Profit, Growth, & the Agency Reality Check | Jon Morris

Hey creative, are you ready to discuss profits, the money, the ways to make it happen? The Profitable Creative Podcast is for you, the creative, how you define it. Videographers, photographers, entrepreneurs, marketing agencies, you get it. CEO of Core Group and author Christian Brim interviews industry experts, creative entrepreneurs, and professionals alike who strive to be creative and make money at the same time. Sound like you? Tune in now. It's time for profit.

Welcome to another episode of The Profitable Creative, the only place on the interwebs where you will learn how to turn your passion into profit. I am your host, Christian Brim. Special shout out to our one listener in Chestertown, Maryland. That's just a great name. And I was thinking not enough people are named Chester anymore. So maybe this will be an inspiration for you. Uh, but in any case, thank you for listening. Joining me today, John Morris of Fiscal Advocate. Welcome to the show, John.

Christian, great to be here. Really appreciate it.

Yeah. So, uh, we were talking, uh, in the green room about your background and let's jump right into that because I find that fascinating. So you, you started as a digital marketer back in the— it's not even the aughts. You, you were pre-aughts.

Yeah. Mid-1990s. I learned about the internet in January of 1996, and I started—

when Al Gore invented it.

Exactly. And, uh, graduated college in May, took a day to move, started my business the next day. And I started out creating the ugliest websites you've ever seen.

They were all ugly.

It wasn't your fault. But I, I had a special case of ugly. Uh, I really was not very talented. But a lot of people kept asking me like, how's my website going to get found? And I didn't know the answer. No one knew the answer. And so I started analyzing, uh, all the different ways to optimize for the search engines and truly was one of the pioneers of search engine optimization. Uh, grew an agency called Net Traffic. It failed, uh, in the dot-com crash. And then in 2004, I started a company called Rise Interactive. Which was my second digital agency. And I grew that from just me to a little bit under $40 million and then exited it, uh, in 2020. And then I took my knowledge from there and I started Fiscal Advocate, which is a fractional CFO and strategic planning company specifically to teach marketing agencies the playbooks I used to scale Rise.

Okay. There's just so many questions that raises. Okay. So let's go back to the, the dot-com failure? What, what did you get wrong?

So 3 to 4 things I got wrong. So the first thing was customer concentration. 80% of my revenue was tied up into 3 clients. I lost all 3 clients in September of 2021— or sorry, 2001— and was not able to weather that storm. So that was issue number 1. Issue number 2.

Well, let me, let me ask a follow-up question on that. Was that on purpose that you, you had that concentration or not?

It was definitely not on purpose. And I had all sorts of pitches that I could have won, but I tried to be too aggressive in pricing and was overcharging. Uh, I did not manage to the 20% EBITDA that you should be managing to. So I was on a really fine line in terms of profitability. Uh, there was definitely some talent, uh, that I should have gotten rid of and was scared to fire people. Uh, so the storm happened. I absolutely could have weathered the storm, uh, but did not navigate it properly. There was one other major issue, and I think this is a big factor of why Rise was so successful and why NetTraffic was not successful. Was it was the same playbook. It was a data-driven approach to doing digital marketing. The problem was there just was not that many good places to advertise in the mid-1990s to late 1990s. You know, people were doing these deals on AOL that made no sense when you put the math together. And I was trying to use, you know, you know, true data in terms of what's your cost per acquisition, how scalable is it. And I couldn't find scalable places to advertise. And I think that was a big problem. By the time I started Rise, just literally 3 to 5 years later, you know, Google is now in the picture. Uh, social media hasn't formed yet, but social media is about to come into the picture. And so all of a sudden there was this much larger network of really solid places to advertise. And I did think that was a big factor, is I was a little bit too early. In the mid-1990s.

Yeah, I mean, that's a real problem, especially when you're talking about technology. Uh, you know, I think you see a ton of that with the, the AI companies. Yeah, like, you know, there's a, there's a whole bunch of them that just don't have— you can't monetize it. It's like, it's, it's— yeah. Okay, so 3 years before you start your next agency, what, what did you do?

