off of four months of just pushing, pushing, pushing, pushing and frustration after frustration after frustration. And I’m impatient, and so I’m a little tired.
But looking back, I’m really proud of what we did. And the fact that, objectively, we made it through, and it only really took us three to four months, is pretty freakin’ phenomenal. You know, it’s pretty awesome. And we just had our big wholesale trade show a couple of weeks ago, and we doubled what we did last year. So we’re getting traction, and I can’t wait for two months down the road, when we’re just flying. You know, we’re just totally flying.
Loren Feldman:
Sarah, how are you doing?
Sarah Segal:
That’s a good question. I had a little reset last year when we lost a couple big clients. And so I went into this year saying: You know what, when you have too many big clients, and one or two of them part for various reasons, it completely collapses your business, as an agency owner. And you’re faced with having to lay people off and all that kind of good stuff. So I went into this year with the, “Hey, I’m going to instead build a business based on small-to-midsize clients.” And I am doing that.
It does have its challenges, though. Because we’re close to having 15 clients by the end of next month, and that’s a lot of accounts to manage. And I need to hire more junior level people. I need to build my internal hierarchy so nobody’s dealing with more than—the sweet spot for most people is managing six to eight accounts. And so if you have anything more than that, then they’re just not focused enough on each client. So it’s making sure that I have enough staff to kind of grow in this fashion. Although I have to say that having a nice meaty client would be really nice.
So, it’s good. I am paying my bills. We have our lovely little office in San Francisco, and I’m actually negotiating with the landlord to take over the upstairs office as well, because we’re having a couple of interns starting this summer. I’m anticipating some additional growth before the end of the year. And you know, it’s slow and steady wins the race. I am cautiously optimistic. Let’s put it that way.
Loren Feldman:
In the past, we’ve talked a little about your efforts to market your agency, to go find clients. Have you done anything different now that you’re looking for a different size client?
Sarah Segal:
So what am I doing? I was telling somebody the other day, I was like, “I need to get back out there and go to conferences.” I was listening to last week’s podcast about going to trade shows and stuff, and walking the floor, which I understand is not necessarily the best use of your time, but just getting out there and being part of the community. Also, there’s Jaci and her book they wrote, how that’s worked as a marketing tool.
I’m just kind of trying to think of ways that I can introduce myself in a meaningful way that’s not salesy, because I don’t think that that works. It’s more giving myself out as a resource, and then eventually, that relationship develops into something else. There are new biz people for PR. There are reps. They’re hard to find, though, because they’re usually more senior people. So they work for the larger companies that go out and find new business. I would love if there were somebody out there that did it for smaller businesses like myself. But as of yet, I have not found that magical creature to pitch us to prospects.
Jay Goltz:
You know, you said something very interesting. You said that going to trade shows isn’t necessarily a good use of your time. I can’t imagine what you could do that could be a better use of time. Like, everybody’s in the same room. And in one afternoon, you could hit up 50 companies. And then you said you don’t want to be too salesy. I don’t know why you wouldn’t. I just wonder whether you couldn’t be a great salesperson going to a trade show and picking up some clients right there on the floor. Because it seems like it’s shooting fish in the barrel.
Sarah Segal:
You think? I mean, my question is, about trade shows, it’s not usually the decision makers that are running the booths, right?
Jay Goltz:
Well, that’s not true for the size companies you’re talking about. Why wouldn’t the owner, the person in charge, be at a national trade show? I would absolutely think they’re there. There are not just a bunch of salespeople there. That’s where business is done, going to lunch, running into somebody from… I mean, trade shows—
Laura Zander:
One hundred percent.
Sarah Segal:
So, Jay and Laura, so you’re at a trade show. You have a booth. And this lovely lady with strawberry blonde hair, and a little gray, comes up to you. What would be the best pitch that you could hear? How would you like to be sold PR?
Jay Goltz:
I go to trade shows all the time. I go to conferences. If someone walked up to me and knew about my business and somebody would say, “Jay, you’ve got an incredible story. I would love to… I think I could really get you some good …” I would absolutely engage with them. It doesn’t happen because—I’m going to make a statement just from being the customer—I can’t think of worse salespeople than PR people, because they’re not out there. No one ever calls. No one ever sends anything. No one ever sends a letter.
I would, in fact, engage with someone. And I might hire them, but they don’t call on me. Now is it just because I’m a retailer, and that’s not on the radar? I don’t know.
Loren Feldman:
Laura, how about you? What pitch would work with you?
