Meet Jon Morris

We are live with John Morris, my newest victim. Oh wait, I'm not doing true crime. Sorry, sorry, I'm the co-host of a very popular true crime podcast. No, no, he's not a victim. He's brave, he's bold, I'm pretty sure he's brilliant by reading his bio. I literally have no clue who John is, so John, you have to share. John, from what I read here Could you please, when you go to explain it and we have a conversation, make believe I'm 12? So you have to kind of explain it in very layman teenager terms. Okay, so everyone meet John Morris. John, introduce yourself.

Nice to meet everyone. Uh, so yeah, a little bit of background on me. From 1996, which shows how old I am, to 2020, I was in the digital marketing space. In my last business. I went to University of Chicago for business school. I entered an annual business plan competition. I took second place. 21 years later, I can tell you I'm very, very bitter. It should have been first, uh, but I won $10,000 as the prize money, and I used that to grow a digital agency called Rise Interactive from just me to a little bit under $40 million in revenue before exiting it 5 years ago. I stepped down on April 1st, 2020. I happen to love April Fool's Day, and I feel like this was sort of a prank coming back to me, but it was right at the beginning of the pandemic. When you build a fairly decent-sized company and you think about what your exit's going to be, you envision somewhere going on a plane that's warm and doing fun things, and the world was shut down. The airports were closed, the golf courses were closed. And so I created my current company, Fiscal Advocate, uh, and it was really based on the success of Rise. So Rise, we took financial data and we used that data to make better decisions on how to scale and grow our business than I think our competition. And so now what I do is I, I help mainly anyone in the service-based space, but primarily tech service and marketing service companies make better decision makings to grow faster, increase profits, and grow cash by utilizing their financial data.

Interesting. Okay, so thank you. So that's Rise Interactive. So what's the interactive part?

Uh, it was an interactive agency. So Rise, you know, back from 2004 to 2020, some people call it digital agency, some people called it an interactive agency. And so that's what the interactive was.

Okay, so now you're with Fiscal Advocate, and so I get who you serve. I'm not sure how you serve them, so you have to really remember I'm 12.

I'll go with the 12-year-old version. So perfect.

So give me, or give me an example. Did you have like a case study or an example? Because I'll do— I do great with those. Yep.

So I generally help two different types of businesses. First type of business I help is just cash-constrained or financially, uh, in trouble organizations, and I get them back to a place that's healthy. And, uh, when I say financial data, in the service-based sector, there are very clear benchmarks of how much money you should spend in every single area of your business. So if you are overspending on delivering for your customers, we help you right-size that. If you're overspending on sales and marketing, we help you right-size that. So we help you understand how much you need to spend in each specific area. The second—

oh, okay, so you have the technology. This is all technology-based, so you're inputting their information.

Yep. So we build our own budgeting and forecasting and benchmarking software, but it's also service. So if you want, basically think of us— we will take over your finance department We will be an extension of your finance department, or we will just give you the technology that your finance department can use. So we, you know, are really, you know, a fractional CFO is a good way of putting it.

So you offer done-for-you or do-it-yourself? Yep. Is that correct?

Both scenarios. Now, the second type of business we help are companies that have just hit a plateau. They grew to $20 million, they got stuck, and they don't know how to get bigger. And so we help guide them on— it's, it's really interesting. Like, once you organize someone's financial data and you put everything into the buckets that I want to see your spending, it tells an immediate story. I can tell you exactly why you're not growing. And it's generally, you know, the, the biggest thing what I tell people is your gross margin, which is how much money you have left over after you service your customers, 90% of the time is too low before they come to us. So you should be spending, if you're in the service-based sector, 50% of your revenue or less to deliver for your customers. And if you're spending more than that Uh, you're just not delivering profitably enough. And so that's one area that we fix. Oftentimes we find that the back office— so your HR, your legal, your corporate IT, your finance department— you know, you, you got some massive office that you shouldn't have gotten, you know, like. So we could figure out really quickly what's happening, why you're not growing, and what we need to do to put you on a path to growth.

