Luis Scott 5:58
Let me just make a note that after 16 years, it is not the natural progression to have 100 employees. So I know it takes, it takes a lot more than just being in business 16 years. So I applaud you for that. How did you stay committed in that process? And because one of the things that I deal with when I’m working with clients is this feeling of overwhelm, stress, I can’t keep doing this. I hear these things like, Oh my gosh. Like, I don’t know how I can continue on during the tough times. What was it that you were focusing on that helped you stay committed?
Jason Kruger 6:37
Yeah, I think for me, it was always focusing on the core of our work and and the future and what we were looking to accomplish. And so what I mean by that is always looking at, you know, if the goal is to get to, you know, pick a number, 10 million to 20 million, 100 million, what? What needs to happen to get there? And, you know, it’s all about scalability, right? So building that foundation from the beginning, and that mindset of our model is recurring revenue model. We work with companies and clients on a recurring basis, so meaning we support and drive the success of their their internal accounting department, and support them at the CFO level as necessary as well. So for us, it’s recurring revenue. So how do we continue to build that base of recurring revenue and also support our clients and maintain those clients by providing them that quality of service and work? So it was always about achieving looking forward and saying, Okay, how do we maximize if I’m going to sell at some point in the future, how do I always look at maximizing the business value? So I’m building this the right way and the smart way. It’s not all about me. It’s not all about Jason. If I leave, I don’t want the value of the firm or the company to diminish. So how do I build that around me? And then how do I continue to build, you know, one client at a time to achieve the goals I have. And so you know, a lot of that, again, is you can’t get from zero. Well, most, you know, firms can’t get from zero to 10 million in professional service overnight. And so again, it’s the steps along the way. It’s celebrating, the successes along the way that you’re having, the excitements. And really always looking at, for me, it was looking at that long term vision. And I’ve always had, I think I’ve always had some level of patience, being able to wait it out, knowing that, hey, least we’re moving forward in the right direction.
Luis Scott 8:38
Yeah, I think patience is a big thing. There’s so many people who want that quick success. They want to see something happen immediately, because they want to increase their lifestyle. And I’ve always talked about how many times business owners they live at a lifestyle that they haven’t earned yet. And what I mean by that is they make their first 200,000 300,000 in personal income, and they go out and are doing $60,000 vacations, and they’re, I’m like, invest in your business. Like, don’t go out and do that. Get get to a point where that 345, $100,000 income level is more predictable and sustainable, so that way you don’t have shortfalls. And I think really big thing that I see with young entrepreneur entrepreneurs is social media glorifies entrepreneurship in a way that that doesn’t really exist out there, like there’s a there’s a true grind when it comes to to entrepreneurship. Now, yeah, as you’ve hired people, especially after the pandemic recently, in 2020, what have what challenges have you seen in finding great people? Because that’s another sticking point in growing a business is, is, how do we find and retain great talent? What are some strategies that you’ve used?
Jason Kruger 9:46
Yeah, yeah. Well, I say, I will say it took four years before I hired my first employee. So talking about that patience and that grind we were talking about and and really trying to figure it out that was first four years. Was really trying to figure that. Process out, and then, you know, was able to hire my first employee and build off of that. And the good thing is, the individual that we hired, she’s still with us. I guess it’s 12 years later, amazing, which is fantastic, but, you know, it’s a slow progression. I can’t emphasize the value of culture and what actually a an awesome director of HR can bring to a company a lot of times, you know, it’s like I didn’t even know what. Hardly know what HR was, right? And a lot of companies don’t know what HR is, or what it what it what it means. But HR really creates that culture, that foundation for to develop a culture and an organization that people want to work for and want to work with, right and and that culture is so critical in not only attracting the talent, but in keeping the talent as well, and that’s something that we’re constantly working on and working to improve, is that culture, and not only it, culture isn’t just about fun things and doing fun things like going to a baseball game or going to a happy hour. It’s really about, how do you ensure when you’re hiring people, how you know, how do you give them the foundation or the platform to be able to achieve the goals that they have in their career and in their life? And so that’s something that we work heavily on, is showing our team the progression of their career, their career development, what it means if you come in at this level, what it means and how you get to this level, and what it also means if you decide to leave. We want you everybody to stay, but we also celebrate if somebody has been here for five years, and they decide to leave and they have a great opportunity that’s a success, and we celebrate that as well. So we want to develop a platform that allows people to succeed and grow. And the other is you know, obviously HR, it helped to develop that process. We also have a full time recruiter who’s always looking for talent, and we’ve really developed our process on how we interview and how we find talent. Is, is we’ve really dialed that in over the years on how we do that. And then the last thing I can say is, for what we do, you know, the interview is important, but we also do live role plays and, you know, and a test that’s involved, too, from a from a skill set perspective, to make sure that we have confidence that this individual not only can do the work from a technical perspective, which is important, but what we was important for us too, is being able to communicate effectively with our clients to drive success in their environment.
