Do you want to attract better, smarter and more engaged employees to your small business? You might have to loosen the reigns on remote work and fringe benefits say Gene Marks and Elizabeth Larkin in the latest episode of the Small Biz Ahead Podcast. Also discussed: how to know when to sell your business.
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Links Discussed in This Episode
- 9 Tech Tools for Your Work-At-Home Employee
- What to Know About the Virtual Workforce
- 7 Do’s and Don’ts for Managing Work-from-Home Employees
- Why Every Business Needs a CRM System (Yes, Even Yours)
- What’s the Best Online Payroll Option for Your Small Business Right Now?
Questions Answered in this Episode
- What do millennials want in a workplace?
- What does work/life balance even mean?
- Should you hire millennials because of their youth?
- Should you give up your parking spot for your employees?
Elizabeth: Welcome back to the Small Biz Ahead podcast. We’re going to talk about fringe benefits, and when to sell your company. Gene.
Elizabeth: We were just talking about Millennials, and how they really value a “work life balance” more than a paycheck. What does work life balance even mean?
Gene: Yeah, it’s funny. When we were talking about fringe benefits. I wish I had the source for you, Elizabeth, but there was a .. There was some study that was just done recently where 2/3 of the Millennials … By Millennials, 18- to 34-year-olds, somewhere in that range. 2/3 of them would prefer more flexibility in their job than a pay raise. It’s that much more important to them.
Elizabeth: That means the ability to work at home or the ability to go down to an 80% paycheck or something.
Gene: It is. It’s being mobile, it’s working from home, it’s having more paid time off in lieu of compensation, it’s having the ability to be a little bit more independent. It’s the entrepreneurial Millennial, where there’s this blending of the corporate worker and somebody who does feel like they have a little bit more control over their day. I always thought the number one biggest benefit that I’ve ever gotten from running my own business is I have more control over my life. There’s a lot of downsides. People that work in companies sometimes don’t, so to give them the ability, the younger generation get it. They’re smarter, and it’s not worth it.
Elizabeth: Do you think that’s different from other generations? I’m a Gen Xer, and I would love more flexibility in my job.
Gene: Yeah. I think it all sounds great to people of older generations, but I think it’s the Millennial generation that are actually making it a case. They’re actually doing something about it and actually negotiating compensation in their contracts based on having that kind of flexibility. The biggest thing that’s changed it is that you and I might have said this years ago, “Oh, I would like more flexibility and whatever.” There was no technology. The employers would get it and they would be like, “Okay, but we can’t do that because we don’t know when you leave the office.” Now, because everybody’s got mobile devices and the internet’s everywhere and your network can be set up all cloud based applications, you really, really can now give your employees a bit more rope and have them out there and working from home and on the way and whatever and stay in touch with them. I think technology is what’s changed.
Elizabeth: As a small business owner, you’re actually putting yourself at more of an advantage if you can offer a virtual office.
Gene: 100%. It’s not necessarily a virtual office, but I’ve just seen; I talk about this a lot; that when you’re interviewing Millennials it is not always about the money. It’s about the lifestyle. Now, with very inexpensive technologies, if a person really wants to work at home one day a week or even more than that, or if a person says, “Look, I don’t know if I can be here all the time. I’m going to be out. I’m going to be about. I’m going to be whatever,” that’s okay because you have the technology to help that as well. Even if you don’t want to hire somebody and you want to outsource it to an independent contractor, because a lot of Millennials are doing that as well, that’s okay nowadays because if you need to get a hold of these people, you can. You can communicate and collaborate. I think technology’s made a big impact. I think business owners my age, I’m 51, you got to have a different attitude when you’re interviewing people 20 years younger than you.
Elizabeth: Do you have a lot of Millennials working with you?
Gene: I do. I do. Well, I say a lot. I have three out of the 10 of us.
Elizabeth: Well, that’s a good number out of 10 people.
Gene: Yeah, 30% of our company. In fact, I’m right now searching for somebody, like a research assistant, like a part time job, but I got which changes … There’s no geographic limitations. I put the ad out, and I’m like, “I don’t really care where you’re located as long as you do what you got to do and I can just get a hold of you when I need to.”
Elizabeth: You have three Millennial kids, too.
Gene: Yeah, we do.
Elizabeth: Actually, are they?
Gene: They are. They’re all 20 and 21 years old, so they fall into that …
Elizabeth: Okay, so they’re like the tail end of …
Gene: Yeah, they’re on the bottom. Yeah.