Okay, so this is really interesting. So give me your, like, what, what size business do you, do you find that, that there, you know, the issues start growing? Is it the single solopreneur or 5 employees, 10 employees?

So I would say the issues start with every different size business. We tend to serve $5 million to $50 million businesses, and I would say the vast majority are between $10 million and $20 million.

Okay. So when you come into the business and you come, you go and they hire you or they bring you in, is there some fear going on with the employees that maybe, uh, weren't keeping records correctly, spending too much money? Is, has that ever become an issue?

So I don't, I'm not talking to the core group that often. Mainly I'm talking to the CEO. If they have a finance department, I'll be talking to the finance department. I might be talking to a few leaders. I am generally very honest. When you are in the service-based industry, 80% of your costs are people. And if you're losing money, I can tell you my playbook. You're going to have to reduce your expenses. You know, everyone would love to grow based on, you know, get to profitability by just increasing revenue. But that's not a guarantee. Reducing your expenses is a guarantee. When I say reducing expenses, it generally means getting rid of people that have been with you, that you love, that you've been in the trenches with, that you deeply care about. And so I start off by just saying to them that I want to make sure that you have the emotional strength to do what I'm going to suggest, because I, I'm here to help. You know, it's kind of like when you go to the doctor and the doctor tells you, you got to change your lifestyle and you got to do all these things. The doctor can't make you do those things. Like you have to be willing to do them yourself. When I come in and I try to get you to a financially healthy spot, you know, you're most likely going to have to let some people go and have a tough conversation. And so if you can't do that, I would say two things. I don't think you should be running the company if you can't do it. And then the second thing is you shouldn't hire me because you're going to waste your money because I'm going to tell you what to do and then you're not going to want to do it because you don't like the news.

So I would think that family business, it would be tougher on a family business to let someone go because I was just thinking today that a lot of times employees kind kind of hijack the company, right? They, they in smaller— am I wrong? Like they, they tend to, you know, tell the owner what to do instead of the owner saying it. And often the owner doesn't, you know, like has to listen because they don't want to lose that employee. And it's that circle, uh, as a cycle of the employee is good, but they're not the best. Or could there be someone better? But in family businesses, I think that it's even harder to let someone go. But that's just me. Is that what you're finding?

Well, so absolutely, but let's just put it this way. In every job, no matter what job you take, there is something that is the worst part of the job, you know, that you're just like, I absolutely dread and I hate this component. If you're going to be a CEO or you're going to be a manager, you have to make really tough decisions in a non-emotional manner. And the closer you are to those individuals, you know, like you have Thanksgiving around the corner, and it— if you have to fire Uncle Joe, you know, that's going to make it a very uncomfortable Thanksgiving dinner. Uh, but what I would tell you is don't put yourself in that situation. You know, I, I have— I've let go of a lot of people who I deeply care about and I have great relationships with still. But when I hired them, I, I had an honest conversation of like, you know, I, I gotta run this in a non-emotional manner. Like, if you're not meeting my needs or the company's needs, uh, you know, I'll have a conversation with you. You know, I do it with heart, I do it with caring, but I, I got to take care of the 90% still within the organization as opposed to the 10% that aren't performing to what we would want them to perform.

But it's not just about the people, or is it? Is there other areas that you're looking at where you could save money? And is that even how, even how companies invoice you, that maybe they're, you know, placing, they're doing lawn work, painting, yard, all of that in one bucket? And so when you're looking at it, you're unable to like really break it down. Is that like, are those kind of problems taking place?

