Carrying the Weight on PurposeWhy Buying Seay HR Was the Best Decision of Marci LaRouech's Life

Welcome back to another episode of Bought the Biz. Today we're interviewing Marcy, who purchased a business about 18 months ago, and she, like myself and like Christi Loucks, bought in an industry she was experienced in. She also talks about some of the challenges that she's had and the rewards of being an owner-operator. She definitely says it is the best decision she's ever made in her life. Some of the lessons she talks about are how to bring in change, when to bring in how to be a leader, and really leading with explaining why to her team and to her customers. Gets into some of the details about how to increase prices on customers that haven't had a price increase in over 10 years, what the implications of that are, and how she made that— those trade-offs with losing some customers while also being up on revenue 30%. So you're not going to want to miss this. Stay tuned, and welcome to Bought the Biz. Bought the Biz is a podcast for ETA entrepreneurs who've gone from searching for a business to actually running one. It tells the the real story of what happens after the deal closes. The day-to-day operational, emotional, strategic, and leadership challenges that just don't show up in the highlight reels.

The show is story-driven and practical, sharing real experiences from operators along with clear, actionable takeaways you can use in your own business today.

I'm Garth Fossano.

I'm Christi Loucks.

Welcome to Bought the Biz.

Marci, welcome to Bot the Biz. We are so excited to have you on. You are a searcher that is now the CEO and owner of an HR business, and we're excited to learn all about your transition, some of the pricing conversations you've had with customers, and continue to share the message about what it's really like to run a business after the acquisition. So welcome, and please give us a quick intro.

Thanks, Garth. Thanks, Christi Loucks. I really appreciate being here today. I'm excited to chat with you all. Yeah, I acquired CHR in May of 2024, so it's been about 18 months now, and they've flown by. It's been a great experience, but not one that I would say is for the faint of heart, which I'm sure we can chat more about. But I have a background in HR. I started in the PEO and payroll space in 2006 and worked here in Orlando, Florida, then was recruited out to Honolulu, Hawaii, and Most recently, prior to acquiring this business, I was the CEO of an HR company in Honolulu. We sold it to a strategic. It was a great exit. And I decided at that point that, um, it was time for me to, to go out on my own and buy a company. It was something I'd been dreaming of doing for probably about the last 15 years now. Um, and had some great mentors through this process. Um, but yeah, I was able to find CHR through a proprietary search, um, self-funded. Um, and, uh, you know, found this gentleman who was 80 years old who had had this company for 44 years. He's actually the second generation owner, so it's a 60-year-old HR consulting firm that I'm proud to be the third generation owner of and to carry it on to, you know, the next hopefully 60 years of success here. So that's, uh, CHR, and I'm sure we'll talk more about it. But yeah, just really excited to share the story of, um, you know, how I got there, but also what we've done with it since then and what we plan to do.

I think one important theme to hit on is that all three of us acquired businesses in our areas of expertise. Adam, out of curiosity, did you look outside of HR at any point during your search?

I did. But I would say that it was— well, first off, it was definitely intimidating to me. I kind of have the mindset that I'm smart enough. I could probably figure it out. But when I was looking at, as an example, as an extreme example, one of the companies I looked at a few years ago was a sandbag manufacturing company. So they made the sandbags, filled the sandbags, and then ship the sandbags. And these were like giant industrial ones for like construction sites or like rivers or things like that, right? And so for me, like, it's like, okay, okay, now I not only have to figure out like manufacturing but also distribution, transportation. Like, like, I feel like, like, a lot of things to learn, right? And so I was like, all right, why don't I just stay in my wheelhouse a bit? So I would, I would peek because, as we do as searchers, right, like you get excited about different businesses and you're learning and you're— we're naturally curious people. But then I was like, stay in your lane, Marcy, right? And so, um, I, I widened the search in HR, but it was primarily the groups that I was talking to and, and, and reaching out to were in, you know, at least tangentially in the HR space.

Okay, so then you, you did buy in the area you knew, so it must have been really easy, right? Everything was smooth sailing.