Laura Zander:
Research. I mean, not just coming in cold and saying, “Hey, cute booth. I could help you,” and not knowing anything about our business, not knowing when we started, not having a pitch for how you could help us. So when we were just a few years into the business, I would put together packets. And I would research every single—not every single but—all of the booths, like 10 to 15 booths. I would research all about their business. I would figure out how much we’ve sold of their products, how much we think we could sell, and then I would come up with three ideas of how I could work with this business or how they could work with us.
And at the time, these were our vendors. So I was asking for, like, maybe a custom product, or —this is before social media—maybe we could do some co-op advertising together, blah, blah, blah. But I made it very individual. And I actually, like, wrote a letter for each one of these booths that I would go by. And I had a nice little folder that had some info on us and examples of stuff that we’ve done in the past. And then I would go to each booth, and I’m like, “Hey, I don’t want to bug you too much, but I just want you to know, blah, blah, blah, blah, blah. And then here’s some more information about us. Here’s some ideas on how we could work together.” And it was personalized.
You know, you can take them a coffee, take them a chocolate bar, just take them something that’s a little out of the ordinary, because most people don’t do it. They don’t have the balls to go up and do the research. And most people just come in and kind of cold call. And it’s kind of lazy.
Sarah Segal:
No, I like that. What we do with prospects in general is we will ask them prior to our initial call, or at some point during the conversation, we’ll determine who their competitors are. And so we can pull together a pretty comprehensive report on what their competitors are doing, in terms of the media space, and basically kind of walk them through what their competitors are doing, and where they’re falling short, and where we might be able to support them. So that’s pretty standard.
We can also easily pull, “Here’s the top five reporters that you should be reaching out to. If you don’t engage with us, please at least talk to these reporters, because they’ll be interested in the business.” But I like the idea of a leave-behind. It’s kind of old school, because people are so digital nowadays, but like giving somebody something memorable that stands out. We have these great, branded Stanleys. Everybody needs a Stanley.
Laura Zander:
Yeah, exactly. Exactly. Now, I will say—and this is probably just nitpicking words, so feel free to ignore me—but you mentioned where they fall short. So, when I’m at a trade show, the majority of people who come to our booth are our customers, and a good percentage of them are coming to complain. And so the last thing I want to hear is something about how I could do better. So, even just rephrasing and just being like, “Hey, you could really kill it, blah, blah, blah.” But just be mindful—and I don’t know, Jay. I don’t know if you have the same experience. I mean, I know I’m just particularly sensitive to that. But what I want to hear while I’m there is how great I am, not how I need to improve.
Jay Goltz:
Absolutely. The other thing I gotta tell you, viscerally—and people do call me for other stuff. The second they start going, “Oh, we do business with your competitors,” I say to myself, “Screw you.” I really don’t care. I don’t want to hear about my competitors.
Laura Zander:
I don’t.
Jay Goltz:
This is the interesting part. We’ve got the internet. You can do research. In five minutes, you can find out anything you want to know. Go to my website. I’ll tell you all about me right there. So they come and go, “Wow, Jay, you’ve got the largest frame place in the country. And then you’ve morphed into opening a furniture store. And that’s really an interesting Chicago story, and I haven’t read about it. Have you been in the papers lately? Because I gotta tell you, I think you’re an incredible story for Chicago.” Very seldom do you read about a Chicago business these days. Most of the retailers in Chicago—they’re gone. I’m one of the few retailers. I would absolutely be engaged and interested to talk to that person.
Laura Zander:
I’m already well aware of how my competitors are kicking my ass. Like, I don’t need somebody to tell me that.
Loren Feldman:
In terms of what, Laura? How are they kicking your ass? In PR, or in performance?
Laura Zander:
Everything. I mean, the people who are doing better than us are doing better than us. They do more in sales. Sometimes they have more PR. They’ve got better events. I mean, that’s part of just who I am. And that’s why I drive so hard to win, in some ways. But yeah, they do better. They have better products. They have a better website. They’ve got better SEO. They’ve got better this. They’ve got better that.
That’s part of my job, is to figure out all the ways that the competitors, all the things that they’re doing better than us, so that I can figure out how to be better than them. So I’m just hyper-aware already. It never works really well when somebody comes in and says, “Your competitors are beating you here.” And I’m like, “No shit. Like, I know that. You don’t need to tell me that.” Like, help me figure out other ways and other interesting ways to be better.