I think in different industries there might be more of a percent of your revenue that are non-people expenses. In the world of service companies where what you sell is time, 80% of your costs are people. So yes, you could look at the 20% and see if there's something you could do there, but I'll just give an example. Uh, imagine you run a web development company. And your revenue is $10 million. You have a budget of $5 million in order to service those customers. That's what you have to figure out how to do. Now imagine your cost is $8 million, so you're spending $3 million more than you're supposed to be in that area. So you only have a 20% gross margin— the $10 million minus $8 million. So When I talk about getting rid of expenses, sure, if you have some piece of technology that happened to be 2 of that $3 million that you don't need, you know, that you need to cut, then that's a no-brainer. I just have enough experience to know that I'm not looking at the cuts holistically across the entire company. I'm looking at by individual department based on benchmarks of how much you're supposed to spend. And so, you know, like, let's just say you had a house and, you know, you're like, you have a budget for the house and you're like 10 times over your budget on your landscaping and you're half a percent over your budget on, I don't know, your groceries or something like that. You know, we're going to go attack landscaping. We're not going to attack the groceries. And it's, it's same thing with running the business.

Okay, so then what if, what if you go into a business and you find the salaries are really high, they're exorbitant, they're— and that family members are under the salary? Have you ever had that issue where you have the owners are taking a very large salary, their children are taking a large salary, and, and how, how would you even fix something like that?

So once again, my job is to give information. And to try to create a sense of urgency for them to make the right decision. So let's just look at it this way, uh, the first thing is I get very involved in your org structure. Uh, typically you should have 4 direct reports at a minimum per manager. So using my $8 million is what you're spending, but you should only be spending $5 million example, I'm going to be looking at your org structure, and if I see that you got 10 managers and each of them only have 2 direct reports, I'm going to explain that you need to have only, you know, uh, 10 direct reports. You only need 3 managers, you know, or 4 managers. I had to do the math in my head, but you know, the idea is that you have too many managers. So you're going to have to— you might have a conversation with somebody and they might say, you know, we're going to have to lower your salary and make you, you know, a direct report as opposed to a manager, or we're going to have to go replace you with somebody else. Most likely you're going to replace them, but you're going to have to cut your managers by 5 or 6 to 7 people. And if you're not willing to do it, you're not going to fix the problem. You know, you're going to continue to lose money. So, and I'm giving you like the hard scenario. There are times where it's fun. You know, I have a client right now that is incredibly profitable, but they're not growing. And, uh, in this scenario, they're way under-investing in their sales and marketing and their R&D. And so, you know, company I was just talking to last week $5 million in revenue, 40% in profit. So they're making $2 million in profit off of that $5 million. The first thing I explained is you don't need to do anything. Like, you're making more than enough money. Like, you know, like, you can live like that, you can live like a king. Like, you know, we don't need to change anything. But if you want to grow and you want to go from $5 million to $10 million, which is why they called me, then we have to reduce your profits and invest in sales and marketing and invest in innovation so that you can scale and grow.

That makes sense. That makes sense. So you are— I'm trying to figure out where you fall as a company is looking at their, like, P&L and they're saying, uh-oh, we're, we're not— we're like all the different scenarios that are out there. But are they, are they contacting you in the beginning to go through, or is it more towards the end when they realize that it's a people problem?

I hope that they're contacting me in the beginning, but I'll give you an example. I happen to know the exact dates. October 11th of last year, I had a potential client that decided not to work with me, and they called me up a few weeks ago, and they did not have a good year. They ran into debt. They lost money. And now we're in a major turnaround situation where I have to help them with their cash flow and make sure that they have enough cash while we turn their business around. Had they hired me a year ago, I would have saved them a lot of pain. I would have helped them sleep at night, and we'd probably talk about investing and putting out a path to growth as opposed to a financial turnaround. So I get people call me at all different stages.

What was their objection last year?

They had an internal employee that was running the finances, and I don't think that they were ready to let go of that employee, or, and that employee was not ready to embrace us. And so, um, so they stuck with what they were currently doing and waited. And I see that very, you know, it, once again, it's hard to let people go. And I, I see that as a common thread where You have an internal finance team. You're very nervous about making a change to that team, but that team's not giving you what you need.