I will say that the actual acquisition process wasn't very hard. Um, my seller, Sandy C., um, still, uh, a great mentor. We have, we have a lunch every quarter. Um, I consider him a friend. Um, he was 80 when I acquired the business. And, um, we were introduced through a mutual friend, um, here in Orlando. And in our very first conversation, he said to me, you know, hey, if you don't buy this business, I'm probably going to shut it down. So that was like what we were starting from, from the initial conversations. And really he was incredibly trusting in me. And, um, he actually reached out to my former CEO here in Orlando from many years ago and said, hey, is Marcy legit? Like she's thinking about buying my company. And thank God he was like, yeah, she's legit. Because he then told his CPA and the main employee here who had really access to everything, he said, give her anything she wants from the diligence standpoint. And so I had full keys to the kingdom. I got every report I asked for. And this is a pretty straightforward business. We provide consulting services and people pay us. They either pay us on a monthly basis or on a project basis, right? So like there wasn't a lot of accruals or, you know, that, you know, there wasn't a ton of accounts receivable. Like it was, it was a pretty straightforward business with few staff members. So from that perspective, it wasn't extraordinarily hard. The negotiations weren't hard. We, we agreed on LOI. We stuck to that. There was no retrade throughout the entire process. So Was it, was it still, was it emotionally draining? Were there still challenging moments in it? Sure. But like in the grand scheme of things, especially after selling a much larger business in Hawaii, it was like, okay, this, you know, like that felt pretty smooth. But then you wake up the next day and you own a business. And I can tell you, you know, that the emotional change that happened for me was, was significant and it wasn't a bad thing, but I can vividly remember.

Oh, sorry, tell me more about that, because you were the CEO of another HR business and now you're the CEO again. It feels like— why is that? Like, yet you just said, wow, this big emotional change. So I need to dig in a little bit and understand what you mean by that, because I think, Christine, I know what you're talking about, but I want to—

yeah, yeah, it really comes down to a responsibility, and, um, and, and it's a responsibility that I want and that I, I lean towards and that, um, drives and motivates me. And when I own the company or when I ran the company in Hawaii, I had ownership. So, um, so I was an owner there, there was a group of us. Um, and so I was a shareholder in that business. And, um, I can vividly remember the day that obviously I can remember the day we sold because that's a big experience all the way around. Um, but I, at that, that night after, you know, we closed and, you know, we're celebrating and, you know, telling the team and everything. And that night I, I cried my eyes out and it wasn't, Um, I was, I was sad. I was certainly proud of what we did and what we built and the exit that we had and everything. But I was sad because, um, I, it was a part of my life and a chapter of, I worked with such great people. We had such a great company that like, that was over now. And that I was never going to have that exact same thing again. The next day I woke up and there was a sense of relief and it wasn't a like, oh, thank God I don't have to do that job anymore. But it was like, oh, okay. I'm not responsible for, I had 50 employees. I'm not responsible for 50 employees. Making sure that they're getting paid and that our company stays afloat, right? And, you know, like that sort of thing, right? So like, I— there was a freeness, an airiness that came with that. I, you know, fast forward, it took me about 6 months to acquire this business, which was very fast. I wasn't expecting to go that quickly, right? Um, but about 6 months later, I sign on the dotted line here. I wake up the next morning and the weight was there again. And again, it wasn't a burden. It was absolutely like, I'm responsible. I'm now responsible for payroll for our team. I'm responsible for growing and developing them and creating a great place to work for them. I'm responsible for our clients and creating a great client experience for them, right? Like, and again, I signed up for this. This is what I want, right? And so it wasn't necessarily— it was not a bad thing, but it definitely was a shift of emotion to me to say, like, I'm proud, I'm glad I did this, but, but it— I— now it's not just me that I'm responsible for. It's this group of people, whether it's our clients, our partners, our— my team, that now I now have responsibility to again, um, outside of just myself in the search process.

Yep, I can relate.

I think that's such a part of the searcher profile in most cases too, right? I've had people tell me, oh, you're a glutton for punishment, you sign up for all this stuff and you take on the world. And yes, you could view it that way, but I think there's something, not to get too philosophical, but it's so profoundly meaningful to bear that weight. And even if you do have a small team, it doesn't necessarily matter the size of the company or the team, but You are, the buck stops with you. And there's something that is heavy in a really, I think, incredible way. And I see that in a lot of searchers. They're actually, I mean, they're looking for that. You know, other people, you know, I think the people who aren't serious about some of the like entrepreneurship and business acquisitions, they see the allure of like freedom of time, freedom of money, right? But at the end of the day, like, it's not reality. I mean, that could be a nice little perk, but you have to first and foremost be ready to, to shoulder that, um, and embrace it for what it is?

I think about this business 24/7, like, like constantly. And it's, again, it's not a burden like you said. It's not, um, I don't think about it negatively. I'm not stressed about it 24/7. It's not that. It is just that this is, this is mine, this is ours, what I'm creating, right? The buck stops with me like you said, right? Like, so I'm constantly thinking about how do I, you know, how can we improve this? How can we change that? How can we make that more efficient for my team, right? Like, what am I not thinking about that's coming coming down the pike? Who should I be reaching out to for, for, um, you know, new business, things like that. Like it is always on my mind. I'm constantly, you know, sending myself voice notes or notes, you know, email notes to tell me to do, you know, remind myself to do these things. Cause it's just like on all the time. I cannot turn it off. And I'm fine with that. That's not, like I said, it is not a burden. It's not a stress. It is innate in who I am. And kind of how I think about it is like, I did that when I was working for other people. Now at least I'm doing it and I'm like, I, you know, it's my own, it's my own thing. Right. In that regard. So it is, um, yeah, it's been a really positive shift for me. Um, but it doesn't like, it is in no way light or, or simple or, but it, but it's because it's there all the time in my mind. I can't, I cannot turn it off.