So I went to Ketchum Directory Advertising, which was owned by Omnicom, and I ran their digital marketing group.

Okay.

And then I went to University of Chicago to get my MBA. Um, and I went there to focus on finance. So my best friend owned a head, uh, or actually was working in a mutual fund at that point in time and was doing really well. He, we grew up together. Typically everything he loved to do, I love to do. And so I, I went to leave digital marketing and go into finance. And I got a job at a hedge fund, was bored out of my mind. I kept on interviewing all these CEOs and I was like, I really want their job. I didn't want to research companies. I wanted to grow companies. So it was a little bit of a, you know, confusion about what I should do next.

Was there, I mean, I'm assuming. That failure probably put some doubt in, in your mind about like, I mean, so you, so you went back to work for somebody else, but like you realize this is not what I'm supposed to be doing. Um, how did, how did that failure, uh, play out as far as starting your second agency?

Um, so I, I'm gonna get into that because I got a really good story about that. Okay. Is University of Chicago has an annual business plan competition called the New Venture Challenge. Okay. Uh, I decided to enter the competition and I had zero interest in starting a business. I just, you know, I'm a few years after the failure of my first business. Uh, and I ended up taking second place in the competition, which was Rise Interactive. And all of a sudden you have all these highly successful entrepreneurs, venture capitalists, private equity people who really believed in me and believed in my business idea. And so I was thinking about starting my own business because of how well we did. Uh, but yet I was very scared about what happened in the past and I didn't want to spend another 5 years with no success. My parents called me up and they asked if I wanted to go out to dinner with them and my grandma. And so I said yes. And so I go out to meet with them and it was an intervention. It was specifically to talk me out of starting this business.

Really?

Okay. And so that's where I, that's the story of, uh, I did very well in business school and they were very nervous that I had this window of opportunity to take advantage of on-campus recruiting and, you know, meet the Googles of the world and the Amazons of the world and these large companies., and potentially get a job working for them with a high salary and growing through the ranks and all that. And they didn't want me to lose that opportunity. So what I did is I, I graduated in 2005, but I took second place in 2004. So I had a year of time to try to see if I can make this work while at the same time I'm still a student and I wasn't working while I was a student. So. Any money I made was extra money. Uh, so I created milestones and I didn't hold true to those milestones. And if I didn't make a certain amount in revenue, I was going to stop what I was going to do. And I was going to go look for a job because, uh, one of the things I learned in business school is the only thing worse than going bankrupt is to be a business of the living dead, which is you make just enough money to never make any money. And when I look at my first agency, it was a business of the living dead. As we talk about, you know, how do creative shops become profitable? Like, you know, we wanna make sure that they're not a business of the living dead, that another year goes by where they make no money and they're stressed and they're sweating, you know, all the time and energy they're putting into this and it's not growing or going anywhere. So I hit those milestones and you know, I was, I think, at $350,000 revenue by the time I graduated. I then went to $750,000, then $1.1 million.

Yeah, not insignificant doing it part-time. Yep. And so then you launched and the rest, as they say, is history. Did you replicate any of your profitability mistakes with the second iteration?

No. Um, I, two things. I had really strong finances and I had really strong HR practices. So when you think about owning an agency, in my opinion, the worst part of the job is that at some point you have to fire people. And they're not just people, they're people you love. They're people you've been in the trenches with. They're people you deeply care about. And in my first agency, you know, I was 22 years old when I started it. Uh, I was petrified to fire someone. And the second time around, I recognized that that was a weakness and that if I was going to do this, I had to do it right. And I had to be willing to make the tough decisions. In 2006, I fired 50% of the people I hired. Um, I was looking for people who were analytical. And what I found is that people were really good at the interview process of convincing me they were analytical, but they weren't analytical. And so I created an analytics exam and it had a 22% pass rate. And all of a sudden I had a method to hire for people who are analytical. And when you think about business, I think it is the greatest sport out there. It is a team sport.. And when you think about your very first 10 hires, if you have 2 that are not A players, that means 20% of your staff are not A players. Mm-hmm. And I wasn't willing to sacrifice not having an A player in my first 10 employees. And so I was very focused on who I needed to hire, why I wanted to hire them, what I was looking for. And if they didn't meet my criteria, I was gonna let them go and, and, you know, make sure I'd found the right person for that wall.