Elizabeth: Do you think that … Do you think that informs you thinking about how you interact with your kids for interacting with Millennial employees?
Gene: It does. It’s really funny, not to talk about my kids, but when I’m looking for this research person to help me out-
Elizabeth: You can talk about your kids, Gene.
Gene: When I’m looking for the research person, some of that has to do with it, I’m kind of discriminating who I’m looking for because I’m actually looking for somebody young. I don’t want another experienced 51-year-old. I’m 51. For what I’m looking to do, I actually want somebody that’s closer to 30 years old, a little bit older than my kids, because I think they’d bring a whole new perspective on the content I want to provide but also on my organization. I encourage people, don’t roll your eyes when a “Millennial” asks to work from home or asks for something you’re not used to hearing. Having more young people in your company keeps you young and fresh and innovative.
Elizabeth: The funny thing, too, is everything that they say, all those think pieces about Millennials, like, “Oh, they’re lazy, they do this and that,” they said the exact same things about Gen-Xers.
Elizabeth: They said the same thing about baby boomers, I’m sure. It’s just the same stuff over and over again. The difference is I feel like the Millennials really are choosing to not play the game.
Gene: Yeah. I also think you just hear about it a lot more because the internet and the media. It’s just more in your face and it’s more …
Elizabeth: Yes. Statistically, they’re a huge generation.
Gene: They are.
Elizabeth: There’s a ton of kids born at that time.
Gene: They represent more than half of the workforce right now. That is a huge, huge population, a huge demographic. Every generation complains about the generation after them. It’s just like a given. That’s why when I hear people complaining about Millennials, I’m like, “Please, you have to accept this is reality. This is the way it is.” You know, the perfect example is paid time off. I was speaking at some business group, and a bunch of guys, men, like in their 40s, 50s, 60s running companies and from the Midwest. We were talking about paid time off and what some of the companies are offering for paid time off. LinkedIn offers unlimited paid time off, and Netflix for a year. These guys are rolling their eyes. They’re like, “Jeez, that generation, they don’t know whatever.” Really, it’s like, “Guys, whatever you might think, this is what it is. If you’re not going to offer that, you’re not going to be able to hire and attract good people to work for your company.”
Elizabeth: You might get people, but you’re not going to get the best people.
Gene: You’re not. You’re not, so like it or not, this is just what reality is today. The generation before us, probably, they look at us saying, “I can’t believe they’re going to work. They’re not in a suit and tie.” Well, okay. People change the way they dress.
Elizabeth: I can’t believe they’re in business casual on a Friday. Terrible.
Gene: I know. No respect anymore.
Elizabeth: Oh, my gosh. We could do a whole episode on this, and I definitely want to get into-
Gene: I think we will.
Elizabeth: We definitely will, and I want to get into questions because we’ve got two great questions today. We’ll be right back after we hear from our sponsor.
QUESTION 1: Should I Keep This Benefit For Myself?
Elizabeth: I know, it’s great. All right, we’re back with our first question, Janet from Wisconsin. She writes:
“I run a small deli and I have four employees. We only have one parking space in the back reserved for us and the rest is metered street parking. I don’t like the idea of reserving the parking space for myself and making my employees park on the street because I feel that in a small business the owner shouldn’t have fringe benefits that employees don’t get. What do you think I should do in regards to the parking situation?”
Gene, this is such a good question for you. This really goes into what we were talking about with Millennials in the workforce and benefits changing, but this is a really old-school problem, metered street parking.
Gene: Right. She said this is actually a reserved space that she gets for the deli, right?
Elizabeth: Yeah. I’m assuming that she either owns the space and there’s-
Gene: Love this question.
Elizabeth: … and there’s a parking spot, or she’s renting and the rent includes a parking spot.
Gene: Yeah. See, I draw the line here. This is where we could talk about Millennials or no Millennials. We’re all, everybody has to share whatever. Her business, her risk, her money. You know what direction I’m going in here?
Gene: It’s her freaking parking spot. Let her park in the parking spot. She’s employing these people; maybe she’s providing them benefits. They’re her employees, she’s the owner. This is not a democracy. Once they walk in the door, it’s a dictatorship. Now, that doesn’t mean that she has to run it like a dictatorship and she can’t make it a good atmosphere to work out of.
Elizabeth: Yeah. She sounds like she wants to be an inclusive manager and make sure that everyone feels like they’re part of a team, but I have to agree.