Yep. It is, it is always there, you know, especially in the first 2 years, it was always there in my mind. My business has changed a whole bunch. So it's, it's, in some ways more of a burden, in some ways less of a burden over the past 6 months. I think it was, you know, I always, I was so excited about this because of the freedom of time and what that would allow me to do. And one of the funniest things that I've shared a couple of times is, you know, people would ask me, so how much do you actually work? And I'd be like, oh, you know, well, some weeks it's 60, but, you know, other weeks it's 20. And my wife would be standing there looking at me like I was completely crazy. And she was like, no, no, no, I need to correct the record. He works every day. All the time, and it's definitely 80 plus. And I've had to reconcile that so many times because it just never felt like that, even though I've done that in my career and it felt like that. And this has not felt like that, which is, I think, this really magical unlock for people. But surgeons need to know that that's probably what's going to happen.

It becomes a big piece of, you know, it is It has become a big piece of my identity. But I think, I think it is fair to also state that, you know, I, um, I, I set my own schedule. I create the hours that I want to be working, working. That does not mean I am not, not thinking about it all the time, right? So like, and, and we are fully remote. Most our team is here in Central Florida, but, um, but our clients across the nation, we're fully remote. And so like, I can do this job. I was just up in Michigan for the holidays and I did some work there. Like, I can do it from anywhere and, and I do. Um, but I do also, you know, I, I try and create some boundaries, but it's never turned off in my head. So that's kind of a different thing is like, how many hours am I working? Like sitting in front of my laptop, like engaging with my team or our clients or something like that, like X number of hours, but like engaging mentally in the growth and success of this business. Like it's unlimited hours. There's not like, there's no clocking in and out of that for me at least. Right. And I think, and I do think, you know, that that is important as searchers going into this to, you know, Oh, I'm just gonna— I'm gonna hire a GM to do these things. I'm gonna have like— sure, yes, you can, but it's still— I mean, even when I was the CEO of the company in Hawaii, like, I had a 2-person board. They were fantastic. Dustin Sellers was one of them, um, incredible mentor for me. But like, I know he was thinking about the business even though I was running it, and he trusted me implicitly to run that business on a day-to-day basis. Like, he was still— that was still his baby, and he was making sure that it was going, you know, going the way he wanted it to. So you can say all day long, like, Sure, yeah, I've got somebody else running or whatever. Like, it's still, it's still there and it's still on your mind no matter if you're doing the work or if somebody else is, um, and you're, you know, just kind of overseeing that. Is that's my perspective and my experience both being on both sides of the, of the, of the fold from that. And yeah, I think there's a point where perhaps there'll be somebody that will be doing more of the day-to-day management of this company. I don't know, I love doing it too, so that would be, you know, so it'll be interesting to see like if I ever either get bored or want a different or new challenge on it because I do really like the quote-unquote work that I do in this business. And I say that with quotes because it's hard to define sometimes. Like, you know, like, I, you know, I, I don't do HR consulting. I have team members that are much better at HR than I am on that, right? And so, but mine is more of the sales and marketing, the administrative side of things, um, and, and, you know, growing this business and the technology, things like that. So, you know, it's kind of hard to articulate the number of hours that I am on or off from that perspective, but I love it. I'm, I'm, you know, this has been an incredible choice for me from a lifestyle perspective, but it's not easy.

Yeah. So tell us a little bit about your transition then. What were some of the things when you stepped into the company, maybe like even what are some tidbits from when you first met the team and got to say, hello, I'm the new owner?