Hey listeners, are you ready to turn your passion into profit? Then grab a copy of Profit First for Creatives. Click the link in the show notes to purchase a copy. And if you're not ready to make that full commitment, you can download a free copy of the first chapter. Check it out right now. Yeah, there's a couple of things I'll comment on that from my own journey. I think one is that most entrepreneurs don't have any experience hiring and managing people, right? Like when they come to the table, they don't know what they're doing. And I sure as hell didn't. And two, I too struggled with firing people. And I think a lot of entrepreneurs do. I think, you know, for me, it was like, I'm a very loyal person and it felt disloyal. But what I realized was that you mentioned a team and it is a team. And like, if you have a basketball team and you've got one player on the court that can't shoot, they're a liability, right? And so you're really only playing with 4 people. And it's not— I hate to use the F-word— it's not fair to the other 4 if you let that 5th person drag everybody else down. And switching your mindset to saying like, My, my job is to protect the team. And, and, and if, if, if this person is not cutting their weight, even though I, I like them personally, they have to go. And that's why I've never— I have never, and I, I don't like companies that say, oh, we're a family. Well, no, you're not, because you don't fire family.

Right? Yeah, you're a team.

You're a team. And like, if you don't perform, that doesn't mean I don't like you. And that doesn't mean we can't be friends, but you just can't work here anymore. And most employees that I've had that conversation with, or my team has had that conversation with, they don't receive it that way. Right? You know, the employee doesn't feel, oh, okay, this isn't personal. Well, of course it's personal. It feels personal because it's you and your performance. But The reality is, is it's not, it's not about John or Christian. It's like, it's that the team needs something different than you can provide.

Yep. And what's also hard is that a team member might be a complete A-player from 1 employee to 25 employees, but they're no longer an A-player from 25 to 100. And then someone else might be an A-player from 25 to 100, but it's not an A-player from 100 to 250.

And right, which is different skill set.

Yep. Which I find is probably the hardest fires that you have to do is ones that got you to a certain point, but are not the ones that are going to get you to the next point.

Yes, that, that 100% sucks. Um, I, let me ask you, as far as, um, your, your consulting, who is your target customer? You said, you said creative agencies, but it sounds like they tend to be maybe bigger.

$5 million to $50 million is the range. But I would say the vast majority are between $5 and $20 million.

Okay. Um, let's unpack this. I have, I have, you know, we, we have lots of, um, agencies as clients and have had over the years. Uh, all of them would be below that $5 million threshold.

So we may be comparing apples and oranges here, but we aren't, and I'll be able to get you into all the numbers. So, okay, so many clients between 1 and 5, uh, that I work with. I just primarily target between 5 and 50.

Sure, sure. Uh, what I, I have— I went to— I got invited to a mastermind of agency owners, um, earlier this year, and, and there were probably 20 of them, and they were all between the million, $2 million range, right? Okay. So they'd had success, and they were sharing their numbers in this group. And, um, I was invited because I was a financial person, and they really didn't have that skill set in, in this group of owners. And one of the things, as they were reviewing their numbers, that just floored me because I guess I hadn't noticed it in working with our clients because we were primarily focused on the financial side was that their average retention as an agency was 2 years. And they thought that was great because it was so much higher than the industry. And I'm in the back of the room kind of like scratching my head. Where we have retention that's, you know, 90%. So we have a client for 10 years, right? And I'm like, it feels like if you're churning clients that fast, you're not really solving their problem, right? What's your thought and experience on that?