Gene: Yeah. It’s just like listen, there’s just a line that you hit. Honestly, if you’re an employee working at a deli, that’s the owner’s deli and the parking spot comes with it. What’s the difference between that and you have a deli and you’ve got a little office in the back and that’s the owner’s office? It’s still the same amount of square feet; it just happens to be a parking spot outside the …
Elizabeth: I would be shocked if an employee complained about this. The only time I can see an employee complaining is if it wasn’t a very safe neighborhood and someone had to open it at 4:00 in the morning by themselves.
Elizabeth: Then, yeah, maybe give them the spot for the first couple hours when you’re not there. Janet’s probably the one showing up at 4 am.
Gene: I totally agree with that. The other thing is, I wouldn’t even make it an issue. I wouldn’t talk about the parking spot. I wouldn’t even bring it up as a topic. I can see some people saying, “Oh, maybe you have a employee of the month and you give them it, or you pay for their on-street parking for a little bit or help them,” but my feeling is you don’t even talk about it. Parking is the parking. That’s what the deal is.
Elizabeth: Agreed. Absolutely agreed. The hair salon I go to actually has the same situation as Janet in Wisconsin does. What is a way around that? For people that are getting paid hourly, let’s say they’re there for eight hours, the meter runs out after two, so the hair salon … I feel like I talk about my hair salon all the time, but I’m there a lot. They’re running out. In the middle of doing someone’s hair, they’ve got to run out and feed the meter. One salon that I used to go to, they made that the receptionist’s job. She would just go out. She would go out and take-
Gene: Right. One person takes ownership to do it.
Elizabeth: I don’t know if there’s a good way, but I think that would be really tough if, let’s say, your employees are constantly getting tickets because the meter’s … Janet, you do owe it to everyone to figure out a team way to figure that out if it’s a problem, but keep the spot for yourself.
Gene: Yeah, I agree. Then the other thing is I hate getting compensation involved in it because now you’re giving people really money, in effect, because they have a car versus the people that are taking public transportation into the place as well.
Elizabeth: Ooh, you couldn’t cover public transportation.
Gene: Correct. You could do that as well. I think more importantly, like you just said, Elizabeth, you need to have a process where it’s not disrupting your business.
Elizabeth: Yeah, exactly. All right, we’ll be right back with-
Gene: Great question, Janet. Sorry.
Elizabeth: … question two.
QUESTION 2: When Is The Best Time to Sell My Business?
Elizabeth: Okay, we’re back with question two. This is Louis from California.
“I’ve received offers for my software company. I am 32 years old, and the offers aren’t enough for me to retire on, but they’re very significant and possibly more than I will make with my business in the next eight years, but not more than I will make in the next 30. What are some things to consider when selling a business?”
Elizabeth: I would love to have this problem when I was like 50.
Gene: Yeah, I know. 32, the guy’s got an offer. Good for him.
Elizabeth: This is a great problem to have when you’re 50.
Gene: It’s very cool.
Elizabeth: I have a friend whose brother is a serial tech entrepreneur, and he’s been selling companies since he was 26. What he does is he builds up a company, he works there for two years and he sells it and then he goes and takes a fabulous vacation and then starts another company.
Gene: Comes back and does something else. Good for him. That’s awesome. You know, people like that are really great because a company’s just an asset. The entrepreneurs that I know that really build wealth, they have an emotionless view when it comes to their companies. They get it. Employees, people, and it’s a good thing, and it’s providing products and services. They get all of that, but in the end they step one step apart from that and they’re like, “This is an asset, and when it gets to a certain value if somebody’s willing to buy it from me, you buy low and you sell high and then you move on to another asset. Louis’ issue is, I wasn’t sensing that he’s so passionate about his company that it feels like he’s changing the world with his company.
Elizabeth: It sounds like he’s thinking about it.
Gene: Yeah, he is. My feeling is that you certainly have to have a plan. If he isn’t going to retire on it, that’s fair enough. As long as he has an idea what he would do … It sounds like he’s a software developer. It’s a software company that he had.
Elizabeth: Yeah, it sounds like it. Yeah, software company.
Gene: Right. It’s a skill that he’s got, which basically means that if he were to sell his company, maybe he could take a little bit of time off but then get back to writing more software, maybe for somebody else or starting up another company.