Jay Goltz:
So Sarah, where do you get the list—if you were to have someone who said, “Hey, I want you to spend the next week. Let’s get together.” Where would you get the list of prospective customers from?
Sarah Segal:
So it’s everything from my team flagging new businesses. It’s other businesses that I know other agencies are covering, but they’re not getting any press. And I’m like, “They’re not getting what they pay for.” Word of mouth, like people just telling me about opportunities. There’s no list, necessarily. It’s just doing a lot of online research.
I tend to look for companies that have a certain level of revenue. The reason why is, if you go below a certain amount, you’re dealing with people who literally count every penny. So their PR budget is not a line item. And if they’re too small, they don’t have somebody managing the PR agency. It’s the owner, which is terrible.
Jay Goltz:
A $2 million company probably can’t afford or has the head to go spend 10 grand a month or 15 grand a month. I was that company, and you’re 100 percent right. There’s no point in chasing smaller companies, because they’re just simply not going to spend the money. So the question, to me, is: What’s the biggest opportunity? People who have good companies that aren’t doing any PR? Or people who already have a PR firm that aren’t doing a great job?
Sarah Segal:
Both.
Jay Goltz:
Yeah.
Sarah Segal:
It’s both. And we do do smaller companies, Jay. The reason why is that sometimes we see a company, and we’re like, “Yeah, it’s small, but we can help make this company big.” We see the promise and value of it. They’re not doing any media or influencers or social media right now, and we know if we turn that light on, it’s going to transform their business.
We have a franchise business that we’re working with that didn’t have anything. Now, they’re booked through the roof. We have a restaurant we started working with that nobody knew about. Now, their Mother’s Day weekend was totally booked out. And they have influencers now DMing them asking them to come because of the work that we did. We sometimes see these smaller companies as, “You know what? We know we could turn the lights on for these folks really quickly and make a difference.”
Jay Goltz:
I think the opportunity for you is, I don’t think most companies, if you said, “Hey, how are your PR efforts going?” I can’t imagine most companies going, “Oh, no, I’ve got that down.” I think that everybody—Laura, me, everybody knows—“Yeah, I’m sure I could be doing better.” I don’t know how to do it. And frankly, no one’s been calling on me to sell me that service. So it’s not like I’m gonna wake up tomorrow and go, “I’m gonna go look for a PR firm today.” I wouldn’t even know where to start.
Sarah Segal:
I know. Well, that’s another thing. I do a lot of research into how people find PR agencies, if they’re not going through referral. If you’re a larger company, a lot of people will turn to their board and say, “Hey, do you know any good PR agencies?”, and that’s how they find them. But people without that kind of extended executive network will search. I have a blog post on my website, and it is probably the most viewed and read blog post of any blog posts we’ve ever created, and it’s “How much do PR agencies cost?”
Laura Zander:
Yeah, that’s funny, because I was going to actually ask you that. I was going to ask what the range was, as we were talking about different sizes of business. Jay mentioned $10,000 a month, but I suspect it’s not that much?
Sarah Segal:
It depends. So if you’re working with an individual practitioner—like, there are people out there, and a lot of great people out there who have worked at an agency or have worked in-house, but decided just to go independent. And they’ll work for a client for $1,500 or $2,000 a month, and all they’re doing is pitching. They’re pitching your product. They’re independent, and they’re looking for those opportunities. They don’t necessarily have all the tools and resources and capabilities that the agency has, but they’re pitching you out. Most boutique agencies or smaller agencies start at the $5,000 range. That is the sweet spot, from $5,000.
And then you start getting into the $10,000 range when you’re talking about B2B companies, where there’s no consumer appetite, and they don’t necessarily want only trade coverage. They want to be relevant across the board. So it’s a lot more complicated to put them together. So you’re doing things like a survey, like by-lines. You’re putting together this whole gamut.
And then you’re adding in things like influencer relations. Influencer relations is a lot of work. It’s not just about, “Hey, I’m gonna give you a product and post about it.” There is so much back and forth with every influencer that we work with: about the content that they’re gonna post, the hashtags they’re gonna post, the timing that they’re gonna post. Sometimes they want money. Each influencer probably takes my team about four to five hours to manage. Just one influencer.
Laura Zander:
Sure.
Loren Feldman:
I want to go back to something you said before. You said that it is terrible when you have to deal directly with an owner.
Sarah Segal:
It’s not terrible. It’s just different.
Loren Feldman:
What’s the issue with it? Why is that difficult?