I'm on your side with this one. You know, my largest client at Rise, we lost them after 16 years and 5 CMOs. Okay, the fifth CMO did not give us a chance. Like, they made a decision before they got there that we were not going to be staying. Uh, right. And I have clients— my— this business has been around for 5 years. I have clients that have been with us for 4 of those 5 years. Um, you know, I, I call it the pursuit of world class. You have some problem you are trying to solve for a client, and every year you got to get better at solving that problem. And, you know, there's 120,000 agencies, marketing agencies, just in the United States. So if you're a creative shop, you have thousands of competitors that do the exact same thing. So if you're not innovating and you're not evolving and you're not getting better, you're going to lose them after 2 years. You have to think about how you're building long-term sustainable relationships that you hold on to that book of business for as long as you can. You know, uh, Can I say one more thing before you—

yeah. Yes, yes, go ahead.

So my VP of accounting used to say to me every year at the beginning of the year, John, you are handed a baby. That baby has 10 fingers and 10 toes, and that baby is your book of business, your clients. At the end of the year, I want that baby to have all 10 fingers and all 10 toes and be a little bit bigger. You know, that was our mindset. That was our goal. Um, and so I would agree with you. 2 years just seems like too short of a lifespan. Uh, it's very hard to scale because you're replacing all your clients.

Yeah, you're just putting all your efforts into marketing.

Yeah.

Yeah. Okay. So, so here's my observation and I'd also like your opinion. Yeah. And listeners, you've, you've heard me say this multiple times. There's kind of in, in the marketing space, and this is agencies and other providers, so not just necessarily creative shops, but, you know, they're in the marketing or marketing adjacent space. There's this crackhead energy that it's like there's— and I don't— the marketers are not the crackheads, they're the dealers. The business owners are the crackheads and they're like, they're chasing this high, whatever that is, whether it's some metric that they've focused on, like website visits or whatever, without really understanding their fundamental marketing needs. And so they keep chasing that next fix. And I think that's what contributes to this churn. But there's also this idea that you can build a business and make money selling them what they need, what they want, not what they need, right? So they're crackheads, they want crack, and so you just sell them crack rather than actually solving their marketing problem. What do you think? What's your observation?

I think you need to know the business you're in and the problem you're trying to solve. You know, I'll just give an example with Fiscal Advocate, my current company. You know, I run into two major problems that we try to help solve. The first one is cash-distressed organizations that literally need a turnaround and we need to help stabilize their business before we get them on a pathway to growth. The second one are people who have hit some type of plateau. It might be the $2 million marker, might be the $5 million marker, might be the $20 million marker, but for whatever reason, they're no longer growing. And I find that the story tends to be in their finances. Like, if you know how to analyze the income statement properly, you can clearly see why they're not growing and what they need to do about it. About it. Um, and so I know the problem I'm trying to solve. Uh, there's only 3 KPIs I care about that I focus on, uh, that— and I believe that no one's been able to come up with a 4th yet. I'm happy to share with you at some point those 3 KPIs.

Let's hear them. I want to hear them.

Okay, so the first one is how much cash you have relative to your monthly overhead. Okay, if you have a lot of cash, you can, A, weather the storms, going back to my, you know, net traffic example I gave earlier. And the other one is you can be opportunistic. You know, Microsoft bought LinkedIn for $26.2 billion in an all-cash deal. If you have lots of cash, you have lots of optionality. The second one is your profit margin. In a creative agency space, 20% is considered best of breed. So you're not at 20%. That means that you have some inefficiencies within your finances. That you need to understand where and why. And the third one is year-over-year revenue growth. Not only will you get a higher multiple if you, uh, improve your year-over-year revenue growth, but you can build a sustainable company. You can take care of your employees by giving them promotions, giving them more responsibilities, uh, really building careers for them. So those are the only 3 KPIs that I believe matter.

I will offer a potential fourth. Okay. And I'll give you a little background on this.

Yeah.

I don't know if you know who Greg Crabtree is. He's an author of Simple Numbers and Simple Numbers 2.0. He's a colleague of mine in Entrepreneurs Organization. And he was running a cohort for startup businesses and he was leading it. And I was kind of the promoter of the local chapter. So I went and I knew the content and it was on cash.