Elizabeth: I think that’s the key, is that it’s skill-based. It’s not like it’s a company he inherited from his family and has an offer for it and then he sells that and this is the only thing he’s ever done, and how is he going to get another job? It sounds like he could actually go out and either become a serial entrepreneur or go work for someone else.
Gene: That’s correct. It’s funny. Your value in this world are the skills that you have. Some are skilled, like your brother-in-law is it, that buys? Right? Who’s the person that you were talking about that-
Elizabeth: Just a friend’s brother.
Gene: Just a friend, sorry. He buys and sells businesses, and then he builds them up. That’s a skill. Clearly, he’s skilled in managing companies and growing them to a certain level. Other people are skilled as developers. Other people are skilled as barbers or tailors or accountants or architects. If you’ve got a skill, then you’ll never have to worry about putting food on the table, which means, getting back to Louis’ situation, he’s got that skill. If somebody’s offering a good enough price and he wants to move on, he should be very much considering that.
The only other things I can say is if somebody comes to you and offers you a price to sell your business that basically means that you’ve built up something of value, it would probably be a really good idea to take that opportunity and maybe go to a business broker or two and see if there … One guy’s interested in this. Maybe there’s other people that might have an interest, just to make sure that it’s just not a one-off thing. The other thing is when people want to sell their business, people always ask me, “Is now a good time to sell my business?” There’s never a good time to sell your business or a bad time, but you should always be operating your company as if you’re going to sell it tomorrow. That’s the idea. Is it as valuable as it could possibly be?
Elizabeth: That, I think, is probably a hard pill to swallow for a lot of small business owners.
Gene: It is. It is, because when you look at your balance sheet, you look at your PNL, you look at your organization, you just know there’s a million things that would need to be done to be fixed. If people are like, “Oh, what should I do to prepare my business to sell it?” the answer is, well, you should be doing that every day. You should be running your business at the highest value possible. Louis, this situation is great. I’m happy for him. I hope he-
Elizabeth: Yeah, that’s a good problem to have.
Gene: I hope he gets a good price for it. Yeah.
Elizabeth: All right, great. We’ll be back with question number two. Oh, actually no. This is the last question. Wow, this one’s going really fast. Thanks for your question, Louis, and this is going to do it for another episode of the Small Biz Ahead podcast. If you have any questions for us, please send them to our Twitter account, which is Small Biz Ahead, and thanks for being with us another week, Gene.
Gene: Happy to be here. I hope the weather continues to be good.
Elizabeth: Okay. All right, we’re going to hear from our sponsor, and then we will be right back with our words of brilliance. We’re back, and we’re going to get our words of brilliance from Gene.
BONUS: Words of Brilliance
Gene: This week, I have two words of brilliance for you. They go together. Elizabeth, they are job costing. Costing out jobs. Why I bring that up is because I frequently go to clients, I’m a CPA, and they are always wondering how they can be more profitable. No matter what kind of business you run, if you are selling products and services, if you are providing a service, in effect you’re doing jobs. You’re going out and providing services at a customer’s place or you’re selling stuff from inventory. You’ve got to put some value added to it. You’re doing jobs. You’re placing and fulfilling orders.
The best way to really figure out how profitable you are, the best way to solve any big problem, is to break it down into smaller problems. What I’ve found works really well. Some clients, I’ve seen people do this. A really good way is each month, even each week, they pull out just a sample of the jobs that they do, whether it’s a service that they performed at Mrs. Miller’s house or a project that they were working on this month or actual products that were shipped out the door. You might do 100 shipments in a week, or you might do 20 jobs in a month. Pick out one, two, or three of those and drill down into the actual costs of those jobs.
What I’ve seen work well is they’ll pick a sample of the jobs, they’ll put it all on a spreadsheet, and they’ll dig into what the cost of materials were, what the cost of labor was on that, and even with a little bit of an overhead application to figure out what’s on that as well. You can even leave overhead out of that calculation for now. Just materials and labor. If you figure out materials and labor for just the specific job, going back with 20/20 hindsight, and seeing what you charged for it to see what your profit margin was on that specific job. Is your margin at least enough to cover what your overall overhead is as a percentage of revenues for your company that month? If your overhead is 20% of revenues, you better hope that that specific job is earning you a lot more than 20% so you’re covering it.
Elizabeth: I’m going to guess after running this exercise, a lot of small business owners are going to decide they need to raise their rates.