Jay Goltz:
Their money. It’s easy, it’s their money.
Sarah Segal:
It’s not just the money. They don’t have the bandwidth for it.
Laura Zander:
That’s what I was going to say.
Sarah Segal:
They’re dealing with so many other things. We have started and stopped working with a number of businesses where, literally, at the end of the day, they called us up and they said, “We love you guys. But we feel like we’re not doing our part of the job.”
Laura Zander:
One hundred percent.
Sarah Segal:
Because we don’t have anybody to give you the new photographs, provide you the details on the new product or service. We’re falling short on our side of the project.
Laura Zander:
Super interesting.
Jay Goltz:
Wow, that surprises me.
Sarah Segal:
But even for a company like both of yours, having somebody—and they can be junior. They can be like, this is their second job, it’s fine. But at least having somebody internal that can be like, we can go, “Hey, listen, can you pull us photographs of this new chair or this new dye lot? But we’d love some images. So we can push that out in a spring pitch,” or what have you. Or, “We want to schedule it out on our social media system. So it goes out over the next couple of weeks.” Just having somebody to do those internal tasks that we don’t have access to, you can’t put a value on that.
Laura Zander:
And how do you report back on the results? Who manages the ROI?
Sarah Segal:
So it depends on the client, right? And so, when we start with a client, our first question for all of our client leads is: What will make you look good to your boss? What metrics does your boss look at? What are they like? And we’ll add in what they like to look at, but some CEOs and owners, they just love the logo. They want to know that they got in Glamour magazine or Architectural Digest or whatever. They like the logo. Some bosses really like mass quantity over quality. And some want their name in headlines. They want their name in print.
Laura Zander:
It’s not sales, huh?
Sarah Segal:
Oh, God, no. We’re not sales. That’s not what we do.
Laura Zander:
I know it’s not what you do. But at the end of the day, I mean, I can’t pay you if we don’t get an increase in sales.
Sarah Segal:
Well, that’s the problem with PR. That’s not what PR does. That’s what marketing does. PR does not do that. So for example, I get you a segment on Good Day Las Vegas or whatever, right? How do you quantify that? Like, how do you tie sales to something that’s on broadcast?
Laura Zander:
I can watch site traffic. I mean, it’s not that-day sales, but it’s over six months, over the next year. I mean, basically, the sales line is increasing. If I see the sales decreasing, then it’s not working.
Sarah Segal:
Yeah, but it’s subjective.
Loren Feldman:
You can’t know for sure that it’s coming from PR.
Sarah Segal:
Right, you don’t know that that’s coming from PR. You know, we do work with clients where we say, “Okay, create us a promo code.” And then we can include that and see how many people use that promo code. We do things where we will work with influencers, and we give them an affiliate link. And so we can see how many transactions came through that way. Also, most media publications now, most of them, like Hearst, Condé Nast, even The New York Times—the Associated Press literally started this, where they’re creating round-ups of products and services, and they are all based on affiliate links. So it’s “The 10 suitcases that you should consider for your next travel abroad.” You’ll literally find this on the Associated Press. They’ve just launched it in March. And if you click on that, and you make that purchase, the Associated Press gets a kickback.
Laura Zander:
And I guess, when I’m thinking sales, I’m talking long-term sales as a result of brand awareness. Right?
Sarah Segal:
Well, so, yeah, if you have somebody doing your Google Analytics, you can see where some of the traffic is coming from, for sure. But if I get you in The New York Times print edition, there’s no tracking of that.
Laura Zander:
I’m not looking for tracking. I’m just looking for, like, health and sales, like long-term. When I was doing PR, that’s when we saw the greatest bump in our revenue. And it was from being in The New York Times and the Wall Street Journal and like five to 10 different things all at the same time. And I mean, I’m not going back to look at tracking. You just know that you’re getting all these eyeballs. You just know that it’s going to result in a boost in awareness and sales.
Sarah Segal:
But a lot of people will be like, “Well, I need numbers to validate it.” And that’s not what we’re doing. Our job is more brand awareness. We will add in all of those bells and whistles, if you give them to us, for sure, if you want to try to quantify it. But we’re looking to establish relationships with editors and influencers, and a cadence of content on your social media that follows trends so you’re getting views. We’re doing all of these things so when people encounter your brand, there’s a continuity, and there’s just a brand awareness that is consistent across any public-facing, non-paid advertising.