Luis Scott 12:54
What are some things that you do? Because I’m always curious when when companies say they have great cultures. I’m always curious, what do they do that’s uniquely different? Is there anything that you do that is unique and that sets you apart, from a culture standpoint, that may be creating that pool to bring people in and keep them there?
Jason Kruger 13:13
Yeah, I think one of the things that we did, and, you know, I even grew up in the, you know, the big four and to the support you got is, really, is you got evaluated from the people who what job you were on, and they evaluated you, and you got instruction and support from them, and then you may go to another job and work with somebody else, or report to somebody else, and then they give you some sort of like a buddy or something like that, right? Well, we’ve what we’ve done is we’ve gone a lot deeper than that, and we’ve created an entire people management structure behind the scenes so that everybody has a people manager that they report to that supports them. It’s more than just a buddy, because the people manager has the tough conversations with them as well. The people manager is involved in the hiring process. So when we need a new individual at a new level that people managers identify, and they’re part of the hiring process, they have conversations about promotions and raises, and then it also gives the the individual the support that they need to be able to have somebody to go to, and that is their true manager within The organization at the same time, those individuals are working within teams on different clients and being supported and learning from them at that time as well. But that people management structure that we’ve developed, and the systems around that, and the technology we use to support that has been critical in how we support our team and and what we do in addition to that, you know, we obviously have a, we have a, I don’t know if it’s called a social committee or, you know, we call it a an experienced team, or something like that. And we’re always trying to do different things. And, you know, I think, and. And it’s not always about getting the whole team together, because we have employees, you know, in San Diego, we have employees throughout California, we have employees throughout the United States now, with how, you know, how we service our clients, but it’s about creating a common bond, whether it’s either remotely through a zoom or an experience through zoom or an event that we do, or even getting together in small patch, small little groups, so three or four people getting together for coffee, or some people doing an event over here. And so we try to do, and I think one month, we had 30 or 40 different events where people got together and did different things, and we really promoted that, because that creates that, that culture, and that creates the the people getting together, and not just stuck behind the computer screens all day long, like we are, you know, post covid,
Luis Scott 15:55
yeah, when you said Social Committee, and the first thing that came to my mind was the party planning committee from the office. Yeah, exactly. You have a couple of people managing party planning. No, I think, I think it’s great. I think that, you know, people underestimate the importance of having regular and consistent feedback. And it doesn’t have to be always because of a disciplinary action that that needs to be taken. Sometimes people need to hear that they’re doing a good job. And one of the things that I try to encourage bosses is like, with the same energy that you tell someone they’re doing a bad job, use that same energy to tell them they’re doing a good job, like we knit things that people are doing wrong, but we don’t nitpick when they’re doing it right, and take the opportunity to say that they’re doing something right. So that’s one thing that they do, right? We should, we should, just as enthusiastically tell them that they’re doing it right, even though it’s small. The same way that we get upset if somebody writes an email that may be, you know, not that great. And so I think that so true. Having that one to one connection is really, really powerful. So now, you know, because of this culture, you’ve been able to service a lot of people. I got a question yesterday, and this is highly relevant, so I’m going to ask you this to see if maybe you have, like, like, a four, four part strategy for this. But yeah, how does a person actually select the right accountant? Like, that was a question I received because they they said, I have an accountant. I don’t feel like they give me any kind of strategy. I don’t feel like I’m not really sure what I’m supposed to be looking for. So how does a person hire the right accountant, or expand on, you know, all the services you do, like accounting or whatever, CFO or analytics? How do you know you’re hiring the right one? Because that’s, that’s a challenge.