I was really fortunate. Again, I think I have somewhat of a unique experience in that my seller was at the stage of life and professionally as he was. And so I got to meet our, one of our team members, Sissy Egan. She has been here now for 21 years and she's extraordinary and just a really great human being beyond being a great HR consultant as well. And he introduced me to her 2 weeks into the process. Like as soon as he felt like he was going to sell it to me, he was like, you need to meet Sissy. And again, she helped with the diligence and things like that. And so we grabbed coffee together, hit it off. And, you know, just really started, we really started to work together at that point. And there was two other folks that were working in the organization. They were contractors, 1099s. They're no longer with us, but we left on great terms, and I can certainly have them help with projects and things like that. But I wanted to build a team of direct W-2 employees to build out our culture and, you know, just kind of build it out from that perspective. So, so it wasn't the, you know, my experience in selling the business, like, you know, no one knew about it. And then the morning of we have, you know, Teams calls and Zoom meetings and are like announcing to both companies that we bought this business, right? This was much more of a low drama or less like no surprises kind of conversations. It was just like, okay, we have a close date coming up. Okay. We're at the close date. Okay. Now I own the business. And Sissy and Sandy, the seller, and I had lunch the very next day and started to go through the client lists in detail. And what was the game plan to tell our clients? So really my focus was more on. The conversation with the clients, some of them have been with this company for 40 years. Um, but our, our average client tenure is over 10 years. And, you know, they had known Sandy the seller for all of that time. And he wasn't necessarily doing a ton of HR consulting at the end. Um, so that was good. So it wasn't like we had these like really, um, you know, really connected clients of his. They knew him and they trusted him, but they were working with other consultants primarily by the time that I bought the business. And, um, and so, you know, I didn't— there were no surprises when I bought this company. I got exactly what I bought, and that is not normal at all. Um, and again, I think part of it was that he was just at a point where he was like, she's— she wants to buy it, so I might as well tell her everything that's in it. Like, I have no surprise because otherwise I'm going to shut it down, right? So it's like, I might as well just tell her what she's getting. And like, and that worked out well for us. Um, but I would say then kind of as we started to, to get into the day-to-day of running it, you know, there was no CRM system. Everything was on an Excel spreadsheet. Um, there was no way of tracking, you know, and managing who doing what as far as client communications, emails, things along that nature. There was no sales or marketing at all. It was all just word of mouth and referrals as far as any new business that came in the door. And, you know, we had a, a bit of an archaic pricing structure at the time that I bought it. But those were all things that I would say, um, you know, I, I've been, you know, I started in HR in 2006, so I'm not new to this business. And again, that was HR outsourcing that I was— I've always been a part of it. I've never been internal HR anywhere. I've always been a part of companies that have supported HR from far, right? Um, and so I understand the model, I understand this business really well, but I still didn't come in here on day one and make a bunch of changes. It was probably 45 days of me just listening, having conversations with clients, learning, making sure I really understood how we did what we did in order to then say, okay, now I feel like we can make this adjustment here. We can make this change here. We can— now this is the type of CRM that we should get, right? Like starting to make those things over time. Even with the amount of experience that I had in this industry. And I think that served me really well. I think that served my team well. I think that served our clients well because it proved to them that, hey, if anything changes, it's going to be for the positive with this new ownership. We're not just coming in and switching things over overnight for you. We're like, what you've, what you've been paying this company for, you are going to— we are going to continue to deliver at the high level we are. And if anything, we're going to add more to the mix for you. And So we didn't lose any clients through that. We, you know, like it was, um, you know, any team changes were, you know, joint decisions between the two of us that it was the right fit for, you know, the right move for them to move on. But otherwise, like, I took my time and that's hard for me. I'm not a patient person. I, I, I saw where we were going. I saw what we needed to do, but I was like, you know what, this company has been working for 60 years. Like, there's nothing I'm going to do today on day one that's going to change that positively, right? Like, like my, my mentor Dustin, who I mentioned earlier, he always says, do no harm, right? Like your first 90 days, like just do no harm. Like you can do stuff, but like, don't do anything that's going to hurt the business. So, you know, I took that to heart and really kind of, you know, took my time through it. And then we started to accelerate some changes. Um, but yeah, so that's, that was kind of the first 60 to 90 days there was me being patient, listening, and really making sure I 100% knew what it was that I bought and, and being able to take that moment to, also transition back into the leadership role for myself from searching. It's, it's a shift, right? And then also getting a better sense of where I wanted to take the business.

I think it's probably really hard for a lot of entrepreneurs in that, in that seat to do. I think there were a couple things that I probably started to change too early even, but at the 45-day mark, and I remember this very distinctly, I, I showed a potential proposed maybe new org chart and it caused chaos. And, and, and I was just trying to do the early socialization part of that. And, and so how did you know that the team was ready, the company was ready, and like, what, how did you prioritize what to do when?