Yeah.

And I, I had the hubris to say, well, you know, I could sit here and teach this course because of my background and experience. I'm like, I've I actually had— this was the third time going through the material. So I'm like, I know this. I sat there and listened to him. He's my age, maybe a little older. And I took more notes at that event than I had at any learning event with EO in a long time. And it was my willingness to show up with a learning mindset and not not assume that I knew everything that allowed me to do that. But one of the concepts he has in Simple Numbers 2.0, which as an aside, I told him this, this book is not simple. And anybody I recommend the book, but like if an average business owner without a financial experience and understanding education It's not simple. So be prepared. One of the things he talks about as the primary driver of a business growth, and he's not in the creative industry space, he's just agnostic as to industries that he advises, is the direct labor efficiency. And the direct labor efficiency as he defines it is the gross margin without labor divided by the all-in labor cost. And his, his statement is that most, uh, most businesses, the majority of the effective decisions you can make are around people, not, you know, capital expenditures, etc. And managing that labor efficiency, how much additional gross profit are you generating for the labor dollars you spend, is, is the primary growth driver in a business. And I'm like, yeah, I mean, I, I learned, I learned this from him 3 years ago and, and applied it in our business and with our clients. And I'm like, yeah, that really that gets the most traction. I'm not saying it's the only thing, but it's like, it's something most people can get their brains around. If not the computation of it, at least the concept of it.

So first of all, 100% aligned with you that that is an absolutely crucial metric. And as I talk about profit margin, I break profit margin into two numbers. The first one is, what is your gross margin? I can tell you this, 99% of the people I talk to before I— they start working with me or I have a conversation with them do not know what their gross margin is. They don't know how to calculate it. And so what oftentimes happens is your gross margin should be between 50 and 60% as a creative agency. And just for anyone listening who doesn't know what the definition is, this is my definition, is you take your net revenue— so pass-through revenue does not count— and you subtract all costs that relates to doing client work. So that is your payroll, your freelancers, your technology, your travel and entertainment, client gifts, you name it. If it's related to client work, goes into that bucket. Okay, whatever you have left over is your gross profit. Right. That gross profit divided by your revenue is your gross margin percentage. Correct. So I, I'm not dividing it by your labor, but what I'm saying is whether you divide it by your labor, you don't divide it by your labor, you're not going to get to your 20% EBITDA if that number is too low.

Correct.

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Now, to give you another example, because you talked about drivers of growth, and this is where I talk about on the revenue growth side, That number is the most important number for driving growth. Here is a real-life example. I have a client of mine with a really low gross margin and 20% EBITDA. What that means is that all of their non-client-related expenses are insanely low, and there's only 4 categories for those— in— for those non-client-related expenses. It's sales and marketing, R&D, your back office, so operations and finance, and your executive team. And if that number is really low, well, then you can't invest in sales and marketing, you can't invest in R&D. And so by improving your gross margin, you not only improve your profit margin, but you improve your revenue growth. So I'll go back to— I still believe that the 3 that I gave you are the 3 most important, But what you picked is probably the most important number to improve your profit margin and your revenue growth.

Yeah. And I'll use an agency that does a lot of advertising and manages advertising and has a lot of flow-through dollars as an illustration. So if you think about this, well, no, let me use a contractor example because that's maybe easier if you're not trying to see it through your own lens, but looking at somebody else. So you've got a general contractor that's out there building shit, and they have a whole bunch of supply cost, and they have a whole bunch of subcontract labor, um, you know, they're paying subs, and they could have a million-dollar business real easy, right? I mean, that's, that's just like 3 or 4 homes, right? Yeah, if they're, they're building residences. But how much of that, to your point, you, you, I don't remember what label you, you pass, pass-through doesn't count. Mike Michalowicz talks about it in Profit First as real revenue.

So like, yeah, I call it net revenue. You'll call it revenue, right?