But OK, so this kind of circles around though to my, like, my first question, because that was kind of my first thought, is that there's many people in positions that probably aren't so wonderful, but there may be a relationship— not like, you know, relationship, but, you know, maybe, maybe You know that there's, there's a couple of things that they do that, that the CEO loves, right? But there's some things that are not offering what they, that what that company needs. So they get in that position, that pickle of not wanting to let someone go. So it's nice to be able to turn it over to you, right? So that it kind of takes the emotion out of it and takes that you're not, you're doing it. So I think that really makes sense. Where do people, when they get to this, situation, how do they even look you up? Like, what does that look like as far as like if I— oh, I'm going to use this word. Don't laugh, John.

Okay.

Oh, maybe you're too young. Back in the day when you use the Yellow Pages, what would I look you up if I was going to go to the Yellow Pages or Google? How do I Google what you do?

Probably fractional CFO would be like the typical term people would look for. By the way, I worked for a very brief moment for the third largest Yellow Page advertising agency. So I am old enough to know what the Yellow Pages are. But, but going back to your comment before about the emotional aspects, this goes back to my comment. The worst part of being a manager or CEO is that you have to fire people. And if you can't do the job, then I would really challenge if you're the right person for that job. And so if you're in a family-run business, you've hired your best friend, you've hired your cousin, you know, like, you can't sacrifice the quality of your company because you're scared of those decisions. You need to make sure that you put yourself in a place that you can make those decisions. And this is my— the example I like to use is, um, the President of the United States sends bombs into other countries and kills people. And I personally couldn't do that job. Like, I could not sleep at night personally, uh, that I made a mistake and impacted someone in such a drastic way, or a country in such a drastic way. I can do this job. I can, I can run a company and make the tough decisions because I generally believe that although I may be causing pain I can help them find their next job, that it's generally, you know, a temporary pain point, not a permanent pain point, you know, but it's a horrible part of the job. And so that's where I agree with you. It's harder in a family-run business, but I still think that you need to have the ability to make those decisions.

So interesting. John, hold on for one second. I just want to say hello to Latonya and Bruce. They are here live on Chatter Social. I don't know if you could see that. So, uh, Latonya, Bruce, thank you for being here, both of you. And if you have any questions, please let us know. And actually, what I want John to do, if you don't mind repeating this— I meet you in the elevator. Yeah, and we're going up to my penthouse suite that I have, all like all 5 penthouse suites in the building. But seriously, give me your elevator pitch so that Bruce and Latonya and anyone else listening or coming in halfway understand what you do.

So my company, Fiscal Advocate, specializes in helping $5 million to $50 million service-based companies manage their finances more effectively, provide strategic planning and executive coaching to help you focus 3 numbers: how much cash you have relative to your monthly overhead. Microsoft bought LinkedIn for $26.2 billion in an all-cash deal. If you have lots of cash, you have lots of optionality, improve your profit margin, and have you grow faster on a year-over-year basis.

Interesting. So how I look at it, John, is that you could be in business and you could put like, you know, a paper bag over your head and, and not really see what's taking place and kind of just hope every month that the numbers match up. Um, and you may be thinking to yourself, well, I don't have the money to even go this route, but like share that, um, you spend to save is kind of how I look at this.

It's a, it's a great way of looking at it. You know, I happen to know the service-based space, but every industry has benchmarks. But the goal in a service-based company is 20% of your revenue is profit. And if you have been year after year after year below 20%, you are overspending somewhere and not getting the impact or the return off of that investment. And so by hiring us, we're gonna get you to that 20% profit. We're gonna get you more money than what you pay us. So it's a really good trade. And the other part is ideally, we're gonna put you on a path to growth that we're gonna get you to spend your time and your money more intelligently and more effectively to grow appropriately.

So is this a proprietary software too that you have?