Yeah, I don't think, I don't think I knew, you know, to be very frank, right? Like, I don't, I don't think there's any way to know for sure. Especially when you're dealing with, you know, other human beings that have their own needs, wants, desires, priorities on your team, right? Like, you're never gonna make everybody happy. Not everybody's gonna be collaborative. And some people are gonna— showing a new org chart is gonna scare the crap out of them. Other ones are gonna be like, cool, yeah, okay, let's do it, right? Like, you can't play all that. So I think it's just got to be a sense of, you know, for me it was about communication, it was about giving heads up, it was about, you know, just Showing the direction we were going and why we were doing the things was really important. Um, and I think that helped build that trust with Sissy and I was, it was like, I'm not just throwing out that we're going to do X. It was, hey, I want to do this and here's why, here's my thought process behind it. I don't like, uh, you know, you don't need to buy into it 100%, but you just got to trust me on it. But I'm going to, I'm going to answer any questions. There's no dumb questions here. There's no like taking the time to actually have those conversations. Served us well to not only, um, make changes but also build the relationship between us, um, to be working well together on the long— in the long haul. I think if I just made some switches or things like that without, um, being thoughtful and intentional about that, it might not have had as good of an outcome. But there's no— I don't think, Art, there's a real way to know when is the right time to make changes. You just got to feel in your gut, and, and you're going to mess up. I— like, we have had 3 CRMs now. In 18 months. Which one's your favorite? Twice. I maybe have messed up a third time. We're trying really hard to make this one work. Like, like, I, I'm, you know, I don't know all the answers, and I don't expect my team to, right? And I don't think they expect me to know all the answers. They, they expect certain things of me as far as the direction we're going and that we can execute on that and that we're going to, you know, uh, that I'm going to pay them and that they are going to get compensated fairly and that they're going to get a workload that is appropriate for the number of hours that they work, right? Like, there is a trade-off here But at the same time, like, I'm human and I'm going to talk about that, right? I don't have to be this, you know, high on the mountain and know everything and have all the answers. Um, you know, coming into it with humility, but also still confidence that like, I know we're going to get through this. I know we're going to get through this next CRM iteration and it's going to be fine and we're going to figure it out, right? Like, I have faith in that. And that's part of leadership too, is you've got to stay optimistic. You've got to be real, but have that vision and keep driving towards that vision in a way that everyone can get on board with you and go and go with you on that ride. Okay. Can I jump in really quickly though?

I, I, Just an observation kind of by just listening to what you're saying. Do you think your, or how do you think your background in HR being people aware, emotionally aware, like how do you think that that played a role in this? 'Cause I think that is a very unique skillset that I'm hearing pieces of that come through as you're talking. Just curious how you interpret that.

Yeah, that's a great question. I am a, uh, I'm naturally a fairly empathetic person. Um, I do care a lot about my team. That's always been something that has been a part of my leadership style, regardless from the first time I managed one part-time employee to having 50 people at my last company. Um, and I think having the exposure to other small business owners and leaders, um, and seeing the things that they have to make decisions on, sometimes really difficult decisions, um, hearing the stories, uh, seeing how they react to certain employee behaviors. I think it just has exposed me to a lot of the good, the bad, and the ugly, truly, um, in, in when it comes to employee and employer relations. And neither one of them is perfect, right? I've seen some really bad employers, I've seen some really bad employees, right? I've seen some both together, and I've seen good together too, right? Um, and so there's always extremes in everywhere So having that exposure, I think Christi has given me some perspective of what, what inspires me around that. Like seeing somebody do something, I'm like, oh, that's pretty cool that they made that choice. Right? Like, I don't know if I would've ever thought of that. Um, that's inspiring. And also the bad stuff too, where I'm like, oh, that, that's not, that's not how I would wanna deal with that if it comes to me. Right. And so learning from people's successes and mistakes that I've been exposed to. From being in HR outsourcing, I think, has shaped a bit of how I, how I lead. And, um, but I think there is just a natural, uh, I, I definitely get it from my mom and my dad, um, from my parents, like, you know, a caring nature, um, a leadership component, a drive. Um, and I think those things, you know, come innate in me. But then I've just had this exposure from the HR perspective that I think has shaped some of the kind of the softer sides around that for me, um, personally.

I will— you have— you mentioned something that I think is really important in leadership, letting your team know it's okay to make mistakes and not be right. When I came into my company, that was not at all the culture. It was we had to be right, we had to be perfect, had to follow these processes. The former owner was always right and set these out.

Was—

how did you shift the culture? Did you need to shift the culture when you joined?