So the thing is, is that can give you an illusion, having those dollars flow through your business, that you have a million-dollar business. But if your margin in a contractor example is only 10% or 15% on that, you really don't have a million-dollar business. You have $150,000, maybe a $200,000 business. And that is a completely different business, right? And if you, to me, gross profit is indicative of the value that your business contributes. Like if, and so that's the number that you have to maximize. Because that's, that's what value you're bringing to the table. The rest of it is just, did you get the right people? Did you get the right contractors? Did you pick the right technology?

Yep. So let me use Rise as an example. Rise managed $250 million of media that flow through our company. That's a lot. So when I applied for the Inc. 500 every year, they allow me to use that number. So in their world, I was a $250 million business., right? The reality though is I didn't get to keep $210 million of it. I got to keep $40 million of it. And so I called that net revenue.

Mm-hmm.

Then after that, I had a 57% gross margin when I left the business. So what that means is that 43% of that $40 million, which I can't do the math exactly in my head, but it's between $16 and $17 million or so. Was spent on labor to deliver for our customers.

Yes, yes.

So I took the $40 million minus— I'll just say $16 million for easier math purposes— purpose. That gave me $24 million. And then I had a choice with that $24 million. I could put it in my pocket, or I could invest it in sales and marketing, R&D, the executive team. And operations and finance. And there's benchmarks, by the way, for each one of those categories. And so these were kind of the tricks that I used at Rise. By knowing those numbers, I was able to figure out how to scale and grow faster. I was able to figure out how to ensure that I had the right profitability targets. I was able to understand how much cash I should grow. And so those are kind of the ways that I manipulated everything to fuel the growth of the business.

I don't know if you've experienced this, but I find in creative agencies specifically, there's oftentimes this struggle between the creative and the analytical, right? Like, and you seem to bridge that gap quite well. How, I guess the first question is, do you experience that with your clients? Like they're more on the creative side. And then the follow-up question would be, how do you get them to buy into using the other part of their brain?

So the first thing that I try to explain to people is There is two versions to the founder. Every, every creative agency, the founder most likely was working for another agency or working in the marketing department and decided they could do this better. And so they started their own shop and they're a creative person, but they're now also an entrepreneur. And the first question I always ask them is, Which do you want to be? Are you looking to be a CEO that happens to be of a creative agency, which is a very different skill set? Or are you looking to be a creative? And if you're looking to be a CEO, it is your responsibility. You talked about having a growth mindset, you know, and listening and how you were taking notes in that EO session. Your job is to learn how to be a great CEO, right? And so it's going to be next to impossible to not be a great CEO with some type of analytical capability, you know. Absolutely. When you think about decision-making, no matter what decision we make, there is a leap of faith that it is the right decision.

Right. We, we never have all the information or all the answers. There's unknowns.

So what data does and what analytics does is it makes the leap smaller. That's all it's doing, you know, but you're still making a leap. And so, you know, and what I would say, if it's not your strong suit, first of all, I think anything, if you want to, can be learned and you got to put the time and energy into it., but you can also surround yourself by people who, you know, are great at that component.

Yes.

When I started my web development practice, I don't have a creative background. I appreciate you talking about my balance and that there is a creative side to me. But, you know, I ended up hiring as an advisor a woman named Cheryl Berman. Cheryl is in the Hall of Fame of, of advertising agencies as one of the top 50 most influential women ever in marketing. She's created to this day, uh, one of the Super Bowl ads that's considered still one of the top Super Bowl ads ever. She was the chairman and chief creative officer of Leo Burnett. I mean, she's, her background is just unbelievable. And her first job was I thought I had special talent at Rise. And I said, I just want you to evaluate my talent. Turns out I was right, which I was very happy about. But I was like, if they're not the right people, if they can't build world-class creative, then I want to, I want to find people who can. And because I believe in this concept of the pursuit of world-class and constantly making your product better and better and better., but I needed somebody with that skillset because I don't have that skillset. And, and it's interesting if, if I'm as far left-brained, she's as far right-brained as you can get. And what I find brilliant about her is I'm so process-oriented and she really is not that process-oriented. And then all of a sudden, just like this brilliance comes out of her, you know, which is like a true creative, you know, that like, yeah, I was like, I just don't know how you're like, where the hell did that come from? Exactly. And how do you, How do you develop a process around that? And I don't— you can't. Yeah. And so, um, but you know, so I surrounded myself by somebody who filled a gap that I didn't have. And that's what I would suggest is fill, fill your team. Once again, we talked about this being a team sport. You don't have to be the best at everything, but you need to surround yourself so that you have all those, all your bases covered.