Jason Kruger 17:35
Yeah, that’s a that’s a big challenge for business owners, because their background is in their business, not in accounting, not in finance, not in marketing, not in sales, in most cases. And so, you know, as entrepreneurs, you the individual gets in, they start their business because they know their business. They know their product or their service, very, very well. And now all of a sudden, they’re business owners. And they have to, you know, they have to do all the other stuff that they didn’t realize came along with being a business owner, right, the stuff that you don’t hear about on social media that you were talking about earlier, which is, you know, you gotta hire people. You have to build out processes. You have to build a foundation for growth. And so when it comes to, you know, hiring all not only accountants, but how do you know? How do you hire a salesperson? How do you hire a marketing person? How do you do all this stuff? It’s, it’s, it can be very difficult. What I would say is, so the first thing I’d say, from overall perspective, is know your business, and that means know every aspect of your business. So educate yourself on and you know on on finance and accounting. You don’t have to know how to do journal entries, but at least educate yourself on how to read financial statements. Educate yourself on on marketing you know on on what that means. Educate yourself on business development and sales and obviously the operational side. Usually the business owner knows, because that’s what they they know best, and and that then allows you to to hire good people, but then also to manage them. And so what, what I see a lot with entrepreneurs is they say, Okay, I’m going to start a business. I know how to provide this service or this product. And then when I grow a little bit, I’m going to hire a salesperson, and that person is going to go, you know, sell, sell a bunch. Then I’m going to hire an accountant, and they’re just going to do the the accounting over here, and I don’t have to worry about them. And then, you know, I’m still going to be doing this. Well, that’s where I see things fail a lot, is where, if you hiring somebody and then just giving them free rein and not providing them the oversight or direction is is a recipe for for, you know, disaster, in my opinion, because even though you may hire the expert, they still need they still need support, they still need direction, and they still need somebody that is able to. To collaborate with them to ensure that they’re successful. So I’d say, you know, educating yourself on all aspects of your business, on sales, marketing, accounting, finances, understanding how to read financials will really help to understand. Will help that individual determine the right individuals that they should be hiring and on. And also, what I would say is talk to an expert. You know, I think at a minimum, most companies use a tax CPA help them. Talk to that individual about have them read the job description. Have them even support the an interview, you know, have them interview the person they’d be if they’re a good advisor to you, just like you know, I’m sure a lot of your clients are, or listeners are, to their clients, they’d be more than happy to participate or to have a conversation with that individual to ensure that that person is the right person for that role. So that’s how I would go about it. We we are obviously very heavily involved with our clients. We’re a fractional service. A lot of our clients have that full have a full time person in house, and we support that person too. And so we all obviously help our clients when they are looking or when the need does arise that they need to hire a full time person. We’re there. We’re helping them. We’re helping them through them process, but we can obviously support that. But you know, I would, I would do all of those things, is educate yourself, lean on an expert that you may know that you and that you also trust.