Gene: They do. They learn a lot when they do it. Remember, it’s a sample, but where they learn is sometimes they make a lot of money on some jobs. Like, “Wow, this job …” Some, like you just said, Elizabeth, are like, “Oh, we’re not doing so good here. We might want to raise our rates on that.” Sometimes the light bulb goes off and says, “We’re making a lot more money doing this kind of work instead of that kind of work, so we should do more of this kind of work because that’s what it’s continuously showing us.”
Elizabeth: What do you do, then? Let’s say your core offering, you’re not making enough money off of that but then different offerings that you’ve come up with you’re making more money on. Do you then start shifting your business in that direction?
Gene: You do, and it’s easier said than done because it’s tough to shift off of your core.
Elizabeth: Yeah. You sell CRM systems.
Gene: CRM software, and we know the profit that we need to make on jobs. I do this. We have at any given time 10 or 20 jobs. Today I’ve got 16 or 17 jobs going on right now within my company. Every month I usually pull one or two of those jobs out and the cost of the software that we sold and the cost of the services that we’re providing, and then I look at the revenues that we have coming in. I have a certain level that I know that we have to hit. Some products are more successful than others. I shouldn’t even mention it, but we sell smaller accounting products. Those jobs are not as successful, and that used to be our core business as a CPA. It was accounting software, and we’ve moved out of that, over a 10-year period of time, to CRM because it was more profitable to do.
Elizabeth: Then you find yourself shifting away from things.
Gene: You do, so it just helps you make a decision as to whether or not things are profitable enough. A lot of times it’s like, “Oh, we have to have a whole job costing system.” Yeah, that would be great, but it’s not reality for a lot of small companies. My advice is if you’re shipping products out the door, pick 10 products during the month and drill down into how much they really made you. Do the same thing if you’re doing projects or jobs as well, and you’ll learn a lot about how profitable you are.
Elizabeth: Great tip. My word of brilliance this week, which is actually an article, because of course I’m always going to suggest an article that we just wrote. This came out of a podcast episode. We had someone write in. I think it was a candy shop in Wisconsin.
Gene: Oh, I remember that. Okay, sure.
Elizabeth: Yes. She had five employees and was doing her own payroll.
Gene: Cheese lollipops. No, I’m just kidding. That’s what she was making.
Elizabeth: Cheese curds. Then I was having lunch with a friend who works for a small business. It’s just her and her boss, and he had messed up her taxes because he made a payroll accounting mistake. I realized that we didn’t have any articles on resources for small business owners for payroll, so we had one of our best writers … Her name is Kelly Spors. She’s great. We should have her on the podcast.
Gene: She’s great.
Elizabeth: She did a bunch of research into the best options for small business owners to pay their employees, and you had given a lot of options. She cataloged those, went through, I think she talked about Gusto, Paychex, a couple others, and she also really delves into what it costs to hire someone on Upwork to do that for you. That’s up on the site. We will link to that in the show notes. It’s a quick read. I think it’s about 1,200 words, but it just goes through your different options. If you are doing your own payroll, stop doing that right now and go over to Small Biz Ahead and you need to read this article. If you already are using a company to do your payroll, you might want to switch to maybe a free service for that. There’s a lot of options on that.
Gene: There is. It’s funny when you talk about payroll as well. I used to think that anybody who does their own payroll in their business is a lunatic because it is so time consuming to do. You need your own expertise to do it, and God forbid you make one silly mistake on a form that you’re submitting into the IRS and you’re just buried in notices from the IRS until the day you die. It’s the worst. I always thought, “Just outsource it to one of the payroll firms. They deal with it all.” That still is true in most cases, but I do have to say there are some really great cloud based payroll systems. Gusto is a great one. Xero has payroll with it as well. It’s X-E-R-O. QuickBooks has it as well, where they’ve made it a lot, lot easier to do for the business owner.
Elizabeth: Yeah, it’s just single entry. You enter the information and they take care … You just have to make sure you enter a current.
Gene: That’s right. The biggest issue is, again, God forbid if anything goes wrong or you make a mistake or whatever. It’s so time consuming and it’s just corresponding with the federal and the state agencies.
Elizabeth: Yeah, and if your answer to this is going to the IRS website, downloading forms, hand … There is a better way.
Gene: Yeah, no doubt.
Elizabeth: There’s a better way, and we go through this in the article.
Gene: It’s good.
Elizabeth: Gene, thanks for joining us for another week.
Gene: Glad to be here. Looking forward to coming back.
Elizabeth: All right. We’ll talk to you next week. Thanks for tuning in. All right.
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