Yeah, so we have, uh, one piece of software called Engine BI that does budgeting, forecasting, benchmarking, specifically designed for the service-based industry. It's basically taking what I did at Rise Interactive, uh, and which I had Google Sheets, and I productized it. And then next quarter we're launching an AI CFO copilot, so think of it as eventually it will connect to your bank account, your accounting software, your credit cards, your time tracking, your CRM, and any question you have that relates to— any question you had that relates to your financial needs, it will be able to answer.

Wait, you can use the word Copilot?

Yeah, I don't think that Microsoft owns the word Copilot. I call it a CFO copilot. So it's not the product name. It's just what it is. It's a, it's a copilot to the CFO to help them.

I love it. I love it. I love it. And Bruce and Latanya, if you have any questions, please let, let us know. This is a little bit over my head between just between us. Hopefully nobody else hears. So what questions should I be asking you since I really do no prep?

Um, you know, assuming your audience is interested in either two things— stabilizing their business or growing faster— the first thing I explain is there are only three KPIs that matter, the ones I just mentioned: your cash, your profit margin, and your revenue growth. And if you narrow all of your decisions to just improving those three numbers, that to me is a really good starting point. The second thing is, um, you know, what you want to do is there's a department in the finance group called FP&A. It stands for financial planning and analysis, and I think it is one of the most important elements to growing your business. So it will do your budgeting, your forecasting, your cash flow analysis. It's really giving you your forward-looking insights, and you should be investing and having those forward-looking insights. Uh, the third thing, and this was the trick to how I grew Rise, was I focused on servicing our customers as profitably as we possibly could, and then I used that money to invest more in sales and marketing and more into R&D. Uh, the, the big number that you want to look at is what percent of your revenue do you spend on sales and marketing, and you want it to be as high a percent as possible. So if you're spending more on sales and marketing relative to your competition is the exact same size, you should have an edge over time.

Interesting. Sorry, Mike, I have to just clear out some windows because it's causing an issue. Oh, Bruce, Bruce, say hello. Hi, Bruce. Nice to see you too.

Good afternoon. Now it is afternoon. I'm in Vegas. Does this pertain more to corporate-type businesses, you know, brick-and-mortar-type businesses, because I'm an entrepreneur and I'm building a business through another company. It's my— I'm an independent business owner. So when I go out and I am growing, um, uh, my team, and when I'm out there, um, getting customers. I do it on more of a one-on-one basis. I can do it online and do that kind of way, but I'm more, um, successful when I go out and just have conversations. And, and I go out and I give samples and do things like that. So is that— is this more geared towards the corporate type of structure?

It's really geared for any business. But let me ask you, Bruce, what does your business do?

Um, I have— I sell products, everything from cleaning supplies all the way to, um, health and wellness. So I got the whole gamut, personal care, um, you know, I do all that.

Okay. And then tell me a little bit about what are your dreams? Like, do you want to keep it small? Do you want to grow it into something large? Like, how big of a company do you want to create?

I want it to be as big as I can make it, you know.

Okay.

I'm able to— the way it's structured, uh, you know, once I build my team and once I get my customers, um, I can build it as big as I want to grow it. And then I can also will it over to the next generation should some— well, when— not should— when something happens and I'm gone, I can pass it on to the next generation and they can grow on top of what I've already grown.

And how many employees do you have today?

Uh, I don't need any employees at all. Zero.

Okay, so the first thing is, if you want to grow, uh, I say, you know, you can't have a goal unless you budget for it. So the first thing you have to start— you have to think about is, you know, what percent of your revenue are you going to dedicate to sales and marketing? And to help you win new customers. Now, it could be that you're still the salesperson, but, you know, you're going to spend more money on travel to go to more events. It could be that you're going to hire somebody and they're going to go to those events. It could be that you're going to do a media campaign, you know, like there's lots of different ways to spend it. But if you don't spend money on sales and marketing, you're not going to grow. Uh, second thing I would be thinking about is over time, if you can add more and more employees, there are really, you know, in every business is a different industry, but you know, you're gonna have a head of growth, you're gonna have a head of someone taking care of the customers, you're going to have a head of your back office, and you might have a head of innovation. And right now it might be you doing all of those things, but like, you know, 2026 is around the corner. You want to start thinking about what investments are you going to make so that your business is better at the end of the year than it is at the beginning of the year. You want to think about what is your revenue number going to be, what is your profit number going to be, and And so, you know, right now it doesn't matter that you're a, you know, a one-person shop. You should be really investing in your budgeting and strategically thinking about how you spend your time and your money next year so that you'll get the greatest return. Okay. All right.