Luis Scott 21:36
Now, how does your fractional service work? Because one of the things that I that I hear from my clients is, well, I don’t want to hire a fractional service because I don’t feel like I can control the work product. I don’t feel like I can get the value that I need. So how does your How does your fractional service work? And how do you integrate with a company that’s not accustomed to having a fractional
Jason Kruger 22:00
team? Yeah, yeah. I think usually there’s some sort of, there’s, there’s got to be some level of pain point up front. If everything’s going well, or if the business owner is satisfied, they’re they’re likely not going to say, Hey, I’m going to change my accounting now. So there’s usually some sort of a pain point or, or they, they’re experiencing growth beyond the skill set of their team. And so the first question, the first thing that we talked to the business owner about, is really understanding their team and and what those, those current pain points are, understanding the direction and the goals that they have for their firm or their business and where they want to go. So where are they now? Where do they want to go? And then we help to educate them on what that means, from an accounting perspective, from a business perspective, from a finance perspective, on how they know, ultimately, ultimately, want to get there. But the first step is, you know, we we assess kind of their their current environment. So we look at their their current team, their people, their processes, their technology they’re using. So what accounting systems are they using, and what other systems are they using that may integrate within accounting? And then we look at the reporting infrastructure, and through that, we help to then define the roles and responsibilities of their existing team, and then us, we and also the plan as we move forward, so that they have very a lot of clarity, and it’s very clear on what they’re going to be getting out of this relationship, and the value that they’re getting out of that which should be above and beyond, obviously, what they currently have and should be, you know, above and beyond the price point from a value perspective that they’re seeing as well. In some cases, we do replace their current person or team, but in a lot of cases, they’ve outgrown their team or their person, and we provide that support of that person to help continue the growth of the company beyond the skill set of that person. And so instead of having to hire a full time person that, like you said before, they may or may not understand who they’re hiring, we now can work with them to provide them that structure, make sure they have the right people doing the right thing at the right time, support the right individual, give them that flexibility, and be very clear with them on consistent communications, how we’re working together Again, we’re part. We feel we’re part of your team. We just don’t happen to be sitting in your office every day, you know, right next to you. But we’re available. We’re there. We’re we, we, you know, we want to see you succeed, and we’re we’re working with you collaboratively and consistently, always.
Luis Scott 24:36
Let’s talk fraud prevention. I had a client who just recently had an ex employee, or they just discovered that they had $119,000 stolen from from the client. What are some measures that people can put into place to prevent those kind of things? And then how does a third party accounting service so. Serve as a, I guess, a barrier for for stuff like that happening. Yeah,
Jason Kruger 25:05
I would say that the biggest challenge with small businesses is that they obviously can’t afford a full they can’t afford and they don’t need a full team, right? So it’s very different. Can be more challenging to put those controls in place, or processes in place, to provide to ensure that there is not fraud happening. But it also goes back to what I was saying before, which is what I would recommend not doing, is hiring a bookkeeper or an accountant and then just not just letting them do their thing, right? Hey, you take care of accounting. I’m going to run the business over here that gives them free reign to do everything, and at the same time, then the business owner doesn’t have a full understanding of what’s happening from an accounting perspective in their business. And so that’s what I was talking about earlier, too, about know your business, know what’s happening in all areas your business. So you can provide the oversight, and you can provide the management of those aspects. So even though you hire me, even though an individual may not have an under strong understanding or background in accounting and finance, when they hire somebody in accounting and finance, that person needs to be managed. So that’s that’s step number one, also basic, you know, basic areas of controls can be put in place. So we don’t want one person doing everything you don’t want you want to separate the bill pay process. So you don’t want to have that individual just have free reign to be able to pay bills a lot of times they, you know, somebody can commit fraud. They can easily set up a dummy vendor account and just start paying bills to that vendor, you know, pay cutting checks to that vendor account, while that vendor account is, that is them, essentially, and they’re, they’re then stealing funds, right? Another area I’ve seen it done is through payroll, through expense reimbursements, where they give them self expense reimbursements. There’s no oversight, no review, nobody’s looking at it. They can easily, you know, steal that way. And in some cases, I’ve seen it where the person even gives themself a raise because they have full access to payroll. Nobody’s looking at it, and nobody understands, and it just comes out in one lump sum out of the bank account. And so, you know, those things like we’re creating, finding the ability to to prove to provide some structure oversight managing that person, and then create some level of barriers and controls as it relates to everything associated with the outflow of cash, which is critical. So that’s the AP process, the payroll process. You know, even understanding the invoicing process and how payments are coming in is critical as well. So the other option, obviously, is, you know, making sure you don’t just have one person that’s doing everything. So you may have an accounting person, but you maybe you have an office manager that can provide can perform some some roles, so there’s some checks and balances that is involved in that process. Or maybe you, as the business owner, is performing some roles, and should be performing roles on approving any outgoing payments that are being made, and understanding and being able to tie out any outgoing payments to what city in the bank account. So getting that visibility from a reporting perspective is critical. And then, you know, as the company grows, obviously ensuring that it’s built out in a way where there are checks and balances and and that’s really the value that we bring, obviously, to the table, is we provide those checks and balances. We provide that that team approach, the structure, we build, the processes so that really there is no, you know, the risk of fraud is very, very low when we’re involved.