Jay Goltz:
Attribution is obviously very difficult with this stuff. But you said the key word: You can try at least. And like, I’m on public radio, and I’m spending a decent amount of money on it. And I’m absolutely confident—because I ask customers, “Do you listen to public radio?” “Yes.” 50 percent of my customers listen to it.
The attribution is difficult, but you do get some anecdotal things. Or I’m sure you’ve had someone go, “Oh, I read that article.” You can get some anecdotal things. There are people who go, “Yeah, I heard you on public radio.” So it’s something. It’s frustrating, though, because it would be great if every single person who came in from public radio said, “Oh, I heard you on the radio.” And then I have my existing customers. How many of them came in again who maybe weren’t thinking about coming in, but heard the ad on the radio?
Laura Zander:
Totally.
Jay Goltz:
And that’s off the radar screen, totally. I mean, they were already in my customer base as a repeat customer. So it’s extremely difficult to do that. But I’d still try.
Loren Feldman:
We are running short of time. Jay, I don’t want to leave you out. How are your businesses doing?
Jay Goltz:
It’s difficult out there. If 40 percent of the people buy furniture because they move, and interest rates are 7 percent, so half the people are moving, there’s less furniture. And it turns out the entire furniture industry, from what I hear—and I talk to reps—is down at least 20 percent. And you know, my store is no different. And there’s not much I can do about it except wait it out.
Loren Feldman:
How about picture framing?
Jay Goltz:
Stable, but it’s not the old days. In my case, it’s the Baby Boomers. The youngest Baby Boomer is now 60, and they’re downsizing. They’re not framing pictures, mostly. And do kids have stuff on the wall? Many of them don’t. So, it’s okay. But it will be better when interest rates get back to something that’s not 7 percent, that’s for sure.
Loren Feldman:
Jay, we’ve talked a number of times—actually, over a couple of years, I think—about your struggles with your inventory issues, going back to the early days of Covid. Have you gotten your hands around that? Have you figured that out?
Jay Goltz:
Here’s my new thing, which took me too many years to figure out. I would argue—I will argue—every business owner needs to be their own CFO. The idea that you think you’re gonna hire someone and just put it on automatic cruise [control], and they’ll take care of it, you’re putting your life in their hands. And I should have been more involved with the inventory numbers. And now I’m totally into it. That’s all I’ve been doing for the last six months. And I’m getting it under control. I told the buyers: Look, here’s what we have. Here’s what we need to get it down to.
They’re all with me. They all know what the number is. And we are reducing inventory for the rest of the year, and we’re going to get it under control, because it got out of control. And I take full responsibility. It’s my business. I should have been involved with this more. I’m really good at not paying attention to stuff that I don’t get into. There’s a reason why I have an accounting degree, but I didn’t go into accounting. I like the other stuff. So I’m paying the price. And it’s okay. By the end of this year, I am confident we’ll get the inventory back to where it needs to be.
Laura Zander:
When it comes to the CFO stuff, it’s interesting because I struggle with, like, I am our CFO. And I’m like, “Ah, I’m not the right person. I don’t have these skills.” I look at all these numbers all the time. I still don’t fully understand retained income and equity and the balance sheet. So it’s interesting that you say that I’m probably in the right spot, that maybe I should be doing this.
Jay Goltz:
And my guess is, you’ve got a handle on the key things, and you are watching it. I’m not saying you shouldn’t have a good accounting person there.
Laura Zander:
But when you had the CFO before the last one, did you feel the same way? I mean, it seems like this all slipped when he retired and you brought the new one in.
Jay Goltz:
Well, I was on automatic pilot. There’s stuff that I should have been looking at back then.
Laura Zander:
Okay, so it wasn’t perfect back then either? You just didn’t know?
Jay Goltz:
I’m paying the price for 20 years of basically ignoring it, not watching inventory enough. And it’s not like I need to run the accounting department. It’s a simple case of, it’s what Lou Mosca talks about every week. It’s about having—maybe not even weekly—monthly meetings. “Here’s the numbers. Where’s the inventory? Where’s the receivables?” And being the CEO. And I’ve always said, I’m 80 percent entrepreneur and 20 percent manager.
Loren Feldman:
But Jay, there’s a big difference between having regular meetings and being on top of the numbers and serving as your own CFO. I would guess that if Lou Mosca were here, he would say that a company of your size needs to have a full-time CFO.