That's some good information.

That is, Bruce. Thank you. Great question. Thank you, Bruce. I really appreciate it. So I, I, I'm not sure if I have any more questions. You, you answered everything. I have a much better idea of what you do now and can grasp it. And I've heard of other companies that go in and do this. They, you know, will go in and— but it's very, very software, like, you know, pretty much they're taking the numbers, putting in the software and spitting it back out. It sounds like you are more hands-on. You may be doing that, but you're doing more of the, um, you know, speaking with the, the, uh, CEO, CFO, and you are actually letting the people go? I mean, are you the one that's doing it?

I'm just giving them the guidance of what, how much they need to spend, and I'll help them think about how much to spend in those areas. Uh, but yes, I, I come with a philosophy, an approach. My software mirrors that approach. But I really, you know, what I found that's necessary when you hire a CFO is that you need someone with a crazy sense of urgency to help you make those decisions. And, uh, and that they— I hate to use the word pressure, but they, they care enough that they don't just say like, hey, go make a decision and then go to sleep at night whether they make the decision or not. You know, that Like, we need to make things happen and we need to make them happen very quickly.

So interesting, you know, I did October 14th and 15th, we had an event called SWAT in Order. This is the book from the speakers, but you fall right into that because that's exactly where people need to look at their strengths, weaknesses, opportunities, and threats.

Absolutely.

I love that. I will have to ask you to be a speaker at our next one when we do it next year. It was a great event. We multi-streamed it. We were live on Chatter. So all the, the speakers were kind of surprised to have a real voice. Bruce is a real person. And of course, they have their chapter in the book, which is great. All right. I don't have any other questions. So unless I totally missed something, I want to thank you for being bold enough to come on live. Never easy, and you answered a lot of questions. And I absolutely— how can we— where— what can we listen to? So if we're having a conversation, or I like to go out to eat and listen to other people's conversations, like, I'm sure, Bruce, you like to listen to other people's conversations too. I'm kidding you. I'm sure I'm the only one that does that. But if I heard someone saying, geez, our business is at $10 million, but we're having troubles, you know, meeting our, our salary or meeting, um, our goals, I could say, wait, talk to Fiscal Advocate.

Yep. So a couple things. I post every week on LinkedIn, 3 times a week at a minimum, never miss a week. So you can go find me at LinkedIn. You can go to fiscaladvocate.com. I have a fairly large resource section. I have an ebook with my whole philosophy, uh, and then you can always email me. I'd love to hear from anybody at jon@fiscaladvocate.com.

Oh, I love that. I'm putting the— okay, I'm putting it right here. Amazing. Yeah, really, I, I found this fascinating. A little over my head, but fascinating. I, I really understand. Okay, so thank you so much for your time, John. I appreciate it. Thank you, Bruce and Latonya. Appreciate your being here. And thank you for anyone that's watching or will be watching. This will be turned into a podcast, and so I will send you that information, John, and love PodMatch. So, so glad that you found me on PodMatch.

So glad to be here, and I'm really happy as well.

Thank you so much. All right, well, have a great rest of the day, and I appreciate your being here.

Absolutely, you too. Have a good one, and thank you for, uh, for those who joined.

Yes, thank you so much, you guys. I'm going to close the room because I'm going to end the stream. So thank you so, so much for being here. It always means a lot to me.