Yeah. And I know in my journey, that was absolutely hardest part was the getting out of my own way and the diminishment of ego, frankly, which a lot of— I've talked about this before that, and you've alluded to it with team members, but this also applies to the founder, is that The skills, the beliefs, the talents that you have that made you successful oftentimes become an impediment to growing to the next level. And, you know, being self-reliant, being stubborn or, you know, persistent, however you want to phrase that, having a can-do attitude. All of those things are very important as an entrepreneur until they're not. And, and for me, it was like, if you don't get out of your own way, this company will not move forward. And that, that is true. Looking backwards, that was true from day one. I just didn't, I just didn't really I can't see it until I reach the cap. And the company will grow to the cap of the founder. And if the founder will either not grow themselves and learn the skills and change their beliefs or whatever is necessary, or get out of the way and let someone else do it, the company's stalled. It can't grow.

I would completely agree with that. I also think as a CEO, you have to be comfortable not being the best at everything. 100%. You know, we had a saying at Rise, and I haven't really brought it to Fiscal Advocate, but it's kind of ingrained in me, so I want to do it, is I really want to be the dumbest person in the company.

Mm.

And yeah, and I'll tell you who I want to be the second dumbest are the people who report to me. And the third dumbest is the people like, if your direct reports are all better at their job than you are, Think about how amazing that is. Yeah, but it does— it's weird, it actually takes a lot of confidence in an individual to recognize that somebody is better at something than you are, you know. Like, I'm very comfortable with that. Not everyone is.

I just finished a book, uh, called Great Leaders Live Like Drug Addicts. By Brody Waite. Have you read it? No, I haven't. He has the most popular TEDx in Nashville, and you can go watch that. But then after that, he wrote this book, and it was really eye-opening to me. I had come to realize that because I just finished the book. I'd come to realize a lot of that leadership problem, but he helped crystallize it and put a system around it. But the idea that the owner has to know everything, right?

Yeah.

Like the owner has the answers. And until you can say, you know what, I don't know what the answer is. I don't know. That's what I'm relying on you to help me figure out. Like that's to your team. Because if you're, if you're the only one with answers, you're only going to grow to the scale of you.

Exactly. Yeah, exactly. I pride myself as I consider myself a really good salesperson, you know, and I, in my current company, I still manage all the sales. I hired a person at Rise named Howard Diamond. And not only is he a phenomenal salesperson. He's absolutely a better salesperson than I am. And by hiring him and allowing him to study his craft and focus— he did study his craft. He read books, he went to Sandler training every week. Like, he, he focused on every single aspect of how to be a great salesperson. And when my last year at Rise— it's interesting that there's, in my opinion, there's 4 stages of a CEO, uh, the startup, the growth, the mature, and the mega. And in the mature stage, you truly are a strategic CEO. And what I mean by that is that you have great leaders in place for all aspects of your business. So you're, you're no longer a player coach, you're just the coach. I found out, by the way, that that bores me. I, I like being in the thick of it. But we— no one wanted me involved in any of their aspects of the business. They wanted me to guide the strategy, but, you know, Howard didn't want me pitching. And, um, there was one day where I had to go to a pitch, and the only reason why I went there is because every single person was at a pitch somewhere else across the country. And I go to the pitch We do not win it. I then leave, and that summer they re-pitched the account and they won it. And I know it sounds strange, but it's one of my proudest moments of that business is because I built something so special and so great that it was able to survive and thrive without me. Um, and yes. Um, and so, you know, that to me is when you know you built something special, is that when they don't need you because it keeps on operating incredibly well.