Jay Goltz:
I’m not saying you shouldn’t have a key accounting person. I’m suggesting that, ultimately, you need to watch those numbers and keep an eye on those numbers. And so when I say, “Be your own CFO,” it means every business owner—and I wouldn’t have said this two years ago—every business owner off the top of their head should know what their inventory is, should know what the receivables are running, should know what your contribution margin is. And Laura, I believe you know all those things. So you’re doing a good job at that.
Loren Feldman:
Jay, you’ve told us in the past that you debated telling your buyers just to stop buying, but you hated doing that, because you thought that was like Samson’s hair, that what you do is sell cool, interesting stuff. And you need a constant flow of that. How did you resolve that?
Jay Goltz:
I was half right. My new thing is: Look, here’s where we’re at. We need to get this inventory down. Buy half as much stuff. Be more selective with what you buy. And let’s get more aggressive with getting rid of the stuff that isn’t selling well. Let’s mark it down quicker. It’s a management thing.
And you know what? Everyone who works for me—I didn’t hire anybody away from a retailer. I took them from a kid out of college with a theater degree, who has turned out to be extremely competent and talented. I need to teach him how to run it. And I also never grew up in the furniture business. So I’ve had to figure it out. So now, the answer is, “Here, spend X dollars this year, instead of Y.” But I let it go too far. And that was the artist part of me talking—the, “Oh, you don’t want to slow it down.”
Loren Feldman:
Have you made any progress on buying technology, a software platform, that will help you track your inventory better?
Jay Goltz:
No, I’m working on that. That’s a huge undertaking. It’s triage. The triage at the moment is, this is the year to get my inventory back under control. And I’m working on the technology thing, but that is no easy flick—you would think, “Oh, a furniture store, there must be 20 programs out there…”
Yeah, not really. We’ve interviewed some of them. Not really. It’s trickier than it looks. And when you hear these ads on the radio about NetSuite or whatever? It’s like, you could spend millions of dollars with some of this. It’s not that easy. And Laura, you have a huge advantage over me in that regard. Your husband’s your chief technology officer. I don’t have that. So that’s huge.
Loren Feldman:
Laura, do you have technology that keeps track of your yarn inventory?
Laura Zander:
Oh, yeah.
Loren Feldman:
Would it work for Jay?
Laura Zander:
Uhhhh, maybe, but I wouldn’t use it. I mean, it’s too custom to us.
Jay Goltz:
Yeah, I mean, the problem is, I’m the largest framing place anywhere. As a result, no one’s software is set up to handle the size of my business. So I’m too big to use stuff that’s out there that’s canned, and I’m too small to write my own program. To go write my own program, I’ve come to understand, would be a million dollars. I mean, it would just—
Loren Feldman:
That would be crazy. But Laura, you’re switching from custom to a canned program, aren’t you?
Laura Zander:
In some parts of the business, yes. But not in other parts of the business. So on the manufacturing side, we’re not switching to canned. We’re keeping the custom stuff.
Jay Goltz:
Having Doug do your software is absolutely one of your strengths in the business.
Laura Zander:
One hundred percent.
Loren Feldman:
Well, you could hire a Doug, couldn’t you, Jay?
Laura Zander:
Well, yeah, but he’s actually gonna cost him a million bucks.
Jay Goltz:
Yeah. And my son is in charge of it. And he’s doing a very good job with it. But he’s frankly overwhelmed. It’s just, I’ve got four different businesses. I mean, I will fix it, but it’s going to take some time. It’s not as simple as you would think.
Laura Zander:
No, I agree.
Jay Goltz:
Yeah, it’s really way more complicated than is imaginable. And you’re talking to someone, to remind you again, when I started in business, there were no computers. So like, this isn’t my thing. So yeah, that’s the next challenge. The first one is inventory. I’m gonna get that all taken care of this year. And then next year—we’re working on the technology thing. But I wish it was as simple as a plug and play. “Oh, call up so and so.” Trust me, if I could write a check for 200 grand right now and get it all done, I would do it in a second. It’s not that simple.
Laura Zander:
Hmm. Well, maybe. Doug probably could adapt our system for that, for 200 grand.
Loren Feldman:
You just bought Doug.
Laura Zander:
It would take him a weekend. It would take him a weekend though.
Jay Goltz:
Does he want me to wire the money, or can I mail you a check? How does that work?
Loren Feldman:
All right, my thanks, Jay Goltz, Sarah Segal, and Laura Zander—and to our sponsor the Great Game of Business, which helps businesses use an open-book management system to build healthier companies. You can learn more at greatgame.com. Thanks, everybody.