Luis Scott 28:51
One of the things that this person did was that they were writing checks to a to a dummy vendor, and then they were going and cashing the checks. And I think what I recommended after they found this out is like, the person who who prints the check can’t sign the check has to be too too eyeball on this exactly in a scenario where you’re involved, would your company print and or sign the check on behalf of the like, let’s say I’m a small company of six people, yeah, I don’t have the the infrastructure, the manpower to have two people overseeing everything. How would, how would you guys come in to support in that kind of scenario? Yeah,
Jason Kruger 29:32
we would set up a process just similar to what you mentioned. We’re not a big proponent of cutting physical checks and signing physical checks for a number of reasons, one, a couple of what you pointed out there’s a there’s some very inexpensive AP automation tools. Bill.com is one. It just automates the bill pay process so that you never have to cut a manual check again. It either sends directly to the vendor through a. Ch or it will cut the checks for you, and it creates a process of preparing and approval. So, and it’s very inexpensive. It’s, you know, probably less than 100 bucks a month. And it’s, you know, $1 per check, which is basically what postage and and and envelopes are these days. And so it’s a it’s a way to and it integrates with QuickBooks, which a lot of companies have as well, and and it integrates with other systems too. So we want to get away from the manual process of things so that that helps to eliminate fraud, uh, very easy, you know, a lot. It helps to reduce risk. And what it also does is it creates a set of approval guidelines. So like, as you mentioned before, one person can, can prep the outgoing payments, but then the business owner, or somebody else, as he is, the one that has to approve any outgoing payments. When it’s automated like this, they can do it on their phone. They can do it on within the system, and they just check the boxes of what’s going out that week at pay, they have the opportunity to review the invoices and it goes out. And so one is to, you know, eliminate the manual process of cutting checks if you have to do that, exactly what you mentioned Luis, which is one person prepares them and prints them. Somebody else signs them, the person that signs them should have all of the bills or invoices that they are able to review before they sign them and it goes out. So that is a big, you know, a process that has to happen. But ultimately, we want to make sure that, you know, companies are moving away from paper checks and signing because that creates risk in other areas, like somebody stealing a check or forging a check, or something else like that as well.
Luis Scott 31:46
I agree. I mean, I think that that there’s so many options for the the check writing procedure we use something where I could, I could actually approve it and sign it electronically, instead of instead of having to let people handle checks and so forth. So I do agree with that. So where can people find you? If they want more information about working with you, you’ve built a company. You know what it’s like to be an entrepreneur? You know what it’s like to employ lots of people. You know what it’s like to prevent fraud, to work fractionally with people. And I’m sure there’s somebody out there who’s saying, I need something just like this. So where could people find you to get your services? Yeah,
Jason Kruger 32:26
thanks. Luis, it’s our website. Is Signature Analytics.com. You can find me on LinkedIn. Jason Krueger, obviously, with it with Signature Analytics, and then I’m happy if anyone wants to email me the letter JKruger@Signatureanalytics com. And again, happy when anybody reaches out. Love talking to business owners. If we can help them, that’s great. If not, usually we know somebody that that can and Yeah, happy to answer any questions. Awesome. Well, thank
Luis Scott 32:59
you very much for being on the show. We’re so happy that you were able to share that information about fraud prevention. I think that’s going to help a lot of people I know, especially in a world where cash tends to have a lot of legs. So I appreciate them. You’ve been listening to The Guts and Glory Show.
Outro 33:16
You’ve been listening to The Guts and Glory Show for more and to learn more about Luis, hit the website at LuisScottjr.com for consulting opportunities, hit 8figurefirm.com that’s the number 8figurefirm.com We hope you’ve enjoyed the show. Make sure to like, rate and review, and we’ll see you next time on The Guts and Glory Show.