Um, yeah, it's a great question. I'm trying to think if that was— I came into a fairly collaborative culture. I, I don't think that my— like, the, the prior owner, Sandy, is a, is a, a brilliant man, um, has incredible experience, obviously been doing this successfully for 40-plus years, plus the years before that that he was in HR before he bought this business. Um, but he was never, you know, I, I think he came across as is very knowledgeable and experienced, but he was never like, I'm the smartest guy in the room. At least I've never gotten that impression from him. He's always been very open to hearing my thoughts and ideas. I've seen him and Sissy interact. I saw him and former team members interact, and it wasn't like, hey, it's my way or the highway or anything like that. It was always like, oh yeah, that's interesting. Actually, let me, let me reconsider what I was, you know, thinking about giving guidance on here, or that I hadn't heard that before. I love that idea, you know, like he— so So, I think I was really fortunate. Again, I was fortunate in a lot of ways with this company that I acquired, but it was, at least in that regard, a pretty open environment. I will say that, you know, like owning up to your mistakes or being okay with the fact that we are going to make mistakes, we're human, that probably wasn't as much of the culture. And it wasn't because anyone was tapped down. I think it's just innate in some of my team members' personalities is that they want to do things really well. It's not that they need to be right all the time. It's not that, but like they're, you know, they want perfection, right? And that's just— We're going to do our best. And we're sometimes going to make mistakes. And that's, you know, that is a part of it. And we have to own up to that and we have to shift. So, so I don't think I had to make a— fortunately, I didn't have to make a huge culture shift around that. But I think just showing that like, hey, I'm vulnerable. I, you know, I'm having feelings about this. I'm, I'm, I'm stumped here. I'm not the smartest gal in the room by any means. I'm hiring really smart people that can go out and do this work. And I might have ideas and thoughts and perspectives, but like, I'm not micromanaging anybody. I don't want to do that. Um, but you know, if we, if we are off track, like let's get back on track and let's figure out a way to resolve for, for positive for everybody involved, then that's going to happen. And that's okay. And I'm never afraid of like the call from the client, like, you know, like, uh, hey, we did it. I can handle that. You know, like I'd much rather have that than somebody just not tell us, we, you know, their thoughts on things. But, um, yeah, it's, it's a, I didn't have to do too much, uh, rehab as far as that was concerned, fortunately.

Perfect.

That's great.

All right. One of the other transition things you talked about was, and changes you made, was going out to some clients about your pricing and the pricing that had been in the market for many, many years. So tell us a little bit about that experience and how that went. I think that was probably something so intimidating for maybe many new owners, but you've had a lot of experience in this industry and with this specific type of company.

I think the, the kind of perfect storm that I walked into from a pricing perspective was, um, there hadn't been any real price increases for at least 10 years. We had some clients that are— that were paying the same rate they paid 40 years ago when they joined our company. Um, and so, you know, I think I know what our market rate is. I know what we're worth in the market. I know what new clients are paying us, right? And so like we had to go back out to these clients and say, hey, listen, We would love to continue to work for you, but if you're going to use this as a full-time fractional HR person, like, you got to pay us a little bit more, right? And, and I didn't go out and 10x anybody, but like, you know, we're slowly ramping them up. And I think I was really surprised, and I don't know why I was naive about this because I've never done— I've never done a price increase on anybody that's been on the same price for 40 years. So, so I didn't have any experience in this area. The, the— and it was just a handful. Most of the clients were like, of course, Yes, you're very valuable to what we do, no questions asked. Sure, give us the new contract, we're good.

It's great.

The handful that came to us and were like, why? Like, I, I'm just like, what do you mean why? Like, so, so you haven't raised your prices to your clients in 15 years, you haven't had any increase in your expenses in 15 years, and you're asking me why I'm increasing this and it's so— I mean, and of course I didn't answer that way, but it was just like baffling to me as a business owner. If I was on the other side, and most of my vendors, right, and our partners, they raised my rates every single year. You, you kind of expect that to a certain extent. And so I think part of what I was, um, on that, that kind of caught me off guard was that there were some clients that were paying so little that they— that it actually devalued our service to them. Right. We were giving extraordinarily high VP of HR, Director of HR, CHRO-level guidance and support to them. And they were paying us an offshore person hourly rate from a call center rate. Right. And, and they couldn't understand why this person that in the market, if they were hiring directly, they'd be paying $150 grand a year plus load. Right. Why should we be paying more than $100 a month for you, right? And, and so I think that they saw the great service, but they said, well, that's only worth $100 a month because we're getting it, we've been getting it for 10 years that way, right? Um, and so that, that was— made sense once I started to have the dialogue. I could see where they were coming from, but that was a surprise to me in the pricing exercise. Am I glad I did the pricing exercise? Yes. Yes. Is it the right thing to do? Yes. Do I encourage searchers that have bought the company? Absolutely. So, I don't want this to be discouraging in any way, but that was the reality that a component that surprised me in the process was not— I didn't expect everybody to just roll over and say, "Yes, of course," right? I expected there to be conversation. But the like, "Why?" and the kind of like, "Your service is only worth this little amount?" That part I think was surprising to me versus like, negotiation, like, oh, okay, I'll give you half of that, or something like that. It was just like, no, I'm just gonna continue to pay this insanely low rate. And I was like, well, then we're probably not the right fit for you. And that's okay, right? Like, there's nothing wrong with that. And it freed up a lot of our time and energy for clients that were paying us our worth. And, and so we are— we have, we have probably, I would say, we lost about 10% of clients, but we're up 30% revenue. And again, it's not because we're We're, and we're still undervalued under, we still have clients that are definitely underpaying us for what we're bringing to the table. I'm okay with that. Right. Um, we will, we will get there. New clients coming in, they're paying us a fair market rate for what we're doing. Um, and they're seeing incredible value for what we're bringing to the table to them. And so I feel very confident in our current pricing structure, but that was definitely an eyes wide open moment of, um, the ones that didn't just push back, but push back in such a way that I was like, oh, you don't, you don't see the value in what we're doing. Darn. You know, like that's, that's going to be a hard road to, to, or, you know, a hard thing to dig out of. After 10 years of you feeling that way? And some I was successful, but not all on that.