Yes. And that should be your goal as an entrepreneur is not creating a job for yourself, but, but creating something that exists without you. Not to say that you can, I mean, like, you know, you, you, the business still needs you as leader.

Like, that's not to say that you have to drive the strategy. You have to point the ship in the right direction and make sure, you know, like, I have a lot of different sayings. One of my sayings is that your ultimate boss is the income statement. And it is a completely objective boss.

Yeah. You know, it don't, it don't care what you think. It's going to give you the numbers.

Yeah. And if, If you're flat year after year after year, if you're shrinking, you know, if you're growing, but you never have any profits, uh, you're not doing your job. And so I know I did my job at Rise. Like the numbers prove that I did my job well and that I steered the ship in the right direction. But it's also because I had these amazing people in place., that, you know, we're able to do their part of the job much better than I could ever do it.

Yeah. I, I, I think that's, uh, people, whenever they find out that I'm an accountant, which I don't ever lead with, like I hide the fact that I'm a CPA.

Yeah.

Uh, but they'll say, oh, well, you, you must love math. And I'm like, well, I mean, sort of, but accounting, uh, the, the highest level of math that I use is arithmetic, and I learned that in second grade. So it's not really math, it's language. And I, I think that the, the language of the finances and accounting tell a story about your business. And if You don't want to read the story. You want to just make up the story in your own head. That's totally fine. But the numbers tell the story about your business. So you can either read it or not read the book. But you're, you're, you're living in la-la land if you don't.

Yep. And, and by the way, I do find that's the case. You know, I have a client of mine. I don't think they really want a CFO. Um, you know, their story is their gross margin is too low, right? And, you know, it's a $10 million company. The only way they want to fix it, which is the easy way, theoretically easy, is by growing revenue. You know, they don't want to fix it by figuring out the tough decisions and letting people go and bringing in a lower cost structure. Which is what they really need to do. And so I've given them the story. The story is very clear. They just don't like the story.

And so, yeah, you know, yeah, and, and, and that's why, you know, CPAs, CFOs, accounting types always get the, the label of being, you know, Dr. No. You know, they're the people that tell you the bad news. But, but that's, that's, that's not entirely true. I think it's, it's not necessarily negative or positive. We, we are a mirror for you to look in and see the reality. And if you don't like what you see, that's up to you. Like, you— I can tell you how to fix you, but if you don't, if you don't want to fix you, I can't help you.

But, you know, and going back to, it's not always no, sometimes it's yes with like a great sense of urgency. Yes. Like, no, that's right. This investment's really paying off. How do we get more money in there?

Like, yeah, do more of this. Yeah. More cowbell.

Yeah. Uh, I have a client, complete turnaround. Like last year they lost a million and a half. This year they're going to make a million and a half. And, uh, and the story for 2026 is all about investments. Like we're looking to invest more in sales and marketing. We're looking to invest in R&D where, you know, like we've stabilized all their finances. You know, we, we, they're, they're almost out of debt, you know, that like now we get to have the fun stuff like this, you know, but he earned it because he did all the hard work, you know, to stabilize his business. Yeah, absolutely.

Well, John, how do people find out more about Fiscal Advocates and, and the work that you do?

Uh, so you can follow me on LinkedIn. Uh, I post minimum of 3 times a week, haven't missed a week since August of last year. Uh, you can go to fiscaladvocate.com. I have a whole resource section where, um, you can download my ebook, follow my blog posts. Or just email me, jon@fiscaladvocate.com. I'd love to hear from you.

Awesome. Listeners will have those links in the show notes. If you like what you heard, please rate the podcast, share the podcast, subscribe to the podcast. If you don't like what you've heard, which I don't understand why you wouldn't, shoot us a message, tell us what you like to hear, and we'll try and find a replacement for Jon. I don't know if that's possible.

I'm sure you can do much better.

We'll do our best. Until then, ta-ta for now.