Can I, first of all, I think that's, I mean, I think that's prudent, right? Like to be able to walk away from engagements where it may have been the right thing in the right time for, you know, a decade or more, but you know, in this new phase of growth, it just isn't going to work with where you wanna take the business. And I think those are hard decisions to make and certainly a lot of different factors to weigh me in those decisions. But like, to your point, I mean, now the business is up 30%, so yeah, that's amazing.

And, and one has come back.

There you go.

Said, said, yeah, we actually do.

I miss you.

And, and, you know, I'm not going to be vindictive about it. I might be like, well, then now you're gonna pay 10 times what I told you before, right? Like, it's, it's— we're gonna— but they're paying more than they would have if they just said yes the first time. I mean, not, not crazy amounts, but more fair, um, for, for what we're doing and bringing to the table. And I expect that we'll have a couple more come back next year. I really do feel we're staying in touch with them, right? Like, and so when the time is right and there's an HR issue, whatever, they know us, they trust us, then I think they'll see the value in what we're doing. So I think— and even if they don't, that's fine too. Um, but we're, you know, it was absolutely the, the right thing to do for us, for our team's capacity, and for our ability to bring on new clients that absolutely get what we're doing and feel relief and peace of mind with the services that we're providing to them so they don't have to worry about HR all day every day when they're trying to actually run and grow their business as well.

How did you— I would say, how did you go about that pricing exercise? And then Garth, you can chime in on yours. Like, did you have a method or did you just kind of know market rates based on your prior experience? Um, I think something that Garth and I have talked about is like, we both changed our pricing models after we acquired companies, but You know, there's so many different ways of looking at that, of like analyzing your pricing, trying to understand market rates. How did you do that?

Um, it was a couple, a couple different components for sure. Um, we have, we, so, so our business is about 60% recurring revenue. You pay a monthly or a yearly fee to us and, and we're your fractional HR support team. Um, and so, but that can look like a lot of different things. We have clients that call us once a year. They have clients. We have clients that call us once a day. So a lot of our pricing is based on utilization. How many hours do we think you're going to use over a period of time that you have a contract with us? And that's what we go after, right? Um, so part of it was, was looking through and seeing like the groups that weren't using us and just needed us for that very much peace of mind. Like, I didn't raise their rates. It's fine, right? Like, like that. Like, they'll call us every once in a while if something big pops up, then we'll talk about a project for them. That's fine. For the groups that were truly utilizing us as like full or part-time HR, right, those were the ones that we had to take take into consideration. I understood from a market perspective, like a general high level. I talked to a few other HR consultants in different, like, Southeast markets, not here in Orlando, to get a sense from them. I talked to a couple in the Midwest as well because I just wanted to get a sense of what were you— how are you structuring it, what are people paying out there, like what value, you know, what services are you providing, to make sure we were aligned with that. So I, so I had that market intel, so I felt confident based on my previous experience as well as current market intel that what I was going out there and what I'm currently going out there from a pricing perspective is, um, is within market. It's still probably slightly lower than most, um, HR consultants, but not, not significantly like when I acquired the business there. So it was a lot of that. And then from a project standpoint, um, it was kind of just taking our standard hourly rate, kind of taking into consideration how long these projects typically take us and then backing into it. So we usually— we do some hourly projects, but we primarily, when they're pretty set and dry, like a handbook review, we generally know how long it's going to take us to review a handbook. And so we can we do a project fee. Um, we kind of know how many hours it's going to be, and then we back into what an overall project fee is for that. So again, that was just us updating our hourly rate as to what was appropriate for the market on those services.

That's awesome. Garth, you speak, speak, Garth.

I was just coming on the, your boomerang customers. It was something that we had a lot of experience with as well. Um, not because of pricing changes or because of any of the transition items, You know, I think a lot of customers had— did not perceive a lot of value. And we had had them around for 10+ years when I acquired the business. And, you know, some of them went to go try a different provider. And, you know, pretty much every single one came back that did that in those first 2 years. And that was very heartwarming. But again, we were not vindictive about it either.

No, I always want to have a terminate— like, and this has been my MO since starting in HR outsourcing so many years ago. Like, if I have the ability to control it, I want to have a good exit for anybody who leaves us, um, and because I want to welcome them back with open arms. I mean, I have fired a couple clients, that's a different story, but very few, um, but, uh, and, and all of them to a T, uh, well, one didn't pay us, but the other one's like, we're just mean to my, my team and I will not tolerate that. Otherwise, if you've left, I'm going to leave on good terms. I'm going to be supportive of you leaving, um, and, and, you know, because if there's a time for you to come back, great. I don't want to to, you know, be mean, you know, kick you on the doorway out because a lot of times, well, the reason why clients leave us after the pricing exercise has been either they got acquired, so it's not anybody's control there, or, you know, they're looking to, you know, they have to cut costs in order to stay afloat. And so when times are down, I get it, right? Um, now I wouldn't recommend cutting HR support during those times because it's actually when you need it the most, but I get it, you have to do it. And then if times get better again, I want you to know that you're always welcome to come back and we're going to support you through that. So, um, so that's always been my MO. In running these businesses is like, why, why kick them when they're going out the door? Like, who cares? You know, like, it's, they're gone. It's fine. You've done your best to keep them. If they're moving on, if they come back, I want it to be a positive thing for them.

Yeah, makes sense. So I acquired a call center, by the way, with remote employees in like 20+ states. And I learned a lot about HR in my first 6 months. I probably, you know, wish I had known about companies like yours But maybe you should just tell everyone a little bit more about exactly what you do. And before we wrap this up too.

Yeah. And we, and I talked to a lot of people who have just acquired businesses. Obviously I can relate from, from selling and buying this business, selling my previous business and buying this. But so, but we work with companies in all industries, typically under 100 employees, although we do have a few that are above that. But primarily we're going to serve two functions. One is you don't have any HR. And so perhaps you have a bookkeeper that's running payroll, you might have an employment attorney for really sticky stuff, and now you're using ChatGPT to try and figure it out. Well, we can be your HR person, right? We're going to be able to have more of a consultative approach, help you with onboarding, employee experience, offboarding, performance reviews, the day-to-day stuff that comes up from an HR perspective, FMLA, ADA, like anything that, you know, is going to help you to navigate things in a compliant manner, but also in a way that protects your business, but also creates a really good employee experience. We kind of keep those three pieces together in a pyramid to help support our clients thinking about all those different stakeholders there. And so that's where we are, you know, we are your HR team for you. And then when we do have some larger clients or maybe some more complex clients where they have an HR person and perhaps at a director, manager, coordinator level, when they want someone that they can bounce ideas off of, so like things might become a little complex and, you know, instead of paying $800 an hour for an employment attorney, right? You can call us and we're— you're going to get CHRO level, chief level, VP level, 20+ years experience. Our, you know, our least experienced HR consultant has over 20 years of experience, right? Like, so, you know, you're going to get someone who's seen it, done it, or can ask another team member on our team to, to give input on it. So you get access to a whole team of people to help navigate that. So, so, you know, so we typically are going to be doing that fractional HR either for that small business that doesn't have anybody in HR or if you do have someone in HR but a little more junior that they can bounce ideas off of, we can mentor, help them grow and develop as well. And then on the other side of things is our project work. And so that is where we can do things like handbook reviews, compensation analysis, employee engagement surveys, strategy and consulting with employee matters, employee investigations. Unfortunately, with holiday parties coming up, we see an uptick in that in this time of year.

But drink responsibly, everyone out there.

Exactly. Yes, yes. Um, and so from that perspective, um, we can do one-off projects, one-time projects, things like that to help, um, navigate, you know, specific situations, or, you know, an HR audit or handbook review or things like that if we haven't— if somebody hasn't done one of those in a while. So we offer both of those options for our clients, um, but primarily our clients are, um, using that fractional HR support, um, that helps them on a, you know, daily, weekly, monthly basis to stay compliant, help their employees, you know, with a good experience, but also, you know, help protect their company as well. Awesome.

Well, we should probably wrap this up because we've been going on great topics, but anything else that you want to leave us with, with Marcy? It seems like you have a ton of experience with this and it's great hearing some of your stories too.

Yeah, I, you know, I appreciate this opportunity. Buying this business has been the best decision I've made in my entire life. I can say that without a doubt. It is still hard and it's still something that I think about all day, every day, as I mentioned. But there are people out there to help you. and whether it's listening to this, it's the, the community that has happened in ETA, which is so incredible to tap into. And, you know, hearing people from other podcasts or seeing things on LinkedIn or going to the ETA conferences or things like that, like, I've just created this great network and it's been so supportive to be a part of. And I'm proud of, of the folks that are out there doing this. It's a big leap, it's a big risk, but gosh, um, it's incredibly rewarding. Um, and so, you know, I just say, you know, if it's— if, if you're excited about this, you know, work hard to take that leap and then have people, whether it's us or others, to help you after you bought the business. Um, you know, keep, keep working, you know, with your mentors, keep working with people who have done it before, learn from others, and, and you'll be successful.

Can't say it any better than that. Thanks for joining us, Marcy.

Thank you.